Case Title: Anthony Gagliano & Co., Inc. v. Openfirst, LLC

Citation: 2014 WI 65

Docket Number: 2012AP000122

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2014-07-15T00:00:00Z

Document:
2014 WI 65 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2012AP122  
COMPLETE TITLE: 
Anthony Gagliano & Co., Inc., 
          Plaintiff-Appellant, 
     v. 
Openfirst, LLC and New Electronic Printing 
Systems, LLC, 
          Defendants-Respondents, 
RWK Enterprises, Inc., d/b/a Alphagraphics, 
Inc., OFH  
Distribution, LLC , f/k/a Openfirst Holdings and 
New  
Diversified Mailing Services, LLC, 
          Defendants, 
Quad Graphics, Inc. and Robert Kraft, 
          Defendants-Respondents-Petitioners.   
 
 
 
 
 
 
 REVIEW OF A DECISION OF THE COURT OF APPEALS 
346 Wis. 2d 47, 828 N.W.2d 268 
(Ct. App. 2013 – Published) 
PDC No: 2013 WI App 19 
 
 
OPINION FILED: 
July 15, 2014 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
December 18, 2013   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Milwaukee 
 
JUDGE: 
Dennis P. Moroney 
 
 
 
JUSTICES: 
 
 
CONCUR/DISSENT: 
BRADLEY, J., concurs in part, dissents in part. 
(Opinion filed.)   
 
DISSENTED: 
ABRAHAMSON, C.J., dissents. (Opinion filed.)   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For 
the 
defendant-respondent-petitioner 
Quad 
Graphics, 
there were briefs by Michael B. Apfeld, Michael D. Huitink, and 
Godfrey & Kahn, S.C., Milwaukee, and oral argument by Michael B. 
Apfeld.  
 
 
 
2 
 
For the defendant-respondent-petitioner Robert Kraft, there 
were briefs by Ann M. Maher, Lisa M. Lawless, and Whyte 
Hirschboeck Dudek S.C., Milwaukee, and oral argument by Lisa M. 
Lawless. 
 
For the plaintiff-appellant, there were briefs by Thomas 
Armstrong, Beth J. Kushner, and Von Briesen & Roper, S.C., 
Milwaukee, and oral argument by Thomas Armstrong. 
 
An amicus curiae brief was filed by Thomas D. Larson, 
Madison, on behalf of the Wisconsin Realtors Association.  
 
 
 
 
2014 WI 65
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2012AP122 
(L.C. No. 
2008CV17601) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Anthony Gagliano & Co., Inc., 
 
          Plaintiff-Appellant, 
 
     v. 
 
Openfirst, LLC and New Electronic Printing 
Systems, LLC, 
 
          Defendants-Respondents, 
 
RWK Enterprises, Inc., d/b/a Alphagraphics, 
Inc., OFH Distribution, LLC , f/k/a Openfirst 
Holdings and New Diversified Mailing Services, 
LLC, 
 
          Defendants, 
 
Quad Graphics, Inc. and Robert Kraft, 
 
          Defendants-Respondents-Petitioners. 
 
FILED 
 
JUL 15, 2014 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed in 
part, reversed in part, and remanded.   
 
No. 
2012AP122   
 
2 
 
¶1 
PATIENCE DRAKE ROGGENSACK, J.   We review a decision 
of the court of appeals1 reversing the circuit court's order2 
dismissing plaintiff Anthony Gagliano & Co., Inc.'s (Gagliano) 
claims against defendants New Electronic Printing Systems, LLC; 
Openfirst, 
LLC; 
Robert 
Kraft; 
and 
Quad/Graphics, 
Inc.  
Gagliano's claims concern rent allegedly owed under several 
commercial leases.  This case presents two issues for our 
review:  (1) whether Gagliano gave sufficient notice to extend 
the leases to the time when the alleged breach occurred; and (2) 
whether Quad/Graphics was a subtenant of the lessee or an 
assignee of the leases.   
¶2 
As to the first issue, we conclude that Gagliano's 
notice was valid.  Gagliano provided notice:  (1) to the entity 
designated as the tenant on the original lease; (2) to the 
entity who was the current tenant at the time of the notice; and 
(3) to the entity a subsequent amendment of the lease designated 
as the tenant.  The notice is also valid because the current 
tenant at the time Gagliano sent the notice had actual notice 
that Gagliano was exercising its alleged right to extend the 
leases.  Accordingly, we affirm the portion of the decision of 
the court of appeals that reversed the circuit court's directed 
verdict, which had concluded that Gagliano's notice was not 
valid.  We remand to the circuit court for fact-finding 
                                                 
1 Anthony Gagliano & Co. v. Openfirst, LLC, 2013 WI App 19, 
346 Wis. 2d 47, 828 N.W.2d 268. 
2 The Honorable Dennis P. Moroney of Milwaukee County 
presided. 
No. 
2012AP122   
 
3 
 
necessary to decide the merits of Kraft's remaining arguments 
relating to the lawfulness of the extension provision in the 
leases.   
¶3 
In regard to the second issue, we conclude that 
Quad/Graphics is not liable to Gagliano because Quad/Graphics 
was a subtenant of the lessee, not an assignee of the leases.  
Undisputed evidence shows that New Electronic Printing Systems, 
the assignee of the original tenants, did not transfer its 
entire remaining leasehold estate to Quad/Graphics.  Because 
Gagliano and Quad/Graphics did not share privity of estate, it 
is not an assignee.  Therefore, we do not hold Quad/Graphics 
liable for New Electronic Printing Systems' alleged breach of 
contract to which Quad/Graphics was not a party.  Accordingly, 
we reverse the portion of the decision of the court of appeals 
that reversed the order of the circuit court granting summary 
judgment in favor of Quad/Graphics and remand to the circuit 
court for dismissal of all claims against Quad/Graphics.3 
I.  BACKGROUND 
¶4 
In 1996, Robert Kraft formed Electronic Printing 
Systems, Inc.,4 a data processing company that helped businesses 
                                                 
3 On a motion for summary judgment, the circuit court found 
Quad/Graphics was "not an alter ego under the circumstances of 
this case."  While Gagliano argued for reversal of that 
determination to the court of appeals, it makes no such argument 
in this review.  We therefore deem that argument abandoned, 
requiring no further consideration.  See Gister v. Am. Family 
Mut. Ins. Co., 2012 WI 86, ¶37 n.19, 342 Wis. 2d 496, 818 N.W.2d 
880. 
4 This is a different corporate entity from New Electronic 
Printing Systems, LLC, which is a party to this action. 
No. 
2012AP122   
 
4 
 
with their billing operations.  Over the course of about 12 
years, that company was rebranded, restructured, and sold to 
various entities.  It also changed locations within Milwaukee's 
third ward from its original facility on Buffalo Street to 
Gagliano's facility at 300 North Jefferson Street, where it 
remained until it went out of business.    
¶5 
This case involves several leases that the company and 
its progenies had with Gagliano.  It requires us to determine 
whether Gagliano provided valid notice to extend those leases to 
the time of the alleged breach.  It also requires us to 
determine whether Quad/Graphics, the last entity to acquire 
assets of what was Electronic Printing Systems, can be held 
liable for that alleged breach.  Before reaching these issues, 
we review the leases and describe the various changes the 
company underwent that bear on our decision.  
A.  The Leases 
¶6 
There are two North Jefferson Street leases that 
underlie this action:  the May 22, 2000 lease and the May 18, 
2001 lease.  Both leases were amended numerous times as will be 
explained below. 
¶7 
On April 11, 2000, Gagliano and Kraft entered into a 
lease for 50,000 square feet of property in the Jefferson Street 
facility for a term of five years.  The lease initially gave the 
tenant, which the lease listed as "Electronic Printing Systems," 
the right to extend the lease for "two consecutive additional 
periods of three years."  The record shows that this section was 
crossed out.   
No. 
2012AP122   
 
5 
 
¶8 
On May 22, 2000, Gagliano and Kraft executed a revised 
version of the lease, which superseded the April 11, 2000 
version.  Whereas the first lease covered only 50,000 square 
feet of property, the May 22, 2000 lease covered 90,000 square 
feet, divided into two leased premises.  The portion of the 
lease for the initial 50,000 square feet expired June 23, 2006.  
The portion of the lease for an additional 40,000 square feet 
expired six years after the tenant took occupancy.5   
¶9 
The May 22, 2000 lease contained several terms that 
bear on our analysis.  First, it provided that upon notice at 
least 120 days before the expiration of the initial term, 
Gagliano had the right to extend the lease for an additional 
four-year term.  Kraft claims that Gagliano fraudulently 
inserted this extension right for the landlord in place of the 
tenant's right to extend that was set out in the April 11, 2000 
lease.  Second, the May 22, 2000 lease provided that Gagliano 
was to send notices to Electronic Printing System's Buffalo 
Street address prior to commencement of the lease and to the 
Jefferson Street facility thereafter.  Third, Kraft personally 
guaranteed the May 22, 2000 lease and was, along with Electronic 
Printing Systems, to remain liable in the event of any sublease 
or assignment, both of which required Gagliano's consent.   
¶10 About a year after executing the May 22, 2000 lease, 
Kraft decided to lease additional space in the Jefferson Street 
                                                 
