Triple Interest, Inc. v. Motel 6, Inc., 74-C-242.

Decision Date10 June 1976
Docket NumberNo. 74-C-242.,74-C-242.
Citation414 F. Supp. 589
PartiesTRIPLE INTEREST, INC., Plaintiff, v. MOTEL 6, INC., Defendant. WARREN & COLLINS, INC., Defendant and Third-party Plaintiff, v. MOTEL PROPERTIES, INC., Third-party Defendant.
CourtU.S. District Court — Western District of Wisconsin

Jay D. Moretti, Madison, Wis., for plaintiff Triple Interest.

William H. Alverson, of Godfrey & Kahn, Milwaukee, Wis., and Marshall Manley, of Manatt, Phelps & Rothenberg, Los Angeles, Cal., for defendant Motel 6.

John P. Brady, of Weiss, Steuer, Berzowski & Kriger, Milwaukee, Wis., for defendant and third party plaintiff Warren & Collins.


DOYLE, District Judge.

This is a civil suit arising out of an agreement for the purchase and sale of real estate. Jurisdiction is claimed under 28 U.S.C. § 1332(a).

Plaintiff alleges it entered into an agreement to sell certain land in LaCrosse, Wisconsin, to defendant Warren & Collins, Inc., the exclusive and authorized agent of defendant Motel `6', Inc.; that at the time for closing, defendants refused to pay plaintiff the purchase price of the land in conformance with the agreement, although plaintiff stood ready to tender a warranty deed to the premises; and that as a result of defendants' refusal to perform, plaintiff has been damaged in the amount of $64,000.1

Defendant Warren & Collins admits the allegation that it acted as agent for defendant Motel `6' and that it entered into an agreement to purchase the LaCrosse property from plaintiff. Defendant Warren & Collins, Inc., has cross-claimed against defendant Motel `6', alleging that defendant Motel `6' agreed to indemnify and hold it harmless from liability arising from its relationship with Motel `6'; and alternatively alleging that it has a lease agreement with defendant Motel `6' for the LaCrosse property on which it demands specific performance.

Defendant Warren & Collins, Inc. has filed a third-party complaint against Motel Properties, Inc., alleging that it entered into an agreement with Motel Properties, Inc., to assign to Motel Properties, Inc. the Motel `6' sites "in process and negotiation as of December 31, 1973," one of which is the LaCrosse site which is the subject of this lawsuit.

Defendant Motel `6' has moved for summary judgment as to plaintiff's claim against it on the ground that the agreement for the sale of the LaCrosse property is unenforceable against Motel `6' under the Wisconsin Statute of Frauds, §§ 706.02, 706.03, Wis.Stats. Defendant Motel `6' asserts that the agreement is unenforceable against it under § 706.02 as it was not signed by defendant Motel `6' itself nor was it signed by defendant Warren & Collins, Inc. as agent for Motel `6', and, further, that it is unenforceable against it under § 706.03 because Motel `6' is not identified in the agreement, the agreement is not signed by Warren & Collins, Inc. as agent for Motel `6', and Motel `6' is not identified as an authorizing principal either in the contract itself or in the form of signature or acknowledgement.

Plaintiff has moved for summary judgment against both defendants, contending that defendant Motel `6' is liable to it as authorizing principal of defendant Warren & Collins, Inc.; that the agency relationship and the authority of defendant Warren & Collins, Inc. to execute purchase agreements in behalf of defendant Motel `6' are shown conclusively by the copy of the agency agreement on file herein; and that since the purchase agreement was executed in California, the Wisconsin Statute of Frauds is not applicable. Plaintiff argues, alternatively, that even if the agreement is governed by Wisconsin law, it is not made unenforceable by the Statute of Frauds because the parties have relied upon the agreement and under either the general provisions of equitable estoppel or under the explicit provisions of Wis.Stats. § 706.04, Motel `6' is estopped from denying the validity of the agreement.

Plaintiff argues, also, that whether or not this is a proper case for the entry of summary judgment against defendant Motel `6', it is appropriate for the entry of judgment against defendant Warren & Collins, Inc., as Warren & Collins, Inc. has failed to dispute any substantial issue of fact.

The cross-motions for summary judgment are presently before the court.

From the record, I find that there is no genuine issue as to the following matters set out under the heading, "Facts."


