*1 N. William Ehlinger, Plaintiff-Respondent-Cross-Appellant-Cross-
Petitioner, v. Moulding, Inc., and Evald Jon A. Hauser Defendants-Appellants-Cross-Respondents-
Petitioners.
Supreme Court
15, 2009.
September
argument
Oral
No. 2007AP477.
25, 2010.
Decided
June
For the plaintiff-respondent-cross-appellant-cross there petitioner were briefs by Timothy W. Sara J. Feeley, Hall, Render, Killian, MacCarthy, and Heath & Lyman, PC., Milwaukee, and oral argument by W. Timothy Feeley. BRADLEY, ANN WALSH J. This case is before
the court on a petition and a cross-petition for review of a decision of the court of appeals.1 It involves a contrac- ("Hauser") tual dispute between Jon Hauser *4 and Robert Ehlinger who ("Ehlinger"), joint are the and equal
1 Ehlinger Inc., See v. Hauser & Evald Moulding, 2008 WI 123, 718, App 2d affirming Wis. 758 N.W.2d decisions of the circuit court County, Erwin, for Jefferson Jacqueline R. J. ("Evald"), Moulding, Inc. a Wis- of Evald shareholders parties' located Watertown. consin Buy-Sell Agreement provides if of the share- that one totally disabled, the non-disabled holders becomes purchase at "book to his shares is entitled shareholder value." circuit court that both the 2. Hauser contends incorrectly appeals concluded that
and court of agreement buyout First, he asserts is unenforceable. it determined that the the circuit court erred when that buyout rendered the "book value" undefined term argues agreement Second, Hauser that unenforceable. sup- incorrectly appeals determined that the court necessary component porting of a is a documentation accounting prac- generally accepted computation under ("GAAP"). that the circuit court Third, he asserts tices erroneously him it denied its discretion when exercised spe- challenge opportunity and counter further argues magistrate's the mean- He conclusions. cial ambiguous ing and that he is entitled value" is of "book parties. trial determine the intent to a did not err that the circuit court 3. We conclude agreement unenforce- that the was it determined when agree is entitled able. Both they ac- to determine whether Evald's books examine corporation's curately liabilities, assets reflect perform special magistrate unable to task that Accordingly, need we records. to the state of Evald's due am- indefinite or the contract is not resolve whether biguous circumstances, it under these here because cannot be enforced. Additionally, Hauser's char- extent that to the appeals' accurate, decision is court of
acterization of the scope argument about that his we determine *5 fails. The not question GAAP is what is under required but what is to determine the required parties' GAAfi rights. 5. conclude that the circuit court did Finally, we
¶ erroneously exercise its discretion when it denied subject Hauser opportunity special magis- cross-examination, trate to a scope broader to depose and to his special magistrate, present expert own witness rebuttal. 6. In his cross-petition, Ehlinger argues that the
¶ circuit court erroneously permitted defendants' litigation expenses to be This paid corporation. decision would not be if erroneous Hauser was entitled to indemnification or if spent Evald its assets in its own defense. We determine that Hauser was not entitled to indemnification by according Evald to the provisions (2007-08).2 Further, Wis. Stat. 180.0855 under these facts, the litigation were not incurred expenses by the Therefore, for its corporation own defense. we conclude the circuit court exercised its discre- erroneously tion when it permitted pay Hauser's litigation expenses.3 subsequent All references to the Wisconsin Statutes are to
the 2007-08 version.
3 The buyout first issue addresses agreement whether the (Chief is justices unenforceable. Four Justice Abrahamson and Prosser, Bradley, Roggensack) Justices conclude that unenforceable, agreement is although they differ on the ratio (Justices 3; concurrence, nale. supra, justices See Two Gableman) Ziegler and would remand to the circuit court for a determination of whether the contract is enforceable. regards issue, justices agree to the second all that we need required not decide what do compilation under argument GAAP and that Hauser's fails. the court of as appeals we affirm Accordingly, *6 and remand to the circuit court opinion
modified this receiver.4 of a appointment
I of this case is history lengthy. 8. The procedural of between encompasses years litigation It over seven Hauser, and Jon friends, Ehlinger former William two Inc. Moulding, and shareholders of Evald equal the sole officers, manages are but Hauser corporate Both men Evald's day-to-day operations.5 meeting 9. Evald's shareholders have not held a 2002, and last elected they successfully corporate
since an part by officers in 1995. These failures are caused (Chief issue, justices Answering the four Justice third Bradley, Prosser, Roggensack) and Justices and Abrahamson erroneously did not exercise its conclude that the circuit court opportunity when it denied Hauser further to chal- discretion magistrate's conclusions. Two lenge special and counter the Gableman) (Justices Ziegler would remand to the justices development for further on this issue. circuit court the circuit court erro- Finally, the fourth issue is whether litigation neously pay Hauser's permitted (Chief and Justices expenses. justices Four Justice Abrahamson Bradley, Ziegler) conclude that the circuit Roggensack, and (Justices justices erroneously exercised its discretion. Two Gableman) circuit court did not Prosser and conclude err. receiver, hold a appointing the circuit court shall receiver. Wis.
hearing powers and describe the and duties of the 180.1432(2). 180.1432(1), may The receiver sell the §§ Stat. Stat. parts of the business in or as a whole. See Wis. assets 180.1432(3)(a). President, Officer, Executive Hauser is Evald's Chief manages day-to-day operations. Treasurer. He Evald's Secretary. is Evald's a Buy-Sell Agree- over of
ongoing dispute provisions and Hauser in 1992.6 by Ehlinger ment executed The for the transfer of a agreement provides shares total upon disability.7 disabled shareholder's for the shares is disabled shareholder's purchase price in the agreement set forth as follows: upon For transfers of all of a Shareholder's stock .. . his disabled, becoming purchase price of a $350,000.00 Shareholder's shares of stock shall be greater Book whichever is .... For Value transfers involuntary all of a Shareholder's stock on threat of transfer, purchase price of a Shareholder's shares of the book end stock shall be value said shares as year. of the last fiscal
The was Hauser and in agreement signed by Ehlinger their as officers and as sharehold- capacities corporate Shortly ers. after the the parties signed agreement, Ehlinger Parkinson's Disease. developed 2000, Ehlinger 11. December and Hauser met for dinner at a restaurant in According Watertown. opening paragraph Buy-Sell Agreement The states: day 1992,
Agreement August by made this 14 of and between Ehlinger wife, Ehlinger William N. and his Kathleen L. ("Ehlinger"), wife, and Jon A. Hauser and his Diana M. Hauser ("Hauser"), outstanding the of all of the Shareholders issued Moulding Company, Inc., Corporation stock of Evald a Wisconsin ("the Corporation"). Upon becoming totally Shareholder disabled as defined (24) hereafter, months, period twenty-four for a consecutive right the other purchase Shareholder shall have the first to all part by or of the stock owned the disabled Shareholder.... The legal representative disabled Shareholder his shall sell all of Agreed stock owned the disabled Shareholder at the upon Purchase Price as defined in Section 6 hereof and terms and conditions set forth herein. said that he had lost inter- notes, Ehlinger
to Hauser's make an offer in and asked Hauser to est the business any did not to agree to his shares. purchase did that they agree at the but buyout meeting, terms entitled to Evald's books. inspect Ehlinger 20, 2001, Hauser sent a letter On June He disability buyout agreement. Ehlinger invoking intended to initiate the process buying stated that he out entire interest Evald. The letter Ehlinger's explained: Agreement,
According to Section 3 of the when a disabled", "totally that share- shareholder becomes Moulding in Evald holder must sell their interest Further, Company. this section also states that right purchase other shareholder has the first this right purchase interest. Jon Hauser will act on this your Moulding Company. interest Evald year-end Hauser enclosed Evald's most recent fiscal statement, Hauser calculated statement. Based on $431,400 shares to be Ehlinger's book value of the first installment would be explained payment sent of this "immediately upon acceptance purchase Hauser's offer. Ehlinger accept offer." did meeting called a sharehold- be ers on 2002. He moved that Evald's books April the corpora- audited in order to determine the value of *8 tion, Hauser declined to second the motion. but annual elec- also to hold their attempted shareholders officers, deadlock, they but due to corporate tion unable to do so.8 were on closing 14. Hauser to hold a attempted
¶ a check Ehlinger shares. On he sent Ehlinger's April 8 22, 2002 by Ehlinger According April to the minutes taken subsequently rejected by Hauser: and of what Hauser calculated to be $86,280, percent for the offer Ehlinger of the shares. refused the book value and never cashed the check. Ehlinger seeking judicial filed suit dissolu- corpora-
tion. He the shareholders of the alleged to elect officers tion were at an and had failed impasse years. for more than two successive declaratory judgment 16. He also sought "unenforceable for lack of buyout agreement was terms," and means of including essential the definition Further, contended determining Ehlinger "book value." enforceable, if "determining that even the contract was due impossible the true book value would be difficult or to the the defendant has Evald's books." He way kept ambiguity agree "[b]ecause asserted that of the of the there subsequent ment and the defendant's actions has of minds between the as to meeting never been a in the 1992 meaning Buy-Sell Agreem book value ent."9 17. The Both parties engaged discovery. par- expert
ties submitted to determine reports purporting the book value and fair market value of Evald. Discov- ery completed September Ehlinger coming Mr. then nominated himself as a director for the year. Mr. Hauser then nominated himself as a director for coming year. Ehlinger Mr. all his voted shares his election as nay. a director and Mr. Hauser voted Mr. Hauser voted all of his election, nay. for his and shares Mr. voted Since neither shares, majority candidate received a vote of a Mr. Hauser meeting declared that neither candidate had been elected at the that, accordingly, both directors would remain in office previous continuing virtue of their election and status as directors. 9 Ehlinger sought accounting also an of Hauser injunction Ehlinger's partnership preventing and an Hauser voting Ehlinger's by proxy. from shares These claims are not appeal. relevant to this *9 moved for Ehlinger summary judgment on
¶ He grounds. two that Hauser was not entitled to argued invoke the disability buyout agreement because "totally was not disabled" within the meaning Further, of the he agreement. sought summary judg- ordering judicial ment dissolution of Evald due to shareholder impasse. 19. Hauser that no such argued impasse existed
because the corporation had initiated the process buying result, out shares. As a Hauser con- Ehlinger's tended, Ehlinger dispute could Evald would price for the shares but he no had the pay longer authority to vote shares. Hauser moved for summary judgment that he had declaring validly exercised the disability buyout agreement. 20. The court an January issued order on
2004. It declined to grant summary to either judgment party regarding of the enforceability applicability Instead, buyout agreement. it concluded that there were material issues of fact in dispute. Further, finding that the shareholders were
deadlocked and had failed to elect officers for more than years, two successive the court judicial ordered dissolu- tion pending resolution contract issue: summary
The plaintiffs judgment ordering motion for liquidation Moulding the dissolution and of Evald Com- pany, appointing Inc.... a receiver to make an accounting of the financial affairs of Evald and to dispose of its for business the benefit of its shareholders granted pending parties dispute resolution of the option about to purchase defendant's exercise plaintiffs prevails, plaintiffs shares. If defendant claim If plaintiff prevails, dissolution will be moot. final judgment of dissolution will be entered. *10 that no alternative to The court determined between the resolve the deadlock
dissolution could shareholders: alter- urges defendant the Court to consider
While the dissolution, impasse. the One none resolve natives to ac- by the defendant is to order an solution offered at least counting. exercise has been undertaken This underlying continues. will once ... and the conflict Nor dividends, money capital distribution or declaration of remedy. The damages provide adequate shareholders years today and remain so have been deadlocked for expectation of extrication.10 without of July, September and May, bench trial on the five-day applicability the court held a of the It found enforceability buyout agreement. and meaning that disabled" within the "totally Further, the the court determined that agreement. the sale of the disabled agreement the "requires shareholder's stock on the occurrence of total disabil- ity." 24. The court short of the sale stopped ordering action, It
and however. determined dismissing there was an about the enforceabil- outstanding dispute the court to address ity agreement required term value": meaning "book remedy sought by Mr. And I Hauser is dismissal. perceive I hesitate to dismiss case because dispute additional —an additional unresolved contract 180.1430(2)(a) permits Wis. Stat. a court to order of a due to shareholder deadlock. dissolution appealed grant summary judgment Hauser has not ordering Additionally, argued appeal he on dissolution. has not erroneously that the circuit court exercised its discretion when grounds it determined that for dissolution existed.
regarding meaning of "book I value" and don't want to leave without recourse in this lawsuit. I you don't want to have come back some other forum delay. and have that ... I don't want to dismiss if there are further contract be interpreted.