5 The leases referred to the leased spaces as "Demised 
Premises I" and "Demised Premises II," respectively.  We will 
refer to them as the first and second leased premises. 
No. 
2012AP122   
 
6 
 
facility for his son's printing business.  On May 18, 2001, 
Gagliano and Kraft, this time on behalf of Openfirst, Inc., 
executed a new lease for an additional 1,848 square feet in the 
Jefferson Street facility that expired 16 months after the 
completion of certain work.  This was a new lease (the 2001 
lease) and not an amendment of the May 22, 2000 lease.  Gagliano 
concedes that Kraft did not guarantee the 2001 lease.  The 2001 
lease did not provide for any extensions of the lease term by 
Gagliano.  
¶11 Gagliano and Kraft amended the 2001 lease twice to 
extend its term, first to November 7, 2004 and then to June 23, 
2006.  The second amendment added a provision that permitted 
Gagliano to extend the lease for an additional four-year term by 
giving notice within 120 days of the lease's expiration.   
¶12 Gagliano and Kraft also amended the May 22, 2000 lease 
in a document that lacks a date of execution, but states that it  
"commences" October 23, 2003.  This amendment added 8,900 square 
feet of space in a third leased premises and designated 
"OpenFirst, Inc., successor in interest to Electronic Printing 
Systems" as the appropriate recipient for further notice.   
¶13 On November 6, 2002, Openfirst, Inc. and related 
companies sold their assets to Openfirst Holdings, LLC; New 
Diversified Mailing Services, LLC; and New Electronic Printing 
Systems.  As part of the asset purchase, the leases that 
underlie this action were assigned to the buyers.  Gagliano 
consented to the assignment on the condition that the "Tenant 
and any and all guarantors of [the] Lease[s] . . . remain fully 
No. 
2012AP122   
 
7 
 
liable under [the] Lease[s]."  Gagliano also consented to New 
Electronic Printing System's subsequent assignment of the leases 
as collateral to Associated Bank, NA, again on the condition 
"that none of the original obligors and/or guarantors" be 
released from liability.   
¶14 On December 29, 2005, Gagliano sent notice of its 
intention to extend both leases for an additional four-year 
term.  He sent the notices to the persons, entities, and 
addresses that follow: 
Robert Kraft 
300 N. Jefferson St. 
Milwaukee, WI 53202 
 
Electronic Printing Systems, Inc.  
300 N. Jefferson St. 
Milwaukee, WI 53202 
 
Open First, Inc. 
300 N. Jefferson St. 
Milwaukee, WI 53202 
 
Target  
300 N. Jefferson St. 
Milwaukee, WI 53202 
¶15 Kraft received Gagliano's notice and informed Gagliano 
that he did not "recognize" the extension as valid.  New 
Electronic Printing Systems remained in the facility and 
continued to pay rent into the extended period.  
¶16 At the time Kraft received Gagliano's notice, he had 
begun 
negotiations 
with 
Quad/Graphics 
to 
restructure 
the 
businesses. 
 
As 
part 
of 
the 
restructuring 
agreement 
"Quad/Graphics loaned money to, and received a promissory note 
from the following entities so they could buy Quad/Graphics's 
No. 
2012AP122   
 
8 
 
interest in the business:  Openfirst [Holdings], LLC; New 
Diversified Mailing Services, LLC.; and New Electronic Printing 
Systems, LLC."  Anthony Gagliano & Co. v. Openfirst, LLC, 2013 
WI App 19, ¶17, 346 Wis. 2d 47, 828 N.W.2d 268 (internal 
quotation marks omitted).  At the end of this transaction, New 
Electronic Printing Systems still owned the leases.  Kraft 
remained a minority shareholder and officer until September 
2007, when Quad/Graphics terminated his employment.   
¶17 The restructuring with Quad/Graphics did not spell 
success for the companies involved.  About two years later, New 
Electronic Printing Systems went out of business.  Vice 
President and General Counsel of Quad/Graphics Andrew Schiesl 
explained the arrangement that followed:   
[New Electronic Printing Systems] was going out of 
business, [and] it owed QuadGraphics money as a 
borrower because QuadGraphics was a lender to it.  As 
part of the ultimate resolution of that loan . . . the 
remaining business[, New Electronic Printing Systems, 
Inc.,] was effectively surrendered to QuadGraphics to 
pay back, to try and pay back the loan.  QuadGraphics 
then started effectively sub-contracting or doing the 
business that it had just taken over at that point, 
and it needed to enter into a sublease with the 
sublessor so they could continue to use that space.   
¶18 On June 23, 2008, to accomplish this arrangement, New 
Electronic Printing Systems and Quad/Graphics entered into two 
contracts.  The first was the Voluntary Surrender Agreement and 
the second was the Sublease for certain space at the North 
Jefferson Street facility.   
¶19 In the Voluntary Surrender Agreement, New Electronic 
Printing 
Systems 
agreed 
to 
surrender 
collateral 
to 
No. 
2012AP122   
 
9 
 
Quad/Graphics, and Quad/Graphics could, "in its sole discretion, 
accept" the collateral or "any portion thereof."  New Electronic 
Printing Systems did not tender, and Quad/Graphics did not 
accept, surrender of the leases.  In this regard, the Voluntary 
Surrender Agreement stated, "For the avoidance of doubt, the 
Collateral shall not include any lease for real property."  
¶20 The 
Voluntary 
Surrender 
Agreement 
permitted 
Quad/Graphics to "store the Collateral at [the North Jefferson 
Street facility] at no charge to Quad until all of [New 
Electronic Printing Systems, LLC's] obligations to Quad are 
satisfied in full or until disposition of the Collateral, 
whichever occurs earliest."  Quad/Graphics and New Electronic 
Printing Systems set forth the terms of the storage arrangement 
in 
the 
Sublease, 
which 
expired 
October 31, 
2008, 
unless 
terminated sooner by either party.6  Gagliano did not sign a 
written agreement consenting to the sublease.   
¶21 Quad/Graphics' communication with Gagliano began when, 
on September 1, 2008, Schiesl wrote to Gagliano informing 
Gagliano that New Electronic Printing Systems intended to vacate 
                                                 
6 The copy of the Sublease in the record does not bear a 
signature on behalf of Quad/Graphics, but the parties do not 
dispute 
that 
Quad/Graphics 
did 
sign 
the 
Sublease. 
 
On 
December 6, 2013, Quad/Graphics moved to correct the appellate 
record and substitute a complete copy of the document that 
includes a signature page bearing the signature of Andrew 
Schiesl on behalf of Quad/Graphics.  Gagliano opposed this 
motion.  We reserved ruling on the motion until after oral 
argument, and now deny it.  There is no dispute that 
Quad/Graphics did sign; therefore, the signed copy is not 
necessary to our decision.   
No. 
2012AP122   
 
10 
 
and surrender the Jefferson Street facility on October 31, 2008.  
When Gagliano did not receive rent allegedly owed after that 
date, Gagliano's attorneys notified Kraft, Electronic Printing 
Systems, New Electronic Printing Systems, and Openfirst, Inc., 
that they were in default of the leases.  This suit followed.  
B.  Procedural History 
¶22 On June 4, 2009, Gagliano brought breach of contract 
claims against New Electronic Printing Systems, Quad/Graphics, 
and Kraft.7  Gagliano claimed that its December 29, 2005 Notice 
of Landlord's Extension of Leases extended the terms of the 
May 22, 2000 lease for the first and third leased premises, as 
well as the 2001 lease for 1,848 square feet of space in the 
same building, to June 23, 2010.  Gagliano also claimed that the 
notice extended the lease for the second leased premises to 
January 23, 2012.   
¶23 Gagliano argued that New Electronic Printing Systems, 
as an assignee of the primary lease, was liable for prematurely 
vacating the premises, and Kraft was liable as a guarantor.  As 
to Quad/Graphics, Gagliano claimed that Quad/Graphics had taken 
an assignment of the leases when it purchased New Electronic 
Printing Systems' assets in 2006 and therefore, was liable for 
the extended terms of the leases as well.  
¶24 Quad/Graphics moved for summary judgment, arguing that 
there was no evidence that Quad/Graphics had taken a written 
                                                 
7 Gagliano 
also 
brought 
claims 
against 
several 
other 
entities that did not participate in this review.  
No. 
2012AP122   
 