Plaintiff is a closely-held Wisconsin corporation with its principal place of business in Madison, Wisconsin. Its principal business is real estate development. Defendant Warren & Collins, Inc. is a California corporation whose principal place of business is Santa Barbara, California. Defendant Motel `6' Inc. also has its principal place of business in Santa Barbara, California.2

Plaintiff has been involved in at least eight attempts to develop sites in Wisconsin for defendant Motel `6'. Some of the sites have been utilized by defendant Motel `6'; others have not.

On October 30, 1973, plaintiff entered into an agreement in writing with defendant Warren & Collins, Inc. under which plaintiff agreed to sell and Warren & Collins, Inc. agreed to purchase certain land located at LaCrosse, Wisconsin, for the sum of $105,000. The agreement was executed in Santa Barbara, California, by John L. Warren on behalf of "Warren & Collins, Inc. and/or assignee," as Buyer and by "David J. Meier, Triple Interest, Inc. by David J. Meier" as Seller. The agreement provided that the buyer's obligation to conclude the transaction was conditioned on the consummation of the following:

1. Subject to seller's providing engineers certificate of soils bearing capacity of 2,200 pounds sq. ft. for support of buyer's standard two-story motel.
2. Subject to provision at seller's expense of certified topographical survey.
3. Subject to seller's provision of additional compacted fill on site to raise building areas to that minimum elevation required by City of LaCrosse, and the balance of the site to conform to a reasonable drainage plan; all of said improvements to be completed by March 1, 1974.
4. Subject to seller's provision of any required off-site improvements for storm sewer drainage.
5. Subject to issuance of Building Permits for 100 unit (approximately) motel without buyers incurring expense for off-site improvements other than normal sewer and water connections from adjacent street and connection charges therefore not to exceed $500.00.

Nothing on the face of the agreement indicates that the parties made a choice as to which state's law would apply to their agreement. The agreement does not identify or refer to an authorizing principal. The agreement is not signed by Motel `6' nor is there any identification of Motel `6' in the agreement.

In reliance upon the agreement to purchase, plaintiff exercised two options for the purchase of the two portions of the land covered by the agreement and caused improvements to be made to the land. At the time for closing of the agreement, plaintiff was ready and able to tender a warranty deed and demanded that defendant Warren & Collins, Inc. perform in accordance with the terms of the agreement. Despite plaintiff's demands, defendants Warren & Collins, Inc. and Motel `6' refused to pay plaintiff the purchase money pursuant to the terms of the agreement.

After this suit was begun, a judgment was entered by the county court for LaCrosse County, Wisconsin, foreclosing plaintiff's interest in the land which was the subject of the agreement with defendant Warren & Collins, Inc. On or about March 28, 1975, plaintiff entered into a contract for the sale of the land to a corporation which is not a party to this lawsuit. The contract contained a contingency which would have permitted defendants or either one of them to complete the purchase of the land by April 17, 1975. Plaintiff advised defendants of the contract and of the contingency. Defendants failed to perform the agreement. On May 19, 1975, plaintiff conveyed the land to the non-party corporation for a purchase price of $39,000.


Although plaintiff chose Wisconsin as the forum for its lawsuit, it now seeks to avoid the effect of Wisconsin law and of the Wisconsin Statute of Frauds by urging the application of California law to the agreement which is at issue herein. Although plaintiff did not raise the matter of the possible application of a foreign law in its original pleadings, nor amend its pleadings to raise the issue, defendants have responded to the issue in their briefs. I consider that defendants have had an adequate opportunity to raise objections to the application of foreign law to the agreement and that it is appropriate to decide the issue.

The facts demonstrate substantial contacts with the state of California: the agreement was executed in California and both defendants have their principal places of business in that state; however, there is nothing in the record to show that there is a conflict between the laws of California and Wisconsin which will affect the outcome of the lawsuit.

In its brief, plaintiff has cited California, Civil § 1624. I take judicial notice that § 1624 provides as follows (in applicable part):

"The following contracts are invalid, unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by his agent:
* * * * * *
(4) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; and such agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged; . . .."

Plaintiff contends that there is a substantial difference between the California statute and § 706.03(1) of the Wis.Stats., which provides:

"A conveyance signed by one purporting to act as agent for another shall be ineffective as against the purported principal unless such agent was

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