Case Title: Farm Credit Services of North Central Wisconsin v. David Wysocki

Citation: 2001 WI 51

Docket Number: 1999AP001013

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2001-05-30T00:00:00Z

Document:
2001 WI 51 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
99-1013 
 
 
Complete Title 
of Case: 
 
Farm Credit Services of North Central Wisconsin, 
ACA,  
 
Plaintiff-Appellant-Petitioner, 
 
v. 
David Wysocki,  
 
Defendant-Respondent.  
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2000 WI App 124 
Reported at:  237 Wis. 2d 522, 614 N.W.2d 1 
(Published) 
 
 
Opinion Filed: 
May 30, 2001 
Submitted on Briefs: 
      
Oral Argument: 
January 31, 2001 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Portage 
 
JUDGE: 
James M. Mason 
 
 
JUSTICES: 
 
Concurred: 
ABRAHAMSON, C.J., concurs (opinion filed). 
 
Dissented: 
      
 
Not Participating: BABLITCH, J., did not participate. 
 
 
ATTORNEYS: 
For the plaintiff-appellant-petitioner there were 
briefs by Jerry W. Slater and Kelley, Weber, Pietz & Slater, 
S.C., Wausau, and oral argument by Jerry W. Slater. 
 
 
For the defendant-respondent there were briefs by 
Gary L. Dreier and First Law Group, S.C., Stevens Point, and oral 
argument by Gary L. Dreier. 
 
 
2 
 
An amicus curiae brief was filed by Eric H. 
Rumbaugh, Donald A. Daugherty, David A. Dixon and Michael Best & 
Friedrich, LLP, Milwaukee, and oral argument by Eric H. Rumbaugh 
on behalf of Wisconsin Manufacturers and Commerce. 
 
2001 WI 51 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear 
in the bound volume of the official reports. 
 
 
No. 99-1013 
 
STATE OF WISCONSIN                    :  
  IN SUPREME COURT 
 
 
Farm Credit Services of North Central  
Wisconsin, ACA,  
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
David Wysocki,  
 
          Defendant-Respondent. 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed and 
cause remanded. 
 
¶1 
JON P. WILCOX, J.   This case presents two issues.  
The first issue is whether the restrictive covenant in David 
Wysocki's (Wysocki) 1983 employment agreement with Production 
Credit Association (PCA) of Wausau is void as a matter of law 
because the geographic area in which PCA of Wausau was 
authorized to conduct business was expanded through a 1986 
merger.  Because we find that the covenant not to compete here 
is narrowly tailored to a customer list and does not contemplate 
a geographic restriction, we rule that it is not per se invalid. 
 Therefore, we remand the case to the circuit court to determine 
FILED 
 
MAY 30, 2001 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
99-1013 
 
 
2 
whether the covenant not to compete was "reasonably necessary 
for the protection of the employer or principal."  Wis. Stat. 
§ 103.465 (1997-98).   
¶2 
The second issue is whether Farm Credit Services (FCS) 
is the same corporation as PCA of Wausau, which contracted with 
Wysocki in 1983.  Reviewing the two plans of merger in light of 
the relevant statutes, we conclude that PCA of Wausau is the 
surviving corporation of both mergers and, therefore, FCS is 
entitled to enforce the covenant not to compete provision in 
Wysocki's employment agreement.  Accordingly, on both issues, we 
determine that summary judgment in favor of Wysocki was 
inappropriate. 
¶3 
FCS brought this action against Wysocki to enforce a 
covenant not to compete provision in his 1983 employment 
agreement with PCA of Wausau.  Wysocki moved for summary 
judgment, arguing that Wysocki did not contract with FCS.  The 
circuit 
court 
for 
Portage 
County, 
Judge 
James 
M. 
Mason 
presiding, found that FCS was not the same entity as PCA of 
Wausau and, therefore, was not entitled to enforce the covenant. 
 The circuit court also granted summary judgment in favor of 
Wysocki on the ground that the covenant not to compete was 
unilaterally enlarged through the two mergers and was thus void. 
 The court of appeals, in a split decision, affirmed the 
decision of the circuit court.  Farm Credit Services of North 
Central Wisconsin, ACA v. Wysocki, 2000 WI App 124, ¶19, 237 
Wis. 2d 522, 614 N.W.2d 1.  The majority assumed, "arguendo, 
that FCS is the same corporation as PCA," but that the covenant 
No. 
99-1013 
 
