911 N.W.2d 1
Wis.2018Background
- In 2006 Wuensch executed a negotiable promissory note secured by a mortgage; the note was later endorsed in blank and changed hands several times, ultimately ending with Deutsche Bank.
- Wuensch defaulted in February 2008; Deutsche Bank filed foreclosure in August 2009 and attached a copy of the note to its complaint.
- At a 2014 bench trial Deutsche Bank's attorney produced the original wet-ink note (endorsed in blank), the court inspected it, admitted a copy into evidence, and found Deutsche Bank to be the holder entitled to enforce the note.
- The circuit court stayed entry of foreclosure to allow Wuensch to cure but otherwise entered judgment in favor of Deutsche Bank; the court relied on UCC provisions and equitable assignment doctrine.
- The court of appeals reversed, holding that possession by counsel and unsworn statements were insufficient; it required testimony from a witness with personal knowledge that the bank possessed the note when suit was filed and at trial.
- The Wisconsin Supreme Court granted review and reversed the court of appeals, holding presentment of the original wet-ink note endorsed in blank to the trier of fact (including via counsel) establishes possession and the right to enforce the note.
Issues
| Issue | Plaintiff's Argument (Deutsche Bank) | Defendant's Argument (Wuensch) | Held |
|---|---|---|---|
| Whether presentment of an original wet-ink note endorsed in blank by plaintiff's counsel establishes the holder's possession and right to enforce | Possession shown by counsel producing the original at trial suffices under UCC; copy may be admitted after court inspection | Counsel's unsworn presentation cannot substitute for admissible evidence; bank must present sworn testimony proving possession (including at filing) | Held: Presentment of the original endorsed-in-blank note to the trier of fact (via counsel) establishes possession and entitlement to enforce under UCC |
| Whether a copy of the note may be admitted | Copy is admissible after the court inspects and authenticates the original (self-authenticating commercial paper) | A copy alone is insufficient absent extrinsic authentication; original must be available and shown to be in plaintiff's possession | Held: A copy may be admitted after the court personally inspects and authenticates the original; § 909.02(9) and § 909.015(3) support admission |
| Whether counsel's presentation impermissibly introduces unsworn testimonial evidence | Counsel acts as agent for client in presenting physical evidence; such presentation is not sworn testimony and is permissible | Counsel’s unsworn statements are not evidence; possession cannot be proved by unsworn remarks of counsel without witness testimony | Held: Counsel presenting the original on client’s behalf is acting as client’s agent, not as a witness offering unsworn testimony; this is permissible to establish possession |
| Whether equitable defenses/unclean hands barred relief | Bank argued holder status and foreclosure remedy; court considered predecessor misconduct when tailoring equitable relief | Wuensch argued prior holders' misconduct and lack of standing should prevent foreclosure | Held: Court accepted holder status and upheld foreclosure judgment but exercised equitable discretion (stay to allow cure); unclean hands argument did not prevent enforcement here |
Key Cases Cited
- Mitchell Bank v. Schanke, 268 Wis. 2d 571 (Wis. 2004) (plaintiff must prove terms of indebtedness and party's right to enforce note to foreclose)
- Dow Family, LLC v. PHH Mortgage Corp., 354 Wis. 2d 796 (Wis. 2014) (mortgage follows assignment of the note; an authenticated original or properly authenticated copy is required to show entitlement to enforce)
- Horvath v. Bank of New York, N.A., 641 F.3d 617 (4th Cir. 2011) (possession of an instrument endorsed in blank confers full power to enforce)