11 
 
assignment of the leases, which the statute of frauds required, 
and that the doctrines of waiver and estoppel barred Gagliano's 
claims.  The circuit court granted Quad/Graphics' motion, 
finding that "there is absolutely no indication that Quad agreed 
to any" assignment, and that it was Gagliano's obligation to 
find out "who the heck they're really doing business with" and 
negotiate for additional security from that party if it so 
desired.  
¶25 Gagliano's remaining claims proceeded to trial.  At 
the close of evidence, Kraft moved for a directed verdict on the 
grounds that Gagliano's notice of extension was invalid because 
Gagliano did not address the notice to New Electronic Printing 
Systems, the tenant at the time notice was given.  The circuit 
court granted the motion, concluding that "there is a strict 
requirement of notice," under which Gagliano needed to serve 
Kraft in his capacity as a representative of New Electronic 
Printing Systems.  In other words, Gagliano needed to address 
the notice to "New Electronic Printing Systems, c/o Robert 
Kraft," rather than simply to Kraft at New Electronic Printing 
Systems' address.  Since the circuit court concluded that the 
notice of extension was invalid, it dismissed Gagliano's claim 
against Kraft and the other defendants. 
¶26 Gagliano appealed, arguing that the circuit court 
erred when it granted Quad/Graphics' motion for summary judgment 
and when it directed a verdict on the notice of extension issue.  
No. 
2012AP122   
 
12 
 
The court of appeals reversed both orders.8  Regarding the 
directed verdict, it concluded the notice of extension was valid 
because "service was made on the correct entity"; "Open First, 
Inc., received the benefits of the May 18, 2001, lease"; and 
none "of the other documents changed that."  Gagliano, 346 
Wis. 2d 47, ¶31. 
¶27 As to the circuit court's grant of summary judgment, 
the court of appeals concluded that Quad/Graphics was liable for 
rent for the remainder of the term of the extended leases 
because "Gagliano's consent to the assignment of the leases [to 
Associated Bank] when New Electronic Printing Systems took over 
the Openfirst business was conditioned on" any subsequent third 
party to whom New Electronic Printing Systems transferred its 
interest assuming "the obligations under and pursuant to the 
Leases."  Id., ¶35.  It further reasoned that Quad/Graphics was 
liable because it "accepted the benefits conferred by the 
Gagliano leases and their amendments" and the Sublease between 
New Electronic Printing Systems and Quad/Graphics was not 
                                                 
8 The court of appeals stated that the appeal asked it "to 
review 
the 
trial 
court's 
grant 
of 
summary 
judgment 
to 
Quad/Graphics dismissing Gagliano's claims against it, and the 
trial court's grant of a directed verdict dismissing Gagliano's 
claims against New Electronic Printing Systems, LLC, and 
Openfirst, LLC."  Gagliano, 346 Wis. 2d 47, ¶27.  The court did 
not relate that Kraft joined the motion for a directed verdict 
and participated in the appeal.  The court did, however, write 
that it was not going to "separately address" Gagliano's claims 
against Kraft, which we take as an acknowledgment that the 
portion of its decision reversing the directed verdict bound 
Kraft, as well as the other defendants.  Id., ¶1 n.1. 
No. 
2012AP122   
 
13 
 
binding on Gagliano because Gagliano was not a party to it.  
Id., ¶36.  
¶28 Quad/Graphics petitioned this court for review of the 
following issue:  "May a landlord recover from its tenant's 
subtenant (or more remote subtenants) all future rent that the 
immediate tenant had promised to pay, regardless of the terms of 
the transfer from tenant to subtenant or the amount of time that 
the subtenant occupies the premises?"   
¶29 Kraft opposed Quad/Graphic's petition, but in the 
event that review was granted, cross-petitioned this court to 
review the following issues:  (1) whether the court of appeals 
properly determined claims involving Kraft; (2) whether the 
court of appeals correctly reversed the circuit court's directed 
verdict; and (3) whether the court of appeals erred in regard to 
the fraud issue Kraft raised.  We granted both petitions.  
II.  DISCUSSION 
A.  Standard of Review 
¶30 This case requires us to review both a directed 
verdict and an order granting summary judgment.  When an 
appellate court reviews the evidentiary basis for a circuit 
court's decision to grant a directed verdict, the verdict must 
stand unless the record reveals that the circuit court was 
clearly wrong.  Weiss v. United Fire & Cas. Co., 197 Wis. 2d 
365, 389, 541 N.W.2d 753 (1995) (quoting Helmbrecht v. St. Paul 
Ins. Co., 122 Wis. 2d 94, 110, 362 N.W.2d 118 (1985)) ("An 
appellate court should not overturn a circuit court's decision 
to dismiss for insufficient evidence unless the record reveals 
No. 
2012AP122   
 
14 
 
that the circuit court was 'clearly wrong.'").  A circuit 
court's evidentiary determination is clearly wrong when there is 
any credible evidence to support the position of the non-moving 
party.  See Marquez v. Mercedes-Benz USA, LLC, 2012 WI 57, ¶49, 
341 Wis. 2d 119, 815 N.W.2d 314.   
¶31 Our review of the circuit court's directed verdict 
does not turn on the sufficiency of the evidence.  Rather, it 
involves the application of undisputed facts to principles of 
law.  Specifically, we focus on whether a landlord's contractual 
notice to a tenant is sufficient when an appropriate person 
receives that notice at the appropriate address, but the notice 
does not indicate in what capacity the recipient of the notice 
is being addressed.   
¶32 Although review of a directed verdict ordinarily 
focuses on the sufficiency of the evidence, we see no reason 
that a directed verdict based on a legal error, rather than an 
evidentiary problem, should escape review.  We base this 
conclusion on our previous observation that summary judgment, 
similar to our determination in the present case, "is a legal 
conclusion by the court," and can rest on the "same [legal] 
theory" as a directed verdict.  Steven V. v. Kelley H., 2004 WI 
47, ¶35, 271 Wis. 2d 1, 678 N.W.2d 856; Lambrecht v. Estate of 
Kaczmarczyk, 2001 WI 25, ¶40 n.23, 241 Wis. 2d 804, 623 N.W.2d 
751 (citing 10A Charles A. Wright et al., Federal Practice and 
Procedure:  Civil § 2713.1, at 242-43 (1998); Daniel P. Collins, 
Note, Summary Judgment and Circumstantial Evidence, 40 Stan. L. 
Rev. 491, 491 (1988)).  Both are appropriate when the moving 
No. 
2012AP122   
 
15 
 
party is entitled to judgment as a matter of law because there 
is no genuine issue, in the case of summary judgment, or 
credible evidence, in the case of a directed verdict, to support 
the position of the nonmoving party.  Wis. Stat. § 802.08(2) 
(2011-12);9 Wis. Stat. § 805.14(1).  Furthermore, we have 
previously construed decisions of a circuit court to conform 
with the analysis required to correct an error.  Bubb v. Brusky, 
2009 WI 91, ¶30, 321 Wis. 2d 1, 768 N.W.2d 903 (construing a 
circuit court's dismissal of a claim as if a motion for directed 
verdict had been made).  As such, we review the legal basis for 
the circuit court's directed verdict independently.  Tufail v. 
Midwest Hospitality, LLC, 2013 WI 62, ¶22, 348 Wis. 2d 631, 833 
N.W.2d 586 (the interpretation of a lease, a written contract, 
presents a question of law for our independent review).   
¶33 This case also requires us to review the circuit 
court's grant of summary judgment in favor of Quad/Graphics.  
"We review a grant of summary judgment independently, applying 
the same methodology as the circuit court" and the court of 
appeals, but benefitting from their prior discussions.  City of 
Janesville v. CC Midwest, Inc., 2007 WI 93, ¶13, 302 Wis. 2d 
599, 734 N.W.2d 428.  In order to determine whether summary 
judgment was appropriate in this case, we must review various 
leases among the parties, which again presents a question of law 
for our independent review.  Tufail, 348 Wis. 2d 631, ¶22.   
                                                 
9 All subsequent references to the Wisconsin Statutes are to 
the 2011-12 version unless otherwise indicated. 
No. 
2012AP122   
 
16 
 
B.  Directed Verdict  
¶34 We begin with Gagliano's notice of extension because 
if the notice was not valid, we need not reach the issue of 
whether Quad/Graphics was an assignee.    
¶35 The body of law concerning the notice required to 
extend a lease deals almost exclusively with a tenant's right to 
extend.  E.g., 2 Milton R. Friedman and Patrick A. Randolph, 
Jr., Friedman on Leases § 14:2, at 14-45 to -46 (5th ed. 2005) 
("A 
tenant's 
right 
of 
renewal 
is 
generally, 
though 
not 
necessarily, conditioned on giving the landlord prior notice of 
the election to renew."); Robert S. Schoshinski, American Law of 
Landlord and Tenant § 9:4, 604 (1980) ("The mode of exercise of 
an option to renew or extend" usually requires "that notice be 
served on the lessor a specified time before expiration of the 
original term.").   
¶36 In that circumstance, most states require a "tenant 
. . . [to] strictly comply with the notice provisions of an 
option contract."10  52 C.J.S. Landlord & Tenant § 94 (2014).  
This means that major departures from a prescribed method of 
notice can render a notice ineffective.  For example, a notice 
may be invalid if it is late.  Dyer v. Ryder Student Transp. 
Servs., Inc., 765 A.2d 858, 860 (R.I. 2001).  The same holds 
true when a tenant utilizes a method of delivery different than 
                                                 
