Weber v. Weber

• Decision Date: 27 April 1993
• Docket Number: No. 90-2327,90-2327
• Citation: 501 N.W.2d 413,176 Wis.2d 1085
• Parties: Eugene J. WEBER, and Ann M. Weber, Plaintiffs-Respondents-Cross Appellants, v. Jerold J. WEBER, and Ruth C. Weber, Defendants-Appellants-Cross Respondents-Petitioners. . Oral Argument
• Court: Wisconsin Supreme Court

Page 413

501 N.W.2d 413

176 Wis.2d 1085

Eugene J. WEBER, and Ann M. Weber Plaintiffs-Respondents-Cross Appellants, v. Jerold J. WEBER, and Ruth C. Weber Defendants-Appellants-Cross Respondents-Petitioners.

No. 90-2327.

Supreme Court of Wisconsin.

Oral Argument April 27, 1993.

Decided June 23, 1993.

For the plaintiffs-respondents-cross appellants there was a brief by Edward F. Zappen and Zappen & Meissner, Wausau and oral argument by Edward F. Zappen.

HEFFERNAN, Chief Justice.

This is a review of a decision of the court of appeals, 169 Wis.2d 538, 485 N.W.2d 447 (Ct.App.1992), affirming a decision of the circuit court, James M. Mason, Judge, which denied the defendants' motion for relief from a Judgment of Foreclosure under sec. 806.07(1)(d), Stats. ¹ The defendants, Ruth and Jerold Weber, argued that Ruth's failure to sign the mortgages and notes given by her husband, Jerold, to his parents, plaintiffs Eugene and Ann Weber, rendered the mortgages void under the homestead requirement of the statute of frauds, sec. 706.02(1)(f), Stats. ² The circuit court held, and the court of appeals affirmed, that Jerold and Ruth Weber waived their right to assert the defense of statute of frauds because they failed to raise the defense until after the foreclosure judgment had been entered against them.

The initial question before this court is whether the signature requirement of the homestead provision of the statute of frauds can be waived by failure to plead it as an affirmative defense in a mortgage foreclosure action. We hold that prohibiting defendants from raising the defense of statute of frauds during a post-judgment motion on a homestead mortgage foreclosure violates the substantive protection afforded homestead property pursuant to sec. 706.02(1)(f) and evidenced by this state's long-standing policy favoring homestead rights over other property interests. We therefore reverse the decision of the court of appeals and remand the case for further proceedings.

For several years prior to 1979, Jerold Weber and his wife Ruth worked and lived on the family farm owned by his parents, Eugene and Ann Weber, at a wage of $10 per week plus basic necessities. On or around January 1, 1979, the elder Webers orally conveyed the farm to Jerold and Ruth with the understanding that the younger couple would run the farm, pay all the bills and keep all the profits in return for a monthly payment of about $3,000 per month to Eugene and Ann. As evidence of the parties' intentions, the elder Webers presented the farm check book to Jerold and Ruth.

The parties' performance on this agreement continued through May, 1980, when Eugene, Ann and Jerold entered into a written agreement consisting of (1) an offer to purchase, (2) a mortgage and note for $300,000, (3) another mortgage and note for $150,000, and (4) a deed from the parents to the son. These documents, drafted by the parents' attorney, Patrick Juneau, were dated January 1, 1979, although in fact they were signed on May 30, 1980. Ruth Weber did not attend the meetings at which these arrangements were made, nor did she sign any of these documents.

On July 25, 1988, Eugene and Ann filed a complaint in the circuit court for Wood county demanding Judgment of Foreclosure against Jerold and Ruth. ³ Attorney Drach, a former partner in Juneau's firm, filed an answer on behalf of Jerold and Ruth, but failed to plead as an affirmative defense that Ruth had not signed the notes and mortgages. Subsequently, Eugene and Ann moved the court for summary judgment and on February 20, 1989, the circuit court granted a default summary judgment against Jerold and Ruth and ordered the sale of the mortgaged property subject to a one year period of redemption. Attorney Drach approved the judgment as to form and content and the defendants did not appeal.

Approximately eleven months after judgment had been entered, and one month before the period of redemption expired, the younger Webers moved to amend the judgment to reflect Ruth's homestead interest. Subsequently, Jerold and Ruth also moved for relief from the judgment under sec. 806.07 on grounds that it was void because the mortgages were not valid without Ruth's signature. ⁴ The circuit court denied the motions, stating the statute of frauds defense could not be raised after the court had entered judgment. In a written decision, the circuit court distinguished the instant case from State Bank of Drummond v. Christophersen, 93 Wis.2d 148, 286 N.W.2d 547 (1980), in which a husband successfully petitioned for relief from a Judgment of Foreclosure after discovering that his wife had executed a mortgage on the homestead by forging his signature. Whereas the State Bank of Drummond court vacated the judgment because the signature requirement of 706.02(1)(f) had not been satisfied, the circuit court here concluded that the revised procedural statutes require the statute of frauds to be pleaded as an affirmative defense.

