Bitters v. Milcut, Inc.

• Decision Date: 19 December 1983
• Docket Number: No. 83-378,83-378
• Parties: Merlin W. BITTERS, Plaintiff-Appellant, v. MILCUT, INC. and Carl W. Strohmaier, Defendants-Respondents.
• Court: Wisconsin Court of Appeals

Page 418

343 N.W.2d 418

117 Wis.2d 48

Merlin W. BITTERS, Plaintiff-Appellant, v. MILCUT, INC. and Carl W. Strohmaier, Defendants-Respondents.

No. 83-378.

Court of Appeals of Wisconsin.

Submitted on Briefs Nov. 16, 1983.

Opinion Released Dec. 19, 1983.

Opinion Filed Dec. 19, 1983.

Minahan & Peterson, S.C., Milwaukee, for plaintiff-appellant; Thomas E. Reinhart, Milwaukee, of counsel.

Quarles & Brady, Milwaukee, for defendants-respondents; Wayne E. Babler, Jr., Milwaukee, of counsel.

Before WEDEMEYER, P.J., and DECKER and MOSER, JJ.

DECKER, Judge.

Merlin Bitters (Bitters) appeals from a judgment which held that Milcut, Inc. (Milcut) was not obliged under sec. 180.43, Stats., to produce interim corporate financial statements for Bitters' inspection upon his demand. We agree with the trial court that such interim statements are not within the "books and records of account" language of sec. 180.43(2), and accordingly affirm.

Bitters had been a member of Milcut's board of directors from 1966 to 1979. He resigned his employment with Milcut in 1980, since which time he has been a self-employed manufacturer's representative for several firms, including some competitors of Milcut.

Before June of 1980, Bitters and Carl Strohmaier (Strohmaier), the president of Milcut, were the only shareholders. From March through the end of 1980, Bitters transferred some of his Milcut stock to third parties.

On November 5, 1981, Bitters, by letter, demanded a copy of all interim profit and loss statements and balance sheets (interim financial statements) for the stated purpose of determining the current value of his holdings. While Milcut provided Bitters with a standard annual financial statement as well as a specially prepared shareholder interim financial statement for the first quarter of 1980 and the opportunity to inspect various board transaction records, it refused to provide him with the opportunity to examine the detailed quarterly interim profit and loss statements which he sought. Bitters brought suit for their production. The trial court concluded that Milcut was not obliged under sec. 180.43(2), Stats., to produce these interim financial statements. Bitters appeals.

The crux of this appeal is the interpretation of sec. 180.43(2), Stats. The construction of a statute is a question of law, Robinson v. Kunach, 76 Wis.2d 436, 446, 251 N.W.2d 449, 453 (1977), as is the application of a statute to a particular set of facts. Bucyrus-Erie Co. v. DILHR, 90 Wis.2d 408, 417, 280 N.W.2d 142, 146-47 (1979).

In construing a statute, the first recourse is to the language of the statute itself. State v. Derenne, 102 Wis.2d 38, 45, 306 N.W.2d 12, 15 (1981). Our examination of sec. 180.43(2), Stats., persuades us that the "books and records of account" language is unambiguous and does not include interim profit and loss statements within its purview.

Where a statute is clear on its face, this court will not look outside the language of the statute in applying it. Wisconsin Electric Power Co. v. Public Service Commission, 110 Wis.2d 530, 534, 329 N.W.2d 178, 181 (1983). Looking at the "books and records" language in context of the remainder of the statute, ¹ we are led to conclude that an interim profit and loss financial statement does not fall within the "books and records" purview.

Subsection (1) requires each corporation to keep books and records of account, minutes of proceedings, and a record of shareholders. It further requires each corporation to make, file and keep available for shareholders' inspection "a true statement of its assets and liabilities as of the close of each fiscal year and of the results of its operations and of changes in surplus for each fiscal year, all in reasonable detail ...." This requirement is undoubtedly one for an annual financial statement, because subsection (3), which gives voting trust certificate holders "the same rights of examination as are accorded to shareholders," ² adds "annual financial statements" to the above catalog of what records a corporation shall keep.

Subsection (1), then, distinguishes between "books and records of account" and annual financial statements. In essence, Bitters argues that interim financial statements are to be included within the "books and records of account" provision of subsec. (2). Because of the distinction drawn by subsecs. (1) and (3) between "books and records of account" and "annual financial statements," we cannot justify broadening the meaning of "books and records" for subsec. (2) purposes when both subsecs. (1) and (3) treat "books and records" and "financial statements" independently. To adopt Bitters' interpretation would be to render "annual financial statements" in subsec. (3) effectively meaningless or superfluous, a circumstance to be avoided whenever possible. See Kollasch v. Adamany, 104 Wis.2d 552, 563, 313 N.W.2d 47, 52 (1981).

We reject Bitters' argument that State ex rel. McClure v. Malleable Iron Range Co., 177 Wis. 582, 187 N.W. 646 (1922) mandates a broad interpretation of "books and records of account." While McClure can fairly be read to require broad powers of inspection by shareholders, its vitality as case law has been significantly diminished by subsequent statutory amendments.

Section 1757, Stats. (1921) provided in pertinent part: "The books of every corporation containing the stock subscriptions and accounts shall at all reasonable times be open to the inspection of the stockholders ...." The modern equivalent, sec. 180.43, Stats., has refined and...