Deutsche Bank National Trust Company v. Thomas P. Wuensch

2018 WI 35SUPREME COURT OF WISCONSIN
CASE NO.: 2015AP175
COMPLETE TITLE: Deutsche Bank National Trust Company,
Plaintiff-Respondent-Petitioner,
v.
Thomas P. Wuensch,
Defendant-Appellant,
Heidi Wuensch,
Appellant.
REVIEW OF A DECISION OF THE COURT OF APPEALS
(no cite)
OPINION FILED: April 17, 2018
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: October 2, 2017
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: La Crosse
JUDGE: Todd W. Bjerke
JUSTICES:
CONCURRED:
DISSENTED: A.W. BRADLEY, J., dissents, joined by
ABRAHAMSON, J. (opinion filed).
NOT PARTICIPATING:
ATTORNEYS:
For the plaintiff-respondent-petitioner, there were briefs
filed by Thomas C. Dill and BP Peterman Group, Brookfield;
Robert W. Brunner and Bryan Cave LLP, Chicago, Illinois; and
Kenneth Lee Marshall and Bryan Cave LLP, San Francisco,
California. There was an oral argument by Kenneth Lee Marshall.
For the defendant-appellant there was a brief filed by
Christa O. Westerberg, Susan M. Crawford, Aaron G. Dumas, and
Pines Bach LLP, Madison. There was an oral argument by Christa
O. Westerberg.
2018 WI 35NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2015AP175
(L.C. No. 2009CV752)
STATE OF WISCONSIN : IN SUPREME COURT
Deutsche Bank National Trust Company,
Plaintiff-Respondent-Petitioner,
v.
FILED
Thomas P. Wuensch,
APR 17, 2018
Defendant-Appellant,
Shelia T. Reiff
Heidi Wuensch, Clerk of Supreme Court
Appellant.
REVIEW from a decision of the court of appeals. Reversed.
¶1 REBECCA GRASSL BRADLEY, J. This is a review of an
unpublished court of appeals summary disposition reversing the
La Crosse County Circuit Court's1 foreclosure judgment against
Thomas P. Wuensch in favor of Deutsche Bank National Trust
1
The Honorable Todd W. Bjerke presiding.
No. 2015AP175
Company (Deutsche Bank).2 The circuit court admitted the
promissory note signed by Wuensch (the Note) into evidence when
offered by Deutsche Bank through its attorney, and permitted the
Bank to enforce the Note, ruling that the original Note,
endorsed in blank, was sufficient to establish possession. We
reverse the court of appeals' summary disposition3 and affirm the
circuit court's judgment of foreclosure.
¶2 The issue before this court is whether presentment by
a party's attorney of an original, wet-ink note endorsed in
blank is admissible evidence and enforceable against the
borrower without further proof that the holder had possession at
the time the foreclosure action was filed. To answer this
question, we must determine the evidence necessary to prove that
an entity seeking to enforce a note against a borrower has the
right to do so. We hold that presentment to the trier of fact
in a mortgage foreclosure proceeding of the original, wet-ink
note endorsed in blank, establishes the holder's possession and
entitles the holder to enforce the note.
2
Deutsche Bank's full title in this action is "Deutsche
Bank National Trust Company as Trustee for American Home
Mortgage Assets Trust 2007-2 Mortgage-Backed Pass Through
Certificates, Series 2007-2, by American Home Mortgage Servicing
Inc., its attorney-in-fact."
3
Deutsche Bank Nat'l Trust Co. v. Wuensch, No. 2015AP175,
unpublished order (Wis. Ct. App. Aug. 23, 2016).
2
No. 2015AP175
I. BACKGROUND
¶3 In December 2006, Wuensch signed an adjustable rate
Note issued by HLB Mortgage for $301,500. Wuensch secured the
Note with a mortgage he executed in favor of the mortgagee,
Mortgage Electronic Registrations Systems, Inc. as nominee for
HLB Mortgage, the lender. By the time this action was filed,
HLB had transferred the Note to American Home Mortgage
Servicing, Inc. (AHM),4 HLB's parent entity, and AHM had endorsed
the Note in blank.
¶4 It is uncontested that in February 2008, Wuensch
defaulted. He failed to make any payment on the Note after
February 2008 and has remained in default through the pendency
of this foreclosure action. The events surrounding the default
underlie the circuit court's ruling that "equity dictates that
Wuensch be allowed one last opportunity to cure his default,
because his default on the Note may have been caused by the
actions of the preceding Note holders." They also color
Wuensch's arguments on the primary issue regarding whether
Deutsche Bank in fact possessed the original Note.
¶5 Wuensch's Note required him to remain current on all
property taxes by paying into an escrow account serviced by the
lender, which would pay his property taxes directly from the
escrow account. His promised monthly mortgage payment, due the
4
By the time the case was before the circuit court, AHM had
changed its name to Homeward Residential, and subsequently
merged with or was purchased by Ocwen Financial Services, the
current servicer of the Note.
3
No. 2015AP175
first of each month, totaled $1,487.68, consisting of $1,210.98
for the Note itself, plus $276.70, which went into escrow to
cover property taxes.5 In August 2007, although Wuensch was
current on his mortgage payments, he received notice from the
Town of Onalaska that his property taxes had not been paid.
Around this time, Wuensch learned that AHM, then in possession
of his Note, had filed for bankruptcy earlier in the month.
¶6 In a letter dated February 23, 2008, AHM informed
Wuensch it had not received his February mortgage payment.
Wuensch claimed he had submitted payment via Western Union on
February 15, 2008. Wuensch's attempts to resolve the February
payment issue were unsuccessful. Allegedly based on the
recommendation of an AHM employee, Wuensch stopped making
payments on the Note altogether. As a result, AHM sent Wuensch
notice of acceleration dated March 4, 2008, indicating that he
was in default and owed $2,355.89, which had become due on or
after February 1, 2008. Regardless of why Wuensch stopped
making payments, there is no dispute that AHM never received any
mortgage payments from Wuensch after February 15, 2008.
¶7 Deutsche Bank filed this foreclosure action against
Wuensch in August 2009, attaching a copy of the Note to the
complaint. It elected to proceed to foreclosure under Wis.
Stat. § 846.101 (2013-14), waiving any deficiency judgment
against Wuensch, and consenting to Wuensch's continued occupancy
5
The moneys held in the escrow account also covered hazard
insurance and other costs and fees.
4
No. 2015AP175
of the property until the circuit court entered confirmation of
a sale.6
¶8 Deutsche Bank claimed to be the "lawful holder of said
note and mortgage." During the life of the loan, Wuensch's Note
and mortgage were transferred multiple times, ultimately landing
with Deutsche Bank on August 4, 2009. Because of the nature of
a note endorsed in blank, precisely how Deutsche Bank came into
physical possession of the Note is not relevant. For purposes
of enforcing the Note, it is enough that Deutsche Bank was in
possession of the original Note at trial, a copy of which was
attached to the complaint.
