Aliсe H. KOCINSKI, Plaintiff-Appellant-Petitioner, v. THE HOME INSURANCE COMPANY, a foreign corporation, Robert S. Ondrejka, and City of Milwaukee, a municipal corporation, Defendants-Respondents-Petitioners.
No. 87-1640
Supreme Court of Wisconsin
Submitted on briefs October 5, 1989. —Decided March 13, 1990.
452 N.W.2d 360
For the Home Insurance Company and Robert S. Ondrejka, there were briefs by Ronald L. Piette, Brian J. Frank, and Piette, Nelson, Zimmerman & Dries, S.C., Milwaukee.
For the City of Milwaukee, there were briefs by Scott G. Thomas, assistant city attorney.
CHIEF JUSTICE HEFFERNAN. This is a review of a deсision of the court of appeals, 147 Wis. 2d 728, 433 N.W. 2d 654 (Ct. App. 1988), which reversed1 an order of the circuit court for Milwaukee county, Charles L. Larson, Reserve Judge, directing the plaintiff Kocinski to enter into a settlement of her cause of action against the city of Milwaukee and other named defendants. We affirm that decision but direct that the cause be remanded to the circuit court for trial.
Two questions are posed on this appeal. We address both, although only the answer to one is dispositive. The first question is whether a stipulation under the terms of
We conclude, as did both the trial court and the court of appeals, that such stamped facsimile name satisfies the statutory requirement that the document be “subscribed” by the party to be bound.
Because the parties have extensively briefed this issue and it is one that is likely to recur, we address it, although its rеsolution does not control the disposition of this case.
The controlling issue is whether the stipulation of settlement, even if properly “subscribed,” was enforceable where the plaintiff withdrew her offer to settle prior to the Milwaukee Common Council‘s acceptance of the settlement. We conclude that the stipulation, by its terms and as a matter of law, was unenforceable until such time as the plaintiff‘s unrevoked offer to settle was accepted by the Milwaukee Common Council, the body which alone had the authority to come to a settlement agreement with the plaintiff. Because our resolution of this issue nullifies the proposed settlement, the case must be returned to the circuit court for trial or other proceedings.
The facts are simple and not in dispute. The chronology is, however, significant. On September 3, 1982,
On April 13, 1987, Kocinski‘s attorney wrote to the attorneys for the defendants and also to Kocinski, stating that the letter was in confirmation of telephone conversations between the parties on April 10, 1987.
Pertinent to this review are the following excerpts from that letter:
[I]t was agreed [in the prior telеphone conversations] that this matter is settled for a total payment to Alice Kocinski of $260,000.
...
It is my understanding that the City of Milwaukee will pay a total of $170,750. It is further my understanding that [Home Insurance and Ondrejka] will pay a total of $89,750. Upon receipt of this money from the parties, Alice Kocinski will execute the required Releases.
Although I understand that Mr. Konrad [the Deputy City Attorney] must proceed through the Common Council for final approval of this payment, it is my understanding that this step will be accomplished as quickly as possible by Mr. Konrad.
...
If any of you have any disagreement with any part of this letter, please contact me immediately.
Very truly yours,
HABUSH, HABUSH & DAVIS, S.C.
[Stamped name] Gary R. Kuphall
Gary R. Kuphall
On the same day Deputy City Attorney Konrad wrote to counsel, stating, inter alia, “The settlement agreement is subject to the approval of the Common Council of the City of Milwaukee.”
The record summarized by the court of appeals demonstrates that Kocinski promptly objected to the terms of the proposed settlement because, she claimed, on the date of her counsel‘s confirmatory letter she, for the first time, discovered additional disabling residuals frоm the accident—residuals which she felt entitled her to additional compensation.
On April 22, 1987, Robert Habush, senior partner of the firm representing Kocinski, wrote to the trial judge advising him that there had been an “attempt,” with Kocinski‘s approval, to settle the case and that a settlement figure of $260,000 had been agreed to. He also told the judge that Kocinski had subsequently withdrawn her consent to the agreement. He asked the trial judge for “help in convincing the client that it is in her best interest to accept this settlement.” A copy of this letter reciting Aliсe Kocinski‘s decision to withdraw from the proposed settlement, was sent to Deputy City Attorney Konrad.
