Schroeder v. Raich

• Decision Date: 30 May 1979
• Docket Number: No. 76-498,76-498
• Citation: 278 N.W.2d 871,89 Wis.2d 588
• Parties: George F. SCHROEDER and Gordon A. Schroeder, Plaintiffs-Respondents, v. Nicholas S. RAICH, Defendant-Appellant, Sharon M. Raich, his wife, Defendant.
• Court: Wisconsin Supreme Court

Page 871

278 N.W.2d 871

89 Wis.2d 588

George F. SCHROEDER and Gordon A. Schroeder, Plaintiffs-Respondents, v. Nicholas S. RAICH, Defendant-Appellant Sharon M. Raich, his wife, Defendant.

No. 76-498.

Supreme Court of Wisconsin.

Submitted on Briefs March 28, 1979.

Decided May 30, 1979.

Starobin & Abrahamson, S. C., Milwaukee, on brief, for Nicholas S. Raich and Sharon M. Raich.

William H. Lawler, Milwaukee, on brief, for plaintiffs-respondents.

ABRAHAMSON, Justice.

George and Gordon Schroeder filed suit against Nicholas Raich, a resident of Florida, seeking to recover $25,000 plus interest, the balance allegedly due on a promissory note given to the Schroeders by Raich. As provided in sec. 802.06(2), Stats., ¹ Raich filed a motion to dismiss the action on the ground that the court lacks jurisdiction over him. After holding a jurisdictional evidentiary hearing, ² the trial court entered an order denying Raich's motion to dismiss the action against him. Raich argues on appeal that the facts as set forth in the affidavits and elicited at the hearing do not support a finding of jurisdiction under sec. 801.05, Stats., and that the trial court's exercise of personal jurisdiction over him violates his constitutional right to due process. We affirm the trial court's order.

The record of the jurisdictional evidentiary hearing is scanty indeed, but the following essentially undisputed facts regarding Raich's contacts with Wisconsin can be gleaned from it: ³ On or about April 7, 1972, Gordon A. Schroeder and George F. Schroeder sold their interest in two parcels of real estate in Muskego, Wisconsin, to a partnership whose partners were Nicholas Raich, Sam Lawent, and Judd Kassuba. These two parcels are sometimes characterized as "commercial property." As part payment for the Muskego real estate Raich and his wife signed a promissory note, whereby they promised to pay to the Schroeders at Milwaukee the sum of $75,000 in three equal installments. The Schroeders seek in the instant action to recover from Raich the third and final installment of $25,000, which they allege is unpaid and due. ⁴

Raich stated by affidavit that he was a resident of Florida at the time of the purchase of the real estate and at the commencement of this action and that he executed the note in Florida and returned it to the Schroeders by mail. Raich's affidavit states that he has not entered Wisconsin to inspect or otherwise attend to the property purchased and has carried on all his dealings with respect to the promissory note by means of the United States mail.

As of February, 1976, when this action was commenced, Raich held interests in at least two other parcels of real property in Wisconsin. Raich and Sam Lawent held undivided half interests in a store in Racine, Wisconsin. Lawent characterized the relation between himself and Raich with regard to this property as "a loose partnership." The record is silent as to the business carried on at the store and as to whether Raich and Lawent operate this business or rent the premises to others who operate the business.

Raich also had an interest in a store in the vicinity of Waukesha, Wisconsin. The nature of the business operated at this second store, the nature of Raich's involvement, if any, in the business operation, and the extent of Raich's activities with this property are unfortunately not detailed in the affidavits or in the testimony in the record.

On the basis of the trial court's finding that Raich had interests in three parcels of real property in Wisconsin, the trial court concluded that it had jurisdiction over Raich pursuant to sec. 801.05(1)(d), Stats., which provides:

"A court of this state having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to s. 801.11 under any of the following circumstances:

"(1) Local presence or status. In any action whether arising within or without this state, against a defendant who when the action is commenced:

". . .cal

"(d) Is engaged in substantial and not isolated activities within this state whether such activities are wholly interstate, intrastate, or otherwise."

The various jurisdictional bases defined in sec. 801.05, Stats., were intended by the legislature to provide for this state's exercise of jurisdiction over nonresident defendants to the full extent consistent with the requisites of due process of law. The statutes regulating long arm jurisdiction are thus to be given a liberal construction in favor of the exercise of jurisdiction. Huck v. Chicago, St. P., M. & O. Ry., 4 Wis.2d 132, 137, 90 N.W.2d 154 (1958); Flambeau Plastics Corp. v. King Bee Mfg. Co.,24 Wis.2d 459, 464, 129 N.W.2d 237 (1964).