¶9 In his answer, Wuensch denied that Deutsche Bank was a
holder entitled to enforce the Note and denied that any payments
were past due. Wuensch also asserted the following affirmative
defenses: material misrepresentation, laches, estoppel, lack of
standing, improper joinder of parties, and lack of note. In an
amended answer, Wuensch also alleged fraud and unclean hands by
Deutsche Bank and again asserted that the Bank lacked the
ability to foreclose.
¶10 Pretrial proceedings continued for five years before
the case finally came before the circuit court for a bench
trial. In May 2014, Deutsche Bank's attorney presented the
original, wet-ink Note to the circuit court to inspect and asked
the circuit court to admit into evidence a copy of the Note as a
6
All subsequent references to the Wisconsin Statutes are to
the 2013-14 version unless otherwise indicated.
5
No. 2015AP175
self-authenticating, "non-hearsay instrument . . . offered for
its legal significance, not to prove the truth of the matter
asserted."7 Wuensch's counsel objected on the bases of hearsay
and lack of personal knowledge on the part of Deutsch Bank's
counsel, while also asserting that Deutsche Bank's counsel was
impermissibly acting as a witness. The circuit court overruled
these objections and after inspecting the Note, observed:
THE COURT: When I looked at the document purporting
to be an original, looks like original ink on
signatures and appears to be the same as what has now
been marked as a copy Exhibit 1 . . . .
. . . .
It will be admitted.
The circuit court then concluded that "plaintiff is, in my mind,
the holder in due course of a note endorsed in blank and they
can proceed on it." Wuensch's counsel objected to the admission
of the Note and questioned the validity of the signatures on and
the assignment of the instrument, arguing that there were "no
indentations on the initials" and "the assignments of the
mortgage are relevant because of the false nature of them." The
circuit court responded, "the law is pretty clear that somebody
that is holding a note endorsed in blank has the right to seek
foreclosure of such a document" and that it did not think "the
assignments were relevant when there's a note endorsed in
blank."
7
Deutsche Bank's counsel also moved to admit the mortgage,
to which Wuensch's counsel made no objection.
6
No. 2015AP175
¶11 Deutsche Bank called one witness at trial, Rasheed
Blanchard, a loan analyst from Ocwen Financial Corporation, the
entity that serviced the loan. He testified as to Wuensch's
payment history and the processes by which Ocwen serviced the
loan.
¶12 Wuensch testified regarding the difficulty he had
contacting AHM to resolve the 2007 property tax issue, the
payment history leading up to his default, and the events that
followed his default. He also claimed that the Note presented
by Deutsche Bank did not contain his original, wet-ink
signature.
¶13 In December 2014, the circuit court issued findings of
fact and conclusions of law in its judgment and order. It
determined that Deutsche Bank "is entitled to a judgment of
foreclosure of the Defendant's mortgage." It found Deutsche
Bank:
is the holder of the original Note, endorsed in blank.
The Court is satisfied that the Plaintiff has in its
possession the original ink Note. The Plaintiff
produced the original Note at trial and the Court
examined it. The Court is satisfied that it is the
original Note executed by Wuensch on December 18,
2006. Exhibit 1 is a true and accurate copy of the
original ink Note.
7
No. 2015AP175
It further found Wuensch was in default on the Note in the
principal amount of $315,233.64.8
¶14 The circuit court concluded that Wuensch's arguments
regarding allegedly fraudulent practices associated with
mortgage-backed securities comprised of pooled mortgages such as
his own were "beyond the scope of this case." Relying on Dow
Family, LLC v. PHH Mortgage Corp., 2014 WI 56, ¶21, 354 Wis. 2d
796, 848 N.W.2d 728, the circuit court ruled that "[u]nder the
doctrine of equitable assignment, a mortgage automatically
follows the assignment of the note." The circuit court applied
the Dow Family holding that "security for a note is equitably
assigned upon transfer of the note, without need for a written
assignment." Pivotally, the circuit court held that "[t]he
holder of an original note endorsed in blank has the right to
enforce the note"; therefore, Deutsche Bank had standing to
bring the foreclosure action against Wuensch.
¶15 The circuit court, however, exercised its equitable
authority to delay entry of the foreclosure judgment and permit
Wuensch the opportunity to return to the position he occupied
prior to the default event of February 2008. It explained:
8
The principal amount for which Wuensch was found liable
exceeds the original principal amount in the Note because the
Note provided for changes in the interest rate and the monthly
payment, resulting in the amount of Wuensch’s monthly payment
not fully paying accrued interest. In the Note, Wuensch agreed
"THE PRINCIPAL AMOUNT I MUST REPAY COULD BE LARGER THAN THE
AMOUNT I ORIGINALLY BORROWED" but the Note capped the principal
amount at not more than 110% of the original amount.
8
No. 2015AP175
Even if the Plaintiff is without blame for the
problems with Wuensch's mortgage, the same cannot be
said about the preceding holders of his Note.
Although the question of whether Wuensch's Note was
fraudulently passed between creditors before it came
into the Plaintiff's possession is beyond the scope of
this case, the Court is convinced that the seemingly
unregulated transferring of mortgages during the
housing bubble and crash contributed to Wuensch
finding himself in this position.
Accordingly, the circuit court stayed entry of the judgment
until January 24, 2015, to allow Wuensch to cure the default by
paying Deutsche Bank $347,826.03——the sum of the unpaid
principal, plus expenses paid by Deutsche Bank for property
taxes, hazard insurance, and other costs and fees. If Wuensch
did not pay that amount by January 24th, the circuit court would
enter judgment of foreclosure in favor of Deutsche Bank for the
entire amount sought——totaling $455,641.85.
¶16 Wuensch appealed in September 2015 and the court of
appeals summarily reversed the judgment of foreclosure.
Deutsche Bank Nat'l Trust Co. v. Wuensch, No. 2015AP175,
unpublished order (Wis. Ct. App. Aug. 23, 2016). Wuensch argued
the circuit court lacked a factual basis to enter judgment of
foreclosure against him because Deutsche Bank did not prove it
was the holder of the original Note entitled to enforce it. Id.
at 4. He contended that Deutsche Bank was required to present
evidence not only that the purported original Note was in fact
the original Note, but also that Deutsche Bank's counsel had
obtained the Note from the Bank. Id. Wuensch insisted that
possession alone of the purported original Note endorsed in
blank was not enough to prove possession. Id.
