Kohler Co. v. Wixen
| Decision Date | 04 September 1996 |
| Docket Number | No. 95-2977,95-2977 |
| Citation | 555 N.W.2d 640,204 Wis.2d 327 |
| Parties | KOHLER COMPANY, Plaintiff-Respondent, v. Ben WIXEN and Francine A. Wixen, Defendants-Appellants. |
| Court | Wisconsin Court of Appeals |
On behalf of the defendants-appellants, the cause was submitted on the briefs of Robert C. Hahn of Holden & Hahn, S.C. of Sheboygan.
On behalf of the plaintiff-respondent, the cause was submitted on the brief of Stephen M. Seymour of Halvorsen, Buesing & Seymour, S.C. of Sheboygan.
Before ANDERSON, P.J., and BROWN and SNYDER, JJ.
Ben and Francine A. Wixen appeal from a judgment requiring them to fulfill the obligations of a personal guaranty by making remuneration for their corporate debt to the Kohler Company. On appeal, the Wixens contend that the "forum selection" clause in the guaranty was insufficient to confer personal jurisdiction over them. Alternatively, the Wixens argue that the guaranty was limited to one year from the date of execution, and consequently was not in effect at the commencement of this action. We conclude that the forum selection clause memorialized the Wixens' consent to personal jurisdiction in any Wisconsin court capable of exercising subject matter jurisdiction. We also find sufficient grounds to support the jury's finding that the guaranty was not limited to one year. Accordingly, we affirm.
The Kohler Company is a manufacturer of plumbing products and fixtures based in Kohler, Wisconsin. Ben was the president and principal owner of Wixen Pipe and Supply Company located in California. Francine was the secretary of the corporation. Wixen Pipe and Kohler entered into a distributorship agreement whereby Kohler supplied Wixen Pipe with plumbing products for sale in California. At some point during the course of the distributorship, Wixen Pipe began having financial difficulties. Subsequently, Kohler requested assurance of payment for the products it supplied to Wixen Pipe on credit.
On November 21, 1990, the Wixens executed an "Unconditional Guarantee" with which they personally guaranteed payment for any debt owed to Kohler. Kohler drafted the guaranty, which included the following provision:
Legal rights and obligations hereunder shall be determined in accordance with the laws of the State of Wisconsin, and the undersigned hereby agree that the venue for all actions initiated hereunder shall be the court of competent jurisdiction within the State of Wisconsin.
Prior to accepting Kohler's draft of the guaranty, Ben added additional language via an attached letter which enumerated two conditions. Specifically, one condition limited the guaranty to "one (1) full year from the date of execution." This guaranty, including this amendment, was subsequently accepted by both parties.
During the following year, Wixen Pipe remained indebted to Kohler. Prior to the expiration of the first guaranty, Kohler requested a second personal guaranty. Kohler prepared another "Unconditional Guarantee" containing the same language as in the first draft. The parties discussed limiting this guaranty to one year as in the original guaranty. However, no such agreement was consummated either verbally or in a separate written document. On November 5, 1991, the parties executed the second guaranty.
Throughout the following year, Wixen Pipe continued to receive Kohler products on credit. Kohler did not make any further requests for assurance of payment of the debt and continued to extend credit to Wixen Pipe until March 1993. Wixen Pipe subsequently filed for bankruptcy protection. Kohler then demanded payment of all of Wixen Pipe's debt under the second personal guaranty. When the Wixens failed to make payments on their debt, Kohler filed suit in Sheboygan County against both Ben and Francine.
The trial court held a separate evidentiary hearing in which it determined that the forum selection clause was legally sufficient to confer personal jurisdiction over the Wixens to the court, barring a finding of unconscionability. A second hearing found the clause not to be unconscionable. At trial, the Wixens argued that because the original guaranty was limited to one year, the second guaranty was also limited to one year. A jury found in favor of Kohler. From these findings, the Wixens appeal.
On appeal, the Wixens first contend that the language used in the forum selection clause did not confer personal jurisdiction over them to the trial court. The relevant language provides that the parties "agree that the venue for all actions initiated hereunder shall be the court of competent jurisdiction within the State of Wisconsin." They submit that the forum selection clause is ambiguous and, in particular, point to the phrase "the court of competent jurisdiction." They argue that this phrase should be interpreted as binding them to submit to the jurisdiction of any Wisconsin court that has subject matter jurisdiction and can obtain personal jurisdiction over them.
Kohler maintains that the forum selection clause should be interpreted as conferring personal jurisdiction over the Wixens to any Wisconsin court with the proper authority to adjudge issues relating to the personal guaranty.