terms[]like book value to .... And what I think I'm going get from Plaintiff is that there is more than one way value, to calculate book going get what I'm from the Defendant is: This how we have calculated book value for Evald custom practice and that's what's determinative. *11 jurisdiction Thus, the court retained of the case. Nei- party objected. ther party provide 25. The court ordered each to a explained parties'
definition of "book value." It that the provided special magistrate, definitions would be to a according who would determine book value to the court's instructions. parties agreed
¶ 26. Both that "book value" would They be defined as "assets minus liabilities." differed, however, on how to determine which assets and liabili- computed ties should be calculation, and what degree Ehlinger argued of verification was needed. company's financial statements were calculated for purposes represent tax and thus failed to the true worth corporation. of the assets of the He further asserted supporting that deficiencies of documentation "make simply focusing clear on the definition of book simplistic." value is too appointed
¶ 27. The Del Chmielewski, public special magistrate. certified During accountant, as the hearing held in October the court explained: Special to instruct my present intention Hit's year-end
Magistrate subject review the statement to prior two-years' any from the report deviation method, any from report and to deviation accounting accounting methods to recalcu- generally-accepted value.... necessary [YJou're late as to come to book inquiries Special Magistrate, required answer of the any advocacy. I but don't want Further: accounting I generally-accepted principles, say
When I any I Mr. adopt expect don't of rules. mean to set plenty does of books for plenty [w]ho Chmielewski— small generally accept- know what's corporations —to able and not. And his conclusions could be what's know, by just You I subject you examination folks. going impediment much of an don't think this is be as I it's mysterious you going or as as fear. think to be folks straightforward. real statute under which the specify court did not or he would whether
special magistrate appointed, of a an expert. the role referee or perform objected to the special Neither the instructions magistrate's appointment provided clarified: attorney court. Hauser's Mr. saying I think Court's is that Chmielewski what the *12 going say:... in going things; is to look at these he's accounting good accounting these is this or situations reasonable, accounting not? Is or not? If this accurate it, problem way going that's he's I no with got to do suggestion I that. want there to be some wouldn't there's is called an elaborate set rules which GAAP .... the sense of a formal reference for the In an order out instructions setting the court stated: special magistrate,
300 special The magistrate Court's will determine Evald's 31, 2001, using March book generally accepted value principles accounting appropriate which are for the size, corporation. function structure this special magistrate any depar- will advise Court of report Finally, tures from GAAP his to the Court.
special magistrate any will report substantial inconsis- reporting methodology tencies in the used Evald in previous years. 2001 vis a vis two Neither objected order, to the party over next months, several the special magistrate obtained docu- ments Evald. from 30. During the course of his inquiry, special
magistrate discovered that it was impossible verify Evald's financial Some statements. of the supporting documentation Evald’s underlying computer summa- ries had been discarded were otherwise unavail- able.11 The magistrate determined that he special could not confirm that the financial represented statements "book value." May 8, 31. Specifically, report his 2006 ex-
plained:
Wehave that all verified of the items on balance Evald's sheet have been recorded in accordance with GAAP except following items. has Evald F/Y/E 3/31/01 they provide stated that are not able to the information verify needed through items 1 their because computer software summarizes data and the informa- tion for the retrievable. F/Y/E 3/31/01 (1) Physical inventory
(2) procedures Accounts receivable and invoice cutoff accounting Hauser asserted detail information was system argue lost in a computer crash. did not that the loss of this information was intentional.
(3) procedures and payable cutoff Accounts (4) clearing The of PO account use (5) clearing account IC ... use of on of the business is based the balance Since sheet, value up necessary to back documents it is have reported the balance sheet. ... support the numbers on we cannot verification the aforementioned Without above, are the items mentioned which confirm that generated Evald's balance sheet are presented on Generally Accounting Prin- Accepted accordance to ciples. court to 32. filed a motion asking he entitled to decision that was not
reconsider its prior buyout He asserted that declaratory judgment. a the book value not enforceable because agreement was not be calculated. Hauser opposed of Evald could June motion, the court set the matter for trial on an trial, before Hauser days requested Two magistrate. to cross-examine the special opportunity outset expected At the of what trial, the role of one-day would be the court clarified the special magistrate: address, primary purpose today to if we can
[O]ur see value to effectuate the earlier determine book Court's give opportunity order. I like to counsel an would both statement, give you me a brief offer evidence that have, argument. might then witness, I calling special magistrate Regarding as this, I would didn't talk to Mr. Chmielewski about but you question regarding just him allow either of essentially couple things which are clarification *14 reports. any his One is arithmetical calculation he's made; what, two what he sources had as to abase the used; figures third, he that the opinions that he report made in his to the anybody's Court. He's not witness; would, expert but I if you questions just have aspects report, on those of his testify. allow him to 34. Hauser called Evald's ¶ accountant and book- as keeper fact witnesses. He called the accountant that an Ehlinger had as engaged expert witness. Addition- ally, special he called the magistrate as a witness and cross-examined him extensively. The examination of the special magistrate occupies 126 of the trial pages transcript. 35. The special magistrate testified that he was
unable to calculate Evald's book value based on financial that provided; records were computer given
The records I really [was] that ... were in summarized form. And so the standard that I'm trying apply to apply is difficult to in a summarized manner, you got any because haven't assurances as to up what it’s made because accounting proce- ... happen dures on day-to-day are kind of basis transparent, you can't by being see them.... And able to see accounting that some normal procedures were applied, you then can yourself assure that at least it like looks prepared documents were properly to support the financial statement.
He testified that he was unable to validate 76 percent Evald's assets and 90 percent of Evald's liabilities. 36. Hauser argued that requisite informa- tion was available and blamed the for special magistrate to for failing ask it. he Additionally, requested court him permit present expert an accountant rebut the special magistrate's conclusions. August adjourned until it the trial so, but
declined to do magistrate special more conduct could so that investigation: your you to have your request for a—for time deny
I will, report I expert provide a on book value. own however, magistrate do as he assign special is, do, avail morning he and that could testified this and which he are available items which himself those mistakenly thought weren't.... days August 2006, before the four On *15 multiple recommence, Hauser submitted was to
trial They a "motion court. included to the documents opinion" special expert limine to exclude magistrate, deposition a and full cross for a "motion present opportunity rebuttal a and the examination expert," inference from that no adverse "motion appropriate." missing records is special magistrate August sub- 11, the 38. On stating report he could sub- a revised mitted inventory, physical accounts the balance for stantiate explained payable. He that the receivable, accounts accounting problems software, Evald's were due to reports: which summarized reports, any which summarizing caused a lot
This have, system to be unavail- accounting normal would not view a detailed We could able the F/Y/E 3/31/01. aging subsidiary ledger report of the listing or A/R account, inventory account, report, the A/R A/P account, clearing clearing or the IC account the PO account, as of 3/31/01. Monday, day on of trial was held The second
August Hauser's 14. The was unable to address they receiving evidence because were motions before untimely. again special 40. Hauser cross-examined the magistrate length. special magistrate at testified verify that he was unable to Evald's financial state- corporation ments because the had not retained subsid- iary ledgers necessary support which were the bal- ance sheet.
¶ 41. In a written order 29, 2006, dated November the court determined that the term "book value" precluding enforceability indefinite, of the contract. The court concluded that it could not "cure the contract deficiency by grafting requirement that the value be by using generally accepted accounting ascertained principles appropriate for a of Evald Moulding’s size, structure and function." Further:
As the special magistrate Court's made his inquiry, report presentation, it par- became clear that the vague ties' contractual term was too to cure. "Book anything value" could simple adoption mean from year end statement to an audited determination. The attempt give Court's definite meaning to the contract arbitrary any term is as as other definition.
Although waiting year discussed for the end statement meeting, their December *16 any 2000 infer- ence that this discussion ratified Defendants' definition of hook value is parties' agreement vitiated the to have Plaintiff review the parties' books thereafter. The give conduct is meaning insufficient to definite to the vague term.
(Citations omitted).
¶ 42. Hauser submitted a "motion for reconsid- setting eration, and for an order for trial the issue of ambiguity buy/sell agree- of the term book value in the argued ambiguous ment." He that "book value" was rather than indefinite and that the court committed a
305 he hearing, 2007 January of At a error law. manifest validity presumptive court of the reminded contracts: that courts very clear Wisconsin The law is
Counsel: void fingerholes for ways do not look for —look contracts. sought I did here. I and Well, clearly not what Court: together. contract struggled try to hold this denied his motion. The court motion, submitted a Ehlinger In February, an in- reconsideration, requesting titled a motion directing corpo- from Hauser junction prohibiting The court expenses.12 for the pay litigation ration to had motion, concluding that denied the be "impossible in the and it would an "interest" lawsuit fees between Hauser today" here to assign as we sit the corporation. Ehlinger cross- 44. Hauser appealed, affirmed the circuit court of appeals The
appealed. its rationale.13 some modification court with Inc., 2008 WI Evald Moulding, v. Hauser & 476. It did not 718, Wis. 2d 758 N.W.2d App indefinite. that the term "book value" was determine Id., Rather, the term was it concluded the circuit resolved ambiguous and that reasonably determining ambiguity by GAAP using value" to be calculated intended "book injunction on four Ehlinger had for a similar asked litigation. court never during the course of the occasions injunction. granted an acknowledge neglected to appeals' The court of mandate remanding the circuit court for further necessity proceedings. *17 by simply accepting
rather than the calculation listed year-end on Id,., Evald's statement. Regarding Ehlinger's cross-petition,
¶ 45. appeals court of concluded the circuit court did not erroneously exercise its discretion when it determined pay that Evald's assets could be used to the defendants' litigation expenses. Additionally, ¶¶ Id., 46, 48. it con- corporate cluded that Hauser was entitled to indemni- litigation expenses. fication his Id., own
II requires ¶ 46. This case tous examine several appeals. decisions of the circuit court and the court of We must determine whether the circuit court erred when it concluded that the undefined term "bookvalue" buyout agreement rendered the unenforceable. ad- appeals dition, we must determine whether the court of by concluding supporting erred documentation is a necessary component computation. a GAAP interpretation generally 47. The of a contract is question Levy Levy, of law. v. Wis. 2d 523, 528-29, (1986). necessary components 388 N.W.2d170 of a computation question GAAP is also a of law. We deter- questions independently mine of law of the conclusions appeals. rendered court circuit and the court of Id. at 529.
¶ 48. We also must determine whether the circuit erroneously exercised its it discretion when de opportunity challenge nied Hauser further special magistrate's counter the conclusions and when permitted litigation it fund the expenses proceedings. uphold incurred in these We will *18 if "examined discretion it circuit court's exercise of
the applied proper law, and, facts, of a standard the relevant process, using at a rational arrived a demonstrated judge reach." DeWitt a reasonable could conclusion that Gaming Racing Galaxy Ltd., Stevens, & v. Ross & S.C. 577, 21, 273 Wis. 2d 682 N.W.2d 2004 WI
Ill addressing begin by issues set forth the 49. We petition raises three for review. Hauser in Hauser's (A) it err when determined did the circuit court issues: term "book value" rendered the that the undefined (B) appeals agreement unenforceable;14 did the court of by concluding supporting is a err that documentation component" computation; "necessary of a GAAP erroneously (C) court exercise its discre- did the circuit subject it to tion when denied Hauser's motion magistrate complete special cross-examination, special magistrate, present depose his and to own expert We address these issues witness rebuttal? turn.
