Vol. 76, No. 7, July
Supreme Court Digest
This column summarizes all decisions of
the Wisconsin Supreme Court (except those involving lawyer or judicial
discipline, which are digested elsewhere in the magazine). Profs. Daniel
D. Blinka and Thomas J. Hammer invite comments and questions about the
digests. They can be reached at Marquette University Law School, 1103 W.
Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.
by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer
Amendment to Statute of Limitation for Sexual Assault of a Child -
Ex Post Facto Challenge
State v. Haines,
2003 WI 39 (filed 13 May 2003)
In 2000 the state charged the defendant with second-degree sexual
assault of a child under age 16, in violation of Wis. Stat. section
948.02(2). The complaint alleged that the offense occurred in 1992. At
the time of the offense, the applicable statute of limitation provided
that the prosecution had to commence before the victim reached age 21.
In 1994, about five years before the victim would turn 21, the statute
of limitation was amended to provide that a prosecution had to commence
before the victim reached age 26. When the charge in this case was
brought in 2000, the victim was 22 years old.
The defendant moved for dismissal, claiming that the prosecution was
barred by the age 21 limitation in effect at the time of the alleged
assault. He also claimed that prosecution under the amended (age 26)
limitation that was in effect when the complaint was filed violated the
ex post facto clause of the Wisconsin Constitution. The circuit court
dismissed the complaint, concluding that prosecution under the amended
statute of limitation violated the ex post facto clause.
The court of appeals reversed. See 2002 WI App 139. The
court held that the 1994 amended version of the statute of limitation
applies to the defendant. The 1994 law specifically provides that its
longer time limitation first applies to offenses that were not barred
from prosecution on the effective date of the change, April 22,
The court of appeals further concluded that application of the 1994
amended statute allowing prosecution to commence before the victim
reached age 26 did not violate the ex post facto clause. Among other
things, the ex post facto clause protects against removal of a defense
that was available at the time the act was committed. The 1994 amendment
did not remove a defense that was available to the defendant in 1992. At
the time of the alleged assault, the defendant had no statute of
limitation defense. In fact, such a "defense" would not have been
available until 1999, when the former statute of limitation would have
run. The court of appeals found persuasive the decisions of federal and
state courts that have concluded that retroactive application of a new
statute of limitation, enacted at a time when the old limitation period
had not yet run, does not violate the ex post facto clause.
The supreme court, in a decision authored by Justice Bablitch,
unanimously concluded that it could not improve upon the court of
appeals' analysis and reasoning as summarized above and, accordingly, it
affirmed that decision.
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Homicide - Year-and-a-Day Rule Abrogated
State v. Picotte,
2003 WI 42 (filed 16 May 2003)
The defendant injured John Jackson in an altercation that left
Jackson in a coma. The defendant pleaded guilty to aggravated battery
and was sentenced to prison. More than two years later Jackson died. The
defendant was then prosecuted for first-degree reckless homicide and was
convicted and sent to prison. On postconviction motions the defendant
claimed that his homicide conviction was barred because it violated the
common-law year-and-a-day rule, which establishes an irrebuttable
presumption that a death that occurs more than one year and one day
after an accused's injury-inflicting act was not caused by the accused.
The circuit court denied the motions, and the court of appeals certified
the case to the Wisconsin Supreme Court.
In a majority opinion authored by Chief Justice Abrahamson, the
supreme court reversed the decision of the circuit court and held that
the homicide conviction in this case is barred by the common-law
year-and-a-day rule. The court concluded that: 1) the year-and-a-day
rule has been the law of Wisconsin since statehood, preserved through
Article XIV, Section 13 of the Wisconsin Constitution; 2) the supreme
court has the authority to develop the common law and therefore may
abrogate the year-and-a-day rule; 3) the year-and-a-day rule is an
archaic rule that no longer makes sense and should be abrogated; and 4)
the abrogation of the year-and-a-day rule should be applied
prospectively only. The court articulated many reasons for abandoning
this 13th-century rule, including advances in modern medicine that
permit causes of death to be determined with great certainty.
Justice Sykes, joined by Justices Wilcox and Crooks, dissented from
that part of the majority decision that applies the abrogation of the
year-and-a-day rule prospectively only.
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Interrogation - Voluntariness
State v. Hoppe, 2003
WI 43 (filed 22 May 2003)
Hoppe was charged with the homicide of a female acquaintance. In a
suppression hearing, the trial judge suppressed as involuntary various
statements made by Hoppe to police officers during the course of the
investigation. Although the judge found that the officers had not
engaged in any "egregious actions," their conduct had nonetheless
coerced Hoppe, whose chronic alcoholism and other problems left him in a
"vulnerable" mental state. The court of appeals affirmed.
