Younger v. Rosenow Paper & Supply Co., 303

• Decision Date: 25 June 1971
• Docket Number: No. 303,303
• Citation: 51 Wis.2d 619,188 N.W.2d 507
• Parties: Dean YOUNGER, Respondent, v. ROSENOW PAPER & SUPPLY CO., Inc., Appellant.
• Court: Wisconsin Supreme Court

Page 507

188 N.W.2d 507

51 Wis.2d 619

Dean YOUNGER, Respondent, v. ROSENOW PAPER & SUPPLY CO., Inc., Appellant.

No. 303.

Supreme Court of Wisconsin.

June 25, 1971.

This is an action to recover the claimed amount due under a stock purchase plan. Plaintiff-respondent was employed by defendant in 1950 and continued in defendant-appellant's employ as a salesman and general manager until February 14, 1968, when plaintiff voluntarily terminated his employment. At the time plaintiff entered defendant's employ, defendant was primarily a paper jobber, but through the efforts of plaintiff and because of his expertise, defendant became a paper converter. At all times pertinent to this action, defendant was a small closed corporation.

On November 30, 1956, the following resolution was passed at one of its meetings by defendant-corporation's board of directors:

'It was moved and seconded that a bonus plan be set up for Dean Younger as follows:

'2 1/2% of the net profit for the last six months of 1956

'5% of the net profit for the year of 1957

'10% of the net profit for the year of 1958 and until further change.

'The bonus plan is to be known as 'STOCK PURCHASE PLAN' of stock of the Rosenow Paper & Supply Co. Motion carried.'

The instant action is based on this resolution.

On June 14, 1968, plaintiff commenced this action, alleging (1) that the defendant had set up a bonus plan for his benefit (set forth in the resolution), (2) that plaintiff continued in defendant's employ in reliance on the resolution, and (3) that on or about February 14, 1968 (when plaintiff terminated his employment), plaintiff and defendant, through its president Henry Rosenow, agreed that defendant would pay to plaintiff all of the money due him in accordance with the resolution, although the amount would be computed from January 1, 1965, to February 14, 1968.

On July 11, 1968, defendant answered, admitting the resolution of November 30, 1956, but alleging:

'* * * that said 'Stock Purchase Plan' was orally set forth by the defendant's president, H. J. Rosenow, to the plaintiff and agreed upon by the said plaintiff, wherein only if and when the plaintiff had accumulated the total sum of $25,000.00 as a book credit under the above resolution, the defendant corporation by its officers and stockholders would reorganize the stock ownership and the plaintiff would receive 250 shares of stock and the other two stockholders would receive approximately 1000 shares. The credit accumulated by plaintiff would only be converted into stock and only when and if the amount reached $25,000.'

The answer further denied any agreement to pay plaintiff the amount he had accumulated on February 14, 1968, and further set up affirmative defenses under the statute of frauds, sec. 241.02(1), and the two-year statute of limitations, sec. 893.21(5).

On August 31, 1968, the defendant-corporation was sold in its entirety to Louis J. Tenore. On November 2, 1968, H. J. Rosenow died.

Both parties brought stipulated motions for summary judgment. The defendant also moved the court to find as a matter of law (1) that the statute of frauds, sec. 241.02(1), and applied; (2) that the two-year statute of limitations, sec. 893.21(5), applied; and (3) that plaintiff's testimony should be limited because, as a matter of law, the dead man statute, sec. 885.16, applied. All motions were heard by the court on June 19, 1970, at which time the trial court decided that the dead man statute applied to both parties. On June 23, 1970, the court notified counsel for both parties, by letter, of its decision to enter judgment for plaintiff in the amount of $9,593.76.

Findings of fact were entered which included a determination that the resolution of November 30, 1956, was valid, that the bonus plan was a valid and enforceable contract as of the day of plaintiff's departure from defendant's employment, in the amount of $9,593.76 as computed from defendant's books. The court further concluded, as a matter of law, that the statute of frauds, sec. 241.02(1), had no application, and that sec. 893.21(5) did not bar plaintiff's claim.

Defendant appeals.

Di Renzo & Bomier, Jeffrey F. Snyder, Neenah, for appellant.

Jerome H. Block, Appleton, F. David Krizenesky, Menasha, of counsel, for respondent.

WILKIE, Justice.

The principal issue presented on this appeal is whether the trial court acted correctly in granting summary judgment to the plaintiff and in denying summary judgment to the defendant.

Before reaching the merits of this issue, two preliminary matters must be considered. Both are raised by the defendant.

