Opinion
November 7, 1956 —
December 7, 1956.
APPEAL from a judgment of the circuit court for Florence county: AROLD F. MURPHY, Circuit judge. Affirmed.
For the appellant there was a brief by Lehner, Lehner Behling, Adolph P. Lehner, and Howard N. Lehner, all of Oconto Falls, and oral argument by Howard N. Lehner.
For the respondent there was a brief and oral argument by Emmet McCarthy of Marinette.
This is an action for payment of a promissory note brought by the payee, Ruth Ebenreiter, as plaintiff, against the maker, V.H. Freeman, as defendant. The defense was failure of consideration and breach of warranty.
At an auction sale held May 7, 1949, the defendant V.H. Freeman, purchased a cow and two heifers (all registered) from the herd of Harry Seils which were there offered for sale. The price was $781. The plaintiff as an individual doing business under the name and style of Gillett Sales Company, was the clerk of the auction sale under the terms of a written contract between Harry Seils and the auctioneers. The plaintiff's husband, C.H. Ebenreiter, represented the plaintiff at the sale. The defendant paid $200 in cash to C.H. Ebenreiter, and also signed and delivered to him a printed form of instrument (presented and filled out by Ebenreiter), consisting of a promissory note for $581 and a conditional sales contract, the latter which in part contained the following provisions:
"The consideration hereof is the conditional sale to the maker hereof, of personal property the title to which has been transferred to by the seller to the holder hereof, financing said sale, said property being described as: Holstein cow eartag M H-3446, Holstein heifer 2 yrs. eartag, Holstein heifer 2 yrs. eartag.
"The express condition of this transaction is such that the title and ownership of the above-described property shall remain in and shall not pass from the seller thereof, and if the promissory note hereby secured and this contract, either or both, be transferred or assigned, then the title and ownership of above-described property shall pass to, and remain in the holder hereof until the note hereby secured and interest, together with all fees, charges, and expenses as herein provided shall have been paid in full, and the delivery of said property to the maker of this instrument at this time is subject to that condition, and it is further agreed that should the maker hereof at any time before the note hereby secured is fully paid, sell or otherwise dispose of said property, or attempt so to do or remove it from the premises now occupied by him without the written consent of the holder of this instrument, or in case of default in any of the payments as herein mentioned then and in either case, the holder of this instrument shall have the right to declare this instrument, and the note hereby secured, due and payable, and in any or either of said events, or if the holder of this instrument shall deem herself insecure, then and in either case, the holder shall have the right to take possession of said property wherever it may be found. In the event of the retaking of the herein-described property, the same may be taken as provided by chapter 122, Wisconsin statutes [Uniform Conditional Sales Act], and the holder hereof may sell the same and apply the proceeds of such sale to the payment of the balance then due on this instrument together with all costs of the taking, keeping, and selling of the said property, including reasonable attorney's fees, and shall hold the residue, if any, subject to the disposal of the maker hereof.
"The holder hereof shall not be responsible for any warranties, representations, agreements, or promises relative to this instrument or the property hereinbefore described other than such as are set forth on the face of this instrument, and in consideration of the acceptance of this instrument, by her, each maker hereof expressly waives any and all claims of every nature whatsoever against the seller of the personal property herein described and any and all defenses against this instrument and against any and all holders hereof arising out of any such warranties, representations, agreements, and promises, if any, which may have been made with reference to this instrument and the above-described property." (Italicized portion handwritten.)
The contract between the auctioneers and Harry Seils contained provisions as follows:
"1. Said auctioneers agree to cry said owners public auction sale at the time and place hereinafter stated.
"2. Said auctioneers agree to cry said sale and furnish clerk. Gillett Sales Company, to clerk said public auction of personal property and pay owner the total proceeds of the sale less eight per cent commission for services at the conclusion of sale May 7, 1949. Advertising is to be paid by auctioneers and clerk. Bang's test is to be paid by auctioneers and clerk.
"3. Date of Sale. May 7, 1949.
"4. Place of Sale. Harry Seils farm.
"5. Description of property in general. Cattle, machinery, feed grain.
"6. Said auctioneers agree to get cattle clipped for the sale and line all machinery for the sale."
Forty days after the defendant purchased the cattle, one of the heifers aborted. The other heifer aborted about fifty-nine days after the sale. Tests indicated that both heifers were infected with brucellosis (Bang's disease), and that the cow was afflicted with mastitis. Although the tests did not indicate that the cow was infected with brucellosis, nevertheless as part of the herd it had been exposed thereto. The defendant sold the three head of cattle to a slaughterhouse for beef and received $384.31 for them.
When the defendant purchased the cattle he had not been presented with certificates indicating that they had passed a negative test for brucellosis as required under secs. 95.49 and 95.495, Stats. 1949.
The trial court held that the plaintiff was actually the seller of the cattle to the defendant. In its decision the court said:
"The plaintiff claims that she was not the seller of the cattle purchased by Freeman but was merely his banker, and that the title to the cattle passed when they were knocked down to him as the highest bidder by the auctioneer, who, under the law, was deemed to be the agent of the seller, Harry Seils.
"The title and owner ship of the cattle had been transferred to the plaintiff, Ruth Ebenreiter, by Seils prior to the execution of the note and conditional sale agreement according to the plain terms of said agreement. Whether the transfer was made prior to or after the auctioneer knocked down the cattle to the defendant is not established by any proof. The exact moment of transfer of title, however, is immaterial for the reason that the plaintiff was, under the law, a `legal successor in interest' of Seils.
"Section 122.01(9), Wis. Stats., (1949), Uniform Conditional Sales Act provides: `Seller' means the person who sells or leases the goods covered by the conditional sale, or any legal successor in interest of such person.
