Village of Brown Deer v. City of Milwaukee

• Decision Date: 03 April 1962
• Citation: 114 N.W.2d 493,16 Wis.2d 206
• Parties: VILLAGE OF BROWN DEER, a municipal corporation, Appellant, v. CITY OF MILWAUKEE, a municipal corporation, et al., Respondents.
• Court: Wisconsin Supreme Court

Page 493

114 N.W.2d 493

16 Wis.2d 206

VILLAGE OF BROWN DEER, a municipal corporation, Appellant, v. CITY OF MILWAUKEE, a municipal corporation, et al., Respondents.

Supreme Court of Wisconsin.

April 3, 1962.

Rehearing Denied June 5, 1962.

This is an action for a declaratory judgment commenced on March 15, 1956, by the village of Brown Deer against the city of Milwaukee and the town of Granville. Prior to the events which precipitated this lawsuit, Granville was an unincorporated area of 22 1/2 square miles located in Milwaukee county. In 1956, Brown Deer adopted five ordinances purporting to annex five different territories in Granville. Milwaukee, in 1956, adopted an ordinance purporting to annex territory in Granville, a part of which was included in one of the Brown Deer annexations. During that same year Milwaukee and Granville adopted consolidation ordinances which were subsequently approved at a referendum. Thereafter, Milwaukee asserted jurisdiction over all of Granville. Originally, Brown Deer sought a declaratory judgment which requested a determination that its five annexation ordinances were valid, that Milwaukee's annexation ordinance was invalid, and that Milwaukee's and Granville's consolidation ordinances were invalid.

In the first of the prior appeals this court determined that Brown Deer's annexations of territories in Granville took precedence over Milwaukee's consolidation with Granville. Thus, if Brown Deer's annexation ordinances were valid, then the territories involved would become part of Brown Deer. Brown Deer, Village of, v. City of Milwaukee (1956), 274 Wis. 50, 79 N.W.2d 340.

Pursuant to the mandate of this court in the second appeal, the trial court entered summary judgment that the consolidation ordinances of Milwaukee and Granville were valid. Brown Deer, Village of, v. City of Milwaukee (1957), 2 Wis.2d 441, 86 N.W.2d 487.

Subsequent to the decision of this court on the second appeal, the matter finally proceeded to trial. Brown Deer sought to establish the validity of its five annexation ordinances and the invalidity of an annexation ordinance adopted by the city of Milwaukee. The ordinances in issue are:

1. Brown Deer

No. 31--Corrigan Territory--10 1/2 square miles

No. 35--Brown Deer Park Territory-- 3/4 square mile

No. 53--Laun Territory-- 1/4 square mile

No. 32--Tripoli Territory-- 1/4 square mile

No. 34--Johnson Territory--4 1/2 square miles

2. Milwaukee

No. 631--Schroedel-West Territory--1 square mile

The trial court determined that Brown Deer's ordinances nos. 32 and 34 were valid, but that nos. 31, 35 and 53 were invalid; and that Milwaukee's ordinance no. 631 was invalid. A judgment was entered on September 25, 1959. Brown Deer is appealing from that portion of the judgment which determines that three of its annexation ordinances are invalid, and Milwaukee has moved to review certain matters involved in such appeal. Milwaukee is cross-appealing from that portion of the judgment which upheld the validity of the two Brown Deer annexation ordinances, and which held invalid the Milwaukee annexation ordinance. Brown Deer has moved to review certain questions involved in the appeal taken by the city of Milwaukee.

Further facts will be stated in the opinion.

Harold H. Fuhrman, Village Atty., John P. Roemer, Ralph M. Hoyt, Sp. Counsel, Milwaukee, for appellant.

John J. Fleming, City Atty., Harry G. Slater, Deputy City Atty., Richard F. Maruszewski, John F. Cook, Asst. City Attys., Milwaukee, Marvin E. Klitsner, Milwaukee, of counsel, for respondents.

GORDON, Justice.

All of the six annexations involved here were prosecuted under sec. 62.07(1)(a), Stats.1955. This statute provided in part that:

'(1) Annexation procedure. Territory adjacent to any city may be annexed to such city in the manner following:

'(a) A petition therefor shall be presented to the council 1. signed by a majority of the electors in such adjacent territory and by the owners of one-half of the real estate within the limits of the territory proposed to be annexed, or 2. if no electors reside in the said adjacent territory signed by the owners of one-half of taxable property therein according to the last tax roll, or 3. by a majority of the electors and the owners of one-half of the real estate in assessed value; provided, that no petition for annexation shall be valid unless at least 10 days and not more than 20 days before any such petition is caused to be circulated, a notice shall be posted in at least 8 public places in the municipality.'