 
3 
not to compete was void because the "'specified territory,' as 
that term is used in Wis. Stat. § 103.465, has been unilaterally 
changed by FCS."  Id. at ¶19.  We then granted FCS's petition 
for review. 
I 
¶4 
The basic facts are undisputed for the purposes of 
this review on motion for summary judgment.  In 1983 Wysocki 
signed an employment agreement with PCA of Wausau as a "Related 
Services 
Coordinator/Loan 
Officer" 
in 
order 
to 
provide 
"accounting, bookkeeping, or prepare tax returns for PCA 
membership."  PCA of Wausau was authorized to serve five 
counties and part of a sixth:  Lincoln, Marathon, Portage, 
Price, Wood, and a portion of Taylor.  As stated in its 
employment 
contract 
with 
Wysocki, 
PCA 
of 
Wausau 
"is 
a 
corporation under the Farm Credit Act of 1971, as amended, and 
is in the business of making agricultural loans and providing 
related services, including bookkeeping, accounting, and income 
tax 
consultation 
and 
service 
for 
its 
customers." 
 
This 
employment contract contained the following covenant not to 
compete: 
 
Post-employment Competition.  In consideration of the 
special training and materials provided to Employee by 
PCA and the preparation of tax returns for persons 
engaged in agriculture and confidential information 
made available to Employee by PCA concerning the 
financial 
affairs 
of 
its 
members, 
including, in 
particular, 
information 
generated 
by 
the 
Agrifax 
program, it is agreed that the Employee's activities 
shall be restricted in accord with this paragraph.  If 
the Employee ceases to be a PCA Employee, for any 
No. 
99-1013 
 
 
4 
reason, the Employee shall not, for a period of one 
year immediately following the date of separation from 
PCA, directly or indirectly, engage in the business of 
tax preparation, tax consultation, bookkeeping, or 
accounting, or any other duties performed as a tax 
consultant for PCA with the persons(s) [sic] the 
Employee consulted or serviced in performance of 
his/her consultant duties at any time during the one 
year immediately prior to the date of separation.  
Person(s) includes individuals, sole proprietorships, 
partnerships, and corporations. 
It is undisputed that this covenant is aimed at preventing 
Wysocki from providing various accounting services to PCA of 
Wausau customers whom he had serviced in the year prior to his 
separation. 
¶5 
In 
1986, 
three 
years 
after 
Wysocki 
signed 
the 
employment agreement, PCA of Wausau merged with PCA of Antigo 
and PCA of Neillsville.  The agreement of merger provided that 
PCA of Wausau would be the "continuing association and its 
charter 
and 
bylaws 
shall 
be 
those 
of 
the 
continuing 
association."  Pursuant to the merger agreement, PCA of Wausau 
was renamed PCA of North Central Wisconsin.  This merger 
effectively enlarged the geographical area in which PCA of 
Wausau had been chartered to operate from almost six counties to 
twelve counties.  Five years after that, in 1991, PCA of North 
Central Wisconsin entered into an "Agreement and Plan of Merger" 
with Federal Land Bank of North Central Wisconsin, in which PCA 
of 
North 
Central 
Wisconsin 
was 
named 
as 
the 
"surviving 
association."  The Agreement and Plan of Merger further 
specified that PCA of North Central Wisconsin's name would then 
"be changed to Farm Credit Services of North Central Wisconsin, 
No. 
99-1013 
 
 
5 
ACA."  Throughout this entire period, Wysocki continued working 
for PCA of Wausau, renamed PCA of North Central Wisconsin, and 
subsequently renamed FCS, preparing tax returns for various 
customers.   
¶6 
However, on November 30, 1998, FCS alleges that 
Wysocki informed his supervisor that he was leaving FCS and that 
he intended to solicit FCS' customers whose returns he had 
prepared during 1997.  FCS further alleges that Wysocki then 
solicited FCS customers for whom he had prepared tax returns in 
1997.  In order to enforce the covenant not to compete, FCS 
filed suit against Wysocki.  The circuit court granted Wysocki's 
motion for summary judgment and the court of appeals affirmed. 
II 
¶7 
This case is before us on review of summary judgment. 
 It is well established that we review a grant of summary 
judgment by applying the same methodology as the circuit court. 
 Pinter v. American Family Mut. Ins. Co., 2000 WI 75, ¶12, 236 
Wis. 2d 137, 613 N.W.2d 110.  "Summary judgement will be granted 
only when there is no genuine issue of material fact and the 
moving party is entitled to judgment as a matter of law."  Id. 
¶8 
We first are presented with a question of law 
regarding the construction of a covenant not to compete in an 
employment contract.  Jones v. Jenkins, 88 Wis. 2d 712, 722, 277 
N.W.2d 815 (1979).  We review this question of law de novo.  Id. 
 We begin our review by determining whether the covenant not to 
compete provision is per se invalid. 
No. 
99-1013 
 
