State v. Alles
| Decision Date | 02 March 1982 |
| Docket Number | No. 80-1379-CR,80-1379-CR |
| Citation | 316 N.W.2d 378,106 Wis.2d 368 |
| Parties | STATE of Wisconsin, Plaintiff-Respondent-Cross-Appellant-Petitioner, v. Kenneth E. ALLES and Nancy A. Waynert, Defendants-Appellants-Cross-Respondents. |
| Court | Wisconsin Supreme Court |
David T. Flanagan, Asst. Atty. Gen. (argued), for plaintiff-petitioner; Bronson C. La Follette, Atty. Gen., on brief.
Robert J. Lerner, Milwaukee (argued), for Nancy Waynert; Robert J. Lerner and Perry, First, Reiher, Lerner & Quindel, S. C., Milwaukee, on brief.
Franklyn M. Gimbel, Milwaukee (argued), for Kenneth Alles; Thomas Brown and Gimbel, Gimbel & Reilly, Milwaukee, on brief.
This is a review of an unpublished decision of the court of appeals, 308 N.W.2d 420, reversing Milwaukee county circuit court Judge Michael J. Skwierawski's judgments of conviction entered following a jury trial on the charges of transferring encumbered property, party to a crime. The court of appeals dismissed the state's cross-appeal on the issue of notice which is also before us on this review.
The sequence of events leading to the defendants' prosecution may be summarized as follows. In March of 1975, Triland, Inc., a corporate entity in the business of developing and selling homes, advertised forty-eight homes to be built in a subdivision in the Village of Dousman, Wisconsin. Triland offered to provide financing to prospective buyers at rates of 5 to 6 percent, which was substantially below the market value at that time. The defendants were corporate officers of Triland. Defendant Kenneth Alles was vice president and chief executive officer, and defendant Nancy Waynert was secretary-treasurer.
In April of 1975 the three buyers, the Dyers, the Moens, and the Dables, entered into contracts in which Triland agreed to build and convey homes and to procure mortgage financing for the buyers. Both the Moens and Dables made a down payment at the time their contracts were signed. The Dyers entered into an additional contract with Triland to convey certain real property as a down payment.
Triland financed the construction of the three homes by a series of loans from National Savings & Loan Association of Milwaukee. On July 16, 1975, the defendants signed a separate construction loan in the amount of $25,600 and a mortgage securing the loan to be held by National Savings & Loan with respect to each of the three homes to be constructed. Under the terms of the loan, Triland was required to make monthly interest payments of 91/4 percent over a two-year term, the principal being due at the end of that period.
Prior to the closings, each buyer received a one-page document captioned, "Building Contract and Closing Procedures," which stated the buyers would receive a title policy "showing the property to be free and clear of all liens and encumbrances." In October of 1975 closings occurred on each of the three residences. At that time there was a $24,785.03 balance due on the construction loan financing the Dable home, and a $24,800.03 balance due on the Moen and Dyer residences. The mortgage held by National Savings & Loan, securing the Triland construction debt, remained as an encumbrance on each of the three properties.
At the closing, all three buyers testified they were provided with a warranty deed stating that Triland was conveying the home "free and clear of encumbrances except municipal and zoning ordinances, recorded easements and building restrictions, if any." Each of the warranty deeds had been signed by the defendants on October 1, 1975. The buyers testified at trial that they were not told at the closing of the existence of the mortgage held by National Savings & Loan and that they understood the only mortgage on the property was the one to Triland which they signed. Each buyer signed a note and mortgage payable to Triland, securing the loan.
Prior to the closings, Triland had requested Waukesha Title Co., Inc., to prepare a separate title insurance commitment letter regarding each of the three properties. In each instance the fifteen-page title insurance commitment letter listed the "Mortgage executed by Triland, Inc. to National Savings & Loan Association for $25,600, dated July 16, 1975," as an exception to insurance coverage. A witness from Waukesha Title testified at trial that it was likely that the title insurance commitment letter was delivered to Triland prior to each closing. The controversy before this court involves the determination of when Mrs. Dable received notice of the encumbrance on the property.