10 See also 63 Am. Jur. Proof of Facts 3d 423 (2013) ("a 
provision in a lease requiring notice to a lessor of the 
lessee's election to exercise an option to renew or extend the 
lease must be strictly complied with").   
No. 
2012AP122   
 
17 
 
the lease specified and the notice does not reach the landlord.  
W. Tire, Inc. v. Skrede, 307 N.W.2d 558, 562 (N.D. 1981).  
Still, "[s]mall variances [from the prescribed method of giving 
notice] 
will 
not 
make 
notice 
of 
renewal 
ineffective."  
2 Friedman, supra § 14:2, at 14-47 (citing Beckenheimer's Inc. 
v. Alameda Assocs. Ltd. P'ship, 611 A.2d 105, 112-13 (Md. 1992) 
(failure to attach a notice of net worth that the lease required 
did not render notice invalid)).  
¶37 Although we are required to determine in this case 
whether the contractual notice provisions have been satisfied, 
we note that in Wisconsin, the legislature has set forth the 
methods by which a tenant may provide notice of extension.  Wis. 
Stat. § 704.21(2).  These include giving notice to the landlord 
personally, giving notice to a competent person in charge of a 
landlord's place of business, and mailing the landlord notice by 
registered or certified mail.  Id.  If the landlord is a 
corporation, a tenant may provide notice to a corporate officer 
by these methods.  § 704.21(3).  Even if a tenant does not use 
one of the enumerated methods to provide notice, the notice is 
valid if the landlord has actual notice.  § 704.21(5).11  
¶38 As previously mentioned, the present case does not 
involve a tenant's notice to extend a lease.  However, we 
consider that body of law relating to the sufficiency of a 
                                                 
11 Actual notice by a landlord to a tenant is likewise 
statutorily sufficient in some circumstances, including notice 
to terminate a tenancy, notice to inspect a tenant's premises, 
and notice of an automatic renewal clause in a residential 
lease.  Wis. Stat. § 704.21(5).  
No. 
2012AP122   
 
18 
 
tenant's notice to extend in order to avoid imposing disparate 
standards on landlord and tenant, particularly in a commercial 
context.    
¶39 Two possible documents potentially govern the issue of 
notice in the present case:  the original May 22, 2000 lease and 
the subsequent amendment commencing October 23, 2003.  The 
May 22, 2000 lease directed that Gagliano send notices to the 
tenant, Electronic Printing Systems, at the Jefferson Street 
address.  The October 23, 2003 amendment provided that notices 
be sent to: 
OpenFirst, Inc., successor in interest to Electronic 
Printing Systems, Inc.  
c/o Robert Kraft  
300 N. Jefferson St.  
Milwaukee, WI 53203 
While the parties dispute which contractual notice provision 
governs, we need not resolve that issue because we conclude the 
notice was valid under both.  
¶40 We begin with the May 22, 2000 lease, which Kraft 
claims controls.  According to Kraft, Gagliano's notice was 
invalid because that lease said that notices should go to the 
"tenant," which on December 29, 2005 was New Electronic Printing 
Systems.  Gagliano's notice did not name that entity, and 
instead went to Electronic Printing Systems, Robert Kraft, and 
others at the Jefferson Street address.  
¶41 Gagliano's notice was valid under the May 22, 2000 
lease for at least two reasons.  First, the parties never 
amended the lease to designate New Electronic Printing Systems 
No. 
2012AP122   
 
19 
 
as the tenant.  Removing the October 23, 2003 amendment from 
consideration, the lease required Gagliano to send notices to 
Electronic Printing Systems at the Jefferson Street address.  
Gagliano did exactly that.  Second, even if Kraft were correct 
that Gagliano was required to send the notice to New Electronic 
Printing Systems, Gagliano did that as well.  Gagliano sent the 
notice to Kraft, an officer of New Electronic Printing Systems, 
at New Electronic Printing Systems' address.  That Gagliano 
addressed the notice to an officer of New Electronic Printing 
Systems simply ensured that an appropriate individual within the 
entity received the notice.   
¶42 Next, 
we 
consider 
the 
notice 
provision 
in 
the 
October 23, 2003 amendment.  Gagliano claims that this document, 
not the May 22, 2000 lease, sets forth the controlling method of 
giving notice because the parties executed it after New 
Electronic Printing Systems acquired the leases.  Under the 
amendment, Gagliano was to send notices to "OpenFirst, Inc., 
successor in interest to Electronic Printing Systems."  Gagliano 
sent the notice to Openfirst, but did not designate that 
entity's status as "successor in interest to Electronic Printing 
Systems."  Because Gagliano sent the correct entity the notice 
at the correct address, we cannot conclude that such an omission 
renders the notice invalid.   
¶43 Finally, even if Gagliano's notice were defective 
under either document, undisputed evidence shows that New 
Electronic Printing Systems had actual notice that Gagliano was 
exercising a right of extension.  Kraft admitted that he could 
No. 
2012AP122   
 
20 
 
accept notices on behalf of New Electronic Printing Systems and 
that he did, in fact, receive Gagliano's notice.  Although Kraft 
vigorously 
disputes 
whether 
Gagliano 
lawfully 
inserted 
a 
landlord's right of extension in the lease, he cannot reasonably 
contend that New Electronic Printing Systems was unaware that 
Gagliano was exercising what Gagliano asserted was its right to 
extend.   
¶44 Having concluded the notice was valid, we affirm the 
portion of the decision of the court of appeals, albeit on 
different grounds.12  We remand to the circuit court for 
                                                 
12 The court of appeals concluded that the notice of 
extension was valid for the following two reasons:  
(1) service was made on the correct entity ('Open 
First, Inc.'), and we see no reason not to apply the 
general principle that we disregard errors that 'do 
not affect substantial rights,' see Wis. Stat. Rule 
805.18(1) (parenthetical text omitted); and (2) Open 
First, Inc., received the benefits of the May 18, 
2001, lease and under the law we have already 
recognized was therefore bound by the . . . extension 
clause adopted by the May 18 lease. 
Gagliano, 346 Wis. 2d 47, ¶31. 
We disagree that there is "no reason not to apply" Wis. 
Stat. § 805.18(1).  That statute applies to "any error or defect 
in the pleadings or proceedings," whereas the notice at issue in 
this case is purely contractual.  
No. 
2012AP122   
 
21 
 
determination of Kraft's remaining arguments, including whether 
Gagliano fraudulently inserted the extension provision into the 
May 22, 2000 lease and whether that provision materially altered 
his obligations under the guarantee.13  Because Quad/Graphics' 
liability can be determined independently of the notice issue, 
however, we turn to the issue of whether Quad/Graphics was an 
assignee of New Electronic Printing Systems.   
C.  Summary Judgment 
¶45 Quad/Graphics argues that the court of appeals erred 
in reversing the circuit court's grant of summary judgment 
because Quad/Graphics was a subtenant, not an assignee, of New 
Electronic Printing Systems and, therefore, was not liable to 
                                                                                                                                                             
As to the court of appeals' second rationale, we explain in 
the next section that we cannot allow the general principle that 
"[a] party that accepts a contract's benefits is bound to its 
burdens" to eviscerate the longstanding distinction between an 
assignment and a sublease.  Id., ¶28.  For the moment, however, 
we note that Gagliano concedes that it "did not appeal the trial 
court's ruling that Kraft did not guaranty the May 18, 2001 
Lease . . . but . . . appeal[s] [only] the trial court's ruling 
that Kraft was not liable under his guaranty for the May 22, 
2000 Lease, and its October 23, 2003 Amendment."  
13 Because Kraft prevailed on the notice issue at the 
circuit court level and did not receive a dispositive adverse 
determination from the circuit court on the fraud or guarantee 
issues, Kraft had no reason to cross appeal the circuit court's 
order directing a verdict in his favor.  As such, we cannot say 
that he has abandoned these claims on appeal.  Additionally, 
when Gagliano appealed the order of the circuit court, the court 
of appeals should not have decided the factual issue of fraud 
and the related factual issue of the guarantee.  Gottsacker v. 
Monnier, 2005 WI 69, ¶35, 281 Wis. 2d 361, 697 N.W.2d 436 (the 
court of appeals cannot make factual determinations where the 
evidence is in dispute). 
No. 
2012AP122   
 
22 
 
Gagliano for any unpaid rent.  According to Quad/Graphics, the 
court of appeals ignored long-standing precedent that recognizes 
that a landlord may "recover unpaid rent from both its tenant 
and that tenant's 'assignee,' [but] may not do so from its 
tenant's mere 'subtenant.'"  
¶46 Gagliano concedes that "a legitimate sublessee is 
[not] liable to the landlord for unpaid rent."  Its argument is 
that Quad/Graphics was not a "legitimate sublessee" because it 
was an assignee, rather than a subtenant, since the primary 
lease 
prohibited 
subleasing 
without 
Gagliano's 
consent.  
Gagliano also argues that Quad/Graphics was actually an assignee 
because the substance of the transaction between New Electronic 
Printing Systems and Quad/Graphics transferred the entire 
remainder of the former's leasehold estate.  We conclude that 
Quad/Graphics was not an assignee of New Electronic Printing 
Systems and, therefore, is not liable to Gagliano for any unpaid 
rent.  
1.  Assignment/Sublease general principles 
¶47 As early as 1864, we recognized a principle dating 
back to feudal law that a tenant who transfers the entire 
remainder of his estate, thereby retaining no reversionary 
interest, creates an assignment of the lease, while a tenant who 
transfers 
something 
less, 
creates 
a 
new 
contractual 
relationship.  Cross v. Upson, 17 Wis. 638 (*618), 643 (*623) 
(1864) (distinguishing between an assignment and "an under-
tenancy, which is the relation ordinarily established between 
the lessee and the party in possession by proof that there was 
No. 
2012AP122   
 
