Schoenburg v. Klapperich

• Decision Date: 02 December 1941
• Parties: SCHOENBURG et al. v. KLAPPERICH et al.
• Court: Wisconsin Supreme Court

239 Wis. 144

300 N.W. 237

SCHOENBURG et al.

v.KLAPPERICH et al.

Supreme Court of Wisconsin.

Oct. 7, 1941.

Rehearing Denied Dec. 2, 1941.

Appeal from several orders of the Circuit Court for Marathon County; George J. Leicht, Circuit Judge.

Action by Phyllis Schoenburg and another, copartners, unsecured creditors of Associated Buyers Cooperative, Inc., an incorporated cooperative association, against E. H. Klapperich and others, who were the incorporators, members and stockholders of the association, to enforce their claim against such defendants under St.1939, § 180.06(4). From orders sustaining defendants' demurrers to the complaint, the plaintiffs appeal-[By Editorial Staff.]

Orders reversed and cause remanded, with directions.

Action commenced July 25, 1940, by Phyllis Schoenburg and M. L. Price, co-partners, unsecured creditors of Associated Buyers Cooperative, Inc., an incorporated cooperative association, of which the defendants, the respondents herein, and others are the incorporators, members, and stockholders, to enforce their claim as against the individual defendants under section 180.06(4), Stats. Defendants demurred to the complaint and from orders sustaining those demurrers, plaintiffs appeal.

The plaintiffs Schoenburg and Price are co-partners engaged in the wholesale fruit and produce business in Chicago, Illinois. The defendants, retail grocers in Wisconsin, are the incorporators, members, and stockholders of the cooperative association, Associated Buyers Cooperative, Inc., of Marshfield, Wisconsin. This corporation was organized under chapter 185, Wis.Stats. It has capital stock of which each defendant owns one or more shares. It was engaged in the business of purchasing fruit and produce at wholesale for sale and distribution for the benefit of and to the defendants.

Before the corporation had 50% of its capital stock subscribed and 20% of its authorized capital stock actually paid in it transacted business with others than its members, among them the plaintiffs, and contracted the obligation which is the basis for this action. Subsequently the corporation was found to be insolvent by the county court of Wood County and a receiver was appointed. Upon refusal of the individual defendants to comply with plaintiffs' demands for payment this action was brought.

Several of the defendants demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action. The demurrers were sustained by the trial court on the ground that the provisions of section 180.06(4), Stats., forbidding the transaction of business with others than members until at least 50% of the authorized capital stock has been subscribed and 20% actually paid in, did not apply to cooperatives organized under chapter 185, Wis.Stats., and that therefore defendants were not personally liable to plaintiffs.

William E. Kaplan, of Wausau, and Theo. W. Brazeau, of Wisconsin Rapids, for appellants.

Reginald I. Kenney, of Milwaukee, for respondents.

MARTIN, Justice.

This appeal presents the single question: Are the incorporators and stockholders of a stock cooperative association, incorporated under chapter 185, Wis.Stats., subject to the provisions of section 180.06(4), Stats.?

Section 180.06(4), Stats., forbids a corporation to transact business with any others than its members until one-half of its capital stock shall have been subscribed and one-fifth of its authorized capital actually paid in. If Associated Buyers Co-operative, Inc., is subject to the provisions of section 180.06(4), Stats., the defendants are liable to the plaintiffs and the complaint states a good cause of action.

[1] Fundamentally, a cooperative association organized under chapter 185, Stats., with capital stock is a corporation; but the legislature has seen fit to set up a separate chapter of laws relative to its organization, powers, functions, and dissolution. Chapter 185, Stats. Section 185.01, Stats., defines the word ‘association’ as meaning a corporation organized under chapter 185, Stats. Section 185.08(1), Stats., provides: “An association created under sections 185.01 to 185.22, inclusive, shall have all the powers of a corporation organized under section 180.02, subject to the provisions of section 185.20.”

Section 185.20, Stats., provides: “General corporation law to apply. The general corporation law of this state shall apply to all associations, except where said general corporation law expressly exempts such associations, or where the provisions of said general corporation law are opposed to or inconsistent with the provisions of this chapter [ch. 185, Stats.].”

There is no express exemption in favor of cooperative associations under section 185.20, Stats.

The next consideration is whether section 180.06(4), Stats., which so far as here material provides:

180.06(4): “The corporation shall not transact business with any other than its members until one-half of its capital stock shall have been subscribed and one-fifth of its authorized capital actually paid in. *** If any obligation shall be contracted in violation hereof, the corporation offending shall have no right of action thereon; but the signer or signers of the articles and the subscriber or subscribers for stock transacting such business or authorizing the same, or having knowledge thereof, consenting to the incurring of any debt or liability, as well as the stockholders then existing, shall be personally liable upon the same.”, is opposed to or inconsistent with the provisions of ch. 185, Stats.

The trial court in its opinion says: “To determine if sec. 180.06(4), Stats., is opposed to or inconsistent with the provisions of sec. 185.20, Stats., we must construe and consider sec. 180.06(4), sec. 185.01, and sec. 185.20, Stats., together, in the light of the definition given to the word, ‘corporation’. As a result we must arrive at the inevitable conclusion that sec. 180.06 (4), Stats., applies only to those corporations not organized under ch. 185, Stats. This construction gives the cooperatives the liberality and favor contemplated in the law. No other construction would do so.”

Section 185.01, Stats., defines both a corporation and an association as follows: “‘Corporation’ means a corporation not organized under this chapter. ‘Association’ means a corporation organized under this chapter.”

[2] Section 185.20, Stats., is plain and unambiguous. No interpretation is necessary. State ex rel. Associated Indemnity Corporation v. Mortensen, Commissioner of Insurance, 224 Wis. 398, 400, 272 N.W. 457, 110 A.L.R. 524. The same is true of the other sections mentioned.

[3] Chapter 185, Stats., relates to cooperative associations authorized and empowered to do business in a corporate capacity. The Associated Buyers Cooperative, Inc., is so organized under this chapter. The phrase “*** opposed to or inconsistent with the provisions of this chapter,” (ch. 185, Stats.), is likewise clear and unambiguous, and not open to...