The supreme court, in a decision authored by Justice Bradley, also
affirmed. In setting forth the well-established "totality of the
circumstances" test, the court observed "that some coercive or improper
police conduct must exist in order to sustain a finding of
involuntariness." Yet case law does not require that the police conduct
be "egregious or outrageous" (¶46). Hoppe suffered "from cognitive
impairment associated with his chronic alcoholism" (¶48). Conceding
that the facts before it were "unique," the supreme court upheld the
trial judge's factual findings, which were based on an audiotape of the
interrogation and expert evaluations of Hoppe's fragile mental state
while he was being interrogated. Of particular importance were the
absence of any Miranda warnings and the increasingly "direct and
accusatory" tone of successive interrogations.
Justice Sykes, joined by Justice Prosser, dissented, because there
was "no evidence of coercive or improper conduct here" (¶69).
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Informants - Privilege
Vanmanivong, 2003 WI 41 (filed 14 May 2003)
A jury convicted the defendant of eight counts of delivering cocaine.
The court of appeals reversed five of the convictions and remanded the
case for a hearing as to whether the identities of two confidential
informants should have been disclosed.
The supreme court, in an opinion written by Justice Wilcox, reversed
the court of appeals. Acknowledging the case's factual and legal
"complex[ity]," the court focused on two issues (¶15). The first
issue was whether the court of appeals applied the correct standards in
reversing the five counts. The supreme court "reaffirm[ed]" its earlier
holding in State v. Dowe, 120 Wis.2d 192 (1984) that the
"concurrence" in State v. Outlaw, 108 Wis.2d 112 (1982) "states
the test to be applied in determining whether an informant's identity
must be disclosed. Based on the language of the concurrence, a defendant
must show that an informer's testimony is necessary to the defense
before a court may require disclosure" (¶24). The "necessity"
standard requires the defendant to demonstrate that the evidence sought
"could create reasonable doubt."
The court then set forth the procedures to use when determining
whether informants' identities should be disclosed. "Once a defendant
has made an initial showing that there is a reasonable probability that
an informant may be able to give testimony necessary to the fair
determination of the issue of guilt or innocence, the state has the
opportunity to show, in camera, facts relevant to determining whether or
not the informant can, in fact, provide such testimony. If, and only if,
the court determines that an informer's testimony is necessary to the
defense in that it could create a reasonable doubt of the defendant's
guilt in jurors' minds, must the privilege give way" (¶ 32).
The second issue concerned the procedures employed by the circuit
court in this case. The supreme court held that the judge erred by
"independently requesting additional information from law enforcement"
and later reviewing a detective's unsworn memo (¶34). Nonetheless,
the error was harmless because "[t]he jury had before it the same
information it would have had if the procedural errors had not occurred"
Chief Justice Abrahamson, joined by Justice Bradley, dissented, on
the grounds that the court of appeals correctly concluded that a remand
was essential so that Wis. Stat. section 905.10 can be properly applied,
and that the majority's opinion "leaves the correction interpretation of
§ 905.10(3)(b) in doubt" (¶72).
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Double Jeopardy - Manifest Necessity
State v. Seefeldt,
2003 WI 47 (filed 28 May 2003)
The defendant was charged with assorted criminal counts involving
drug possession and carrying a concealed weapon. During defense
counsel's opening statement, the prosecutor objected that a reference to
15 open arrest warrants for "Bart," a key witness for the state,
violated "a pretrial order prohibiting the introduction of other acts
evidence." The court held a hearing at which it decided that defense
counsel's reference had indeed violated an earlier ruling and that a
mistrial was warranted. The judge also disqualified the defendant's
Later, a second trial was commenced and the defendant was convicted.
The court of appeals reversed the conviction because the state had
failed to demonstrate that a "manifest necessity" justified the
mistrial; hence, the second trial violated the defendant's right of
The supreme court, in an opinion written by Justice Bradley, affirmed
the court of appeals. On this record the trial judge failed to exercise
the "sound discretion" required by case law. "First, the existence of
Bart's 15 warrants would likely have been admissible during trial and
the record does not reflect that the judge considered whether the
evidence would ultimately be admissible. Second, the trial judge did not
provide sufficient opportunity for the parties to present, and for the
judge to consider, arguments regarding whether a mistrial should be
ordered and the possible alternatives to a mistrial" (¶38). In sum,
a defense counsel's violation of a pretrial order "is not a basis for a
mistrial unless the violation creates that high degree of necessity
required by the double jeopardy clause" (¶40).
