Wyss v. Albee

• Decision Date: 23 September 1993
• Docket Number: No. 92-2572,92-2572
• Citation: 183 Wis.2d 245,515 N.W.2d 517
• Parties: John WYSS, Plaintiff-Appellant, d v. Alfred ALBEE, Joseph Palen, Mathew Palen, Sr., Mathew Palen, Jr., Val Palen, and John Strohm Estate, Robert J. Lager, Federal Land Bank, Trustee for James E. Miles, James E. Miles, William McNulty, Jr., Trustee for Robert J. Lager, and R.B. Milam, Defendants-Respondents. . Oral Argument
• Court: Wisconsin Court of Appeals

Page 517

515 N.W.2d 517

183 Wis.2d 245

John WYSS, Plaintiff-Appellant, ^d v. Alfred ALBEE, Joseph Palen, Mathew Palen, Sr., Mathew Palen Jr., Val Palen, and John Strohm Estate, Robert J. Lager Federal Land Bank, Trustee for James E. Miles, James E Miles, William McNulty, Jr., Trustee for Robert J. Lager and R.B. Milam, Defendants-Respondents.

No. 92-2572.

Court of Appeals of Wisconsin.

Oral Argument Sept. 23, 1993.

Opinion Released March 24, 1994.

Opinion Filed March 24, 1994.

Before GARTZKE, P.J., and DYKMAN and SUNDBY, JJ.

DYKMAN, Judge.

This is an appeal from a judgment dismissing John Wyss's claim for a deficiency or other money judgment against Alfred Albee and other Defendants. We have previously heard this case. In Wyss v. Albee, No. 89-1808, unpublished slip op., 1991 WL 74159 (Wis.Ct.App. Mar. 28, 1991), we reversed a summary judgment that dismissed Wyss's complaint. On remand, a trial was held, which resulted in this judgment. Wyss appeals.

Wyss sold his farm on land contract to Co-Jem Farms, a partnership. Co-Jem was a limited partnership, but because no limited partnership certificate was properly filed, Defendants were liable as general partners.

In our previous opinion, we concluded that Albee and the others were general partners under Iowa law, and because the Defendants had not established a prima facie defense, we reversed a summary judgment in their favor. Id. at 15-19. The issue in this second appeal is whether Co-Jem may be held liable for a deficiency in the first instance. The trial court concluded that a statute of frauds made the land contract ineffective as to Co-Jem. We agree, and therefore affirm.

The basis of the dispute in this case is Co-Jem's First Amended Agreement and First Amended Certificate of Limited Partnership. It provides in pertinent part:

ARTICLE II.

NAME AND BUSINESS OF THE PARTNERSHIP

....

B. The purpose of the partnership shall be to purchase, sell, develop, and farm real estate located in the States of Minnesota or Iowa, and to buy and sell all property relating to such business and to enter into any and all contracts relating to the same.

ARTICLE V.

DUTIES, POWERS AND COMPENSATION OF PARTNERS

A. The general management, control and conduct of the business shall be solely vested in the General Partners, except that without the written consent or ratification of all Limited Partners, the General Partners shall have no authority to:

1. Do any act in contravention of this First Amended Agreement and First Amended Certificate of Limited Partnership....

The real estate Wyss sold to Co-Jem is in Wisconsin. Co-Jem signed the land contract: "CO-JEM FARMS, an Iowa Partnership[,] By: Robert J. Lager, Jr. partner[, and]By: James E. Miles, partner." Wyss also signed the contract.

The trial court held that § 706.03(1), STATS., 1989-90, ¹ rendered the land contract between Wyss and Co-Jem unenforceable. That statute 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 expressly authorized, and unless the authorizing principal is identified as such in the conveyance or in the form of signature or acknowledgment. The burden of proving the authority of any such agent shall be upon the person asserting the same.

The trial court found that Lager and Miles were not expressly authorized to purchase Wisconsin land for Co-Jem, and that there was no written ratification of their acts.

MARTH V. EDWARDS

Wyss argues that § 178.06(1), STATS., applies to this case, not § 706.03, STATS. Section 178.06(1) provides:

Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority.

In Marth v. Edwards, 159 Wis.2d 773, 465 N.W.2d 248 (Ct.App.1990), William and Violet Edwards sued Greenbriar Partnership and Doerr, one of Greenbriar's partners, for breach of a real estate purchase agreement. They asserted that Swoboda, another Greenbriar partner who had signed the agreement to buy real estate from them, was Greenbriar's agent. They claimed that Swoboda had the apparent authority to bind Greenbriar and Doerr, making the partnership and Doerr liable for damages resulting from breach of the agreement.

