Halbman v. Lemke

• Decision Date: 25 November 1980
• Docket Number: No. 79-029,79-029
• Citation: 298 N.W.2d 562,99 Wis. 2d 241
• Parties: James HALBMAN, Jr., Plaintiff-Respondent and Cross-Appellant, v. Michael LEMKE, Defendant-Appellant and Cross-Respondent-Petitioner.
• Court: Wisconsin Supreme Court

Page 562

298 N.W.2d 562

99 Wis.2d 241

James HALBMAN, Jr., Plaintiff-Respondent and Cross-Appellant, v.Michael LEMKE, Defendant-Appellant and Cross-Respondent-Petitioner.

No. 79-029.

Supreme Court of Wisconsin.

Argued Oct. 28, 1980.

Decided Nov. 25, 1980.

Henry A. Tessmer, and Michael E. Geary, Milwaukee, of counsel, on brief; Michael E. Geary, Milwaukee, argued for defendant-appellant and cross-respondent-petitioner.

Louis A. Maier, Jr.(argued) and Maier & Fitzpatrick, Ltd., Milwaukee, on brief for plaintiff-respondent and cross-appellant.

CALLOW, Justice.

On this review we must decide whether a minor who disaffirms a contract for the purchase of a vehicle which is not a necessity must make restitution to the vendor for damage sustained by the vehicle prior to the time the contract was disaffirmed.The court of appeals, 91 Wis.2d 847, 282 N.W.2d 638, affirmed the judgment in part, reversed in part, and remanded the cause to the circuit court for Milwaukee County, the Honorable Robert J. Miech presiding.

I.

This matter was before the trial court upon stipulated facts.On or about July 13, 1973, James Halbman, Jr.(Halbman), a minor, entered into an agreement with Michael Lemke(Lemke) whereby Lemke agreed to sell Halbman a 1968 Oldsmobile for the sum of $1,250.Lemke was the manager of L & M Standard Station in Greenfield, Wisconsin, and Halbman was an employe at L & M.At the time the agreement was made Halbman paid Lemke $1,000 cash and took possession of the car.Arrangements were made for Halbman to pay $25 per week until the balance was paid, at which time title would be transferred.About five weeks after the purchase agreement, and after Halbman had paid a total of $1,100 of the purchase price, a connecting rod on the vehicle's engine broke.Lemke, while denying any obligation, offered to assist Halbman in installing a used engine in the vehicle if Halbman, at his expense, could secure one.Halbman declined the offer and in September took the vehicle to a garage where it was repaired at a cost of $637.40.Halbman did not pay the repair bill.

In October of 1973 Lemke endorsed the vehicle's title over to Halbman, although the full purchase price had not been paid by Halbman, in an effort to avoid any liability for the operation, maintenance, or use of the vehicle.On October 15, 1973, Halbman returned the title to Lemke by letter which disaffirmed the purchase contract and demanded the return of all money theretofore paid by Halbman.Lemke did not return the money paid by Halbman.

The repair bill remained unpaid, and the vehicle remained in the garage where the repairs had been made.In the spring of 1974, in satisfaction of a garageman's lien for the outstanding amount, the garage elected to remove the vehicle's engine and transmission and then towed the vehicle to the residence of James Halbman, Sr., the father of the plaintiff minor.Lemke was asked several times to remove the vehicle from the senior Halbman's home, but he declined to do so, claiming he was under no legal obligation to remove it.During the period when the vehicle was at the garage and then subsequently at the home of the plaintiff's father, it was subjected to vandalism, making it unsalvageable.

Halbman initiated this action seeking the return of the $1,100 he had paid toward the purchase of the vehicle, and Lemke counterclaimed for $150, the amount still owing on the contract.Based upon the uncontroverted facts, the trial court granted judgment in favor of Halbman, concluding that when a minor disaffirms a contract for the purchase of an item, he need only offer to return the property remaining in his hands without making restitution for any use or depreciation.In the order granting judgment, the trial court also allowed interest to the plaintiff dating from the disaffirmance of the contract.On postjudgment motions, the court amended its order for judgment to allow interest to the plaintiff from the date of the original order for judgment, July 26, 1978.

Lemke appealed to the court of appeals, and Halbman cross-appealed from the disallowance of prejudgment interest.The appellate court affirmed the trial court with respect to the question of restitution for depreciation, but reversed on the question of prejudgment interest, remanding the cause for reimposition of interest dating from the date of disaffirmance.The question of prejudgment interest is not before us on this review.

II.

The sole issue before us is whether a minor, having disaffirmed a contract for the purchase of an item which is not a necessity and having tendered the property back to the vendor, must make restitution to the vendor for damage to the property prior to the disaffirmance.Lemke argues that he should be entitled to recover for the damage to the vehicle up to the time of disaffirmance, which he claims equals the amount of the repair bill.

