Driver v. Driver

• Decision Date: 25 April 1984
• Docket Number: No. 82-2393,82-2393
• Citation: 119 Wis.2d 65,349 N.W.2d 97
• Parties: James O. DRIVER, Plaintiff-Appellant, v. Constance F. DRIVER, Constance J. Driver, Robert Driver and James O. Driver, Jr., Defendants-Respondents.
• Court: Wisconsin Court of Appeals

Page 97

349 N.W.2d 97

119 Wis.2d 65

James O. DRIVER, Plaintiff-Appellant, v. Constance F. DRIVER, Constance J. Driver, Robert Driver and James O. Driver, Jr., Defendants-Respondents.

No. 82-2393.

Court of Appeals of Wisconsin.

Submitted on Briefs Feb. 13, 1984.

Opinion Released April 25, 1984.

Opinion Filed April 25, 1984.

Roger G. Schnitzler and Van Metre, Hanson, Clarke, Schnitzler & Meyer, Madison, for plaintiff-appellant.

Carl W. Ross and Kittelsen, Barry, Ross & Wellington, Monroe, for defendants-respondents.

Before GARTZKE, P.J., DYKMAN, J., and RUDOLPH T. RANDA, Reserve Judge.

DYKMAN, Judge.

James O. Driver appeals from a summary judgment. The trial court held that appellant raised no relevant factual issues, that his attempted amendments to the bylaws of the United Telequipment Corporation were invalid because contrary to statute, and that respondents' actions in adding themselves to the corporation's board of directors and removing appellant as president were valid. We affirm the judgment.

Prior to July 1982, appellant was the president and sole director of the United Telequipment Corporation. All the shares of the corporation were owned by appellant, respondents, who are members of appellant's family, another relative of the Drivers, and two employees of the corporation. Appellant owned 2,250 shares, the other members of the family each owned 2,000 shares, and the employees each owned 675 shares.

In February 1982, respondent Constance F. Driver called a special meeting of the shareholders to amend the corporation's bylaws to increase the number of directors and to revoke the board's power to amend the bylaws. Appellant countered with notice of a special meeting to amend the bylaws to prevent the number of directors from being changed for five years, unless a majority of the shareholders, including appellant, approved the change. The shareholders met, but no amendments were passed.

On April 1, 1982, appellant, acting as the director, amended the bylaws without notice to the other shareholders. The amendments are as follows (new material emphasized):

1. Board of Directors. The Board of Directors of United Telequipment Corp. shall consist of one person, who shall be the president of this corporation, elected by the Board of Directors, who shall have the authority provided by law acting in the capacity of the Board of Directors....

....

3. Special Meetings. Special stockholders' meetings may be held upon call of the President of this corporation or by the stockholders, providing those calling the meeting shall include the holder of the largest number of shares of this corporation, upon 48 hours' prior notice being given in person or by telegraphing or depositing the same in the mail, addressed to each stockholder at his address as set forth in the records of the corporation.

....

15. Amendments. Save for any provisions that may be otherwise specifically restricted by unanimous action of the shareholders, these bylaws may be amended, altered, or repealed at any regular or special meeting of the stockholders of this corporation by a vote of a majority attending, provided those stockholders voting to amend, alter or repeal these bylaws shall include the holder of the largest number of shares of this corporation, or by the Board of Directors.

On July 6, 1982, Constance F. Driver called a special meeting of the shareholders for July 9 to amend paragraph 1 of the bylaws to provide for a five-member board of directors and to elect members of the board. Notices were mailed or delivered by hand to each shareholder. Appellant was personally served with a notice on July 7 by an officer of the Monroe Police Department. He appeared at the meeting and objected to its being called, but left before any votes were taken. The remaining shareholders amended paragraph 1 as proposed and elected appellant and respondents to be the members of the board.

A meeting of the new board of directors was held July 13, 1982. Appellant did not attend. The board repealed appellant's April 1 amendment to paragraph 3 of the bylaws, removed him as president of the corporation, and elected Constance J. Driver as president, Robert Driver as vice president and Constance F. Driver as secretary/treasurer.

Appellant commenced an action against respondents, alleging that the July 9 special meeting of shareholders was invalidly called because he had not participated in the call. He requested a temporary injunction against respondents and a declaratory judgment that the meeting was improper and that he was the duly elected and acting president, chief executive officer and sole director of the corporation. Respondents counterclaimed for a temporary injunction against appellant and a declaratory judgment that the meeting was proper and that they were the duly elected officers of the corporation.

