Goodman v. Wis. Elec. Power Co.

• Decision Date: 20 November 1945
• Citation: 20 N.W.2d 553,248 Wis. 52
• Parties: GOODMAN v. WISCONSIN ELECTRIC POWER CO. et al.
• Court: Wisconsin Supreme Court

248 Wis. 52

20 N.W.2d 553

GOODMAN

v.WISCONSIN ELECTRIC POWER CO. et al.

Supreme Court of Wisconsin.

Nov. 20, 1945.

Appeal from an order of the Circuit Court for Milwaukee County; Otto H. Briedenbach, Judge.

Reversed.

Action commenced January 11, 1944, by E. M. Goodman, a stockholder of Wisconsin Electric Power Company, on his own behalf and on behalf of all stockholders of said company who desire to join, and in the right of defendant Wisconsin Electric Power Company, plaintiff, against Wisconsin Electric Power Company, a Wisconsin corporation, the Milwaukee Electric Railway & Transport Company, a Wisconsin corporation, James D. Shaw, Sylvester B. Way, Harold S. Falk, Lawrence F. Seybold, Gould W. Van Derzee, Roy H. Pinkley, William W. Coleman, General Electric Realty Corporation, a foreign corporation, Kenosha Motor Coach Lines, Inc., a Wisconsin corporation, and George H. Tiernan, defendants, to recover damages for alleged wrongful conduct on the part of defendants in the sale and purchase of properties and securities of the Wisconsin Electric Power Company and subsidiaries. Judgment was entered May 1, 1945, dismissing plaintiff's complaint, and for costs and disbursements to the defendants. July 25, 1945, an order was entered vacating and setting aside the findings and judgment previously entered and granting a new trial, from which order all defendants appeal, separate appeals being taken by the General Electric Realty Corporation, Kenosha Motor Coach Lines, Inc., and George H. Tiernan, and the defendants Wisconsin Electric Power Company, the Milwaukee Electric Railway & Transport Company, James D. Shaw, Sylvester B. Way, Harold S. Falk, Lawrence F. Seybold, Gould W. Van Derzee, Roy H. Pinkley and William W. Coleman joining in one appeal.

Martin R. Paulsen and Van B. Wake, both of Milwaukee, for appellant Wisconsin Electric Power Co. and others.

Thompson, Myers & Helm, of Racine, for appellant Kenosha Motor Coach Lines, Inc.

Quarles, Spence & Quarles, of Milwaukee (Edward H. Borgelt, of Milwaukee, of counsel), for appellant General Electric Realty Corp.

Lecher, Michael, Spohn & Best, of Milwaukee (Herman E. Friedrich, of Milwaukee, of counsel), for appellant George H. Tiernan.

Wilbershide & Baumblatt, of Racine, for respondent.

BARLOW, Justice.

Plaintiff moved to dismiss this appeal for the reason that it is not an appealable order. Sec. 274.33(3), Stats., designating appealable orders, includes an order granting a new trial. While this does not mean that every order granting a new trial is appealable, when issue has been joined and judicial examination of the issues between the parties has been had and judgment entered thereon, a substantial right has been obtained by the successful party. An order vacating such judgment and granting a new trial affects this substantial right and prevents a judgment from which an appeal might be taken so as to review the order of the court. Moran v. Moran, 1920, 172 Wis. 59, 178 N.W. 248. It is considered this is an appealable order.

The next question involved is whether the trial judge is without jurisdiction to hear and determine a stockholder's derivative action where the judge's wife, at the time of the commencement of the trial, owns in her own right shares of preferred stock in a corporation that is not a party to the action but is a subsidiary of the corporate defendant. This requires an examination of the nature of the action and the statutes involved.

For the purpose of convenience the Wisconsin Electric Power Company will hereinafter be referred to as ‘power company,’ and Milwaukee Electric Railway and Transport Company as ‘transport company,’ and Wisconsin Gas and Electric Company as ‘electric company.’

The plaintiff, E. M. Goodman, a stockholder of the Wisconsin Electric Power Company, in the right of the power company, on his own behalf, and on behalf of all other stockholders of said company, brings this action against the directors of the power company and the directors of the transport company and other persons who were interested in the transactions alleged to have been wrongful, setting forth six causes of action, the fifth of which charged the respective directors with unlawfully selling property of the electric company by virtue of the electric company being a subsidiary and under the complete domination and control of the parent power company, defendant, and its directors, thus causing a material loss to the parent company. The relief prayed for is that the director defendants and purchaser defendants account for and pay over to the power company and transport company any losses and damages suffered by said companies by reason of the unlawful acts of the defendants. Nowhere in the complaint is there any charge of wrongful conduct on the part of the directors or officers of the electric company, nor is the electric company a party defendant. The fifth cause of action is the only one affecting any property of the electric company, and the complaint generally alleges that the defendant directors, while in control of the electric company (a subsidiary of and under the complete domination and control of the power company) sold and conveyed the properties known as the local transportation system in the city of Kenosha, being a trackless trolley line, to Kenosha Motor Coach Lines, Inc., at a price which is unknown to the plaintiff, with an insignificant down payment but at a substantial loss to the stockholders of the selling company, which sale was made for an illegal purpose.

At all times during the pendency of the action, the electric company had outstanding 33,425 shares of preferred stock, 4 1/2% series of the par value of $100 per share, with an aggregate par value of $3,342,500, and 300,000 shares of common stock with an aggregate par value of $6,000,000. All the common stock, including directors' qualifying stock, was owned beneficially by the power company and the preferred stock, of which the wife of the presiding judge owned 12 shares, was at all times in the hands of the public and owned by approximately 2,400 different holders. At no time in the year 1945 did the electric company own or control any stock, common or preferred, or...