Quinn Distributors, Inc. v. Miller

• Decision Date: 27 June 1969
• Docket Number: No. 302,302
• Citation: 43 Wis.2d 291,168 N.W.2d 552
• Parties: QUINN DISTRIBUTORS, INC., a Wis. corporation, Respondent, v. Alfred J. MILLER, Appellant.
• Court: Wisconsin Supreme Court

Page 552

168 N.W.2d 552

43 Wis.2d 291

QUINN DISTRIBUTORS, INC., a Wis. corporation, Respondent, v. Alfred J. MILLER, Appellant.

No. 302.

Supreme Court of Wisconsin.

June 27, 1969.

The order appealed from denied the motion of the defendant-appellant, Alfred J. Miller, under sec. 269.46(1), Stats., to vacate a cognovit judgment.

On March 9, 1967, Miller signed and delivered a cognovit promissory note to E. R. Flint & Company, in the amount of $17,000, payable six months from the date of execution without interest.

On February 23, 1968, the plaintiff-respondent, Quinn Distributors, Inc., obtained a judgment on the cognovit note in the amount of $17,018. In the complaint filed by Quinn it alleged the note was executed and made payable to Flint on March 9, 1967; that it became due September 9, 1967, and '(T)hat subsequently, E. R. Flint & Co. assigned said promissory note to the plaintiff for value received.'

Miller received notice of entry of judgment on February 27, 1968.

On May 23, 1968, and October 8, 1968, the defendant obtained orders to show cause why the judgment should not be vacated. Both orders to show cause were supported by an affidavit and proposed answer. The motions to vacate the judgment as they appear in both orders to show cause were denied without opinion; the first one on June 28, 1968, and the second October 31, 1968.

The defendant, Miller, appeals from the order of October 31, 1968.

Additional facts will be set forth in the opinion.

Morris J. Hack, Milwaukee, for appellant.

Wickert & Fuhrman, Milwaukee, Aaron Belongia, Milwaukee, of counsel, for respondent.

BEILFUSS, Justice.

The question before us is whether the affidavit and the proposed answer of October 8, 1968, entitle the defendant to open the judgment and defend the action.

Sec. 269.46(1), Stats., provides:

'The court may, upon notice and just terms, at any time within one year after notice thereof, relieve a party from a judgment, order, stipulation or other proceeding against him obtained, through his mistake, inadvertence, surprise or excusable neglect and may supply an omission in any proceeding. In addition to the required affidavits, all motions to vacate a judgment entered upon default or cognovit and to obtain a trial upon the merits shall be accompanied by a proposed verified answer disclosing a defense.'

The defendant, Miller, contends that he should be allowed to defend the action because he has a good defense and because he was surprised by the taking and entry of the judgment.

Miller asserts, and plaintiff-respondent generally agrees, that our court has been liberal in opening judgments taken on cognovit.

In Uebele v. Rosen (1957), 2 Wis.2d 339, 342, 343, 86 N.W.2d 439, 441, the court said:

'The general rule was well stated in a memorandum opinion written as trial judge by the late Mr. Justice GEHL in State ex rel. Chinchilla Ranch v. O'Connell (1952), 261 Wis. 86, 88, 51 N.W.2d 714, 715:

"'The courts have generally been quite liberal in opening judgments entered on cognovit. Wessling v. Hieb, 180 Wis. 160, 192 N.W. 458. And where a substantial defense is pleaded, even though it is attacked as sham, the Court should permit its presentation. State ex rel. Bobroff v. Braun, 209 Wis. 483, 245 N.W. 176.

"'Plaintiff may be entirely correct in his contention that defendant will be unable to establish its defense by proof, but the court may not so assume. The court is compelled to assume that the defense is offered in good faith, and since it pleads one the principles of equity require that he be given that opportunity.'''

In the affidavit filed in support of the motion it is stated:

'3. That the defendant had no notice that the within action had been commenced or judgment taken until after judgment was taken, that is, February 27, 1968. That the within action is on a cognovit note given by defendant to one E. R. Flint & Co. That in fact on October 4, 1967, defendant was notified by the Wisconsin Department of Taxation that said note had been assigned to it, and further, on January 25, 1968, defendant was advised that said note had been listed as an asset in the bankruptcy of said E. R. Flint & Co. Thus the judgment obtained by the within plaintiff, Quinn Distributors, Inc., came by surprise to the defendant.'

The proposed answer of the defendant denies the note 'was made, executed and delivered for a valuable consideration,' and denies the plaintiff, Quinn, is a lawful owner and holder of the note. The answer sets forth four affirmative defenses.

'6. Alleges that the said promissory note was discharged and satisfied by the filing of a mechanics' lien by E. R. Flint & Co. on August 14, 1967 in the Office of the Clerk of Circuit Court of Milwaukee County against the defendant herein for the sum of $20,368.00, a sum greater than the claim for which said promissory note was given.

'* * *

'8. Alleges that the said promissory note was discharged and satisfied by the assignment of E. R. Flint & Co. on October 4, 1967 to the Wisconsin Department of Taxation of the account in the sum of $15,945.00 for which said promissory note was given.

'* * *

'10. Alleges that the said promissory note was discharged and satisfied by the election on January 25, 1968 of E. R. Flint & Co., the payee on said promissory note, (in the bankruptcy proceedings of E. R. Flint & Co. in the Federal District Court for the Eastern District of Wisconsin), by listing as an account receivable from the defendant the...