 
6 
¶9 
In Wisconsin, covenants not to compete are regarded 
with 
suspicion by 
the 
courts because 
the 
law 
seeks to 
"encourage[] the mobility of workers."  Gary Van Zeeland Talent, 
Inc. v. Sandas, 84 Wis. 2d 202, 214, 267 N.W.2d 242 (1978).  
Indeed, because free movement and personal liberty of employees 
are preeminent features of employment relations in this state, 
we have remarked that "so long as a departing employee takes 
with 
him 
no 
more 
than 
his 
experience 
and 
intellectual 
development that has ensued while being trained by another, and 
no trade secrets or processes are wrongfully appropriated, the 
law affords no recourse."  Id.  Consistent with encouraging the 
free movement of employees, we have applied the following canons 
of construction to covenants not to compete:  (1) such covenants 
are prima facie suspect; (2) they must withstand close scrutiny 
to pass legal muster as being reasonable; (3) they will not be 
construed to extend beyond their proper import or further than 
the language of the contract absolutely requires; and (4) they 
are to be construed in favor of the employee.  Streiff v. 
American Family Mut. Ins. Co., 118 Wis. 2d 602, 611, 348 N.W.2d 
505 (1984).   
No. 
99-1013 
 
 
7 
¶10 These canons are grounded in Wis. Stat. § 103.465 
(1997-98),1 which sets forth the law on covenants not to compete 
in our state: 
 
A covenant by an assistant, servant or agent not to 
compete with his employer or principal during the term 
of the employment or agency, or thereafter, within a 
specified territory and during a specified time is 
lawful and enforceable 
only 
if 
the restrictions 
imposed are reasonably necessary for the protection of 
the employer or principal.  Any such restrictive 
covenant 
imposing 
an 
unreasonable 
restraint 
is 
illegal, void and unenforceable even as to so much of 
the covenant or performance as would be a reasonable 
restraint. 
As we recently observed, this statute "evidences a strong public 
policy against the enforcement of trade restraints which are 
determined to be unreasonable upon all employees."  Tatge v. 
Chambers & Owen, Inc., 219 Wis. 2d 99, 114-15, 579 N.W.2d 217 
(1998).   
¶11 But we cannot allow the underlying policy of Wis. 
Stat. § 103.465 and our rules of construction to overwhelm the 
focus of our analysis in what are, at their core, contract 
                     
1 Although Wis. Stat. § 103.465 is unchanged, on remand, the 
circuit court must determine whether the covenant not to compete 
was reasonable at the time FCS alleged Wysocki violated the 
agreement.  See Streiff v. American Family Mut. Ins. Co., 118 
Wis. 2d 602, 607, 348 N.W.2d 505 (1984) (analyzing covenant not 
to compete under Wis. Stat. § 103.465 (1981-82) at the time the 
employer sought to enforce the agreement in circuit court); 
Chuck Wagon Catering, Inc. v. Raduege, 88 Wis. 2d 740, 752-54, 
277 N.W.2d 787 (1979) (analyzing reasonableness of agreement at 
the time the employer alleged the employee violated the 
agreement).  Because FCS alleges that Wysocki violated the 
agreement in 1998 after Wysocki left FCS, the 1997-98 version of 
the Wisconsin Statutes should be utilized.  
No. 
99-1013 
 