A disability buyout agreement sets 50. The price shares at "book for the disabled shareholder's agreement Nevertheless, does not define value." parties agree in the absence of a value." Both "book definition, value" refers to value contractual "book company deducting liabili- of after its of the assets court, the court In brief to this Hauser contends that his appeals erred it that "book value" was when concluded ambiguous, upheld circuit court's reasonable but then to the interpretation of the term without trial. his brief argued that the circuit court erred appeals, court Hauser concluding the term "book value" was indefinite. parties disagree, however, ties.15 as to which assets and liabilities should be included in the calculation and those values be how should calculated. complaint, alleged
¶ 51. In his that the agreement among because, was unenforceable other reasons, it did not indicate how "book value" would be computed. years Over course several of circuit proceedings, attempted give meaning the court *19 the to term. During proceedings
¶ 52. court, the at the circuit Hauser asserted that the intended "book value" computed to to refer the value of assets minus liabilities year-end on statements, the financial which are calcu- By liability. lated order to minimize contrast, tax Ehlinger argued that "bookvalue" refers to the value of computed according gener- liabilities, assets minus to (GAAP). ally accepted accounting principles argues ¶ 53. Hauser now that the circuit court holding when, erred without on intent trial the parties, it concluded that the term "bookvalue" was "too vague may to be cured." He asserts the that term be ambiguous, argues it Therefore, is not he but indefinite. parties' necessary a trial on the intent solve ambiguity.16 he what considers to be a contractual 15 Samuels, 373, 377, But see Schumann v. 31 Wis. 2d 142 (1966). Schumann, 777 N.W.2d the that in court concluded definition, of a absence contractual "book value" referred to the "market value of the of the company deducting assets after its added.) (Emphasis liabilities." party Neither cites to Schumann premise appears for this to advance the Schumann definition. 16 It years, should be noted that over the course of seven days circuit court seven regarding held trial the enforceabil ity buyout agreement: 9, 2005, 10, 2005, May May July 2005, July 27, 2005, 7, 2005, 26, 2006, September June questions embedded 54. are distinct There two agreement inquiry. parties' be First, can the
within our
meaning
interpreted
give
term "book value"?
interpreted,
Second, if it
so
what was
dollar
can be
31, 2001?
amount of "book value" on March
term
55. The circuit court concluded
vague
indefinite, and that
value" was
"book
agreement
unenforceable. The court
was therefore
rejected
appeals
the circuit court's conclusion that the
Rather, it
that the term
term
indefinite.
concluded
was
ambiguous.
ambiguous
being
¶ 56. A contract can be
without
Computer
Management
Servs., Inc. v.
indefinite. See
Baptie
Hawkins, Ash,
Co.,
158, 178,
&
206 Wis. 2d
("An
(1996)
ambiguous
contract is not nec-
N.W.2d
essarily
indefinite.").
ambiguous
when it is
A contract is
"fairly susceptible of
than
construction." Id. at
more
one
ambiguous,
If
a contract term is
extrinsic evidence
help
meaning.
may
Id.
be used to
construe its
requirement
By
contrast,
"the definiteness
interpretation."
formation,
is relevant
to contract
*20
requires mutual
Id. at 178. A contract
assent of the
parties'
and "must be definite as to the
basic
obligations."
commitments and
Id. Mutual assent
is
looking
judged
objective standard,
on an
to the
based
express
"Vagueness
used in a
Id.
or
words
contract.
agreement
term of
as to an essential
the
indefiniteness
prevents the
an
contract." Id.
creation of
enforceable
"[b]ook
explained
have
value is a
58. We
that
meaning"
ambiguous
it
term of
is not further
when
Samuels,
defined
a contract.
v.
31 Wis. 2d
Schumann
14,
following
hearings were held on the
August
2006. Additional
19, 2005,
2005,
May 7, 2002,
17,
dates:
October
November
28,
31, 2006,
17, 2007,
February
January
October
310
(1966).
373, 376,
to books order to validate that buyout price accurately reflected book Evald's value.17 See Townsend v. LaCrosse Trailer Wis. Corp., brief, agreed his Hauser that "Shareholders in a right statutory inspect Wisconsin have a copy the accounting records of corporation." argument, sought
At oral one justices clarify argument: Hauser's just position Court: Your look at the books. Look at the value of books, books,
the assets on the look at the on value of liabilities half, right? and divide it in Clearly attorney: position. Hauser's But I that's our do want to clarify position it was never our that Dr. wouldn't have right dig into books to make sure the books accurately— *21 Court: Sure. (1948). special the This is task that
N.W.2d perform magistrate the state to due to of was unable financial records. Evald's Townsend, that In we concluded the "right go
employee-stockholder behind had the to the books, to examine all of the financial statement order corporation files the defendant which records, and of might at 37. In the value" of his stock. Id. reflect book employee case, a an and his that contract between employer provided upon employee's the termina- that corporation right buy had the to out the tion, the employee's price equal at a to one-half of former stocks request employee's their book value. We evaluated the argument accounting support to his examine records to corporation's did the financial statements that accurately corporation. reflect the book value argued employee
¶ 62. The that the be limited an examination of financial "should prepared by company's ... auditors be- statement definitely the book value of cause such statement sets rejected corporation's Id. the stock." at 36. We "definitely financial sets contention statement holding stock," the book value that the book value just any may arbitrarily be entered is not value that company. upon the books of a Id. at 37. if the contract this case we decided that ambiguous meaning on and a trial "book might accept warranted, the fact-finder
value" was position intended "bookvalue" Hauser's mean the assets minus liabilities calculated value of purposes year-end tax on the statement. as recorded circumstances, those be entitled Under would "gobehind the in order to exam- financial statement *22 books, ine all of the records, and files" of Evald which might reflect that value. This task cannot now be performed. Alternately, might accept
¶ 64. the fact-finder Ehlinger's position parties that the intended "book value" to mean the value of assets liabilities, minus computed according Again, Ehlinger to GAAE would be entitled to examine books, records, files, the which cannot now done. be regardless Here, of whether the in- computed
tended assets and liabilities to be on a cost any basis, basis, a tax a fair basis, market value other unavailability basis, the of Evald's financial records prevents Ehlinger exercising right from his to examine accuracy buyout the books order to assess the price. practical legal standpoint, From both and a the unavailability precludes agreement of the records this being from enforced.18 Typically, appellate
¶ 66.
an
court should decide
possible grounds.
cases on the
Blalock,
narrowest
State v.
(Ct.
1989).
App.
688, 703,
150 Wis. 2d
442 N.W.2d514
dispositive
Issues that are not
need not be addressed.
Gross v.
296, 300,
227
Hoffman,
Wis.
some of Evald's and files was we no draw inference based on their absence. We do not infer prepared by inaccurately financial statements Evald represent corporation's "book value" on as valued a tax Conversely, basis. we opposite cannot make the inference —that represent Evald's financial statements the actual "hook value" valued on a tax basis. the term Here, the resolution of whether ambiguous practical has no indefinite or
"bookvalue" is controversy. existing upon need We therefore effect question.19 that, under We conclude not resolve presented, not err circuit court did circumstances buyout agreement could it determined when not be enforced.
B court addition, Hauser contends that the 68. by concluding supporting appeals that documen- erred "necessary component" of a is valid GAAP tation a Ehlinger, computation. 2d He 718, Wis. See 313 require compilation a does not asserts that under GAAP supporting documentation. may matter, threshold Hauser be mis- As a appeals'
construing conclusion. It is not clear the court of general appeals a court of made statement whether the necessary compo- supporting a that documentation is computation cases, nent of GAAP all a valid only supporting it determined that documenta- whether required tion was under the facts of this case.20 19 assertion, Contrary Roggensack's do not to Justice we parties Evald's assume that the intended March determining Justice balance sheet to be the basis for book value. Further, concurrence, Roggensack's we do not contend ¶ 123. underlie availability of the documents that Evald's balance pro in the any ambiguity sheet could cure or indefiniteness Id. We buy-sell agreement. simply determine that we posed (if anything) question need not of what answer question resolution of the intended "book value" because change would not the outcome of the case. stated, "[W]e The that the use of are satisfied GAAP calculations, the more
rather than the use Hauser's correctly ¶ 70. if Even Hauser construes the court appeals' conclusion, Hauser's assertion misses the question mark. The before the court is not what is required compilation to do a under but what is GAAP required parties' rights. to determine the contractual During two-day
¶ 71. trial over corporation's value, book Hauser cross-examined the special magistrate. special magistrate agreed perform accountants three levels of service under compilations, agreed GAAP: reviews, and audits.21 He necessary verify that it was not financial statements performing compilation. when argues ¶ 72. that, Hauser based on the circuit special magistrate court's instructions, was re- quired "accept representations of Evald Mould- ing, performing Inc. and Hauser." He asserts that in compilation, special magistrate permitted was not express any assurance on the statements. position
¶ 73. Hauser's misconstrues the circuit *24 special magistrate. court's instructions to the The cir- special magistrate perform cuit court did not ask the compilation. a Instead, it asked him to "determine using generally 31, Evald's March 2001 book value reasonable construction addition, 'book value.' In sup- the porting necessary documentation was a component of a valid Ehlinger, computation." GAAP 718, 313 Wis. 2d 21As the Third explained, Circuit compilation provides "the lowest level of regarding entity's assurance an financial statements," expressing opinion "neither an any nor level of Pennsylvania assurance." Otto Ass'n, v. State Edu. 330 F.3d (3d 2003). Cir. A provides review "limited assurance on the entity's financial provides statements." An audit highest "the assurance," level of and "provides the accountant verification the assertions, financial statements' claims and expresses and opinion an entity's on the financials." Id.
accepted accounting principles
appropriate
which are
corporation."
of this
size,
function and structure
magistrate
special
that he could not
concluded
knowing
book
determine Evald's
value without
corporation's
from
the numbers on
basis
which
computed.
financial statements were
argument
problem
Hauser's
is that
74. The
with
intended
value,"
it assumes that
"book
nothing
taken from Evald's
more than
number
argument
year-end
is tantamount
statement. Hauser's
required
accept
to an assertion that
year-end
value listed on Evald's
financial statement
soundly
inquiry.
rejected that
without further
argument
Yet we
Although
supra, ¶¶
in Townsend. See
61-62.
corporation may keep
the confines of
its books within
company's
fit,22
the law
as it sees
financial
"definitely set[] the book
statements do not
value
Townsend,
stock."
C Finally, ¶ 75. Hauser the circuit contends that erroneously depose fully denied motion to his special magistrate present cross-examine the expert and to an special witness in rebuttal. He asserts that the magistrate appointed not as a referee under Wis. § court-appointed expert 805.06, Stat. but rather as a argues such, Hauser under Wis. Stat. 907.06. As by preventing using the court erred him from all of the 22By determinations, require these we do accountants accounting principles keeping to use GAAP of tax when instead Instead, simply prior reaffirm case their client's books. we our *25 in regarding corporation's law determination of a book value dispute. a shareholder
tools the adversary system to challenge and counter the special magistrate's conclusions. 76. The Wisconsin statutes authorize a court to a
appoint referee to determine "matters of account" and other complicated issues.23 "The role of a referee is to in help the court cases where the expertise of the referee is needed" to assist the court in obtaining facts and arriving at a correct result complicated litiga- tion. Patricia The New Graczyk, Wisconsin Rules of Civil Procedure Chapters 805-807, 59 L. Marq. Rev. (1976). 671, 683-84 77. The procedure for a appointing referee in
Wisconsin is similar to the procedure for
a
appointing
master under the Federal Rules of
Procedure,
Civil
Rule
53. The court order
a
appointing
referee and describing
the referee's
is called a
powers
"reference." If a party
reference,
wishes to contest the
it should move the court
to revoke the reference.
Jay
3A
E. Grenig, Wisconsin
(3d
2003)
Practice Series: Civil Procedure 35
ed.
(citing
(1957)).
La
Co.,
v. Howes Leather
Buy
receive further recommit 805.06(5)(b). § instructions. Wis. Stat. permit also a court to 80. Wisconsin statutes expert
appoint See 907.06. an witness. Wis. Stat. expert parties appoints witness, an the the court When may expert's deposition expert the can be take and the party. Hauser as a either the court or a called witness that the did not conduct contends because referee hearings report court, or file with the he was an his subject discovery expert witness, and full to cross- examination.
¶ 81. The did not cite to either the referee court-appointed expert or the witness statute statute magistrate appointed special it the and instructed when him the value Neverthe- to determine book of Evald. apparent record the time less, it is from the that at of appointment, parties court understood the analogous special magistrate to role of the be a Computation or a of referee master. Evald's book value proved to be was a of account" had a "matterO disputed complicated over issue which had years. appears It that the court the course several expertise special required that it determined magistrate help arrive at the court obtain facts and result. correct magis- appointing special its order magistrate's specified
trate, the court role as fol- he 2001 book lows: "will determine Evald's March any departures value," from "will advise the Court any report and "will substantial inconsistencies" GAAfi" the court clarified During hearing, in Evald's books. and report was to receive magistrate the special required "[YJou're The court stated: only. evidence I don't but Special Magistrate, inquiries answer Further, the court ex prohibited advocacy." any want *27 conversations. parte by outlined procedure Hauser to agreed
¶ stated: attorney his hearing, a During court. saying is that Mr. Chmielewski I what the Corat's think say:... in things; going to look at these he's going to accounting or good is this accounting situations these If reasonable, accounting or not? accurate not? Is this it, got problem do I no with way going he's to that's the that. was report special magistrate's after the only
It was verify he unable to he concluded that was and complete objected Hauser first liabilities that Evald's assets and not evince an The record does the proceedings. to the, special magis- that understanding by witness. expert as an appointed trate was special first discussed 84. The court ¶ held October a on hearing at appointment magistrate's months, nine following the course of the 19, 2005. Over books, com- Evald's investigated magistrate the special his drafts of and parties, prepared with the municated report. cross- to right asserted party 85. Neither 27, 2006, two until June special magistrate
examine Hauser first asserted At that point, before trial. days to subject an witness expert magistrate the special limited permitted The circuit cross-examination. it clari- but magistrate, of the special cross-examination witness." anybody's expert "[h]e's fied that Further, neither party an requested opportu- to nity depose special magistrate present rebuttal expert testimony until after already the trial had com- menced. Toward the end of the day24 first to response objection an counsel, opposing Hauser's first attorney suggested that he should be entitled to depose special magistrate his present own expert witness. 87. Under circumstances, these Hauser forfeited right
his
object
the procedures specified by the court
in the reference.