9
No. 2015AP175
¶17 The court of appeals agreed. It held that Wuensch's
pleadings and his objections as to authenticity and possession
at trial placed "possession of the original note in dispute, and
there is no dispute that this was an issue that the plaintiff
had to prove at trial." Id. Citing Wis. Stat. §§ 906.02 ("A
witness may not testify to a matter unless evidence is
introduced sufficient to support a finding that the witness has
personal knowledge of the matter."), 906.03(1) ("which provides
that a witness must take an oath before testifying"), and
901.04(2) ("a judge is to make preliminary determinations on the
qualifications of a person to be a witness"), the court of
appeals held as "axiomatic" the rule "that 'unsworn statements'
have 'no proper place' as substitutes for evidence in a trial."
Id. at 5 (citations omitted). The court of appeals recognized
the "difficulties" the Bank's counsel would have encountered had
he attempted to testify as to his personal knowledge surrounding
the Note and its possession. Id. at 5. Nevertheless, the court
of appeals held that the Bank was required to present testimony
from a witness with personal knowledge who could verify
possession of the Note by the Bank up to the moment Deutsche
Bank's attorney presented the Note to the circuit court. Id. at
6-7.
¶18 Acknowledging that the "mandate reversing the judgment
of foreclosure in this action may appear at first blush to
elevate form over substance and to produce a highly inefficient
result," the court of appeals nonetheless persisted in holding
that possession by the Bank's counsel would not suffice to prove
10
No. 2015AP175
possession by the Bank itself or the concomitant right to
enforce the Note endorsed in blank. Id. at 8. Deutsche Bank
filed a petition for review, which this court granted.
II. STANDARD OF REVIEW
¶19 "Our review requires us to construe a statute and
apply it to the facts of the case." Warehouse II, LLC v. DOT,
2006 WI 62, ¶4, 291 Wis. 2d 80, 715 N.W.2d 213. Ordinarily, a
circuit court's "[f]indings of fact shall not be set aside
unless clearly erroneous, and due regard shall be given to the
opportunity of the [circuit] court to judge the credibility of
the witnesses." Wis. Stat. § 805.17(2). Furthermore, "the
decision whether to admit evidence is within the circuit court's
discretion." State v. Zamzow, 2017 WI 29, ¶10, 374 Wis. 2d 220,
892 N.W.2d 637 (citing State v. Griep, 2015 WI 40, ¶17, 361 Wis.
2d 657, 863 N.W.2d 567), cert. denied, 138 S. Ct. 501 (2017).
However, the application of a statute to the facts of a case is
a question of law this court reviews de novo, although the court
benefits from the analyses of the circuit court and court of
appeals. Warehouse II, 291 Wis. 2d 80, ¶4 (first citing State
v. Reed, 2005 WI 53, ¶13, 280 Wis. 2d 68, 695 N.W.2d 315; and
then citing State v. Cole, 2003 WI 59, ¶12, 262 Wis. 2d 167, 663
N.W.2d 700).
III. DISCUSION
¶20 In mortgage foreclosure actions, the plaintiff has the
burden of proving the terms of indebtedness secured by a
mortgage. Mitchell Bank v. Schanke, 2004 WI 13, ¶32, 268 Wis.
2d 571, 676 N.W.2d 849 (citing Doyon & Rayne Lumber Co. v.
11
No. 2015AP175
Nichols, 196 Wis. 387, 390, 220 N.W. 181 (1928)) (noting the
"requirement that the mortgagee prove the existence of debt in
order to foreclose on the mortgage, as a mortgage cannot exist
without a debt"); see PNC Bank, N.A. v. Bierbrauer, 2013 WI App
11, ¶10, 346 Wis. 2d 1, 827 N.W.2d 124. This includes verifying
that foreclosure proceedings are maintained by the party with
the right to enforce the note, a requirement that is not a mere
formality. See Bierbrauer, 346 Wis. 2d 1, ¶10. It is in fact a
foundational precondition for any foreclosure action, protecting
borrowers from wrongful loss of their homes, affording lenders a
procedure for enforcing notes, and providing certainty
surrounding property rights in mortgages. See, e.g., David A.
Dana, Why Mortgage "Formalities" Matter, 24 Loy. Consumer L.
Rev. 505, 507-08 (2012); Elizabeth Renuart, Uneasy
Intersections: The Right to Foreclose and the U.C.C., 48 Wake
Forest L. Rev. 1205, 1212 (2013); Adam J. Levitin, The Paper
Chase: Securitization, Foreclosure, and the Uncertainty of
Mortgage Title, 63 Duke L.J. 637, 648 (2013).
¶21 In ascertaining who has the right to enforce a note,
we begin with the language of the relevant statutes, a step the
court of appeals mostly relegated to footnotes. State ex rel.
Kalal v. Cir. Ct. for Dane Cty., 2004 WI 58, ¶45, 271
Wis. 2d 633, 663, 681 N.W.2d 110. Article 3 of the Uniform
Commercial Code (U.C.C.), codified in Wisconsin at ch. 403 in
12
No. 2015AP175
1995, provides that where a note is negotiable,9 it may be
enforced by a "holder." Wis. Stat. § 403.301. A "holder," as
relevant here, includes "the person in possession of a
negotiable instrument that is payable . . . to bearer." Wis.
Stat. § 401.201(2)(km)1. A "bearer" includes a person in
possession of an instrument endorsed in blank. Wis. Stat.
§ 401.201(2)(cm). "If endorsed in blank, an instrument becomes
payable to bearer," and can be "negotiated by transfer of
possession alone."10 Wis. Stat. § 403.205(2); Bierbrauer, 346
Wis. 2d 1, ¶12.
9
A note is a negotiable instrument, defined as "an
unconditional promise or order to pay a fixed amount of money,
with or without interest or other charges," provided that all of
the following apply:
(1) The note "is payable to the bearer or to order at the
time that it is issued or first comes into possession of a
holder."
(2) The note "is payable on demand or at a definite time."
(3) "It does not state any other undertaking or instruction
by" the borrower or lender (subject to a few, inapplicable
exceptions).
Wis. Stat. § 403.104(1) (2013-14). The Note at issue here is
unquestionably a negotiable instrument.
10
A blank endorsement, or an endorsement in blank, is
"[o]ne made by the mere writing of the indorser's name on the
back of the note or bill, without mention of the name of any
person in whose favor the indorsement is made, but with the
implied understanding that any lawful holder may fill in his own
name above the indorsement if he so chooses." Black's Law
Dictionary 774 (6th ed. 1990) (also spelled "indorsement").