1. Is the action in violation of the statute of frauds?

2. Is the action barred by the two-year statute of limitations, sec. 893.21(5)?

The answer to both questions were correctly held by the trial court to be 'No.'

Statute of Frauds.

Sec. 241.02(1), Stats., is not applicable in this case:

'Noncontributory pension plans are held to give rise to a contractual obligation by the employer to pay pension benefits to the employees entitled thereto under the plan communicated to the employees where the employees thereafter remain in the employer's employment and render service for the requisite period. * * * The same principle is applicable to profit sharing plans. Zwolanek v. Baker Mfg. Co. (1912), 150 Wis. 517, 137 N.W. 769.' ¹

In Zwolanek, which involved a profitsharing plan, this court stated:

'It is manifest that the statute of frauds has no application to the case.' ²

Statute of Limitations.

Defendant contends that the two-year statute of limitations, sec. 893.21(5), applies. This section provides:

'893.21 * * * Within 2 years:

'* * *

'(5) Any action to recover unpaid salary, wages or other compensation for personal services, except fees for professional services.'

Plaintiff urges, and the trial court agreed, that sec. 893.19(3), Stats., applies. This section provides:

'* * *

'(3) An action upon any other contract, obligation or liability, express or implied, except those mentioned in ss. 893.16 and 893.18.'

Plaintiff contends that this is an action to enforce a contract, and also that under this court's definition of personal services in Estate of Javornik, ³ it is clear that the bonus plan was not set up to compensate plaintiff for his personal services but rather to 'purchase' the end product of the services, i.e., profit. Plaintiff also urges that the application of the two-year limitation might 'invalidate every profit sharing or pension plan in the state.'

In Estate of Javornik this court defined 'personal services' as used in sec. 893.21(5), Stats.:

'We think 'personal services' as used in sec. 893.21(5), Stats., means human labor such as is commonly rendered in return for a salary or a wage in the case of an employee and for 'other compensation' in the case of an independent contractor or one not in an employee relationship. Such human labor must be in the nature of a service as distinguished from the end product or the fruit of the service. While some personal services may result in the salable article or an end-product, the distinguishing feature of personal services for the purpose of this section is whether the human labor itself is sought and is the object of the compensation or whether the end-product of the service is purchased.' (Emphasis added.) ⁴

In Cheese v. Afram Brothers Co., ⁵ plaintiff brought actions against his employer and his union on the theory that he was wrongfully discharged, thereby breaching the collective bargaining agreement. This court upheld the lower court's order sustaining the defendant's demurrers, but reversed the court's order denying the plaintiff the right to replead on the grounds that the action was barred by sec. 893.21(5), Stats. We held that sec. 893.19(3) was the proper section to be applied.

Casey v. Trecker, ⁶ relied on by defendant, involved what was clearly a claim by an employee for unpaid wages against a bankrupt corporation. The action was brought against the two shareholders of the corporation personally under a statute which provided that shareholders would be liable for 'all debts which may be due and owing to its clerks, servants, and laborers for services performed by such corporation. * * *'

Given all of the circumstances and facts available in this record, it is reasonable to hold that plaintiff's action here is one for breach of contract, failure to pay him the bonus as agreed, either originally or subsequently. In his complaint plaintiff was careful to allege that the bonus plan was separate from any agreement as to salary and that he had been fully compensated as agreed in that respect. Defendant does not dispute this. Although the precise terms of the agreement and the intent of the parties thereto are in dispute in the instant case, we are satisfied that the action is one for breach of contract. In light of Estate of Javornik, narrowly construing the two-year statute of limitations, we are satisfied that the six-year statute of limitations, sec. 893.19(3), applies, rather than the two-year statute of limitations, sec. 893.21(5).

Summary Judgment.

This case should be tried. The trial court was in error in granting plaintiff's motion for summary judgment. There is at least one issue of fact to be resolved.

In his complaint, plaintiff pleads the resolution of November 30, 1956, his continuing employment with defendant in reliance on this resolution and then alleges:

'4. That on or about February 14, 1968, the plaintiff terminated his employment with defendant and at the said time, the value of plaintiff's bonus plan was $12,000.00. That on or about February 14, 1968, the plaintiff and defendant agreed that defendant would pay to plaintiff all of the moneys due him in accordance with the Resolution adopted by the defendant on November 30, 1956, except that defendant would have to compute the amount due plaintiff from January 1, 1965, to date of termination, February 14, 1968.

'* * *

'6. That upon...