 
8 
cases.  In these cases, we necessarily must focus on the 
individual contracts.  Hence, we begin our analysis of this 
issue by scrutinizing the language of the covenant not to 
compete in Wysocki's employment contract.  See Streiff, 118 
Wis. 2d at 610.   
¶12 The standard rules of contract interpretation apply:  
the primary goal in contract interpretation is to determine and 
give effect to the parties' intention at the time the contract 
was made.  Wisconsin Label v. Northbrook Prop. & Cas. Ins., 2000 
WI 26, ¶23, 233 Wis. 2d 314, 607 N.W.2d 276.  When the language 
is unambiguous, we apply its literal meaning.  Id.  If, on the 
other hand, we determine that a contract provision is ambiguous, 
we then look to extrinsic evidence to discern its meaning.  
Management Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 
206 Wis. 2d 158, 177, 557 N.W.2d 67 (1996).  In sum, if the 
provision is not invalid per se and is unambiguous, we uphold 
its plain meaning.  Therefore, we first look to whether the 
covenant not to compete is invalid per se. 
¶13 The covenant not to compete at issue here is a 
customer list limitation rather than a geographical restriction. 
 It 
prevents 
Wysocki 
from 
servicing 
those 
customers 
he 
"consulted or serviced in the performance of his[] consultant 
duties at any time during the one year immediately prior to the 
date of separation."  In Hunter of Wisconsin, Inc. v. Hamilton, 
101 Wis. 2d 460, 304 N.W.2d 752 (1981), we considered whether a 
similar——albeit 
much 
broader——customer 
list 
limitation 
was 
invalid as a matter of law.  There, two employees of an 
No. 
99-1013 
 
 
9 
insurance agency challenged a covenant not to compete that 
prevented them from soliciting business from any of the agency's 
customers for the lesser of either two years after the 
employment relationship ended or the duration of the employment 
relationship.  Id. at 462-63.  Reasoning that the term 
"specified territory" in § 103.465 encompasses customer lists as 
well as geographical restrictions, we stated that "[a] flat rule 
invalidating all restrictive covenants whose scope exceeded a 
former employee's actual customer contact would amount to a 
declaration that it is never reasonably necessary to protect an 
employer against improper use of information about customers 
with whom the employee did not have actual contact."  Id. at 
466, 468.  Accordingly, we ruled that such a covenant is not 
invalid per se and remanded the cause to the circuit court to 
determine whether, given the totality of the circumstances, the 
covenant in question was reasonable and enforceable.  Id. at 
464, 471. 
¶14 Here, we are presented with a covenant that is more 
narrowly tailored than the covenant at issue in Hunter.  Rather 
than including all of PCA of Wausau's customers during the 
period of Wysocki's employment, the covenant not to compete 
provision here includes only the customers that Wyscocki 
serviced 
in the year 
prior 
to his 
date 
of 
separation.  
Furthermore, 
whereas 
the 
covenant 
in 
Hunter 
effectively 
restricted each of the two employees for two years after the 
separation, the covenant here restricts Wysocki for only one 
year after separation.  Therefore, under Hunter, we cannot 
No. 
99-1013 
 
 
10
conclude that this covenant not to compete is invalid per se, 
especially when this covenant is less restrictive than the 
covenant we examined in Hunter.  See also Chuck Wagon Catering, 
Inc. v. Raduege, 88 Wis. 2d 740, 754, 277 N.W.2d 787 (1979) 
(noting that "in Wisconsin a restrictive covenant protecting an 
employer's customer contacts in a situation of necessity will be 
enforced provided the restraint is reasonable"). 
¶15 Attempting to avoid our Hunter decision, Wysocki 
urges, and the court of appeals accepted, the argument that 
because the two mergers "unilaterally enlarged the specified 
territory of the restrictive covenant beyond that to which the 
parties agreed in 1983, it is unenforceable."  Farm Credit 
Services, 2000 WI App 124 at ¶13.  This argument, however, is 
flawed because it discounts the plain terms of the covenant and 
our decision in Hunter.  Wysocki's covenant not to compete with 
PCA of Wausau anticipated enlargement as well as contraction of 
the "specified territory," which is the list of customers that 
Wysocki serviced in the year prior to his separation from PCA of 
Wausau.  As evidenced by the terms, the parties contemplated a 
fluid customer list limitation rather than a rigid geographical 
restriction.  In accordance with the policy of encouraging the 
freedom of movement of employees and protecting their personal 
liberty, such fluid customer list limitations should be given 
greater breadth than rigid geographical restrictions because 
they oftentimes "more closely approximate[] the area of the 
employer's vulnerability to unfair competition by a former 
employee and [do] not deprive the employee of legitimate 
No. 
99-1013 
 