13
No. 2015AP175
¶22 Wuensch makes a variety of arguments undercut by a
plain reading of the statutes and application of relevant case
law. First, Wuensch argues that Deutsche Bank is not a
"holder." He asserts that self-authentication is not equivalent
to showing physical possession. He also insists that physical
possession of the original Note by Deutsche Bank's trial counsel
does not make the Bank a "bearer" and that "unsworn statements"
by trial counsel were insufficient to prove possession by
Deutsche Bank.
¶23 We reject Wuensch's arguments and uphold the circuit
court's admission of a copy of the original Note into evidence
based upon the court's inspection of the original Note and its
self-authentication. The circuit court compared the Note and
the copy side-by-side, observed that the copy was identical to
the original, and admitted the copy into evidence.11 Wisconsin
Stat. § 909.015(3) permits the trier of fact to compare
specimens that have been authenticated, and Wis. Stat.
§ 909.02(9) provides that commercial paper is self-
authenticating under chs. 401-411. Because the circuit court
admitted the copy of the self-authenticating Note based upon a
proper application of the law, its exercise of discretion was
not erroneous.
11
We note Wis. Stat. § 910.03 provides that "[a] duplicate
is admissible to the same extent as an original unless (1) a
genuine question is raised as to the authenticity of the
original or (2) in the circumstances it would be unfair to admit
the duplicate in lieu of the original."
14
No. 2015AP175
¶24 As a preliminary matter, we conclude that a person who
possesses an original note endorsed in blank is the "holder" of
that note. The "holder" is a person entitled to enforce the
note. Wis. Stat. § 403.301. As Deutsche Bank's counsel
physically possessed the original Note on his client's behalf at
trial, § 403.301 is satisfied. This rule alone resolves the
issue in favor of Deutsche Bank.
¶25 The rule that possession of an original note endorsed
in blank confers a right to enforce the note is not a new
concept or even one originating in the U.C.C. Deutsche Bank
accurately explains in its briefing that the principle traces
back to Lord Mansfield and took root in American common law as
15
No. 2015AP175
early as 1895.12 See Miller v. Race (1758), 97 Eng. Rep. 398; 1
Burr. 452 (Lord Mansfield) (KB) ("bank notes are paid by and
received of the holder or possessor of them, as cash; and that
12
William Murray, Earl of Mansfield, served as Chief
Justice on the Court of King's Bench, the highest common law
court in England, from 1756 to 1788. Bernard L. Shientag, Lord
Mansfield Revisited——A Modern Assessment, 10 Fordham L. Rev.
345, 348-49 (1941). While the basic principles of negotiability
and the enforcement of notes endorsed in blank were established
prior to Lord Mansfield's tenure as Chief Justice, the holdings
in Miller v. Race and its progeny were revolutionary in setting
the course for modern doctrines on negotiable instruments.
Edward L. Rubin, Learning from Lord Mansfield: Toward A
Transferability Law for Modern Commercial Practice, 31 Idaho L.
Rev. 775, 778 (1995). For example, they informed Blackstone's
Commentaries on the Laws of England, which defined a "promissory
note" as "a plain and direct engagement in writing, to pay a sum
specified at the time therein limited to a person therein named,
or sometimes to his order, or often to the bearer at large." 2
William Blackstone, Commentaries on the Laws of England 467
(Oxford 1766) (emphasis added); see also W. S. Holdsworth,
Blackstone's Treatment of Equity, 43 Harv. L. Rev. 1, 10-11
(1929) ("Blackstone owed much to Lord Mansfield. . . . [W]e can
see that in [Blackstone's] treatment of commercial law . . . as
well as in his treatment of equity, he accepted and incorporated
into his book the reasoning and the results of the decisions of
Lord Mansfield . . . ." (footnotes omitted)). In the United
States, these early cases also eventually led to codification in
every state of the Uniform Negotiable Instruments Law, the
precursor to the U.C.C. See, e.g., § 2675-9, ch. 356, Wis. Laws
of 1899 ("The instrument is payable to bearer . . . [w]hen the
only or last indorsement is an indorsement in blank."); see also
Mark B. Greenlee & Thomas J. Fitzpatrick IV, Reconsidering the
Application of the Holder in Due Course Rule to Home Mortgage
Notes, 41 Unif. Com. Code L.J. 225 (2009). While a promissory
note is no longer transferred as readily as cash, "the
underlying purpose of negotiability——facilitating the transfer
of debt instruments——remains relevant." See Rubin, supra, at
796. Wisconsin Stat. §§ 403.301 and 403.205(2), which permit
the transfer of promissory notes endorsed in blank, likewise aid
in the transferability of debt instruments.
16
No. 2015AP175
in the usual way of negotiating bank notes, they pass from one
person to another as cash, by delivery only and without any
further inquiry or evidence of title, than what arises from the
possession."); Dawson Town & Gas Co. v. Woodhull, 67 F. 451, 452
(8th Cir. 1895) ("When these notes were offered, they were in
the hands of the plaintiff's attorneys. The legal presumption
was that they had received them from the hands of their
client . . . ."); see also Peacock v. Rhodes (1781), 99 Eng.
Rep. 402, 403; 2 Doug. 633, 636 (Lord Mansfield) (KB) ("I see no
difference between a note indorsed blank, and one payable to
bearer. They both go by delivery, and possession proves
property in both cases."). Wuensch argues that these cases are
"inapposite" and outmoded. We disagree. Although the cases are
not controlling authority, the principles derived from them
persuasively inform the interpretation of Wisconsin's U.C.C.,
which has not displaced them. Wis. Stat. § 401.103(2) ("Unless
displaced by the particular provisions of chs. 401 to 411, the
principles of law and equity . . . shall supplement its
provisions."); Met-Al, Inc. v. Hansen Storage Co., 844 F. Supp.
485, 489 (E.D. Wis. 1994) ("[P]re-Code case law is available to
aid in interpretation of the UCC unless violative of its
specific provisions.").