Attempts to change Kocinski‘s mind failed, and in May of 1987 defendants brought motions asking the court to enforce by order the settlement referred to in the telephone conversations of counsel and memorialized in the letters exchanged between Kocinski‘s attorney and the City Attorney in April of 1987. It was the posi-
The motion to determine whether the stipulation of settlement conformed to the formal requirements of
Surprisingly, although the pre-motion-hearing correspondence made clear that Kocinski had revoked the offer to settle prior to any action by the Common Council of Milwaukee, counsel for the defendants in their motions gave their attention only to whether the stipulation was subscribed as required by
Evidence was adduced that tended to show that the now newly claimed disability reasonably was known to
This argument of plaintiff‘s counsel—that the offer was revoked—which we conclude raises the dispositive issue, was not addressed at all by the judge. He correctly concluded that the document was not deficient because of the stamped signature, because the stamp satisfied the requirement of
The order filed July 17, 1987, denominated “final,” directed enforcement of the settlement and ordered dismissal of the complaint upon thе defendants paying the agreed-upon sums and the execution of releases. On July
The settlement payment was refused, and Kocinski brought her appeal from the order of the circuit court compelling settlement. The court of appeals agreed with the determination of the circuit court that the rubber-stamped signature of Kocinski‘s attorney satisfied the requirement that the writing under
To place much emphasis on these formal requirements begs the question. It appears that is what the trial court did, because, once it found that the document was properly subscribed in conformance to the formal requirements of
The court of appeals agreed with the circuit court that the formal requirements of a “subscribed” name had been met, but had reservations about what it referred to as “the nature of the settlement agreement.” Accordingly, it remanded the cause for factfinding to determine the parties’ intent. Did the agreement between counsel referred to in the letter of April 13, 1987, сonstitute the settlement, subject only to the perfunctory ministerial acquiescence of the Common Council, or was it merely an offer by Kocinski that could only ripen into a settlement upon its acceptance by the Common Council prior to any change of heart by Kocinski? The majority of the court of appeals concluded that the subjective intent of the parties had to be ascertained as a matter of fact by further proceedings before the question could be resolved. That conclusion was erronеous. We agree with the opinion of the dissenting judge that the nature of the agreement is to be determined wholly as a matter of law. The dissenting judge correctly stated:
[N]o amount of evidence would be able to show when the City accepted a settlement agreement, other than when the common council accepted a proposal which had already been revoked by Kocinski.
Moreover, the subjective intent of the parties under the facts here is irrelevant in respect to the legal determination of when thе settlement could first be said to spring into life. Under the law of Wisconsin and the law of municipal corporations generally, on the basis of undisputed facts it can be said with certainty that no settlement was ever reached in the instant case.
The law in respect to the authority of city attorneys is clear. Charles Rhyne asserts the universally accepted generalization:
The city attorney generally has power to institute court actions, and defend actions against the municipality. However, he may not . . . compromise claims and consent to judgments against the municipality . . . .
Rhyne, Municipal Law, ch. 6, p. 95 (1957); see also, 10 McQuillin, Law of Municipal Corporations, sec. 29.15, p. 254 (3d ed. 1981).
The city attorney‘s brief acknowledges the lack of authority to bind the city to a settlement. He seeks, however, to bind Kocinski by asking us to construe the documents as an option contract which would hold the plaintiff to her offer, but leave the municipality the freedom to reject. This argument by the city attorney, therefore, recognizes that the documents proffered were at the most an offer, and not a memorialization of a settlement already completed. The city attorney would have us resolve this dispute by having us conclude that the plaintiff‘s offer was irrevocable and, hence, was timely accepted by the Common Council.
The court of appeals concluded that, “Principles of contract law may thus illumine our inquiry.” 147 Wis. 2d at 738. In this case, it does more than that. Contract law is dispositive. It should be pointed out that there may well be stipulations as to procedure and formalities in the course of trial that do not implicate contract law at all, but it goes too far to say that contract law is inapplicable to all agreements reached under
It is, however, correct to say, as did the court of appeals in Adelmeyer v. Wis. Electric Power Co., 135 Wis. 2d 367, 369, 400 N.W. 2d 473 (Ct. App. 1986), “[T]he statute [
Southern Colonization Co. v. Howard Cole & Co., 185 Wis. 469, 201 N.W. 817 (1925), and Illinois Steel Co. v. Warras, 141 Wis. 119, 123 N.W. 656 (1909), thoroughly discuss the stаtus of an in-court stipulation and under what circumstances the stipulation is to be treated as a contract rather than an understanding for the convenience of the parties and the court to obviate procedural and evidentiary obstacles.
One of the bases, reiterated in the majority opinion of the court of appeals, for the rationale that stipulations of settlement not be treated as contracts is that relief from them is to be granted only under
In the instant case, there is no doubt that, from a formal point of view, a stipulation was entered into in conformance with
As stated above, a city attorney cannot make a valid contract on behalf of the city unless he has prior authority to do so. Only the municipal council has that authority or the authority to delegate that authority. See Rhyne and McQuillin, supra. Wisconsin law is in accord. See Probst v. Menasha, 245 Wis. 90, 94, 13 N.W. 2d 504 (1944). The city attorney acknowledges that he has no authority to contract a settlement for the City of Milwaukee except where the amount to be paid is $2,500 or less. The latter аuthority is specifically delegated to the city attorney by an ordinance that became effective by common council action on October 22, 1985. No other delegation of authority to settle on behalf of the city is even asserted.
The commonly understood rationale which governs the settlement authority of a city, and specifically of the City of Milwaukee, is carefully set out in the dissent of Judge Moser. He summarizes his conclusions at pp. 758-59:
The above review of legislation surveys state law and provides two conclusions. First, only the common council of a city controls its finances. It alone can levy taxes to obtain monies needed to run the city government, and it alone can appropriate and disburse monies obtained in that matter. Second, only the common council is competent and has the capacity to settle any claim or cause of action against the city. In short, state law gives no authority to a city attorney to settle claims or lawsuits against the city, or to disburse city funds in settlement of claims or lawsuits. Because no such authority was vested in
the city attorney involved herе, and because the city council did not adopt the resolution accepting the city attorney‘s recommendation of acceptance of Kocinski‘s settlement offer before she revoked it, the trial court erred in holding that there was a binding settlement, and that Kocinski was therefore bound by its terms.
