Becker v. Becker
| Decision Date | 17 February 1975 |
| Docket Number | No. 397,397 |
| Citation | 225 N.W.2d 884,66 Wis.2d 731 |
| Parties | Joseph A. BECKER, Individually and as Trustee for Joseph Becker, III and Susan Ehrke, Respondent, v. Carl R. BECKER et al., Appellants, J. H. Becker & Sons, Inc., Defendant. |
| Court | Wisconsin Supreme Court |
Niebler & Niebler, Menomonee Falls, James R. Mattison, Milwaukee, for appellants; Chester J. Niebler, Menomonee Falls, of counsel.
Morris Karon, Milwaukee, for respondent.
This is a shareholders' derivative action which has been here before on the appeal of defendants Carl R. Becker and Mary Helen Peters from an order overruling their demurrer to the plaintiff's complaint. Becker v. Becker (1972), 56 Wis.2d 369, 202 N.W.2d 688. The purpose of the derivative action is to recover allegedly excessive compensation paid to the above named defendants pursuant to employment contracts between them and the defendant corporation. The orders appealed from were entered August 14, 1973, and October 2, 1973. The August 14th order denied summary judgment and refused joinder of an additional defendant. We affirm the denial of summary judgment, although we do not sustain the trial court's reason. We dismiss the appeal as to the joinder portion of the order. The order of October 2d denied defendants' motion to require a bond from plaintiff as part of the terms for a temporary injunction. This order we reverse.
Summary judgment.
The motion for summary judgment was grounded on the fact that plaintiff, as a director of the corporation, had voted to approve the contracts providing the allegedly excessive compensation. These contracts were two of four employment agreements approved at a board of directors' meeting on November 10, 1965. The other two employment agreements were entered into with plaintiff and Louis A. Becker. The three Becker brothers and their sister, Mrs. Peters, were the directors of the corporation. The individual defendants argue here, as they did in the trial court, that the actions of plaintiff in voting for approval of all four employment agreements, accepting the compensation provided in his agreement, and waiting for approximately five years before bringing suit to challenge the compensation paid under two of the agreements, establish defenses of laches, equitable estoppel, and unclean hands as a matter of law. Circuit Judge Allen Kinney, who heard the motion for summary judgment before he was replaced by Judge Parnell, denied the motion on the ground that defenses of laches, acquiescence, waiver, ratification, estoppel, and unclean hands were not available against a shareholder in a derivative suit.
A shareholders' derivative action is an action in equity. A plaintiff who is subject to an equitable defense should not be able to avoid that defense by bringing suit in a representative capacity. We hold that equitable defenses are available against a plaintiff shareholder for the purpose of defeating his derivative suit. See: Anno. 16 A.L.R.2d 467. However, it does not follow that the motion for summary judgment should have been granted.
This court has often said that the existence of a material issue of fact will defeat a motion for summary judgment. Equitable defenses such as estoppel, laches, and unclean hands depend entirely upon the factual context in which they are raised. Just as it is a rare case when summary judgment can be granted in an action grounded on negligence, Dottai v. Altenbach (1963), 19 Wis.2d 373, 120 N.W.2d 41, it is also a rare case when summary judgment can be granted in an action defended on equitable grounds.
The record in this case discloses several triable issues of fact, but we will discuss only one. The employment contracts entered into by the corporation on November 10, 1965, cannot be relied upon as a defense to an action to recover unreasonable compensation paid by the corporation to the individual defendants, because it was beyond the power of the board to establish unreasonable compensation. Sec. 180.31, Stats.; Gauger v. Hintz (1952), 262 Wis. 333, 55 N.W.2d 426. If plaintiff received unreasonable compensation under his employment agreement, which was part of the same transaction, he is guilty of unclean hands and may not...
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...restraining order is to suspend proceedings until the court can determine whether an injunction should issue. Becker v. Becker, 1975, 66 Wis.2d 731, 225 N.W.2d 884; Beers v. City of Watertown, 1920, 42 S.D. 441, 176 N.W. 149. Upon grant or refusal of the injunction, the temporary restrainin......
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...the subject matter in litigation and that the party asserting the doctrine of unclean hands was thereby injured); Becker v. Becker, 66 Wis.2d 731, 225 N.W.2d 884, 885 (1975) (holding in a derivative action the equitable defense of unclean hands is available against a plaintiff shareholder f......
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Mulder v. Mittelstadt, 83-1635
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