Wipperfurth v. U-Haul Co. of Western Wisconsin, Inc.

• Decision Date: 29 April 1981
• Docket Number: U-HAUL,No. 80-144,80-144
• Citation: 304 N.W.2d 767,101 Wis.2d 586
• Parties: Paul L. WIPPERFURTH, Plaintiff-Respondent-Petitioner, v.COMPANY OF WESTERN WISCONSIN, INC., Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 767

304 N.W.2d 767

101 Wis.2d 586

Paul L. WIPPERFURTH, Plaintiff-Respondent-Petitioner, v. U-HAUL COMPANY OF WESTERN WISCONSIN, INC., Defendant-Appellant.

No. 80-144.

Supreme Court of Wisconsin.

Argued March 2, 1981.

Decided April 29, 1981.

James S. Grodin and Grodin & Grodin, Milwaukee, for plaintiff-respondent-petitioner.

Andrew O. Riteris, Ellen E. Sward and Michael, Best & Friedrich, Madison, for defendant-appellant.

STEINMETZ, Justice.

The trial judge, the Honorable P. Charles Jones, entered summary judgment declaring ch. 135, Stats., the Wisconsin Fair Dealership Law, was retroactive and constitutional. The trial court also granted the petitioner's request for a temporary restraining order placing over the petitioner (Paul L. Wipperfurth) the mantle of protection of the requirements of ch. 135 pending the outcome of the action.

The court of appeals reversed the trial court finding the provisions of ch. 135, Stats., prospective only and therefore not applicable to the contract between petitioner (Wipperfurth) and defendant-appellant, U-Haul Company of Western Wisconsin, Inc. (U-Haul). That court took no action regarding the trial court's restraining order. The court of appeals found a serious question concerning the constitutionality of ch 135 would arise if it were given retroactive application. That court stated its conclusion was supported by the ambiguity of the language of the act and the legislative history which did not make explicit a requirement that the act apply retroactively.

The parties entered into a written contract on September 17, 1969. That contract was for an indefinite duration. It permitted either party to terminate the contract on 30 days written notice to the other. U-Haul complied with the terms of the contract in terminating the Wipperfurth dealership.

Wipperfurth states ch. 135, Stats., has granted him protections not in the original contract, that the law is retroactive and that it is a reasonable exercise of the state's police power.

U-Haul argues the practical result of this law is that a dealership agreement is a life-long or even perpetual contract unless the grantor can terminate it for "good cause" as defined in the statute and on 90 days notice to the dealer. If the dealer's deficiencies are corrected within 60 days of the grantor's giving the notice, the termination cannot become effective. It is claimed the notice and correction of deficiencies relationship could continue ad infinitum, with the dealer constantly on the margin of acceptable business practice. To apply this policy prospectively differs greatly from applying it retroactively to a contract which never contemplated such relationship.

U-Haul states its business practices and mode of operation have changed dramatically since the contract was entered into in 1969.

Under its standard dealership contract, as in issue here, U-Haul places its equipment (trailers, trucks, dollies and other equipment associated with domestic moving) with a filling station operator who agrees to store, rent and maintain the equipment. The filling station operator pays no fee for the right to do so, but merely enters into an agreement with U-Haul to perform the services mentioned. The dealer receives a percentage of the gross rental fees and is paid for automotive maintenance work done on the equipment. The title and the right to possession of the equipment remains in U-Haul. U-Haul provides a nationwide "do-it-yourself" moving service and, instead of doing all of the necessary work through employees, has utilized filling station operators who, as independent contractors, perform some of the needed services for the agreed upon fee.

As U-Haul expanded its line to more complex and sophisticated equipment, the nature of many American filling stations changed from a full-service garage to a semi or a full "self-service" station. Thus, as the complexity of U-Haul's equipment and services increased, the need for skilled mechanical help in America's filling stations decreased.

Due to the decrease in the ability of filling stations' management to service and maintain its equipment, U-Haul decided that in metropolitan areas it would retain direct possession of its equipment and would directly perform the rental, maintenance and other services to the public.

It was this change in circumstances and business judgment which led U-Haul to terminate Wipperfurth's dealership.

