Opinion
No. 185.
Argued March 30, 1970. —
Decided April 28, 1970.
APPEAL from a judgment of the county court of La Crosse county: LEONARD F. RORAFF, County Judge. Affirmed.
For the appellant there was a brief and oral argument by N. George De Dakis of La Crosse.
For the respondent there was a brief by Johns, Flaherty, Harman Gillette and Robert D. Johns, all of La Crosse, and oral argument by Robert D. Johns.
This is an action by Quality Lumber Coal Company, Inc., plaintiff-appellant, to recover $2,077.64 from defendant-respondent, Harold Kemp. This sum was allegedly due plaintiff from defendant for building materials sold to Kemp while he was doing business in La Crosse under the name of Kemp's Cabinet Shop. Kemp, in answer to plaintiff's complaint, pleaded a discharge in bankruptcy.
A jury trial was commenced on December 17, 1968, and the attorneys for both parties agreed that the trial court could read the following stipulation to the jury:
"Members of the Jury: Various facts in this case have been agreed upon. In order to save time, the parties have agreed that I could state such agreed facts. While the exact date of the filing of the petition in bankruptcy is uncertain the parties have agreed that purpose of this litigation the petition in bankruptcy was filed by Harold Kemp on June 2, 1965, and that he was adjudicated a bankrupt on such day. On and prior to June 2, 1965, Harold Kemp was indebted to the plaintiff Quality Lumber and Coal Company, Inc., in the sum of $3,077.64. Harold Kemp listed Quality Lumber and Coal Company as a creditor in the bankruptcy proceedings for the amount of $1,000.00. Quality Lumber and Coal Company as part of the bankruptcy proceedings received notice of the bankruptcy proceedings but did not file a claim. Pursuant to the bankruptcy proceedings defendant, Harold Kemp, received a discharge in bankruptcy on February 7, 1966, which discharge included, among other claims, the claim of Quality Lumber and Coal Company. The foregoing facts are to be accepted by you as established facts without the presentation of evidence to establish them.
"The issue in this case is whether or not after June 2, 1965, the defendant, Harold Kemp, promised to pay such claim of Quality Lumber and Coal Company. The plaintiff will contend that the defendant, Harold Kemp, authorized his attorney James McKenzie to promise and agree on his behalf that he would pay such claim and that Attorney James McKenzie communicated such promise to the plaintiff. The defendant will contend that there was no authorization to such effect. The matter for you to determine in the course of this action will therefore be, whether or not the plaintiff has established, according to the degree of proof that I will instruct at the close of this trial, defendant Harold Kemp authorized the making of such promise on his behalf, and if such promise, if authorized, was communicated to the plaintiff, Quality Lumber and Coal Company."
After the close of plaintiff's case and again at the close of the testimony, the defendant moved that the action be dismissed. The court reserved its ruling until after verdict. The jury returned a verdict with affirmative answers to the following questions:
"Question 6. After June 2, 1965, did the defendant Harold Kemp authorize his attorney, James McKenzie, to inform Quality Lumber and Coal Company that he agreed and promised to pay the balance of $2077.64?
"Question 7. . . . Did Attorney James McKenzie communicate such authorization and promise to plaintiff, Quality Lumber and Coal Company?"
After the verdict, the trial judge directed the verdict for the defendant, Harold Kemp. The plaintiff, Quality Lumber Coal Company appeals.
A single issue is dispositive of this appeal: Was there sufficient evidence for the jury to find that defendant, after the discharge in bankruptcy, made an oral promise to plaintiff to pay the amount due?
It is well settled that in determining whether the trial court was in error in directing the verdict, the evidence is to be construed in the light most favorable to the party against whom the verdict was directed. Furthermore, a verdict should only be directed against a plaintiff where plaintiff's evidence, given the most favorable construction it will reasonably bear, is insufficient to sustain a verdict in plaintiff's favor. The precise question in this case is: Was there sufficient evidence for the jury to find a revival of the debt?
Olson v. Sentry Ins. Co. (1968), 38 Wis.2d 175, 156 N.W.2d 429, and cases cited therein.
Wallow v. Zupan (1967), 35 Wis.2d 195, 150 N.W.2d 329, and cases cited therein.
In Lupinski v. Fischer, this court quoted with approval the language used in Allen v. Ferguson, an old United States Supreme Court decision regarding the revival of a debt discharged in bankruptcy: "`All the authorities agree in this, that the promise by which a discharged debt is revived must be clear, distinct, and unequivocal. It may be an absolute or a conditional promise, but in either case it must be unequivocal, and the occurrence of the condition must be averred if the promise be conditional. . . . Nothing is sufficient to revive a discharged debt unless the jury are authorized by it to say that there is the expression by the debtor of a clear intention to bind himself to the payment of the debt. . . .'" (Emphasis added.)
(1949), 255 Wis. 182, 185, 38 N.W.2d 429.
(1873), 85 U.S. (18 Wall.) 1, 3, 21 L.Ed. 854.
See also France v. Sullivan (1937), 223 Wis. 477, 271 N.W. 42; Graham v. Dreutzer (1890), 75 Wis. 558, 44 N.W. 776; Hill v. Trainer (1880), 49 Wis. 537, 5 N.W. 926.
It is clear that a debt discharged in bankruptcy can be revived by a new promise, whether the promise be oral or written. However, the promise must be definite, distinct, express and unambiguous.
