Oostburg State Bank v. United Sav. & Loan Ass'n
| Citation | 372 N.W.2d 471,125 Wis.2d 224 |
| Decision Date | 05 June 1985 |
| Docket Number | No. 84-472,84-472 |
| Court | Court of Appeals of Wisconsin |
| Parties | OOSTBURG STATE BANK, Plaintiff-Respondent, d v. UNITED SAVINGS & LOAN ASSOCIATION, Defendant-Appellant, Auto-Owners Insurance Company, Defendant. |
Edward A. Dudek, Milwaukee, argued, for defendant-appellant; Thomas J. Arenz and Michael J. Lund of Frisch, Dudek and Slattery, Ltd., Milwaukee, on brief.
Arthur J. Olsen of Chase, Olsen, Kloet & Gunderson, Sheboygan, argued, for plaintiff-respondent; James O. Conway, Sheboygan, on brief.
Before SCOTT, C.J., BROWN, P.J., and NETTESHEIM, J.
United Savings & Loan Association (United) appeals from a default judgment in favor of the Oostburg State Bank (Oostburg) in the total amount of $307,214.03. United also appeals from the trial court's memorandum decision of March 16, 1984 and ensuing order of March 29, 1984 which denied United's motions to extend the time in which to answer, to grant relief from the judgment previously granted and for reconsideration of the previous order granting a default judgment to Oostburg.
We conclude United served and filed its answer within the time limits prescribed by Oostburg in a letter terminating a "courtesy agreement" which had extended the time for answer. Therefore, the default judgment was inappropriate. Accordingly, we reverse and remand for further proceedings.
Alternatively, we conclude that even if United was in default under the "courtesy agreement," the trial court abused its discretion in awarding the default judgment to Oostburg under the facts of this case.
On September 29, 1983, Oostburg served United with a summons and complaint claiming damages in the amount of $302,817.15. 1 The summons and complaint were executed on behalf of Oostburg by Attorney James Conway of the law firm of Chase, Olsen, Kloet and Gunderson.
On October 12, 1983, Attorney Thomas Klug of the law firm of Borgelt, Powell, Peterson and Frauen, S.C., telephoned Attorney Conway and advised him that the Borgelt firm had been retained by United. Klug requested an extension of time in which to answer. Conway agreed. Klug confirmed this understanding the next day by sending Conway a copy of a letter sent to the Sheboygan county clerk of courts enclosing Klug's notice of appearance. The Conway copy of the letter carried the following language:
BPS: Mr. James O. Conway
Dear Jim: We are in the process of preparing a responsive pleading to the Complaint in this matter. This will confirm our telephone conversation of October 12, 1983 at which time you were gracious enough to grant us a brief extension of time in which to responsively plead.
Attorney Steven Mocarski of the Borgelt firm appeared for United at an intervenor motion hearing brought by Auto-Owners Insurance Company on November 30, 1983. Conway appeared on behalf of Oostburg. At this hearing, Conway requested Mocarski to see to the filing of the answer as soon as possible.
Next, Conway wrote to Mocarski on December 6, 1983, transmitting various documents related to the case. Conway also stated:
As discussed, I would appreciate receiving a copy of your answer as soon as possible.
On December 15, 1983, Conway telephoned Mocarski and requested that the answer be filed as soon as possible.
Finally, on December 21, 1983, Conway again wrote to Klug and Mocarski reciting the procedural history of the case and complaining about the absence of an answer. The letter's critical language is as follows:
I will be compelled to move the Court for entry of a Default Judgment unless I receive your Answer within ten (10) days.
Although this letter was mailed on December 21, 1983, United submitted affidavits reciting that it was not received at the Borgelt firm until December 27, 1983. No evidence refutes this contention.
On January 3, 1984, Conway served and filed a notice of motion and motion for default judgment, scheduling the hearing for January 11, 1984. Klug received this motion on January 5, 1984. He served the answer upon Conway by mail the following day, January 6. Klug then had several telephone conversations with Conway's firm to discuss whether the hearing for default judgment was still necessary since the answer had been served and filed. Conway's firm, however, refused to withdraw the motion.
At the January 11, 1984 default judgment motion hearing, Klug did not present a formal written motion for an enlargement of time to answer; nor did he expressly make such a verbal request to the trial court. He did, however, point out that an answer had been filed, and he explained the reasons for the delay. By bench decision, the trial court found United in default and also determined that United had not demonstrated excusable neglect.
