Case Name: Lawrence Investment Company, Appellant, vs. Wenzel & Henoch Company, Respondent
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1953-01-06
Citations: 263 Wis. 13
Docket Number: 
Parties: Lawrence Investment Company, Appellant, vs. Wenzel & Henoch Company, Respondent.
Judges: I am authorized to state that Mr. Justice Fairchild and Mr. Justice Brown join in this concurring opinion.
Reporter: Wisconsin Reports
Volume: 263
Pages: 13–23

Head Matter:
Lawrence Investment Company, Appellant, vs. Wenzel & Henoch Company, Respondent.
December 3, 1952
January 6, 1953.
For the appellant there was a brief by Orth, Riedl & Orth of Milwaukee, and oral argument by Charles A. Riedl.
For the respondent there was a brief by Harvey C. Hart-wig, attorney, and Bernard C. Westfahl of counsel, both of Milwaukee, and oral argument by Mr. Hartwig.

Opinion:
Fritz, C. J.
Plaintiff's complaint alleged that its articles of incorporation were amended by resolution adopted February 8, 1929, which provided for an authorized capital stock of-$85,000, consisting of 500 shares of common stock of the par or face value of $100 each, and 350 shares of preferred stock also of the par value of $100 each; and that said resolution provided:
"Out of the profits of the corporation dividends shall be paid upon issued and. outstanding preferred stock at the rate of seven per cent (7% ) per annum, payable semiannually, on the first days of July and January in each year before any dividends are paid on the common stock; and if for any reason, there is a nonpayment of dividends on such preferred stock, there shall be an accumulation of such dividends and payment thereof in full before any dividends are paid on the common stock; . . . Subject to the interest of the general creditors of the corporation, the preferred stock shall be a prior lien on all of the assets of the corporation, and shall have a preference, not however, exceeding the par valine thereof, over the common stock in the distribution of the assets of the corporation, other than profits. On and after the 8th day of February, 1934, the corporation may redeem any or all of its issued or outstanding preferred stock by payment of its face or par value, together with a premium of two per cent (2%) of its par value, and the payment of all dividends due to the date of such redemption. The amount of, and the manner, time, and method of the redemption of such preferred stock shall be determined by the board of directors of the corporation. ."
Plaintiff's complaint further alleged that of said preferred stock, certificate No. 4 for 25 shares was issued to the defendant Wenzel & Henoch Company on or about the 25th day of June, 1929; that the plaintiff corporation at no time since the issuance of its preferred stock by its board of directors or otherwise declared or paid a dividend upon any of such stock; that of said preferred stock there was outstanding on September 20, 1950, some $5,200 and on that day in order to enable plaintiff to retire said preferred stock, it at a meeting of its board of directors passed a resolution to redeem the same at par, together with a premium of two per cent as provided for in the amendment to its articles of incorporation; and that it thereafter notified the preferred stockholders, including the above-named Wenzel & Henoch Company, defendant, of its intent to redeem such stock, and offered to pay par plus two per cent premium for it, but that defendant refused such offer.
Defendant's answer admits that said .certificate No. 4 for 25 shares of the preferred stock was issued to the defendant, and that defendant is the owner and holder thereof; and admits that defendant has refused to surrender said certificate of stock to the plaintiff upon payment of the par value plus two per cent premium. Defendant denies having knowledge or information sufficient to form a belief as to whether or not the plaintiff has at any time taken any action with reference to dividends on the preferred stock, or taken any action to redeem it; and as to whether or not any dividend has ever been paid on the common, stock of'plaintiff corporation.
Defendant's answer and affidavits set forth the equitable defense that the controlling-stockholder of plaintiff, for his own advantage only, and not for, the interests of the corporation, wrongfully and in fraud of the rights of the defendant preferred stockholder, so manipulated the affairs of plaintiff corporation as to avoid the payment of preferred stock dividends, and when plaintiff's financial condition became such that payment of such dividends could no longer be escaped, then sought to exercise the redemption privilege. Such conduct would be inequitable, and plaintiff cannot come into a court of equity with clean hands, in seeking to force the defendant to surrender its stock. Inasmuch as the facts are in dispute in the instant case as to whether or not the corporation did have a surplus sufficient to permit the payment of cumulative dividends of the preferred stock at the time of redemption, the case cannot be disposed of by summary judgment, as such issue of fact must be determined by trial.
As stated in Batson v. Nichols, 258 Wis. 356, 358, 46 N. W. (2d) 192:
"Summary judgment should be granted only when it is perfectly plain that there is no substantial issue to be tried. Prime Mfg. Co. v. A. F. Gallun & Sons Corp. (1938), 229 Wis. 348, 281 N. W. 697; Atlas Investment Co. v. Christ (1942), 240 Wis. 114, 2 N. W. (2d) 714. The summary-judgment statute (sec. 270.635, Stats.) is not a substitute for a regular trial nor does it authorize the trial of controlling issues on affidavits. If there is any substantial issue of fact which entitles the plaintiff to a determination thereof by a jury or the court, the defendant's motion for summary judgment must be denied. Parish v. Awschu Properties, Inc. (1945), 247 Wis. 166, 19 N. W. (2d) 276."
By the Court. — Order affirmed.