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Child Support - Arrearages
State v. Hamilton,
2003 WI 50 (filed 30 May 2003)
The father and mother were divorced in 1970, and the father was
ordered to pay child support. The child support order was amended in
1977. In 2000, the state filed this action to collect child support
arrearages from the father. The issue presented by this case was whether
the state, as the assignee of the father's deceased wife, timely filed
this action. Specifically, "(1) Does Wis. Stat. § 893.40
(2001-2002) apply to independent actions to collect child support not
paid after July 1, 1980, and (2) if § 893.40 applies, when does the
20-year limitations period in the statute begin to run?" (¶3)
The supreme court, in an opinion authored by Justice Prosser, held
that "Wis. Stat. § 893.40, which became effective on July 1, 1980,
governs the time within which a party may bring an independent action to
collect child support arrearages that accumulated after the statute's
effective date. In addition, [the court] conclude[d] that, under the
statute, an action brought to enforce a child support judgment must be
commenced within 20 years of the date when the judgment is entered. The
period of limitation begins to run upon entry of judgment, irrespective
of whether any payment under that judgment has been missed"
Since the last child support judgment was entered in November 1977,
the state had until November 1997 to begin this action to collect
arrearages that incurred after 1980. Thus, the 2000 action was untimely.
The state had "ample time" to bring this action (¶43), because
subsequent changes in law have mitigated the "seemingly harsh result
from applying § 893.40 in the context of child support judgments"
(¶46). For example, "[a] party to whom child support is owed need
not wait until the youngest child reaches majority before going to court
to enforce collection" (¶46) and "contempt proceedings remain a
viable option" (¶47).
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Bad Faith - Punitive Damages
Trinity Evangelical Lutheran
Church v. Tower Ins. Co., 2003 WI 46 (filed 23 May 2003)
Trinity Evangelical Church and School sought to renew its "hired and
non-owned automobile insurance coverage" because its teachers
occasionally transported students. Its insurance agent, however,
"inadvertently failed" to check the appropriate box on the application,
and thus the policy omitted the requested coverage. The mistake was
uncovered in 1995, when a teacher transporting students caused a serious
accident. The insurance agent contacted Tower, the insurer, documented
the mistake, and requested that Tower backdate coverage for Trinity.
Tower refused to do so despite several requests.
The circuit court ruled that Trinity was entitled to reformation of
the insurance contract as a matter of law. The court also granted
summary judgment, because the court found that Tower had engaged in bad
faith. A jury awarded Trinity $3.5 million in punitive damages. The
court of appeals affirmed the punitive damages award but concluded that
issues of fact relating to the bad faith claim had to be resolved in a
The supreme court, in an opinion written by Justice Crooks, affirmed
in part and reversed in part. First, the circuit court had properly
granted summary judgment on the issue of bad faith. "It is clear that
Tower, knowing of the mutual mistake, failed to take 'honest,
intelligent action or consideration based upon knowledge of the facts
and circumstances' presented to it when it denied coverage to Trinity.
Tower also failed to take such action or consideration when it failed to
inform the court of [the agent's] error and his request for backdating.
As a result, Tower failed to act in conformity with its duties"
(¶42) (citation omitted).
The court also affirmed the multimillion dollar punitive damages
award and set forth the appropriate standard for de novo review, based
on Wisconsin and federal case law. "[I]n determining whether an award of
punitive damages is excessive, the United States Supreme Court has
applied a three-part test. The test asks the reviewing court to weigh:
(1) the degree of egregiousness or reprehensibility of the conduct; (2)
the disparity between the harm or the potential harm suffered and the
punitive damages award; and (3) the difference between the punitive
damages and the possible civil or criminal penalties imposed for the
conduct" (¶52) (citations omitted). Applying this standard to the
facts of this case, the court observed, for instance, that the punitive
damages award represented a 7:1 ratio of punitive damages to
compensatory damages based on Trinity's evidence (¶65).
