Pavlic v. Woodrum, 91-1420

• Decision Date: 22 April 1992
• Docket Number: No. 91-1420,91-1420
• Parties: Robert S. PAVLIC, Plaintiff-Respondent, v. Timothy P. WOODRUM, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 533

486 N.W.2d 533

169 Wis.2d 585

Robert S. PAVLIC, Plaintiff-Respondent, v. Timothy P. WOODRUM, Defendant-Appellant.

No. 91-1420.

Court of Appeals of Wisconsin.

Submitted on Briefs Feb. 26, 1992.

Opinion Released April 22, 1992.

Opinion Filed April 22, 1992.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Jeffrey A. Schmeckpeper and John E. Cain of Kasdorf, Lewis & Swietlik, S.C. of Milwaukee.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Jeffrey J. Ek of Bode, Gross & Carroll, S.C. of Waukesha.

Before BROWN, ANDERSON and SNYDER, JJ.

ANDERSON, Judge.

Timothy P. Woodrum appeals from an order denying his motion to dismiss for lack of personal jurisdiction. ¹ Because we conclude that Wisconsin lacks personal jurisdiction over Timothy Woodrum, we reverse.

Timothy Woodrum and Louis Woodrum organized a Florida Sub-S corporation which sold specialty food items. The corporation was located in Florida. Timothy Woodrum was a shareholder and the president of the corporation. Louis Woodrum, Timothy Woodrum's father, was a shareholder and the vice president of the corporation. Both Woodrums are residents of Florida.

Robert S. Pavlic is a resident of Wisconsin. Louis wrote to Pavlic in Wisconsin to solicit Pavlic's investment in the corporation. The corporation offered Pavlic twenty percent of the stock for $15,000. Pavlic wrote a letter to Louis stating that he was interested in purchasing the stock but under certain conditions. Louis responded to Pavlic's conditions. Subsequently, Pavlic purchased 1000 shares of the common stock. Timothy sent the stock certificates by mail to Pavlic's Wisconsin address. After the corporation failed, Timothy sent a letter to Pavlic informing him of the failure.

Pavlic sued Timothy personally in Wisconsin for damages arising from fraudulent misrepresentation and conspiracy. Pavlic also claimed that Timothy was negligent and breached his fiduciary duty to Pavlic in the conduct of the business. Finally, Pavlic claimed that Timothy is personally liable under sec. 551.59, Stats., for offering stock for sale in Wisconsin without registering the stock in Wisconsin.

The trial court found sufficient contacts with Wisconsin to exercise personal jurisdiction over Timothy. The court reasoned that the statutory requirements of personal jurisdiction were met because Louis solicited Pavlic on behalf of Timothy, Timothy gained a financial benefit from the solicitation, and Timothy contacted Pavlic two times through the mail. The court also reasoned that substantial justice and fairness would not be violated because Timothy voluntarily assumed interstate obligations by soliciting and obtaining Pavlic's investment while Pavlic was in Wisconsin.

The issue is whether Timothy's contacts in Wisconsin were sufficient for Wisconsin to exercise personal jurisdiction over Timothy. We will adopt the trial court's jurisdictional factual findings unless they are clearly erroneous, although we conduct an independent review of the court's ultimate determination on the sufficiency of the state contacts. M.C.I., Inc. v. Elbin, 146 Wis.2d 239, 242-43, 430 N.W.2d 366, 368 (Ct.App.1988).

As a threshold matter, we must determine to what extent Louis' actions expose Timothy to personal jurisdiction in Wisconsin. We conclude that Louis' actions, standing alone, do nothing to expose Timothy to personal jurisdiction. Louis had numerous phone calls with and mailings to Pavlic while Pavlic was in Wisconsin. Louis solicited Pavlic to invest in the corporation and Louis was acting on behalf of the corporation. Assuming arguendo that these contacts satisfy the statute and the minimum contact requirement, Wisconsin courts would have personal jurisdiction over Louis and the corporation. See, e.g., State v. Advance Mktg. Consultants, Inc., 66 Wis.2d 706, 715-19, 225 N.W.2d 887, 892-94 (1975). However, personal jurisdiction over the corporation cannot be the sole basis for personal jurisdiction over an officer. See Oxmans' Erwin Meat Co. v. Blacketer, 86 Wis.2d 683, 691, 273 N.W.2d 285, 288 (1979). Therefore, jurisdiction over Louis and the corporation does not extend personal jurisdiction over Timothy. ²

Section 801.05(4), Stats., sets forth the requirements for personal jurisdiction in this kind of case:

LOCAL INJURY; FOREIGN ACT. In any action claiming injury to person or property within this state arising out of an act or omission outside this state by the defendant, provided in addition that at the time of the injury, either:

(a) Solicitation or service activities were carried on within this state by or on behalf of the defendant; or

(b) Products, materials or things processed, serviced or manufactured by the defendant were used or consumed within this state in the ordinary course of trade.

The trial court found that Louis was acting on behalf of Timothy, but did not point to the basis for that finding. The only indication of an agency relationship articulated by Pavlic is Louis' use of the words "we," "us," and "our" in the correspondence between Louis and Pavlic on the corporation's letterhead. Pavlic also relies on Timothy's use of "we," "us," and "our" in Timothy's two letters to Pavlic. The first letter was on the corporation's letterhead and the second letter was not.

An agency exists if there has been a manifestation by the principal to the agent that the agent may act on the principal's account. RESTATEMENT (SECOND) OF AGENCY sec. 15 (1958). Apparent authority to do an act is created by conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him. Id. at sec. 27. The record does not contain any evidence or reasonable inferences that would support a manifestation by Timothy to Louis creating Louis as Timothy's personal agent. Nor does the record contain evidence or reasonable inferences which would reasonably cause Pavlic to believe that Timothy consented to Louis acting on his behalf. This conclusion is further supported by the fact that all the letters, except one letter written after the dissolution of the corporation, was written on the corporation's stationery.

Ordinarily the court of appeals is not authorized to make findings of fact. However, where there is no conflicting evidence or only one reasonable inference can be drawn from the evidence, the drawing of that inference is a question of law. See Bulik v. Arrow Realty, Inc., 154 Wis.2d 355, 361, 453 N.W.2d 173, 176 (Ct.App.1990). Because there is no competing evidence or competing reasonable inferences to support a finding of an agency relationship, we conclude as a matter of law that Louis was not acting on behalf of Timothy. Therefore, these actions do not provide a basis to expose Timothy to personal jurisdiction in Wisconsin.

The only contacts Timothy had with Wisconsin were two contacts through the mail: one mailing of the stock certificates and one mailing of the notice of the corporation's dissolution. These contacts were not solicitation within the meaning of sec. 801.05(4), Stats. The rationale behind the solicitation requirement of sec. 801.05(4) is that when a person solicits, the person anticipates a direct or indirect financial benefit and subjects himself to the jurisdiction of the courts of the state where the solicitation occurs. See Fields v. Playboy Club of Lake Geneva, Inc., 75 Wis.2d 644, 653, 250 N.W.2d 311, 316 (1977). Timothy's two mailings were not solicitation within the meaning of the statute because it cannot be said that he anticipated a financial benefit when he made the two mailings. Rather, mailing...