Litigation over financial contracts, promissory notes, home and auto loans, and other consumer contracts are commonplace. One defense often raised by consumers is the lack of mutual agreement. Specifically, when a bank sues to enforce a loan contract, a consumer may allege a signature is not authentic or that a document is fake. There are presumptions that govern how courts in Wisconsin rule on these defenses.
The authenticity of a signature on a promissory note, for example, is presumed authentic and the signer is further presumed to have authority to sign the note. See Wis. Stat. § 403.308(1); see also One West Bank the Sowl, 2013 WI App. 73, ¶ 14, 348 Wis. 2d 262, 831 N.W.2d 824 (unpublished opinion) (signatures on a note were presumed to be authentic and authorized). As applied to financial instruments, the statute provides in part: “the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleading.” See § 403.308(1). A second issue arises if the defendant denies the authenticity or authority to sign a document: the burden to establish validity of the signature is on the person claiming it is valid, usually the plaintiff attempting to enforce the instrument. Nevertheless, the starting point in litigation is to presume a signature is authentic and authorized.
On the issue of authorization, § 403.308(1) of the Statutes also creates a presumption of authority for evidentiary purposes. That is, defendants often raise a hearsay objection to introducing a promissory note and mortgage in foreclosure actions. Hearsay is defined as a statement, other than one made by the person testifying at trial, offered to prove the truth of the matter asserted. A loan document, such as a mortgage or mortgage assignment, however, is typically used in foreclosure litigation to demonstrate its legal effect (i.e., the debt obligation of the borrower), and because it is presumed authentic and authorized under § 403.308, it is enforceable. Such a document is, therefore, not hearsay. It has inherent characteristics of reliability that allow it to be entered into evidence. Hence, the forgery or fake document defense asserted by borrowers in consumer or residential foreclosure actions typically does not prevail.