Plesko v. Figgie Intern.

• Decision Date: 20 December 1994
• Docket Number: Nos. 93-2335,93-3023,s. 93-2335
• Citation: 528 N.W.2d 446,190 Wis.2d 764
• Parties: , 26 UCC Rep.Serv.2d 489 Erwin J. PLESKO, Plaintiff-Respondent-Cross Appellant, v. FIGGIE INTERNATIONAL, Defendant-Third Party Plaintiff-Appellant-Cross Respondent, v. DEAN WITTER & CO., Third Party Defendant. Erwin J. PLESKO, Plaintiff, v. FIGGIE INTERNATIONAL, Defendant-Third Party Plaintiff-Appellant, v. DEAN WITTER & CO., Third Party Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 446

528 N.W.2d 446

190 Wis.2d 764, 26 UCC Rep.Serv.2d 489

Erwin J. PLESKO, Plaintiff-Respondent-Cross Appellant, v. FIGGIE INTERNATIONAL, Defendant-Third Party Plaintiff-Appellant-Cross Respondent, v. DEAN WITTER & CO., Third Party Defendant.

Erwin J. PLESKO, Plaintiff, v. FIGGIE INTERNATIONAL, Defendant-Third Party Plaintiff-Appellant, v. DEAN WITTER & CO., Third Party Defendant-Respondent.

Nos. 93-2335, 93-3023.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 2, 1994.

Opinion Released Dec. 20, 1994.

Opinion Filed Dec. 20, 1994.

For the defendant-third party plaintiff-appellant-cross respondent and defendant-third party plaintiff-appellant the cause was submitted on the briefs of Jane C. Schlicht of Godfrey & Kahn, S.C. of Milwaukee.

For the plaintiff-respondent-cross appellant the cause was submitted on the briefs of Paul G. Sherburne, of counsel, of Petrie & Stocking, S.C. of Milwaukee.

For the third party defendant-respondent the cause was submitted on the briefs of Michael R. Wherry and Louis F. Raymond of Davis & Kuelthau, S.C. of Milwaukee.

Before WEDEMEYER, P.J., and SULLIVAN and SCHUDSON, JJ.

WEDEMEYER, Presiding Judge.

Figgie International (Figgie) appeals from a judgment that orders it to register an appropriate number of its shares of common stock in the name of Erwin J. Plesko and that denies it indemnification from Dean Witter & Co. Plesko cross-appeals from a judgment that denies his claim to dividends declared on the same stock. Because the trial court's finding that Plesko was a bona fide purchaser was not clearly erroneous, because Plesko's claim for registration of transfer was timely commenced, and because Figgie's claim against Dean Witter for indemnification is barred by the statute of limitations, we affirm the judgment appealed by Figgie; however, because the trial court erred in refusing Plesko's claim for dividends from the time he presented the stock for registration, we reverse that part of the judgment cross-appealed by Plesko.

BACKGROUND

In June 1967, Plesko purchased three stock certificates representing 300 shares of Interstate Engineering Corp. (Interstate). The certificates were registered in the street name of Dean Witter & Co., were endorsed in blank, and were delivered to Plesko's agent, the Associated Bank of Commerce of Milwaukee (Associated Bank). In November 1967, Interstate and Automatic Sprinkler Corporation of America (Automatic) merged, resulting in Automatic as the surviving company. By terms of the merger agreement, record shareholders of Interstate were notified to tender their stock certificates in exchange for which they would receive stock certificates in Automatic. In 1970, Automatic was renamed ATO. Plesko never became the registered owner of the certificates on the books of ATO.

In April 1970, an affidavit of lost stock certificate and an indemnity bond in lieu of Interstate's stock certificates 84,708, 84,709, and 84,710 were presented to ATO's transfer agent, Marine Midland Bank. Dean Witter & Co. presumably presented the affidavit and requested that new ATO certificates be issued to Kidder Peabody as replacement for the Interstate certificates. Marine Midland complied and the old certificates were canceled. In 1981, ATO was renamed Figgie International (Figgie).

Meanwhile, in 1972, Plesko pledged the Interstate stock to secure a loan from First National Bank of Boston. In September 1976, the Bank of Boston returned the certificates to Plesko which were then placed in his wife's safety deposit box. When Plesko's wife died in December 1987, he found the certificates in the safety deposit box. In January 1988, Plesko presented the certificates to his broker, Paine Webber, for purposes of registration and sale. Paine Webber, as Plesko's nominee, presented the three Interstate certificates, 84,708, 84,709, and 84,710 to Figgie's new transfer agent, the Bank of Boston, and requested that new Figgie certificates be issued in Paine Webber's name. The Bank of Boston discovered that the same certificates had been canceled in 1970 when Dean Witter presumably presented the affidavit and bond. Thus, the Bank of Boston refused the request and kept the certificates.

