Morn v. Schalk

• Decision Date: 03 October 1961
• Citation: 111 N.W.2d 80,14 Wis.2d 307
• Parties: John MORN et al., d/b/a a copartnership under the firm name of John Morn Insulation Co., Appellants, v. John SCHALK, Respondent.
• Court: Wisconsin Supreme Court

Page 80

111 N.W.2d 80

14 Wis.2d 307

John MORN et al., d/b/a a copartnership under the firm name

of John Morn Insulation Co., Appellants, v. John SCHALK, Respondent.

Supreme Court of Wisconsin.

Oct. 3, 1961.

Action by plaintiffs John Morn and James R. Howlett, co-partners doing business as John Morn Insulation Company, against defendant Joh Schalk to enforce payment of a $1,000 promissory note executed by the defendant to the plaintiffs. Defendant counterclaimed for rescission of a contract entered into between the parties, part of the consideration for which was this note.

Trial was had to the court without a jury. Under date of November 9, 1960, judgment was entered dismissing the complaint and decreeing rescission of the contract. As part of the relief granted to the defendant by way of rescission, the judgment provided for the recovery by defendant of the sum of $1,000 which defendant had previously paid to the plaintiffs pursuant to the contract.

Plaintiffs have appealed from such judgment. The facts will be stated in the opinion.

Beaudry & Kershek, Milwaukee, Bernard J. Lutzke, West Allis, for appellant.

Aaron Weiss, Lakes & Marcuvitz, Milwaukee, Jerold I. Perlstein, Milwaukee, of counsel, for respondent.

CURRIE, Justice.

A sharp dispute exists in the testimony as to the terms of the contract entered into between the parties. The learned trial court resolved this dispute by finding the terms of the agreement to be as testified to by the defendant. By its memorandum opinion, it found that defendant was entitled to rescind the contract on two grounds: (1) defendant had been induced to enter into the agreement by material false representations made by the plaintiffs; and (2) plaintiffs were guilty of an anticipatory breach of this contract. However, only the ground for rescission based upon fraud was incorporated into the findings of fact and conclusions of law.

Either of these grounds would be sufficient to sustain the judgment of rescission if supported by proper findings grounded upon the evidence adduced. Because a case of anticipatory breach is so clearly established by the instant record, we find it unnecessary to pass on the issues raised by plaintiffs with respect to the trial court's determination that the contract was induced by material false representations.

The first attack leveled by the plaintiffs on the judgment below is that the trial court erred in its determination of the terms of the contract. In order to properly pass on this contention, it is first necessary to set forth the evidence which tends to support the findings with respect to the provisions of the contract. Second, a question of law is presented as to whether the testimony given by defendant with respect to the terms of the contract possesses any materiality in view of the parol evidence rule.

Plaintiffs are engaged in the insulating business with their office and warehouse situated in the city of Wauwatosa. On September 1, 1957, they entered into a written agreement with the Promat Division of Poor and Company whereby the plaintiffs were granted a nonexclusive distributorship of Promat's insulating material marketed under the trade name of 'Prosul.' The term of such distributorship was for one year subject to being extended by mutual agreement of the parties. Promat transferred possession and title to the plaintiffs of a quantity of Prosul and equipment for its application. The total agreed consideration to be paid by the plaintiffs for the distributorship, material, and equipment was $7,047.82. Plaintiffs paid Promat $2,500 in cash and executed their note for the balance in the sum of $4,547.82. Prosul was but one of the insulating materials used by the plaintiffs in carrying on their insulating business.

On November 1, 1957, defendant entered the employ of the plaintiffs as a salesman. In addition to his selling activities his duties also included expediting and installing insulation material in residences. Although defendant worked up and submitted estimates for the furnishing of Prosul on certain insulating jobs, these met with no success. Prior to defendant's employment by the plaintiffs, only one installation using Prosul had been sold by the plaintiffs. At the time they entered into the contract with defendant, plaintiffs had on hand nearly all of the Prosul previously acquired from Promat.

Defendant left plaintiffs' employ the later part of April, 1958, and went to work in his father-in-law's used car lot. Defendant's version of the events which thereafter transpired is sharply disputed in many respects by the testimony of the plaintiffs. However, it is apparent from the trial court's memorandum opinion, and findings of fact, that it believed defendant and disbelieved plaintiffs with respect to the disputed points material to this appeal. For the purposes of this appeal it is only necessary that we recount defendant's testimony. This is because such testimony reasonably supports the material findings, and is not discredited by evidence other than the verbal testimony of the plaintiffs. Therefore, the facts hereinafter related are those testified to by defendant, except as otherwise noted.

Plaintiff Howlett went to see the defendant several times between May 1 and June 30, 1958. In these conversations he endeavored to interest defendant in taking over the Prosul distributorship and purchasing the material and equipment which plaintiffs had acquired from Promat. The terms offered by Howlett were that plaintiffs would sell the material on hand, the equipment, and the distributorship to defendant in return for $2,000 and his assumption of the balance owing on plaintiffs' note to Promat. Howlett represented to defendant that by accepting this offer he would thereby receive exclusive distributorship rights to Prosul in Wisconsin. Defendant evinced an interest in this proposal, and on June 30, 1958, the parties met at plaintiffs' office to consummate the deal on the basis of the terms previously proposed by Howlett.

Plaintiffs drafted the following writing which all three parties signed at their conference of June 30, 1958:

'Both partys [sic] concerned agree to:

'John Morn Insulation Company, James R. Howlett and John Morn agree to sell to John Schalk said Pro Mat equipment and the right to be the exclusive applicator of said material in the State of Wisconsin.

'John Schalk agrees to assume the amount of note do [sic] on equipment in the amount of $4547.82. This note shall be paid in the amount of 1/3 of the total price of each job done by John Schalk till the balance is paid in full.'

Coincident with the signing of the above writing, defendant paid plaintiffs $1,000 and executed a $1,000 note, which was payable to the order of the plaintiffs in $100 monthly instalments commencing August 1, 1958. After this transaction had taken place, plaintiffs delivered to defendant their file on Prosul, which contained the distributorship agreement entered into with Promat on September 1, 1957.

The next day, after reading this distributorship agreement, defendant discovered that it contained a clause requiring Promat's consent to any assignment of that agreement by the plaintiffs. That same day, July 1, 1958, defendant went to Waukegan, Illinois, to contact Promat for the purpose of effectuating the transfer of the distributorship to himself. Promat informed him that in order to do this he must have a written assignment from the plaintiffs and that he also 'would have to comply financially.'

Upon defendant's return from Waukegan, he went to the plaintiffs and demanded a written assignment of the Prosul distributorship, but the plaintiff refused. In this conversation, plaintiffs also informed defendant that their agreement did not include the Prosul material on hand because only the...