Swan Sales Corp. v. Jos. Schlitz Brewing Co.

• Decision Date: 21 August 1985
• Docket Number: No. 85-0076,85-0076
• Parties: SWAN SALES CORPORATION, a domestic corporation, Plaintiff-Appellant, v. JOS. SCHLITZ BREWING COMPANY, a domestic corporation, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 640

374 N.W.2d 640

126 Wis.2d 16

SWAN SALES CORPORATION, a domestic corporation, Plaintiff-Appellant, v. JOS. SCHLITZ BREWING COMPANY, a domestic corporation Defendant-Respondent.

No. 85-0076.

Court of Appeals of Wisconsin.

Submitted on Briefs July 2, 1985.

Opinion Released Aug. 21, 1985.

Opinion Filed Aug. 21, 1985.

Herbon, McLaughlin & Herbon, Milwaukee, for plaintiff-appellant; Ellis R. Herbon, Milwaukee, of counsel.

Godfrey & Kahn, S.C., Milwaukee, for defendant-respondent; William H. Levit, Jr., Milwaukee, of counsel.

Before WEDEMEYER, P.J., and MOSER and SULLIVAN, JJ.

MOSER, Judge.

Swan Sales Corporation (Swan) appeals from an order denying its motion to compel discovery. Swan also appeals the trial court's summary judgment for the Jos. Schlitz Brewing Company (Schlitz). We affirm on both issues.

The subject of this action is an agreement entered into by Swan and Schlitz on May 22, 1962. The letter agreement provided that Swan would perform promotional and merchandising services for Schlitz in connection with beer sales to the American military in the following countries: United Kingdom, France, Spain, Italy, Sicily, Crete, Libya, Morocco, Turkey, Azores, Germany and Greece. The agreement spelled out Swan's duties and provided for payment to Swan of a per case "Service Allowance," or commission. It also provided that it could be terminated at any time by either party by giving written notice to the other party.

In the course of Swan and Schlitz's twenty-year business relationship, modifications were made to the agreement in four general areas: (1) addition of countries to Swan's promotional and merchandising responsibilities; (2) deletion of countries; (3) increase in the per case commission paid to Swan; and (4) addition of beer products to the ones Swan promoted to the military. In particular, Schlitz made several modifications between 1974 and 1979 that are pertinent to this appeal. All modifications in the agreement were made in writing by letter from Schlitz to Swan.

On September 1, 1982, Schlitz gave written notice to Swan that it was terminating the letter agreement between the parties on September 30, 1982. Swan brought the instant action claiming that the letter agreement and its later modifications constituted a "dealership" within the meaning of ch. 135, Stats., the Wisconsin Fair Dealership Law (WFDL). Swan claimed that because Schlitz did not terminate Swan for good cause, and because Schlitz failed to give Swan statutory notice and an opportunity to cure its inadequate performance, Schlitz violated the WFDL and was liable for damages and attorney fees. The trial court granted Schlitz's motion to dismiss the complaint, but treated that motion as one for summary judgment. ¹ The court also denied Swan's motion to compel discovery of Schlitz's privileged and work product documents. Swan appeals.

We turn first to the summary judgment issue. Swan argues that the trial court erred in granting summary judgment, as there exist disputed material facts sufficient to entitle Swan to a trial on the merits. We disagree.

Summary judgment is appropriate where the pleadings, depositions, affidavits and other papers on file show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. ² In reviewing a trial court's grant of summary judgment, this court must apply the standards set forth in sec. 802.08, Stats., in the same manner as the trial court. ³

Reviewing the documents marshaled in support of and in opposition to summary judgment, we, like the trial court, can find no issue as to any material fact. In its motion to dismiss, Schlitz admits that both the letter agreement and the modifications thereto occurred. Swan asserts that factual issues exist regarding the parties' intent, the legal effect of the modifications, and changes originally anticipated by the parties. These are legal questions interpreting the facts under the law and are insufficient to raise a material factual issue.

Since the facts are undisputed, we must determine whether the trial court was correct in granting judgment for Schlitz as a matter of law. Swan contends that the WFDL applies under a correct interpretation of the 1962 letter agreement and its subsequent modifications. Swan argues that since Schlitz failed to comply with the notice and termination requirements of the WFDL, Swan should be compensated for its allegedly unlawful termination. Schlitz submits that the WFDL does not apply because Swan's dealership is not situated in Wisconsin. Schlitz also argues that the WFDL does not apply because modifications of the letter agreement occurring between April 5, 1974, and November 24, 1977, did not rise to the level of a new agreement, nor did changes occurring after November 24, 1977, rise to the status of a "renewal" or "amendment" of the original agreement needed for the WFDL to apply.