Ndina,
See State
21,
v.
2009 WI
29-30,
2d
¶¶
Wis.
tional It with the process. unfamiliar often be referee will more clearly the reference better had have been would responsi- magistrate's powers the special defined delineate the court's clearly should A reference bilities. the referee of evidence types regarding expectations including of the report, and the form examine should of fact findings should make the referee whether that are enu- Explicit parameters of law. conclusions report. Ziegler's magistrate's See Justice object special a misread of coneurrence/dissent, Such an assertion is record. provided clerk of court The record reveals prior some time report to the at magistrate's special The June 29 trial. days before the 2006—at least June opportunity to exercised his reveals that Hauser record also object. He on June 6. objected report to the letter
Hauser first was an inaccurately stated that Evald report asserted that the report and that the C-Corporation, than a S-Corporation rather for deferred of an accrual for a calculation failed to account adjusted report his special magistrate income taxes. C-Corporation. reflect that Evald was trial, At one-day trial. was scheduled as The June 29 trial special report, asserting that the again objected to the Hauser magistrate certain financial documents. failed to consider had magistrate special trial that the adjourned the so The court *29 However, magis- special the documents. could consider these alter his conclusion documents did not indicated that the trate of Evald. determine the book value he was unable to that 805.06(1). See Wis. Stat. merated in a reference will help clarify procedures and keep court, parties, the referee on track. Nevertheless, on this record we are satisfied
¶ that at the time the order appointing special mag- issued, istrate was the court and the parties contem- plated special magistrate would fulfill the role of a referee. We are also satisfied that the parties were a given full opportunity object to the special magistrate's factual determinations. We therefore con- clude that the circuit court's exercise of discretion was not erroneous.
IV 91. We turn next to Ehlinger's for cross-petition review, which an presents issue of first in impression Wisconsin. Ehlinger argues this is primarily dispute between shareholders it and was improper Hauser's litigation to be expenses paid from the corporate till. 92. Both Hauser and Evald are named in this dispute. During the proceedings court, circuit Ehlinger learned that Hauser was directing corpo- ration to pay for the defendants' litigation On expenses. occasions, four asked the circuit court enjoin Hauser from for the paying litigation cor- with funds. porate In addressing Ehlinger's concern, the circuit it opined presented close call. Without
further discussion, the court concluded that the corpo- ration had an interest and that is was more than a nominal party the litigation:
I think that prospective attorney sourcing fee is a closer issue. But it seems to me Corporation that the more party; than a nominal it does have an interest *30 and, me, impossible here seems to would be for the today prospectively here to Court as we sit ascertain assign any attorney's fees. how to Ehlinger's Accordingly, it denied motion. prima-
¶ 94. contends that this action is rily dispute shareholders, the a between two and that only party corporation is a to the action so that the jurisdiction Thus, court has argues to order its dissolution. he improper litiga- that it for the defendants' corporate expenses paid from the tion to be till. ap-
¶ circumstances, it be 95. Under these would propriate corporation to fund the if for the lawsuit he either Evald indemnified Hauser for actions took corporation capacity corporate the his as a officer or spent funds in defense. We address these its its own arguments in turn. court, In his brief to this Hauser contended by corporation indemnified for
that he had been expenses corporate incurred on his behalf as a officer. 180.0851(1) (2) § require indemnification Wis. Stat. of an officer under certain circumstances when party because he or she is director officer "was corporation." officer of the statute, however, Under the indemnification self-executing. are Rather, certain formalities
required. good policy for for- There is a reason these justification They prevent malities. taking corporate after-the-fact personal use. Without these funds for corporation formalities, an officer could direct the only pay funds for his own defense and later assert corporation. he had indemnified been indemnifi- 98. "A director or officer who seeks request [180.0851] shall make a written cation under 180.0851(3). corporation." Further, if Wis. Stat. corporation pay expenses the officer wants a final the officer must disposition, provide advance of written affirmation of his or "[a] with her faith belief that he or she has not breached or good *31 failed to his or her duties to the as perform corporation" or undertaking, "[a] well as written executed personally behalf, on his or her the allowance" if it is later repay that indemnification is not Wis. required. determined § Stat. 180.0853. An officer who is "successful on the merits or entitled to under
otherwise" is indemnification section 180.0851(1).27 An officer may who was not successful (2), still be entitled to indemnification under sub. but there must be a "determination of indemnifi whether 180.0851(2)(b). § cation is Wis. Stat. Section required." prescribes procedures by 180.0855 six which the deter mination that a director is entitled to indemnification 28 can be made. 180.0851(1) provides § Stat. "[a] Wis. officer, indemnify shall a director or to the extent that he or she has been successful on the merits or otherwise in the defense of proceeding, expenses a in pro all reasonable incurred the ceeding . . .." Hauser does not assert that he entitled to is (1), likely indemnification under sub. because he has not been in proceeding successful the defense of this and did not follow 180.0851(3) procedural requirements the in section and section 180.0853. provides Section seeking 180.0855 that the director in following demnification shall select one of the six means for (1) determining right majority the a indemnification: vote of (2) quorum directors; independent legal of disinterested (3) (4) counsel; arbitrators; panel of three an affirmative vote (but of the shares any shares of shareholder interested (5) (6) litigation); 180.0854; § in the order any under (not provided any right other method for in appli additional here). cable 100. Given the deadlock of board direc- only option case, in this viable would have been tors 180.0854(1) provides order. Section that "a a court party proceeding may director or officer who is a to a conducting apply for indemnification to the court jurisdic- proceeding competent or to another court of if it de- tion." court "shall order indemnification" termines that the director is entitled to indemnification fairly the officer under reasonably statute or that entitled to indemnification view of all the 180.0854(2). § circumstances. Id. relevant court, In his brief this Hauser contended his circuit court ordered indemnification under 180.0854(1). support Stat. The record does not Wis. this assertion. any
¶ 102. Hauser did not follow formali- ties described There is no indication in the above. *32 request record that Hauser made a written to Evald for 180.0851(3). required by as section indemnification provided Further, there is no indication that he good of his faith and a written written affirmation belief necessary undertaking repay if as to the allowance by Finally, required there is no indi- section 180.0853. applied cation that he to the court for indemnification appears Rather, it that he under section 180.0854.29 simply corporation pay legal expen- directed the all pending ditures for the lawsuit. mistakenly concluded that "the appeals The court did in order be indemnified."
circuit court fact Hauser fact, Ehlinger, 313 Wis. 2d 48. In there is no indication ¶ indemnification, and applied ever to the court for that Hauser record. there is no order for indemnification by failing Ehlinger's rule on suggests Justice Prosser litigation paying the enjoin motions to from discretion to order expenses, the circuit court exercised its 103. We need not determine here whether ¶ Hauser could have been indemnified by order had he followed the statutory procedure. Rather, simply we observe that Hauser did not that procedure follow was therefore not entitled to indemnification by Evald. 104. At oral Hauser argument, abandoned the assertion that he had been indemnified and instead argued circumstances, that under these he could have been indemnified. When his attorney was asked to pin- point indemnification, order for he responded that he could not:
Well, bury let me this indemnification I issue. don't for, think it ever frankly was asked I don't think the trial explicitly court ever ordered Iit. think the court of appeals essentially saying that the trial court could perhaps have done so and impliedly did so when it denied all of Dr. Ehlinger's motions. abandoned the Having argument that he Evald,
was indemnified by Hauser now rests exclusively on the assertion that the litigation expenses were in- curred in defense of the corporation. He notes that Evald is a named and he party, asserts that Evald could retain counsel its represent own interest in a dissolution proceeding.
Hauser's indemnification. See Justice Prosser's concurrence/dis- sent, 193. This assertion is incorrect for two reasons.
First, the statute does not authorize indemnification default. A court's failure to rule on a motion cannot be the *33 equivalent functional of ordering Second, indemnification. when finally the court Ehlinger's denied injunction motion for an in February of the court did not cite statutory or discuss supra, indemnification at all. See Accordingly, 93. ¶ the circuit court did not "exercise its discretion" on subject of indemni- fication. Justice Prosser's 193-194. ¶¶ concurrence/dissent Cf.
326 Levitt, cites to Petition Hauser of (N.Y. 1985), authority Div. as for his App. N.Y.S.2d 736 case, however, tends to undermine his That argument. The Levitt court that "in the clearly states argument. . . the corporation ap usual dissolution proceeding,. nominal and the amounts to party proceeding as a pears Id. at 742. The shareholders[.]" between dispute the limited and as a "for corporation appears party it amenable to the orders rendering of passive purpose Bros., the court." Id. Matter Clemente (citing (N.Y. 1963)). N.Y.S.2d 703 Div. App. 107. The Levitt there acknowledged rule: general
are to this exceptions non-dissenting appears [the to be merit [T]here that, Toohey's claim inasmuch as he had stockholder] buy-out already option [New exercised his under York law], remains is a determination of the fair all that stock, and once that is [other shareholder's] value of the made, corpo he will be the beneficial owner of all the Therefore, may that, it be found as to the rate stock. Toohey's buy-out option ... period after exercise , corporate impropriety there was no his use of funds Corporate funds could pay legal expenses. his own not, however, fees properly pay be used to his counsel prior incurred to that election.
Id. case, at the core of the question this was whether Hauser was entitled
parties' dispute and thus be- disability buyout agreement invoke the of all the stock." corporate come the "beneficial owner such, he not. As The circuit court concluded that fit enumerated exception this case does not under Levitt. Rather, Petition of this is "the usual dissolution *34 a dispute which "amounts to between proceeding," shareholders."30 that under some circum- acknowledge 109. We
stances, a
can and does retain counsel
corporation
in a
proceeding.
Esposito
its own defense
dissolution
(Mass.
Co.,
&
Id.
stressed, however, that
110. We have repeatedly
the interests of shareholders
and the
are
corporation
See,
always
e.g.,
Hoffman,
same.
Button v.
61
20,
(1884);
Wis.
20
667
Milwaukee
Co. v.
Toy
N.W.
Commission,
Industrial
203 Wis.
conclusion that this is a dispute between shareholders and Evald is a nominal merely party. his complaint, Ehlinger asked court to enter a judgment declaring that Hauser "has no present right... to require plain- tiff to tender his shares of Evald Inc. for Moulding, redemption by judicial He corporation." sought dissolution of the because sharehold- corporation "[t]he ers of Evald are deadlocked in voting power." instance, Attorney only For Ahrens was the counsel sign following on documents behalf the defendants: Defendants' Motion to Dismiss Pursuant to Wis. Stat. 805.17(1) (filed August 29, 2005), § [sic] Defendant's Motion for 9, September Ruling Regarding Partial Reconsideration of Any by Particularization and Trial of Claim Plaintiff of Waste (filed 2005); By 9, September Defendants Notice of Motion and (filed January 27, 2006); Stipulation Motion in Limine entry trial, (stipulating Order to the of exhibits for the 2005 21, 2006); filed June Notice Motion and Motion for Recon Setting sideration and for an Order for Trial the Issue of the Buy/Sell Ambiguity Agreement of the Term Book Value in the (filed Substantially [sic] and Whether Defendant's Performed (filed 2007). 11, 2006); Appeal April December Notice ¶ 113. clarified that "Evald is named as a judicial plaintiff defendant because seeks dissolution of impasse Evald because of and because of the actions of facts, defendant Hauser." Under these any way was not made a defendant in related to the corporation's Ehlinger. Rather, actions it towards complaint. Hauser's actions that form the basis of the ¶ 114. We have concluded that Hauser was not according provisions entitled to indemnification to the of Wis. Stat. 180.0855. We further determine that may militantly align Evald itself on the side of equal, by Hauser, shareholders, one of two discordant paying expenses incurred Hauser in defense of his actions as a shareholder. although Here, the court concluded that dispute,
Evald had an interest it did not define *36 apply that interest or Therefore, the relevant law. we erroneously conclude that the circuit court exercised its by failing enjoin charging discretion to Hauser from litigation expenses corporation. to the See v. State (1999). Delgado, 270, 281, 223 Wis. 2d N.W.2d V ¶ sum, 116. we conclude that the circuit court agreement did err not when it determined that the was parties agree Ehlinger unenforceable. Both that is entitled to examine Evald's books to determine whether they accurately corporation's reflect the assets and special magistrate liabilities, a task that the was unable perform to due to the state of Evald's records. Accord- ingly, we need not resolve whether the contract is ambiguous indefinite or here because under these cir- cumstances, it cannot be enforced.
