Nischke v. Farmers & Merchants Bank & Trust

• Decision Date: 16 August 1994
• Docket Number: No. 93-2634,93-2634
• Citation: 187 Wis.2d 96,522 N.W.2d 542
• Parties: Lois M. NISCHKE, Plaintiff-Appellant-Cross- Respondent,d v. FARMERS & MERCHANTS BANK & TRUSTd and General Casualty Co. of Wisconsin, Defendants-Respondents-Cross- Appellants.dd
• Court: Wisconsin Court of Appeals

Page 542

522 N.W.2d 542

187 Wis.2d 96

Lois M. NISCHKE Plaintiff-Appellant-Cross- Respondent,d v. FARMERS & MERCHANTS BANK &amp TRUSTd and General Casualty Co. of Wisconsin Defendants-Respondents-Cross- Appellants.dd

No. 93-2634.

Court of Appeals of Wisconsin.

Submitted on Briefs May 10, 1994.

Opinion Released Aug. 16, 1994.

Opinion Filed Aug. 16, 1994.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

LaROCQUE, Judge.

Lois Nischke appeals the reduction of her $250,000 property damage award. The award was to compensate her for damages she suffered when gasoline leaked from an underground storage tank on her property contaminating her soil and water. The court found the award contrary to law and reduced it to reflect the lesser of the cost of repair or the property's diminished value. For reasons explained herein, we reverse and remand for a new trial. However, we conclude that because Nischke is legally obligated to incur the costs of removing the hazard on her property, on retrial she may recover for those costs even though they exceed the property's diminished value.

Farmers & Merchants Bank & Trust (the bank) cross-appeals. It argues that the court erred by admitting testimony that the bank promised Nischke, in a phone call and visit to her, that it would remove the tank. The bank claims this testimony was prejudicial inadmissible hearsay lacking in foundation. We agree that the bank was prejudiced by the court's erroneous admission of this evidence. We therefore reverse and remand for a new trial.

In the interest of judicial economy, we address additional issues that we expect to arise again on retrial. We conclude that the bank possessed the tank and thus owed Nischke a duty of due care while it possessed the tank. We further conclude that while the bank did not have a duty independent of its duty of due care to inform Nischke it was abandoning the tank, a jury might find the bank's failure to so inform Nischke was a breach of the bank's duty of due care. Finally, we conclude that the court is not required to impute Nischke's husband's negligence to her.

BACKGROUND

In 1966, Carl and Lois Nischke entered into a lease agreement with the Rowley Oil Company (Rowley). Under the contract, Rowley installed and leased a gasoline pump and an underground storage tank on the Nischke farm in exchange for their agreement to buy all their gas from Rowley. The Nischkes stopped using the tank in the late 1970s, and the pump broke and became idle in 1982. In 1979, Rowley borrowed money from the bank. The loan agreement gave the bank a security interest in certain assets, including Rowley's equipment. In 1984, Rowley defaulted on the loan and, in lieu of foreclosure, transferred the secured property to the bank, which agreed to attempt to sell the property and apply the proceeds to the debt. Toward this end, the bank sent a letter to Carl Nischke in 1984 stating that it had taken possession of Rowley's assets and offering to sell the gas pump and tank to Carl. Carl did not answer the letter.

Around 1989, after Carl died, Nischke's water began tasting and smelling like gasoline. A Department of Natural Resources specialist discovered petroleum-contaminated soil around her gas tank, confirmed that her water was contaminated with a hazardous substance due to a leak in the underground tank and advised Nischke to stop consuming the water. The DNR also advised Nischke that because she was legally responsible for the contamination under § 144.76(3), STATS., ¹ she was required to conduct a site investigation and take remedial action to restore the environment if necessary. Nischke was financially unable to test for and clean her property's contamination. She filed this lawsuit against the bank.

Nischke's cause of action was based in negligence. She argued that the bank was negligent for failing to inform her that it was abandoning its security interest in the gas tank. She also argued that the bank, as a secured creditor, had exercised dominion and control over the secured property and therefore had a duty to protect against dangerous conditions in the property. In support of these theories, Nischke presented evidence of the bank's letter. She also testified that sometime in 1984, she received a call from someone saying that he was from the bank and informing her that the bank had taken over Rowley's holdings and wanted to come to the property to remove the pump and tank. She testified that a few days later, two men who said they were from the bank came to the property, removed the gas pump and said they would return to remove the tank at a later date.

