Title: William N. Ehlinger v. Jon A. Hauser
Citation: 2010 WI 54
Docket Number: 2007AP000477
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 25, 2010

2010 WI 54 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2007AP477 
COMPLETE TITLE: 
 
 
William N. Ehlinger, 
          Plaintiff-Respondent-Cross-Appellant-
Cross-Petitioner, 
     v. 
Jon A. Hauser and Evald Moulding, Inc., 
          Defendants-Appellants-Cross-
Respondents-Petitioners. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2008 WI App 123 
Reported at: 313 Wis. 2d 718, 758 N.W.2d 476 
(Ct. App. 2008-Published) 
 
 
OPINION FILED: 
June 25, 2010   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
September 15, 2009   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Jefferson   
 
JUDGE: 
Jacqueline R. Erwin   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
ROGGENSACK, J., concurs (opinion filed).   
 
CONCUR & DISSENT: 
PROSSER, J., concurs in part/dissents in part 
(opinion filed). 
GABLEMAN, J., joins concurrence/dissent (in 
part). 
 
ZIEGLER, J., concurs in part/dissents in part 
(opinion filed). 
GABLEMAN, J., joins concurrence/dissent (in 
part). 
 
DISSENTED: 
        
 
NOT PARTICIPATING: CROOKS, J., did not participate.   
 
 
 
ATTORNEYS: 
 
For the defendants-appellants-cross-respondents-petitioners 
there were briefs by Gary A. Ahrens, Daniel J. Vaccaro, Monica 
M. Riederer, and Michael Best & Friedrich LLP, Milwaukee, and 
Kristen L. Hauser, Watertown, and oral argument by Gary A. 
Ahrens. 
 
 
 
 
2 
For 
the 
plaintiff-respondent-cross-appellant-cross 
petitioner there were briefs by Timothy W. Feeley, Sara J. 
MacCarthy, and Hall, Render, Killian, Heath & Lyman, P.C., 
Milwaukee, and oral argument by Timothy W. Feeley. 
 
 
 
2010 WI 54
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No. 2007AP477  
(L.C. No. 
2002CV217) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
William N. Ehlinger,   
 
 
Plaintiff-Respondent-Cross-Appellant- 
 
Cross-Petitioner,   
 
 
v. 
 
Jon A. Hauser and 
Evald Moulding, Inc.,   
 
 
Defendants-Appellants-Cross-
 
Respondents-Petitioners   
FILED 
 
JUN 25, 2010 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Modified and 
affirmed, and as modified, cause remanded.   
 
¶1 
ANN WALSH BRADLEY, J.   This case is before the court 
on a petition and a cross-petition for review of a decision of 
the court of appeals.1  It involves a contractual dispute between 
Jon Hauser ("Hauser") and Robert Ehlinger ("Ehlinger"), who are 
the joint and equal shareholders of Evald Moulding, Inc. 
("Evald"), a Wisconsin corporation located in Watertown.  The 
                                                 
1 See Ehlinger v. Hauser & Evald Moulding, Inc., 2008 WI App 
123, 313 Wis. 2d 718, 758 N.W.2d 476, affirming decisions of the 
circuit court for Jefferson County, Jacqueline R. Erwin, J. 
No. 
2007AP477   
 
2 
 
parties' Buy-Sell Agreement provides that if one of the 
shareholders 
becomes 
totally 
disabled, 
the 
non-disabled 
shareholder is entitled to purchase his shares at "book value."   
¶2 
Hauser contends that both the circuit court and court 
of appeals incorrectly concluded that the buyout agreement is 
unenforceable.  First, he asserts that the circuit court erred 
when it determined that the undefined term "book value" rendered 
the buyout agreement unenforceable.  Second, Hauser argues that 
the court of appeals incorrectly determined that supporting 
documentation is a necessary component of a computation under 
generally accepted accounting practices ("GAAP").  Third, he 
asserts that the circuit court erroneously exercised its 
discretion when it denied him further opportunity to challenge 
and counter the special magistrate's conclusions.  He argues 
that the meaning of "book value" is ambiguous and that he is 
entitled to a trial to determine the intent of the parties. 
¶3 
We conclude that the circuit court did not err when it 
determined that the agreement was unenforceable.  Both parties 
agree that Ehlinger is entitled to examine Evald's books to 
determine whether they accurately reflect the corporation's 
assets and liabilities, a task that the special magistrate was 
unable to perform due to the state of Evald's records.  
Accordingly, we need not resolve whether the contract is 
indefinite or ambiguous here because under these circumstances, 
it cannot be enforced.   
¶4 
Additionally, 
to 
the 
extent 
that 
Hauser's 
characterization of the court of appeals' decision is accurate, 
No. 
2007AP477   
 
3 
 
we determine that his argument about the scope of GAAP fails.  
The question is not what is required under GAAP, but what is 
required to determine the parties' rights.   
¶5 
Finally, we conclude that the circuit court did not 
erroneously exercise its discretion when it denied Hauser the 
opportunity to subject the special magistrate to a broader scope 
of cross-examination, to depose the special magistrate, and to 
present his own expert witness in rebuttal. 
¶6 
In his cross-petition, Ehlinger argues that the 
circuit court erroneously permitted the defendants' litigation 
expenses to be paid by the corporation.  This decision would not 
be erroneous if Hauser was entitled to indemnification or if 
Evald spent its assets in its own defense.  We determine that 
Hauser was not entitled to indemnification by Evald according to 
the provisions of Wis. Stat. § 180.0855 (2007-08).2  Further, 
under these facts, the litigation expenses were not incurred by 
the corporation for its own defense.  Therefore, we conclude 
that the circuit court erroneously exercised its discretion when 
it 
permitted 
the 
corporation 
to 
pay 
Hauser's 
litigation 
expenses.3  
                                                 
2 All subsequent references to the Wisconsin Statutes are to 
the 2007-08 version. 
3 The first issue addresses whether the buyout agreement is 
unenforceable.  Four justices (Chief Justice Abrahamson and 
Justices Bradley, Prosser, and Roggensack) conclude that the 
agreement 
is 
unenforceable, 
although 
they 
differ 
on 
the 
rationale.  See supra, ¶3; concurrence, ¶122.  Two justices 
(Justices Ziegler and Gableman) would remand to the circuit 
court 
for 
a 
determination 
of 
whether 
the 
contract 
is 
enforceable.   
No. 
2007AP477   
 
4 
 
¶7 
Accordingly, we affirm the court of appeals as 
modified in this opinion and remand to the circuit court for the 
appointment of a receiver.4    
I 
¶8 
The procedural history of this case is lengthy.  It 
encompasses over seven years of litigation between two former 
friends, William Ehlinger and Jon Hauser, the sole and equal 
shareholders of Evald Moulding, Inc.  Both men are corporate 
officers, but Hauser manages Evald's day-to-day operations.5   
                                                                                                                                                             
In regards to the second issue, all justices agree that we 
need not decide what is required to do a compilation under GAAP 
and that Hauser's argument fails.   
Answering the third issue, four justices (Chief Justice 
Abrahamson 
and 
Justices Bradley, Prosser, and Roggensack) 
conclude that the circuit court did not erroneously exercise its 
discretion 
when 
it 
denied 
Hauser 
further 
opportunity 
to 
challenge and counter the special magistrate's conclusions.  Two 
justices (Justices Ziegler and Gableman) would remand to the 
circuit court for further development on this issue. 
Finally, the fourth issue is whether the circuit court 
erroneously permitted the corporation to pay Hauser's litigation 
expenses.  Four justices (Chief Justice Abrahamson and Justices 
Bradley, Roggensack, and Ziegler) conclude that the circuit 
court erroneously exercised its discretion.  Two justices 
(Justices Prosser and Gableman) conclude that the circuit court 
did not err. 
4 In appointing a receiver, the circuit court shall hold a 
hearing and describe the powers and duties of the receiver.  
Wis. Stat. §§ 180.1432(1), 180.1432(2).  The receiver may sell 
the assets of the business in parts or as a whole.  See Wis. 
Stat. § 180.1432(3)(a). 
5 Hauser is Evald's President, Chief Executive Officer, and 
Treasurer.  He manages Evald's day-to-day operations.  Ehlinger 
is Evald's Secretary.  
No. 
2007AP477   
 
5 
 
¶9 
Evald's shareholders have not held a meeting since 
2002, and they last successfully elected corporate officers in 
1995.  These failures are caused in part by an ongoing dispute 
over the provisions of a Buy-Sell Agreement executed by Ehlinger 
and Hauser in 1992.6   
¶10 The agreement provides for the transfer of a disabled 
shareholder's shares upon total disability.7  The purchase price 
for the disabled shareholder's shares is set forth in the 
agreement as follows: 
For 
transfers 
of 
all 
of 
a 
Shareholder's 
stock . . . upon his becoming disabled, the purchase 
price of a Shareholder's shares of stock shall be 
$350,000.00 or Book Value whichever is greater . . . .  
For transfers of all of a Shareholder's stock on 
threat of involuntary transfer, the purchase price of 
a Shareholder's shares of stock shall be the book 
                                                 
6 The opening paragraph of the Buy-Sell Agreement states: 
Agreement made this 14 day of August 1992, by and 
between William N. Ehlinger and his wife, Kathleen L. 
Ehlinger ("Ehlinger"), and Jon A. Hauser and his wife, 
Diana M. Hauser ("Hauser"), the Shareholders of all of 
the issued and outstanding stock of Evald Moulding 
Company, 
Inc., 
a 
Wisconsin 
Corporation 
("the 
Corporation").   
7 Upon a Shareholder becoming totally disabled as 
defined hereafter, for a period of twenty-four (24) 
consecutive months, the other Shareholder shall have 
the first right to purchase all or part of the stock 
owned by the disabled Shareholder. . . . The disabled 
Shareholder or his legal representative shall sell all 
of the stock owned by the disabled Shareholder at the 
Agreed Purchase Price as defined in Section 6 hereof 
and upon the terms and conditions set forth herein.  
 
No. 
2007AP477   
 
6 
 
value of said shares as of the end of the last fiscal 
year.  
The agreement was signed by Hauser and Ehlinger in their 
capacities as corporate officers and as shareholders.  Shortly 
after the parties signed the agreement, Ehlinger developed 
Parkinson's Disease.   
¶11 In December 2000, Ehlinger and Hauser met for dinner 
at a restaurant in Watertown.  According to Hauser's notes, 
Ehlinger said that he had lost interest in the business and 
asked Hauser to make an offer to purchase his shares.  The 
parties did not agree to any buyout terms at the meeting, but 
they did agree that Ehlinger was entitled to inspect Evald's 
books. 
¶12 On June 20, 2001, Hauser sent a letter to Ehlinger 
invoking the disability buyout agreement.  He stated that he 
intended to initiate the process of buying out Ehlinger's entire 
interest in Evald.  The letter explained: 
According to Section 3 of the Agreement, when a 
shareholder 
becomes 
"totally 
disabled", 
that 
shareholder must sell their interest in Evald Moulding 
Company.  Further, this section also states that the 
other shareholder has the first right to purchase this 
interest.  Jon Hauser will act on this right to 
purchase your interest in Evald Moulding Company.   
Hauser enclosed Evald's most recent fiscal year-end statement.  
Based on that statement, Hauser calculated the book value of 
Ehlinger's shares to be $431,400 and explained that the first 
payment 
installment 
would 
be 
sent 
"immediately 
upon 
the 
acceptance of this purchase offer."  Ehlinger did not accept 
Hauser's offer. 
No. 
2007AP477   
 
7 
 
¶13 Ehlinger called a meeting of the shareholders on 
April 22, 2002.  He moved that Evald's books be audited in order 
to determine the value of the corporation, but Hauser declined 
to second the motion.  The shareholders also attempted to hold 
their annual election of corporate officers, but due to 
deadlock, they were unable to do so.8 
¶14 Hauser attempted to hold a closing on Ehlinger's 
shares.  On April 30, he sent Ehlinger a check for $86,280, 20 
percent of what Hauser calculated to be the book value of the 
shares.  Ehlinger refused the offer and never cashed the check.   
¶15 Ehlinger filed suit seeking judicial dissolution.  He 
alleged that the shareholders of the corporation were at an 
impasse and had failed to elect officers for more than two 
successive years.   
¶16 He also sought a declaratory judgment that the buyout 
agreement was "unenforceable for lack of essential terms," 
including the definition and means of determining "book value."  
                                                 
8 According to the April 22, 2002 minutes taken by Ehlinger 
and subsequently rejected by Hauser: 
Mr. Ehlinger then nominated himself as a director for 
the coming year.  Mr. Hauser then nominated himself as 
a director for the coming year.  Mr. Ehlinger voted 
all of his shares for his election as a director and 
Mr. Hauser voted nay.  Mr. Hauser voted all of his 
shares for his election, and Mr. Ehlinger voted nay.  
Since neither candidate received a vote of a majority 
of the shares, Mr. Hauser declared that neither 
candidate had been elected at the meeting and that, 
accordingly, both directors would remain in office by 
virtue of their previous election and continuing 
status as directors.   
No. 
2007AP477   
 