 
11
competitive opportunities to which he is entitled."  Hunter, 101 
Wis. 2d 466. 
 Furthermore, 
there is 
no 
mention of any 
geographical territory, such as a county or counties, or any 
extraneous document, such as a charter, in the covenant at hand. 
 The absence of a reference to PCA of Wausau's charter is 
especially telling; it is difficult to understand how a change 
in the charter that does not otherwise alter the legal capacity 
or standing of either party would affect the covenant not to 
compete, which fails to reference the charter.  Thus, looking at 
the plain terms of the covenant, we reject Wysocki's argument 
that the two mergers have somehow unilaterally enlarged the 
"specified territory" of the agreement. 
¶16 Because the covenant at issue here is not per se 
invalid, we remand the cause to the circuit court to develop the 
evidentiary record in order to determine whether the covenant is 
reasonable under § 103.465 (1997-98).  On remand, FCS will be 
permitted to develop facts about whether the restriction was 
reasonably necessary for the protection of its legitimate 
business interests.  Id. at 468.  To counter FCS, Wysocki can 
develop facts about whether the restraint unreasonably inhibited 
his ability to pursue a livelihood in his field.  Id. at 470; 
see also Chuck Wagon, 88 Wis. 2d at 754-55 (observing that 
evidence at trial indicated that the defendant had experience in 
other lines of work and that the covenant at issue did not 
prohibit him from working in that particular line, only from 
soliciting Chuck Wagon customers).  As we observed in Hunter, 
these considerations are not exhaustive.  Id.  They are merely 
No. 
99-1013 
 
 
12
several of the issues within the totality of circumstances that 
the circuit court should examine to determine whether the 
covenant not to compete is reasonable under § 103.465. 
III 
¶17 Wysocki, however, argues that PCA of Wausau has been 
merged out of existence.  FCS, according to Wysocki, was not yet 
in existence when he signed his employment agreement with PCA of 
Wausau.  Therefore, as a matter of law, FCS cannot enforce the 
covenant not to compete as part of the 1983 employment agreement 
between PCA of Wausau and Wysocki.  Again, we are confronted 
with a question regarding the interpretation of legal documents, 
the merger agreements, which we review de novo in light of the 
relevant merger statutes.  Jones, 88 Wis. 2d at 722.  Merger 
agreements are contracts; our objective in interpreting such 
contracts is to ascertain the intent of the parties.  Roth v. 
City of Glendale, 2000 WI 100, ¶15, 237 Wis. 2d 173, 614 N.W.2d 
467.  As noted above, we do not look to extrinsic evidence 
outside the four corners of the document unless we determine 
that it is ambiguous.  Energy Complexes, Inc. v. Eau Claire 
County, 
152 
Wis. 2d 
453, 
467-68, 
449 
N.W.2d 
35 
(1989).  
Therefore, we begin our analysis by looking to the relevant 
merger statutes and to the plain language of the merger 
agreements. 
¶18 The first merger took place in 1986.  In regard to 
this merger, Wis. Stat. § 180.62 (1985-86) sets forth the 
appropriate procedure: 
 
No. 
99-1013 
 
 
13
Procedure for merger. (1) Any 2 or more domestic 
corporations may merge into one of such corporations 
pursuant to a plan of merger approved in the manner 
provided in this chapter. 
 
(2) The board of directors of each corporation 
shall, by resolution adopted by each such board, 
approve a plan of merger setting forth: 
 
(a) The names of the corporations proposing to 
merge, and the name of the corporation into which they 
propose to merge, hereinafter designated the surviving 
corporation; 
 
(b) The terms and conditions of the proposed 
merger; 
 . . .  
 
(e) Such other provisions with respect to the 
proposed merger as deemed necessary or desirable. 
The 1986 agreement of merger states, in accordance with the 
above statute, that "[t]he Production Credit Association of 
Antigo and the Production Credit Association of Neillsville 
shall merge into the Production Credit Association of Wausau 
which shall be the continuing association and its charter and 
bylaws shall be those of the continuing association."  The 
agreement further indicates that "[t]he name and location of the 
continuing 
association 
shall 
be 
the 
Production 
Credit 
Association of North Central Wisconsin, Wausau, Wisconsin."  
Therefore, in accordance with § 180.62, the agreement provided 
the names of the three corporations that were to be merged, that 
PCA of Wausau would be the continuing association, and that the 
continuing 
association 
would 
be renamed Production 
Credit 
Association of North Central Wisconsin.   
¶19 The effect of this statutory merger is explained in 
Wis. Stat. § 180.67 (1985-86): 
 
