Grognet v. Fox Valley Trucking Service

Decision Date19 December 1969
Docket NumberNo. 15,15
Citation45 Wis.2d 235,172 N.W.2d 812
PartiesClarence GROGNET, Appellant, v. FOX VALLEY TRUCKING SERVICE, a Wis. Corp., et al., Respondents.
CourtWisconsin Supreme Court

This is an appeal from an order denying the plaintiff's motion for summary judgment. The plaintiff Clarence Grognet is a minority stockholder owning on third of the stock of the defendant Fox Valley Trucking Service, a corporation engaged in selling and repairing trucks. The defendant John S. Toppins owns approximately two thirds of the stock, his father, the defendant A. F. Toppins owns one share, and both are directors and officers.

In January, 1966, Grognet commenced this suit for an involuntary dissolution of the trucking company because of mismanagement by the Toppins. After an examination of the books and records of the company and an attempt to adversely examine the individual defendants in relation thereto, the plaintiff filed a complaint and the defendants answered. Grognet then moved for summary judgment and voluminous affidavits were submitted in support and in opposition thereto. After keeping the motion under advisement for 15 months, the court denied it on the grounds the affidavits and the complaint contained conclusions of law and also presented material issues of fact to be determined. Grognet appeals on the ground there is no issue of fact but only a question of law presented by his complaint.

Kaftan, Kaftan & Kaftan, Green Bay, for appellant.

Bollenbeck, Patterson, Froehlich, Jensen & Wylie, Appleton, for respondents.

HALLOWS, Chief Justice.

This suit was commenced by service of summons and an affidavit requesting an examination of the Toppins and Marvin Schnese, the bookkeeper of the company. Schnese also owns one share of stock and is a director and secretary-treasurer of the company. With the summons and affidavit was a notice of an adverse examination and a subpoena which required the production of corporate books and records covering the years 1960 to 1965 inclusive. The affidavits stated the purpose of the examination was to obtain information to allow the plaintiff to frame a complaint for the involuntary dissolution of the corporation for mismanagement and for other causes.

The record contains many affidavits and various preliminary motions prior to the motion for summary judgment. In the affidavits relating to the motion for summary judgment we are told that Grognet was formerly employed by the company and left its employment in 1963, and that he has offered to sell his stock. According to Toppins, this suit is an attempt to blackmail and to coerce them to purchase Grognet's stock at an excessive price. Grognet complains he has not received any dividends on his stock while the Toppins have received salaries and have so mismanaged the company as to lead him to believe they are unfit to continue as directors and officers. There is no doubt that there is a serious disagreement between the parties over management and an impasse has been reached. Grognet argues the facts justify an involuntary liquidation of the corporation and it should be a Fromm-type of liquidation. See Strong v. Fromm Laboratories (1956), 273 Wis. 159, 77 N.W.2d 389.

The facts relied upon for summary judgment are not in dispute. After Grognet attempted to examine the books and records, which examination he claims to be unsatisfactory, he attempted to adversely examinine the Toppins and Schnese, all of whom refused to answer any question about the management of the corporation and took refuge in the fifth amendment on the ground that any answer by them would incriminate them. The question of whether the witnesses should answer was certified to the county court. While this issue was pending before the court, Grognet brought his motion for summary judgment, withdrew the certification and stood on the legal proposition that the refusal of the officers of the corporation to answer his questions on the ground of the fifth amendment amounted to an illegal and fraudulent act which entitled him to an involuntary dissolution of the corporation under sec. 180.771, Stats. 1 In this posture, the case was presented to the trial court and it is likewise presented to us on appeal.

The question presented is whether the refusal of the directors and officers of a corporation, who also own a majority of the stock in the corporation, to answer questions on an adverse examination concerning their acts as officers and directors on the ground that their answers might incriminate them constitutes an illegal and fraudulent act within the meaning of sec. 180.771. This section provides that circuit courts have the power to liquidate a corporation in an action by a stockholder when it is established 'That the acts of the directors or those in control of the corporation are illegal or fraudulent.'

Taking refuge in the fifth amendment is not an illegal or fraudulent act but it is conceivable that such action could be fraudulent in some circumstances if no basis exists for invoking the protection of the fifth amendment. But if a person is justified in seeking the protection of the fifth amendment then his act per se is neither illegal nor fraudulent aside from what inference might be drawn in a civil case from such action. It has long been recognized in Wisconsin that a person may invoke the fifth amendment in a civil case in order to protect himself from the use of such evidence against him in a subsequent criminal action. Karel v. Conlan (1913), 155 Wis. 221, 144 N.W. 266, 49 L.R.A.,N.S., 826; see Milwaukee v. Burns (1937), 225 Wis. 296, 274 N.W. 273. However, in a civil case as distinguished from a criminal case, an inference of guilt or against the interest of the witness may be drawn from his invoking the fifth amendment. Since only one inference can be drawn logically in such a case, the court may as a matter of law draw such inference. But the granting of summary judgment is not mandatory upon the court which may prefer because of other reasons to hear all the facts. The trial court considered there were issues of fact to be resolved and too many conclusions of law were pleaded in the complaint and in the affidavits to make a determination on affidavits. Whether this be true or not we think that in this case there should be a trial of the facts because the determination of the serious question of whether a successful corporation should be liquidated ought not to rest upon affidavits. Summary judgment is not an absolute right nor a 'short cut to avoid a trial and to obtain quick relief at the expense of a searching determination for the truth.' Schandelmeier v. Brown (1968), 37 Wis.2d 656, 155 N.W.2d 659; Leszczynski v. Surges (1966), 30 Wis.2d 534, 141 N.W.2d 261.

Grognet argues it is a hardship for him to be put to a trial when the defendants by invoking the fifth amendment prevent him from obtaining evidence. However, the trial court need not accept the claim of the fifth amendment by the defendants. It may make a limited examination of a witness claiming the fifth amendment to determine whether valid grounds exist for seeking shelter in the right. In the instant case the defendants were ordered to answer by the court commissioner and the questions were certified, but Grognet withdrew the certifications when he moved for...

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    ...Asserts Privilege Against Self-Incrimination As To Pertinent Question," 4 A.L.R.3d 545, § 3 (1965). Cf. Grognet v. Fox Valley Trucking Service, 45 Wis.2d 235, 238, 172 N.W.2d 812, 815 Before allowing an adverse inference to be drawn against the defendant at trial, the plaintiff would have t......
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    ...marks and citations omitted). 30.Reget v. Paige, 2001 WI App 73, ¶ 12, 242 Wis.2d 278, 626 N.W.2d 302. 31.Second Amended Complaint, ¶ 24. 32.Grognet v. Fox Valley Trucking Serv., 45 Wis.2d 235, 241–42, 172 N.W.2d 812 (1969). 33.Rose v. Schantz, 56 Wis.2d 222, 228, 201 N.W.2d 593 (1972). 34.......
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    • August 14, 2014 closely held corporations owe a fiduciary duty to the corporation and minority shareholders. See Grognet v. Fox Valley Trucking Serv., 45 Wis.2d 235, 241, 172 N.W.2d 812 (1969). But the Wisconsin Supreme Court has not determined whether or not minority shareholders owe a similar duty. Se......
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