8 
 
Further, Ehlinger contended that even if the contract was 
enforceable, "determining the true book value would be difficult 
or impossible due to the way the defendant has kept Evald's 
books."  He asserted that "[b]ecause of the ambiguity of the 
agreement and the defendant's subsequent actions there has never 
been a meeting of minds between the parties as to the meaning of 
book value in the 1992 Buy-Sell Agreement."9  
¶17 The parties engaged in discovery.  Both parties 
submitted expert reports purporting to determine the book value 
and fair market value of Evald.  Discovery was completed in 
September 2003. 
¶18 Ehlinger moved for summary judgment on two grounds.  
He argued that Hauser was not entitled to invoke the disability 
buyout agreement because Ehlinger was not "totally disabled" 
within the meaning of the agreement.  Further, he sought summary 
judgment ordering the judicial dissolution of Evald due to 
shareholder impasse.   
¶19 Hauser argued that no such impasse existed because the 
corporation had initiated the process of buying out Ehlinger's 
shares.  As a result, Hauser contended, Ehlinger could dispute 
the price Evald would pay for the shares but he no longer had 
the authority to vote the shares.  Hauser moved for summary 
                                                 
9 Ehlinger 
also 
sought 
an 
accounting 
of 
Hauser 
and 
Ehlinger's partnership and an injunction preventing Hauser from 
voting Ehlinger's shares by proxy.  These claims are not 
relevant to this appeal. 
No. 
2007AP477   
 
9 
 
judgment declaring that he had validly exercised the disability 
buyout agreement. 
¶20 The court issued an order on January 12, 2004.  It 
declined to grant summary judgment to either party regarding the 
enforceability 
or 
applicability 
of 
the 
buyout 
agreement.  
Instead, it concluded that there were material issues of fact in 
dispute.   
¶21 Further, finding that the shareholders were deadlocked 
and had failed to elect officers for more than two successive 
years, the court ordered judicial dissolution pending resolution 
of the contract issue: 
The plaintiff's motion for summary judgment ordering 
the dissolution and liquidation of Evald Moulding 
Company, Inc. . . . and appointing a receiver to make 
an accounting of the financial affairs of Evald and to 
dispose of its business for the benefit of its 
shareholders is granted pending resolution of the 
parties dispute about defendant's exercise of the 
option to purchase plaintiff's shares.  If defendant 
prevails, plaintiff's claim for dissolution will be 
moot.  If plaintiff prevails, final judgment of 
dissolution will be entered.   
¶22 The 
court 
determined 
that 
no 
alternative 
to 
dissolution could resolve the deadlock between the shareholders: 
While the defendant urges the Court to consider 
alternatives to dissolution, none resolve the impasse.  
One solution offered by the defendant is to order an 
accounting.  This exercise has been undertaken at 
least 
once . . . and 
the 
underlying 
conflict 
continues.  Nor will declaration of dividends, capital 
distribution or money damages provide adequate remedy.  
No. 
2007AP477   
 
10 
 
The shareholders have been deadlocked for years and 
remain so today without expectation of extrication.10   
¶23 In May, July, and September of 2005, the court held a 
five-day bench trial on the applicability and enforceability of 
the buyout agreement. It found that Ehlinger was "totally 
disabled" within the meaning of the agreement.  Further, the 
court determined that the agreement "requires the sale of the 
disabled 
shareholder's 
stock 
on 
the 
occurrence 
of 
total 
disability."    
¶24 The court stopped short of ordering the sale and 
dismissing the action, however.  It determined that there was an 
outstanding dispute about the enforceability of the agreement 
that required the court to address the meaning of the term "book 
value": 
The remedy sought by Mr. Hauser is dismissal.  And I 
hesitate to dismiss the case because I perceive 
additional——an additional unresolved contract dispute 
regarding the meaning of "book value" and I don't want 
to leave the parties without recourse in this lawsuit.  
I don't want to have you come back in some other forum 
and have that delay.  
. . . I don't want to dismiss if there are further 
contract terms[]like book value to be interpreted. 
. . . .   
And what I think I'm going to get from Plaintiff is 
that there is more than one way to calculate book 
value, and what I'm going to get from the Defendant 
                                                 
10 Wis. Stat. § 180.1430(2)(a) permits a court to order 
dissolution of a corporation due to shareholder deadlock.  
Hauser has not appealed the grant of summary judgment ordering 
dissolution.  Additionally, he has not argued on appeal that the 
circuit court erroneously exercised its discretion when it 
determined that grounds for dissolution existed.   
No. 
2007AP477   
 
11 
 
is: This is how we have calculated book value for 
Evald by custom and practice and that's what's 
determinative.  
Thus, the court retained jurisdiction of the case.  Neither 
party objected. 
¶25 The court ordered each party to provide a definition 
of "book value."  It explained that the parties' definitions 
would be provided to a special magistrate, who would determine 
book value according to the court's instructions.   
¶26 Both parties agreed that "book value" would be defined 
as "assets minus liabilities."  They differed, however, on how 
to determine which assets and liabilities should be computed in 
the calculation, and what degree of verification was needed.  
Ehlinger argued that the company's financial statements were 
calculated for tax purposes and thus failed to represent the 
true worth of the assets of the corporation.  He further 
asserted that deficiencies of supporting documentation "make 
clear that simply focusing on the definition of book value is 
too simplistic."  
¶27 The court appointed Del Chmielewski, a certified 
public accountant, as the special magistrate.  During a hearing 
held in October 2005, the court explained:  
[I]t's my present intention to instruct the Special 
Magistrate to review the subject year-end statement 
and report any deviation from the prior two-years' 
accounting method, and to report any deviation from 
generally-accepted 
accounting 
methods 
and 
to 
recalculate as necessary to come to book value. . . . 
[Y]ou're required to answer inquiries of the Special 
Magistrate, but I don't want any advocacy.     
Further: 
No. 
2007AP477   
 
12 
 
When I say generally-accepted accounting principles, I 
don't mean to adopt any set of rules.  I expect Mr. 
Chmielewski——[w]ho does plenty of books for plenty of 
small 
corporations——to 
know 
what's 
generally 
acceptable and what's not.  And his conclusions could 
be subject to examination by you folks.  You know, I 
just don't think this is going to be as much of an 
impediment or as mysterious as you folks fear.  I 
think it's going to be real straightforward.  
The court did not specify the statute under which the special 
magistrate was appointed, or whether he would perform the role 
of a referee or an expert.   
¶28 Neither of the parties objected to the special 
magistrate's appointment or the instructions provided by the 
court.  Hauser's attorney clarified:  
I 
think 
what 
the 
Court's 
saying 
is 
that 
Mr. 
Chmielewski is going to look at these things; he's 
going to say: . . . in these accounting situations is 
this good accounting or not?  Is this reasonable, 
accurate accounting or not?  If that's the way he's 
going to do it, I got no problem with that.  I 
wouldn't want there to be some suggestion that there's 
an elaborate set of rules which is called GAAP in the 
sense of a formal reference . . . .    
¶29 In an order setting out instructions for the special 
magistrate, the court stated: 
The Court's special magistrate will determine Evald's 
March 31, 2001, book value using generally accepted 
accounting principles which are appropriate for the 
size, function and structure of this corporation.  The 
special magistrate will advise the Court of any 
departures from GAAP in his report to the Court.  
Finally, 
the 
special magistrate will report any 
substantial 
inconsistencies 
in 
the 
reporting 
methodology used by Evald in 2001 vis a vis the 
previous two years.   
Neither party objected to the order, and over the next several 
months, the special magistrate obtained documents from Evald. 
No. 
2007AP477   
 
13 
 
¶30 During 
the 
course 
of 
his 
inquiry, 
the 
special 
magistrate discovered that it was impossible to verify Evald's 
financial statements.  Some of the supporting documentation 
underlying Evald's computer summaries had been discarded or were 
otherwise unavailable.11  The special magistrate determined that 
he could not confirm that the financial statements represented 
"book value." 
¶31 Specifically, his May 8, 2006 report explained: 
We have verified that all of the items on Evald's 
balance sheet have been recorded in accordance with 
GAAP for F/Y/E 3/31/01 except the following items.  
Evald has stated that they are not able to provide the 
information needed to verify items 1 through 5 because 
their 
computer 
software summarizes data and the 
information for the F/Y/E 3/31/01 is not retrievable. 
(1) 
Physical inventory 
(2) 
Accounts receivable and invoice cutoff procedures 
(3) 
Accounts payable and cutoff procedures 
(4) 
The use of PO clearing account 
(5) 
The use of IC clearing account 
 . . .  
Since the value of the business is based on the 
balance sheet, it is necessary to have back up 
documents to support the numbers reported on the 
balance 
sheet. . . . Without 
verification 
of 
the 
aforementioned 
we cannot confirm that the items 
mentioned 
above, which are presented on Evald's 
balance sheet are generated in accordance to Generally 
Accepted Accounting Principles. 
                                                 
11 Hauser asserted that accounting detail information was 
lost in a computer system crash.  Ehlinger did not argue that 
the loss of this information was intentional. 
No. 
2007AP477   
 
14 
 
¶32 Ehlinger filed a motion asking the court to reconsider 
its prior decision that he was not entitled to a declaratory 
judgment.  He asserted that the buyout agreement was not 
enforceable because the book value of Evald could not be 
calculated.  Hauser opposed the motion, and the court set the 
matter for trial on June 29, 2006.  Two days before trial, 
Hauser requested an opportunity to cross-examine the special 
magistrate.   
¶33 At the outset of what the court expected would be a 
one-day trial, the court clarified the role of the special 
magistrate: 
[O]ur primary purpose today is to address, see if we 
can determine book value to effectuate the Court's 
earlier order.  I would like to give both counsel an 
opportunity to give me a brief statement, offer 
evidence that you might have, and then argument. 
Regarding calling the special magistrate as witness, I 
didn't talk to Mr. Chmielewski about this, but I would 
allow either of you to question him regarding just a 
couple of things which are essentially clarification 
of his reports.  One is any arithmetical calculation 
he's made; two is what, what sources he had as a base 
to the figures that he used; and third, the opinions 
that he made in his report to the Court.  He's not 
anybody's expert witness; but I would, if you have 
questions just on those aspects of his report, allow 
him to testify. 
¶34 Hauser called Evald's accountant and bookkeeper as 
fact witnesses.  He called the accountant that Ehlinger had 
engaged as an expert witness.  Additionally, he called the 
special 
magistrate 
as 
a 
witness 
and 
cross-examined 
him 
No. 
2007AP477   
 
15 
 
extensively.  The examination of the special magistrate occupies 
126 pages of the trial transcript.   
¶35 The special magistrate testified that he was unable to 
calculate Evald's book value based on the financial records that 
were provided: 
The 
computer 
records 
that 
I 
[was] 
given 
really . . . were in summarized form.  And so the 
standard that I'm trying to apply is difficult to 
apply in a summarized manner, because you haven't got 
any 
assurances 
as 
to 
what 
it's 
made 
up 
of 
because . . . the accounting procedures that happen on 
a day-to-day basis are kind of transparent, you can't 
see them. . . . And by being able to see that some 
normal accounting procedures were applied, then you 
can assure yourself that at least it looks like the 
documents 
were 
prepared properly to support the 
financial statement.   
He testified that he was unable to validate 76 percent of 
Evald's assets and 90 percent of Evald's liabilities. 
¶36 Hauser argued that the requisite information was 
available and blamed the special magistrate for failing to ask 
for it.  Additionally, he requested that the court permit him to 
present an expert accountant to rebut the special magistrate's 
conclusions.  The court declined to do so, but it adjourned the 
trial until August so that the special magistrate could conduct 
more investigation: 
I deny your request for a——for time for you to have 
your own expert provide a report on book value.  I 
will, however, assign the special magistrate to do as 
he testified this morning he could do, and that is, 
avail himself of those items which are available and 
which he mistakenly thought weren't . . . .   
No. 
2007AP477   
 
16 
 
¶37 On August 10, 2006, four days before the trial was to 
recommence, Hauser submitted multiple documents to the court.  
They included a "motion in limine to exclude the expert opinion" 
of the special magistrate, a "motion for a deposition and full 
cross examination and the opportunity to present a rebuttal 
expert," and a "motion that no adverse inference from missing 
records is appropriate."   
¶38 On August 11, the special magistrate submitted a 
revised report stating that he could not substantiate the 
balance for physical inventory, accounts receivable, or accounts 
payable.  He explained that the problems were due to Evald's 
accounting software, which summarized reports: 
This summarizing caused a lot of reports, which any 
normal accounting system would have, to be unavailable 
for the F/Y/E 3/31/01.  We could not view a detailed 
listing or subsidiary ledger report of the A/R aging 
report, 
the 
A/R 
account, 
the 
A/P 
account, 
the 
inventory account, the PO clearing account or the IC 
clearing account, as of 3/31/01. 
¶39 The second day of trial was held on Monday, August 14.  
The court was unable to address Hauser's motions before 
receiving evidence because they were untimely.   
¶40 Hauser again cross-examined the special magistrate at 
length.  The special magistrate testified that he was unable to 
verify Evald's financial statements because the corporation had 
not retained subsidiary ledgers which were necessary to support 
the balance sheet.  
¶41 In a written order dated November 29, 2006, the court 
determined that the term "book value" was indefinite, precluding 
No. 
2007AP477   
 