¶26 This rule is as widely supported today as it has been
historically. See, e.g., Dow Family, 350 Wis. 2d 411, ¶¶15, 24
(relying on ch. 403 to define the right to enforce a note: "if
an instrument is endorsed in blank, it becomes payable to the
bearer and may be negotiated by transfer of possession
17
No. 2015AP175
alone. . . . Without the original note, or a properly
authenticated copy, there is no showing that [mortgage
corporation] is entitled to enforce the note as the party in
possession of a note endorsed in blank." (citing Mitchell Bank,
676 N.W.2d at 849)); Rodger v. Bliss, 130 Misc. 168, 169 (N.Y.
Sup. Ct. 1927) ("The notes were presented by the plaintiff in
open court . . . . They were negotiable instruments and their
possession was prima facie evidence of ownership." (citations
omitted)); Schmoldt v. Chi. Stone Setting Co., 33 N.E.2d 182,
183 (Ill. App. Ct. 1941) ("The production of the note by
plaintiff was prima facie evidence of his ownership"); In re
Foreclosure of a Deed of Trust Executed by Rawls, 777 S.E.2d
796, 799-800 (N.C. Ct. App. 2015) ("[n]egotiable instruments
like mortgage notes that are endorsed in blank may be freely
transferred. And once transferred, the old adage about
possession being nine-tenths of the law is, if anything, an
understatement. Whoever possesses an instrument endorsed in
blank has full power to enforce it." (quoting Horvath v. Bank of
New York, N.A., 641 F.3d 617, 621 (4th Cir. 2011) (alteration in
original))). However, the 2008 financial crisis precipitated
inconsistent judicial application of a previously longstanding
rule.13 Renuart, supra ¶20, at 1241 ("The connection between the
13
Wisconsin has not been immune to this dissonance and the
court of appeals has issued numerous discordant opinions in the
years following the financial crisis addressing the precise
issue before this court. See, e.g., Bank of New York Mellon v.
Harrop, No. 2014AP2200, unpublished slip op., ¶¶ 8, 15 (Wis. Ct.
App. Mar. 31, 2016) (per curiam) (contradicting its holding in
(continued)
18
No. 2015AP175
right to foreclose and the U.C.C. is one of the most common
issues faced by courts over the last five years due primarily to
the mishandling of the notes and mortgages and the foreclosing
party's response to the lack of proper documentation."). In
2011, the Permanent Editorial Board for the Uniform Commercial
Code issued a report addressing "[r]ecent economic developments
the instant case when it ruled the Bank could enforce the note
against Harrop based on presentment of "the original Note" with
the debtor's signature "in original pen ink" and admission of a
copy into evidence; the court of appeals upheld the circuit
court's finding that "the fact that . . . counsel is
representing the [Bank] in this case, has the note physically in
his possession, is enough to establish that the note is in
possession of the [Bank]."); Bank of Am., N.A. v. Minkov, No.
2012AP2643, unpublished slip op., ¶18 (Wis. Ct. App. Aug. 8,
2013) ("Under this principle, because the note is endorsed in
blank, Bank of America is entitled to enforce the note if indeed
it possesses the note. However, as discussed above, Bank of
America has failed to identify any evidence in the record that
it possesses the original note. Therefore, it has not made a
prima facie showing that it is entitled to summary judgment."
(Emphasis added.)); PHH Mortg. Corp. v. Kolodziej, No. 2010AP60,
unpublished slip op., ¶28 (Wis. Ct. App. Mar. 10, 2011)
("Because PHH's submissions do not provide authentication for
the mortgage assignment and for the endorsed note, its
submissions do not make a prima facie showing that it is the
holder of the mortgage and note.").
The Wisconsin appellate court system functions fairly and
efficiently only if the court of appeals fulfills its
responsibility to publish opinions according to Wis. Stat.
§ (Rule) 809.23(1). The court of appeals, in particular
district IV with respect to the very issue presented here, has
been issuing unpublished opinions, per curiam opinions, or
summary disposition decisions even when the issue satisfies the
criteria for publication. This not only deprives the bench and
bar of important guidance on legal issues of substantial and
continuing public interest, it risks inconsistent disposition of
cases across Wisconsin.
19
No. 2015AP175
[that] have brought to the forefront complex legal issues about
the enforcement and collection of mortgage debt."14
Specifically, the board addressed the situation where "the party
to whom a note is payable may be changed by indorsement." The
board offered the following illustration mirroring the instant
case:
Maker issued a negotiable mortgage note payable to the
order of Payee. Payee indorsed the note in blank and
gave possession of it to Transferee. Transferee is
the holder of the note and, therefore, is the person
entitled to enforce it. UCC §§ 1-201(b)(21)(A), 3-
301(i).[15]
¶27 As applied here, Wuensch was the maker and issued the
original Note to the order of HLB Mortgage, the payee. HLB
Mortgage subsequently endorsed the Note to AHM, also the payee,
which then endorsed the Note in blank. At this point, the Note
became enforceable upon transfer by the party in possession.
See Dow Family, 350 Wis. 2d 411, ¶17 n.6. When Deutsche Bank
took possession of the Note before trial, it mirrored the
position of the illustration's transferee. Thus, physical
possession of the original Note, endorsed in blank, by Deutsche
14
Permanent Editorial Board for the Uniform Commercial
Code, Report: Application of the Uniform Commercial Code to
Selected Issues Relating to Mortgage Notes 1 (2011).
15
This report largely reflects in form and function the
official comments to the U.C.C. While this report and its
illustrations are not law, we find them to be persuasive
authority. See, e.g., Paulson v. Olson Implement Co., Inc., 107
Wis. 2d 510, 523–24, 319 N.W.2d 855 (1982); State v. Eugenio,
210 Wis. 2d 347, 352, 565 N.W.2d 798 (Ct. App. 1997), aff'd, 219
Wis. 2d 391, 579 N.W.2d 642 (1998).
20
No. 2015AP175
Bank's attorney at trial was sufficient evidence to support the
circuit court's conclusion that Deutsche Bank was the holder of
the Note, enabling the Bank to enforce it. Rawls, 777 S.E.2d at
800.
¶28 Second, possession of the original Note by Deutsche
Bank's trial counsel in his capacity as legal representative of
the Bank does not impair the Bank's status as bearer. When
trial counsel presented the original Note to the circuit court,
he was not acting to enforce the Note himself of course, but on
behalf of his client. Dawson Town & Gas Co. v. Woodhull, 67 F.
451, 452 (8th Cir. 1895) ("When the notes were offered, they
were in the hands of the plaintiff's attorneys. The legal
presumption was that they had received them from the hands of
their client . . . ."); see also U.C.C. § 3-420 cmt. 1 (Am. Law
Inst. & Unif. Law Comm'n 2013-14) ("Delivery to an agent [of the
payee] is delivery to the payee.").16 On this issue, we find
particularly persuasive In re Hernandez, No. 13-04735-8-SWH,
slip op., at 5 (Bankr. E.D.N.C. Dec. 24, 2014), in which a
bankruptcy court in the Eastern District of North Carolina
concluded that in presenting an original note during court
proceedings in order to establish the client's possession
thereof, an attorney acts as an agent for the holder:
At the hearing . . . counsel for [petitioner]
presented the original Note with a blank endorsement.
While [petitioner's counsel] was in actual possession
of the Note, he was acting as attorney, agent and
16
See supra note 15.
21
No. 2015AP175
proxy for [petitioner] and it is clear from the
court's examination of the Note that it was the
original document clearly in the possession of
[petitioner]. . . .
Because one underlying purpose of Wisconsin's U.C.C. is "[t]o
make uniform the law among the various jurisdictions," Wis.
