Zohrlaut v. Mengelberg

• Decision Date: 17 June 1914
• Citation: 158 Wis. 392,148 N.W. 314
• Parties: ZOHRLAUT v. MENGELBERG.
• Court: Wisconsin Supreme Court

158 Wis. 392

148 N.W. 314

ZOHRLAUT

v.MENGELBERG.

Supreme Court of Wisconsin.

June 17, 1914.

Appeal from Circuit Court, Milwaukee County; J. C. Ludwig, Judge. Modified and affirmed.

This action was brought to restrain the collection of a former judgment obtained by defendant against plaintiff in an action between the parties to this suit on the ground that the written agreement upon which the former judgment was entered was not the agreement of the parties, and that upon the agreement made the defendant was not entitled to any judgment against the plaintiff.

Barnes, J., dissenting.

The former action was brought by the plaintiff here against the defendant here, and the defendant counterclaimed and obtained a judgment on his counterclaim against the plaintiff. The case was appealed to this court and the judgment affirmed and a motion for rehearing denied. Zohrlaut v. Mengelberg, 144 Wis. 564, 124 N. W. 247, 128 N. W. 975. The foregoing case gives quite a full history of the facts upon which the judgment sought to be restrained in the instant case is based. There was a demurrer to the complaint and motion for temporary injunction staying proceedings on the judgment pending action in the instant case. The demurrer was overruled and an order made continuing the preliminary injunction. On appeal to this court from these orders they were affirmed. Zohrlaut v. Mengelberg, 148 Wis. 592, 134 N. W. 1135.

The defendant then answered the complaint in the present action, which complaint alleged that the plaintiff agreed to sell to the defendant a 1/20 interest in the corporate assets of the Herman Zohrlaut Leather Company at a certain time, at a certain price and upon certain conditions, and the plaintiff agreed to a re-purchase on certain conditions; that plaintiff did sell a 1/20 interest for $25,000.00 and took the note of defendant due five years after date with interest in payment thereof; that an agreement was entered into in writing respecting the alleged sale and re-purchase. This agreement is set out in the complaint; that plaintiff and defendant mistakenly assumed that the writing correctly set forth the agreement; that on December 1, 1899, the defendant delivered to plaintiff a note of $25,000.00 and also a certificate of stock in the Herman Zohrlaut Leather Company representing the undivided 1/20 interest in the net corporate assets of said company; that defendant was in the employ and an officer of the Herman Zohrlaut Leather Company from December 1, 1899 to January 1, 1905; that plaintiff commenced an action at law against defendant on the note referred to and defendant counterclaimed and set up that plaintiff was required to purchase of defendant according to the writings instead of according to the real contract of the parties; that it was not until March 23, 1905, that plaintiff first discovered that it was claimed the writings did not correctly contain the true agreement and that plaintiff could not by diligence have discovered such fact before.

The complaint further alleges that in the former action commenced against the defendant he employed competent counsel and plaintiff was informed that the writings set out the real contract and so believed in good faith until the decision of this court in the action, and plaintiff believed he could not by reason of the law as it then stood reform the writing; that plaintiff did not ask reformation of the writings because he was advised by counsel and believed that reformation was not necessary and believed that the writings obligated him to purchase from defendant only a 25/500 interest in the net corporate assets of the corporation and not a 25/326 interest; that the undivided 1/20 interest was on January 1, 1905, worth less than $24,000.00, and that plaintiff was only obliged to purchase a 1/20 interest at such price as it might appear to be worth at that time according to the books of said company and that there was due plaintiff on the note from defendant on January 1, 1905, $25,000.00. That plaintiff moved for a rehearing in the Supreme Court, which was granted and a rehearing had, and the case reargued October 29, 1910, and the judgment of the circuit court was on November 10, 1910, by an even decision of the Supreme Court affirmed, and that plaintiff again moved for a rehearing, which was denied January 31, 1911, and that it was only finally determined that the writing meant something different from the true agreement on January 31, 1911, and that plaintiff brings the present action for reformation within a reasonable time after the making of said agreement.

