Wyss v. Albee

Citation532 N.W.2d 444,193 Wis.2d 101
Decision Date31 May 1995
Docket NumberNo. 92-2572.,92-2572.
PartiesJohn WYSS, Plaintiff-Appellant-Petitioner, v. Eva J. ALBEE, as Personal Representative for the Estate of Albert Albee, Joseph Palen, Steven R. Palen as Special Administrator for the Estate of 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. Miliam, Defendants-Respondents.
CourtUnited States State Supreme Court of Wisconsin

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For the plaintiff-appellant-petitioner there were briefs by John G. Barsness, Paul A. Dirkse and Barsness Law Offices, Madison and oral argument by John G. Barsness.

For the defendants-respondents there was a brief by Bryant Klos and Klos, Flynn & Papenfuss, Chartered, LaCrosse and oral argument by Bryant Klos.

DAY, J.

This is a review of a decision of the court of appeals1 affirming a judgment of the circuit court for La Crosse County, Honorable Dennis G. Montabon, Judge, that held that the statute of frauds provision in sec. 706.03(1), Stats. 1979-80,2 precluded enforcement of a land contract between Mr. John Wyss and "CO-JEM FARMS, an Iowa Partnership" (Co-Jem Farms) because the persons who signed the contract in the name of the partnership did not have express authority to make the purchase. The issue on review is whether the statute of frauds provision of sec. 706.03, Stats., or the apparent authority provision of the Uniform Partnership Act, sec. 178.06(1), Stats., controls. We conclude that if the express provisions of sec. 178.06(1), were satisfied, the transaction was controlled by that statute.

Co-Jem Farms was organized as an Iowa limited partnership. There were two general partners: James E. Miles and Robert J. Lager, and nine limited partners, including Respondents Alfred Albee, Joseph Palen, Mathew Palen, Sr., Mathew Palen, Jr., and Val Palen. On December 1, 1978, the partners executed a Limited Partnership Certificate. The Certificate was never recorded.

On about January 3, 1980 the partners executed a First Amended Agreement and First Amended Certificate of Limited Partnership. The Amended Agreement and Amended Certificate stated in relevant part as follows:

the parties hereto agree that the Limited Partnership Certificate dated as of December 1, 1978 is amended to read in its entirety as follows:
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 Amended Agreement and Amended Certificate were never recorded.

On or about March 2, 1981, Wyss entered into a land contract as vendor with Co-Jem Farms as vendee. The document was signed:

Co-Jem Farms, an Iowa Partnership, by Robert J. Lager, Jr., partner, and by James E. Miles, partner.

Under the contract, Co-Jem Farms agreed to pay monies described therein to Wyss in exchange for title to real estate in Jackson County, Wisconsin. Because the land was in Wisconsin, according to the terms of the Amended Agreement and Amended Certificate the general partners did not have express authority to buy the land. Co-Jem Farms sold its interest in the abovedescribed real estate to defendant R.B. Miliam by land contract dated December 31, 1982. Payments to Wyss on the underlying Wyss/Co-Jem Farms land contract continued until Co-Jem Farms' default in 1985. Wyss declared the entire contract due and payable and filed this suit in La Crosse County on July 28, 1986 seeking a sheriffs sale and deficiency judgment if the sale price did not satisfy the balance due under the contract.

Respondents, Albee, et al, moved for partial summary judgment based on their status as limited partners, and the circuit court granted partial summary judgment. Wyss appealed, and the court of appeals reversed and remanded the case. During this first appeal, the court of appeals determined that Iowa limited partnership law applies. Wyss v. Albee, No. 89-1808, unpublished slip op at 13 (Ct. App. March 28, 1991). Under that law, the failure to record the limited partnership made the limited partners potentially liable for the land contract as general partners if "Wyss's attorney in fact believed that the six defendants were general partners." Id. at 15. Wyss settled and dismissed all claims against one of the six defendants, John Strohm Estate. On remand, after a trial to the court, the circuit court found that Wyss's attorney in fact believed Co-Jem to be a general partnership and "did believe Alfred Albee, Mathew Palen, Sr., Mathew Palen, Jr., Joseph Palen and Val Palen were general partners in Co-Jem Farms." Respondents do not challenge these legal conclusions or factual findings.

However, although the circuit court stated that Respondents were "not relieved from liability to John Wyss by reason of their partnership status," it held that Respondents were not liable to Wyss because the statute of frauds provision in sec. 706.03(1), Stats.,3 precluded enforcement of the land contract. A divided of appeals affirmed. Wyss petitioned this court for review, which was granted August 26, 1994.

The question of whether the statute of frauds provision of sec. 706.03, Stats., or the apparent authority provision of the Uniform Partnership Act, sec. 178.06(1), Stats., controls is a question of law. This court must decide questions of law independently without deference to the decisions of the circuit court and court of appeals. Ball v. Dist. No. 4, Area Board, 117 Wis. 2d 529, 537, 345 N.W.2d 389 (1984).

Section 178.06(1), Stats. 1993-94, provides:

178.06 Partners are agents of partnership. (1) 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 the partner 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 the partner is dealing has knowledge of the fact that the partner has no such authority.

Section 706.03, Stats. 1979-80, provided:

706.03 Agents, officers and guardians. (1) 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.

Both of these statutes are unambiguous on their face. However, the interaction of two statutes can create an ambiguity. Village of Shorewood v. Steinberg, 174 Wis. 2d 191, 201, 496 N.W.2d 57 (1993). Here, when the two statutes are read together an ambiguity appears in the form of an apparent conflict.

That apparent conflict may be summarized as follows: while sec. 178.06(1), Stats., states that a partner is an agent of the partnership and that a partner with apparent authority acting in the partnership name may bind the partnership by the execution of "any instrument," sec. 706.03, Stats., states that an agent needs express authority to bind his principal if the conveyance he executes involves an interest in real estate. We conclude that if the express provisions of sec. 178.06(1), Stats., were satisfied, the transaction in question was controlled by that section.

It is a cardinal rule of statutory construction that conflicts between statutes are not favored and will be held not to exist if the statutes may otherwise be reasonably construed. Mack v. Jt. School Dist. No. 3, 92 Wis. 2d 476, 489, 285 N.W.2d 604 (1979); Salzman v. DNR, 168 Wis. 2d 523, 530, 484 N.W.2d 337 (Ct. App. 1992). Here, conflict may be avoided if the statute of frauds provision of sec. 706.03, Stats., is interpreted as being applicable to all principle-agent relationships except those partnership transactions which fall within the express provisions of sec. 178.06(1), Stats Section 178.06(1), Stats., states that a partner may bind the partnership by executing an instrument in the partnership name,4 only if the partner is apparently acting within the ordinary course of the partnership business and the third party does not know that the partner is acting beyond the scope of his authority. These limitations on the power of the partner to bind the partnership leave many potential actions of a partner unaddressed. For example, the statute does not address a purchase of real estate by a partnership whose usual way of business does not apparently include real estate transactions. Thus, we conclude a reasonable interpretation of the two statutes is that when the transaction falls within the express provisions of sec. 178.06(1), Stats., the partner "is an agent of the partnership," and sec. 178.06(1), controls; and when the transaction does not fall within those provisions, the partner "purports to act as an agent," and sec. 706.03, Stats., controls.

The facts of this case are similar to those in Marth v. Edwards, 159 Wis. 2d 773, 465 N.W.2d 248 (Ct. App. 1990). In that case, William and Violet Edwards sued Greenbriar Partnership and...

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