See generally, 8 Remington, Bankruptcy, p. 133 et seq., sec. 3288 et seq. See also Annot. (1931), 75 A.L.R. 580.
The trial court here was correct in finding there was no such promise and that there was no evidence to support the jury finding to the contrary.
McKenzie, who was Kemp's attorney at the time of bankruptcy and who subsequently drafted the summons and complaint for Quality against Kemp, testified that Kemp was reluctant to file bankruptcy at first "because he [Kemp] actually didn't know what he wanted to do with the Quality account; he wanted to leave the account completely out of the bankruptcy, that's what his original statement to me was, to leave them completely out, and actually I prevailed upon him to file it as a thousand dollars, . . . . He told me to tell them [Quality] he was only going to file for a thousand on the claim, and that they would get their money, all but the thousand, and that he'd pay after the bankruptcy was over; . . . ."
McKenzie further testified that Kemp told him that "He [Kemp] thought by maybe Christmas, or the first of the year that he would be in good shape and be able to start paying them back at that time."
On the other hand, Harold Kemp testified that he had never authorized McKenzie to contact Quality Lumber; that he told McKenzie that he owed Quality a considerable amount of money and that McKenzie suggested he list them for one thousand dollars so that if they were listed and it went through bankruptcy court, he would be free and clear of all his debts. This is what he intended to achieve by going through bankruptcy.
In addition to the testimony of McKenzie, Curtis Smith, secretary-treasurer of the plaintiff, also testified on behalf of the plaintiff. Smith testified that although Kemp never personally told him he was going to pay the amount owed, he (Smith) did have several conversations with McKenzie as Kemp's lawyer after the discharge in bankruptcy, concerning the debt. In essence, Smith testified it was his understanding from what McKenzie told him that Kemp would pay the debt owed to the plaintiff "when he got back on his feet."
It is undisputed that neither Kemp nor McKenzie ever executed any written memorandum concerning payment of the debt. This lack of a writing as evidence of the alleged promise is, of course, not fatal to plaintiff's case since this is not within the statute of frauds. Without a writing, however, serious evidentiary problems are present.
Viewing this case in a light most favorable to the plaintiff's position, it is clear that what is present is an instruction from Kemp to McKenzie to tell Smith that the debt would be paid when Kemp got back on his feet. Even assuming that this is definite, express, distinct and unambiguous, it is, at best, a conditional promise. The promise may be conditional and yet binding providing the condition is definite. A promise to pay as soon as the bankrupt is able is a valid conditional promise unless it is merely a general declaration of good intentions to pay on the part of the bankrupt.
See Lupinski v. Fischer, supra, footnote 3.
See generally, Allen v. Ferguson, supra, footnote 4.
1 Collier, Bankruptcy (14th ed.), p. 1758, sec. 17.34.
The instant case does not appear to be merely a general declaration of good intentions on the part of Kemp. However, it does not follow that this promise can be enforced. Whenever the new promise is dependent upon a condition or contingency this fact must be stated in the pleading and it must be averred and proved that the condition has been performed or that the contingency has happened.
See generally, Lupinski v. Fischer, supra, footnote 3.
In the instant case, not only is there no allegation in the pleadings that the condition ( i.e., Kemp gets back on his feet) has been met, there is no proof that this condition has been fulfilled. The only evidence that this condition might have been met is Kemp's own testimony that he is working for a construction company. However, proof that he has a job does not necessarily mean that he is "back on his feet."
The trial court was of the opinion that the testimony of McKenzie as to what the promise was was cancelled out by the testimony of Smith as to what he understood the promise to be. We agree. McKenzie's interpretation of the promise is immaterial as long as Smith's interpretation as an officer of the plaintiff was that the promise was conditional. Smith's interpretation must have come McKenzie since Smith had no contact with Kemp. Were it not for Smith's testimony and the requirement that the evidence must be viewed most favorably to the plaintiff, it would be difficult to find any promise at all here. Kemp denies making any promise; McKenzie claims that he did. Yet McKenzie drafted the original pleadings for the plaintiff in this case making no mention of a promise from Kemp to pay Quality.
The trial court was not in error in directing a verdict for the defendant.
We cannot close our discussion of this case without joining the trial court in questioning some of Attorney McKenzie's activities associated with this litigation. The record is unclear as to exact dates, but it does appear that prior to representing Kemp on his bankruptcy, McKenzie represented Quality Lumber, and that there may have been some concurrent representation of both. Smith recommended McKenzie to Kemp who was looking for a lawyer to do collection work for him. McKenzie represented Kemp from about September, 1964, until October of 1965.
The record reveals that McKenzie apparently failed to fully recognize his responsibilities to either Kemp or Quality. One potential conflict of interest that McKenzie apparently failed to recognize was in representing Kemp in the bankruptcy at a time when Kemp was indebted to Quality, who had been his client. Another conflict apparently unrecognized by McKenzie was in representing Quality and drafting the pleadings against Kemp to whom he had just given legal assistance during the bankruptcy proceedings. The entire controversy arose out of alleged actions taken by McKenzie while he was representing Kemp and on Kemp's behalf. This seeming insensitivity to his role as a pivotal witness in the case is difficult to understand. Indeed, it was only upon the trial court's suggestion that he be replaced as attorney for Quality that McKenzie stepped out of the case.
By the Court. — Judgment affirmed.