When efforts to register his stock proved futile, Plesko filed suit against Figgie. He sought an equitable remedy to compel registration in his name of the equivalent amount of Figgie stock as represented by the 300 shares of Interstate stock, plus ancillary damages for lost dividends. In the alternative, in an action-at-law, based on a conversion theory, he sought damages for the loss of value of the stock and dividends because Figgie refused to register the transfer. Figgie commenced a third-party claim against Dean Witter & Co., the last known registered owner who presumably directed cancellation of the Interstate certificates and the reissuance of new certificates. ¹

After a bench trial, the trial court determined that: (1) Plesko was a bona fide purchaser; (2) Plesko's claim for Figgie stock survived the statute of limitations and he was entitled to the issuance of Figgie stock; (3) Plesko's conversion claim for damages for loss of value of the stock was barred by the six-year statute of limitations; (4) Plesko was not entitled to dividends because he never made a claim for the dividends; and (5) Figgie's claim against Dean Witter was barred by the six-year statute of limitations. Figgie now appeals and Plesko cross-appeals portions of the trial court's judgments.

DISCUSSION

I. FIGGIE'S APPEAL.

Figgie's appeal consists of three contentions. First, it claims the trial court erred in finding that Plesko was a bona fide purchaser who is entitled to an appropriate number of shares. Second, it claims Plesko's claims were time-barred either by the statute of limitations or the doctrine of laches because he waited twenty-four years before pursuing a claim. Finally, Figgie claims the trial court erred in denying its indemnification claim against Dean Witter.

A. Bona Fide Purchaser.

Figgie first claims the trial court erred in concluding that Plesko was a bona fide purchaser for value because: (1) there was no proof of value; (2) Plesko did not take delivery at the time he purportedly gave value; (3) Plesko had notice of an adverse claim when he took delivery and failed to act in good faith; and (4) Plesko did not personally present the certificate of stock for registration of transfer. We shall examine each of these contentions seriatim.

When the trial court acts as the finder of fact, it is the ultimate arbiter of the credibility of the witnesses and the weight to be given to their testimony. Gehr v. City of Sheboygan, 81 Wis.2d 117, 122, 260 N.W.2d 30, 33 (1977); Milbauer v. Transport Employes' Mut. Benefit Soc'y, 56 Wis.2d 860, 865, 203 N.W.2d 135, 138 (1973). When evidence supports the drawing of either of two conflicting but reasonable inferences, the trial court, and not this court, must decide which inference to draw. Onalaska Elec. Heating, Inc. v. Schaller, 94 Wis.2d 493, 501, 288 N.W.2d 829, 833 (1980).

Section 408.302(1)(a), STATS., defines a bona fide purchaser as one who pays value for shares, in good faith, without notice of any adverse claim and who received delivery at the time value was given.

1. Value.

Figgie claims Plesko failed to meet his burden of proof on value. As noted, a trial court's findings of fact are reviewed under the clearly erroneous standard; however, whether Plesko met his burden of proof is a question of law that this court reviews de novo. Figgie bases this assertion on the fact that Plesko had no recollection of how and when he paid for the Interstate stock, his broker did not know how much was paid, nor did his broker have any record to substantiate the purchase. Plesko stated he directed his broker to purchase the shares and have them delivered to the Associated Bank. Yet, no employee of the bank could confirm that such delivery occurred nor could Plesko's broker confirm a delivery.

Plesko, however, testified that when he purchased stock, he utilized a "payment against delivery" system that authorized his bank to pay for stock only when it was delivered to the bank in acceptable form. He stated he would not have possession of the securities unless he paid market price for them, which constitutes the giving of value. Three witnesses confirmed that this type of purchase practice was common in 1967. There was also testimony that Plesko physically pledged the certificates to the Bank of Boston and received them back again upon liquidation of the secured debt.

The trial court determined, based on Plesko's own testimony and his broker at the time, coupled with Plesko's later pledging of the certificates, that he had paid value for the shares in question and, by inference, received possession of the same.

From this review, it is obvious there was a basis in the record for this finding. Therefore, we conclude the trial court's findings were not clearly erroneous and we conclude that sufficient facts exist to support the trial court's conclusion that Plesko met his burden of proof.

2. Delivery.

Figgie also argues that Plesko is not a bona fide purchaser because he did not prove delivery of the stock certificates, physically or constructively, at any time prior to reissuance in 1970. Figgie bases this assertion on § 408.313(1), STATS., ² which sets forth how "delivery" occurs. Figgie argues Plesko did not prove that "delivery," as defined by this statute, actually occurred.

Plesko counters by asserting that because he purchased the stock in 1967, Figgie's reliance on § 408.313(1), STATS., which is the codification of the 1977 amendments of the Uniform Commercial Code, is misplaced. Plesko argues that the definition of "delivery" that he must prove is governed by pre-1977 code. ³

Figgie claims that Plesko waived this argument because he did not raise it at the trial court level. The rule that "issues not raised or considered in...