The express concession of the city attorney that he has no authority to bind the city is the basis for the city attorney‘s argument that the stipulation must, therefore, be construed as an irrevocable option contract. He reasons that, because the city attorney does not have the authority to bind the city, the “agreement” should be construed as one that binds the offeror to hold the offer open irrevocably and gives the city the option to accept the offer. The city attorney claims he has the authority to enter into option contracts of this kind; however, this “agreement” simply is not an option contract.
Bratt v. Peterson, 31 Wis. 2d 447, 451, 143 N.W. 2d 538 (1966), discusses a typical option contract. The nature of the contract as one of option should be made clear, the obligation of the offeror to hold the offer open for a specific periоd of time should be set forth, and the consideration for the option should be expressed with certainty.7 It is the usual provision that consideration for extending an irrevocable option may be retained by the offeror even though the option is not exercised. None of these characteristics are even alluded to in the exchange of correspondence that the city attorney now claims to be an option contract.
Thus, the resolution of this case is controlled by contract law.
Only the Common Council was authorized to accept the plaintiff‘s offer to settle her lawsuit. The facts are undisputed that Kocinski revoked her offer prior to its acceptance by the Common Council. An offer can be revoked by a communication to the offeree that the offeror no longer intends to enter into the proposed contract. Williston on Contracts, sec. 55, pp. 176-77 (3rd ed. 1957); and Corbin on Contracts, sec. 38, p. 61 (one volume ed. 1952). Here the revocation of the offer was communicated in a timely fashion. The offer was not a part of an irrevocable option. Accordingly, Kocinski had every right to withdraw from the proposed agreement prior to its acceptance by the Common Council. No сontract ever sprang into existence. The litigation now stands in the same posture as it did prior to April 13,
This opinion has discussed at length the alleged agreement between the city and the plaintiff to the neglect of the arguments asserted by the individual defendant and his insurance company, who were also parties to the proposed settlement. Obviously, the legal determination that pertains to the rights and obligations of the city of Milwaukee are not applicable to these nonmunicipal defendants. We conclude, however, from the clear language of the settlement offer, that the other defendants’ responsibility to satisfy the plaintiff‘s claim was inextricably interwoven with the overall offer of the plaintiff and the larger portion of the settlement amount to be paid by the city. Because the entire proposed settlement collapsed as the result of the withdrawal of Kocinski‘s offer, the other defendants stand in the same position as they did prior to April 13, 1987—defendants in a pending lawsuit.
By the Court.—Decision modified and, as modified, affirmed; cause remanded to the circuit court for trial.8
SHIRLEY S. ABRAHAMSON, J. (concurring). I write to remind attorneys to take care in relying on
In this case the majority opinion of the court of appeals stated:
The Supreme Court has indicated that although settlement agreements under the aegis of Rule 807.05, Stats., ‘have occasionally been referred to as contracts, they are not governed by contract law’ and may be set aside, in the court‘s discretion, for any of the reasons specified in Rule 806.07(1), Stats. Burmeister v. Vondracheck, 86 Wis. 2d 650, 664, 273 N.W. 2d 242, 248 (1979). Apart from the ameliorating provisions of Rule 806.07, however, certain stipulations under Rule 807.05 ‘are entitled to all the sanctity of an ordinary contract.’ Thayer v. Federal Life Ins. Co., 217 Wis. 282, 285, 258 N.W. 849, 850 (1935). Principles of contract law may thus illumine our inquiry. 147 Wis. 2d at 737.
Because this language in the court of appeals’ opinion might survive the court‘s modification of the court of appeals’ decision, the court‘s opinion attempts to clarify this language and the Burmeister case. The court opinion states that the Burmeister court “goes too far to say that contract law is inapplicable to all agreements reached under sec. 807.05, Stats.,” majority op. p. 67, and is “incorrect to say that sec. 807.05 operates to make enforceablе as a contract a putative agreement that is not a contract, just because the formalities of that statute have been observed,” majority op. p. 67.
Notes
Stipulations. No agreement, stipulation, or cоnsent between the parties or their attorneys, in respect to the proceedings in an action or special proceeding shall be binding unless made in court and entered in the minutes or recorded by the reporter or made in writing and subscribed by the party to be bound thereby or the party‘s attorney. [Emphasis supplied.]
806.07(1) On motion and upon such terms as are just, the court may relieve a party or legal representative from a judgment, order or stipulation for the following reasons: (b) Newly-discovered evidence which entitles a party to a new trial under s. 805.15(3); (h) Any other reasons justifying relief from the operation of the judgment.
SIGNATURE. If the signature of any person is required by law it shall always be the handwriting of such person or if he is unable to write, his mark or his name written by some person at his request and in his presence.