17 
 
the enforceability of the contract.  The court concluded that it 
could 
not 
"cure 
the 
contract 
deficiency 
by 
grafting 
a 
requirement that the value be ascertained by using generally 
accepted accounting principles appropriate for a corporation of 
Evald Moulding's size, structure and function."  Further: 
As the Court's special magistrate made his inquiry, 
report and presentation, it became clear that the 
parties' contractual term was too vague to cure.  
"Book value" could mean anything from simple adoption 
of the year end statement to an audited determination.  
The Court's attempt to give definite meaning to the 
contract term is as arbitrary as any other definition.  
Although the parties discussed waiting for the year 
end statement in their December 2000 meeting, any 
inference that this discussion ratified Defendants' 
definition of book value is vitiated by the parties' 
agreement 
to 
have 
Plaintiff 
review 
the 
books 
thereafter.  The parties' conduct is insufficient to 
give definite meaning to the vague term.   
(Citations omitted). 
¶42 Hauser submitted a "motion for reconsideration, and 
for an order setting for trial the issue of the ambiguity of the 
term book value in the buy/sell agreement."  He argued that 
"book value" was ambiguous rather than indefinite and that the 
court committed a manifest error of law.  At a January 2007 
hearing, he reminded the court of the presumptive validity of 
contracts: 
Counsel: The law is very clear in Wisconsin that 
courts do not look for ways——look for fingerholes to 
void contracts. 
Court: Well, clearly not what I did here.  I sought 
and struggled to try to hold this contract together.    
The court denied his motion. 
No. 
2007AP477   
 
18 
 
¶43 In February, Ehlinger submitted a motion, titled a 
motion for reconsideration, requesting an injunction prohibiting 
Hauser from directing the corporation to pay for the litigation 
expenses.12  The court denied the motion, concluding that the 
corporation had an "interest" in the lawsuit and it would be 
"impossible as we sit here today" to assign fees between Hauser 
and the corporation.  
¶44 Hauser appealed, and Ehlinger cross-appealed.  The 
court 
of 
appeals 
affirmed 
the 
circuit 
court 
with 
some 
modification of its rationale.13  Ehlinger v. Hauser & Evald 
Moulding, 
Inc., 
2008 
WI 
App 
123, 
313 
Wis. 2d 718, 
758 
N.W.2d 476.  It did not determine that the term "book value" was 
indefinite.  Id., ¶30.  Rather, it concluded that the term was 
ambiguous and that the circuit court resolved the ambiguity by 
reasonably determining that the parties intended "book value" to 
be calculated using GAAP rather than by simply accepting the 
calculation listed on Evald's year-end statement.  Id., ¶31. 
¶45 Regarding Ehlinger's cross-petition, the court of 
appeals concluded that the circuit court did not erroneously 
exercise its discretion when it determined that Evald's assets 
could be used to pay the defendants' litigation expenses.  Id., 
¶¶46, 48.  Additionally, it concluded that Hauser was entitled 
                                                 
12 Ehlinger had asked for a similar injunction on four 
occasions during the course of the litigation.  The court never 
granted an injunction. 
13 The court of appeals' mandate neglected to acknowledge 
the necessity of remanding to the circuit court for further 
proceedings. 
No. 
2007AP477   
 
19 
 
to corporate indemnification for his own litigation expenses.  
Id., ¶48.  
II 
¶46 This case requires us to examine several decisions of 
the circuit court and the court of appeals.  We must determine 
whether the circuit court erred when it concluded that the 
undefined term "book value" rendered the buyout agreement 
unenforceable.  In addition, we must determine whether the court 
of appeals erred by concluding that supporting documentation is 
a necessary component of a GAAP computation. 
¶47 The interpretation of a contract is generally a 
question of law.  Levy v. Levy, 130 Wis. 2d 523, 528-29, 388 
N.W.2d 170 
(1986). 
 
The 
necessary 
components 
of 
a 
GAAP 
computation is also a question of law.  We determine questions 
of law independently of the conclusions rendered by the circuit 
court and the court of appeals.  Id. at 529.    
¶48 We also must determine whether the circuit court 
erroneously exercised its discretion when it denied Hauser 
further opportunity to challenge and counter the special 
magistrate's conclusions and when it permitted the corporation 
to fund the litigation expenses incurred in these proceedings.  
We will uphold the circuit court's exercise of discretion if it 
"examined the relevant facts, applied a proper standard of law, 
and, using a demonstrated rational process, arrived at a 
conclusion that a reasonable judge could reach."  DeWitt Ross & 
Stevens, S.C. v. Galaxy Gaming & Racing Ltd., 2004 WI 92, ¶21, 
273 Wis. 2d 577, 682 N.W.2d 839. 
No. 
2007AP477   
 
20 
 
III 
¶49 We begin by addressing the issues set forth in 
Hauser's petition for review.  Hauser raises three issues: (A) 
did the circuit court err when it determined that the undefined 
term "book value" rendered the agreement unenforceable;14 (B) did 
the 
court 
of 
appeals 
err 
by 
concluding 
that 
supporting 
documentation is a "necessary component" of a GAAP computation; 
and 
(C) 
did 
the 
circuit 
court 
erroneously 
exercise 
its 
discretion when it denied Hauser's motion to subject the special 
magistrate to complete cross-examination, to depose the special 
magistrate, and to present his own expert witness in rebuttal?  
We address these issues in turn.    
A 
¶50 The disability buyout agreement sets the price for the 
disabled shareholder's shares at "book value."  Nevertheless, 
the agreement does not define "book value."  Both parties agree 
that in the absence of a contractual definition, "book value" 
refers to the value of the assets of a company after deducting 
                                                 
14 In his brief to this court, Hauser contends that the 
court of appeals erred when it concluded that "book value" was 
ambiguous, but then upheld the circuit court's reasonable 
interpretation of the term without a trial.  In his brief to the 
court of appeals, Hauser argued that the circuit court erred by 
concluding that the term "book value" was indefinite.  
No. 
2007AP477   
 
21 
 
its liabilities.15  The parties disagree, however, as to which 
assets and liabilities should be included in the calculation and 
how those values should be calculated. 
¶51 In his complaint, Ehlinger alleged that the agreement 
was unenforceable because, among other reasons, it did not 
indicate how "book value" would be computed.  Over the course of 
several years of circuit court proceedings, the court attempted 
to give meaning to the term.  
¶52 During the proceedings at the circuit court, Hauser 
asserted that the parties intended "book value" to refer to the 
value of assets minus liabilities computed on the year-end 
financial statements, which are calculated in order to minimize 
tax liability.  By contrast, Ehlinger argued that "book value" 
refers to the value of assets minus liabilities, computed 
according to generally accepted accounting principles (GAAP). 
¶53 Hauser now argues that the circuit court erred when, 
without holding a trial on the intent of the parties, it 
concluded that the term "book value" was "too vague to be 
cured."  He asserts that the term may be ambiguous, but it is 
not indefinite.  Therefore, he argues that a trial on the 
                                                 
15 But see Schumann v. Samuels, 31 Wis. 2d 373, 377, 142 
N.W.2d 777 (1966).  In Schumann, the court concluded that in the 
absence of a contractual definition, "book value" referred to 
the "market value of the assets of the company after deducting 
its liabilities."  (Emphasis added.)  Neither party cites to 
Schumann for this premise or appears to advance the Schumann 
definition.    
No. 
2007AP477   
 
22 
 
parties' intent is necessary to solve what he considers to be a 
contractual ambiguity.16   
¶54 There are two distinct questions embedded within our 
inquiry.  First, can the parties' agreement be interpreted to 
give meaning to the term "book value"?  Second, if it can be so 
interpreted, what was the dollar amount of "book value" on 
March 31, 2001? 
¶55 The circuit court concluded that the term "book value" 
was vague and indefinite, and that the agreement was therefore 
unenforceable.  The court of appeals rejected the circuit 
court's conclusion that the term was indefinite.  Rather, it 
concluded that the term was ambiguous.   
¶56 A contract can be ambiguous without being indefinite.  
See Management Computer Servs., Inc. v. Hawkins, Ash, Baptie & 
Co., 206 Wis. 2d 158, 178, 557 N.W.2d 67 (1996) ("An ambiguous 
contract is not necessarily indefinite.").  A contract is 
ambiguous when it is "fairly susceptible of more than one 
construction."  Id. at 177.  If a contract term is ambiguous, 
extrinsic evidence may be used to help construe its meaning.  
Id. 
                                                 
16 It should be noted that over the course of seven years, 
the circuit court held seven days of trial regarding the 
enforceability of the buyout agreement: May 9, 2005, May 10, 
2005, July 26, 2005, July 27, 2005, September 7, 2005, June 26, 
2006, and August 14, 2006.  Additional hearings were held on the 
following dates: May 7, 2002, October 19, 2005, November 17, 
2005, October 31, 2006, January 17, 2007, and February 28, 2007. 
No. 
2007AP477   
 
23 
 
¶57 By contrast, "the definiteness requirement is relevant 
to contract formation, not interpretation."  Id. at 178.  A 
contract requires mutual assent of the parties and "must be 
definite as to the parties' basic commitments and obligations."  
Id.  Mutual assent is judged based on an objective standard, 
looking to the express words used in a contract.  Id.  
"Vagueness or indefiniteness as to an essential term of the 
agreement prevents the creation of an enforceable contract."  
Id. 
¶58 We have explained that "[b]ook value is a term of 
ambiguous meaning" when it is not further defined by a contract.  
Schumann v. Samuels, 31 Wis. 2d 373, 376, 142 N.W.2d 777 (1966).  
Under some circumstances, an undefined term might not only be 
ambiguous, but it might be indefinite as well.  If a contract 
term is indefinite, a trial cannot cure the contract deficiency. 
¶59 Here, however, we need not resolve whether the buyout 
agreement is indefinite, ambiguous, neither, or both because 
resolution of that question would not change the outcome of this 
case.  If we concluded that the contract was indefinite, further 
fact-finding could not cure the deficiency and the agreement 
would not be enforced.  Moreover, if we determined that the 
agreement was ambiguous, a trial on the parties' intentions 
would 
be 
a 
superfluous 
exercise 
due 
to 
the 
specific 
circumstances presented in this case.  Because Ehlinger cannot 
now validate any claimed "book value," the contract cannot be 
enforced regardless of how the term could be defined. 
No. 
2007AP477   
 
24 
 
¶60 The parties agree that Ehlinger is entitled to examine 
the books in order to validate that the buyout price accurately 
reflected Evald's book value.17  See Townsend v. LaCrosse Trailer 
Corp., 254 Wis. 31, 35 N.W.2d 325 (1948).  This is a task that 
the special magistrate was unable to perform due to the state of 
Evald's financial records. 
¶61 In 
Townsend, 
we 
concluded 
that 
the 
employee-
stockholder had the "right to go behind the financial statement 
in order to examine all of the books, records, and files of the 
defendant corporation which might reflect the book value" of his 
stock.  Id. at 37.  In that case, a contract between an employee 
and his employer provided that upon the employee's termination, 
the corporation had the right to buy out the former employee's 
stocks at a price equal to one-half of their book value.  We 
evaluated the employee's request to examine accounting records 
                                                 
17 In his brief, Hauser agreed that "Shareholders in a 
Wisconsin corporation have a statutory right to inspect and copy 
the accounting records of the corporation."   
At oral argument, one of the justices sought to clarify 
Hauser's argument:  
Court: Your position is just look at the books. Look 
at the value of the assets on the books, look at the 
value of liabilities on the books, and divide it in 
half, right?   
Hauser's attorney: Clearly that's our position.  But I 
do want to clarify it was never our position that Dr. 
Ehlinger wouldn't have the right to dig into the books 
to make sure that the books accurately—— 
Court: Sure. 
No. 
2007AP477   
 
25 
 
to support his argument that the corporation's financial 
statements did not accurately reflect the book value of the 
corporation.   
¶62 The corporation argued that the employee "should be 
limited to an examination of the financial statement prepared by 
the company's auditors . . . because such statement definitely 
sets the book value of the stock."  Id. at 36.  We rejected the 
corporation's contention that a financial statement "definitely 
sets the book value of the stock," holding that the book value 
is not just any value that may be arbitrarily entered upon the 
books of a company.  Id. at 37. 
¶63 In this case if we decided that the contract was 
ambiguous and a trial on the meaning of "book value" was 
warranted, the fact-finder might accept Hauser's position that 
the parties intended "book value" to mean the value of assets 
minus liabilities calculated for tax purposes as recorded on the 
year-end statement.  Under those circumstances, Ehlinger would 
be entitled to "go behind the financial statement in order to 
examine all of the books, records, and files" of Evald which 
might reflect that value.  This task cannot now be performed. 
¶64 Alternately, the fact-finder might accept Ehlinger's 
position that the parties intended "book value" to mean the 
value of assets minus liabilities, computed according to GAAP.  
Again, Ehlinger would be entitled to examine the books, records, 
and files, which cannot now be done. 
¶65 Here, regardless of whether the parties intended 
assets and liabilities to be computed on a cost basis, a tax 
No. 
2007AP477   
 
26 
 
basis, a fair market value basis, or any other basis, the 
unavailability of Evald's financial records prevents Ehlinger 
from exercising his right to examine the books in order to 
assess the accuracy of the buyout price.  From both a practical 
and a legal standpoint, the unavailability of the records 
precludes this agreement from being enforced.18  
¶66 Typically, an appellate court should decide cases on 
the 
narrowest 
possible 
grounds. 
 