Sec. 801.05(1)(d), Stats., corresponds in a general way to the "doing business" statutes common in other states. Nagel v. Crain Cutter Co., 50 Wis.2d 638, 646, 184 N.W.2d 876 (1971); Foster, Revision Notes 1959, Wis.Stats.Annot., sec. 801.05, pp. 55-56 (1977). We have said that the court must look to the nature of Raich's activities in Wisconsin to determine whether they were such as to constitute "substantial and not isolated activities . . ." within the meaning of sec. 801.05(1)(d), Stats. This determination must be made in light of the requirements of due process. Zerbel v. H.L. Federman & Co., 48 Wis.2d 54, 179 N.W.2d 872 (1970).

The Schroeders had the burden at the evidentiary hearing to prove prima facie the facts supporting jurisdiction. Hasley v. Black, Sivalls & Bryson, Inc., 70 Wis.2d 562, 577, 235 N.W.2d 446 (1975). Unfortunately they failed to pinpoint the nature of Raich's activities relating to the three parcels of Wisconsin real estate; the record is weak, but nonetheless, we think it provides a sufficient basis for concluding that the requirements of sec. 801.05(1)(d), Stats., which are as applicable to natural persons as to corporate entities, ⁵ are met. The trier of fact is not limited to facts directly proven but may find any or all of the material facts in the case by reasonable inferences drawn from circumstantial evidence. Stevens v. White Motor Corp., 77 Wis.2d 64, 74, 252 N.W.2d 88 (1977); Bautista v. State, 53 Wis.2d 218, 223, 191 N.W.2d 725 (1971); Tri-City Fur Foods Inc. v. Ammerman, 7 Wis.2d 149, 152, 153, 96 N.W.2d 495 (1959).

The record shows that the real estate whose sale underlies the case at bar was purchased by a partnership in which Raich is a partner. There is also evidence in the record that Raich and Lawent formed a "loose partnership" with respect to the Racine store in which each held an undivided one-half interest.

The Uniform Partnership Act defines "partnership" as "an association of 2 or more persons to carry on as co-owners a business for profit." Sec. 178.03(1), Stats. All partners have equal rights in the management and conduct of the partnership business, sec. 178.15(5), Stats., and each partner is the agent of his or her copartners for the purpose of the partnership business. Sec. 178.06(1), Stats.; Reliable Pharmacy v. Hall, 54 Wis.2d 191, 198, 199, 194 N.W.2d 596 (1972).

The facts regarding Raich's status as a partner in one partnership, and possibly in two, owning real estate in Wisconsin, viewed in the light of the provisions of the Uniform Partnership Act, warrant the inference that Raich was participating in one or more business ventures in Wisconsin involving Wisconsin real estate and that Raich's partners, Kassuba and Lawent (a resident of Wisconsin), were authorized to act as Raich's business agents. Raich, a partner, may be said to be doing business in Wisconsin because the partnership does business in this state and partnership business is carried on in behalf of each partner. Restatement (Second) of Conflict of Laws, sec. 40, Comment E, p. 168 (1971).

A reasonable inference from the record is that Raich engaged in continuous and systematic activities in Wisconsin relating to the real estate whether he did so in person, by mail, by telephone or by agent. Foster, Revision Notes 1959, Wis.Stats.Annot. sec. 801.05, pp. 55-56 (1977). The trier of facts can infer from Raich's membership in at least one partnership and his ownership of three parcels of real estate, including two stores, that at a minimum, Raich was involved in the payment of property taxes and income taxes in Wisconsin, in obtaining insurance coverage on Wisconsin property, and in the rental, maintenance, or other management operations of the properties. Raich's activities bear a reasonable and substantial connection to Wisconsin.

The trial court concluded that "with three properties in Wisconsin, I don't think there is any question about it that he is here for not just isolated activities. He has substantial activities." On the basis of the record, we hold that at the commencement of this action Raich was "engaged in substantial and not isolated activities within" Wisconsin, within the meaning of sec. 801.05(1)(d), Stats.

Raich asserts that the application of sec. 801.05(1)(d), Stats. to give the trial court personal jurisdiction over him violates due process. Although this court in Zerbel v. H.L. Federman & Co., 48 Wis.2d 54, 179 N.W.2d 872 (1970), made a separate analysis to determine whether the jurisdictional contacts which satisfy a subsection of sec. 801.05 were also sufficient to satisfy due process requirements, we do not believe this additional analysis is always required. Sec. 801.05, Stats., lists the situations or transactions in which it is not unfair or a denial of due process to extend Wisconsin's long arm of jurisdiction to a nonresident defendant. The standards set by sec. 801.05, Stats., if met, prima facie meet the constitutional demands of Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877), and ...