The bank admitted sending the letter offering to sell the pump and tank, but consistently denied it ever promised Nischke in a call, visit or otherwise that it would remove them. In motions in limine, objections at trial and motions after verdict, the bank objected to Nischke's testimony. The court denied these motions and objections. It instructed the jury that if the bank exercised dominion and control over the tank, it was liable for any unsafe condition in the secured property that caused injury. It also instructed the jury that if it found the bank had informed Nischke that it possessed the gas tank, the bank had a separate duty to inform her it was abandoning the tank and was negligent if it failed to do so. The bank requested a special verdict question asking whether the Nischkes had signed a hold harmless agreement releasing Rowley from liability. The court refused to submit the question.

The jury returned a special verdict finding that the bank negligently exercised dominion and control over the tank and negligently breached a separate duty to inform. The jury attributed 70% of Nischke's injuries to the bank's negligence; 10% to her own negligence; 5% to her husband, Carl's, negligence and 15% to Rowley's negligence. It found Nischke's damages were $250,000. On the bank's motions after verdict, the court reduced the damages from $250,000 to $49,000 to reflect the diminution in the property's value. The court refused to impute Carl's negligence to Lois and denied the bank's motions to change the answers in the verdict and to order a new trial. The parties filed this appeal and cross-appeal.

ADMISSIBILITY OF ALLEGED EMPLOYEES' STATEMENTS

The bank argues that the trial court erred by admitting evidence of the purported phone call and visit to the Nischkes. It argues that this evidence was highly prejudicial inadmissible hearsay lacking foundation. A trial court's decision to admit or exclude evidence is a discretionary determination that will not be upset on appeal if it has a reasonable basis and was made in accordance with the facts of record. State v. Jenkins, 168 Wis.2d 175, 186, 483 N.W.2d 262, 265 (Ct.App.1992). If the court's decision is supportable by the record, we will not reverse even if the trial court gave the wrong reason or no reason at all. Id. We conclude that the court erred by admitting the out-of-court statements because they were not sufficiently authenticated as being made by bank employees.

A prerequisite to the admissibility of all evidence is that it meet the authentication requirements of § 909.01, STATS. Nelson v. Zeimetz, 150 Wis.2d 785, 797, 442 N.W.2d 530, 535 (Ct.App.1989). Section 909.01 states that the "requirements of authentication or identification as a condition precedent to admissibility are satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." Thus, Nischke's testimony is only admissible against the bank if sufficient evidence in the record supports a finding that the statements were actually made by bank employees.

We conclude that there is not sufficient evidence to support a finding that the statements made in the phone call and visit were made by bank employees. The alleged statements of self-identification may not themselves be used to identify the speakers as bank employees. As one authority notes, "a telephone call out of the blue from one who identified himself as 'X'... is not sufficient authentication of the call as in fact coming from X." 2 MCCORMICK ON EVIDENCE § 226 at 51 (John W. Strong ed. 1992). This is analogous to the long established rule that a declarant's agency may not be established by relying on the declarant's own statements of agency, but must be established with independent evidence. 4 JOHN H. WIGMORE, EVIDENCE IN TRIALS AT COMMON LAW § 1078 at 177 (James H. Chadbourn ed. 1972) ("It may be noted that the fact of agency must of course be somehow evidenced before the alleged agent's declarations can be received as admissions; and therefore the use of the alleged agent's hearsay assertions that he is agent would for that purpose be inadmissible, as merely begging the very question.") (emphasis in the original); Davis v. Henderson, 20 Wis. 547, 550 (1866) ("The fact of agency must first be established by other and independent evidence, before the declarations of the agent can in any case be received to charge the principal.").

Circumstantial evidence does not authenticate the purported employees' statements as coming from the bank's employees. The purported employees were never identified, nor were they present to testify at trial. The bank denied that any of its employees ever called or visited Nischke promising to remove the tank. The letter it sent to the Nischkes made no mention of past or future calls or visits from its employees or promises to remove the tank. Thus, the alleged employees' statements and conduct are not in conformity with known communications from the bank.

Nischke was the only one who testified as to the relationship of the declarants to the bank. She did not have personal knowledge that the people with whom she spoke were in fact bank employees. See § 909.015(1), STATS. She did not recognize the voice on the telephone as being that of a bank employee. Section 909.015(5), STATS. Nor was she able to identify any...