Sussmann v. Gleisner

• Decision Date: 01 November 1977
• Docket Number: No. 75-446,75-446
• Parties: Wilhelm SUSSMANN, d/b/a Wilhelm Sussmann & Co. Plaintiff-Respondent, v. Norbert J. GLEISNER, Defendant-Appellant and Third-Party Plaintiff, Del Monte Corporation, a Foreign Corporation, Third-Party Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 114

259 N.W.2d 114

80 Wis.2d 435

Wilhelm SUSSMANN, d/b/a Wilhelm Sussmann & Co. Plaintiff-Respondent, v. Norbert J. GLEISNER, Defendant-Appellant and Third-Party Plaintiff Del Monte Corporation, a Foreign Corporation, Third-Party Defendant-Respondent.

No. 75-446.

Supreme Court of Wisconsin.

Submitted on Briefs Sept. 6, 1977.

Decided Nov. 1, 1977.

James R. Mattison and Becker, Kinnel, Doucette & Mattison, Milwaukee, for defendant-appellant.

Weidner, Lemke & Cady, Milwaukee, for plaintiff-respondent.

James R. Clark and Foley & Lardner, Milwaukee, for third-party defendant-respondent.

ABRAHAMSON, Justice.

The controlling issue is whether Gleisner's claim against the Del Monte Corporation, his former employer, is an action to recover unpaid salary, wages or other compensation for personal services, and is barred by sec. 893.21(5), Stats., a two-year statute of limitations. The trial court, in a well-reasoned opinion, concluded that it was. We agree.

Norbert J. Gleisner worked for Del Monte Corporation, or one of its subsidiaries, from 1958 through September 30, 1970. In April of 1965, Del Monte sent Gleisner to Hamburg, Germany as a sales supervisor. On July 15, 1974, Gleisner commenced a third-party action against Del Monte ¹ to recover a sum of money which had been deducted from his salary each month during his employment in Germany. This deduction, known as the "hypothetical tax factor," was calculated to be substantially equal to the federal income tax Gleisner would have had to pay if he were employed in the United States. ²

Gleisner contends that Del Monte agreed to pay him the "hypothetical tax factor" less any taxes Del Monte paid to the German government on his behalf. Gleisner never filed a German tax return, and the German government did not make any tax assessment against him. Del Monte, on the other hand, admits it agreed to reimburse an employee for taxes actually paid, but asserts that there was no agreement to pay any part of the hypothetical tax factor to the employee. Rather, deducting the hypothetical tax factor was a method of equalizing salaries of Del Monte's employees in various countries.

Secs. 893.14, 893.21(5) and 893.19, Stats., are the applicable statutory provisions in issue:

"The following actions must be commenced within the periods respectively hereinafter prescribed after the cause of action has accrued. . . ." ³

"Within 2 years: . . . (5) Any action to recover unpaid salary, wages or other compensation for personal services, except fees for professional services." ⁴

"Within 6 years: . . . (3) An action upon any other contract, obligation or liability, express or implied, except those mentioned in ss. 893.16 and 893.18." ⁵

The problem presented is whether the two-year statute of limitation on unpaid salary or the six-year limitation on an action upon "any other contract" is applicable. In this case, as in many other employment cases, the employment relationship is undertaken on the strength of some sort of promise. We have previously stated that even though a salary claim is based upon an express employment contract, the shorter two-year "salary" statute not the longer six-year "contract" statute applies. Estate of Nale, 61 Wis.2d 654, 660, 213 N.W.2d 552 (1973). This court has in a number of cases attempted to distinguish, for purposes of the statute of limitations, between claims for salary and claims for financial benefits under employment contracts which are not claims for salary. The distinction is difficult. In several cases this court has differentiated between the two relying in part on "the fruit of the labor" theory ⁶ and in part on the theory that the two-year statute of limitations should be construed narrowly. ⁷

Thus the court has said that special contractual financial benefits such as pension trusts, welfare funds, vacation funds, stock purchase plans, and bonuses, although a form of compensation, are more than compensation and are not within the contemplation of the two-year statute of limitations. Such benefits which provide long-range security do not compensate for daily work so much as they purchase an employee's continued loyalty and service. Green v. Granville Lumber & Fuel Co., 60 Wis.2d 584, 211 N.W.2d 467 (1973); Estate of Schroeder, 53 Wis.2d 59, 66-67, 191 N.W.2d 860 (1971); Younger v. Rosenow Paper & Supply Co., 51 Wis.2d 619, 626, 188 N.W.2d 507 (1971).