23 
 
no assignment"); 1 Milton R. Friedman and Patrick A. Randolph, 
Jr., Friedman on Leases § 7:4.3, at 7-85 (5th ed. Rel. #24, 
2014) ("[t]he ancient technical system of feudal law based the 
landlord-tenant relation on the existence of a reversion").  We 
affirmed this distinction more recently in Cranston v. Bluhm, 33 
Wis. 2d 192, 201, 147 N.W.2d 337 (1967), in which we explained: 
[T]he basic distinction between an assignment and a 
sublease is that by the former the lessee conveys his 
whole interest in the unexpired term leaving no 
reversion in himself, while the latter transfers a 
part only of the leased premises for a period less 
than the original term. 
(quoting 3A George W. Thompson, Commentaries on the Modern Law 
of Real Property, § 1210, at 48-49 (1981)).  Put another way, 
"an assignment is the transfer of the existing lease, whereas a 
sublease is the creation of a new tenancy between the original 
tenant and the subtenant."  5 Thompson on Real Property, Second 
Thomas Edition §42.04(d), at 324 (David A. Thomas & N. Gregory 
Smith eds., 2007).   
¶48 This distinction is grounded in principles of privity 
of estate and privity of contract, both of which can be conveyed 
by a lease.  Schoshinski, supra §§ 1:1, at 8:1.  Privity of 
estate means "[a] mutual or successive relationship to the same 
right in property."  Black's Law Dictionary 1320 (9th ed. 2009); 
see Schoshinski, supra § 8:1, at 532.  To say that transferring 
privity of estate transfers the same rights in property is 
another way of saying that the transferee stands in the shoes of 
the transferor.   
No. 
2012AP122   
 
24 
 
¶49 Privity of contract is a different creature.  It 
refers to the contractual relationship between parties, who are, 
of course, free to negotiate for any term within the confines of 
the law.  Schoshinski, supra § 8:1, at 532; see generally Queen 
Ins. Co. of Am. v. Kaiser, 27 Wis. 2d 571, 574, 135 N.W.2d 247 
(1965) (quoting Anno. 175 A.L.R. 8, 86) ("the landlord and 
tenant relationship is not a matter of public interest, but 
relates exclusively to the private affairs of the parties 
concerned and that the two parties stand upon equal terms"). 
¶50 The distinction between assignment and sublease, or 
privity of estate and privity of contract, is paramount in this 
case.  This is so because by accepting an "assignment——
regardless of landlord's consent thereto——[an] assignee acquires 
an interest in the premises that brings him into privity of 
estate with the owner and makes him liable to the owner for the 
payment of rent and on those tenant covenants that run with the 
land."  1 Friedman, supra § 7:5.1, at 7-105; 52 C.J.S. Landlord 
& Tenant § 52 (2014) (an assignee "assumes [some of] the 
burdens, as well as the benefits, flowing from the original 
contract" for the entire term of the assignor's lease with the 
original landlord); Thomas, supra § 42.04(d), at 324 ("An 
assignment will . . . bind the assignee to all covenants that 
No. 
2012AP122   
 
25 
 
run with the land . . ., including rent, . . . [while] a 
subtenant is bound only to the sublease itself.")14   
¶51 In contrast, when an occupant is a subtenant, the 
subtenant is liable only to the tenant for the rent agreed upon 
between those parties.  1 Friedman, supra § 7:7.1, at 7-123 to  
-24.  There is neither privity of estate nor privity of contract 
between landlord and subtenant.  Id.  
¶52 The decision of the court of appeals did not address 
this distinction.  Quoting language from the November 4, 2002 
Landlord's Consent Agreement in which Gagliano consented to the 
New Electronic Printing Systems' assignment of the leases as 
collateral to Associated Bank, the court of appeals concluded 
that Quad/Graphics was liable for rent owed under the extended 
leases 
because 
Gagliano 
conditioned 
its 
consent 
to 
the 
assignment upon any subsequent transferee assuming liability for 
the obligations under the leases.  We cannot accept this 
reasoning.   
¶53 Quad/Graphics was not party to the November 4, 2002 
Landlord's Consent Agreement wherein Gagliano consented to New 
                                                 
14 Gagliano claims that at least some of an assignee's 
obligations are now defined by statute.  In Lincoln Fireproof 
Warehouse Co. v. Greusel, 199 Wis. 428, 437-38, 227 N.W. 6 
(1929), we concluded that an assignee had no liability for the 
remaining term of a lease when the assignee abandoned the 
premises and the landlord accepted surrender and repossessed the 
property, thereby terminating privity of estate.  Gagliano 
argues that the adoption of Wis. Stat. § 704.29(1) abrogates the 
ability of an assignee to avoid liability in this manner by 
providing that a landlord's claim for unpaid rent applies to 
assignees.  Because we conclude that Quad/Graphics was a 
subtenant, not an assignee, we do not evaluate this argument. 
No. 
2012AP122   
 
26 
 
Electronic Printing Systems' assignment of the leases as 
collateral to Associated Bank.  Quad/Graphics also was not party 
to the November 6, 2002 Asset Purchase Agreement for which 
Gagliano consented to the principal tenants' assignment of the 
leases 
to 
New 
Electronic 
Printing 
Systems. 
 
Because 
Quad/Graphics was not a party to the Landlord's Consent 
Agreement on which the court of appeals relies, the obligations 
attendant to that contract do not apply to Quad/Graphics.   
¶54 The court of appeals also reasoned that "Quad/Graphics 
accepted the benefits conferred by the Gagliano leases and their 
amendments, which were . . . disclosed to it in the July 6, 
2006, Membership Interest Purchase Agreement.  Therefore, 
Quad/Graphics cannot disclaim or avoid its liabilities for the 
burdens imposed by those leases and amendments——including the 
lease-extension terms."  Gagliano, 346 Wis. 2d 47, ¶36.  The 
problem with this conclusion, as Quad/Graphics points out in its 
brief, is that every occupant can be said to have "accepted the 
benefits" of the underlying lease in the broad sense used by the 
court of appeals.  By this logic, all occupants would be 
No. 
2012AP122   
 
27 
 
assignees, and the distinction between assignment and sublease 
would be swallowed whole.15   
¶55 Having explained the distinctions between assignee and 
subtenant and relative obligations of each regarding payment of 
rent, we turn to the remaining issue in this review:  whether 
Quad/Graphics was an assignee of the Gagliano leases.  
2.  Quad/Graphics' Status  
¶56 In determining whether an occupant of a premises is an 
assignee or a subtenant of the original tenant, we begin with a 
presumption that an occupant, other than the original tenant who 
pays rent directly to the landlord, is an assignee of the 
original tenant, not a subtenant.  Cross, 17 Wis. at 643 (*623) 
("the law infers an assignment from the fact of entry and 
occupation[; a] like presumption arises from payment of rent"); 
Mariner v. Crocker, 18 Wis. 264 (*251), 267 (*254) (1864) 
(citing Cross for "the presumption that a party found in 
possession of demised premises was there as assignee of the 
lessee"); 1 Friedman, supra § 7:5.1, at 7-107 ("When a party 
                                                 
15 Additionally, we note that the cases the court of appeals 
cites for this proposition dealt with parties to an earlier 
contract.  Meyers v. Wells, 252 Wis. 352, 357, 31 N.W.2d 512 
(1948) (employing a presumption that an employee who worked for 
several years after his employment contract expired continued to 
work under the terms and conditions of the contract); S & O 
Liquidating P'ship v. Comm'r, 291 F.3d 454, 459 (7th Cir. 2002) 
(quoting Skelton v. GM Corp., 860 F.2d 250, 260 (7th Cir. 1988)) 
(former partners in an accounting firm who signed a closing 
agreement could not participate in a global settlement because 
"[a] party who has accepted the benefits of a contract cannot 
'have it both ways' by subsequently attempting to avoid its 
burdens"). 
No. 
2012AP122   
 