The dealership law when originally adopted in ch. 179, Laws of 1973, stated in sec. 135.03, Stats.1973, that the law governed agreements entered into after April 5, 1974. ¹ Therefore, in its original form the act was clearly prospective only.

Ch. 171, Laws of 1977, removed the obvious prospective clause and instead adopted a statement of purpose and legislative construction, sec. 135.025, Stats. ² Several arguments are made whether the law was intended to have retroactive interpretation and, if so, then whether it is an unconstitutional violation of the contract clause of the U.S. Constitution.

The legislature did remove the prospective only subsection and instead adopted sec. 135.025, Stats., and particularly (2)(d) which stated the chapter was "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.) This language not only allowed for but invited court interpretation as to legislative intent. The courts were directed in sec. 135.025 that, "This chapter shall be liberally construed and applied to promote its underlying remedial purposes and policies."

Whatever the legislative intent was in regard to retroactive application of the dealership law, it was not clearly and affirmatively stated and therefore has caused conflicting opinions and decisions of the trial courts in this state.

The court of appeals decided the statute was not clear on its face as to its intent to be applied retroactively and therefore that court ruled:

"Since a serious question concerning the act's constitutionality would arise if the WFDL were given retroactive application, the court must conclude that the act covers only agreements entered into after April 5, 1974. This conclusion is supported by the ambiguity in the language of the act and the legislative history, which do not make explicit a requirement to apply the WFDL retroactively. Therefore, the general rule of the prospective operation of statutes applies in this case." ³

Legislative intent as to retroactivity must be determined independent of the constitutionality of the action.

Swanke v. Oneida County, 265 Wis. 92, 99, 60 N.W.2d 756, 62 N.W.2d 7 (1953) stated:

" 'Retrospective operation is not favored by the courts, however, and a law will not be construed as retroactive unless the act clearly, by express language or necessary implication, indicates that the legislature intended a retroactive application. The rule is the converse of the general principle that statutes are to operate prospectively....' "

The legislative history of this law and its present wording could be interpreted as displaying an intent by the legislature that the dealership law be applied prospectively and retroactively if permitted by the courts. This would be a surrender of the legislative authority over its use of police powers for public purposes. The determination then would be left to the courts on a case by case basis and would provide for uneven justice at best. Federal District Judge James E. Doyle, Western District of Wisconsin, stated this also in H. Phillips Co. v. Brown-Forman Distillers, 483 F.Supp. 1289 (W.D.Wis.1980):

"I suggest that it would amount to something like this: We legislators desire the statute to apply to all dealerships, whenever granted; we recognize that constitutional questions exist with respect to its application to dealerships granted prior to April 5, 1974; we abandon our independent responsibility to construe and to honor constitutional limits upon our power; we leave it to the courts to limit application if they decide it must be limited." Id. at 1294.

That is an explanation for the language of sec. 135.025(2)(d), Stats., as follows: "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.) In doing this the legislature also directed the courts at sec. 135.025(1) to liberally construe and apply the chapter to promote its underlying remedial purposes and policies which are stated in subsection (2):

"The underlying purposes and policies of this chapter are:

"(a) To promote the compelling interest of the public in fair business relations between dealers and grantors, and in the continuation of dealerships on a fair basis;

"(b) To protect dealers against unfair treatment by grantors, who inherently have superior economic power and superior bargaining power in the negotiation of dealerships;

"(c) To provide dealers with rights and remedies in addition to those existing by contract or common law;

"...."

On total consideration, this court determines from the legislative history and the language of the law that the intent of the legislature was to give retroactive as well as prospective application to ch. 135, Stats. That then requires the court's analysis of the conflict between retroactive application and the constitutional prohibition against the impairment of the obligation of contract. ⁴

In Kuhl Motor Co. v. Ford Motor Co., 270 Wis. 488, 71 N.W.2d 420 (1955), the statute challenged was in effect at the time the agreement was made and so that case did not consider retroactive impairment of the obligation of contract.

The Kuhl case dealt with prospective application of legislation on the freedom to contract, while the instant case involves the retroactive application of legislation on the obligation of existing contracts.

The due process clause protects the...