Boehm v. Wheeler

• Decision Date: 26 November 1974
• Docket Number: No. 312,312
• Citation: 223 N.W.2d 536,65 Wis.2d 668
• Parties: , 185 U.S.P.Q. 327 Raymond H. BOEHM et al., Appellants, v. Allan B. WHEELER et al., Respondents, S. Lawrence Wheeler, Defendant.
• Court: Wisconsin Supreme Court

Page 536

223 N.W.2d 536

65 Wis.2d 668, 185 U.S.P.Q. 327

Raymond H. BOEHM et al., Appellants, v. Allan B. WHEELER et al., Respondents S. Lawrence Wheeler, Defendant.

No. 312.

Supreme Court of Wisconsin.

Nov. 26, 1974.

Rehearing Denied Feb. 4, 1975.

Foley & Capwell, S.C., Racine, for appellants.

Michael, Best & Friedrich, Milwaukee, (Andrew O. Riteris, Milwaukee, of counsel), for defendants-respondents Joseph P. House, Jr. & Allan B. Wheeler. Hayes & Hayes, Milwaukee, for defendant-respondent Ronald E. barry.

HANLEY, Justice.

The following issues are presented on this appeal:

1. May a demurrer to a complaint be sustained on the basis that the claim is barred by the applicable statute of limitations notwithstanding the absence of any allegation in the body of the complaint setting forth the date such action was commenced?

2. When did the plaintiffs' causes of action accrue for purposes of determining when the statute of limitations began to run?

3. Does the statute of limitations commence to run at the time the plaintiff, in the exercise of reasonable care, is able to discover the negligent act or omission?

4. Is the fixing of the date that a statute of limitations begins to run stayed during the period of time in which the defendant attorney continues to represent, counsel and advise the plaintiffs in the same or similar matters?

5. Does the complaint state facts sufficient to constitute causes of action against the three defendants?

6. Should the plaintiffs be granted leave to amend their complaint in the event it is found to be lacking a material allegation?

Date of Commencement of Action

In finding that the statute of limitations barred the plaintiffs' causes of action, the trial court took judicial notice of the case record and files to determine whether or not the action was commenced within the statutory time period. The court took notice that the action was commenced on September 15, 1972 and found this date to be beyond the period in which the action could be brought. The affidavits of service of the summons and complaint show that the action was commenced on September 15, 1972.

The appellants contend the trial court was in error in taking judicial notice of the undisputed date on which the action was commenced. We do not agree. A complaint never alleges, and indeed cannot allege, the date on which the action is commenced. However, courts can and do take jurisdiction of demurrers of the type in issue because they can take judicial notice of the commencement of the action. In stating the rule as to what may be considered on demurrer, this court recently said:

'In determining the sufficiency of a complaint on demurrer, except for matters of judicial notice and other minor exceptions, a court is obliged to confine its inquiry to the facts stated in the complaint.' Olson v. St. Croix Valley Memorial Hospital (1972), 55 Wis.2d 628, 632, 201 N.W.2d 63, 64.

Here, the date of the commencement of the action is not in dispute and is stated as being September 15, 1972. The defense of the statute of limitations is listed as one which may be raised by demurrer by Sec. 263.07, Stats. Since the date of the commencement of an action does not appear on the face of the complaint the court should be allowed to take judicial notice of that date from its own records. In this case, the affidavit of service is attached to plaintiffs' complaint. To hold otherwise would make Sec. 263.07, Stats., practically meaningless.

When Cause of Action Accrued

The statute of limitations begins to run in Wisconsin when the cause of action accrues. Sec. 893.14, Stats. This section applies to the six-year statute of limitations involved in this case. Sec. 893.19, Stats., provides:

'Within 6 years:

'. . .

'(3) An action upon any other contract, obligation or liability, express or implied, except those mentioned in ss. 893.16 and 893.18.

' '(5) An action to recover damages for an injury to property, or for an injury to the character or rights of another, not arising on contract, except in case where a different period is expressly prescribed.'