Stat. § 401.103(1)(c), Wisconsin courts "give substantial weight
to cases from other jurisdictions" when resolving issues that
arise under that code. Borowski v. Firstar Bank Milwaukee,
N.A., 217 Wis. 2d 565, 577, 579 N.W.2d 247 (Ct. App. 1998).
¶29 The court of appeals erred in concluding that Deutsche
Bank was required to prove "the document in the plaintiff's
counsel's hands in fact came from his client and not from some
other person or entity." Deutsche Bank, No. 2015AP175, at 7.
The U.C.C. requires nothing more than presentment of the
original wet-ink note endorsed in blank in order to enforce it,
and presentment to the circuit court at trial may be
accomplished through the holder's attorney without the need for
testimony regarding how the holder came to possess the note.
¶30 Further, trial counsel did not issue "unsworn
statements" when he presented the original Note and the copy to
the circuit court for inspection. An attorney presenting self-
authenticating evidence to the trier of fact on behalf of his
client is not acting in the same capacity as a witness
22
No. 2015AP175
delivering testimonial evidence.17 Thus, the court of appeals'
holding that "[t]he plaintiff was obligated to prove, under the
rules of evidence, that the document in the plaintiff's
counsel's hands in fact came from his client and not from some
other person or entity" is patently wrong. Id. (emphasis
added). Such testimony is entirely unnecessary where, as here,
no extrinsic evidence was needed to admit the Note, Wis. Stat.
§ 909.02(9), and no testimony was needed to explain the
circumstances of Deutsche Bank's possession; rather, the Bank
had the right to enforce the Note endorsed in blank solely by
virtue of its possession of the original Note. Trial counsel
was merely acting in the ordinary course of his representation
of Deutsche Bank when he offered the original Note to the
circuit court for inspection and the copy of the Note for
admission into evidence.
17
We can find no Wisconsin law directly stating this point,
which comes as no surprise because "[t]he proposition is so
apparent on its face that it is difficult to find legal citation
to support it." State v. Groppi, 41 Wis. 2d 312, 323, 164
N.W.2d 266 (1969), vacated on other grounds, 400 U.S. 505(1971). "Lawyers routinely make assertions of procedural and
process facts and provide background information to
judges . . . . Lawyers do not need to be sworn when asserting
these process and background facts because they have an ethical
obligation not to make false statements of fact or law to the
judge." Judith A. McMorrow, The Advocate as Witness:
Understanding Context, Culture and Client, 70 Fordham L. Rev.
945, 946 (2001) (footnotes omitted); see also SCR 20:3.3(a)(1)
("A lawyer shall not knowingly . . . make a false statement of
fact or law to a tribunal or fail to correct false statement of
material fact or law previously made to the tribunal by the
lawyer.").
23
No. 2015AP175
¶31 Finally, the nature of the original Note as self-
authenticating commercial paper under Wis. Stat. § 909.02(9) is
entirely independent of the issue of possession. Despite the
fact that § 909.02(9) definitively answers the question, Wuensch
argues that a trier of fact would need to determine the
authenticity of the Note. However, "[e]xtrinsic evidence of
authenticity as a condition precedent to admissibility is not
required with respect to . . . [c]ommercial paper, signatures
thereon, and documents relating thereto to the extent provided
by chs. 401 to 411." Wis. Stat. § 909.02(9). Among its
findings of fact, the circuit court was "satisfied that the
Plaintiff has in its possession the original ink Note. The
Plaintiff produced the original ink Note at trial and the Court
examined it. The Court is satisfied that it is the original
Note. . . ." The circuit court was the trier of fact in this
case, its personal examination is supported by Wis. Stat.
§ 909.015(3), and its findings are not clearly erroneous.
¶32 Wuensch suggests that admission of the copy into
evidence itself is problematic. He urges us to consider Dow
Family, 350 Wis. 2d 411, but ultimately misconstrues its
holding. In Dow Family, the court of appeals held that a copy
of an original note is insufficient evidence of possession and
was inadmissible in absence of the original wet-ink note. Id.,
¶20. The court of appeals held that Wis. Stat. § 909.01requires "a document [to] be authenticated in order to be
admissible." Id. Accordingly, the court of appeals considered
the copy of the note alone insufficient to support
24
No. 2015AP175
authentication and admission into evidence. Id., ¶21-22.
Although under Wis. Stat. § 909.02(9) "[e]xtrinsic evidence of
authenticity as a condition precedent to admissibility is not
required with respect to . . . [c]ommercial paper, signatures
thereon, and documents relating thereto to the extent provided
by chs. 401 to 411," in Dow Family, the plaintiff was unable to
"explain the extent to which a copy of a note is self
authenticating . . . ." 350 Wis. 2d 411, ¶22 (emphasis added).
Most relevantly, the court of appeals reasoned that because "the
original note's whereabouts were unknown to [the plaintiff],"
this, along with other evidence, suggested that Fannie Mae,
rather than the plaintiff, was actually in possession of the
original note. Id., ¶23.
¶33 The facts in the instant case are distinguishable.
Whereas in Dow Family the original note was unavailable for
court inspection, Deutsche Bank's trial counsel actually
presented the original Note for inspection and comparison
against the copy. After examining the copy and the original
side-by-side, the circuit court found the Note presented by
Deutsche Bank's trial counsel to be the original Note and
accordingly admitted a copy into evidence. In finding that the
Note was what Deutsche Bank's trial counsel purported it to be,
a "non-hearsay instrument . . . offered for its legal
25
No. 2015AP175
significance, not to prove the truth of the matter asserted,"
the circuit court properly admitted the copy into evidence.18
IV. CONCLUSION
¶34 We reject the court of appeals' legal conclusions
because they disregard the plain meaning of the applicable
U.C.C. provisions and impose evidentiary hurdles with no legal
foundation. Affirming longstanding principles governing
negotiable instruments, we hold that presentment to the trier of
fact in a mortgage foreclosure proceeding of the original, wet-
ink note endorsed in blank, establishes the holder's possession
and entitles the holder to enforce the note. We reverse the
summary disposition order of the court of appeals and uphold the
circuit court's judgment of foreclosure in favor of Deutsche
Bank.
18
Because we uphold the judgment of the circuit court in
concluding Deutsche Bank may enforce the Note against Wuensch,
we need not reach Deutsche Bank's secondary argument that we
should remand this case for Deutsche Bank to present additional
testimony regarding its possession of the original Note.