¶ Further, 117. to the extent that Hauser's char- appeals' acterization of the court of accurate, decision is we determine that argument his about of scope GAAP The question fails. is not what is required under but what is to required parties' determine the GAAR rights. 118. also We conclude circuit court did
¶ not erroneously exercise its discretion when it denied Hauser the opportunity subject the special magis- trate to a scope broader cross-examination, depose magistrate, special present and to his expert own witness in rebuttal. Finally, we conclude that the circuit court
¶ exercised its discretion when it erroneously permitted corporation pay litigation Hauser's We expenses. determine that Hauser entitled to indemnifi- cation by provisions Evald to the of Wis. Stat. according Further, facts, 180.0855. under these litigation expenses were not incurred its own defense. affirm the Accordingly, appeals we court
as modified in this opinion and remand to the circuit appointment for the receiver.
By the Court. —The decision of the court of appeals and, modified and as modified, affirmed the cause is remanded. CROOKS, J., 121. N. PATRICK did not partici-
pate. ROGGENSACK, 122. PATIENCE DRAKE J. I write in
(concurring). concurrence because I conclude (Ehlinger) William Hauser Jon *37 (Hauser) no in agreement had binding buy-sell regard a shareholder's interest in Evald valuing Moulding, (Evald). Inc. The proposed buy-sell agreement is irre in does not an trievably indefinite that it define essen tial term i.e., of the on basis proposed agreement, what Evald's are in assets liabilities to be valued calcu- Accordingly,
lating that I conclude book value. buy-sell agreement proposed unenforceable. is I because con- I in concurrence also write theory proposed majority's that clude buy-sell agreement due to Hauser's is unenforceable verify corporate preserve records to sufficient failure on three balance sheet rests 31, March Evald's agree- assumptions, unspoken I am not with which buy- proposed assumption that the first is ment. The Ehlinger agreement and Hauser intended between sell the basis for 31, 2001 balance sheet to be March Evald's determining basis that no matter on what book value and liabilities were valued. sheet's assets balance obligation assumption had an is that Hauser second verify March sufficient to Evald's maintain documents assumption The third 31, 2001 balance sheet. having Evald's March documents that underlie any ambiguity indefi- cure 2001 balance sheet will buy-sell agreement. proposed None in the niteness Accordingly, assumptions for the is warranted. those respectfully below, I concur. reasons set forth
I. BACKGROUND ably lengthy history set of this case is 124. The repeated majority opinion and need not be out in the say 20, 2001, Hauser it to that on June here. Suffice disability buyout provision proposed invoked Ehlinger's disability. buy-sell agreement Be- based on agreement as the used the term "bookvalue" cause that determining interest a shareholder's measure for what he asserted was book Evald, Hauser calculated time, of Evald's the relevant the end value of Evald at year, 31, 2001. Hauser offered fiscal March purchase his stock in Evald. $431,400 to *38 Ehlinger 125. that agreed Evald's book value ¶ was the measure for ascertaining stock, value of his but he that concluded book value had been understated. Therefore, he refused offer. Hauser's Ehlinger 126. also asked that Evald's financial
¶ records be audited and the book value be determined based refused, on that audit. Hauser and because shareholders, Hauser and Ehlinger are no equal audit was done. 127. In the that us, lawsuit
¶ now before asserted that Hauser had calculated book basis, value on a tax that the accounts receivable were and undervalued that all of the liabilities listed on the 31, March 2001 balance were sheet not valid obligations of Therefore, Evald. 31, he asserted that March sheet balance could not be used to determine the true book value Evald. also He asserted that he had not been with sufficient provided documen- supporting tation to review fully Hauser's determination book value. 128. The circuit appointed mag- special
istrate to determine whether book value could be cal- However, culated. the special magistrate concluded that he verify could not year Evald's book value at fiscal end because of the lack of documentation. He supporting he explained that could verify physical not Evald's accounts inventory, receivable accounts all payable, of which were material determination book value. Thereafter, circuit court determined the proposed buy-sell agreement hopelessly therefore,
indefinite unenforceable. Hauser ap- pealed. After concluding buy-sell the proposed agreement was ambiguous, indefinite, the court of Hauser & Ehlinger v. appeals affirmed the circuit court. App Moulding, 31, 313 Inc., 2008 WI Evald 718, 758 N.W.2d 2dWis. *39 majority opinion concludes
¶ The 130. verify 31, 2001 the March lack of documentation unnecessary determine makes it sheet balance determining correct court was the circuit whether agreement buy-sell proposed indefinite was that the determining appeals that the was correct the proposed ambiguous.1 agreement was
II. DISCUSSION of Review A. Standard ambiguous agreement2 is a is ¶ an 131. Whether independent question Moran v. review. for our of law (1973); 46-47, 348 Shern, 39, 208 N.W.2d 60 2dWis. City Sanitary 2 of Neenah, Dist. No. v. Town of Neenah App 913. ¶ 296, 2d 647 N.W.2d 155, 9, 256 Wis. 2002 WI proposed question of whether a as a law also decide We Realty Pire, agreement Co. v. indefinite. See Gerruth is (1962). 94-95, 115 557 89, 2d N.W.2d 17 Wis. Principles B. General Contract ambiguous capable agreement if it is An is 132. interpretation. Mgmt. one reasonable of more than Baptie Co., Computer Hawkins, Ash, & Servs., Inc. v. (1996). agree An 67 158, 177, 557 N.W.2d 206 Wis. 2d agree of the an essential term ment indefinite when is prevent an the creation of uncertain as to ment is so Determining that a Id. at 178. enforceable contract. 1 Majority op., 2 interchangeably in this contract agreement I use concurrence.
334 ambiguous contract is or that isit indefinite has differ consequences parties proposed ent for the to a contract. alleged agreement ambiguous, If an is presumes binding law contract has been made question parties and a fact arises as to what the meant ambiguous agreement term at the time the Opstein, made. Bank Sun Prairie v. 86 2dWis. (1979); 674-76, 273 N.W.2d Co., 279 v. Lemke Larsen (1967). Additionally, 427, 431-32, 151 Wis. 2d N.W.2d agreement ambiguous, meaning when an agreement solely by is not determined the face of the agreement; extraneous evidence the intent of the parties may also be Patti Co., considered. v. W.Mach. (1976). 348, 351, Wis. 2d 241 N.W.2d158 agreement may testify they about what intended *40 ambiguous they term to mean when entered into at contract. Id. 354-55. The trier-of-fact will then parties determine what the Id. intended. alleged
¶
agreement
134. On
hand,
the other
if an
is indefinite
an
term,
as to
essential
no enforceable
agreement
parties
has been made because the
have not
agreed
particularized obligations. Shetney
to their
v.
Shetney,
(1970);
49
2d 26, 38,
Wis.
1
¶
explained,
agree-
135. As we have
an indefinite
agreement
Realty,
ment is no
at all. Gerruth
17 Wis. 2d
requirement
93.
otherwise,
at
Stated
"the definiteness
[contract]
is relevant to
formation,
contract
inter-
pretation." Mgmt. Computer Servs.,
¶ agreement An enforceable is not created when an essential term is indefinite. An Id. essential as to its there is mutual assent is when
term definite objec- Id. An agreement. to the meaning by there has to determine whether standard is used tive term of an Id. If an essential mutual assent. been unen- indefinite, it renders the contract is agreement agreement analysis alleged our of forceable and with that determination. ends Agreement Proposed Buy-Sell
C.
extensive hearings
court held
circuit
¶
conclusion,
At their
of
value.
meaning
book
on
"
mean anything
could
'[b]ook
that
value'
court found
to an
end statement
year
simple adoption
from
(Jef
Memorandum Decision
determination."
audited
2006). It
29,
Nov.
also found
County
ferson
Cir. Ct.
definite
give
conduct
is insufficient
parties'
"[t]he
Id. at 2. The circuit court
vague
to the
term."
meaning
motion
"grant[]
it must
Plaintiffs
then concluded
Id.
value' undeterminable."
to declare 'book
court's
review,
sustain
circuit
138. On
we
erroneous.
they
clearly
unless
are
findings
fact
Wis., Inc.,
74,
2009 WI
Ins. Co.
Phelps
Physicians
v.
1,
Steinbach v.
34,
(citing
2d
are not erroneous First, noth- there is incurably is indefinite. agreement 336 ing upon in the record from which to ascertain the basis which the decided that book value was to be proposed agreement signed.3 calculated, when the was establishing Yet, that is the relevant timeframe for meaning of book value. See Prairie, Bank Sun 86 2d at Wis. 674-76. generally Second, 140. while book value is ac-
cepted corporation as the assets of a liabilities, less its is there no universal method which a example, values its assets and liabilities. For assets could be on basis, valued a cost a a basis, tax fair market proposed buy-sell value basis or some other basis. The agreement is silent about valuation of Evald's assets purposes buyout. and liabilities for of a shareholder value, Book with no further instructions about what to be included on what basis valuation is to be amorphous provide made, is too a term to the definite- necessary agreement. ness an create enforceable example, ¶ 141. Gardner, For in Gardner v. 190 (Ct. 1994), App. 216, 2dWis. 527 701 N.W.2d the court appeals upheld agreement a settlement because the by separate wife was informed counsel that there awas difference between value and book the fair market value of certain stock. Id. at Therefore, 230-31. she complain could not that her husband had ad equately major disclosed estate, asset which Department was listed as book value. Id. In Wisconsin City Removal, Inc., Revenue v.River WI 27, 2007 Refuse 561, 2dWis. 729 N.W.2d we 396, described a com putation "subtracting of book value as the accumulated depreciation" original purchase price" from "the of as during subsidiary sets, a transfer of assets between parent company. Id., and a buy-sell The proposed agreement signed on August *42 Samuels, 373, 2d 31 v. Wis. In Schumann (1966), had partnership the parties
elected
at 375. We
agreement.
Id.
provision
partnership
parties agreed
that even
both
though
concluded
value,
could be
book
purchased
Schumann's interest
Id. at
nevertheless unenforceable.
agreement
no doubt that
'book
explained,
"[t]here
376-77. As we
to a
anything that
the parties
value' can be almost
it
be." Id. We then remarked
clearly
contract
define
254 Wis.
Corp.,
La Crosse Trailer
Townsend v.
"
(1948), we said that book value was
'the
¶ Third, 145. Hauser does not contend that the finding, buy-sell circuit court's that book value under the agreement anything simple adoption could mean from year a clearly end statement to an audited determination, is argues Instead,
erroneous. he that the circuit "incorrectly diagnosed problem as indefinite- ambiguity." ness instead of chief, Hauser's brief in 17. findings The by of the circuit court cannot be set aside simply contending legal that the issue is whether the proposed agreement ambiguous is rather than indefinite. proposed
¶ agreement I conclude that the is irrespective indefinite as a matter law, of whether that findings conclusion is based on the circuit court's of fact simply agreement. or is derived from the face of the The findings clearly circuit court's of fact are not erroneous, explanation proposed agreement and there is no in the objectively from which one can determine the basis on which Evald's assets and liabilities are to be valued when calculating Accordingly, book value. I would affirm the appeals' court of affirmance of the court, circuit albeit on a different basis. Majority Opinion
D. The majority opinion 147. concludes that it is necessary proposed buy- to determine whether the agreement ambiguous major- sell or indefinite.4 The ity opinion asserts:
4 Majority op., any claimed Ehlinger cannot now validate
Because regard- be enforced value," contract cannot "book defined.5 could be of how the term less concludes opinion majority 148. The the documentation inspect right had Based on balance sheet.6 March underlying assumes, then conclusion, majority opinion this obligation Hauser had an stating, so without verify figures sufficient maintain documentation could arise obligation an sheet. Such Evald's balance on statute, if Evald by or perhaps for Hauser contract USA, v. Doral Dental See Kasten obligation. had the *44 598, N.W.2d 300. 2d 733 LLC, 5, 301 Wis. 2007 WI ¶ an agreement testified to However, no party docu- supporting maintain permanently Hauser would the proposed sheets and for Evald's balance mentation obligation. no such contains buy-sell agreement Evald to statute Furthermore, requires no 149. for documentation supporting maintain permanently corporation business sheets.7 Wisconsin's its balance § 180.1602 Wisconsin Stat. in ch. 180. law is contained records of corporate the inspection addresses the right who qualifies A shareholder shareholder. 180.1602(2)(b)8 § records under inspect corporate to bylaws corporation's statutory right inspect to has 180.1602(lm) categories three additional § under 5Id., 6Id.,
¶¶ 3, 60. 7 agree that justices no four important point to out that It is supporting docu obligation to retain Evald had an Hauser or sheets. for Evald's balance mentation a shareholder who is question There is no categories inspect the three statutory right to qualifies for the 180.1602(2)(a). § in Stat. of records listed Wis. 180.1602(2)(a). § pursuant catego- of records Those corporate ries of records are:
1. Excerpts any from minutes or records that required keep permanent as records 180.1601(1).9 under s.
2. Accounting corporation. records of the shareholders, 3. The record of except provided as 180.1603(3). s. 180.1602(2)(a). § regard "accounting records" of a 180.1601(2) corporation, § provides Wis. Stat. that a "corporation appropriate accounting shall maintain "appropriate However, records." nowhere in ch. 180 are accounting records" defined. requirement In addition, there is no that a
corporation permanently accounting maintain records. 180.1601(1) § Wisconsin Stat. identifies those records permanently.10 listing that must be maintained 180.1601(1) § includes minutes, actions taken without a meeting and committee actions taken on behalf of the corporation. Accounting among records are not those corporate required records that are to be maintained permanently. 180.1601(1) provides: Wisconsin Stat. *45 (1) corporation keep permanent A any shall as records of the
following prepared: that has been (a) meetings Minutes of of its shareholders and board of directors. (b) by Records of actions taken the shareholders or board of meeting. directors without a (c) by Records of actions taken a committee of the board of place directors in of the board of directors and on behalf of the corporation. 10 supra See note 9.