"Section 121.76(1), Wis. Stats., (1949), Uniform Sales Act provides: `Seller' means a person who sells or agrees to sell goods, or any legal successor in interest of such person.
"Mere descriptive terminology of a contract does not settle the legal status of a party to it and it is the entire context of the contract that governs and must be examined. Calling a horse a rabbit does not make it such. Under the clear provision of the conditional sale agreement transferring title and ownership of the cattle to the plaintiff, Ruth Ebenreiter, and the statutes defining the term `seller' I am constrained to hold that the plaintiff was the `seller' of the cattle to Freeman, the defendant."
Besides determining that title to the cattle had been transferred to the plaintiff by Seils before the defendant purchased them, the court found that since the contract of sale was in violation of secs. 95.49 and 95.495, Stats. 1949, it was void and unenforceable, and that the waiver clause in the conditional sales contract was of no effect in view of the illegality of the contract.
The defendant had interposed a counterclaim for the recovery of $200 paid as part of the purchase price. The court denied the same. The court concluded that the defendant was not indebted to the plaintiff on the note given as part of the purchase price, and rendered judgment dismissing the complaint. The appeal is from the judgment.
The crucial question presented is whether the trial court's finding that the plaintiff was the seller, is against the clear preponderance of the evidence. It is not disputed that the sale of the cattle was in violation of secs. 95.49 and 95.495, Stats. 1949. There is no challenge by the plaintiff of the defendant's position that since the sale was prohibited by statute, it was invalid and unenforceable. The controversy involves principally a construction of that clause in the conditional sales contract which provides: "The consideration hereof is the conditional sale to the maker hereof, of personal property the title to which has been transferred to by the seller to the holder hereof, financing said sale, said property being described as . . . ."
Plaintiff maintains that the evidence indisputably indicates that Harry Seils was the seller, and that the sale by him to the defendant was completed with the fall of the hammer at the auction sale, and that thereafter the defendant transferred title to the plaintiff, who in turn sold back to the defendant under a security arrangement for the loan. Plaintiff also contends that while the sale by Seils to the defendant was void for failure to present the required certifications that the cattle were free from brucellosis, nevertheless the contract which the defendant entered into with the plaintiff to furnish money in the form of a loan, was valid.
The record does not disclose particulars of a sale by Seils to the plaintiff. Likewise, the details of a claimed sale by the defendant to the plaintiff are not revealed of record. It is not inconceivable and it may reasonably be inferred from language in the conditional sales contract that Seils sold the cattle to the plaintiff before the auction sale, and that the plaintiff was the real seller in interest at such sale. The defendant submits that by the plain terms of the conditional sales contract, the plaintiff became Seils' legal successor in interest under sec. 122.01(9), Stats. (Uniform Conditional Sales Act).
In support of her position the plaintiff relies on the sale of the cattle by the auctioneer to the defendant, and upon a construction of the clause in the conditional sales contract that: "The consideration hereof is the conditional sale to the maker hereof [Freeman] of personal property the title to which has been transferred to by the seller [Freeman] to the holder hereof [Ruth Ebenreiter] financing said sale, etc."
The defendant maintains that the trial court correctly determined that the seller referred to in the clause was Seils. As evidence of the plaintiff's interest as seller and not as banker, the defendant points to his own testimony at the trial which was not controverted, that:
"At the time I bought the cow described in Exhibit C, Electron Brinka [a heifer], I requested a Bang's card from Mr. Ebenreiter and he said there wasn't any. He said the heifer didn't need it, he said it wasn't extant, there wasn't any test card for the animal. I asked him how I would know that the cattle were clean. He said he guaranteed them to be clean.
"At the time I purchased Electron Elegant Carnation [a heifer], described in Exhibit E, I did not get a report of complete negative Bang's test, or other kind of card with that cow or calf. I requested one of Mr. Ebenreiter. His response was the same as I gave it before. He said: `No card. There isn't any card for that animal.' I asked him twice about why. That calves of that type didn't have a card. I said: `How do I know it is clean ?' He said, `I guarantee it to be clean.'"
It is well established that a contract must be construed most strongly against a party preparing it. Deree v. Reliable Tool Machine, Inc. (1947), 250 Wis. 224, 26 N.W.2d 673; Skelly Oil Co. v. Peterson (1950), 257 Wis. 300, 43 N.W.2d 449. The conditional sales contract with note was prepared by or on behalf of the plaintiff.
We are obliged to determine that there is ample evidence of record to sustain the challenged finding of the trial court, and that said finding is not against the great weight and preponderance of the credible evidence. In view of the invalidity of the conditional sales contract, the waiver provisions contained therein are of no effect. The matter is controlled by principle as declared in Menominee River B. Co. v. Augustus Spies L. C. Co. (1911), 147 Wis. 559, 571, 132 N.W. 1118, that:
"A contract made in violation of a statute or for performance of an act which is prohibited by statute is void and will not be enforced by the court. This is true whether there is a prohibition and a penalty or merely a prohibition. [Cases cited.] . . . If any part of the consideration for a promise be illegal, or if there are several considerations for an unseverable promise one of which is illegal, the promise, whether written or oral, is wholly void, as it is impossible to say what part or which one of the considerations induced the promise. [Cases cited.] The contract is void if it is only in part connected with the illegal transaction and the promise single or entire. [Cases cited.] . . . The appellant, being one of the persons to be protected by the limitation of charges made in this statute, may raise the objection. [Case cited.] Objection to the illegality of this contract could not be waived by making or ratifying the contract, otherwise the statute would be ineffectual; besides, the respondent itself traces its right of action here through this illegal contract."
In the instant matter the note was part of the transaction and was not severable therefrom. It, too, is void and recovery thereon cannot be had by the plaintiff.
The findings of the trial court must be sustained.
By the Court. — Judgment affirmed.