Klauser v. Reeves

• Decision Date: 07 December 1937
• Citation: 276 N.W. 356,226 Wis. 305
• Parties: KLAUSER v. REEVES.
• Court: Wisconsin Supreme Court

226 Wis. 305

276 N.W. 356

KLAUSER

v.REEVES.

Supreme Court of Wisconsin.

Dec. 7, 1937.

Appeal from an order of the Circuit Court for Oconto County; Arold F. Murphy, Judge.

Affirmed.

Action by Lizzie E. Klauser, plaintiff, commenced on November 2, 1936, against Mary J. Reeves, defendant, to recover the amount due on three promissory notes executed by Alfred B. Reeves, former husband of defendant, to plaintiff, which notes are due and unpaid and the liability on which is claimed to have been assumed by defendant. Defendant demurred to the complaint upon the ground that the same failed to state facts sufficient to constitute a cause of action. From an order overruling the demurrer entered on June 12, 1937, defendant appeals. The allegations of the complaint will be summarized in the opinion.Lehner & Lehner, Adolph P. Lehner, and James H. Larson, all of Oconto Falls, for appellant.

Harold W. Krueger, of Oconto, for respondent.

WICKHEM, Justice.

Plaintiff's complaint alleged that defendant is engaged in the business of operating a chicken hatchery; that on October 2, 1929, January 23, 1930, and January 29, 1930, Alfred B. Reeves, former husband of defendant, executed to plaintiff three promissory notes in the aggregate sum of $1,700, all of which are overdue and upon which there is now due the sum of $1,700 in principal and $75 in interest; that on or about March 18, 1936, in a divorce action then pending between the said Mary J. Reeves, and Alfred B. Reeves, her husband, the said Mary J. Reeves and Alfred B. Reeves entered into a stipulation, in writing, signed on that day by the said Mary J. Reeves and her attorney, which provided, among other things, that the said Mary J. Reeves, in settlement as and for a final division of property, and in lieu of alimony, should receive the property thereafter described subject to the outstanding debts against the business. It was alleged that the debt owed to plaintiff was included in the debts listed in the stipulation. The complaint further alleges that a judgment was entered in the divorce action “wherein and whereby the said Mary J. Reeves received as a final division of property all fixtures and utensils connected with said chicken hatchery business and real estate.” There follows a description of the real estate involved in the property settlement, and the further allegation that the judgment provided: “That the said Mary J. Reeves take title to said real estate, fixtures and utensils, subject to the debts listed on Exhibit B and findings of fact referred to in said divorce judgment; that the debt to Lizzie E. Klauser is listed under item 9 of said Exhibit B before mentioned.” The complaint concludes with the allegation that subsequent to the divorce decree the hatchery and fixtures were wholly destroyed by fire. The question is whether these allegations are sufficient to charge that defendant assumed the debt of her husband to plaintiff and became personally liable therefor. This depends upon the significance of the words “subject to” as contained in the stipulation and judgment.

[1] The term “subject to” has been most frequently used with respect to the conveyance of mortgaged property, and it is elementary, as stated in Cleveland v. Southard, 25 Wis. 479, that a conveyance of land subject to a mortgage imposes no personal obligation upon the vendee to pay the debt thereby secured. See, also, Tanguay v. Felthousen, 45 Wis. 30. This doctrine is so established as to make further exposition unnecessary.

[2] The mortgage cases are not particularly helpful in the solution of the question involved upon this appeal. In the conveyance of mortgaged property, the purpose of employing the term “subject to mortgage” is to make clear that the grantee takes an incumbered estate and perhaps also to avoid a breach of warranty by the grantor. In this case it can have no such purpose. So far as appears from the allegations of the complaint, the property transferred to defendant by the divorce judgment was not incumbered by any liens based upon the listed debts of defendant's husband, and the purpose to convey merely an equity in incumbered property is therefore not evidenced by any of the allegations concerning the transaction. It is manifest, however, that there was some purpose in making the allocation of the husband's property to defendant subject to such of his debts as were listed in the stipulation. It is equally manifest that there could only be two purposes for inserting this qualifying clause; (a) to make the debts listed a lien or charge upon the property conveyed to defendant; or (b) to impose upon defendant a personal liability for such debts. In either event creditors could, under the rule of Tweeddale v. Tweeddale, 116 Wis. 517, 93 N.W. 440, 61 L.R.A. 509, 96 Am.St.Rep. 1003, take advantage of the agreement as one made for their benefit; the only difference in the two cases being the extent and scope of the creditors' rights.

In approaching a determination of the effect of the qualifying clause under consideration, two factors are significant: (1) That the transfer to defendant was not subject to the payment of debts, but was merely subject to the debts; (2) that the property so far as disclosed by the facts alleged was not subject to any lien arising out of these debts. Had the transfer been made subject to the payment of the debts, the stipulation and judgment would tend to disclose an intention that defendant assume the debts as her personal liability in view of the fact that the debts were not liens upon the property. Had such been the form of the stipulation and judgment it might well be that the case of Dingeldein v. Third Avenue Railway Co., 37 N.Y. 575, would apply. In that case a transfer was made by a partnership to the defendants of their road, franchises, horses, harness, etc., subject to the payment of all the money which the partnership was bound to pay on account of sewers, etc. It was held that a party having a claim on account of sewers could maintain an action against the defendant, and that such...