28 
 
other than the tenant is shown to be in possession of the 
premises, and paying rent therefor, there is a presumption that 
the lease has been assigned to him.").  What is required in 
order to rebut this presumption is less clear.    
¶57 The majority of cases "have treated a transfer of the 
entire term [of the lease]" as dispositive of an assignment.  
Thomas, supra § 42.04(d), at 326.  Our statement in Cross that a 
party can rebut a presumption of assignment by showing that an 
occupant "charged as assignee never in fact had an assignment of 
the lease" seems to state the majority rule.  Cross, 17 Wis. at 
643 (*623).   
¶58 In a later case citing Cross, however, we stated that 
"[a]ny language which shows the intention of the parties to 
transfer the property from one to the other is sufficient."  
Cranston, 33 Wis. 2d at 201 (quoting 3A Thompson, supra § 1210, 
at 51) (emphasis added).  This focus on intent, rather than 
transfer in fact, seems to fall in line with an alternative line 
of cases that ask "whether the parties intended to assign the 
primary lease to the transferee, or intended to create a 
separate tenancy."  Thomas, supra § 42.04(d), at 326 (collecting 
cases); see also Schoshinski, supra § 8:11, at 558 ("the most 
sensible way to distinguish between an assignment and a sublease 
is that adopted by the Arkansas court in Jaber v. Miller16 'that 
the intention of the parties is to govern.'")   
                                                 
16 Jaber v. Miller, 239 S.W.2d 760, 764 (Ark. 1951). 
No. 
2012AP122   
 
29 
 
¶59 It 
is 
unnecessary 
to 
delve 
further 
into 
this 
distinction at this time for two reasons.  First, it may well be 
that "the intent approach adds little to the traditional 
analysis[] since courts will typically discern intent by looking 
to see whether a reversion or right of entry has been retained."  
Thomas, supra § 42.04(d), at 327.  More importantly, the present 
case does not require us to decide between the approaches, even 
if they are distinct, because we conclude that Quad/Graphics and 
New Electronic Printing Systems intended to enter into a 
sublease and New Electronic Printing Systems did transfer less 
than its entire remaining leasehold estate. 
¶60 Both approaches to the assignment/sublease distinction 
focus on the transaction between tenant and the subsequent 
occupant.  As such, we begin with the two agreements those 
parties, New Electronic Printing Systems, who was the tenant at 
the relevant time, and Quad/Graphics, created on June 23, 2008:  
the Voluntary Surrender Agreement and the Sublease.   
¶61 Quad/Graphics argues that the Sublease is the proper 
focus of our analysis.  Quad/Graphics explains that the 
Voluntary Surrender Agreement expressly excludes the leases from 
surrender and that the parties entered into the Sublease in 
order to convey the portion of the leasehold estate necessary to 
affect the surrender of other collateral.  The term of the 
Sublease was four months, ending October 31, 2008 or sooner upon 
20 days notice by New Electronic Printing Systems.  It did not 
No. 
2012AP122   
 
30 
 
include the remainder of the extended leases, which continued to 
June 23, 2010 and January 23, 2012, respectively.17  
¶62 We agree with Quad/Graphics that the Sublease is 
sufficient to show that New Electronic Printing Systems did not 
intend to and did not convey its entire leasehold estate because 
only four months of the remaining lease term were conveyed.  
Also, the lease unequivocally shows that the parties intended to 
enter into a sublease.  The parties labeled the document a 
sublease, provided that Quad/Graphics would have "no liability 
under any lease of the Premises from the fee owner thereof" and 
"no obligations to [Gagliano] arising out of or relat[ing] to 
this Sublease," and that Quad/Graphics was "not assuming the 
Primary Lease."  See Tufail, 348 Wis. 2d 631, ¶25 (quoting Kernz 
v. J.L. French Corp., 2003 WI App 140, ¶9, 266 Wis. 2d 124, 667 
N.W.2d 751 (in attempting to give effect to contracting parties' 
intentions, "unambiguous contract language controls").   
¶63 Gagliano argues that the Sublease was invalid because 
the primary lease prohibited subleasing without Gagliano's 
consent, which New Electronic Printing Systems never obtained.  
Gagliano asks us to classify the document as an assignment; 
however, the primary lease likewise prohibited assignments 
without Gagliano's consent.  Perhaps in anticipation of the 
logical problem this argument presents, Gagliano casts his 
                                                 
17 This statement should not be interpreted as our view that 
Kraft's allegation that Gagliano improperly inserted a right to 
extend into the leases has no merit.  As explained previously, 
we take no position on this issue, and remand it to the circuit 
court.   
No. 
2012AP122   
 
31 
 
argument in terms of fairness to the landlord.  Specifically, he 
contends that the invalid Sublease may not be used "for any 
purpose" and may not "limit the landlord's rights."  We find no 
support in the law for adding a consideration of fairness to the 
landlord to the test for determining whether a subsequent 
occupant becomes a sublessee or an assignee.  
¶64 As with the leases in the present case, the lease in 
Cross required the landlord's consent to sublet or assign, which 
the tenant did not obtain, yet we concluded that the tenant 
could rebut the presumption of assignment by the actions of the 
parties.  Cross, 17 Wis. at 640, 643 (*620-21, 623).  This is so 
because an occupant charged with an assignment need not prove 
the validity of a sublease, but rather must rebut the 
presumption of an assignment.  See id. at 643 (*623) (an 
occupant that enters with the lessee's consent, but without 
assignment, "must be an under-tenancy of some kind, for years, 
from year to year, at will or by sufferance"); see generally 
Lamonts Apparel, Inc. v. SI–Lloyd Assocs., 967 P.2d 905, 908 
(Or. Ct. App. 1998) (concluding that a contract that did not 
meet the requirements for a valid assignment or sublease did not 
trigger the obligations of either, thus illustrating the basic 
principle that assignment and sublease are not the only two 
types of leasehold estates).  As such, we conclude that although 
a sublease entered into without the landlord's consent may be 
voidable at the election of the landlord and give rise to a 
breach of contract claim, it can be used for the purpose of 
rebutting a presumption of assignment.   
No. 
2012AP122   
 
32 
 
¶65 Although fairness to the landlord does not appear to 
be a proper consideration when determining whether a transfer is 
a 
sublease 
or 
assignment, 
we 
nonetheless 
note 
that 
our 
conclusion does not "limit the landlord's rights," as Gagliano 
contends, because the landlord does not have the right to treat 
any sublease in violation of the primary lease as an assignment.  
The landlord's rights in such a situation are limited to 
eviction of the subtenant and breach of contract action against 
the primary tenant.  John F. Thompson, 2 Wisconsin Property Law 
Series:  Drafting Commercial Leases 21 (1968) ("If [a] lease 
contains a provision prohibiting the assignment or subletting 
without the consent of the landlord, and a tenant does in 
violation of this provision sublet or assign without the consent 
of the landlord, such action on the part of the tenant 
constitutes a breach of the lease, justifying termination of the 
lease or any other remedy available to the landlord.").  To 
conclude otherwise would be to hold a nonparty to the primary 
lease liable for the primary tenant's breach.  
¶66 Gagliano's second argument is that although the 
Sublease may have purported to transfer only a portion of the 
remaining leasehold estate, the substance of the transaction as 
a whole transferred the entire remainder.  Specifically, 
Gagliano contends that because the Voluntary Surrender Agreement 
"gave Quad/Graphics the exclusive right to occupy the leased 
premises for the remaining lease term" and "did not provide New 
[Electronic Printing Systems] with any reversionary interest in 
the premises" the transaction constituted an assignment of the 
No. 
2012AP122   
 
33 
 
leases.  Quad/Graphics' right to occupy was exclusive, according 
to Gagliano, because Quad/Graphics had complete control over the 
conditions by which New Electronic Printing Systems could end 
Quad/Graphic's right to store its collateral:  satisfaction of 
New Electronic Printing Systems obligations to Quad/Graphics in 
full or disposition of the collateral.  In sum, Gagliano argues 
that the "character of the agreement" was an assignment, not a 
sublease.  Again, we disagree.  
¶67 The Voluntary Surrender Agreement did not transfer the 
May 22, 2000 lease from New Electronic Printing Systems to 
Quad/Graphics because the tenant under the lease and the 
subsequent occupant had different rights.  For example, under 
the Voluntary Surrender Agreement, Quad/Graphics could end its 
obligation to pay rent by disposing of the collateral.  New 
Electronic Printing Systems had no such ability under the leases 
with Gagliano.  The Voluntary Surrender Agreement also provided 
that 
New 
Electronic 
Printing 
Systems 
could 
terminate 
Quad/Graphics' right to store collateral by satisfying its 
obligations in full to Quad/Graphics.  Again, New Electronic 
Printing Systems had no such right under the leases with 
Gagliano.  Because the terms of the May 22, 2000 lease and 
Voluntary Surrender Agreement so differ, we cannot say that New 
Electronic Printing Systems assigned the lease to Quad/Graphics.  
See Lamonts Apparel, 967 P.2d at 908 (concluding that there is 
no assignment when a purported sublease differs from the primary 
lease in significant respects).  That Quad/Graphics, not New 
Electronic Printing Systems, was the party who could satisfy the 
No. 
2012AP122   
 