Neither party challenges the absolute right of a minor to disaffirm a contract for the purchase of items which are not necessities.That right, variously known as the doctrine of incapacity or the "infancy doctrine," is one of the oldest and most venerable of our common law traditions.See: Grauman, Marx & Cline Co. v. Krienitz, 142 Wis. 556, 560, 126 N.W. 50(1910);2 Williston, Contracts sec. 226(3d ed. 1959);42 Am.Jur.2dInfantssec. 84(1969).Although the origins of the doctrine are somewhat obscure, it is generally recognized that its purpose is the protection of minors from foolishly squandering their wealth through improvident contracts with crafty adults who would take advantage of them in the marketplace.Kiefer v. Fred Howe Motors, Inc., 39 Wis.2d 20, 24, 158 N.W.2d 288(1968).Thus it is settled law in this state that a contract of a minor for items which are not necessities is void or voidable at the minor's option.Id. at 23, 158 N.W.2d 288;Schoenung v. Gallet, 206 Wis. 52, 55, 238 N.W. 852(1931);Grauman, Marx & Cline v. Krienitz, supra142 Wis. at 560-61, 126 N.W. 50;Thormaehlen v. Kaeppel, 86 Wis. 378, 380, 56 N.W. 1089(1893).

Once there has been a disaffirmance, however, as in this case between a minor vendee and an adult vendor, unresolved problems arise regarding the rights and responsibilities of the parties relative to the disposition of the consideration exchanged on the contract.As a general rule a minor who disaffirms a contract is entitled to recover all consideration he has conferred incident to the transaction.Schoenung v. Gallet, supra.In return the minor is expected to restore as much of the consideration as, at the time of disaffirmance, remains in the minor's possession.Thormaehlen v. Kaeppel, supra, 86 Wis. at 380, 56 N.W. 1089;Grauman, Marx & Cline v. Krienitz, supra142 Wis. at 560-61, 126 N.W. 50.See also : Restatement of Restitution, sec. 62, comment b, (1937);Restatement (Second) of Contracts, sec. 18B, comment c, (Tent. DraftNo. 1, 1964).The minor's right to disaffirm is not contingent upon the return of the property, however, as disaffirmance is permitted even where such return cannot be made.Olson v. Veum, 197 Wis. 342, 345, 222 N.W. 233(1928).See also: Nelson v. Browning, 391 S.W.2d 873, 875-76(Mo.1965);Boudreaux v. State Farm Mutual Auto. Ins. Co., 385 So.2d 480, 483(La.App.1980);Williston, supra, sec. 238, 39-41.

The return of property remaining in the hands of the minor is not the issue presented here.In this casewe have a situation where the property cannot be returned to the vendor in its entirety because it has been damaged and therefore diminished in value, and the vendor seeks to recover the depreciation.Although this court has been cognizant of this issue on previous occasions, we have not heretofore resolved it.See: Schoenung v. Gallet, supra, 206 Wis. at 57-58, 238 N.W. 852;Wallace v. Newdale Furniture Co., 188 Wis. 205, 207-08, 205 N.W. 819(1925).

The law regarding the rights and responsibilities of the parties relative to the consideration exchanged on a disaffirmed contract is characterized by confusion, inconsistency, and a general lack of uniformity as jurisdictions attempt to reach a fair application of the infancy doctrine in today's marketplace.See : Robert G. Edge, Voidability of Minors' Contracts: A Feudal Doctrine in a Modern Economy, 1 Ga.L.Rev. 205(1967);Walter D. Navin, Jr., The Contracts of Minors Viewed from the Perspective of Fair Exchange, 50 N.C.L.Rev. 517(1972);Note, Restitution in Minors' Contracts in California, 19 HastingsL.Rev. 1199(1968);52 Marq.L.Rev. 437(1969).See also : John D. McCamus, Restitution of Benefits Conferred Under Minors' Contracts, 28 U.N.B.L.J. 89(1979); Annot., Infant's Liability for Use or Depreciation of Subject Matter, in Action to Recover Purchase Price Upon His Disaffirmance of Contract to Purchase Goods, 12 A.L.R.3d 1174(1967).That both parties rely on this court's decision in Olson v. Veum, supra, is symptomatic of the problem.

In Olson a minor, with his brother, an adult, purchased farm implements and materials, paying by signing notes payable at a future date.Prior to the maturity of the first note, the brothers ceased their joint farming business, and the minor abandoned his interest in the material purchased by leaving it with his brother.The vendor initiated an action against the minor to recover on the note, and the minor (who had by then reached majority) disaffirmed.The trial court ordered judgment for the plaintiff on the note, finding there had been insufficient disaffirmance to sustain the plea of infancy.This court reversed, holding that the contract of a minor for the purchase of items which are not necessities may be disaffirmed even when the minor cannot make restitution.Lemke calls our attention to the following language in that decision:

"To sustain the judgment below is to overlook the substantial distinction between a mere denial by an infant of contract liability where the other party is seeking to enforce it and those...