No. 
99-1013 
 
 
14
Effect of merger or consolidation.  When any 
merger 
or 
consolidation 
has 
been 
effected 
in 
accordance with this chapter: 
(1) The several corporations parties to the plan 
of 
merger 
or 
consolidation 
shall 
be 
a 
single 
corporation, which, in the case of a merger, shall be 
that corporation designated in the plan of merger as 
the surviving corporation, and, in the case of a 
consolidation, shall be the new corporation provided 
for in the plan of consolidation. 
(2) The separate existence of all corporations 
parties to the plan of merger or consolidation, except 
the surviving or new corporation, shall cease. . . .  
 . . .  
(4) Such surviving or new corporation shall 
thereupon and thereafter possess all the rights, 
privileges, immunities, and franchises, as well of a 
public as of a private nature, of each of the merging 
or consolidating corporations; and all property, real, 
personal and mixed, and all debts due on whatever 
account, including subscriptions to shares, and all 
other choses in action, and all and every other 
interest, of or belonging to or due to each of the 
corporations so merged or consolidated, shall be taken 
and deemed to be transferred to and vested in such 
single corporation without further act . . . . 
 
The plain language of this statute, read in conjunction with the 
agreement of merger, indicates that PCA of Wausau was the 
surviving corporation, which was then renamed PCA of North 
Central Wisconsin.  Consequently, PCA of North Central Wisconsin 
could have enforced the covenant not to compete in Wysocki's 
employment agreement after the 1986 merger was executed.  In 
short, the 1986 merger did not change the parties to the 1983 
employment contract. 
 
¶20 The second "Agreement and Plan of Merger" is dated 
April 4, 1991.  The relevant merger statute at that time, Wis. 
Stat. § 180.1101 (1991-1992), provided, in pertinent part: 
 
No. 
99-1013 
 
 
15
Merger. (1) One or more corporations may merge 
into another corporation if the board of directors of 
each corporation, by resolution adopted by each board, 
approves a plan of merger and, if required by s. 
180.1103, its shareholders also approve the plan of 
merger. 
(2) The plan of merger shall set forth all of the 
following: 
(a) The name of each corporation planning to 
merge and the name of the surviving corporation into 
which each other corporation plans to merge. 
(b) The terms and conditions of the merger. 
In accordance with this merger statute, the 1991 "Agreement and 
Plan of Merger" states that PCA of North Central Wisconsin would 
merge with Federal Land Bank Association of North Central 
Wisconsin and that PCA of North Central Wisconsin "shall be the 
surviving association . . . ."  The agreement further specifies 
that PCA of North Central Wisconsin's "name shall be changed to 
Farm Credit Services of North Central Wisconsin, ACA."  Again, 
the Agreement and Plan of Merger set forth the corporations that 
would be merging, that PCA of North Central Wisconsin would be 
the surviving association, and that it would be renamed FCS, 
which is in accordance with the relevant merger statute in 1991, 
§ 180.1101.  The effect of a 1991 merger is delineated in 
§ 180.1106 (1991-92): 
 
Effect of merger or share exchange.  (1)  All of 
the following occur when a merger takes effect: 
(a) Every other corporation that is party to the 
merger merges into the surviving corporation and the 
separate existence of every corporation party to the 
merger except the surviving corporation ceases. 
(b) The title to all property owned by each 
corporation that is party to the merger is vested in 
the 
surviving 
corporation 
without 
reversion 
or 
impairment. 
No. 
99-1013 
 
 
16
(c) The 
surviving 
corporation 
has 
all 
liabilities of each corporation that is party to the 
merger. 
 . . .  
Under this statute, FCS——the surviving corporation formerly 
known as PCA of North Central Wisconsin——took over all of 
Federal Land Bank Association of North Central Wisconsin's 
assets and liabilities.2  There is nothing in the "Agreement and 
Plan of Merger" that abrogates any contract——employment or 
                     
2 We note that this statute is based on the Model Business 
Corporation Act § 11.07 "Effect of Merger or Share Exchange."  
We 
have 
previously 
utilized 
the 
official 
commentary 
to 
substantially similar Model Business Corporation Act statutes to 
inform our discussion of the legislative intent of Wisconsin 
Business Corporations statutes.  See Einhorn v. Culea, 2000 WI 
65, ¶29, 235 Wis. 2d 646, 612 N.W.2d 78.  The official 
commentary to the Model Business Corporation Act § 11.07 states: 
[I]n the case of a merger the survivor and the parties 
that merge into the survivor become one.  The survivor 
automatically becomes the owner of all real and 
personal property and becomes subject to all the 
liabilities, actual or contingent, of each party that 
is merged into it.  A merger is not a conveyance, 
transfer, or assignment. . . . It does not give rise 
to a claim that a contract with a party to the merger 
is 
no 
longer 
in 
effect 
on 
the 
ground 
of 
nonassignability, unless the contract specifically 
provides that it does not survive a merger.   
 