Issues of personal jurisdiction are questions of law which we review de novo. Landreman v. Martin, 191 Wis.2d 787, 798, 530 N.W.2d 62, 66 (Ct.App.1995). The parties are in agreement that absent the Wixens' consent, there is no independent basis for the trial court's exercise of personal jurisdiction over the Wixens. Therefore, whether the trial court had personal jurisdiction over the Wixens depends upon whether the forum selection clause can be interpreted as consenting to personal jurisdiction in Wisconsin.
The initial step in the analysis is to determine whether the forum selection clause is ambiguous. This is a question of law which we review independently. Wausau Underwriters Ins. Co. v. Dane County, 142 Wis.2d 315, 322, 417 N.W.2d 914, 916 (Ct.App.1987). The parties put forth two possible constructions for the clause--that it confers personal jurisdiction over the Wixens in any Wisconsin court that is competent to hear the case, or that it memorializes the Wixens' agreement to appear in any Wisconsin court that can obtain personal jurisdiction over them. Any contract provision that is reasonably susceptible to more than one construction is ambiguous. Wausau Joint Venture v. Redevelopment Auth., 118 Wis.2d 50, 58, 347 N.W.2d 604, 608 (Ct.App.1984). We conclude that the clause is ambiguous.
When interpreting ambiguous provisions of a contract, the court must select a construction which gives effect to each part of the contract and reject constructions resulting in surplusage or unreasonable results. Id. Also, when construing ambiguous contractual language, we must give effect to the true intentions of the parties. See Maas v. Ziegler, 172 Wis.2d 70, 79, 492 N.W.2d 621, 624 (1992). We must consider all language included in the forum selection clause, as well as the document as a whole. See Crown Life Ins. Co. v. LaBonte, 111 Wis.2d 26, 36, 330 N.W.2d 201, 206 (1983); see also DOR v. United States Shoe Corp., 158 Wis.2d 123, 128, 462 N.W.2d 233, 235 (Ct.App.1990).
In order to construe the language of the forum selection clause, we first consider the interrelationship between personal jurisdiction, subject matter jurisdiction and competency. Personal jurisdiction allows a court with the requisite power to exercise its subject matter jurisdiction to enter a judgment in personam against an individual party. See § 801.04(2), STATS. In Wisconsin, courts may obtain personal jurisdiction over a party through any one or more of the grounds stated in Wisconsin's long-arm statute, § 801.05, STATS., see § 801.04(2), or by consent, Datronic Rental Corp. v. DeSol, Inc., 164 Wis.2d 289, 292, 474 N.W.2d 780, 781 (Ct.App.1991). The parties here agree that the only way for a Wisconsin court to exercise personal jurisdiction over the Wixens in this action is through consent.
Subject matter jurisdiction is defined as the power of the court to entertain a certain type of action. See Mack v. State, 93 Wis.2d 287, 294, 286 N.W.2d 563, 566 (1980). Subject matter jurisdiction cannot be conferred on a court by consent. See § 801.04(1), STATS.
Competency is a narrower concept than subject matter jurisdiction and is grounded in the court's power to exercise its subject matter jurisdiction. Brandt v. LIRC, 160 Wis.2d 353, 367, 466 N.W.2d 673, 678 (Ct.App.1991), aff'd, 166 Wis.2d 623, 480 N.W.2d 494 (1992). Although a court is vested with subject matter jurisdiction by the constitution, the legislature may enact statutes which limit a court's power to exercise subject matter jurisdiction. Such legislative measures affect a court's competency rather than its jurisdiction. 1 Thus, a court may have subject matter jurisdiction and yet not be competent to entertain a particular matter.
Competency is not synonymous with either personal or subject matter jurisdiction. If a court is competent, it is so regardless of whether it can attain personal jurisdiction over an individual party. The definition of competency, as accepted in Wisconsin, is the power of a court to exercise its subject matter jurisdiction. See Village of Shorewood v. Steinberg, 174 Wis.2d 191, 200, 496 N.W.2d 57, 60 (1993). Therefore, substituting this definition for "competent jurisdiction," the forum selection clause would read, "the court with the power to exercise its subject matter jurisdiction within the State of Wisconsin."
Also, consent to venue clauses, as indicated in this instance by the language "the undersigned hereby agree that the venue ... shall be ...," implicitly confer to courts the right to exercise personal jurisdiction. Northwestern Nat'l Ins. Co. v. Frumin, 739 F.Supp. 1307, 1310 (E.D.Wis.1990). Thus, based on the foregoing analysis, we conclude that the Wixens...
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