Justice Prosser dissented separately on the matter of the propriety
of summary judgment on this record. Justice Sykes, joined by Justices
Prosser and Wilcox, also dissented, on the ground that the court of
appeals had correctly remanded the case for a trial on the bad faith
issue. The dissenters also would have overturned the punitive damages
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Juror Qualification - English Comprehension
State v. Carlson,
2003 WI 40 (filed 13 May 2003)
A jury convicted Carlson of second-degree sexual assault. He brought
a postconviction motion for a new trial on the ground that one juror
lacked an adequate understanding of the English language. The trial
court denied the motion, and the court of appeals affirmed.
In a decision authored by Justice Crooks, the supreme court reversed
the court of appeals and held that the juror's inadequate grasp of
English violated statutes and necessitated a new trial. The
postconviction hearing had established that the juror failed to meet the
statutory qualifications for jury service set forth in Wis. Stat.
section 756.02. The juror's own qualification questionnaire
"unequivocally" indicated that he could not understand English, a
deficiency further demonstrated by the juror's postconviction testimony
Moreover, the trial court "erred as a matter of law in finding that
[the juror's] English comprehension was statutorily sufficient"
(¶26). In particular, the trial court erroneously emphasized the
juror's "citizenship status" and his "survival level" of English
comprehension (¶30). Finally, the error was not harmless. "An
ability to understand the English language is necessary in order to
satisfy the statutory requirements of Wis. Stat. § 756.02 and
§ 756.04. If a juror cannot meet the statutory requirements, then
the entire trial process may be nothing more than an 'exercise in
Chief Justice Abrahamson, joined by Justice Bradley, concurred but
wrote separately to emphasize that this case involved a "straightforward
example of error for failure to comply with a clear, mandatory statute";
thus, it was unnecessary to set a "statutory threshold for English
language comprehension" (¶ 50). Also, the concurring justices said
that the majority applied the wrong harmless error standard.
Justice Sykes dissented. "Because the statutory error did not result
in an unqualified juror being empanelled on the defendant's case, it
appears beyond a reasonable doubt that the error did not contribute to
the verdict within the meaning of [prior case law]" (¶90).
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Police and Fire Commission Disciplinary Hearings - Use of Hearing
Conway v. Board of Police
& Fire Commissioners, 2003 WI 53 (filed 3 June 2003)
Wis. Stat. section 62.13(1) and (2)(a) requires cities with a
population over 4,000 to establish a board of police and fire
commissioners. Section 62.13(5) specifies the procedures that must be
followed in disciplinary actions against subordinates employed in the
police and fire departments of those municipalities. The statute
concludes with an explicit authorization for police and fire commissions
to adopt additional rules for the administration of disciplinary
proceedings. See Wis. Stat. § 62.13(5)(g).
The Board of Police and Fire Commissioners of the city of Madison
adopted a rule that permits hearing examiners, who are not necessarily
board members, to conduct both initial and evidentiary hearings in
police and fire department disciplinary cases. After taking evidence in
the case, the hearing examiner must prepare a comprehensive report for
the police and fire commission, including an evaluation of witness
credibility and demeanor and recommendations for disposition of the
matter. The hearing must be videotaped, and a certified transcript of
the hearing must be prepared. After these materials are submitted, the
board may require further proceedings in front of either the hearing
examiner or the board itself. Ultimately, the board - not the hearing
examiner - makes the final decision and determines the disposition of
the disciplinary case.
A Madison Fire Department employee challenged the rule allowing for
the use of a hearing examiner, claiming that the rule exceeds the fire
and police commission's authority under section 62.13(5). The circuit
court agreed. However, the court of appeals reversed. See 2002
WI App 135. The court of appeals concluded that the board had the
authority under section 62.13(5)(g) to adopt a rule permitting a hearing
examiner to carry out the tasks described above, including conducting
initial and evidentiary hearings and making a report to the board on the
examiner's recommendations. The court of appeals said that the rule
"provides practices and rational techniques employed to aid the board
[of police and fire commissioners] in fulfilling the objective of
providing public [disciplinary] hearings as required by § 62.13(5)"
In a majority decision authored by Justice Crooks, the supreme court
affirmed the court of appeals. It held that the disputed rule plainly
comes within the board's express authority to promulgate rules for the
administration of Wis. Stat. section 62.13(5) and is consistent with the
overall purpose of the statutes. The board's authority to enact a rule
allowing hearing examiners to conduct evidentiary hearings is grounded
in the express authorization found in section 62.13(5)(g). Said the
court, "none of the elements of due process in quasi-judicial
administrative hearings are compromised by the appointment of a hearing
examiner for the purposes [described above] because the Board, not the
hearing examiner, makes the final decision and disposition" (¶
The majority concluded that its decision is consistent with the
supreme court's prior decisions leaving the means of carrying out
administrative duties in the hands of the agency involved whenever
possible. It is also consistent with the legislature's intent that
sections 62.01 to 62.26 be liberally construed in favor of the rights,
powers, and privileges of cities, as long as the construction is
compatible with the constitution and general law. See Wis.
