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COURT OF APPEALS
DECISION
DATED AND RELEASED
NOTICE
March 4, 1997
A party may file with the Supreme Court                                          This opinion is subject to further editing.
a petition to review an adverse decision                                         If  published,  the  official  version  will
by the Court of Appeals.  See § 808.10 and                                       appear  in  the  bound  volume  of  the
RULE 809.62(1), STATS.                                                           Official Reports.
No. 96-0598
STATE OF WISCONSIN                                                               IN COURT OF APPEALS
                                                                                 DISTRICT III
EULALIA I. ADDISON,
Plaintiff-Respondent,
v.
CHALLONER MORSE McBRIDE,
Defendant-Appellant.
APPEAL from a judgment of the circuit court for Door County:
SUSAN E. BISCHEL, Judge.  Affirmed.
Before Cane, P.J., LaRocque and Myse, JJ.
PER CURIAM.      Challoner   Morse   McBride   appeals   the
foreclosure of a mortgage on her real estate.   The mortgage secured a $39,000
promissory  note  that  McBride  and  her  deceased  husband  executed  to  a
foundation established by Eulalia Addison, who is now the assignee of the note
and mortgage.  McBride and her husband issued the note and mortgage in their
personal capacities to McBride's husband as payee in his official capacity as
Addison's foundation's trustee, as part of a scheme to steal  $55,000 in U.S.
Treasury Note proceeds Addison had entrusted to their care.   McBride was
convicted of theft by bailee for her part in the crime.    On appeal, McBride




No.   96-0598
argues that her theft by  bailee  conviction operates  as a  collateral estoppel
implicitly  invalidating  the  note  and  mortgage.     She  points  out  that  the
prosecutor considered the entire transaction a fraudulent scheme.    She also
argues that the evidence did not prove default on the note.   We reject these
arguments and affirm the foreclosure judgment.
McBride's criminal proceedings had no bearing on the validity of
the note and mortgage.   The criminal jury determined that McBride executed
the note and mortgage as a false promise, with a concealed, deceitful intent to
dishonor both.   See, e.g., Fitch v. State, 185 So. 435, 437-38 (Fla. 1938); PERKINS,
CRIMINAL LAW 303 (2d ed. 1969).   Although this constituted theft by bailee, it
would not invalidate the note and mortgage.    The legal obligations created
remained valid regardless of McBride's concealed, deceitful intent to dishonor
them.   Only victims, not deceivers and defrauders, may invalidate fraudulent
instruments.   See Gunther v. Ullrich, 82 Wis. 222, 230, 52 N.W. 88, 90 (1892); see
also RESTATEMENT  OF  CONTRACTS                                                         §§  472 and  476  (1932).    In addition, the
prosecution's comments in the criminal trial did nothing more than recognize
that McBride committed a theft by deceit; they did not enlarge McBride's rights.
Addison remains the only one who may invalidate the transaction.   Moreover,
the criminal proceedings did not bind Addison, who was not a party or privy.
See Kichefski v. American Family Mut. Ins. Co.,  132 Wis.2d  74,  78-80,  390
N.W.2d  76,  78-79  (Ct.  App.  1986).    Finally,  the  record  contains  sufficient
evidence of default to warrant the mortgage's foreclosure.
By the Court.—Judgment affirmed.
This opinion will not be published.  See RULE 809.23(1)(b)5, STATS.
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