The prayer of the complaint in the instant action is that defendant be restrained from issuing execution or attempting to collect said former judgment, or any part thereof, from plaintiff, and that the writings be reformed so as to express the true contract between plaintiff and defendant, and that plaintiff be restrained from assigning or selling said judgment, and that he be directed to execute a release and satisfaction of said judgment, and that said judgment be decreed satisfied and discharged, if defendant shall not satisfy it, and for general relief with costs.

The defendant answered admitting the written contract as alleged in the complaint and his employment by the Herman Zohrlaut Leather Company under the contract until January 1, 1905; the severance of his relations with the company at that date and denied that there was any mistake in the writings or that there ever was any agreement between the parties other than as expressed in the writings. Defendant further set up the judgment in the former action as res adjudicata; that the plaintiff's claim was barred by the statute of limitations and that he was not free from laches.

On the issues presented the court below found for the plaintiff as follows: (1) That about August 21, 1899, the plaintiff and defendant agreed orally that if they could agree as to time for which defendant should be employed by the Herman Zohrlaut Leather Company and the salary which should be paid defendant, plaintiff would sell to defendant a 1/20 interest in the net corporate assets of said company at a price based upon a showing of the books of said company on November 30, 1899, and if defendant should not be continued as an officer and director of said company during the agreed term, or should quit its employment during said term the plaintiff would buy back from defendant the said 1/20 interest at the then book value of the same as shown by the books of said company. (2) That on or about August 21, 1899, in pursuance of the agreement mentioned in finding number one the parties entered into a written agreement. (3) That the Herman Zohrlaut Leather Company was a corporation, organized under the laws of Wisconsin with a capital stock of $500,000 divided into 500 shares of $1,000 each; that all of said capital stock was issued, outstanding and fully paid for and owned as specified in this finding, 174 shares evidenced by certificate No. 8 was owned by plaintiff subject to a pledge to Herman Zohrlaut to secure a payment of $100,000 according to a certain promissory note, and that said 174 shares stood upon the corporate books in the name of Herman Zohrlaut and said certificate No. 8 was in the possession of Oscar Loeffler as agent of Herman Zohrlaut. (4) That about December 1, 1899, the plaintiff and defendant agreed that defendant should be employed by said company and elected a director and officer for the term of five years from January 1, 1900, and should be paid a salary for 1900 of $4,000, 1901, $4,500, 1902-3-4, $5,000 per year; and it was further agreed that defendant should pay plaintiff par instead of book value on November 30, 1899 for the 25 shares of capital stock of said company mentioned in the writing of August 21, 1899, which was intended by both parties to represent a 1/20 interest in the corporate assets; that there was issued to and received by the defendant a certificate for 25 shares of the capital stock of said company and the defendant gave his promissory note for $25,000 therefor; that on November 30, 1899, the book value of a 1/20 interest in the net corporate assets of said company was $27,857.19. (5) That thereafter and for the purpose of evidencing said agreement plaintiff and defendant caused to be prepared a writing dated December 1, 1899, and executed the same sometime after February 21, 1900. (6) That in making and executing said writing dated August 21, 1899, and the said writing dated December 1, 1899, it was not the intention of the parties to in any manner cancel, rescind, alter or modify the agreement entered into by them in August, 1899, as set forth in finding number one, except in respect to the price to be paid by defendant to plaintiff for the 25 shares of stock mentioned in said writings, which were supposed and intended by both parties to represent the one-twentieth interest in the net corporate assets so agreed to be sold by plaintiff, but that in making and executing said writings it was the intention of the parties in all other respects except as specified to ratify, confirm and continue in full force and effect the said agreement entered into in August, 1899, and to settle, determine and express the terms thereof and the terms left undetermined by said August agreement, to-wit: the duration of defendant's employment by said company and the salary which should be paid to him. (7) That by mutual mistake and inadvertence of the parties and the...