State 
v. 
Blalock, 
150 
Wis. 2d 688, 703, 442 N.W.2d 514 (Ct. App. 1989).  Issues that 
are not dispositive need not be addressed.  Gross v. Hoffman, 
227 Wis. 296, 300, 277 N.W. 663 (1938).  A court generally will 
not engage in an exercise which circumstances have rendered 
purely academic.  State ex rel. Olson v. Litscher, 2000 WI App 
61, ¶3, 233 Wis. 2d 685, 608 N.W.2d 425. 
¶67 Here, the resolution of whether the term "book value" 
is indefinite or ambiguous has no practical effect upon the 
existing controversy.  We therefore need not resolve the 
                                                 
18 We accept Hauser's contention that the destruction of 
some of Evald's books, records, and files was unintentional, and 
we draw no inference based on their absence.  We do not infer 
that the financial statements prepared by Evald inaccurately 
represent the corporation's "book value" as valued on a tax 
basis.  Conversely, we cannot make the opposite inference——that 
Evald's financial statements represent the actual "book value" 
valued on a tax basis. 
No. 
2007AP477   
 
27 
 
question.19  We conclude that, under the circumstances presented, 
the circuit court did not err when it determined that the buyout 
agreement could not be enforced. 
B 
¶68 In addition, Hauser contends that the court of appeals 
erred 
by 
concluding 
that 
supporting 
documentation 
is 
a 
"necessary component" of a valid GAAP computation.  See 
Ehlinger, 313 Wis. 2d 718, ¶35.  He asserts that under GAAP, a 
compilation does not require supporting documentation.   
¶69 As a threshold matter, Hauser may be misconstruing the 
court of appeals' conclusion.  It is not clear whether the court 
of 
appeals 
made 
a 
general 
statement 
that 
supporting 
documentation 
is 
a 
necessary 
component 
of 
a 
valid 
GAAP 
computation in all cases, or whether it determined only that 
supporting documentation was required under the facts of this 
case.20    
                                                 
19 Contrary to Justice Roggensack's assertion, we do not 
assume that the parties intended Evald's March 31, 2001 balance 
sheet to be the basis for determining book value.  Justice 
Roggensack's concurrence, ¶123.  Further, we do not contend that 
availability of the documents that underlie Evald's balance 
sheet could cure any ambiguity or indefiniteness in the proposed 
buy-sell agreement.  Id.  We simply determine that we need not 
answer the question of what (if anything) the parties intended 
by "book value" because resolution of the question would not 
change the outcome of the case. 
20 The court stated, "[W]e are satisfied that the use of 
GAAP, rather than the use of Hauser's calculations, is the more 
reasonable construction of 'book value.'  In addition, the 
supporting documentation was a necessary component of a valid 
GAAP computation."  Ehlinger, 313 Wis. 2d 718, ¶35.  
No. 
2007AP477   
 
28 
 
 ¶70 Even if Hauser correctly construes the court of 
appeals' conclusion, Hauser's assertion misses the mark.  The 
question before the court is not what is required to do a 
compilation under GAAP, but what is required to determine the 
parties' contractual rights.   
¶71 During the two-day trial over the corporation's book 
value, Hauser cross-examined the special magistrate.  The 
special magistrate agreed that accountants perform three levels 
of service under GAAP: compilations, reviews, and audits.21  He 
agreed that it was not necessary to verify financial statements 
when performing a compilation.   
¶72 Hauser argues that, based on the circuit court's 
instructions, the special magistrate was required to "accept the 
representations of Evald Moulding, Inc. and Hauser."  He asserts 
that in performing a compilation, the special magistrate was not 
permitted to express any assurance on the statements.    
¶73 Hauser's position misconstrues the circuit court's 
instructions to the special magistrate.  The circuit court did 
not ask the special magistrate to perform a compilation.  
Instead, it asked him to "determine Evald's March 31, 2001 book 
                                                 
21 As the Third Circuit explained, a compilation provides 
"the lowest level of assurance regarding an entity's financial 
statements," expressing "neither an opinion nor any level of 
assurance."  Otto v. Pennsylvania State Edu. Ass'n, 330 F.3d 
125, 133 (3d Cir. 2003).  A review provides "limited assurance 
on the entity's financial statements."  An audit provides "the 
highest level of assurance," and the accountant "provides 
verification of the financial statements' claims and assertions, 
and expresses an opinion on the entity's financials."  Id. 
No. 
2007AP477   
 
29 
 
value using generally accepted accounting principles which are 
appropriate for the size, function and structure of this 
corporation."  The special magistrate concluded that he could 
not determine Evald's book value without knowing the basis from 
which the numbers on the corporation's financial statements were 
computed. 
¶74 The problem with Hauser's argument is that it assumes 
that by "book value," the parties intended nothing more than the 
number taken from Evald's year-end statement.  Hauser's argument 
is tantamount to an assertion that Ehlinger is required to 
accept the value listed on Evald's year-end financial statement 
without further inquiry.  Yet we soundly rejected that argument 
in Townsend.  See supra, ¶¶61-62.  Although a corporation may 
keep its books within the confines of the law and as it sees 
fit,22 the company's financial statements do not "definitely 
set[] the book value of the stock."  Townsend, 254 Wis. at 36. 
C 
¶75 Finally, 
Hauser contends that the circuit court 
erroneously denied his motion to depose and fully cross-examine 
the special magistrate and to present an expert witness in 
rebuttal.  He asserts that the special magistrate was appointed 
not as a referee under Wis. Stat. § 805.06, but rather as a 
court-appointed expert under Wis. Stat. § 907.06.  As such, 
                                                 
22 By these determinations, we do not require accountants to 
use GAAP instead of tax accounting principles when keeping their 
client's books.  Instead, we simply reaffirm our prior case law 
regarding the determination of a corporation's book value in a 
shareholder dispute. 
 
No. 
2007AP477   
 
30 
 
Hauser argues that the court erred by preventing him from using 
all of the tools of the adversary system to challenge and 
counter the special magistrate's conclusions. 
¶76 The Wisconsin statutes authorize a court to appoint a 
referee to determine "matters of account" and other complicated 
issues.23  "The role of a referee is to help the court in cases 
where the expertise of the referee is needed" to assist the 
court in obtaining facts and arriving at a correct result in 
complicated litigation.  Patricia Graczyk, The New Wisconsin 
Rules of Civil Procedure Chapters 805-807, 59 Marq. L. Rev. 671, 
683-84 (1976).   
¶77 The procedure for appointing a referee in Wisconsin is 
similar to the procedure for appointing a master under the 
Federal Rules of Civil Procedure, Rule 53.  The court order 
appointing a referee and describing the referee's powers is 
called a "reference."  If a party wishes to contest the 
reference, it should move the court to revoke the reference.  3A 
Jay E. Grenig, Wisconsin Practice Series: Civil Procedure 35 (3d 
ed. 2003) (citing La Buy v. Howes Leather Co., 352 U.S. 249 
(1957)). 
¶78 Section 805.06(3) provides a circuit court with broad 
discretion in crafting the reference.  Although a referee is 
                                                 
23 "A 
reference 
shall be the exception and not the 
rule. . . . [I]n actions to be tried without a jury, save in 
matters of account and of difficult computation of damages, a 
reference 
shall be 
made only upon a showing that some 
exceptional condition requires it."  Wis. Stat. § 805.06(2) 
(emphasis added). 
No. 
2007AP477   
 
31 
 
generally permitted to conduct hearings and subpoena witnesses, 
the reference may specify or limit the referee's powers.  It may 
direct the referee to "receive and report evidence only."  Wis. 
Stat. § 805.06(3); see also Grenig, supra, at 36 ("The order may 
direct the referee to report only upon particular issues, to do 
or perform particular acts, or to receive and report evidence 
only."). 
¶79 The referee must file his or her report with the clerk 
of court.  Wis. Stat. § 805.06(5)(a).  Parties may object to the 
referee's report within 10 days of filing.  Upon objection and 
after a hearing, the court is permitted to adopt the report, 
modify it, reject it in whole or in part, receive further 
evidence, or recommit it with instructions.  Wis. Stat. 
§ 805.06(5)(b).    
¶80 Wisconsin statutes also permit a court to appoint an 
expert witness.  See Wis. Stat. § 907.06.  When the court 
appoints an expert witness, the parties may take the expert's 
deposition and the expert can be called as a witness by either 
the court or a party.  Hauser contends that because the referee 
did not conduct hearings or file his report with the court, he 
was an expert witness, subject to discovery and full cross-
examination.  
¶81 The court did not cite to either the referee statute 
or the court-appointed expert witness statute when it appointed 
the special magistrate and instructed him to determine the book 
value of Evald.  Nevertheless, it is apparent from the record 
that at the time of appointment, the parties and the court 
No. 
2007AP477   
 
32 
 
understood the role of the special magistrate to be analogous to 
a referee or a master.  Computation of Evald's book value was a 
"matter[] of account" that had proved to be a complicated issue 
which the parties had disputed over the course of several years.  
It appears that the court determined that it required the 
expertise of the special magistrate to help the court obtain 
facts and arrive at a correct result.   
¶82 In its order appointing the special magistrate, the 
court specified the magistrate's role as follows: he "will 
determine Evald's March 31, 2001 book value," "will advise the 
Court of any departures from GAAP," and "will report any 
substantial inconsistencies" in Evald's books.  During a 
hearing, the court clarified that the special magistrate was to 
receive and report evidence only.  The court stated: "[Y]ou're 
required to answer inquiries of the Special Magistrate, but I 
don't want any advocacy."  Further, the court prohibited ex 
parte conversations. 
¶83 Hauser agreed to the procedure outlined by the court.  
During a hearing, his attorney stated: 
I 
think 
what 
the 
Court's 
saying 
is 
that 
Mr. 
Chmielewski is going to look at these things; he's 
going to say: . . . in these accounting situations is 
this good accounting or not?  Is this reasonable, 
accurate accounting or not?  If that's the way he's 
going to do it, I got no problem with that. 
It was only after the special magistrate's report was complete 
and he concluded that he was unable to verify Evald's assets and 
liabilities that Hauser first objected to the proceedings.  The 
No. 
2007AP477   
 
33 
 
record does not evince an understanding by the parties that the 
special magistrate was appointed as an expert witness.   
¶84 The court first discussed the special magistrate's 
appointment at a hearing held on October 19, 2005.  Over the 
course of the following nine months, the special magistrate 
investigated Evald's books, communicated with the parties, and 
prepared drafts of his report.   
¶85 Neither party asserted a right to cross-examine the 
special magistrate until June 27, 2006, two days before trial.  
At that point, Hauser first asserted that the special magistrate 
was an expert witness subject to cross-examination.  The circuit 
court permitted a limited cross-examination of the special 
magistrate, but it clarified that "[h]e's not anybody's expert 
witness."   
¶86 Further, neither party requested an opportunity to 
depose the special magistrate or present rebuttal expert 
testimony until after the trial had already commenced.  Toward 
the end of the first day24 and in response to an objection by 
opposing counsel, Hauser's attorney first suggested that he 
should be entitled to depose the special magistrate and present 
his own expert witness.  
¶87 Under these circumstances, Hauser forfeited his right 
to object to the procedures specified by the court in the 
                                                 
24 It appears that the parties and the court expected the 
trial to last only one day and for the court to issue a final 
judgment based on the court's decision.  In fact, due to 
unresolved questions that emerged during the trial, the court 
was required to schedule a second day.   
No. 
2007AP477   
 
34 
 
reference.  See State v. Ndina, 2009 WI 21, ¶¶29-30, 315 
Wis. 2d 653, 761 N.W.2d 612.  We conclude that the circuit court 
did not erroneously exercise its discretion when it denied 
Hauser the opportunity to subject the special magistrate to a 
broader scope of cross-examination, to depose the special 
magistrate, and to present his own expert witness in rebuttal. 
¶88 At oral argument, both parties expressed admiration 
for the circuit court's persistent and pragmatic attempts to 
resolve this complicated litigation.  Nevertheless, Hauser 
points to certain procedural irregularities at the circuit 
court.  For instance, although the special magistrate submitted 
his report to the court and the clerk of courts provided the 
report to the parties, there is no indication that the clerk of 
courts filed the report in the circuit court record.25  See Wis. 
                                                 
25 Justice Ziegler's concurrence/dissent asserts that the 
parties could not have been clear about their opportunity to 
object to the special magistrate's report.  See Justice 
Ziegler's concurrence/dissent, ¶207.  Such an assertion is a 
misread of the record. 
The record reveals that the clerk of court provided the 
special magistrate's report to the parties at some time prior to 
June 1, 2006——at least 29 days before the June 29 trial.  The 
record also reveals that Hauser exercised his opportunity to 
object.   
Hauser first objected to the report by letter on June 6.  
He asserted that the report inaccurately stated that Evald was 
an S-Corporation rather than a C-Corporation, and that the 
report failed to account for a calculation of an accrual for 
deferred income taxes.  The special magistrate adjusted his 
report to reflect that Evald was a C-Corporation. 
No. 
2007AP477   
 
35 
 
Stat. 
§ 805.06(5)(a). 
 