341 Chapter business 180, current Wisconsin's 151. § 303, Act 13. law, 1989 Wis. was created accounting type ch. 180 for which records The of right inspection has received provides of a shareholder's scrutiny. prior judicial However, to the enactment little (1987-88) 180.43(1) § 303, Wis. Stat. 1989 Wis. Act of 180.1602(2). § predecessor Section of Wis. Stat. 180.43(1) (1987-88) part: provided in relevant complete books keep correct and corporation shall
Each proceed- and ... minutes of the records of account [and] ... and board of directors ings of its shareholders .... a record of its shareholders interpreted appeals Wis. Stat. The 180.43(1)11 § Milcut, Inc., 48, 2d 117 Wis. in Bitters v. 1983). (Ct. App. Bitters, In the court 418 343 N.W.2d appeals request inspect a shareholder's addressed corporate Id. at 48. financial statements." "interim the interim in Bitters concluded circuit court scope of were not within financial statements right corporate shareholder's to which a documents 180.43(1) § applied. inspection Id. at 49. under appeals affirming con- court, the court of the circuit obligation permit corporation's share- cluded that inspection of ac- "books and records holder [is] undoubtedly for an annual financial .. one count . Id. at 51. statement." majority opinion presumes Here, the obligation documentation an to maintain
Evald had underlying statement, the March annual financial an 11 version of Wis. Stat. specify does not which Bitters 180.43(1) however, relevant text of the interpreted; it version. See above-quoted as the 1987-88 statute is the same n.1, Milcut, Inc., 2d 343 N.W.2d v. 117 Wis. Bitters 1983). (Ct. App. *46 obligation 31, However, 2001 balance sheet.12 such an proposed buy-sell agree- does not arise under either the ment or under a statute. finally,
¶ And if 154. even Evald had maintained underlying 31, documentation the March balance sheet on which Hauser asserted that he calcu- Evald, court, lated the book value of a nevertheless, could not calculate the book value of Evald. This is so because of the irretrievable in indefiniteness inherent pro- undefined, the posed buy-sell agreement. essential term "book value" in the explain may further, 155. To book value be based on different valuation methods and still be called buy-sell agreement proposed gives "bookvalue." The no direction as to whether the assets were to be valued on basis, basis, a cost a tax a fair market value basis being bought some other basis when shareholder is produce out. Each choice would a different book value. Also, there is no indication of how the liabilities towere be valued. The documentation from which the March might 31, 2001 balance sheet was constructed indicate on what basis the March 2001 balance sheet was stated, it but will not indicate whether the valuation comports
basis used for the balance sheet with the term buy-sell proposed agreement. "book value" Ac- cordingly, missing, underlying records do not re- analyze necessity proposed move whether the buy-sell agreement merely ambiguous. is indefinite or
III. CONCLUSION binding I conclude that the had no buy-sell agreement regard valuing shareholder's proposed buy-sell agree- interest in Evald because the 12 majority op., See *47 in that it does not define irretrievably indefinite
ment is i.e., on agreement, of the proposed an essential term and liabilities are to be valued Evald's assets what basis I conclude that Accordingly, in book value. calculating unenforceable. is buy-sell agreement the proposed that the majority's theory I also conclude 157. ¶ is unenforceable buy-sell agreement that the proposed corporate failure to sufficient preserve due to Hauser's 31, 2001 sheet verify records to Evald's March balance I with which am assumptions, rests on three unspoken The first is that assumption in agreement. and Ehlinger between proposed buy-sell agreement 31,2001 balance sheet to Hauser intended Evald's March book value no matter on determining be the basis for sheet's assets and liabilities were what basis that balance is that Hauser had an valued. The second assumption to verify to maintain documents sufficient obligation 31, March 2001 balance sheet. The third assump- Evald's the documents that underlie Evald's having tion is that sheet will cure any ambiguity March 2001 balance buy-sell agreement. indefiniteness in the None proposed Accordingly, of those is warranted. for assumptions above, forth I concur. respectfully reasons set in J. (concurring part, PROSSER, T. DAVID dissenting part). majority affirms opinion and the court appeals decisions of the circuit court under all the buyout (Buy-Sell) agreement, unenforceable; it re- circumstances, facts and mands the case to the circuit court for appointment I in these determinations. receiver. concur however, I the circuit agree, do not court erred when it Evald Inc. to permitted Moulding, of the attorney representation corporation fees pay officer, treasurer, executive and its chief president, Hauser, Jon A. who also is a my director. view, decision on majority's this issue overlooks critical facts and results a mistaken interpretation the indemnification provisions Wisconsin corpo- ration statutes. Because decision on majority's indemnification of fees has attorney ramifications well case, I beyond respectfully this dissent.
I 160. Dr. William was a dentist who *48 in In Watertown. addition to his dental practiced prac- tice, Dr. in a Ehlinger invested number of business including Evald Inc. From 1981 enterprises, Moulding, Hauser, until Dr. Jon and a third Ehlinger, share- holder, Safford, James each owned one-third interest In Evald. 1985 Dr. and Hauser out Ehlinger bought Safford's interest. In 1989 Hauser the running took over business. 1992 Dr. entered Hauser into the at Buy-Sell Agreement issue this case. 161. The 1992 Buy-Sell Agreement included the
following provisions: upon Disability. Upon a Shareholder Transfer
becoming totally hereafter, disabled as for a defined (24) period twenty-four months, of consecutive right purchase other Shareholder shall have the first by all or of part the stock owned the disabled Share Any part holder. by the stock owned the disabled of initially purchased by Shareholder not the other Share Corporation holder shall then be to the offered for purchase. Any part by of the stock owned the disabled purchased by Corporation Shareholder not must purchased by then be the other Shareholder. dis legal abled or representative Shareholder his shall sell by all of the stock owned the disabled Shareholder at Price defined in Section Agreed Purchase as conditions set forth herein. upon the terms and hereof a Stock disability buy-out insurance there is no If holder, "totally used herein shall be disabled" as defined all the substantial being perform unable to as Moulding with Evald employment material duties his of Inc.; profession he occupation or Company, or of ... . practiced on the date he became disabled. ... Purchase Price. (a) at all a Shareholder's stock For transfers of disabled, death, purchase becoming upon
his his stock shall be price a Shareholder's shares of $350,000.00 except greater, or Book Value whichever determined unanimous if the Shareholders have agree the date of this passed subsequent to resolution price be other than purchase ment shall $350,000.00, shall then the most recent such resolution For transfers of all of a purchase price. determine the transfer, involuntary Shareholder's stock on threat shares of stock purchase price of a Shareholder's end of of said shares as of the shall be the book value fiscal year. the last .... (3) being on a Shareholder disabled For transfers *49 (24) months, twenty-four except for for consecutive insurance, by disability buy-out pay payment funded (90) days ninety within ment shall be made 20% of (24) dis twenty-four end consecutive months of of (60) ability, sixty within months said and 80% after payment payment. portion purchase The initial (90) ninety days of the end of the paid not within (24) disability of shall twenty-four consecutive months prime at Bank equal interest to the rate bear annual Wisconsin, banking One, Watertown, or at its successor institution, adjusted at the end of each and shall be paid at the end of each quarter. annual Interest shall be quarter, and there shall prepayment annual be no (24) upon penalty. twenty-four For transfers such con disability by secutive month which are funded disabil ity buy-out payment sought insurance shall be from the paid Shareholder, insurer over to the disabled as as practicable. soon .... Closing Transactions. The Closing any 8. of of transaction hereunder place principal shall take at the Corporation agreed by office of the on the upon date otherwise agreed: parties, however, provided unless .... (b) Disability In the event Transfers. transfer
upon disability provided, closing as hereinabove such insurance, payments place shall take for funded payment, day 20% at 10:00 a.m. on the 90th first (24) twenty-four disability. consecutive months after remaining payable monthly 80% shall be on a basis 6(b)(3) paragraph with interest as set in above. forth added.) (Emphasis In 1993 Dr. May Ehlinger diagnosed was
with Parkinson's disease. He took a leave of absence from his dental practice seek medical treatment. He was never able to resume his but did practice engage other business activities. December 2000 Dr. asked Ehlinger
Hauser to make an offer for his one-half interest Evald. 11. In June 2001 Majority op., Hauser sent to Dr. letter Ehlinger invoking disability provision 12. Hauser Buy-Sell Agreement. Majority op., ¶ calculated the book value of Dr. shares in Ehlinger's Id. Dr. $431,400. Evald at did not this accept offer, on purchase which based Evald's most recent Id. fiscal year-end statement. *50 annoyed Ehlinger may
¶ at the Dr. have been 164. purchase offer. He Hauser made his manner which clearly the size of the offer. He not satisfied with meeting subsequently and called a of the shareholders Ehlinger April 22, made a motion directors for 2002. Dr. meeting be audited but it was at that that Evald's books adopted. directors. The shareholders failed to elect subsequent ¶ on his effort to close Id., 13. Hauser's Ehlinger purchase Dr. earlier offer also failed when percent Hauser's 20 check. refused to cash Ehlinger April 30, 2003, Dr. filed suit 165. On Moulding. against The suit asked the Hauser and Evald (1) appoint dissolve the and court to §§ provided in and receiver, as Wis. Stat. 180.1431 (2) accounting separate 180.1432; obtain an of a dis- liquidate partnership and and distribute its solved (3) respective rights of the assets; declare (4) Buy-Sell Agreement; and issue a under the 1992 preliminary injunction against him Hauser to restrain Ehlinger's implementing redemption Dr. from stock exercising Ehlinger's proxy Dr. shares. vote of Ehlinger suit, In his Dr. described Hauser President, "the Treasurer and Chief Executive Of- as Moulding, alleged ficer of Inc." Dr. Evald sought part, Evald, in he dissolution of "because of the complained of defendant Hauser." He about the actions compensation paid Hauser; and amount of bonuses employment compensation of Hauser's rela- expenses paid tives; the amount and nature of relatives; Hauser and his Ehlinger's Hauser's refusal to consider employment by Evald; and "the relatives for nonpayment of dividends." alleged: 26, 2002, The suit "On March meeting
plaintiff notice an served annual to address the shareholders directors of Evald *51 in regarding matters that were the of dispute operation added.) At the Dr. April meeting, Evald." (Emphasis made numerous motions. These motions were Ehlinger in The complaint alleged recounted the that complaint. the "defendant refused" to Dr. mo- approve Ehlinger's actions not complaint distinguished ap- tions. The motions "the shareholders" from proved by ap- the "defendant." by proved "the directors 168. The stated: complaint
¶ in the of its management corpo- Evald are deadlocked added.) rate affairs." (Emphasis twice asserted that finan- complaint 169. The ¶ by cial statements of the were corporation "prepared [Hauser]." the defendant 33 stated: Paragraph 170.