Most of the issues concern whether the petition for annexation was signed 'by a majority of the electors and the owners of one-half of the real estate in assessed value.'

Each annexation ordinance will be discussed separately.

1. The Corrigan Annexation

The total assessed value of real estate in the Corrigan territory was $3,863,796, so that signatures of the owners of at least $1,931,898 of assessed value would be required for a valid petition. However, the trial court found that the petition contained the signatures of the owners of only $1,922,775 of assessed value, and thus there was a deficiency of $9,123. For this reason the annexation ordinance was held invalid by the trial court.

There are four principal issues raised upon the challenge to this annexation:

1. Whether the signature on the petition made on behalf of the Evert Container Corporation was properly authorized;

2. Whether the interest of Mary Cudahy Keogh, the owner of a remainder interest in real estate devised to her by her father, John Cudahy, with an assessed value of $30,297.75 was represented on the annexation petition by a sufficient signature;

3. Whether the signature of Mr. and Mrs. Mulholland on the petition was sufficient to commit a tract with an assessed value of $18,800 in favor of the annexation; and

4. Whether real estate owned by two railroads and an electric power company within the area in question should have been added to the total assessed value of real estate in the Corrigan territory.

We conclude that the assessed valuation of the Evert Container Corporation, in the sum of $231,375, was improperly included in the computation of the total assessed value for which owners had signed on the annexation petition. No determination of any of the other issues, or any combination of such issues, in favor of Brown Deer, could alter the result of invalidation which attends our conclusion that the assessed value of the real estate of the Evert Container Corporation was improperly included on the annexation petition. Accordingly, we do not reach the other issues stated above.

The Evert Container Corporation has an eleven member board of directors. Charles Evert is president of the corporation, the majority stockholder and a member of the board of directors. Although he discussed the question of his signing the petition with a majority of the members of the board of directors before he actually signed, the evidence is clear that Mr. Evert purported to sign on behalf of the corporation without obtaining either formal authorization from the board of directors or informal authorization as permitted under sec. 180.91, Stats.

Brown Deer contends that Milwaukee has no standing to challenge the authority of the president, Mr. Evert, to sign the petition on behalf of the corporation. As a general rule, if a corporation does not raise the objection that an officer lacked authority to do an act on behalf of the corporation, such objection may not be raised by a third person. 2 Fletcher, Cyclopedia Corporations, p. 523, sec. 490.

However, we believe that when a corporation purports to perform a political act, as opposed to a business act, other interested parties may be heard to challenge the validity thereof. Milwaukee is a vitally interested third party. Milwaukee has adopted a valid ordinance consolidating Granville; Brown Deer has adopted an ordinance purporting to annex territory in Granville. Such ordinance takes precedence over Milwaukee's consolidation.

We conclude that an interested municipality may raise the question of the lack of authority of a person purporting to sign an annexation petition on behalf of a corporation. Certainly Milwaukee could challenge the legal title of a person who signed an annexation petition as an owner of real estate. We see no difference in principle.

Sec. 180.30, Stats.1955, provides:

'The business and affairs of a corporation shall be managed by a board of directors. * * *'

Sec. 180.91, Stats.1955, provides as follows:

'Any action required by the articles of incorporation or by-laws of any corporation or any provision of law to be taken at a meeting or any other action which may be taken at a meeting, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the shareholders, subscribers, directors or members of a committee thereof entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote, and may be stated as such in any articles or document filed with the secretary of state under this chapter.'

Sec. 180.91 was adopted in order to permit informal action by the board of directors. Corporations owe their existence to the statutes. Those who would enjoy the benefits that attend the corporate form of operation are obliged to conduct their affairs in accordance with the laws which authorized them. In 2 Fletcher, Cyclopedia Corporations, sec. 392, p. 227, it is stated:

'By the overwhelming weight of authority, when the power to do particular acts, or general authority to manage the affairs of the corporation, is vested in the directors or trustees, it is vested in them, not individually, but as a board, and, as a general rule, they can act so as to bind the corporation only when they act as a board and at a legal meeting.'

The legislature having specified the means whereby corporations could function...