Schwabe v. Chantilly, Inc.
Supreme Court of Wisconsin
226 N.W.2d 452 (1975)
In a prior action, Chantilly, Inc. (defendant), a landlord, sued its tenants, James and Mary Schwabe (plaintiffs), for nonpayment of rent. In that action, the Schwabes set up the affirmative defense that they were fraudulently induced to sign the lease, but they did not counterclaim. Judgment was entered in favor of the Schwabes. Thereafter, the Schwabes brought this action against Chantilly seeking damages for the fraud and malicious prosecution. Chantilly moved to strike the causes of action for fraud, arguing that res judicata barred these claims because the Schwabes set up the affirmative defense for fraud in the prior action, but failed to counterclaim. The trial court agreed and struck the fraud causes of action from the complaint. The Schwabes appealed.
Rule of Law
Holding and Reasoning (Wilkie, C.J.)