Model Bus. Corp. Act Ann. §§ 11-71 (3d ed. Supp. 1998-
1999).  According to this commentary, a surviving corporation 
can enforce a contract that a party entered into with a merged 
corporation over the objection that it was not assigned by the 
merged corporation.  Following this commentary, even if PCA of 
Wausau ceased to exist, FSC could enforce the covenant not to 
compete.  However, because we find that PCA of Wausau is the 
surviving corporation, merely renamed FSC, by the plain language 
of the merger agreement read in light of the merger statute, we 
do not need this official commentary to discern the legislative 
intent of Wis. Stat. § 180.1106 here. 
No. 
99-1013 
 
 
17
otherwise——that PCA of North Central Wisconsin had with any 
party. 
 
¶21 Accordingly, we conclude that FCS may enforce the 
covenant not to compete in its employment contract with Wysocki. 
 Wysocki has not raised any ambiguities in either of the merger 
documents that compel us to look beyond their four corners in 
order to determine the intent of the parties.  Moreover, because 
we determine that PCA of Wausau, which was merely renamed FCS 
after the 1991 merger, is the surviving corporation of both 
mergers, we do not need to reach whether Wysocki's covenant not 
to compete is severable from his employment agreement and 
whether 
his 
continued 
employment 
amounts 
to 
an 
implied 
assignment of that covenant. 
IV 
 
¶22 In sum, we find that Wysocki's covenant not to compete 
with FCS is not invalid per se as a customer list limitation; 
this provision is less restrictive than the covenant we examined 
in Hunter, which we likewise determined was not invalid per se. 
 101 Wis. 2d at 468.  On this first issue, we remand the cause 
to the circuit court to determine whether the covenant meets the 
requirements of Wis. Stat. § 103.465 (1997-98).  Furthermore, we 
find that PCA of Wausau survived both mergers and, therefore, 
FCS is entitled to enforce its employment contract with Wysocki. 
 Accordingly, we conclude that summary judgment in favor of 
Wysocki on both issues was inappropriate. 
No. 
99-1013 
 
 
18
By the Court.—The decision of the court of appeals is 
reversed, and the cause is remanded to the circuit court for 
further proceedings consistent with this opinion.   
¶23 WILLIAM A. BABLITCH, J., did not participate.   
 
No. 99-1013.ssa 
 
1 
¶24 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (concurring).  I 
agree that the cause should be remanded to the circuit court for 
further fact-finding.  But I write separately to state that a 
preliminary question of fact, which in my opinion the majority 
has improperly answered as a matter of law, is whether the 
parties intended the scope of the 1983 covenant not to compete 
to be expanded geographically as the corporation's powers under 
the federal charter expanded.  
¶25 The majority opinion correctly states our longstanding 
canons of construction for covenants not to compete, canons 
based on Wis. Stat. § 103.465 (1997-98): Covenants not to 
compete are prima facie suspect; they must withstand close 
scrutiny to pass legal muster as being reasonable; they will not 
be construed to extend beyond their proper import or further 
than the language of the contract absolutely requires; and they 
are to be construed in favor of the employee.3  
¶26 Yet in analyzing the covenant not to compete at issue 
in this case, the majority concludes that "[t]he standard rules 
of contract interpretation apply."4  The majority also concludes 
that "our rules of construction [cannot] overwhelm the focus of 
our analysis in what are, at their core, contract cases."5 
¶27 The internal contradiction in the majority opinion is 
manifest.  If special canons of construction apply to covenants 
                     