The Wisconsin Fair Dealership Law was enacted in 1973 to protect dealers against unfair treatment by grantors, and to provide dealers with rights and remedies in addition to those existing by contract or common law. ⁴ Section 135.02(2), Stats., defines a "dealer" as "a person who is a grantee of a dealership situated in this state." The trial court held that this statutory definition was "not free from ambiguity," and, after looking at the pertinent legislative history, determined that the legislature intended that the dealership, rather than the dealer, had to be situated in Wisconsin. Swan did no business for Schlitz in Wisconsin, but rather represented Schlitz to the military overseas. For that reason, the trial court held that Swan's dealership was not located in Wisconsin and that the dealer-protective provisions of the WFDL were inapplicable.

A statute is ambiguous when it is capable of being interpreted by reasonably well-informed persons in either of two or more senses. ⁵ If, after looking at the plain meaning of the statute, it is still ambiguous, courts may properly resort to legislative history in order to determine legislative intent. ⁶ We need not defer to the trial court in interpreting an ambiguous statute. ⁷

In reading the above definition of "dealer," a reasonably well-informed person might interpret it to mean either that the grantee (dealer) must be located in Wisconsin or that the dealership must be situated in Wisconsin. The definition of "dealer" under the WFDL is thus ambiguous, and we turn to the legislative history for elucidation.

Originally, the 1977 bill amending the WFDL included no geographical limitations. The issue of restricting the WFDL to Wisconsin dealerships was first raised by the drafting legislative attorney. In a drafter's note the attorney recommended that to ensure that the law covered only Wisconsin dealerships, the definition of dealership be changed or restrictions be placed in other sections of the statutes where dealer or dealership was mentioned.

Senator Thomas Petri then proposed Senate Amendment 1 to the proposed bill which would have limited the definition of dealership to "a contract ... by which a person in this state is granted the right to sell or distribute goods." The Senate Commerce Committee solicited a suggestion from Assemblyman Thomas Hauke, the sponsor of the amending bill in the Assembly. Assemblyman Hauke sent a letter prepared at his request by attorney William F. Nelson (Nelson) suggesting language which would ensure "the WFDL only be applicable to Wisconsin dealers." Nelson's letter stated in part:

1. Amendment to make bill applicable only to Wisconsin dealers.

If the bill is to be amended in such a fashion as to be applicable only to dealerships situated within the state of Wisconsin, I would suggest that this would be done by modifying 135.02(5) in the following fashion:

"Dealer" means a person who is a grantee of a dealership, situated in the state of Wisconsin.

The underlined language would constitute the addition to the existing statutory language. (Emphasis in original). ⁸

The Senate Commerce Committee adopted Nelson's suggestion rather than Senator Petri's proposed amendment, changing the language only to read "dealership situated in this state."

This, then, clearly establishes the legislature's intent to make the WFDL apply exclusively to dealerships that do business within the geographic confines of the state of Wisconsin. Since Swan only did business for Schlitz overseas, the trial court was correct in determining that this agreement does not come within the terms of the WFDL. The subject matter of this agreement is not "situated in this state."

Swan next contends that the modifications of the 1962 letter agreement between it and Schlitz were substantial enough to either renew or amend the contract so as to bring it under the post-1977 WFDL. We disagree.

Initially, the WFDL expressly applied only to contracts entered into after April 5, 1974, the effective date of the Act. ⁹ In 1977, however, this express prospective language was deleted in favor of the current expression of purpose and legislative construction as found in sec. 135.025(2)(d), Stats: "(2) The underlying purposes and policies of this chapter are: ... (d) To govern all dealerships, including any renewals or amendments, to the full extent consistent with the constitutions of this state and the United States." (Emphasis added). Our supreme court in Wipperfurth v. U-Haul Co. held that this 1977 amendment could not constitutionally apply the WFDL retroactively to agreements entered into prior to the statute's effective date. The court reasoned that retroactive application would impair the obligation of contracts in violation of U.S. Const. art. 1, sec. 10, cl. 1. ¹⁰

Whether an agreement purporting to be a dealership falls under the WFDL, then, depends on two sets of dates. From April 5, 1974, to November 24, 1977, the WFDL covered only new agreements entered into between those two dates. ¹¹ After...