This conclusion is also dispositive of Wuensch's secondary
argument that the circuit court erroneously exercised its
discretion when it allowed Deutsche Bank an equitable remedy
despite its predecessor-in-interests' "unclean hands." While
the primary issue is dispositive, we note that the circuit court
considered AHM's actions in fashioning its remedy for Deutsche
Bank while also considering that Wuensch was (and remains) in
default as of February 2008. Because we uphold the circuit
court's judgment of foreclosure in favor of Deutsche Bank, which
factored Wuensch's claim of unclean hands into its equitable
remedy for Deutsch Bank, we need not consider Wuensch's
arguments regarding unclean hands further.
26
No. 2015AP175
By the Court.—The decision of the court of appeals is
reversed.
27
No. 2015AP175.awb
¶35 ANN WALSH BRADLEY, J. (dissenting). I agree with
the court of appeals that "the rules of evidence may not be
sidestepped based on the common sense expectation that the
particular entity seeking to enforce a note is generally going
to be the entity legally entitled to enforce the note."
Deutsche Bank Nat'l. Tr. Co. v. Wuensch, No. 2015AP175,
unpublished order at 7 (Wis. Ct. App. Aug. 23, 2016).
¶36 The precepts that govern the admissibility of evidence
at trial do not rest merely on a particular person's idea of
common sense. Rather they rest on the rule of law. The rules
of evidence have been hued over centuries so "that the truth may
be ascertained and proceedings justly determined." Wis. Stat.
§ 901.02. Indeed, the rules of evidence stand as both a
safeguard and cornerstone for the fair administration of
justice.
¶37 The presentation of admissible evidence is carefully
circumscribed. There are only four pathways for the
introduction of admissible evidence. See Wis JI——Civil 50
(2014). Given that "possession" is the essential question here,
even a cursory review of the record reveals that no evidence was
presented bearing on that issue:
 Evidence is the sworn testimony of witnesses——no sworn
testimony on possession was presented.
 Evidence is deposition testimony presented at trial——
no deposition testimony on possession was presented.
 Evidence is exhibits admitted by the court——no
exhibits addressing possession were admitted.
1
No. 2015AP175.awb
 Evidence is agreements, stipulations, or facts the
court directs the jury to find——there are no
agreements or stipulations that Deutsche Bank holds
the Note and its possession is not subject to judicial
notice.1
¶38 Disregarding the evidentiary rules, the majority
allows an attorney to introduce dispositive facts through
unsworn statements and without calling a witness. Because I
determine that Deutsche Bank's end run around the evidentiary
rules is impermissible, I respectfully dissent.
I
¶39 The majority initially states that "[t]he issue before
this court is whether presentment by a party's attorney of an
original, wet-ink note endorsed in blank is admissible evidence
and enforceable against the borrower without further proof that
the holder had possession at the time the foreclosure action was
filed." Majority op., ¶2 (emphasis added). Yet, it is unclear
what the majority considers the issue to be. Without even
attempting to answer the question as initially presented, it
jettisons this question and focuses instead on possession at the
time of trial. Which is it?
1
A court may take judicial notice of an adjudicative fact
that is "not subject to reasonable dispute" in that it is
"generally known within the territorial jurisdiction of the
trial court" or "capable of accurate and ready determination by
resort to sources whose accuracy cannot reasonably be
questioned." Wis. Stat. § 902.01(2). Deutsche Bank's
possession of the Note is not subject to judicial notice. Not
only is it subject to reasonable dispute, but it is in fact
vigorously disputed.
2
No. 2015AP175.awb
¶40 If the question we are answering is based on
possession at the time of filing, then Deutsche Bank must surely
lose. Not only did Deutsche Bank fail to provide admissible
evidence of its possession of the Note at the time of trial, it
also certainly failed to present any information whatsoever to
indicate that it possessed the Note at the time this action was
filed. In other words, it failed to establish that it had
standing to maintain the action in the first instance.2 On this
additional basis alone, Deutsche Bank may have failed to
demonstrate its entitlement to enforce the Note.
¶41 Ultimately, the majority determines that "presentment
to the trier of fact in a mortgage foreclosure proceeding of the
original, wet-ink note endorsed in blank, establishes the
holder's possession and entitles the holder to enforce the
note." Id. In its view, Wis. Stat. § 403.3013 is satisfied
2
Courts around the country have concluded that a party
attempting to enforce a note must have possessed the note not
only at the time of trial, but also at the time of filing in
order to establish standing. See, e.g., Country Place Community
Ass'n, Inc. v. J.P. Morgan Mortg. Acquisition Corp., 51 So.
3d 1176, 1179 (Fla. Dist. Ct. App. 2010); Deutsche Bank Nat'l.
Tr. Co. v. Haller, 100 A.D.3d 680, 682 (N.Y. App. Div. 2012);
U.S. Bank, Nat'l. Ass'n v. Moore, 278 P.3d 596, ¶13 (Okla.
2012).
3
Wisconsin Stat. § 403.301 provides:
"Person entitled to enforce" an instrument means the
holder of the instrument, a nonholder in possession of
the instrument who has the rights of a holder, or a
person not in possession of the instrument who is
entitled to enforce the instrument under s.
403.309 or 403.418(4). A person may be a person
entitled to enforce the instrument even though the
(continued)
3
No. 2015AP175.awb
because "Deutsche Bank's counsel physically possessed the
original Note on his client's behalf at trial . . . ." Id.,
¶24.
II
¶42 In order to maintain a foreclosure action, Deutsche
Bank must demonstrate its entitlement to enforce the Note and
Mortgage. The Note in this case is endorsed in blank and is
therefore enforceable by the bearer. See Wis. Stat.
§ 403.205(2). Accordingly, Deutsche Bank must prove, by
admissible evidence, that it is the bearer of the Note.
¶43 Neither the majority's approach nor its conclusion is
framed by the rules of evidence. Relying on Wis. Stat.
§ 403.301 only, the majority sidesteps normal and accepted
evidentiary procedure.
¶44 Possession, like any other evidentiary fact, is
typically presented through the sworn testimony of a witness
with knowledge of such possession. See Wis. Stat. §§ 909.01,
909.015(1). This remains as true in the foreclosure context as
it is in all others.
¶45 Despite this well known and established procedure, the
Note here was merely presented to the court by Deutsche Bank's
counsel. The transcript reveals the following exchange between
Deutsche Bank's counsel, Mr. Karnes, and Wuensch's counsel, Mr.
Peterson:
person is not the owner of the instrument or is in
wrongful possession of the instrument.
4
No. 2015AP175.awb
MR. KARNES: Your Honor, I’m handing Mr. Peterson a
copy of the original [N]ote. I also have the original
here today. I’m going to allow him to inspect the
original document and compare it to the copy.
MR. PETERSON: Your Honor, I have inspected two
different documents. One appears to be a copy of
another document. Whether this is an original [N]ote,
I have no idea nor could I conclude that, I’m not a
witness.