An action for malpractice against an attorney may sound in tort as well as contract. Denzer v. Rouse (1970), 48 Wis.2d 528, 180 N.W.2d 521. In this case, the breach of any contract clearly occurred when the application for the patent was not timely filed and when the allegedly erroneous advice as to giving out the 'trade secrets' was given. The amendment to the tenth paragraph of the first cause of action shows that the power units were sold and put into public use prior to November 25, 1964 so that even under the facts of the amendment the last day for filing the application must have been prior to November 25, 1965. The second cause of action alleges that upon reliance on the advice of Allan Wheeler, the plaintiffs sent models to Kawneer in October, 1964 and to Stanley in June, 1965. Since the action was not commenced until September 15, 1972, the statute of limitations would bar both causes of action if brought on contract because the action was not commenced within six years.

However, since an action for malpractice may sound in tort, three dates are involved: (1) the date of the negligent act or omission; (2) the date of the injury; and (3) the date of discovery of the injury. Denzer v. Rouse, supra. In Olson v. St. Croix Valley Memorial Hospital, supra, 55 Wis.2d 628 at p. 632, 201 N.W.2d at p. 64, this court stated that:

'We, therefore, have indicated that in a malpractice case the date of the negligent act is not necessarily the benchmark for the commencement of a period of limitations. Only in the event the injury occurs on the same date can it be said the cause of action then 'accrues."

Since this court has refused to accept the 'discovery rule' in legal as well as medical malpractice cases, Denzer v. Rouse, and Peterson v. Roloff (1973), 57 Wis.2d 1, 203 N.W.2d 699, the date of the injury becomes the important date.

The question then becomes when did the injury occur. The trial court held that the injury alleged in the first cause of action occurred not later than October 31, 1965 or one year following the day the patentable process was placed in public use and sold. However, under the stipulation and order amending the tenth paragraph of the complaint, November 25, 1965 would be the date considered under the trial court's reasoning. As to the second cause of action, the trial court held that the injury took place, if not at the date that the advice was given, then at the latest on the dates the plaintiffs acted upon the advice by sending models of the power unit to their competitors. The plaintiffs sent models to Kawneer in October, 1964 and to Stanley in June, 1965. Therefore, the trial court concluded that the six-year statute of limitations would have commenced running no later than June 30, 1965. These dates are all well over six years before the action was commenced on September 15, 1972.

The reasoning of Denzer v. Rouse, supra, supports the trial court's determination. In that case, an action was brought against an attorney for negligently drafting a warranty deed. The deed was prepared and the real estate transaction was consummated in 1947. The plaintiffs commenced their action against the estate of the attorney sometime subsequent to a 1967 decision of this court. This court held that the injury occurred in 1947 on the date of consummation of the real estate transaction because it was on that date that they paid for and received the property described in the deed prepared by the attorney.

In Olson v. St. Croix Valley Memorial Hospital, Inc., supra, this court held that the injury to the plaintiff occurred when she received a blood transfusion rather than when the plaintiff gave birth to a child who lived only seven hours or when the plaintiff delivered an stillborn child.

Under the reasoning of these cases, the trial court's determinations as to when the causes of action accrued are correct. It was in October or November, 1965 that the plaintiffs lost their right to get a patent on the power unit. We think that the loss of the right to a patent is the loss of the right to exclude others and, therefore, the injury occurred on that date the right to a patent was lost. Patents do have the attributes of personal property and are assignable. 35 U.S.C., Sec. 261. The right to exclude others is a valuable right and the loss of it would be an injury which would commence the running of the statute of limitations. Therefore, the trial court was correct in holding the first cause of action accrued in 1965.

As to the second cause of action, the plaintiffs argue that the loss suffered by them was not the loss of the invention or patent right, but the loss of that portion of the profits or compensation the plaintiffs would have received or been entitled to receive from their competitors as a result of the 'unauthorized sale' of the product they invented. They contend, therefore, that it was not until 1968 when Kawneer and Stanley began marketing the product that they were injured and the statute of limitations did not begin to run until then. The defendants counter by claiming that the plaintiffs lost their rights in the invention in 1964 and 1965 when disclosure of it was made to the competitors.

Because the plaintiffs did not have a patent on the power unit and because the unit had been sold and was in public use it is questionable if they had any rights or interests in their invention.

'The nature of a trade secret is such that, so long as it remains a secret, it is valuable property to its possessor who can exploit it commercially to his own advantage. Once the secret is published to the 'whole world,' however, it loses its protected status and becomes available to others for use and copying without fear of legal reprisal from the original possessor.' Underwater Storage, Inc. v. United States Rubber Co. (1966), 125 U.S.App.D.C. 297, 371 F.2d 950, 954...