Tri City Shopping Center, Inc. v. Paulos
| Decision Date | 01 July 1977 |
| Docket Number | No. 75-615,75-615 |
| Citation | 255 N.W.2d 316,79 Wis.2d 251 |
| Court | Wisconsin Supreme Court |
| Parties | TRI CITY SHOPPING CENTER, INC., and Western Tobacco Company, Plaintiffs, v. Chris J. PAULOS, Defendant and Third-Party Plaintiff-Respondent, David A. Ulrich, Gerald La Valley, Henry Karbiner, Jr., and William Gravitter, Third-Party Defendants-Appellants. |
Tri City Shopping Center, Inc., and Western Tobacco Company commenced this action against Chris J. Paulos to recover on promissory notes. Paulos answered the complaint raising affirmative defenses and commenced a third-party action against David A. Ulrich, Gerald La Valley, Henry Karbiner, Jr., and William Gravitter. The third-party defendants demurrer to the third-party complaint and argued that Paulos was not authorized under the statutes to bring the third-party action. From the order overruling the demurrer, the third-party defendants have appealed.
William P. McGovern, Oak Creek, for appellants.
Robert D. Scott, Frank R. Terschan and Frisch, Dudek & Slattery, Ltd., Milwaukee, for respondent.
In the fall of 1975, the plaintiffs, Tri City Shopping Center, Inc., and Western Tobacco Company, wholly owned subsidiaries of National Development, Inc., commenced an action against Chris J. Paulos to collect on three promissory notes. The amended complaint alleged that Paulos signed the three notes in April, 1971, that demand had not been made for payment, that no payment had been received, and that the amount of the notes plus interest was due. Tri City Shopping Center claimed $6,000.00 plus interest was due on its note. Western Tobacco Company alleged that $22,000.00 was due on one of its notes and $87,449.60 plus interest was due on the other.
Paulos served and filed an answer in which he raised affirmative defenses and commenced his third-party action. As to each of the three notes, Paulos denied that he signed the note for valuable consideration; denied that he became obligated by reason of signing the notes; denied that due demand had been made; denied that the notes were in arrears; and denied that the principal amount or interest was due.
As affirmative defenses, Paulos alleged that his execution of each of the three promissory notes was the product of:
Paulos stated that the acts of coercion, duress, fraud and misrepresentation were more specifically described in the third-party complaint.
In the third-party complaint, Paulos identified each of the four defendants: David A. Ulrich, President of Tri City National Bank of Oak Creek, President of Tri City National Bank of West Allis, President of Tri City National Bank of Hales Corners, and Chairman of the Board of National Development, Inc.; Gerald La Valley, employment unknown; Henry Karbiner, Jr., Executive Vice-President and Cashier of Tri City National Bank of Oak Creek; and William Gravitter, Vice-President of the Tri-City National Bank of Oak Creek, Vice-President of the Tri City National Bank of West Allis, and Vice-President of the Tri-City National Bank of Hales Corners.
Paulos alleged causes of action for duress and fraud and misrepresentation against each of the four third-party defendants.
According to the third-party complaint, prior to April, 1971, Paulos managed Western Tobacco Company, which maintained a checking account at Tri City State Bank (the predecessor bank to Tri City National Bank of Oak Creek), and Paulos Enterprises, which maintained a checking account at American City Bank. Paulos alleged that when Western Tobacco became indebted to Tri City State Bank, the third-party defendants instituted a scheme for taking over Western Tobacco and Paulos Enterprises by proposing that Paulos write checks on insufficient funds on his Tri City accounts for deposit in an account in another bank to produce a fund on which to draw checks for his business expenses. Paulos alleged that Ulrich subsequently coerced him into submitting Western Tobacco to an audit; and upon completion of the audit, the third-party defendants demanded that Paulos reorganize and recapitalize Western Tobacco Company so that Tri City Shopping Center, Inc., would become the principal stockholder of the company. Paulos alleged that the third-party defendants accompanied their demand with threats of his personal bankruptcy, exposure of his insufficient fund checks, and loss of all interest in his businesses. Paulos alleged that he complied with the demand of the third-party defendants. As a result, Western Tobacco became a subsidiary of National Development, Inc., and a stock certificate was issued representing Paulos's ownership in National Development on account of his interest in Western Tobacco; but Ulrich has refused to deliver the certificate to Paulos. Paulos alleged that each of the promissory notes executed by him was either a part of the proposed reorganization of Western Tobacco or an implementation of the reorganization for the benefit of the third-party defendants; and that his execution of the notes was done under the same duress and coercion as caused him to execute the agreement for reorganization of the company by which he was divested of his positions as principal stockholder and managing officer.
Paulos alleged that each of the four third-party defendants committed fraud as part of the scheme to force him to relinquish his control and ownership of Western Tobacco Company.
For relief, Paulos requests dismissal of the plaintiffs' complaint and a declaration that the promissory notes were null and void; compensatory damages for his loss of ownership interest in Western Tobacco and Paulos Enterprises and his consequent loss of business opportunities; return of his ownership interest in National Development, Inc.; and punitive damages against the individual third-party defendants.
The third-party defendants demurred to the third-party complaint upon the grounds that it did not state facts sufficient to constitute a cause of action, and that it improperly united several causes of action. In the trial court and on the appeal, the third-party defendants have dropped their claim that the third-party complaint did not state facts sufficient to constitute a cause of action.
In overruling the demurrer, the county court explained that the affirmative defenses in the answer are substantially set forth in the third-party complaint against the officers; and the court concluded that in this circumstance sec. 263.15, Stats., granted the defendant a right to join the third-party defendants.
On the appeal, the third-party defendants argue that sec. 263.15, Stats.1973, is not the statute which establishes the test for determining when a third- party action may be commenced.
Sec. 263.15, Stats.1973, provides:
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