¶ The defendant has assumed total control of Evald years operated in a manner and has for over 7 Evald primarily disproportionately that benefits and the de- family. members of his The defendant fendant and the acting oppres- is thus and will act in a manner is plaintiff, grounds constitutes for the sive the which judicial request dissolution at the 180.1430(2)(b) plaintiff of the Wis- under Section consin Statutes. sum, undoubtedly In Hauser was although
¶ in the com- shareholder, he is referred to repeatedly in his as an officer or director. plaint capacity In Dr. also named Ehlinger the complaint, alleged as a defendant. The suit Moulding Evald seeks plaintiff "Evald is named as a defendant because Evald because of dissolution of judicial impasse of the actions of defendant Hauser." Complaint, because added). that a re- Dr. asked (emphasis He asked that ceiver be court. appointed receiver, turn, accounting" corpora- "make an The complaint of its business." "dispose tion Ehlinger. J. signed by Attorney Ralph critical in this dissent is whether 173. The issue it permitted corpora- the circuit court erred when attorney represent corporation's tion to fees to pay and interests to dissolve the rights litigation corpo- ration, and fees to its attorney represent officer/director Hauser, alleged provide Jon whose conduct short, did the circuit court grounds dissolution. *52 in fees after consider- allowing attorney thoroughly err the facts above? ing
II 1980s, 174. In the a national "director and officer crisis" led to enactment of to liability legislation "give officials act added who within protection corporate A Milakovich, of their duties." Paul scope corporate Director and Indemni- Comprehensive Approach: Officer (1988). Wisconsin, in L. Rev. Marq. fication Wisconsin to address this "crisis" in passed legislation legislation 1987. 1987 Wis. Act 13. The new created Wis. (1987-88). § Stat. 180.044 1989 Wis. Act 303 renum- § bered 180.044 to 180.0851 and made insignificant modifications. Section 180.0851 reads: now (1)
Mandatory indemnification. A shall indemnify officer, a director or to the extent that he or she has been successful on the merits or otherwise in proceeding, expenses the defense of a for all reasonable in if proceeding incurred the director or officer was party a because he or she is a director or officer of the corporation.
(2)(a) (1), In cases not included under sub. a indemnify against director or officer corporation shall a proceed- director or officer liability incurred party officer because the director or was ing to which corporation, or officer of the he or she is a director director or liability incurred because the unless duty or perforin a that he or failed to officer breached corporation and the breach or failure owes to the she any following: constitutes perform corpora- fairly to deal with the 1. A willful failure with a matter in connection tion or its shareholders has a material conflict of director or officer which the interest. law, unless the direc- A violation of the criminal
2. to believe that his or officer had reasonable cause tor or no reasonable cause conduct was lawful her her conduct was unlawful. that his or believe director or officer A transaction from which the personal profit. improper derived an misconduct. Willful (b) Determination indemnification is of whether be made under s. this subsection shall required under 180.0855.
(c) by judgment, proceeding of a The termination *53 conviction, upon plea a of no order, or settlement or itself, not, by create plea, does equivalent contest or an director or indemnification of the presumption that a under this subsection. required officer is not (3) indemnification director or officer who seeks A request to shall make a written under this section corporation.
(4)(a) is not under this section Indemnification articles of incor- extent limited required to the poration under s. 180.0852.
(b) not re- this section is Indemnification under previously received or officer has quired if the director indemnification or allowance of expenses any from person, including corporation, in connection with proceeding. the same added). (emphasis
Wis. Stat. 180.0851 Comment, In his Paul Milakovich made the following observations: recently joined
Wisconsin has other numerous states passing protective adoption statutes.... With statutes, these directors and officers of Wisconsin cor porations can make decisions without the unreasonable outrageous litigation threat of expenses personal liability. or .... codifying provisions its indemnification for di- officers, legislature
rectors and the Wisconsin took a unique approach. rather While most states have adopted mandatory indemnification provisions in lim- ited permissive situations and indemnification in all others, Wisconsin has approaches combined both into a single mandatory indemnification section. Wisconsin require corporation continues to indemnify its they directors and officers to the extent were successful on However, the merits in the proceeding. defense of a the difference under the legislation can be seen in circumstances which do not fall within this "success on 180.044(2) language. the merit" Section of the Wiscon- sin provides Statutes now that a shall indemnify a or against liability director officer it unless is determined that director officer breached or duty failed perform he or corpora- she owed to the tion and the perform breach or failure to constitutes:
(a) A fairly wilful failure to deal corpora- with the tion or its shareholders in connection with a matter in which the director or officer has a material conflict of interest;
(b) A law, violation of criminal unless the director *54 or her cause to believe his officer has reasonable or cause to believe his lawful or no reasonable conduct was unlawful; her conduct was or
(c) which the director or officer A transaction from personal profit; or improper derived an (d) misconduct. Wilful occur, the director or officer any
If of these criteria under Wisconsin law. Like the cannot be indemnified of a dealing with the limitation director's liabil- statute corporations ity, provision applies to all Wisconsin this corporation provides otherwise. unless omitted). (footnotes Milakovich, at 428-29 supra, director and officer indemnification is The area of legislature adopted in has one which Wisconsin vastly approach adopted than that other different require indemnification to the ex- Most states states. on the merits of tent a director or officer is successful they permit indemnification in her actions and his or Wisconsin, the other circumstances. on most other hand, in instances when the requires indemnification merits and in officer director is successful on the corporate official is not success- in which the situations merits, long as the individual's conduct ful on the as statutory exclusions. This does not fall within the provides a provision unique in that it indemnification indemnification director or officer the assurance available, corporation limits this will be unless the right incorporation. its articles omitted). (footnotes Id. at 436 are echoed 176. These 1988 observations E. and Nathan by Jay Grenig Practice Series
Wisconsin Fishbach. write: They rights are "mandatory" indemnification past prac- common and consistent with
straightforward *55 however, They mandatory, any tices. are not since corporation may incorpora- limit them in its articles of provisions, tion. Under these an officer or director is expenses (including entitled to indemnification for rea- fees) attorney they successfully if sonable defend in a proceeding they they in which a party are because are officer or director. Even if such the officer or director is proceeding, unsuccessful its defense of a it is entitled corporation liability, to indemnification for all including expenses, liability unless resulted from misconduct, criminality, interest, willful conflict of or improper personal profit by the director. Fishbach, & Grenig Wisconsin Practice Series: Meth- (4th 2004).1 §
ods Practice 52.71 ed.
III 177. We must examine the text of Wis. Stat. 180.0851, § considering this historical and analytical (1) background. Subsection reads as follows: (1) Mandatory A shall indemnification. officer, indemnify a director or to the extent that he or she has been successful on the merits or otherwise in proceeding, the defense of a expenses for all reasonable proceeding incurred in the if the director or officer was party he or she because is a director or officer of the corporation. 180.0851(1) added).
Wis. Stat. (emphasis 178. This subsection presents several obvious questions light of Jon Hauser's status aas director officer, as well as a shareholder. What does the "if phrase the director or officer was a because he party point any Dr. does limitation on indemni Moulding's fication in incorporation Evald articles of in this case. corporation" is a director or mean?
or she officer of mean if the "director or officer" also Does it is a significant shareholder, the director or officer loses his mandatory right to indemnification? Does it mean that capacity partly in his if a director or officer sued as partly capacity in his as a director or officer right shareholder, his the director officer loses mandatory indemnification? *56 my right
¶ view, a director or officer has a 179. "to the extent that he or she has been to indemnification in successful on the merits or otherwise the defense of proceeding... party a if the director or officer was a corpo- because he or she is a director or officer of the 180.0851(1). § Stat. ration." Wis. lengthy
¶ rendition of the facts in this 180. dispute beyond dissent establishes that Hauser was sued large part in because of his actions as a director or officer. Paragraph Complaint, quoted instance, For in 33 of the acting ¶ in above, in Hauser is accused of a "manner oppressive plaintiff, is to the which constitutes grounds judicial corporation dissolution of the ... for the 180.1430(2)(b)." 180.1430(2)(b) under Section Section may corporation provides that the court dissolve a circuit "(b) [e.g., Ehlinger] [t]hat if a shareholder Dr. establishes [e.g., or those in control the directors acting Hauser] acted, are or will act in a manner have illegal, oppressive is or fraudulent." Wis. Stat. 180.1430(2)(b) added). § (emphasis Paragraph complaint only part 33 of the capacity in as of the that Hauser was sued his evidence Ehlinger alleged Dr. that Hauser a director or officer. prepared statements, the financial and Hauser was Ehlinger alleged them. Dr. that Hauser forced to defend employ- Ehlinger's refused to consider Dr. relatives my any interpretation of the statute that view, ment. In mandatory disqualifies or officer from indem- director exclusively nification if the director or officer is not sued wrong. officer, as a director or is dead question interpreting A in second Wis. 180.0851(1) phrase "to Stat. concerns the extent . successful on the merits or other- that he . . has been By phrase terms, in the defense." its this cannot wise prevail mean that the director or officer must on the every respect. bottom line or litigation 183. One of the critical issues Ehlinger thereby giving disabled, was whether Dr. was right disability provision Hauser the to invoke the Buy-Sell Agreement. Ehlinger alleged in the complaint Dr. his totally
that he "is not disabled and not in has past totally purposes the Buy-Sell Agreement." been disabled for complaint
See, ¶at 48. The cir- "totally found, however, that Dr. cuit was meaning agreement. disabled" within the See majority op., ¶ 23. This determination made after "five-day finding, bench trial." Id. After this the court moved on to a determination of "book value." In addi- *57 many Ehlinger's allegations against tion, of Dr. Hauser by never were found as facts circuit court. The "improper circuit court did not find that Hauser made personal profit" "illegal, oppres- or that his action was though corpo- Moreover, sive or fraudulent." even yet dissolved, ration is on track to be it is not certain Ehlinger's that Dr. final share of the assets exceed will $431,400. result, Hauser's As a it offer cannot be said any that Hauser was not successful to extent in the trial. ¶ If 184. Hauser was sued because he was a direc- corporation
tor or officer of the and if he was successful "on the merits or otherwise" to some extent in the proceeding, defense of the he is entitled to "reasonable as a matter of law. He is entitled to reason- expenses" successful, the extent" he able "to under expenses 180.0851(1). § Wis. Stat. indemnification is not a
¶ Director/officer (1). matter of discretion under subsection When certain facts are a director or officer has a to present, right The circuit court must given indemnification. be latitude "extent" to determine the of success and the reasonable- ness of but it cannot reasonable expenses, deny expenses makes a if altogether. majority profound legal error it Hauser because he disqualifies was not sued exclu- as a director or officer or because he did not sively prevail in the circuit court. completely 186. The majority attempts avoid clear an- 180.0851(1) §
swers to the issues surrounding by assert- failed to ing Hauser With the "formalities" of comply 180.0851(1) § for indemnification under applying making request written to the corpdration, per 180.0851(3). § Majority op., 97-98. ¶¶ seriously 187. The that Jon majority suggests Hauser from disqualified receiving mandated (1) indemnification under subsection because he failed to sit down and write a letter to Jon president, Evald's Hauser, treasurer, Hauser, or Evald's Jon requesting payment attorney fees. This assumes disqualification there is no document that Hauser could produce that would as "a written and that he qualify request" major- could not make such a written now. The request ity grips does come with the of Wis. Stat. meaning (b). 180.0851(4) § 188. The then Stat. majority moves Wis. 180.0851(2), which also indemnification un- requires
less the director or officer "breached or failed to perform to the duty" requires owed but also *58 to follow one of the "means" set out
director or officer § 180.0855 to secure indemnification. Wis. Stat. 180.0851(2) Stat. provides: 189. Wisconsin (2)(a) (1), not included under sub. a cases indemnify against a or officer corporation shall director by proceed- or in a liability incurred the director officer party or officer ing to which the director was a because corporation, he is a director or officer of the or she liability incurred because the director or unless perform duty or failed to a that he or officer breached and the breach or failure to she owes any following: perform constitutes fairly corpora- 1. A failure to deal with the willful tion or its in connection with a matter in shareholders or officer has material conflict of which the director a interest. law,
2. A of the criminal unless the direc- violation had cause to believe his or tor or officer reasonable her conduct was lawful or no reasonable cause to her believe that his or conduct was unlawful.
3. A transaction from which the director or officer improper personal profit. derived an 4. Willful misconduct. (b) Determination whether indemnification
required under this subsection shall be made under s. 180.0855.
(c) proceeding by judgment, The termination a order, conviction, upon plea settlement or of no equivalent not, itself, plea, contest or an does create presumption that indemnification of the director or required officer is not under this subsection.
