Supreme Court Resolves Contract Issue Involving
Delivery of Two-party Check
An insurance company agreed to cover the costs of plumbing services
rendered to its insured. It issued a two-party check naming the insured
and the plumbing company and sent the check to the insured. The plumbing
company, which never got paid, sued the insurer.
By org jforward wisbar Joe Forward, Legal Writer,
State Bar of Wisconsin
2012 – The Wisconsin Supreme Court recently upheld a jury verdict
in favor of an insurer accused of breaching a contract for payment of
plumbing services, where the insurer issued a two-party check
for payment but payment was never made to the plumbing contractor.
Willtrim Group LLC (Willtrim) member
Trevor Trimble enlisted Best Price Plumbing Inc. to fix frozen pipes at
a property owned by Willtrim, which was
insured by Erie Insurance (Erie).
Erie agreed to pay the cost of repair. Best Price Plumbing (Best Price)
performed the work and sent Erie’s property adjuster an invoice
for nearly $9,000. Erie’s adjuster authorized payment for the full
amount, and issued a two-party check payable to both Willtrim and Best Price.
Issuing two-party checks was Erie’s practice according to
industry standard in similar situations, the adjuster later testified at
trial. Erie sent the check to Willtrim, and it was
later deposited into Willtrim’s
account with a handwritten endorsement from “Best Price Plumbing.”
Principals at Best Price said that the endorsement was never made or
authorized. Trimble later testified that he gave the check to a handyman
with directions to get an endorsement from a Best Price employee, and
the handyman did. No Best Price employee testified to endorsing the
check, and no handyman testified at trial. Willtrim Group never
paid Best Price Plumbing.
Best Price Plumbing sued Erie, claiming Erie breached its contract of
payment for services. In turn, Erie argued that there was no contract
between the parties, and even if there was, Erie met its contract
obligation by issuing and sending the two-party check to Willtrim.
and Post-verdict Motion
A jury found that a contract was formed, but Erie met its obligation
when it sent the two-party check, even though the check was never
delivered to Best Price at its place of business.
Best Price filed a motion after verdict under Wis. Stat. section 805.14(5)(c),
asking the court to rule that Erie breached the contract because the
contract was silent as to “place of payment.”
Section 805.14(5)(c) allows a circuit court to “change an answer
in the verdict on the ground of insufficiency of the evidence to sustain
Under State v. Kenosha Home Telephone Co., 158 Wis. 371, 148
N.W. 877 (1914), Best Price argued, when a contract is silent as to the
place of payment, the law implies that payment shall be made at the
residence, office, or place of business of the creditor.
Thus, Best Price asserted, Erie breached the contract of payment as a
matter of law.
Ultimately, the circuit court overturned the jury verdict and awarded
Best Price $14,650, concluding that the contract was silent as to the
place of payment, and Kenosha Home applied to determine that
Erie breached the contract for failure to deliver payment to Best
In an unpublished decision, the court of appeals reversed, concluding
that “credible evidence” supported the jury’s verdict,
which found that Erie did not breach the contract.
Supreme Court Majority
Price Plumbing Inc. v. Erie Insurance Exchange, 2012 WI 44 (May
3, 2012), a Wisconsin Supreme Court majority (5-2) affirmed the appeals
court, and concluded that Kenosha Home did not apply because
Best Price forfeited the right to make that argument.
The majority noted that Best Price did not raise the “place of
payment” rule set forth in Kenosha Home until after the
jury returned an unfavorable verdict.
“A party is not permitted to save its legal arguments until after
trial, only to present those arguments if the party dislikes the
jury’s ultimate conclusion,” wrote Justice Ann Walsh Bradley
for the majority.
The majority also ruled that there was “credible evidence”
to support the jury verdict, namely, that Best Price endorsed the check
and Trimble’s testimony that he directed a handyman to obtain the
endorsement from a Best Price employee. Best Price argued that such
evidence was “patently incredible” and accused Trimble of
converting insurance proceeds through forgery.
“If Best Price wishes to try the issue of the authenticity of the
endorsement, it should file suit against Trimble, the party that
allegedly forged the endorsement and converted the insurance
proceeds,” Justice Bradley wrote in a footnote.
“Best Price introduced the endorsed check into evidence, and the
jury was entitled to draw its own inferences from the signature on the
check and Trimble’s testimony,” Bradley explained.
The majority also noted that even if the jury was instructed on the
Kenosha Home rule, it could have reached the same verdict based
on “legitimate inferences” contrary to the rule. That is,
the jury could have inferred from the evidence that the parties agreed
on place of payment.
Justice Annette Ziegler wrote a dissenting opinion (joined by Justice
Patience Roggensack), arguing that the majority applied the wrong
standard of review. The dissent noted that the circuit court treated the
“motion after verdict” as a motion notwithstanding the
allows a circuit court to render a judgment, notwithstanding the
verdict, “in the event that the verdict is proper but, for reasons
evident in the record which bear upon matters not included in the
verdict, the movant should have judgment.”
Justice Ziegler argued that Best Price was entitled to judgment as a
matter of law under the JNOV standard of review. In addition, the
dissent argued that no jury could reasonably infer that the parties
agreed on a place of payment, as the majority suggested.
“After today, similar small businesses all over the state should
be wary of a client’s mere word or handshake, lest their services
will go unpaid for. In the future, they ought to get a signed contract
requiring payment up-front,” Justice Ziegler wrote.
Elissa Bowlin and Brandon Robison of Jacobson Legal Group S.C.,
Brookfield, represented Erie Insurance Exchange. George Love of Love Law
Offices LLC, Waukesha represented Best Price Plumbing Inc.