The same day, following the default judgment motion, Klug filed written motions for a reconsideration of the bench decision and for an extension of time to answer. Thereafter, Attorney Edward Dudek of the law firm of Frisch, Dudek and Slattery, Ltd., filed a further notice of retainer and appearance on behalf of United. He also filed motions for reconsideration and enlargement of time within which to answer. In addition, Attorney Dudek filed a motion for relief from judgment pursuant to sec. 806.07, Stats.
The trial court conducted a hearing on February 15, 1984, on all of United's motions. On March 16, 1984, the trial court issued its written decision confirming its earlier rulings and denying United's motions. 2
I. The Status of the Professional
We first consider whether a professional "courtesy agreement" must be placed on the court record in order to be binding upon the parties. The trial court indicated that when such courtesies are extended, sec. 807.05, Stats., requires that the trial court be advised and approve the agreement in order for it to be valid. 3 We disagree and conclude that under sec. 807.05, a courtesy agreement is binding even though it is not placed on the court record if the agreement is in writing and subscribed by the party to be bound.
Attorneys Klug and Conway entered into a courtesy agreement granting United a "brief extension of time in which to responsively plead." Although this agreement was not placed upon the court record, the written correspondence between the attorneys memorialized the agreement.
We note that courtesy agreements which extend time beyond the statutory limits in procedural matters are commonplace. Our supreme court has commented that "[t]his practice is common and is not to be condemned...." Giese v. Giese, 43 Wis.2d 456, 462, 168 N.W.2d 832, 835 (1969).
Whether an agreement or stipulation is binding is governed by sec. 807.05, Stats.:
Stipulations. No agreement, stipulation, or consent between the parties or their attorneys, in respect to the proceedings in an action or special proceeding shall be binding unless made in court and entered in the minutes or recorded by the reporter or made in writing and subscribed by the party to be bound thereby or the party's attorney.
We disagree with the trial court's conclusion that the parties to the agreement or stipulation must make the agreement in court, place it upon the record or otherwise give the trial court notice thereof. Rather, we read sec. 807.05 to permit alternate methods to ensure that such agreements are enforceable: they must be "made in court and entered in the minutes or recorded by the reporter;" or they must be "made in writing and subscribed by the party to be bound." Id.
Statutory construction involves a question of law. In re I.V., 109 Wis.2d 407, 409, 326 N.W.2d 127, 128 (Ct.App.1982). On review, an appellate court need not defer to the trial court's conclusions. Id.
The supreme court in Wilharms v. Wilharms, 93 Wis.2d 671, 675, 287 N.W.2d 779, 782 (1980), indicated that the procedures recited in sec. 807.05, Stats., are alternate methods, rather than mandatory collective ones, for memorializing an agreement or stipulation:
This provision is explicit and requires that in order for any agreement or stipulation between the parties to be binding it must be made in court and entered in the minutes; recorded by the court reporter; or made in writing and subscribed by the party or the party's attorney who is to be bound. [Emphasis added.]
Section 807.05, Stats., is in the nature of a statute of frauds. See Gliniecki v. Borden, Inc., 444 F.Supp. 619, 621 (E.D.Wis.1978); 2 Wisconsin Pleading & Practice § 18.04 (3d ed. 1977). The rule seeks to prevent disputes and uncertainties as to what was agreed upon. Burnham v. Smith, 11 Wis. 258, 259 (1860); see also 2 Wisconsin Pleading & Practice at § 18.04. Use of either of the alternative methods under the statute accomplishes this purpose. Therefore, the failure of the parties to place the stipulation upon the record or enter it in the court minutes does not defeat its enforceability since it was reflected in the totality of the writings between the attorneys and subscribed by them. 4
Furthermore, we note that aside from the operation of sec. 807.05, Stats., the parties to a courtesy agreement have an ethical obligation to abide by their agreement:
This section is based on subsection 269.46(2). The only change in the former rule is the addition of the words "or recorded by the reporter." Requiring a minutes entry when an oral stipulation is recorded by the court reporter is duplicative and has been held by the Wisconsin Supreme Court to be unnecessary. It should be emphasized that this statute in no way diminishes counsel's ethical obligation to abide by all oral and off-the-record stipulations. [Emphasis added; footnotes omitted.]
Graczyk, The New Wisconsin Rules of Civil Procedure Chapters 805-807, 59 Marq.L.Rev. 671, 738-39 (1976). In addition, SCR 20.34(3)(t) (1984) states in pertinent part:
A lawyer should be courteous to opposing coun...
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