Further, 
during 
Ehlinger's 
cross-
examination of the special magistrate, he asked the magistrate 
about his opinions "to a reasonable degree of accounting 
certainty"——a phrase generally reserved for expert witnesses. 
¶89 Because 
referee 
appointments 
are 
an 
exceptional 
procedure,26 the court, the parties, and the referee will often 
be unfamiliar with the process.  It would have been better had 
the reference more clearly defined the special magistrate's 
powers and responsibilities.  A reference should clearly 
delineate the court's expectations regarding the types of 
evidence the referee should examine and the form of the report, 
including whether the referee should make findings of fact and 
conclusions of law.  Explicit parameters that are enumerated in 
a reference will help clarify the procedures and keep the court, 
the parties, and the referee on track.   
¶90 Nevertheless, on this record we are satisfied that at 
the time the order appointing the special magistrate was issued, 
the court and the parties contemplated that the special 
magistrate would fulfill the role of a referee.  We are also 
satisfied that the parties were given a full opportunity to 
                                                                                                                                                             
The June 29 trial was scheduled as a one-day trial.  At 
trial, Hauser again objected to the report, asserting that the 
special magistrate had failed to consider certain financial 
documents.  The court adjourned the trial so that the special 
magistrate could consider these documents.  However, the special 
magistrate indicated that the documents did not alter his 
conclusion that he was unable to determine the book value of 
Evald. 
26 See Wis. Stat. § 805.06(1).   
No. 
2007AP477   
 
36 
 
object to the special magistrate's factual determinations.  We 
therefore 
conclude 
that 
the 
circuit 
court's 
exercise 
of 
discretion was not erroneous.   
IV 
¶91 We turn next to Ehlinger's cross-petition for review, 
which presents an issue of first impression in Wisconsin.  
Ehlinger argues this is primarily a dispute between shareholders 
and it was improper for Hauser's litigation expenses to be paid 
from the corporate till.   
¶92 Both Hauser and Evald are named parties in this 
dispute.  During the proceedings in circuit court, Ehlinger 
learned that Hauser was directing the corporation to pay for the 
defendants' litigation expenses.  On four occasions, Ehlinger 
asked the circuit court to enjoin Hauser from paying for the 
litigation with corporate funds. 
¶93 In addressing Ehlinger's concern, the circuit court 
opined that it presented a close call.  Without further 
discussion, the court concluded that the corporation had an 
interest and that is was more than a nominal party in the 
litigation:  
I think that the prospective attorney fee sourcing is 
a closer issue.  But it seems to me that the 
Corporation is more than a nominal party; it does have 
an interest here and, seems to me, would be impossible 
for the Court as we sit here today to ascertain 
prospectively how to assign any attorney's fees.   
Accordingly, it denied Ehlinger's motion. 
¶94 Ehlinger contends that this action is primarily a 
dispute between two shareholders, and that the corporation is 
No. 
2007AP477   
 
37 
 
only a party to the action so that the court has jurisdiction to 
order its dissolution.  Thus, he argues that it was improper for 
the defendants' litigation expenses to be paid from the 
corporate till. 
¶95 Under these circumstances, it would be appropriate for 
the corporation to fund the lawsuit if either Evald indemnified 
Hauser for actions he took in his capacity as a corporate 
officer or the corporation spent its funds in its own defense.  
We address these arguments in turn.  
¶96 In his brief to this court, Hauser contended that he 
had been indemnified by the corporation for expenses incurred on 
his behalf as a corporate officer.  Wis. Stat. § 180.0851(1) and 
(2) 
require 
indemnification 
of 
an 
officer 
under 
certain 
circumstances when the officer "was a party because he or she is 
a director or officer of the corporation."    
¶97 Under the statute, however, indemnification is not 
self-executing.  Rather, certain formalities are required.  
There is a good policy reason for these formalities.  They 
prevent after-the-fact justification for taking corporate funds 
for personal use.  Without these formalities, an officer could 
direct the corporation to pay funds for his own defense and only 
later assert that he had been indemnified by the corporation. 
¶98 "A director or officer who seeks indemnification under 
[180.0851] shall make a written request to the corporation."  
Wis. Stat. § 180.0851(3).  Further, if the officer wants the 
corporation to 
pay 
the expenses in advance of a final 
disposition, the officer must provide the corporation with "[a] 
No. 
2007AP477   
 
38 
 
written affirmation of his or her good faith belief that he or 
she has not breached or failed to perform his or her duties to 
the corporation" as well as "[a] written undertaking, executed 
personally or on his or her behalf, to repay the allowance" if 
it is later determined that indemnification is not required.  
Wis. Stat. § 180.0853.   
¶99 An officer who is "successful on the merits or 
otherwise" 
is 
entitled 
to 
indemnification 
under 
section 
180.0851(1).27  An officer who was not successful may still be 
entitled to indemnification under sub. (2), but there must be a 
"determination of whether indemnification is required."  Wis. 
Stat. 
§ 180.0851(2)(b). 
 
Section 180.0855 
prescribes 
six 
procedures by which the determination that a director is 
entitled to indemnification can be made.28   
                                                 
27 Wis. Stat. § 180.0851(1) provides that "[a] corporation 
shall indemnify a director or officer, to the extent that he or 
she has been successful on the merits or otherwise in the 
defense of a proceeding, for all reasonable expenses incurred in 
the proceeding . . . ."  Hauser does not assert that he is 
entitled to indemnification under sub. (1), likely because he 
has not been successful in the defense of this proceeding and 
did 
not 
follow 
the 
procedural 
requirements 
in 
section 
180.0851(3) and section 180.0853. 
28 Section 180.0855 provides that the director seeking 
indemnification shall select one of the following six means for 
determining the right to indemnification: (1) a majority vote of 
a quorum of disinterested directors; (2) independent legal 
counsel; (3) a panel of three arbitrators; (4) an affirmative 
vote of the shares (but not the shares of any shareholder 
interested in the litigation); (5) court order under § 180.0854; 
or (6) any other method provided for in any additional right 
(not applicable here). 
No. 
2007AP477   
 
39 
 
¶100 Given the deadlock of the board of directors in this 
case, the only viable option would have been a court order.  
Section 180.0854(1) provides that "a director or officer who is 
a party to a proceeding may apply for indemnification to the 
court conducting the proceeding or to another court of competent 
jurisdiction."  The court "shall order indemnification" if it 
determines that the director is entitled to indemnification 
under the statute or that the officer is fairly and reasonably 
entitled to indemnification in view of all the relevant 
circumstances.  Id. § 180.0854(2). 
¶101 In his brief in this court, Hauser contended that the 
circuit court ordered his indemnification under Wis. Stat. 
§ 180.0854(1).  The record does not support this assertion.   
¶102 Hauser did not follow any of the formalities described 
above.  There is no indication in the record that Hauser made a 
written request to Evald for indemnification as required by 
section 180.0851(3).  Further, there is no indication that he 
provided a written affirmation of his good faith belief and a 
written undertaking to repay the allowance if necessary as 
required by section 180.0853.  Finally, there is no indication 
that he applied to the court for indemnification under section 
180.0854.29  Rather, it appears that he simply directed the 
                                                 
29 The court of appeals mistakenly concluded that "the 
circuit court did in fact order that Hauser be indemnified."  
Ehlinger, 313 Wis. 2d 718, ¶48.  In fact, there is no indication 
that Hauser ever applied to the court for indemnification, and 
there is no order for indemnification in the record.  
No. 
2007AP477   
 
40 
 
corporation to pay all legal expenditures for the pending 
lawsuit.   
¶103 We need not determine here whether Hauser could have 
been indemnified by court order had he followed the statutory 
procedure.  Rather, we simply observe that Hauser did not follow 
that procedure and was therefore not entitled to indemnification 
by Evald.   
¶104 At oral argument, Hauser abandoned the assertion that 
he had been indemnified and instead argued that under these 
circumstances, he could have been indemnified.  When his 
attorney was asked to pinpoint the order for indemnification, he 
responded that he could not:  
Well, let me bury this indemnification issue.  I don't 
think it was ever asked for, and frankly I don't think 
the trial court ever explicitly ordered it.  I think 
the court of appeals was essentially saying that the 
trial court could have done so and perhaps impliedly 
did so when it denied all of Dr. Ehlinger's motions. 
                                                                                                                                                             
Justice Prosser suggests that by failing to rule on 
Ehlinger's motions to enjoin the corporation from paying the 
litigation expenses, the circuit court exercised its discretion 
to order Hauser's indemnification.  See Justice Prosser's 
concurrence/dissent, ¶193.  This assertion is incorrect for two 
reasons.   
First, the statute does not authorize indemnification by 
default.  A court's failure to rule on a motion cannot be the 
functional equivalent of ordering indemnification.  Second, when 
the court finally denied Ehlinger's motion for an injunction in 
February of 2007, the court did not cite or discuss statutory 
indemnification at all.  See supra, ¶93.  Accordingly, the 
circuit court did not "exercise its discretion" on the subject 
of indemnification.  Cf. Justice Prosser's concurrence/dissent 
¶¶193-194. 
No. 
2007AP477   
 
41 
 
¶105 Having abandoned the argument that he was indemnified 
by Evald, Hauser now rests exclusively on the assertion that the 
litigation expenses were incurred in defense of the corporation.  
He notes that Evald is a named party, and he asserts that Evald 
could retain counsel to represent its own interest in a 
dissolution proceeding.   
¶106 Hauser cites to Petition of Levitt, 492 N.Y.S.2d 736 
(N.Y. App. Div. 1985), as authority for his argument.  That 
case, however, tends to undermine his argument.  The Levitt 
court 
clearly 
states 
that 
"in 
the 
usual 
dissolution 
proceeding, . . . the corporation appears as a nominal party and 
the proceeding amounts to a dispute between the shareholders[.]"  
Id. at 742.  The corporation appears as a party "for the limited 
and passive purpose of rendering it amenable to the orders of 
the court."  Id. (citing Matter of Clemente Bros., 239 N.Y.S.2d 
703 (N.Y. App. Div. 1963)).   
¶107 The 
Levitt 
court 
acknowledged 
that 
there 
are 
exceptions to this general rule: 
[T]here appears to be merit to [the non-dissenting 
stockholder] Toohey's claim that, inasmuch as he had 
already exercised his buy-out option under [New York 
law], all that remains is a determination of the fair 
value of the [other shareholder's] stock, and once 
that is made, he will be the beneficial owner of all 
the corporate stock.  Therefore, it may be found that, 
as to the period after Toohey's exercise of the buy-
out option . . . , there was no impropriety in his use 
of corporate funds to pay his own legal expenses.  
Corporate funds could not, however, be properly used 
to pay his counsel fees incurred prior to that 
election. 
Id. 
No. 
2007AP477   
 
42 
 
¶108 In this case, the question at the core of the parties' 
dispute was whether Hauser was entitled to invoke the disability 
buyout agreement and thus become the "beneficial owner of all 
the corporate stock."  The circuit court concluded that he was 
not.  As such, this case does not fit under the exception 
enumerated in Petition of Levitt.  Rather, this is "the usual 
dissolution proceeding," which "amounts to a dispute between the 
shareholders."30   
¶109 We acknowledge that under some circumstances, a 
corporation can and does retain counsel for its own defense in a 
dissolution proceeding.  In Esposito v. Riverside Sand & Gravel 
Co., 191 N.E. 363 (Mass. 1934), the defendant caused the 
corporation to retain counsel to resist dissolution and directed 
the payment of corporate funds for the litigation expenses.  The 
court concluded that these actions were reasonable: 
[T]he corporation was attacked; [] both a temporary 
and a permanent receiver for the corporation was 
prayed for in the bill; and [] there was a prayer for 
the liquidation of the assets of the corporation.  
. . . the practical danger to the corporation cannot 
be pronounced so negligible that it could well have 
ignored the plaintiff's suit as the plaintiff now 
                                                 
