Security Nat. Bank v. Cohen
| Decision Date | 04 March 1969 |
| Docket Number | No. 174,174 |
| Citation | 41 Wis.2d 710,165 N.W.2d 140 |
| Parties | SECURITY NATIONAL BANK, a domestic corporation, Respondent, v. Sylvia COHEN, Appellant, Clintonville S & L Assn., a domestic corporation, Defendant. |
| Court | Wisconsin Supreme Court |
Glassner, Clancy & Glassner, Milwaukee, for appellant; R. E. Johnson, Waupaca, of counsel.
Karl J. Goethel, Durand, for respondent.
Three interrelated issues are presented on this appeal:
1. Did plaintiff-respondent prove the underlying obligation for which the mortgage was security?
2. Was the mortgage executory in that it was conditioned upon the return of the hypothecated life insurance policies?
3. In the absence of a showing of fraud, is the defendant entitled to defend the foreclosure of the mortgage, under seal, on grounds of want of consideration?
Appellant's major contentions are (1) that the plaintiff-respondent has failed to establish an obligor-obligee relationship between C & S Cohen, Inc., and the Security National Bank; and (2) that on May 22, 1958, it was agreed that Carl Cohen would substitute a mortgage on certain property in the name of a corporation (C & S Cohen, Inc.) as collateral to replace the insurance policies held by the bank. Appellant contends that the mortgage never became effective because the insurance policies were not returned from the bank.
Underlying Obligation.
Did plaintiff-respondent prove the underlying obligation for which the mortgage was security?
Appellant properly contends that there can be no mortgage unless there is a debt to be secured thereby. 1 It is conceded that there is no note representing the debt.
At the outset it should be pointed out that the obligation for which the mortgage in question was security was the debt of Chain-O-Lakes to the bank. We are not dealing with an obligation of C & S Cohen, Inc., to the bank. The relationship of the bank and C & S Cohen, Inc., was that of principal and surety, 2 C & S Cohen, Inc., securing the obligation running from Chain-O-Lakes to the bank.
As to the nature of that obligation, it appears that Irving Koren and the corporation of which he was president, Chain-O-Lakes Inc., were indebted to the bank in the sum of approximately $33,000 as of May 22, 1958. Of this amount the bank recovered $10,000 from Fidelity and Casualty Company, which company is subrogated for that amount.
A conference was held on May 22, 1958, to settle this indebtedness. The results of this conference, as embodied in the letter of Harold E. Stafford, were that the bank would settle the debt for the sum of $13,000, Irving Koren paying $2,000 down and $1,000 per year, payable quarterly, with interest at five percent per annum. The letter further indicated that Carl Cohen agreed that this obligation was to be secured by a second mortgage on certain properties which were owned by him in the name of a corporation (C & S Cohen, Inc.).
Schiefelbein, who attended the May, 1958, conference, confirmed the agreement as set forth in the Stafford letter. He testified that as of that date the amount owed by Chain-O-Lakes to the bank was approximately $33,000. He also testified that the settlement agreement provided that Irving Koren pay Security National Bank the sum of $13,000. He stated that $2,000 was paid down by Koren and that the balance was to be paid in quarterly installments. Schiefelbein was permitted to testify that the agreement to pay the additional $11,000 was to have been secured by a second mortgage on the property located in Waupaca county owned by C & S Cohen, Inc. According to Schiefelbein, the bank never received any payments upon the $11,000.
In his testimony, Koren acknowledged the debt as described in the letter of June 25, 1958, although he did not testify specifically as to its amount.
Carl Cohen acted upon his part of the agreement. LeRoy J. Hagemann, attorney for Carl Cohen, testified that in the first part of October, 1958, Carl Cohen came to his office with a prepared letter and a mortgage which he wanted him (Hagemann) to execute. Cohen further requested Hagemann to tender the mortgage with the letter to the attorney for the bank, Stafford. The letter stated:
The mortgage reads, in part, as follows:
Thus it appears that Koren owed the Security National Bank the sum of $11,000 plus interest, and that the mortgage executed by Carl and Sylvia Cohen, as officers of C & S Cohen, Inc., was for the purpose of securing that obligation.
The trial court correctly concluded that the indebtedness was fully described in the mortgage and, therefore, it was not material that a separate note had not been executed. 3
Was the mortgage executory in that it was conditioned upon the return of the hypothecated life insurance policies?
The thrust of appellant's argument is that the mortgage executed by C & S Cohen, Inc., never became a lien on the premises because the Security National Bank never returned the insurance policies on the life of Carl Cohen. Irving Koren testified that the general import of the May 22, 1958, conference was that collateral was to be substituted for the insurance policies.
Whether the mortgage was conditioned upon the return of the insurance policies is a question of fact. The trial court concluded that at the conference of May 22, 1958, no reference was made to the insurance policies that had been assigned to the bank by Carl Cohen in 1952. On this, the trial court chose to reject the testimony of Koren and to accept the testimony of Schiefelbein. This it had a right to do.
The trial court also concluded that the correspondence subsequent to the conference supported its conclusion that the return of the insurance policies was not a part of the settlement agreement.
The letter from Attorney Hagemann, representing Carl Cohen, to Attorney Stafford, representing the bank, stated that:
The trial court was of the opinion that it was 'quite obvious' that this letter was not written by an attorney and that Attorney Stafford could arrive at no other conclusion than that set forth in his letter of October 16, 1958, to the Security...
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...under this Rule 13."8 Petitioners maintain that dismissal would not have been fruitless. Citing Security National Bank v. Cohen, 41 Wis.2d 710, 714, 165 N.W.2d 140 (1969); Connor v. Connor, 218 Wis. 336, 343, 259 N.W. 729 (1935); and Doyon & Rayne Lumber Co. v. Nichols, 196 Wis. 387, 390, 2......
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...arbiter of the credibility of the witnesses. Posnanski v. West Allis, 61 Wis.2d 461, 213 N.W.2d 51 (1973); Security Nat. Bank v. Cohen, 41 Wis.2d 710, 165 N.W.2d 140 (1969). Where the facts are disputed, the reviewing court will defer to the fact findings of the jury or the court. Roeske v.......
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