The hypothetical tax factor involved in the case at bar can be distinguished from the special contractual financial benefits in the three cases cited. The tax factor involves a deduction from the employee's base salary, not a payment in addition to the base salary. Even as Gleisner interpreted the contract, the tax factor would be a portion of his established base salary, payable either to the German government, or to him, or to both. We conclude, as did the trial court, that Gleisner's claim is for money allegedly withheld from and owing to him as part of his salary, not for an employee benefit distinct from and in addition to his salary. Therefore Gleisner's action must have been commenced within two years after the cause of action accrued. Sec. 893.21(5), Stats.

No statute defines when Gleisner's cause of action as stated in his complaint accrued. A cause of action accrues when there is "a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it." Holifield v. Setco Industries, Inc., 42 Wis.2d 750, 754, 168 N.W.2d 177, 179 (1968), quoting Barry v. Minahan, 127 Wis. 570, 573, 107 N.W. 488 (1906). See Developments in the Law, Statutes of Limitations, 63 Harv.L.Rev. 1177 (1950).

The nature of and the terms of the employment contract ordinarily determine when the right to recover compensation for services accrues and when the statute of limitations begins to run. If we use Gleisner's theory of his case, there are three dates on which the cause of action may be said to have accrued.

The trial court stated the cause of action accrued no later than each April 15th following each taxable year:

"The cause of action for return of money withheld could have accrued at the end of each taxable year, on April 15 following each taxable year, or at the time the employment contract terminated. . . . If Gleisner's claim is based on the assertion that Del Monte did not pay out any sums for income taxes, the cause of action could not accrue any time later than April 15, 1971, the last date a United States tax return could be timely filed for the last year of Gleisner's employment at Del Monte."

Or, the date of accrual could be fixed with regard to the requirements of the German tax rules, rather than the federal income tax rules, since it was the determination of Gleisner's tax indebtedness to Germany which would trigger his claim against Del Monte. Gleisner filed a United States tax return each year claiming a total exemption from tax because of his physical presence in a foreign country. He never filed a German tax return.

German income tax law does not operate on a self-assessment principle. The potential taxpayer submits the required factual and legal information, and an assessment is made by the local finance office. Gumpel, Taxation in the Federal Republic of Germany (2d ed.) 1311.1b, CCH World Tax Series 1969; Abgabenordnung (Fiscal Code) 1967, sec. 166(2). An individual's German income tax return covers the last preceding calendar year. ⁸ Gumpel, supra, at 1311.1c. Since the mid-1960's, individual returns were required to be filed on a set date in May of the year following the tax year in question. Id. at 1311.1d, n.6; Killius, Business Operations in West Germany A-31, BNA-Tax Management, Foreign Income Portfolios 1975. During each year of his employment in Germany, Gleisner knew the date that the return should have been filed, that he had not filed a return, that no tax would be assessed by the German government for that year, and that, under his interpretation of the contract, Del Monte should reimburse him the full amount of the tax factor deducted for that year. Thus a cause of action for each year of employment accrued in May of the following year. Gleisner's last year of employment was 1970. Under this view, his last cause of action for the year 1970 accrued in May, 1971, and he would have had to begin suit by the same date in May of 1973 to recover for the year 1970.

Gleisner's brief arguing for a six-year statute of limitations asserts that the claim for the hypothetical tax factor for all years of employment accrued on September 30, 1970, when Gleisner terminated employment and left Germany.

Under any of these three views as to when the cause of action for the deduction of the hypothetical tax factor accrued, Gleisner's cause of action is barred by the two-year statute of limitations since suit was not commenced until July 15, 1974.

Gleisner also claims that Del Monte should reimburse him for the total "hypothetical tax factor" ($1,592.10) deducted from his salary during his nine months of...