30 See also Reinschreiber v. Lipp, 416 N.Y.S.2d 31 (N.Y. 
App. Div. 1979) (concluding that "[t]he trial court abused its 
discretion in directing that the funds of the corporations be 
used to reimburse the [shareholder resisting dissolution] for 
the 
cost 
of 
attorney's 
fees 
incurred 
in 
defending 
the 
dissolution 
proceedings."); 
Application 
of 
Cantelmo, 
104 
N.Y.S.2d 282 (N.Y. App. Div. 1951) ("In the dissolution 
proceeding of the corporation [which had two 50 percent 
shareholders,] the court had no power to fix the fees of 
attorneys who were retained by [one of the shareholders] to 
resist the dissolution.") 
No. 
2007AP477   
 
43 
 
contends.  The corporation was not a mere nominal 
defendant. 
Id. at 364.   
¶110 We 
have 
repeatedly 
stressed, 
however, 
that 
the 
interests of shareholders and the corporation are not always the 
same.  See, e.g., Button v. Hoffman, 61 Wis. 20, 20 N.W. 667 
(1884); Milwaukee Toy Co. v. Industrial Commission, 203 Wis. 
493, 234 N.W. 748 (1931).  Additionally, the corporation may not 
assume a "militant alignment on the side of one of two equal, 
discordant stockholders."  Matter of Clemente Bros., 239 
N.Y.S.2d at 706.  In this case, Evald does not have an interest 
in whether Ehlinger remains a shareholder. 
¶111 Here, only one answer, signed by Attorney Ahrens, was 
filed in response to the complaint.  Throughout the proceedings 
and in the court filings, Attorney Ahrens repeatedly signed on 
the defendants' behalf.31  The singularity of Attorney Ahrens' 
representation is indicia that only one interest is being 
                                                 
31 For instance, Attorney Ahrens was the only counsel to 
sign the following documents on behalf of the defendants: 
Defendants' Motion to Dismiss Pursuant to Wis. Stat. § 805.17(1) 
(filed August 29, 2005), Defendant's [sic] Motion for Partial 
Reconsideration 
of 
September 
9, 
2005 
Ruling 
Regarding 
Particularization and Trial of Any Claim by Plaintiff of Waste 
By Defendants (filed September 9, 2005), Notice of Motion and 
Motion in Limine (filed January 27, 2006); Stipulation and Order 
(stipulating to the entry of exhibits for the 2005 trial, filed 
June 21, 2006); Notice of Motion and Motion for Reconsideration 
and for an Order Setting for Trial the Issue of the Ambiguity of 
the Term Book Value in the Buy/Sell Agreement and Whether 
Defendant's [sic] Substantially Performed (filed December 11, 
2006); Notice of Appeal (filed April 25, 2007).  
  
No. 
2007AP477   
 
44 
 
represented——that of Hauser, one of the two equal, discordant 
shareholders.   
¶112 A review of the record underscores the conclusion that 
this is a dispute between shareholders and Evald is merely a 
nominal party.  In his complaint, Ehlinger asked the court to 
enter 
a 
judgment 
declaring 
that 
Hauser 
"has 
no 
present 
right . . . to require plaintiff to tender his shares of Evald 
Moulding, Inc. for redemption by that corporation."  He sought 
judicial 
dissolution 
of 
the 
corporation 
because 
"[t]he 
shareholders of Evald are deadlocked in voting power."   
¶113 Ehlinger clarified that "Evald is named as a defendant 
because plaintiff seeks judicial dissolution of Evald because of 
impasse and because of the actions of defendant Hauser."  Under 
these facts, the corporation was not made a defendant in any way 
related to the corporation's actions towards Ehlinger.  Rather, 
it is Hauser's actions that form the basis of the complaint.   
¶114 We have concluded that Hauser was not entitled to 
indemnification according to the provisions of Wis. Stat. 
§ 180.0855.  We further determine that Evald may not militantly 
align itself on the side of Hauser, one of two equal, discordant 
shareholders, by paying for expenses incurred by Hauser in 
defense of his actions as a shareholder.   
¶115 Here, although the court concluded that Evald had an 
interest in the dispute, it did not define that interest or 
apply the relevant law.  Therefore, we conclude that the circuit 
court erroneously exercised its discretion by failing to enjoin 
No. 
2007AP477   
 
45 
 
Hauser from charging the litigation expenses to the corporation.  
See State v. Delgado, 223 Wis. 2d 270, 281, 588 N.W.2d 1 (1999). 
V 
¶116 In sum, we conclude that the circuit court did not err 
when it determined that the agreement was unenforceable.  Both 
parties agree that Ehlinger is entitled to examine Evald's books 
to determine whether they accurately reflect the corporation's 
assets and liabilities, a task that the special magistrate was 
unable to perform due to the state of Evald's records.  
Accordingly, we need not resolve whether the contract is 
indefinite or ambiguous here because under these circumstances, 
it cannot be enforced.   
¶117 Further, to the extent that Hauser's characterization 
of the court of appeals' decision is accurate, we determine that 
his argument about the scope of GAAP fails.  The question is not 
what is required under GAAP, but what is required to determine 
the parties' rights.   
¶118 We also conclude that the circuit court did not 
erroneously exercise its discretion when it denied Hauser the 
opportunity to subject the special magistrate to a broader scope 
of cross-examination, to depose the special magistrate, and to 
present his own expert witness in rebuttal. 
¶119 Finally, 
we 
conclude 
that 
the 
circuit 
court 
erroneously exercised its discretion when it permitted the 
corporation to pay Hauser's litigation expenses.  We determine 
that Hauser was not entitled to indemnification by Evald 
according to the provisions of Wis. Stat. § 180.0855.  Further, 
No. 
2007AP477   
 
46 
 
under these facts, the litigation expenses were not incurred by 
the corporation for its own defense.   
¶120 Accordingly, we affirm the court of appeals as 
modified in this opinion and remand to the circuit court for the 
appointment of a receiver.    
By the Court.—The decision of the court of appeals is 
modified and affirmed and, as modified, the cause is remanded. 
¶121 N. PATRICK CROOKS, J., did not participate. 
 
 
No.  2007AP477.pdr 
 
1 
 
 
¶122 PATIENCE DRAKE ROGGENSACK, J. (concurring).   I write 
in 
concurrence 
because 
I 
conclude 
that 
William 
Ehlinger 
(Ehlinger) and Jon Hauser (Hauser) had no binding buy-sell 
agreement in regard to valuing a shareholder's interest in Evald 
Moulding, Inc. (Evald).  The proposed buy-sell agreement is 
irretrievably indefinite in that it does not define an essential 
term of the proposed agreement, i.e., on what basis Evald's 
assets and liabilities are to be valued in calculating book 
value.  Accordingly, I conclude that the proposed buy-sell 
agreement is unenforceable.  
¶123 I also write in concurrence because I conclude that 
the majority's theory that the proposed buy-sell agreement is 
unenforceable due to Hauser's failure to preserve sufficient 
corporate records to verify Evald's March 31, 2001 balance sheet 
rests on three unspoken assumptions, with which I am not in 
agreement.  The first assumption is that the proposed buy-sell 
agreement between Ehlinger and Hauser intended Evald's March 31, 
2001 balance sheet to be the basis for determining book value no 
matter on what basis that balance sheet's assets and liabilities 
were valued.  The second assumption is that Hauser had an 
obligation to maintain documents sufficient to verify Evald's 
March 31, 2001 balance sheet.  The third assumption is that 
having the documents that underlie Evald's March 31, 2001 
balance sheet will cure any ambiguity or indefiniteness in the 
proposed buy-sell agreement.  None of those assumptions is 
No.  2007AP477.pdr 
 
2 
 
warranted.  Accordingly, for the reasons set forth below, I 
respectfully concur. 
I.  BACKGROUND 
¶124 The lengthy history of this case is ably set out in 
the majority opinion and need not be repeated here.  Suffice it 
to say that on June 20, 2001, Hauser invoked the disability 
buyout provision of the proposed buy-sell agreement based on 
Ehlinger's disability.  Because that agreement used the term 
"book value" as the measure for determining a shareholder's 
interest in Evald, Hauser calculated what he asserted was the 
book value of Evald at the relevant time, the end of Evald's 
fiscal year, March 31, 2001.  Hauser offered Ehlinger $431,400 
to purchase his stock in Evald.   
¶125 Ehlinger agreed that Evald's book value was the 
measure for ascertaining the value of his stock, but he 
concluded that book value had been understated.  Therefore, he 
refused Hauser's offer. 
¶126 Ehlinger also asked that Evald's financial records be 
audited and the book value be determined based on that audit.  
Hauser refused, and because Hauser and Ehlinger are equal 
shareholders, no audit was done.   
¶127 In the lawsuit that is now before us, Ehlinger 
asserted that Hauser had calculated book value on a tax basis, 
that the accounts receivable were undervalued and that all of 
the liabilities listed on the March 31, 2001 balance sheet were 
not valid obligations of Evald.  Therefore, he asserted that the 
March 31, 2001 balance sheet could not be used to determine the 
No.  2007AP477.pdr 
 
3 
 
true book value of Evald.  He also asserted that he had not been 
provided with sufficient supporting documentation to fully 
review Hauser's determination of book value.   
¶128 The circuit court appointed a special magistrate to 
determine whether book value could be calculated.  However, the 
special magistrate concluded that he could not verify Evald's 
book value at fiscal year end because of the lack of supporting 
documentation.  He explained that he could not verify Evald's 
physical inventory, accounts receivable and accounts payable, 
all of which were material to a determination of book value.   
¶129 Thereafter, the circuit court determined that the 
proposed 
buy-sell 
agreement was hopelessly indefinite and 
therefore, unenforceable.  Hauser appealed.  After concluding 
that 
the 
proposed 
buy-sell 
agreement 
was 
ambiguous, 
not 
indefinite, the court of appeals affirmed the circuit court.  
Ehlinger v. Hauser & Evald Moulding, Inc., 2008 WI App 123, ¶31, 
313 Wis. 2d 718, 758 N.W.2d 476.   
¶130 The majority opinion concludes that the lack of 
documentation to verify the March 31, 2001 balance sheet makes 
it unnecessary to determine whether the circuit court was 
correct in determining that the proposed buy-sell agreement was 
indefinite or the court of appeals was correct in determining 
that the proposed agreement was ambiguous.1 
                                                 
1 Majority op., ¶59. 
No.  2007AP477.pdr 
 
4 
 
II.  DISCUSSION 
A.  Standard of Review 
¶131 Whether an agreement2 is ambiguous is a question of law 
for our independent review.  Moran v. Shern, 60 Wis. 2d 39, 46-
47, 208 N.W.2d 348 (1973); Town of Neenah Sanitary Dist. No. 2 
v. City of Neenah, 2002 WI App 155, ¶9, 256 Wis. 2d 296, 647 
N.W.2d 913.  We also decide as a question of law whether a 
proposed agreement is indefinite.  See Gerruth Realty Co. v. 
Pire, 17 Wis. 2d 89, 94-95, 115 N.W.2d 557 (1962).   
B.  General Contract Principles 
¶132 An agreement is ambiguous if it is capable of more 
than one reasonable interpretation.  Mgmt. Computer Servs., Inc. 
v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 177, 557 N.W.2d 
67 (1996).  An agreement is indefinite when an essential term of 
the agreement is so uncertain as to prevent the creation of an 
enforceable contract.  Id. at 178.  Determining that a contract 
is ambiguous or that it is indefinite has different consequences 
for the parties to a proposed contract.   
¶133 If an alleged agreement is ambiguous, the law presumes 
that a binding contract has been made and a fact question arises 
as to what the parties meant by the ambiguous term at the time 
the agreement was made.  Bank of Sun Prairie v. Opstein, 86 
Wis. 2d 669, 674-76, 273 N.W.2d 279 (1979); Lemke v. Larsen Co., 
35 Wis. 2d 427, 431-32, 151 N.W.2d 17 (1967).  Additionally, 
when an agreement is ambiguous, the meaning of the agreement is 
                                                 
2 I use agreement and contract interchangeably in this 
concurrence. 
No.  2007AP477.pdr 
 
5 
 
not determined solely by the face of the agreement; extraneous 
evidence of the intent of the parties may also be considered.  
Patti v. W. Mach. Co., 72 Wis. 2d 348, 351, 241 N.W.2d 158 
(1976).  The parties to the agreement may testify about what 
they intended the ambiguous term to mean when they entered into 
the contract.  Id. at 354-55.  The trier-of-fact will then 
determine what the parties intended.  Id. 
¶134 On the other hand, if an alleged agreement is 
indefinite as to an essential term, no enforceable agreement has 
been made because the parties have not agreed to their 
particularized obligations.  Shetney v. Shetney, 49 Wis. 2d 26, 
38, 181 N.W.2d 516 (1970); 1 Corbin on Contracts § 95, at 394 
(1963).  The requirement that a contract's essential terms be 
definite stems from requiring mutual assent, or a "meeting of 
the minds," to create an enforceable agreement.  1 Corbin on 
Contracts § 4.13, at 634-37 (rev. ed. 1993).   
¶135 As we have explained, an indefinite agreement is no 
agreement at all.  Gerruth Realty, 17 Wis. 2d at 93.  Stated 
otherwise, "the definiteness requirement is relevant to contract 
formation, not [contract] interpretation."  Mgmt. Computer 
Servs., 206 Wis. 2d at 178.   
¶136 An enforceable agreement is not created when an 
essential term is indefinite.  Id.  An essential term is 
definite when there is mutual assent as to its meaning by the 
parties to the agreement.  Id.  An objective standard is used to 
determine whether there has been mutual assent.  Id.  If an 
essential term of an agreement is indefinite, it renders the 
No.  2007AP477.pdr 
 