Marth considered the conflict between §§ 178.06(1) and 706.03(1), STATS. We concluded that § 706.03(1) takes precedence over § 178.06(1). We said:

Chapter 178, Stats., is not a vehicle of protection for those involved in real estate transactions with partnerships. The vehicle of protection is rather the statute of frauds. Had the Edwardses followed that statute, they would not be in the position they are today. We conclude that the very simple and expedient way to protect those dealing in real estate transactions involving partnerships is the statute of frauds. That, not "apparent authority" under ch. 178, is the remedy provided by the legislature.

Marth, 159 Wis.2d at 781-82, 465 N.W.2d at 251-52.

The facts in Marth are quite similar to the facts here. Though Co-Jem is not a defendant here, Wyss correctly argues that his "contractual claim is against the Co-Jem partnership, not the respondents." We also agree with Wyss's assertion that: "Any recovery by John Wyss on his claim must, therefore, be as a result of whatever enforceable contract John Wyss has with the Co-Jem partnership. It is not through any direct relationship with the respondents." Therefore, in both Marth and here, the critical inquiry is into the agent's ability to bind the partnership. If Co-Jem is bound, our previous decision in Wyss v. Albee necessarily binds Albee and the other partners named in this case. But without Co-Jem's liability, its partners cannot be liable either.

Wyss first asserts that the facts in Marth are different from this case. He suggests that Marth does not control because, unlike the land contract in this case, the conveyances in Marth did not identify a partnership. He points out other differences, such as the fact that his land contract had "all of the earmarks of a fully negotiated" deal and had been "substantially, if not completely performed" until the time of default. Wyss asserts that had he "been dealing with a single individual, had the conveyance been signed only by that individual with no mention of a partnership, had the transaction been vague and incomplete, and had there been no contract performance, then Marth might control the present case."

What Wyss is really asking is that we limit Marth to its facts. Our quotation from Marth shows that we intended the opposite. We spoke of the statute of frauds as providing protection to noncontracting partners. Our warning to the vendor in Marth might as well have been given to Wyss--had he demanded that Co-Jem follow § 706.03(1), STATS., he would have been protected. As one commentator noted:

An agency power to convey may now be given by express oral authorization if the authorizing principal is identified as such in the conveyance or in the form of signature or acknowledgment. Section 706.03(1). Inasmuch as the burden of proving the authority of any such agent is upon the person asserting the same (section 706.03(1)), counsel for the careful grantee normally would insist upon written authorization.

Allen N. Rieselbach, Drafting Conveyances Under Chapter 706, GAVEL (Milwaukee Bar Ass'n, Milwaukee, Wis, Dec. 1971, at 7, 8 (emphasis added).

We conclude that this warning is as applicable to grantors as it is to grantees. Both may want to enforce their rights under conveyances.

Wyss next asks us to overrule Marth because it was wrongly decided. Marth is a very recent case, and there is nothing about its reasoning that convinces us that it was wrongly decided. We agree that Marth could have been decided differently, but there is considerable judicial reluctance to depart from the rule of stare decisis. Though Planned Parenthood v. Casey, 505 U.S. 833, ---- - ----, 112 S.Ct. 2791, 2808-2816, 120 L.Ed.2d 674 (1992), considers matters not present in court of appeals cases, that case clearly explains that stare decisis is a substantial disincentive to change. We conclude that we will not overrule Marth.

Like Wyss, the dissent contends that Marth is factually distinguishable from the case before us. But rather than limit Marth to its facts or overrule it, the dissent argues that we should follow Cinema North Corp. v. Plaza at Latham Assocs., 867 F.2d 135 (2d Cir.1989). In Cinema North, a proposal for a fifteen-year lease was signed on behalf of the partnership, Plaza, by an individual identified as Plaza's vice-president. Plaza argued that because the vice-president was not authorized in writing to execute a lease as Plaza's agent, enforcement of the lease was barred by the New York statute of frauds, N.Y. GEN. OBLIG. LAW § 5-703(2) (McKinney 1989), which provides:

A contract for the leasing for a longer period than one year, or for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing.

The court noted that under case law interpreting § 5-703(2), written authorization was not required for an agreement signed by an officer of a corporation to be binding on the corporation. Cinema North, 867 F.2d at 140 (citing Flax v. B.M. Dev. Corp., 35 A.D.2d 565, 313 N.Y.S.2d 591, 592 (1970)). The court explained that the reason for this exception is that a corporation cannot act for itself, and,...