34 
 
conditions necessary to end Quad/Graphics' obligations to New 
Electronic Printing Systems under the Sublease is not germane.  
The 
question 
is 
whether 
New 
Electronic 
Printing 
Systems 
transferred or intended to assign the Gagliano leases to 
Quad/Graphics.  That Quad/Graphics could end its obligation to 
pay rent before the May 22, 2000 lease expired on June 23, 2010 
is support for our conclusion that New Electronic Printing 
Systems did not make an assignment.   
¶68 Furthermore, 
Gagliano's 
focus 
on 
the 
Voluntary 
Surrender 
Agreement 
is 
misplaced 
because 
that 
agreement 
specifically excluded the leases that underlie this action from 
what was being surrendered when it stated, "[f]or the avoidance 
of doubt, the Collateral shall not include any lease for real 
property of which any Debtor is a party."  We conclude that the 
Sublease and Voluntary Surrender Agreement, when taken together, 
show that New Electronic Printing Systems and Quad/Graphics 
intended a sublease.  Whether the Sublease was not "legitimate," 
i.e., entered into without Gagliano's consent, is of little 
concern because it did not transfer the entire remainder of New 
Electronic Printing Systems' leasehold estate to Quad/Graphics.    
¶69 Having 
concluded 
that 
Quad/Graphics 
was 
not 
an 
assignee of New Electronic Printing Systems' lease, we also 
conclude that Gagliano cannot recover rent allegedly owed under 
the extended leases based on privity of estate.  Accordingly, we 
reverse the portion of the decision of the court of appeals that 
reversed an order of the circuit court granting Quad/Graphics' 
motion for summary judgment.  
No. 
2012AP122   
 
35 
 
III.  CONCLUSION 
¶70 This case presents two issues for our review:  (1) 
whether Gagliano gave sufficient notice to extend the leases to 
the time when the alleged breach occurred; and (2) whether 
Quad/Graphics was a subtenant of the lessee or an assignee of 
the leases.  As to the first issue, we conclude that Gagliano's 
notice was valid.  Gagliano provided notice:  (1) to the entity 
designated as the tenant on the original lease; (2) to the 
entity who was the current tenant at the time of the notice; and 
(3) to the entity a subsequent amendment of the lease designated 
as the tenant.  The notice is also valid because the current 
tenant at the time Gagliano sent the notice had actual notice 
that Gagliano was exercising its alleged right to extend the 
leases.  Accordingly, we affirm the portion of the decision of 
the court of appeals that reversed the circuit court's directed 
verdict, which had concluded that Gagliano's notice was not 
valid.  We remand to the circuit court for fact-finding 
necessary to decide the merits of Kraft's remaining arguments 
relating to the lawfulness of the extension provision in the 
leases.   
¶71 In regard to the second issue, we conclude that 
Quad/Graphics is not liable to Gagliano because Quad/Graphics 
was a subtenant of the lessee, not an assignee of the leases.  
Undisputed evidence shows that New Electronic Printing Systems, 
the assignee of the original tenants, did not transfer its 
entire remaining leasehold estate to Quad/Graphics.  Because 
Gagliano and Quad/Graphics did not share privity of estate, it 
No. 
2012AP122   
 
36 
 
is not an assignee.  Therefore, we do not hold Quad/Graphics 
liable for New Electronic Printing Systems' alleged breach of 
contract to which Quad/Graphics was not a party.  Accordingly, 
we reverse the portion of the decision of the court of appeals 
that reversed the order of the circuit court granting summary 
judgment in favor of Quad/Graphics and remand to the circuit 
court for dismissal of all claims against Quad/Graphics. 
By the Court.—The decision of the court of appeals is 
affirmed in part, reversed in part and the cause remanded to the 
circuit court. 
 
 
 
 
No.  2012AP122.awb 
 
1 
 
¶72 ANN 
WALSH 
BRADLEY, 
J.   (concurring 
in 
part,  
dissenting in part).  This case addresses two issues: (1) 
whether Quad/Graphics was a subtenant or assignee and (2) 
whether the notice of lease extension that Gagliano provided was 
legally sufficient. 
¶73 I agree with the majority when it concludes that Quad 
Graphics is a subtenant.  Because the tenant did not transfer 
all rights in the lease to Quad Graphics and it was not in 
privity of estate with the landlord, Quad Graphics was not an 
assignee.  Therefore, I join Part C of the majority opinion. 
¶74 However, I part ways with the majority on the issue of 
the sufficiency of the notice.  For the reasons set forth in the 
dissent, I agree that the majority opinion is not convincing as 
a matter of statutory interpretation or corporate and agency 
law.  Therefore, I join Part I of the dissent. 
¶75 Accordingly, I respectfully concur in part and dissent 
in part. 
 
 
 
No.  2012AP122.ssa 
 
1 
 
¶76 SHIRLEY 
S. 
ABRAHAMSON, 
C.J.   (dissenting). 
 
The 
instant case seems to present a complex fact and legal 
situation, 
although 
the 
court 
of 
appeals 
discounted 
the 
complexity, 
writing 
that 
"this 
appeal 
has 
a 
veneer 
of 
complexity."1    
¶77 I write only on the issue of the sufficiency of the 
landlord's notice to the tenant of the extension of the lease. 
This case presents a narrow issue:  What does a landlord have to 
do to give notice to a tenant corporation of an extension of the 
commercial lease, when the lease and the statutes are silent on 
the issue of notice?  Notice is a dispositive issue in the 
instant case, majority op., ¶34, and I need not address other 
issues addressed by the majority opinion. 
¶78 The majority opinion phrases the question to be 
answered as "whether a landlord's contractual notice to a tenant 
is sufficient when an appropriate person receives that notice at 
the appropriate address, but the notice does not indicate in 
what capacity the recipient of the notice is being addressed."  
Majority op., ¶31.     
¶79 The majority opinion loses sight of the fact that an 
individual in his or her personal capacity, an individual in his 
or her representative capacity, and a corporation are separate 
and apart under the law.  Robert Kraft individually; Robert 
Kraft as president of the corporation, New Electronic Printing 
Systems; and the current corporate tenant itself, New Electronic 
                                                 
1 Anthony Gagliano & Co., Inc. v. Openfirst, LLC, 2013 WI 
App 19, ¶26, 346 Wis. 2d 47, 828 N.W.2d 268. 
No.  2012AP122.ssa 
 
2 
 
Printing Systems are, under the law, three different, separate 
persons.   
¶80 These 
distinct 
persons 
complicate 
the 
issue 
of 
sufficiency of notice, which arises in numerous situations——some 
regulated by statute, others by contract or the like.  When the 
person to be notified is a corporation, the identity of the 
appropriate individual to receive notice depends on the facts 
and circumstances of each situation.  Notice to a corporation is 
governed by the general principle that a "corporation enjoys a 
legal identity separate and apart from its shareholders, 
directors, and officers."2   
¶81 Deciding whether the notice given is sufficient to be 
notice to the corporation includes such issues as: to what 
individual notice must be given to give notice to the 
corporation; when, how, and where notice must be given; whether 
notice 
was 
in 
strict 
compliance 
with 
the 
applicable 
requirements; whether notice was in substantial compliance with 
the applicable requirements;3 and whether actual notice (that is, 
                                                 
2 1 William Meade Fletcher et al., Cyclopedia of the Law of 
Corporations § 25 (perm. ed., rev. vol. 2006) (citing, inter 
alia, Security Bank v. Klicker, 142 Wis. 2d 289, 418 N.W.2d 27 
(1987)). 
3 The majority opinion is correct in stating that small 
variances generally will not make notice ineffective.  Majority 
op., ¶36 (citing Beckenheimer's Inc. v. Alameda Assocs. Ltd. 
P'ship, 611 A.2d 105, 112-13 (Md. 1992)). However, the case 
cited by the majority opinion does not necessarily illustrate 
the minuteness of variances allowed because the case also 
involves ambiguous terms being construed against the plaintiff.  
Beckenheimer's Inc., 611 A.2d at 111. 
No.  2012AP122.ssa 
 
3 
 
knowledge) can overcome notice that does not comply with the 
applicable requirements.  
¶82 Numerous leases and amendments were negotiated in the 
instant case.  The tenant corporation kept changing, at least in 
name.  The leases and amendments do not always state the name of 
the corporation that is the tenant; some merely state notice is 
to be given to "the tenant."  The leases and amendments in the 
instant case do not always reveal the individual to whom notice 
is to be given to constitute notice to a corporation tenant. 
¶83 The majority opinion concludes that the landlord's 
addressing 
the 
notice 
to 
Robert 
Kraft 
"ensured 
that 
an 
appropriate individual within the [corporate] entity received 
the notice."  Majority op., ¶41. 
¶84 The majority opinion's conclusion is based on two 
faulty reasons:  
(1) 
The majority opinion applies Wis. Stat. § 704.21(3) to 
the instant case.  This statute provides that notice 
by a tenant to a corporation landlord may be conveyed 
by notice to an officer of the corporation.  The 
statute, however, explicitly governs only a tenant's 
                                                                                                                                                             