6 
 
contract unenforceable and our analysis of the alleged agreement 
ends with that determination. 
C.  Proposed Buy-Sell Agreement 
¶137 The circuit court held extensive hearings on the 
meaning of book value.  At their conclusion, the court found 
that "'[b]ook value' could mean anything from simple adoption of 
the year end statement to an audited determination."  Memorandum 
Decision 1 (Jefferson County Cir. Ct. Nov. 29, 2006).  It also 
found that "[t]he parties' conduct is insufficient to give 
definite meaning to the vague term."  Id. at 2.  The circuit 
court then concluded that it must "grant[] Plaintiff's motion to 
declare 'book value' undeterminable."  Id.   
¶138 On review, we sustain a circuit court's findings of 
fact unless they are clearly erroneous.  Phelps v. Physicians 
Ins. Co. of Wis., Inc., 2009 WI 74, ¶34, 319 Wis. 2d 1, 768 
N.W.2d 615 (citing Steinbach v. Green Lake Sanitary Dist., 2006 
WI 63, ¶10, 291 Wis. 2d 11, 715 N.W.2d 195).  Whether an alleged 
contract is indefinite can be determined by the trier-of-fact or 
as a matter of law.  Mgmt. Computer Servs., 206 Wis. 2d at 178.  
Here, according to the findings and conclusions of the circuit 
court, the indefiniteness of book value could not be made more 
certain by surrounding circumstances.  See Gerruth Realty, 17 
Wis. 2d at 92.   
¶139 I conclude that the circuit court's findings are not 
clearly erroneous and that the proposed buy-sell agreement is 
incurably indefinite.  First, there is nothing in the record 
from which to ascertain the basis upon which the parties decided 
No.  2007AP477.pdr 
 
7 
 
that book value was to be calculated, when the proposed 
agreement was signed.3  Yet, that is the relevant timeframe for 
establishing the meaning of book value.  See Bank of Sun 
Prairie, 86 Wis. 2d at 674-76.  
¶140 Second, while book value is generally accepted as the 
assets of a corporation less its liabilities, there is no 
universal method by which a corporation values its assets and 
liabilities.  For example, assets could be valued on a cost 
basis, a tax basis, a fair market value basis or some other 
basis.  The proposed buy-sell agreement is silent about 
valuation of Evald's assets and liabilities for purposes of a 
shareholder buyout.  Book value, with no further instructions 
about what is to be included and on what basis valuation is to 
be made, is too amorphous a term to provide the definiteness 
necessary to create an enforceable agreement.   
¶141 For example, in Gardner v. Gardner, 190 Wis. 2d 216, 
527 N.W.2d 701 (Ct. App. 1994), the court of appeals upheld a 
settlement agreement because the wife was informed by separate 
counsel that there was a difference between book value and the 
fair market value of certain stock.  Id. at 230–31.  Therefore, 
she could not complain that her husband had not adequately 
disclosed a major asset in the estate, which was listed as book 
value.  Id.  In Wisconsin Department of Revenue v. River City 
Refuse Removal, Inc., 2007 WI 27, 299 Wis. 2d 561, 729 N.W.2d 
396, we described a computation of book value as "subtracting 
                                                 
3 The proposed buy-sell agreement was signed on August 14, 
1992. 
No.  2007AP477.pdr 
 
8 
 
the accumulated depreciation" from "the original purchase price" 
of assets, during a transfer of assets between a subsidiary and 
a parent company.  Id., ¶8. 
¶142 In Schumann v. Samuels, 31 Wis. 2d 373, 142 N.W.2d 777 
(1966), the parties had a partnership agreement that addressed 
buyouts upon retirement.  In regard to valuation, that agreement 
provided:  
"[B]ooks shall be kept on . . . a cash receipts and 
disbursements 
method of accounting, with use of 
inventories.  However, this result is to be achieved 
by making the daily entries on the accrual system and 
adjusting them on any valuation date to the cash 
receipts 
and 
disbursements 
method, 
with 
use 
of 
inventories."  
Id. at 374.   
¶143 Schumann decided to retire, and Samuels elected to 
purchase his interest under the above quoted provision of the 
partnership agreement.  Id. at 375.  We concluded that even 
though both parties agreed that Schumann's interest could be 
purchased for book value, the agreement was nevertheless 
unenforceable.  Id. at 376-77.  As we explained, "[t]here is no 
doubt that 'book value' can be almost anything that the parties 
to a contract clearly define it to be."  Id.  We then remarked 
that in Townsend v. La Crosse Trailer Corp., 254 Wis. 31, 35 
N.W.2d 325 (1948), we said that book value was "'the market 
value of the assets'" less the company's liabilities.  Schumann, 
31 Wis. 2d at 377 (quoting Townsend, 254 Wis. at 36).  We then 
imposed Townsend's determination of book value on the parties.  
Id.  
No.  2007AP477.pdr 
 
9 
 
¶144 While we may have reached the correct result for the 
parties in Schumann, we cannot apply its reasoning here because 
Townsend did not decide that book value equaled "market value" 
of assets less the company's liabilities.  Rather, Townsend was 
a discovery case in a pre-complaint filing posture where the 
plaintiff wanted to view a list of documents to determine 
whether he could file a complaint alleging that the balance 
sheet provided to him was fraudulently constructed.  Townsend, 
254 Wis. at 36-37.  Suffice it to say that the definitions 
ascribed to book value and the methods used in calculating book 
value vary considerably from case to case.   
¶145 Third, Hauser does not contend that the circuit 
court's finding, that book value under the buy-sell agreement 
could mean anything from simple adoption of a year end statement 
to an audited determination, is clearly erroneous.  Instead, he 
argues that the circuit court "incorrectly diagnosed the problem 
as indefiniteness instead of ambiguity."  Hauser's brief in 
chief, 17.  The findings of the circuit court cannot be set 
aside by simply contending that the legal issue is whether the 
proposed agreement is ambiguous rather than indefinite.  
¶146 I conclude that the proposed agreement is indefinite 
as a matter of law, irrespective of whether that conclusion is 
based on the circuit court's findings of fact or is simply 
derived from the face of the agreement.  The circuit court's 
findings of fact are not clearly erroneous, and there is no 
explanation in the proposed agreement from which one can 
objectively determine the basis on which Evald's assets and 
No.  2007AP477.pdr 
 
10 
 
liabilities are to be valued when calculating book value.  
Accordingly, I would affirm the court of appeals' affirmance of 
the circuit court, albeit on a different basis.  
D.  The Majority Opinion 
¶147 The 
majority 
opinion 
concludes 
that 
it 
is 
not 
necessary to determine whether the proposed buy-sell agreement 
is ambiguous or indefinite.4  The majority opinion asserts: 
Because Ehlinger cannot now validate any claimed "book 
value," the contract cannot be enforced regardless of 
how the term could be defined.5   
¶148 The majority opinion concludes that Ehlinger had the 
right to inspect the documentation underlying the March 31, 2001 
balance sheet.6  Based on this conclusion, the majority opinion 
then assumes, without so stating, that Hauser had an obligation 
to maintain documentation sufficient to verify the figures on 
Evald's balance sheet.  Such an obligation could arise by 
contract for Hauser or perhaps by statute, if Evald had the 
obligation.  See Kasten v. Doral Dental USA, LLC, 2007 WI 76, 
¶5, 301 Wis. 2d 598, 733 N.W.2d 300.  However, no party 
testified to an agreement that Hauser would permanently maintain 
supporting documentation for Evald's balance sheets and the 
proposed buy-sell agreement contains no such obligation.   
                                                 
4 Majority op., ¶3. 
5 Id., ¶59. 
6 Id., ¶¶3, 60. 
No.  2007AP477.pdr 
 
11 
 
¶149 Furthermore, no statute requires Evald to permanently 
maintain supporting documentation for its balance sheets.7  
Wisconsin's business corporation law is contained in ch. 180.  
Wisconsin Stat. § 180.1602 addresses the inspection of corporate 
records by a shareholder.  A shareholder who qualifies for the 
right to inspect corporate records under § 180.1602(2)(b)8 has a 
statutory right to inspect the corporation's bylaws under 
§ 180.1602(1m) 
and 
three additional categories of records 
pursuant to § 180.1602(2)(a).  Those categories of corporate 
records are:  
1. 
Excerpts from any minutes or records that 
the corporation is required to keep as permanent 
records under s. 180.1601(1).9 
2. 
Accounting records of the corporation. 
                                                 
7 It is important to point out that no four justices agree 
that Hauser or Evald had an obligation to retain supporting 
documentation for Evald's balance sheets. 
8 There is no question that Ehlinger is a shareholder who 
qualifies 
for 
the 
statutory 
right 
to 
inspect 
the 
three 
categories of records listed in Wis. Stat. § 180.1602(2)(a). 
9 Wisconsin Stat. § 180.1601(1) provides: 
(1) A corporation shall keep as permanent records 
any of the following that has been prepared: 
(a) Minutes of meetings of its shareholders and 
board of directors. 
(b) Records of actions taken by the shareholders 
or board of directors without a meeting. 
(c) Records of actions taken by a committee of 
the board of directors in place of the board of 
directors and on behalf of the corporation.  
No.  2007AP477.pdr 
 
12 
 
3. 
The 
record 
of 
shareholders, 
except 
as 
provided in s. 180.1603(3). 
§ 180.1602(2)(a).  In regard to "accounting records" of a 
corporation, 
Wis. 
Stat. 
§ 180.1601(2) 
provides 
that 
a 
"corporation shall maintain appropriate accounting records."  
However, nowhere in ch. 180 are "appropriate accounting records" 
defined.   
¶150 In 
addition, 
there 
is 
no 
requirement 
that 
a 
corporation permanently maintain accounting records.  Wisconsin 
Stat. § 180.1601(1) identifies those records that must be 
maintained permanently.10  The listing in § 180.1601(1) includes 
minutes, actions taken without a meeting and committee actions 
taken on behalf of the corporation.  Accounting records are not 
among those corporate records that are required to be maintained 
permanently.  
¶151 Chapter 180, Wisconsin's current business corporation 
law, was created by 1989 Wis. Act 303, § 13.  The type of 
accounting records for which ch. 180 provides a shareholder's 
right of inspection has received little judicial scrutiny.  
However, prior to the enactment of 1989 Wis. Act 303, Wis. Stat. 
§ 180.43(1) 
(1987-88) 
was 
the 
predecessor 
of 
Wis. 
Stat. 
§ 180.1602(2).  Section 180.43(1) (1987-88) provided in relevant 
part: 
Each corporation shall keep correct and complete books 
and records of account and . . . minutes of the 
proceedings of its shareholders and board of directors 
. . . [and] a record of its shareholders . . . .  
                                                 
10 See supra note 9. 
No.  2007AP477.pdr 
 
13 
 
¶152 The 
court 
of 
appeals 
interpreted 
Wis. 
Stat. 
§ 180.43(1)11 in Bitters v. Milcut, Inc., 117 Wis. 2d 48, 343 
N.W.2d 418 (Ct. App. 1983).  In Bitters, the court of appeals 
addressed a shareholder's request to inspect "interim corporate 
financial statements."  Id. at 48.  The circuit court in Bitters 
concluded that the interim financial statements were not within 
the scope of corporate documents to which a shareholder's right 
of inspection under § 180.43(1) applied.  Id. at 49.  In 
affirming the circuit court, the court of appeals concluded that 
a corporation's obligation to permit shareholder inspection of 
the "books and records of account . . . undoubtedly [is] one for 
an annual financial statement."  Id. at 51.   
¶153 Here, the majority opinion presumes that Evald had an 
obligation 
to 
maintain documentation underlying an annual 
financial 
statement, 
the 
March 31, 
2001 
balance 
sheet.12  
However, such an obligation does not arise under either the 
proposed buy-sell agreement or under a statute.  
¶154 And 
finally, 
even 
if 
Evald 
had 
maintained 
the 
documentation underlying the March 31, 2001 balance sheet on 
which Hauser asserted that he calculated the book value of 
Evald, a court, nevertheless, could not calculate the book value 
of 
Evald. 
 