Mr. Dyer testified at trial that he was unsure when he received the title insurance commitment letter, but it may have been before the closing. Mr. Moen testified that he did receive the title insurance commitment letter at the closing, and although he examined it briefly, defendant Waynert told him, " 'Well, you won't have time to go through all of it now because there's so much wording.' " At trial defendant Waynert denied making this remark.
Mrs. Dable testified at trial that neither she nor her attorney received the title insurance commitment letter until after the closing. She testified that defendant Waynert stated at the closing that Triland had not yet received the letter from Waukesha Title. Mrs. Dable testified that her attorney, Leonard Adent, inquired at the closing if there were any encumbrances on the property and was told by Triland employee, Patrick McElligott, that there were no encumbrances on the property. Attorney Adent did not testify at trial. Defendant Waynert testified at trial that, after receiving the title commitment from Waukesha Title, she wrote on it the name and address of the Dables' attorney and asked an employee to deliver it to the Dables' attorney. She testified this occurred prior to the Dable closing. The employee she directed to deliver the letter did not testify at trial.
Mrs. Dable participated in a second closing on her home in July of 1976. The Triland construction loan was repaid as part of that transaction, and the mortgage securing that loan was satisfied. Mrs. Dable testified at trial, however, that she only learned of the mortgage held by National Savings & Loan in the summer of 1978.
Although Mr. Dyer was uncertain of the date he received the title commitment letter, he was not aware that it disclosed an encumbrance on the property. Mr. Dyer testified he first learned of the unpaid Triland construction debt and the mortgage held by National Savings & Loan in April of 1978. On July 16, 1978, a year after the Triland construction loan went into default, Dyer repaid the construction loan and satisfied his obligation to Triland by refinancing his home through National Savings & Loan.
Although Mr. Moen received the title commitment letter at the closing, he was unaware that it provided notice of an encumbrance. Mr. Moen first became cognizant of the unpaid construction loan in May of 1978. The loan remained unpaid until January of 1979 when Midland National Bank agreed to accept placement of the Dyer and Moen financing, resulting in payment of the Moen mortgage to Triland. The proceeds from the payment of the Moen to Triland mortgage resulted in payment of the Triland construction loan to National Savings & Loan in February of 1979. At the same time, Dyer entered into a third financing transaction with Midland, satisfying his mortgage obligation to National Savings & Loan.
The defendants were tried on three separate counts (for sale of the Moen, Dyer, and Dable homes) of transferring encumbered property, party to a crime, in violation of secs. 943.25 and 939.05, Stats., 1975. The trial judge ruled that the title insurance commitment letter was, as a matter of law, notice of the encumbrance on the property. Accordingly, the issue at trial was whether the buyers had received the title insurance commitment letter at or before the closing. The Moen count was dismissed on the ground that the buyer had received the title commitment letter prior to closing which the trial judge held constituted notice of the encumbrance as a matter of law. The jury acquitted the defendants on the Dyer count and convicted on the Dable count which is the subject of this appeal.
The state cross-appealed challenging the trial court's finding, as a matter of law, that the title insurance commitment letter constituted notice of the encumbrance on the property and instructing the jury to that effect. The court of appeals dismissed the cross-appeal on the ground that the state could only file a cross-appeal from a final, written order or judgment. The court of appeals reversed the defendants' convictions on the ground that there was insufficient evidence to prove the notice element of sec. 943.25(1), Stats., 1975. The court of appeals specifically held that the state failed to meet its burden of proof by failing to call Attorney Leonard Adent as a witness. That court held that Attorney Adent's testimony was essential because the Dables could have obtained notice of the encumbrance through him. The court of appeals concluded that this omission caused the state's evidence to be so lacking in probative value that no jury could reasonably have found guilt beyond a reasonable doubt. 1
We are obliged to address three issues on this appeal. The first issue is whether there was sufficient evidence for the jury to find beyond a reasonable doubt that the defendants failed to inform the Dables of an encumbrance on the property at or prior to the closing, pursuant to sec. 943.25(1), Stats., 1975. The second issue we address, which the court of appeals did not reach, is whether the record contains sufficient evidence on the element of "intent to defraud" to support the defendants' convictions. The third issue is one of procedure: whether the state's right of cross-appeal, pursuant to sec. 974.05(2), Stats., is limited to final orders and judgments. We reverse the decision of the court of appeals...
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