The trial court granted summary judgment for respondents. It held that appellant's amendment to paragraph 3 was invalid because it conflicted with sec. 180.23(3), Stats.; that appellant's amendment to paragraph 15 was invalid because it conflicted with sec. 180.22; and that as a director, appellant had a fiduciary duty to the other shareholders and could not use his position to entrench himself and perpetuate his own control.

Existence of Factual Issue

Appellant contends that the trial court's grant of summary judgment was error, because he raised a factual issue as to whether he received timely notice of the July 9 meeting. Under paragraph 3 of the bylaws, shareholders must receive the notice 48 hours in advance of the meeting. The trial court "found" that appellant had received timely notice. ¹

Summary judgment will be granted where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Sec. 802.08(2), Stats. When reviewing the trial court's decision on a motion for summary judgment, we apply the same analysis as the trial court. Heinz Plastic Mold v. Continental Tool, 114 Wis.2d 54, 57, 337 N.W.2d 189, 191 (Ct.App.1983). That analysis is as follows:

The court must initially examine the pleadings to determine whether a claim has been stated and whether a material issue of fact is presented. If the complaint states a claim and the pleadings show the existence of factual issues, the court examines the moving party's ... affidavits or other proof to determine whether the moving party has made a prima facie case for summary judgment under sec. 802.08(2).... If the moving party has made a prima facie case for summary judgment, the court must examine the affidavits and other proof of the opposing party ... to determine whether there exists disputed material facts, or undisputed material facts from which reasonable alternative inferences may be drawn, sufficient to entitle the opposing party to a trial.

Grams v. Boss, 97 Wis.2d 332, 338, 294 N.W.2d 473, 476-77 (1980).

Appellant contends that a factual issue exists as to whether he received timely notice of the July 9 meeting. Since the meeting was called for 10:00 a.m. on July 9, the notice had to be served by 10:00 a.m. on July 7 in order to be valid. The timeliness of the notice was not made an issue by the pleadings or by the affidavits, however. None of the parties states anywhere what time the notice was served.

Appellant claims that he raised the issue of timeliness in his brief to the trial court. ² His "raising" of the issue consisted merely of a statement that respondents' affidavits did not allege that the notice was timely. Pointing out that respondents did not allege timely notice does not raise a factual issue regarding the time notice was served.

Appellant's argument below attacked the sufficiency of respondents' affidavits, not the timeliness of the notice. A party moving for summary judgment is not required to controvert every possible defense the opponent might raise to a claim. It was appellant's burden to place the timeliness of the notice in issue by stating in his affidavits that the notice was late. He did not do so. We will not review a claim not raised before the trial court. State v. Dean, 105 Wis.2d 390, 402, 314 N.W.2d 151, 157-58 (Ct.App.1981). We follow this rule, even though we apply the same analysis as the trial court, for reasons of judicial economy. Were we to permit the equivalent of a bypass of the circuit court on motions for summary judgment, the court of appeals would become the initial court to address the merits of these motions. ³

Amendment to Paragraph 3

Appellant contends that the call of the July 9 special meeting was invalid under paragraph 3 of the bylaws because he did not join in the call. The trial court held that paragraph 3 was invalid because it conflicted with sec. 180.23(3), Stats. It concluded that the meeting was properly called. Section 180.23(3) provides:

Special meetings of the shareholders may be called by the president, the board of directors, the holders of not less than one-tenth of all the shares entitled to vote at the meeting or by such other officers or persons as may be provided in the articles of incorporation or the bylaws.

Paragraph 3 conflicts on its face with sec. 180.23(3), Stats., because it eliminates the shareholders' right to call special meetings unless appellant concurs with the call.

Appellant argues that paragraph 3 means that he must join in calls only for special meetings to be held on 48 hours' notice. He asserts that the other stockholders may call special meetings on ten days' notice, as provided in sec. 180.24, Stats. ⁴

"[T]he principles which govern the construction of contracts also govern the construction and interpretation of corporate bylaws.... [W]here the terms of a contract are plain and unambiguous, the duty of the court is to construe it as it stands, giving effect to the plain meaning of the language used...." State ex rel. Siciliano v. Johnson, 21 Wis.2d 482, 487, 124 N.W.2d 624, 626-27 (1963) (citations omitted)...