More analogous examples include American Oil Co. v. Rasar, 
308 S.W.2d 486, 491 (Tenn. 1957) (reasoning that notice was 
invalid because it was sent to the original lessors when the 
lease required notice to be sent to assignees of lessors); 
Western Tire, Inc. v. Skrede, 307 N.W.2d 558, 562 (N.D. 1981) 
(reasoning that notice was invalid because the notice was sent 
by ordinary mail instead of certified or registered mail); and 
Bernier v. Benson, 159 N.E.2d 39, 41 (Ill. Ct. App. 1959) 
(reasoning that notice was invalid when notice was provided by a 
partnership, but the lessees actually were the individuals that 
made up the partnership).  
No.  2012AP122.ssa 
 
4 
 
notice to a landlord of extension of a lease, and the 
present case involves a landlord's notice to a tenant.  
Majority op., ¶37-38.   
(2) 
Without 
analysis 
of 
corporation 
and 
agency 
law 
recognizing the separateness of a corporation and 
individuals 
associated 
with 
the 
corporation, 
the 
majority 
opinion 
treats 
an 
individual 
who 
is 
guarantor, an individual who is an officer of the 
corporation, and the corporation as if they are one 
and the same. 
¶85 Robert Kraft is an officer of New Electronic Printing 
Systems.  Robert Kraft was not the "tenant."  New Electronic 
Printing Systems was the tenant.  The landlord knew that New 
Electronic Printing Systems was the tenant. Robert Kraft, 
individually, was a guarantor under the lease.  A careful 
landlord would have given Robert Kraft notice in his individual 
capacity as a guarantor to protect the landlord's rights against 
the guarantor.   
¶86 I dissent because I am not persuaded by the majority 
opinion's reasoning and believe that it may have troublesome, 
unforeseen consequences. 
I 
¶87 To reach its result, the majority opinion misapplies 
Wis. Stat. § 704.21 to the notice at issue in the present case——
a landlord's notice to the tenant of extension of the lease.  
This statute explicitly regulates only a tenant's notice to a 
landlord to extend a lease.  See majority op., ¶37.  The 
No.  2012AP122.ssa 
 
5 
 
legislature singled out a tenant's extensions of leases and 
enacted a statute to govern tenants, not landlords.  
¶88 Contrary to the plain text of the statute, the 
majority opinion expands the statute to govern the landlord's 
notice to a tenant in the present case.   
¶89 The majority opinion does not use the usual tools of 
statutory interpretation to extend the statute beyond its text 
in the present case; the majority opinion does not analyze the 
text, context, purpose, or statutory or legislative history.4   
¶90 Rather, the majority opinion reasons that the court 
does not want to create "disparate standards" on landlord and 
tenant, particularly for commercial tenants and commercial 
landlords.  Majority op., ¶38.  "Why not?" I ask.  No answer is 
given in the majority opinion.   
¶91 Thus, the majority opinion is not convincing as a 
matter of statutory interpretation.  The majority opinion relies 
on a statute that by its very words does not apply to the 
instant case and now leaves many questions unanswered regarding 
the statute's applicability to other landlord-tenant agreements 
and disputes. 
¶92 The majority opinion is not convincing as a matter of 
corporate law and agency law.  The majority opinion conflates 
the individual, Kraft, and the corporate entity, New Electronic 
Printing Systems.  The circumstances of the instant case do not 
bear out this conflation of the person and the corporation.   
                                                 
4 See majority op., ¶37-38. 
No.  2012AP122.ssa 
 
6 
 
¶93 Robert Kraft's admission that he could accept notice 
on behalf of the corporation does not mean that, in the instant 
case, notice to Kraft in his personal capacity constituted 
notice to the corporation.  Rather, the general rule is that 
notice to an officer of a corporation is notice to a corporation 
only when, amongst other requirements, the "notice . . . comes 
to . . . the agent in his or her official or representative 
capacity."5  Put differently, "[s]uch notice, to be binding upon 
the principal, must be notice to the agent when acting within 
the scope of his agency, and must relate to the business, or, as 
most of the authorities have it, the very business, in which he 
is engaged, or is represented as being engaged, by authority of 
his principal."  Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157, 
160 (1869).6 
¶94 In the instant case, Robert Kraft was not named in the 
notice in his representative capacity and nothing in the record 
demonstrates that Kraft accepted service of notice in his 
representative capacity on behalf of New Electronic Printing 
                                                 
5 3 William Meade Fletcher et al,, Cyclopedia of the Law of 
Corporations § 793, at 34-35 (perm. ed., rev. vol. 2010).  See 
also Tele-Port, Inc. v. Ameritech Mobile Communic'ns, 2001 WI 
App 261, ¶7, 248 Wis. 2d 846, 637 N.W.2d 782 ("[C]orporation is 
charged with constructive knowledge, regardless of its actual 
knowledge, of all material facts of which its officer or agent 
receives notice or acquires knowledge while acting in the course 
of his employment within the scope of his authority . . . .") 
(emphasis added, internal quotation marks omitted).  
6 See also 1 Restatement (Third) of Agency § 5.02(1) (2006) 
("A notification given to an agent is effective as notice to the 
principal if the agent has actual or apparent authority to 
receive the notification . . . .") (emphasis added). 
No.  2012AP122.ssa 
 
7 
 
Systems.7  The notice of lease extension document did not state 
that notice was given to Robert Kraft in his representative 
capacity on behalf of New Electronic Printing Systems.  Indeed, 
no reference was made to New Electronic Printing Systems 
anywhere in the notice.  Simply because Kraft was an officer of 
New Electronic Printing Systems does not mean he was provided 
notice in a representative capacity.   
¶95 In the instant case, Robert Kraft, as an individual, 
was a guarantor under the lease and would have received notice 
in his individual capacity. 
¶96 Notice 
came 
to 
Robert 
Kraft 
in 
his 
individual 
capacity; he had an individual interest in the matter.  Notice 
did not come to Robert Kraft in his representative capacity or 
regarding his actual or apparent authority to act as agent of 
New Electronic Printing Systems.8  Whether notice to Robert Kraft 
individually was notice to the corporation might well be a 
question of fact requiring resolution at trial.9    
II 
¶97 If the reader is not persuaded that notice to Robert 
Kraft in his individual capacity was notice to the corporation, 
the majority opinion provides a fail-safe reason justifying the 
sufficiency of the notice, assuring us that the corporation had 
                                                 
7 Kraft was identified in the landlord's notice of extension 
as "Robert Kraft," rather than "New Electronic Printing Systems 
c/o Robert Kraft" or similar language.  
8 See 3 Fletcher, supra note 5, § 793, at 35. 
9 See id. 
No.  2012AP122.ssa 
 
8 
 
"actual notice" that the landlord was extending the lease.10  In 
a single conclusory sentence, the majority opinion declares that 
Robert Kraft "cannot reasonably contend that New Electronic 
Printing Systems was unaware that [the landlord] was exercising 
what [the landlord] asserted was its right to extend."  Majority 
op., ¶43.  "Why not?" I ask.   
¶98 The majority opinion speaks of "actual notice" and 
"awareness," 
but 
the 
majority 
opinion 
obviously 
means 
"knowledge."  The majority opinion imputes Robert Kraft's 
knowledge of the landlord's extension of the lease to the 
corporation, 
without 
considering 
that 
"[t]here 
may 
be 
a 
difference between the effect of notice expressly given an 
officer or agent of a corporation, as binding the corporation, 
and knowledge acquired by such an officer or agent."11  Again, 
the majority opinion conflates the individual and the corporate 
entity.  
¶99 In any event, the general rule is that a corporation 
is charged with constructive knowledge, regardless of its actual 
knowledge, of all material facts of which its officer or agent 
receives notice or acquires knowledge while acting within the 
scope of his or her authority, but does not have constructive 
knowledge of facts learned by its officer or agent outside the 
scope of his or her agency:12   
                                                 
10 Majority op., ¶2. 
11 Notice and knowledge need not have the same effect.  3 
Fletcher, supra note 5, § 791. 
12 See Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157, 160 
(1869); 3 Fletcher, supra note 5, § 790, at 16-17, 26. 
No.  2012AP122.ssa 
 
9 
 
Knowledge acquired or notice received by an agent 
which does not pertain to the duties of the agent, 
which does not relate to the subject matter of the 
employment, or which affects matters outside the scope 
of his [or her] agency is not chargeable to the 
principal 
unless 
actually 
communicated 
to 
[the 
principal].13   
¶100 The majority opinion does not tackle this question of 
imputing Robert Kraft's knowledge to the corporation in a 
satisfactory manner.   
¶101 Because the majority opinion fails to explain or 
employ the applicable rules of landlord-tenant law, corporate 
law, and agency law to the instant case, and fails to furnish a 
persuasive rationale that governs the present case or will 
govern other cases involving notice to a corporation and 
knowledge of a corporation, I do not join this part of the 
majority opinion. 
                                                 
13 Philipp Lithographing Co. v. Babich, 27 Wis. 2d 645, 650 
n.4, 135 N.W.2d 343 (1965) (quoting 3 Am. Jur. 2d Agency § 276, 
at 639). 
No.  2012AP122.ssa 
 
1