The court of appeals affirmed, relying on the language of sec. 802.02(3), Stats., that "any matter constituting an avoidance or affirmative defense including but not limited to ... the statute of frauds," must be pleaded affirmatively to give fair notice to the plaintiff and trial court. The court of appeals stated that while a conveyance of homestead property not signed "by or on behalf of" both spouses is void, "the defense that a spouse did not sign the conveyance by which the spouse's homestead interest was conveyed is personal and may be waived." Weber, 169 Wis.2d at 544, 485 N.W.2d 447. Because Jerold and Ruth had waived the statute of frauds defense by not pleading it, the court held that the mortgages were not void and the Judgment of Foreclosure stood.

We must decide whether the statute of frauds is a spouse's personal right that can be waived in respect to a mortgage held void under sec. 706.02(1)(f) if the statute of frauds is not pleaded affirmatively. Statutory interpretation requires legal determinations which we make without deference to the decision of the court of appeals or the circuit court. Reaching a final resolution of this dispute, however, requires more than statutory interpretation; it requires additional fact finding. Accordingly, we remand the case and direct the circuit court to determine (1) the nature of the original oral conveyance, and (2) whether the parties successfully satisfied or took the conveyance out of the statute of frauds through part performance. If the court concludes from these findings that Ruth and Jerold did secure an equitable interest in the property prior to signing the mortgages, the court must then determine the extent of the younger Webers's homestead interest in the property. ⁵

In respect to the threshold question whether Jerold and Ruth may bring a motion for post-judgment relief on the ground that the mortgages were void under the statute of frauds, both the circuit court and the court of appeals rejected Jerold and Ruth's motion on the basis of sec. 802.02(3), Stats., ⁶ which states:

AFFIRMATIVE DEFENSES. In pleading to a preceding pleading, a party shall set forth affirmatively any matter constituting an avoidance or affirmative defense including but not limited to the following ... statute of frauds....

According to both courts, the statute expressly requires parties to plead the statute of frauds as an affirmative defense in the circuit court. Each court took the position that because Jerold and Ruth failed to comply with sec. 802.02(3) they waived the right to question the legal validity of the mortgages in a motion seeking post-judgment relief.

Both the circuit court and the court of appeals rely upon general statements of law in respect to the pleading of the statute of frauds. The circuit court decision quotes 73 Am.Jur.2d, Statute of Frauds for the proposition that "[i]t is generally recognized that a defendant who, when sued upon an oral contract, desires to invoke the protection of the statute of frauds must set up the statute by some proper pleading...." 73 Am.Jur.2d, sec. 594 at 231. Similarly, the court of appeals notes that federal courts uniformly interpret Rule 8(c) of the Federal Rules of Civil Procedure, from which sec. 802.02(3) is derived, to require "that a defense such as the statute of frauds be pleaded affirmatively to give fair notice to the plaintiff and trial court." Weber, 169 Wis.2d at 543, 485 N.W.2d 447 (citing United McGill Corp. v. Gerngross Corp., 689 F.2d 52, 54 (3d Cir.1982)). ⁷

We do not disagree with these statements as applied to the statute of frauds generally. This court has itself relied on commentators such as Corbin and Williston for the proposition that "[i]t is black-letter law that the defense of the statute of frauds is waived if not raised in the trial court." Hine v. Vilter, 88 Wis.2d 645, 650, 277 N.W.2d 772 (1979). We interpret the procedural dictate of sec. 802.02(3) merely to codify this well-established rule of waiver by requiring parties to plead the statute of frauds defense affirmatively. We do not believe, however, that this rule applies where a homestead interest is at stake.

We note that requiring the statute of frauds to be pleaded affirmatively is consistent with the statutory language of sec. 706.02 which states that unless the statute's requirements are satisfied the disputed conveyance "shall not be valid." If a conveyance of land lacks any one of the statutory requirements, the entire agreement is invalidated and the parties must rely on equity to enforce the contract. See generally sec. 706.04. ⁸ Thus, the pleading requirements set forth in sec. 802.02(3) provide contracting parties the finality and notice necessary to shield themselves from the hardships wrought by such a defense. As stated in State Bank of Drummond, " '[t]he rule [of the statute of frauds] requires reasonable caution and prudence in the transaction of business, and is deeply imbedded in our jurisprudence.... better that...