(3) A director or officer who seeks indemnification request under this section shall make a written to the corporation. *59 (a)
(4) Indemnification under this section is not required by to the extent limited the articles of incor- poration under s. 180.0852.
(b) Indemnification under this section is not re- quired previously if the director or officer has received expenses any indemnification or allowance of from person, including corporation, in connection with added.) proceeding. (Emphasis the same majority deny attorney ¶ 190. The does not fees because circuit court made a determination that perform duty Hauser "breached or failed to that he" to the owed "and the breach or failure" disqualifying constituted one of the four actions set out (2)(a)1. through majority Rather, subsection may eligible concludes that Hauser have been for attor 180.0851(2) ney § fees under Wis. Stat. but he failed to proper seek them in a manner under Wis. Stat. 180.0855(5) 180.0854."). § ("By Majority a court under s. op., ¶¶ 97, 103, 119. problems legal
¶ 191. There are two this with application First, conclusion. there is no time limit for an party for A indemnification. director or officerwho is a to proceeding may apply a conducting for indemnification to proceeding compe- court of another 180.0854(1). jurisdiction. § tent Wis. Stat. The statute prescribe my view, does not a time. it is not too late to 180.0851(4)(b). § apply Support now. See Wis. Stat. for interpretation this found Wis. Stat. 180.0851(2)(c): § proceeding by "The termination of a judgment [or] not, itself, does order... create presumption indemnification of the director or required officer is not under this subsection." Stat. Wis. 180.0851(2)(c) added). nothing (emphasis else, If applied appeals Hauser the court of when he filed his cross-appeal. brief in the majority "[o]n notes, four Second, as the [Dr.] asked the circuit court
occasions, litigation enjoin paying with cor- from Hauser op., Majority porate occasions, 92. On four funds." appeals motions. The court of court denied the majority court. The affirmed the circuit thereafter technicality Hauser did not on another seizes —that *60 approval application to the circuit court for initiate an determining attorney issue on the avoid fees—to Nonetheless, four times the issue was before merits. circuit court that the circuit court. Four times the knew required if order indemnification it deter- court was to officer Hauser was mined that director Hauser or 180.0851(1) (2), § indemnification under entitled to "fairly if or officer Hauser was or reasonably director Hauser to indemnification in view of all the entitled regardless circumstances, indemni- relevant whether 180.0851(2)." required under s. Stat. fication is Wis. 180.0854(2)(b). It The court made four decisions. virtually appellate impossible for an court to now erroneously court exercised its conclude that the circuit under discretion on either the facts or law subsec- (2). tion erroneously exer 193. Unless the circuit court attorney discretion,
cised its
the amount of an
fee
typically is left to the discretion of the circuit
award
Weisflog'sShowroom,
¶22,
14,
2008 WI
court. Stuart v.
Appellate
an
103,
308 Wis. 2d
746 N.W.2d762.
review of
attorney
fees is limited to whether the trial
award
properly
exercised its discretion. Benkoski v.
App
Flood,
¶84,
10,
652,
242
2d
626
2001 WI
Wis.
(citing Hughes Chrysler
Corp.,
v.
Motors
197
N.W.2d 851
(1996)).
973, 987,
"While the
Wis. 2d
¶ "distinct and apart from its members or stockholders." Club- Legion house, Madison, 385, Inc. v. 21 City 248 Wis. (1946). A N.W.2d 668 is corporation entity treated as an from separate its stockholders "under all cir- ordinary State, cumstances." Jonas v. 638, 644, Wis. 2d (1963). N.W.2d 235 These judicial pronouncements are in grounded statutes, the corporation which in provide Wis. Stat. 180.0302: incorporation its articles powers. Unless
General dura- otherwise, perpetual has corporation provide corporate in name and has its tion and succession things person to do all powers as a natural same carry to out its business necessary or convenient power to do all of affairs, including not limited to but following: (1) sued, in its complain and defend and be Sue corporate name. ....
(10) pow- exercise the business ... and Conduct its in this state. granted by chapter this or outside ers § 180.0302. Wis. Stat. to sue and be sued power 196. The corporation's
¶ necessarily name entails to defend its corporate counsel. his compensate to retain. and right "dispose Dr. asked the court Ehlinger complaint, had corporation business." corporation's] [the to resist right request. that, should not assume upon 197. This court that Jon
remand, Moulding, a receiver will sell Evald and that Dr. Hauser purchase corporation, will this a much litigation from emerge will will man. We do not know whether Hauser wealthier the business if he is forced have the means to purchase to the do not attorney corporation. all fees We repay will survive form. any know whether this incorrect on the majority I believe the and is serious doing damage facts and law indemnification statute. For the Wisconsin's corporate stated, I dissent. reasons herein respectfully I am authorized to state that Justice *62 159-198 of this joins MICHAEL J. GABLEMAN ¶¶ opinion. (con ZIEGLER, 200. ANNETTE KINGSLAND J.
curring part). part, dissenting agree I with the majority opinion erroneously circuit the permitted corpora exercised its discretion it when the (Evald), Moulding, pay tion, Evald Inc. to Jon Hauser's litigation expenses. op., Majority ¶¶ However, 111-113. majority opinion, I dissent otherwise from the which appoint remands this case to the circuit court for the ment of a receiver. I would instead remand the case to development the circuit court for full of the record. great ¶ 201. Of concern to me is the circuit court's appointment "special magistrate" of a did who purely expert function as a referee or an witness and forewarning parties, acted, instead without to the as a hybrid appoints of both. When a court a referee or an expert subject appointee witness, that to certain requirements provide parties adequate which the with safeguards ability and the to make a record. The procedures provide safeguards, however, these are depending type appointment. different on the In the magistrate special issue, case if at the indeed was appointed parties referee, as a were denied those safeguards precluded making and thus were from a full regarding record If, referee's actions. on other special magistrate appointed expert hand, an as parties statutorily- witness, were denied their imposed opportunity depose fully and cross-examine appoints him. A court that such an should individual always parties fully ensure that the understand the role scope appointee, appointee's of the involve- parties' ment should never as a denial of effectuate right fully develop complete the case and make a Here, I record. prived dissent because the were de- opportunity fully develop evidence and complete make a record. *63 majority the addition, I that In believe 202. by concluding
opinion that it "need not resolve errs ambigu- buyout agreement indefinite, is the whether question ous, resolution that neither, or both because Majority change case." outcome of this the would agreement ambiguous, op., ¶ is then this case If the the court for a trial on to the circuit should return ambiguous language. contrast, of the determination agreement indefinite, it is unenforceable. if the then deprived oppor- parties However, since the were tunity develop below, case I would reserve their circuit for remand this case the issue and discovery the have for a determination after fully develop opportunity the their been allowed arguments. respectfully reasons, I For those dissent. appointed Del case, In this the circuit court "special public accountant, as a Chmielewski, a certified magistrate" to "determine Evald's March 2001 book accounting accepted principles using generally value appropriate [GAAP] size, are the function which for corporation." The circuit court and structure of this special magistrate to the "advise further instructed report any departures from GAAPin his to the Court of "report any substantial inconsistencies Court" and to reporting methodology used Evald 2001 vis á years." majority opinion previous As vis two authority points ¶ 27, out, it is not clear what see under appointed special magistrate. From the circuit court appears court, this it that the the record now before magistrate special purely as a referee did not function hybrid expert morphed or an witness and instead into a parties being deprived of the safe- of both with guards of each. providing court-appointed
¶ 204. The statutes procedural expert rife with referees and witnesses are safeguards litigants process that ensure due of law. Mandating court-appointed referees "shall be the exception permits rule," and not the Wis. Stat. 805.06 appoint the court to a referee "when issues are complicated," including "matters of account and of (2). §§ computation damages." 805.06(1), difficult See *64 may case, Relevant to this the court direct the referee § report only," 805.06(3), "to receive and evidence but prepare report upon the referee must a the matters by report submitted the order court's and "shall file the 805.06(5)(a). § with the clerk of court," the "Within 10 days being filing after served with notice of the any report party may objections serve written thereto 805.06(5)(b). upon § parties." the other ¶ pursuant 205. hand, On the other to Wis. Stat. § may appoint expert 907.06, the court an witness. The court-appointed expert witness be "shall informed of by judge writing, copy the witness's duties the a of which shall be the clerk, filed with or at conference in parties opportunity participate." the which shall have 907.06(1). § court-appointed expert witness "shall parties findings" may the advise deposed of the witness's and be by any party, may testify by be called to the judge any party, subject and "shall be to cross- by party." examination each Id.
¶ ap court, From the record this before it pears court-appointed "special magistrate" that the was expert a referee turned witness. The circuit court appointed special magistrate to determine Evald's arguably 31, value, March 2001 book which is a "mat ter[] appointed of account" which a referee is under 805.06(2). Stat. Wis. The circuit court instructed the parties they "required inquiries that are to answer Special Magistrate" but that it clarified does not advocacy. want Furthermore, in a statement latched Hauser; v. appeals, onto both the 42, 718, 758 N.W.2d 123, Wis. 2d App WI 85, the circuit see majority opinion, and "anybody's special magistrate that the court denied expert witness." Nevertheless, special magistrate He was quasi expert at least a witness. as
emerged
permitted
the circuit court
testify,
called to
him:
cross-examination of
to conduct a limited
witness, I
special magistrate
as
Regarding calling
this,
I
but would
to Mr. Chmielewski about
didn't talk
just
question
regarding
him
you to
allow either of
essentially
are
clarification of
couple
things
which
any
he's
reports.
arithmetical calculation
his
One
made;
what,
he
a base to the
two is
what sources
had as
third,
used;
he
opinions
figures
he
anybody's
in his
to the Court. He's not
report
made
witness;
would,
you
questions just
I
if
expert
but
have
aspects
testify.
allow him to
report,
on
of his
those
*65
cross-examination,
Indeed,
spe
limited
the
during the
able to form
cial
asked whether he was
magistrate was
a
31,
value "to
an
on Evald's March
2001 book
opinion
A
of
accounting certainty."
degree
degree
reasonable
of
a
on
witnesses.
expert
certitude is
requirement placed
Co.,
420,
2d
See
v. All Am.
& Cas.
72 Wis.
Drexler
Life
(1976)
Wind,
v.
60
(citing
1 In its Stat. Wis. report prepare upon the matters submitted The referee shall and, findings required if to make of fact and the order reference special magistrate's not been could have clear as to the rights obligations including thereto, role and their and object opportunity days "[w]ithin being the to after 805.06(5)(b). § filing." with served notice of the See Despite acknowledging pro- these "certain irregularities," majority op., majority cedural 88, the opinion "[t]he nevertheless concludes that record does understanding by parties not evince an the that the special magistrate appointed expert was an witness," as majority opinion id., ¶ 83. The further concludes that right object procedures "Hauser forfeited his to the specified by Id., ¶ the court in the reference." 87. The majority opinion opportunely objection frames Hauser's procedures as one aimed at the in the court's reference. By doing majority so, the evades the fact that if indeed magistrate special appointed the referee, was as a days being Hauser had "10 after served with notice of filing report" object. the See Wis. Stat. 805.06(5)(b). undisputed magis- special It is that the report trate never filed his with the clerk court. Accordingly, magistrate special ¶ 209. if the was appointed parties pre- referee, indeed aas were making regarding cluded from full record the referee's special magistrate If, hand, actions. on the other appointed expert witness, as an were given statutorily-imposed opportunity their de- pose fully cross-examine him. Without the benefit requirements, majority of either of those concludes appointment that the case should be remanded for the law, report. conclusions of the referee set shall them forth in report The referee shall file the with clerk *66 jury, an action to tried be without unless otherwise directed reference, transcript the order of shall file with ait of the proceedings original and of the evidence and the exhibits. The parties filing. clerk shall forthwith mail to all of notice the
367
of the
deprived
were
parties
a receiver. Because the
a com-
evidence and make
fully develop
opportunity
I
the case
the
record,
instead remand
would
plete
of the record.
development
for full
circuit court
I
the
addition,
majority
dissent
from
¶
not resolve whether
it "need
conclusion
opinion's
neither,
indefinite, ambiguous,
buyout agreement
is
the
not
of that
would
question
resolution
or both because
59. To
Majority op.,
case."
the outcome
this
change
if
in an
are
agreement
contrary,
phrases
the
words
of more than
reasonably susceptible
as in
ambiguous,
to determine
duty
then it is the court's
meaning,
one
the
agreement
at
the time
the
intent
parties'
Invs.,
Packing
v. Whitehall
Inc.
Capital
into.
entered
(1979)
Co., Inc.,
178, 189-90,
2d
MICHAEL J. joins GABLEMAN this dissent 201— ¶¶ 212 of this opinion.