Stat. § 62.04.
Chief Justice Abrahamson filed a dissenting opinion that was joined
by Justices Bablitch and Bradley.
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Power of Police Departments to Promote Officers to a Higher Rank on
a Probationary Basis - Reduction in Rank When Promoted Employee Fails to
Successfully Complete a Probationary Period for Performance-Based
Reasons - No Right to Just Cause Hearing before Police and Fire
Kraus v. Waukesha Police
& Fire Comm'n, 2003 WI 51 (filed 30 May 2003)
A Waukesha police officer was promoted to the position of sergeant
"subject to successfully completing the one-year probationary period."
Near the end of that probation, the police chief advised the police and
fire commission and the officer that the officer had not successfully
completed the probation for the position of police sergeant and that he
was reappointing the employee to the rank of patrol officer. The failure
was performance-based. The employee requested a "just cause" due process
hearing in front of the police and fire commission pursuant to Wis.
Stat. section 62.13(5)(em), which provides that "no subordinate may be
suspended, reduced in rank, suspended and reduced in rank, or removed by
the board [of police and fire commissioners] ... unless the board
determines whether there is just cause... to sustain the charges."
The Waukesha Police and Fire Commission denied the employee a hearing
and the employee appealed. The circuit court affirmed the commission's
decision and the court of appeals certified the officer's appeal to the
supreme court, which granted certification. In a majority decision
authored by Justice Prosser, the supreme court affirmed the circuit
The supreme court began its analysis by addressing the question
certified to it by the court of appeals as to whether police chiefs and
police and fire commissions have the authority to promote officers on a
probationary basis. The court held that such authority does exist,
provided that the probation is reasonable in duration. In this case, the
court concluded that a one-year probationary period is reasonable.
The supreme court further held that if, during the probation
following a promotion, a chief concludes that an officer's performance
is inadequate or that some other lawful, non-disciplinary reason
militates against the officer serving in the higher rank, the chief and
the commission may return that officer to the officer's prior rank
without a hearing before the commission under section 62.13(5)(em). In
this regard, the court contrasted the case of Antisdel v. Oak Creek
Police and Fire Commission, 2000 WI 35, wherein it held that when a
police officer is promoted subject to probation and then demoted during
the probationary period based on disciplinary charges, the
officer is entitled to a just cause hearing before the police and fire
commission under section 62.13(5)(em).
Finally, the court concluded that an officer who is promoted on a
probationary basis but returned during the probation to his or her prior
rank for non-disciplinary reasons does not possess a constitutionally
protected property interest in the higher rank that would require an
alternative type of due process hearing.
Chief Justice Abrahamson filed a dissenting opinion.
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Firefighter Promoted on a Probationary Basis - Return to Former Rank
for Failure to Successfully Complete Probation for a Non-Disciplinary
Reason - Arbitration Not Available
City of Madison v. Wisconsin
Employment Relations Comm'n, 2003 WI 52 (filed 30 May 2003)
A Madison Fire Department employee had worked as a firefighter for
approximately 18 years when he was promoted to the position of fire
apparatus engineer, subject to successful completion of a one-year
probationary period. After the employee had been on probation for 11
months, the fire chief informed him that his probation had been revoked
and that he was reduced to his former rank of firefighter.
The firefighter filed a grievance seeking reinstatement to the rank
of fire apparatus engineer and back pay and benefits associated with the
higher rank. The city of Madison declined to arbitrate the grievance, on
the grounds that the Wisconsin Statutes and the collective bargaining
agreement prohibited arbitration of this issue. The union then filed a
prohibited practices complaint with the Wisconsin Employment Relations
Commission (WERC). WERC held that the city was obligated to arbitrate
the grievance and ordered it to do so. The city sought review in the
circuit court, which affirmed WERC's order.
The city appealed to the court of appeals, which certified the case
to the supreme court on two issues: 1) whether a firefighter who is
promoted on a probationary basis but is returned to his or her former
rank for failing to successfully complete probation for a
non-disciplinary reason is entitled to a just cause hearing under Wis.
Stat. section 62.13(5)(em); and 2) whether the fire chief's decision
that a firefighter has not successfully completed probation and
therefore is ineligible for a promotion is subject to arbitration.