3 See majority op. at ¶9. 
4 See majority op. at ¶12. 
5 See majority op. at ¶11. 
No. 99-1013.ssa 
 
2 
not 
to 
compete, 
then 
the 
standard 
rules 
for 
contract 
interpretation do not apply in their totality.  The legislature 
has not impermissibly "overwhelmed" contract law by creating an 
exception to the ability of employers and employees to negotiate 
to restrict employees' ability to work.  Rather, the legislature 
has expressly concluded that the principle of free movement of 
employees, which this court recently extolled in Mackenzie v. 
Miller Brewing Co., 2001 WI 23, 241 Wis. 2d 700, 623 N.W.2d 739, 
must guide our analysis of restrictive covenants.  
¶28 Applying the principles mandated by the legislature 
and this court's precedent, I conclude that it is an open 
question of fact whether the covenant not to compete anticipated 
enlargement of the specified territory.  In so concluding, I am 
mindful 
of 
the 
special 
nature 
of 
the 
employer, 
whose 
geographical scope and range of services have at all times been 
defined by federal law and federal charter.  The federal law and 
the charter have changed since the employment contract was 
entered, allowing the geographical scope and range of services 
of the employer's business to expand.   
¶29 The majority concludes as a matter of law that the 
parties contemplated a "fluid customer list."6  But contemplation 
of a fluid customer list is not necessarily the same as 
contemplation of changes in federal law and in a federal charter 
that allow an employer to service customers that were previously 
off limits to the employer.  The majority rejects this argument, 
                     
6 See majority op. at ¶15. 
No. 99-1013.ssa 
 
3 
finding that the changes in the employer's charter cannot affect 
the covenant not to compete because the "covenant" fails to 
refer to the charter.7  The covenant not to compete is, however, 
part of the employment contract, and the employment contract 
does explicitly refer to the applicable law governing PCA.  
Recital A of the employment contract states that "PCA is a 
corporation under the Farm Credit Act of 1971, as amended." 
¶30 In any event, it is an odd contortion of the "standard 
rules of contract interpretation" to conclude that an employer's 
federal charter is not relevant to interpreting an employment 
contract unless the federal charter is expressly referred to.8  
Under the facts of this case, the employee may be able to 
demonstrate that he and the employer signed the employment 
contract (including the covenant not to compete) in reliance on 
the federal charter, which limited the scope of his employer's 
service area to six counties at the time the contract was 
entered.  Surely the federal charter would be relevant to the 
parties' intent.  The issue of the parties' intent appears to me 
to be an open question of fact that cannot be resolved at the 
                     
7 See majority op. at ¶15. 
8 According to Professor Corbin: 
Internal references in one document to another are 
often helpful in the processes of interpretation and 
adjudication; but the absence of such a reference does 
not make a document unusable in these processes or 
inadmissible 
in 
evidence. 
 
Its 
connection 
and 
relevancy can be established otherwise. 
 
Arthur L. Corbin, 3 Corbin on Contracts § 549, at 192 (1960). 
No. 99-1013.ssa 
 
4 
summary judgment stage, particularly in light of our precedent 
requiring narrow construction of covenants not to compete. 
¶31 Finally, I take issue with the majority opinion's 
unwarranted conclusion in footnote 2 that "even if PCA of Wausau 
ceased to exist, FCS could enforce the covenant not to compete."9 
 In contrast, the employer in this case apparently concedes, 
relying on precedent, that it may not enforce the covenant not 
to compete against the employee if this court concludes that the 
1983 corporation has been merged out of legal existence.10  
Ignoring this concession, the footnote nevertheless addresses an 
issue that is unnecessary to the resolution of the case before 
us.  This sort of rogue commentary causes confusion for future 
cases in which the explicit legal question addressed in the 
rogue footnote will be raised, briefed, and contested by the 
parties and must be addressed directly by this court.11  
                     
9 See majority op. at ¶20 n.2. 
10 See FCS Reply Brief at 3 ("[I]f Appellant is in fact a 
different 
corporation 
from 
that 
with 
which 
Mr. 
Wysocki 
contracted in 1983, then Farm Credit must concede that the 
contract without an assignability clause, without additional 
consideration and without direct privity would not be binding on 
Mr. Wysocki."). 
In the absence of an assignment clause, enforcing such a 
covenant not to compete would violate our canon of construction 
that covenants not to compete "will not be construed to extend 
beyond their proper import or further than the language of the 
contract absolutely requires."  Streiff v. American Family Mut. 
Ins. Co., 118 Wis. 2d 602, 611, 348 N.W.2d 505 (1984). 
11 For the effect of rogue commentary in a footnote, see, 
for example, State v. Hansen, 2001 WI 53, ___ Wis. 2d ___, ___ 
N.W.2d ___. 
No. 99-1013.ssa 
 
5 
¶32 For the reasons set forth, I write separately.