Hansher v. Kaishian
| Decision Date | 01 July 1977 |
| Docket Number | No. 75-363,75-363 |
| Citation | 79 Wis.2d 374,255 N.W.2d 564 |
| Parties | Lester HANSHER, d/b/a Northern Motors, Respondent, v. Mike KAISHIAN, d/b/a Kaishian Auto Sales, Appellant. |
| Court | Wisconsin Supreme Court |
Brady, Pachefsky & Sullivan, Milwaukee, on brief, for appellant; Jerome F. Pogodzinski, Milwaukee, of counsel.
Emanuel N. Rotter, Milwaukee, on brief, for respondent.
Defendant Mike Kaishian appeals from an order of the county court denying his motion to vacate a default judgment taken against him by plaintiff Lester Hansher. Both parties are engaged in the used car business in Milwaukee.
There are two issues on this appeal:
1. Did Kaishian's unsigned letter to plaintiff's counsel constitute an answer to a complaint?
2. Did the trial court abuse its discretion in denying Kaishian's motion to vacate the default judgment?
The action in which the default judgment was rendered was commenced on December 5, 1974 by personal service of a summons and verified complaint. The complaint alleged that on or about June 25, 1974, Kaishian acquired, as a trade-in from a third party, a 1967 Cadillac which had been sold to the third party by plaintiff Hansher, doing business as Northern Motors. The sale had been made pursuant to an installment contract by which the buyer granted to Northern Motors a security interest to secure payment of the balance due on the price of the car. The unpaid balance under the contract was alleged to be $385.19. The complaint alleged in substance that the security interest created by the buyer was perfected by Northern Motors and that Kaishian had actual or constructive notice thereof, but that Kaishian, on or about July 18, 1974, sold the automobile to another person "free and clear of all liens and security interest" without disclosing Northern Motors' perfected security interest.
On the basis of these factual allegations, the complaint alleged a cause of action under sec. 218.01(9), Stats., which creates for the benefit of a motor vehicle dealer licensee an action for treble damages against another licensee.
Sec. 218.01(9), Stats., provides:
1
Kaishian sent by certified mail an unsigned letter, dated December 5, 1974 (the same date upon which the summons and complaint had been served) to Mr. E. N. Rotter, the person named in the summons as attorney for Northern Motors. The text of Kaishian's letter, in its entirety, is set forth in the margin. 2
Without further communication between the parties, Northern Motors, by Attorney Rotter, applied for a default judgment, the matter being heard before the county court on January 6, 1975. No transcript of the default judgment proceedings is in the record. However, the record does contain an affidavit of the court reporter stating that she had recorded the presentation of Attorney Rotter at the default judgment hearing, that Kaishian's letter of December 5, 1974 had been introduced in evidence, and that the contents of the letter were summarized for the court. Findings of fact and conclusions of law corresponding to the allegations in the complaint were rendered on January 13, 1975, and on January 14, 1975, judgment was entered in favor of Northern Motors in the amount of $1,427.17, which was treble the pecuniary loss of $385.19 together with $250 attorney's fees and $21.60 for disbursements.
Upon being apprised of the judgment, Kaishian retained counsel. On February 3, 1975 he obtained an order to show cause why the judgment should not be vacated so as to allow him to file an answer. A proposed answer was filed, 3 and affidavits by Kaishian were submitted to the court. The substance of the affidavits was that Kaishian was unfamiliar with court procedure, that he had no previous experience with summons and complaints, that he did not know the significance of a summons, and that he thought his letter would serve as an answer to the complaint.
A hearing was held, and Kaishian's testimony revealed that he had been involved in business for twenty years, and in the used car business for fifteen years; that he owned a tire dealership; that he possessed a degree in sociology from the University of Wisconsin Milwaukee; that he owned several parcels of real estate, including rental properties, and that he was familiar with the methods of securing payment of the price of automobiles and with the laws relating thereto.
At the request of Northern Motors, the trial court took judicial notice of court records relating to a lawsuit in the spring or summer of 1971 in which Kaishian had also been the defendant. Those records are not in the record before this court, but from the comments of the trial court, it appears that in 1971 Kaishian had responded to a summons and complaint served upon him by sending a certified or registered letter to the attorney named in the summons. A default judgment was entered which Kaishian moved to vacate, submitting affidavits to the effect that he assumed his letter would stand as an answer and he thought it was a responsive pleading. Apparently the judgment was vacated in that instance, and the matter settled out of court.
Kaishian was cross-examined concerning the earlier suit and admitted remembering that he had been served with process, but claimed not to remember that a judgment had been entered against him or that he had signed an affidavit for the purpose of having it reopened. With respect to the letter written in that case, he testified, "I wrote it about three weeks after I got (the summons and complaint) and they said I wrote it too late."
At the close of the hearing the trial court ruled from the bench that it would deny Kaishian's motion to vacate the judgment. The court felt that a meritorious defense had been pleaded in the proposed answer, referring to the allegation that someone at Northern Motors had told Kaishian it had no lien on the car as possibly giving rise to "some sort of estoppel." However, the court found that Kaishian's failure to answer was not excusable in view of his experience in the 1971 case and his general sophistication, education and experience in business. The court found the statements of lack of understanding and experience contained in Kaishian's affidavits to be untrue, and the court concluded that Kaishian "could not . . . possibly think his letter would serve as a meritorious or proposed answer on his behalf." On March 26, 1975 the court entered its order denying the motion to vacate "for the reason that the defendant has failed to establish that said judgment was rendered through his mistake, or inadvertence, or surprise, or excusable neglect." Kaishian has appealed.
The default judgment herein was rendered pursuant to sec. 270.62, Stats.1973, which provided in pertinent part:
No notice of application for the default judgment was given.
Kaishian's first contention is that his letter of December 5, 1974 was in fact an answer to the complaint, that issue was joined, and that the trial court therefore lacked jurisdiction to enter a default judgment without first having entertained and granted a motion to strike the answer. Reynolds v. Taylor, 60 Wis.2d 178, 208 N.W.2d 305 (1973). As previously noted, the trial court had the letter before it when the default judgment was granted.
Under then-applicable statutes, all pleadings were required to be "subscribed by the party or his attorney," sec. 263.23, Stats.1973, and every pleading except a demurrer was required to be verified. Sec. 263.24, Stats. 1973. Sec. 269.33, Stats.1973, required that the papers in any action or proceeding have endorsed thereon the title of the action. Kaishian's letter was neither subscribed nor verified, nor did it refer to the pending action or indicate that it related to any judicial proceeding. Nor did the letter comply with sec. 263.13, which prescribes the contents of an answer. 4 The letter did contain Kaishian's explanation of the events in question and his assertion that an unidentified individual at Northern Motors told him Northern Motors had no lien on the automobile. However, no denial or comment on the allegations in the complaint was made. Under sec. 263.26, the effect of the December 5th letter as an answer at best would have been to admit all allegations in the complaint and to set up a possible affirmative defense in the nature of an estoppel. It does not appear that Kaishian intended to admit the allegations in the complaint, for his proposed answer denied all allegations save those identifying the parties.
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