¶46 The circuit court examined the documents and stated,
"When I looked at the document purporting to be an original,
looks like original ink on signatures and appears to be the same
as what has now been marked as a copy Exhibit 1 . . . ." It
subsequently found:
The Plaintiff is the holder of the original Note,
endorsed in blank. The Court is satisfied that the
Plaintiff has in its possession the original ink Note.
The Plaintiff produced the original ink Note at trial
and the Court examined it. The Court is satisfied
that it is the original Note executed by Wuensch on
December 18, 2006. Exhibit 1 is a true and accurate
copy of the original ink Note.
¶47 In comparing the circuit court's subsequent findings
of fact to the actual exchange in court4 underlying the circuit
court's findings, a critical inaccuracy in the findings of fact
is illuminated. As cited above, Deutsche Bank's counsel, and
not any employee of Deutsche Bank, presented the purported Note
to the court ("I also have the original here today. I’m going
to allow him to inspect the original document and compare it to
4
I use the term "exchange in court" here rather than
"testimony" because counsel for Deutsche Bank was not testifying
as a witness when introducing the Note, and the circuit court's
finding that Deutsche Bank possessed the Note was not based on
any actual testimony.
5
No. 2015AP175.awb
the copy.") (emphasis added). The attorney did not actually
address Deutsche Bank's possession of the Note.
¶48 Nevertheless, the majority accepts Deutsche Bank's
invitation to simply infer that because Deutsche Bank's counsel
had the Note in his possession, he must have received it from
Deutsche Bank. Yet no witness testified to this and no evidence
was presented at trial that would support this inference.5
¶49 The circuit court took no sworn testimony on the issue
of possession. The Note was put before the circuit court only
through the unsworn remarks of Deutsche Bank's attorney. This
is problematic for several reasons. First, remarks of counsel
are not evidence. Kenwood Equip., Inc. v. Aetna Ins. Co., 48
Wis. 2d 472, 481, 180 N.W.2d 750 (1970); Wis JI——Civil 50, at 5,
110 (2017). Indeed, Deutsche Bank's attorney could not have
acted as a witness without potentially violating his
professional ethical obligations. See SCR 20:3.7(a).6
5
There was likewise no statement made regarding where
counsel obtained the Note. I agree with the majority that such
testimony is unnecessary: "[b]ecause of the nature of a note
endorsed in blank, precisely how Deutsche Bank came into
physical possession of the Note is not relevant." Majority op.,
¶8. Thus, testimony on the topic of possession need not be
extensive. A hypothetical witness need only provide testimony
that the original note is in Deutsche Bank's possession, not
testimony regarding how Deutsche Bank came to possess it.
6
SCR 20:3.7(a) provides:
(a) A lawyer shall not act as advocate at a trial in
which the lawyer is likely to be a necessary witness
unless:
(1) the testimony relates to an uncontested
issue;
(continued)
6
No. 2015AP175.awb
¶50 Second, the attorney's statements were unsworn. It is
well understood that "[b]efore testifying, every witness shall
be required to declare that the witness will testify truthfully,
by oath or affirmation administered in a form calculated to
awaken the witness's conscience and impress the witness's mind
with the witness's duty to do so." Wis. Stat. § 906.03.
Unsworn statements are "not evidence" and have "no proper place
in [a] trial." Nelson v. State, 35 Wis. 2d 797, 812, 151
N.W.2d 694 (1967).
¶51 Finally, Deutsche Bank's attorney gave no indication
he had personal knowledge of Deutsche Bank's possession of the
Note. "A witness may not testify to a matter unless evidence is
introduced sufficient to support a finding that the witness has
personal knowledge of the matter." Wis. Stat. § 906.02. When
proffering the Note to the circuit court, counsel did not use
the word "possession" and did not make any statement akin to a
claim that Deutsche Bank possessed the Note. In sum, no
evidence was presented that Deutsche Bank possessed the Note.
¶52 The majority attempts to escape the conclusion that
the circuit court erred with the assertion that "[a]n attorney
presenting self-authenticating evidence to the trier of fact on
(2) the testimony relates to the nature and value
of legal services rendered in the case; or
(3) disqualification of the lawyer would work
substantial hardship on the client.
Sub. (1) does not apply here because the issue of
possession was contested, and neither sub. (2) nor (3) applies
on its face.
7
No. 2015AP175.awb
behalf of his client is not acting in the same capacity as a
witness delivering testimonial evidence." Majority op., ¶30.
Then in what capacity was he acting? He was attempting to
introduce evidence. If he was acting as counsel, then his
remarks are not evidence. See Kenwood Equip., 48 Wis. 2d at
481. If he was acting as a witness, then he impermissibly
provided unsworn testimony. See Wis. Stat. § 906.03.
¶53 The comments to SCR 20:3.7 emphasize the distinction
between testimony and advocacy: "A witness is required to
testify on the basis of personal knowledge, while an advocate is
expected to explain and comment on the evidence given by
others." Here, the attorney attempted to straddle this line,
but ultimately was unsuccessful on both fronts. He did not
testify to any personal knowledge of possession, and there was
no evidence offered on the topic about which he could comment.
¶54 By accepting Deutsche Bank's attorney's presentation
of the Note, the circuit court created in essence an
unrebuttable presumption that Deutsche Bank possessed it. After
the circuit court accepted the Note as the original and in the
possession of Deutsche Bank, what was the homeowner to do? He
could not cross examine the attorney, who was not under oath and
not called as a witness.
¶55 Based on the actual evidence presented, I conclude
that the circuit court's finding of fact that Deutsche Bank
possessed the Note was clearly erroneous. There was no evidence
to that effect presented and therefore Deutsche Bank failed to
prove it possessed the Note.
8
No. 2015AP175.awb
III
¶56 The court of appeals recognized that its "mandate
reversing the judgment of foreclosure in this action may appear
at first blush to elevate form over substance and to produce a
highly inefficient result." Deutsche Bank Nat'l. Tr. Co. v.
Wuensch, No. 2015AP175, unpublished order at 8 (Wis. Ct. App.
Aug. 23, 2016). Contrarily, the majority opinion is certainly
efficient.
¶57 Although efficiencies are admittedly important,
adherence to the evidentiary rules should drive foreclosure
proceedings. Courts should ensure that a lender has everything
in order before issuing a foreclosure judgment. The rules exist
to ensure that "proceedings [are] justly determined." Wis.
Stat. § 901.02. The corner cutting endorsed by the majority
eschews the evidentiary rules and subverts that goal.
¶58 For the reasons set forth, I respectfully dissent.
¶59 I am authorized to state that Justice SHIRLEY S.
ABRAHAMSON joins this dissent.
9
No. 2015AP175.awb
1