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06/21/83 ASSOCIATES FINANCIAL SERVICES COMPANY

June 21, 1983

ASSOCIATES FINANCIAL SERVICES COMPANY OF WISCONSIN, INC., A WISCONSIN CORPORATION, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
WALTER C. HORNIK, JR., AND SHIRLEY A. HORNIK, HIS WIFE, DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS, UNITED STATES OF AMERICA ACTING THROUGH THE FARMERS HOME ADMINISTRATION, U.S. DEPARTMENT OF AGRICULTURE, AND WAUSAU MEDICAL CENTER, S.C., A WISCONSIN SERVICE CORPORATION, DEFENDANTS



Appeal and Cross-Appeal from a judgment of the Circuit Court for Marathon County: Leo D. Crooks, Judge.

Dean, Cane, and Dykman, JJ.

The opinion of the court was delivered by: Dean

Shirley and Walter Hornik, Jr., appeal from a judgment denying their counterclaim alleging violations of the Wisconsin Consumer Act, Consumer Transactions -- Debt Collections, ch. 427, Stats. The Horniks contend that the trial court erred by not finding that Associates Financial Services Company of Wisconsin, Inc., contacted the Horniks with frequency and in a manner calculated to harass them, that Associates wrongfully contacted Walter's employer, or that Associates used obscene and threatening language. Because we conclude that the trial court's findings are not clearly erroneous, we affirm that part of the judgment dismissing the Horniks' counterclaim. The Horniks also contend that the trial court erred in its assessment of damages and in its Conclusion that the Horniks' answer was frivolous. Associates cross-appeals from the judgment insofar as it assesses the costs of its determination that the Horniks' answer was frivolous against the Horniks, instead of against their counsel. Because we conclude that the Horniks' counterclaim is not frivolous, we reverse the award of frivolous costs to Associates and do not reach the additional issues raised by Associates.

The Horniks obtained a consumer loan from Associates, *fn1 giving them a second mortgage on their home. The eight-year contract called for ninety-six monthly payments, beginning August 11, 1979, and ending July 11, 1987; total payment on the contract was $30,144, of which $14,223.67 was the finance charge. The first payment was timely made. Each subsequent payment the Horniks made was late. The Horniks completed the July, 1980, payment on March 31, 1981. No further payments were made. Associates commenced this foreclosure action on July 9, 1981.

During this period, Walter Hornik worked as a credit manager for Northern Mattress Company. Among his duties, Walter obtained consumer financing for Northern Mattress customers from Associates. Walter and Associates' employes had frequent telephone contact several times per day.

In answer to Associates' complaint, the Horniks denied they had defaulted and asserted a counterclaim alleging violations of debt collection practices. On Associates' motion for summary judgment, the court granted judgment of foreclosure. The Horniks' counterclaim was tried to the court without a jury.

HARASSMENT BY TELEPHONE CALLS

We conclude that the trial court's finding that Associates did not harass the Horniks is not clearly erroneous. See sec. 805.17(2), Stats. In addition to disputing evidentiary questions, the parties dispute how the court should apply sec. 427.104(1) (g), Stats., which provides:

debt collector shall not:

(g) Communicate with the customer or a person related to him with such frequency or at such unusual hours or in such a manner as can reasonably be expected to threaten or harass the customer;

The Horniks contend that the court should apply an objective standard. They essentially agree that the court should ask whether Associates' behavior would have been expected to harass a reasonable person. Associates contends that the standard is whether Walter and Shirley Hornik were harassed.

No prior case interprets or applies ch. 427, and this case presents several questions of first impression. We conclude that the claim created in ch. 427 is in nature a tort action. *fn2 The four elements of a tort are duty, breach, causation, and injury. Anderson v. Green Bay & Western Railroad, 99 Wis. 2d 514, 516, 299 N.W.2d 615, 617 (Ct. App. 1980). Creditors have a duty to act reasonably when collecting debts from their debtors, and in sec. 427.104 the legislature codifies rules describing the duty of care debt collectors owe to debtors. In sec. 427.105, Stats., the legislature provides that a debtor injured by a collector who breached this duty is entitled to actual damages and a penalty.

Section 427.104(1) (g) creates a standard that proscribes communication "as can reasonably be expected to threaten or harass the customer." The focus is whether the collector's communication can reasonably be expected to threaten or harass. We conclude that the duty of care element is better characterized as objective. The standard's objective character does not create a question of law, however. The application of a duty of care to a given set of facts will generally remain within the province of the trier of fact.

In its ruling from the bench, *fn3 the trial court found that the Horniks suffered no actual damage. The trial court found that Associates' telephone record was more credible than the Horniks' evidence both as to number and content of calls. The court found that the calls were not made at unusual times or places; that the four or five calls per month related to the separate monthly payments, each of which was late, and did not accumulate to create a threatening or harassing character; and that the Horniks did not demand that Associates stop calling. The trial court found that Associates did not communicate with a frequency that was reasonably expected to threaten or harass the customer.

The Horniks suggest that the number of calls by itself shows a frequency of communication reasonably expected to harass. We disagree. Instead, we agree with the Florida Court of Appeals, which stated in considering a similar statute: "How frequent must communication be to constitute harassment? Suggestions of a wholly quantified standard seem artificial, because the effect of repeated telephone calls is colored by their tone and purpose." Story v. J.M. Fields, Inc., 343 So. 2d 675, 676 (Fla. App. 1977) (one hundred calls over a five-month period, including calls after a request to stop and an instruction to initiate legal action, were harassment). Because calls must be considered in context, a holding that three calls is harassment, Housh v. Peth, 133 N.E.2d 340, 344 (Ohio 1956) (three calls made in fifteen minutes to a teacher while at work), is ...


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