Wesolowski v. Erickson
| Decision Date | 05 November 1958 |
| Citation | 92 N.W.2d 898,5 Wis.2d 335 |
| Parties | Robert J. WESOLOWSKI, Plaintiff, v. Charles G. ERICKSON and Liberty Savings and Loan Association, Defendants. |
| Court | Wisconsin Supreme Court |
Ray T. McCann, Richard A. McDermott, Milwaukee, for appellant.
Erbstoeszer, Cleary & Zabel, Milwaukee, for respondents.
The questions involved are: (1) was the counterclaim pleadable; (2) was the motion to strike proper or was it in effect a demurrer; (3) if a demurrer did it search the record so as to test the sufficiency of the complaint?
Whether the counterclaim is pleadable depends on whether the plaintiff is suing as an individual or in a representative capacity, and whether the defendant association is such a defendant as can plead a counterclaim. The main difficulty with the complaint is that it does not expressly state the plaintiff is suint in a representative capacity. The appellant relies on the statement in Isaacs v. Milwaukee Chair Co., 1938, 229 Wis. 184, 282 N.W. 1, 2, where this court stated: 'Where a plaintiff sues in a representative capacity the right to do so must be clearly alleged.' This statement was made in reference to the absence of a necessary allegation that the plaintiff was a stockholder at the time of the commencement of the suit. It appeared from the complaint that the plaintiff was not suing in her own right but on behalf of the corporation and was a stockholder at the time of the transactions complained of.
Whether an action is one brought in an individual capacity or in a representative capacity is sometimes difficult to determine. The mere labeling of a complaint does not determine its nature. The nature of an action is to be determined as a whole and all allegations in the complaint must be considered. 13 Fletcher, Cyc. of Corp., sec. 5912, p. 271-2. It is not necessary under sec. 260.12, Stats., 30 W.S.A. 68, that all the names of all the stockholders in a representative suit be given or that they be named as parties in the caption or in the complaint of a representative suit. An analysis of the complaint leads to the conclusion that the question is one of common or general interest to many of the stockholders. Nowhere in the complaint is there an indication that the plaintiff is seeking any personal recovery. The gist of the complaint is that defendant Erickson by wrongful conduct has prevented the plaintiff and other stockholders, together representing at least 50% of the stock, from exercising their rights at a regular stockholders meeting. The defendant Association has a right to have its corporate meetings run properly and legally by its officers. Relief is not demanded against this defendant but rather on its behalf. This the plaintiff has a right to do. Ballantine, Corporation Law & Practice, sec. 185 and sec. 188. Under the facts alleged the defendant Association could not be expected to bring this action against the defendant Erickson. Construing the complaint liberally under sec. 263.27, Stats., we conclude that the plaintiff is not suing in an individual capacity but in a representative capacity.
The appellant relies on sec. 263.14(1), Stats., 30 W.S.A. 544, providing: 'A defendant may counterclaim any claim which he has against a plaintiff, upon which a judgment may be had in the action.' The present form of this rule on counterclaims was created by this court's order effective October 1, 1943. 242 Wis. v. Prior to 1943 sec. 263.14(1)(c), Stats. 1941, the right to counterclaim any cause of action against a plaintiff was restricted to a non-resident plaintiff. This idea was generalized by the adoption of the present form of the rule in sec. 263.14, Stats.
Under the counterclaim statute existing prior to 1943 a personal counterclaim would not lie against a plaintiff who commenced a derivative action against a corporation. Brahm v. M. C. Gehl Co., 1907, 132 Wis. 674, 112 N.W. 1097. In this case a stockholder brought an action to secure the cancellation of stock which he claimed was fraudulently issued. The corporation counterclaimed, alleging that the plaintiff had acted wrongfully as an officer and had withheld certain real estate from the corporation. This court held that the counterclaim could not be pleaded unless it would defeat or in some way qualify the judgment to which the plaintiff was otherwise entitled. While this case is based on a narrower statute on counterclaims it points out that the right of action sought to be enforced by the plaintiff as a stockholder was a right of the corporation.
It is generally implied that a counterclaim to be set off against a plaintiff must be against him in the same capacity in which he brings the suit. The rule is stated in 47 Am.Jur., Setoff and Counterclaim, sec. 51, p. 748:
In Fletcher 13, Cyc. of Corp., sec. 5889, p. 245, it is stated:
If a plaintiff sues as an individual he should not be charged in that action with claims due the defendant from someone whom the plaintiff represents in a different capacity, nor should one who is sued in his legal capacity as a representative of another be allowed to counterclaim on the basis of claims due him individually from the plaintiff. By like reason the plaintiff suing in a representative capacity should not be subject to a counterclaim against him in his individual capacity. 3 Callaghan Wis. Pleading and Practice, sec. 21.54, Capacity in which claim held, p. 459.
The defendant Association is not an adverse party contemplated in sec. 260.08, 30 W.S.A. 19, which defines a defendant as the adverse pa...
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