In a majority decision authored by Justice Sykes, the supreme court
reversed the circuit court. With regard to the first certified question,
the court concluded, as it did in Kraus v. City of Waukesha Police
and Fire Commission, 2003 WI 51 (summarized above) that a police or
fire chief may promote employees on a probationary basis and that the
"just cause" hearing provisions of section 62.13(5)(em) are not
available when an officer promoted on a probationary basis is returned
to his or her prior rank for failing to successfully complete probation
for non-disciplinary reasons.
With regard to the second certified question, the supreme court
concluded that, given the authority vested in the fire chief under
section 62.13, as specifically recognized in the parties' collective
bargaining agreement, an arbitrator may not substitute his or her
judgment for the chief's determination that a firefighter under the
chief's command has not successfully completed probation and is
therefore not qualified to advance from probationary promotion status to
the permanent rank.
Fire and police chiefs and commissions are exclusively empowered to
make, and are responsible for, appointment and promotion decisions under
section 62.13 in order to "secure the best service" in their respective
departments. The supreme court concluded that this statutory scheme does
not contemplate that an arbitrator may overrule decisions that are
specifically entrusted to the chief and to the commission, and that
nothing in the Municipal Employment Relations Act (Wis. Stat. §
111.70) requires such an interpretation of section 62.13.
Moreover, said the court, "the collective bargaining agreement in
this case specifically excludes disputes regarding management rights
under § 62.13 from arbitration, and any interpretation of the
agreement that would effectively transfer to an arbitrator the statutory
authority of the chief and the [police and fire commission] to make
appointment and promotion decisions would clearly conflict with §
62.13" (¶ 33).
Chief Justice Abrahamson filed a dissenting opinion that was joined
by Justices Bablitch and Bradley.
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Environmental Contamination - Liability of Asset Sellers and
Columbia Propane L.P. v.
Wisconsin Gas Co., 2003 WI 38 (filed 13 May 2003)
In this action Columbia Propane sought to hold Wisconsin Gas Co.
liable for environmental contamination on real estate now owned by
Columbia Propane. The contamination was allegedly caused by People's Gas
Co., a prior owner of the real estate, which sold the property to
Wisconsin Gas in 1960 under an asset purchase agreement. Columbia
Propane later purchased the property from Wisconsin Gas.
The state brought an action against Columbia Propane for the
contamination caused by People's Gas. Columbia Propane then brought an
action against Wisconsin Gas, alleging that Wisconsin Gas was liable for
the environmental contamination because Wisconsin Gas had assumed all
People's Gas liabilities when it purchased the People's Gas assets.
The circuit court entered summary judgment in favor of Wisconsin Gas.
However, the court of appeals reversed, concluding that the language in
the asset purchase agreement between People's Gas and Wisconsin Gas was
ambiguous regarding whether Wisconsin Gas agreed to assume unknown tort
liabilities. See 2002 WI App 9.
In a unanimous decision authored by Justice Bablitch, the supreme
court reversed the court of appeals.
The supreme court framed the issue as whether a company that acquires
the assets of another company via an asset purchase agreement is liable
for the liabilities of the selling company that are unknown to either
party at the time they enter into the agreement. In this case the court
concluded that Wisconsin Gas did not assume People's Gas liabilities
that were unknown to either party at the time they entered into the
asset purchase agreement. The court based this conclusion on 1) the
general rule of non-liability for purchasing corporations in the context
of asset purchase agreements, 2) the express language in the asset
purchase agreement between Wisconsin Gas and People's Gas, and 3) the
common interpretation and use of asset purchase agreements in the
With respect to asset purchase agreements, the court specifically
stated that "it is important that we not blur, but rather maintain, the
well-established and fundamental distinction between an asset purchase
and a stock purchase. As described by one commentator, 'asset purchases
feature the advantage of specifying the assets to be acquired and the
liabilities to be assumed'" (¶ 22, citing 10 U. Miami Bus.
L. Rev. 145 (2002)). The court went on to quote the following from the
"An important reason for structuring an acquisition as an asset
transaction is the desire on the part of a buyer to limit its
responsibility for liabilities, particularly unknown or contingent
"Unlike a stock purchase or statutory combination, where the acquired
corporation retains all of its liabilities and obligations, known and
unknown, the buyer in an asset purchase has an opportunity to determine
which liabilities of the seller it will contractually assume"
Justice Wilcox did not participate in this decision.
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