This 
is 
so 
because 
of 
the 
irretrievable 
                                                 
11 Bitters does not specify which version of Wis. Stat. 
§ 180.43(1) it interpreted; however, the relevant text of the 
statute is the same as the above-quoted 1987–88 version.  See 
Bitters v. Milcut, Inc., 117 Wis. 2d 48, 50 n.1, 343 N.W.2d 418 
(Ct. App. 1983). 
12 See majority op., ¶60. 
No.  2007AP477.pdr 
 
14 
 
indefiniteness inherent in the undefined, essential term "book 
value" in the proposed buy-sell agreement.   
¶155 To explain further, book value may be based on 
different valuation methods and still be called "book value."  
The proposed buy-sell agreement gives no direction as to whether 
the assets were to be valued on a cost basis, a tax basis, a 
fair market value basis or some other basis when a shareholder 
is being bought out.  Each choice would produce a different book 
value.  Also, there is no indication of how the liabilities were 
to be valued.  The documentation from which the March 31, 2001 
balance sheet was constructed might indicate on what basis the 
March 31, 2001 balance sheet was stated, but it will not 
indicate whether the valuation basis used for the balance sheet 
comports with the term "book value" in the proposed buy-sell 
agreement.  Accordingly, the missing, underlying records do not 
remove the necessity to analyze whether the proposed buy-sell 
agreement is indefinite or merely ambiguous. 
III.  CONCLUSION 
¶156 I conclude that the parties had no binding buy-sell 
agreement in regard to valuing a shareholder's interest in Evald 
because 
the 
proposed 
buy-sell 
agreement 
is 
irretrievably 
indefinite in that it does not define an essential term of the 
proposed agreement, i.e., on what basis Evald's assets and 
liabilities are to be valued in calculating book value.  
Accordingly, I conclude that the proposed buy-sell agreement is 
unenforceable.  
No.  2007AP477.pdr 
 
15 
 
¶157 I also conclude that the majority's theory that the 
proposed buy-sell agreement is unenforceable due to Hauser's 
failure to preserve sufficient corporate records to verify 
Evald's March 31, 2001 balance sheet rests on three unspoken 
assumptions, with which I am not in agreement.  The first 
assumption is that the proposed buy-sell agreement between 
Ehlinger and Hauser intended Evald's March 31, 2001 balance 
sheet to be the basis for determining book value no matter on 
what basis that balance sheet's assets and liabilities were 
valued.  The second assumption is that Hauser had an obligation 
to maintain documents sufficient to verify Evald's March 31, 
2001 balance sheet.  The third assumption is that having the 
documents that underlie Evald's March 31, 2001 balance sheet 
will cure any ambiguity or indefiniteness in the proposed buy-
sell agreement.  None of those assumptions is warranted.  
Accordingly, for the reasons set forth above, I respectfully 
concur. 
 
 
No.  2007AP477.dtp 
 
1 
 
¶158 DAVID T. PROSSER, J.   (concurring in part, dissenting 
in part).  The majority opinion affirms the decisions of the 
circuit court and the court of appeals that the buyout (Buy-
Sell) agreement, under all the facts and circumstances, is 
unenforceable; and it remands the case to the circuit court for 
appointment of a receiver.  I concur in these determinations. 
¶159 I do not agree, however, that the circuit court erred 
when it permitted Evald Moulding, Inc. to pay attorney fees for 
representation of the corporation and its president, chief 
executive officer, and treasurer, Jon A. Hauser, who also is a 
corporation director.  In my view, the majority's decision on 
this issue overlooks critical facts and results in a mistaken 
interpretation 
of 
the 
indemnification 
provisions 
of 
the 
Wisconsin corporation statutes.  Because the majority's decision 
on indemnification of attorney fees has ramifications well 
beyond this case, I respectfully dissent. 
I 
¶160 Dr. William Ehlinger was a dentist who practiced in 
Watertown.  In addition to his dental practice, Dr. Ehlinger 
invested in a number of business enterprises, including Evald 
Moulding, Inc.  From 1981 until 1985, Dr. Ehlinger, Jon Hauser, 
and a third shareholder, James Safford, each owned one-third 
interest in Evald.  In 1985 Dr. Ehlinger and Hauser bought out 
Safford's interest.  In 1989 Hauser took over running the 
business.  In 1992 Dr. Ehlinger and Hauser entered into the Buy-
Sell Agreement at issue in this case. 
No.  2007AP477.dtp 
 
2 
 
¶161 The 1992 Buy-Sell Agreement included the following 
provisions: 
 
3. 
Transfer 
upon 
Disability. 
 
Upon 
a 
Shareholder 
becoming 
totally 
disabled 
as 
defined 
hereafter, 
for 
a 
period 
of 
twenty-four 
(24) 
consecutive months, the other Shareholder shall have 
the first right to purchase all or part of the stock 
owned by the disabled Shareholder.  Any part of the 
stock owned by the disabled Shareholder not initially 
purchased by the other Shareholder shall then be 
offered to the Corporation for purchase.  Any part of 
the stock owned by the disabled Shareholder not 
purchased by the Corporation must then be purchased by 
the other Shareholder.  The disabled Shareholder or 
his legal representative shall sell all of the stock 
owned by the disabled Shareholder at the Agreed 
Purchase Price as defined in Section 6 hereof upon the 
terms and conditions set forth herein.  If there is no 
disability 
buy-out 
insurance 
for 
a 
Stockholder, 
"totally disabled" as used herein shall be defined as 
being unable to perform all the substantial and 
material duties of his employment with Evald Moulding 
Company, Inc.; or of the occupation or profession he 
practiced on the date he became disabled. . . . 
 
. . . .  
 
6. 
Purchase Price. 
 
(a) For transfers of all of a Shareholder's 
stock at his death, or upon his becoming disabled, the 
purchase price of a Shareholder's shares of stock 
shall be $350,000.00 or Book Value whichever is 
greater, except if the Shareholders have determined by 
unanimous resolution passed subsequent to the date of 
this agreement that the purchase price shall be other 
than $350,000.00, then the most recent such resolution 
shall determine the purchase price.  For transfers of 
all of a Shareholder's stock on threat of involuntary 
transfer, the purchase price of a Shareholder's shares 
of stock shall be the book value of said shares as of 
the end of the last fiscal year. 
 
. . . .  
 
(3) For 
transfers 
on 
a 
Shareholder 
being 
disabled for twenty-four (24) consecutive months, 
No.  2007AP477.dtp 
 
3 
 
except for payment funded by disability buy-out 
insurance, payment shall be made 20% within ninety 
(90) 
days 
of 
the 
end 
of 
the 
twenty-four 
(24) 
consecutive months of disability, and 80% within sixty 
(60) months after said initial payment.  The portion 
of the purchase payment not paid within ninety (90) 
days of the end of the twenty-four (24) consecutive 
months of disability shall bear annual interest equal 
to the prime rate at Bank One, Watertown, Wisconsin, 
or at its successor banking institution, and shall be 
adjusted at the end of each annual quarter.  Interest 
shall be paid at the end of each annual quarter, and 
there shall be no prepayment penalty.  For transfers 
upon 
such 
twenty-four 
(24) 
consecutive 
month 
disability which are funded by disability buy-out 
insurance payment shall be sought from the insurer and 
paid over to the disabled Shareholder, as soon as 
practicable. 
 
. . . .  
 
8. 
Closing of Transactions.  The Closing of any 
transaction 
hereunder 
shall 
take 
place 
at 
the 
principal office of the Corporation on the date agreed 
upon by the parties, provided however, that unless 
otherwise agreed: 
 
. . . .  
 
(b) Disability Transfers.  In the event of a 
transfer upon disability as hereinabove provided, such 
closing for payments not funded by insurance, shall 
take place for the first 20% payment, at 10:00 a.m. on 
the 90th day after twenty-four (24) consecutive months 
of disability.  The remaining 80% shall be payable on 
a monthly basis with interest as set forth in 
paragraph 6(b)(3) above. 
(Emphasis added.) 
¶162 In 
May 
1993 
Dr. 
Ehlinger 
was 
diagnosed 
with 
Parkinson's disease.  He took a leave of absence from his dental 
practice to seek medical treatment.  He was never able to resume 
his practice but did engage in other business activities. 
¶163 In December 2000 Dr. Ehlinger asked Hauser to make an 
offer for his one-half interest in Evald.  Majority op., ¶11.  
No.  2007AP477.dtp 
 
4 
 
In June 2001 Hauser sent a letter to Dr. Ehlinger invoking the 
disability provision of the Buy-Sell Agreement.  Majority op., 
¶12.  Hauser calculated the book value of Dr. Ehlinger's shares 
in Evald at $431,400.  Id.  Dr. Ehlinger did not accept this 
purchase offer, which was based on Evald's most recent fiscal 
year-end statement.  Id. 
¶164 Dr. Ehlinger may have been annoyed at the manner in 
which Hauser made his purchase offer.  He clearly was not 
satisfied with the size of the offer.  He subsequently called a 
meeting of the shareholders and directors for April 22, 2002.  
Dr. Ehlinger made a motion at that meeting that Evald's books be 
audited but it was not adopted.  The shareholders failed to 
elect directors. Id., ¶13.  Hauser's subsequent effort to close 
on his earlier purchase offer also failed when Dr. Ehlinger 
refused to cash Hauser's 20 percent check. 
¶165 On April 30, 2003, Dr. Ehlinger filed suit against 
Hauser and Evald Moulding.  The suit asked the court to (1) 
dissolve the corporation and appoint a receiver, as provided in 
Wis. Stat. §§ 180.1431 and 180.1432; (2) obtain an accounting of 
a separate dissolved partnership and liquidate and distribute 
its assets; (3) declare the respective rights of the parties 
under the 1992 Buy-Sell Agreement; and (4) issue a preliminary 
injunction against Hauser to restrain him from implementing 
redemption of Dr. Ehlinger's stock or exercising a proxy vote of 
Dr. Ehlinger's shares. 
¶166 In his suit, Dr. Ehlinger described Hauser as "the 
President, Treasurer and Chief Executive Officer of Evald 
No.  2007AP477.dtp 
 
5 
 
Moulding, Inc."  Dr. Ehlinger alleged that he sought dissolution 
of Evald, in part, "because of the actions of defendant Hauser."  
He complained about the amount of compensation and bonuses paid 
to 
Hauser; 
the 
employment 
and 
compensation 
of 
Hauser's 
relatives; the amount and nature of expenses paid to Hauser and 
his relatives; Hauser's refusal to consider Ehlinger's relatives 
for employment by Evald; and "the nonpayment of dividends." 
¶167 The suit alleged: "On March 26, 2002, the plaintiff 
served notice of an annual meeting of the shareholders and 
directors of Evald to address the matters that were in dispute 
regarding the operation of Evald."  (Emphasis added.)  At the 
April 22 meeting, Dr. Ehlinger made numerous motions.  These 
motions were recounted in the complaint.  The complaint alleged 
that the "defendant refused" to approve Dr. Ehlinger's motions.  
The complaint distinguished actions not approved by "the 
shareholders" from motions not approved by the "defendant." 
¶168 The complaint stated: "the directors of Evald are 
deadlocked 
in 
the 
management 
of 
its 
corporate 
affairs."  
(Emphasis added.) 
¶169 The complaint twice asserted that financial statements 
of the corporation were "prepared by the defendant [Hauser]." 
¶170 Paragraph 33 stated: 
 
The defendant has assumed total control of Evald 
and has for over 7 years operated Evald in a manner 
that benefits primarily and disproportionately the 
defendant and the members of his family.  The 
defendant is thus acting and will act in a manner that 
is oppressive to the plaintiff, which constitutes 
grounds 
for 
the 
judicial 
dissolution 
of 
the 
corporation at the request of the plaintiff under 
Section 180.1430(2)(b) of the Wisconsin Statutes. 
No.  2007AP477.dtp 
 
6 
 
¶171 In sum, although Hauser was undoubtedly a shareholder, 
he is repeatedly referred to in the complaint in his capacity as 
an officer or director. 
¶172 In the complaint, Dr. Ehlinger also named Evald 
Moulding as a defendant.  The suit alleged that "Evald is named 
as a defendant because plaintiff seeks judicial dissolution of 
Evald because of impasse and because of the actions of defendant 
Hauser."  Complaint, ¶3 (emphasis added).  Dr. Ehlinger asked 
that a receiver be appointed by the court.  He asked that the 
receiver, in turn, "make an accounting" of the corporation and 
"dispose of its business."  The complaint was signed by Attorney 
Ralph J. Ehlinger. 
¶173 The critical issue in this dissent is whether the 
circuit court erred when it permitted the corporation to pay 
attorney 
fees 
to 
represent 
the 
corporation's 
rights 
and 
interests in litigation to dissolve the corporation, and 
attorney fees to represent its officer/director Jon Hauser, 
whose conduct is alleged to provide the grounds for dissolution.  
In short, did the circuit court err in allowing attorney fees 
after thoroughly considering the facts above? 
II 
¶174 In the 1980s, a national "director and officer 
liability crisis" led to enactment of legislation to "give added 
protection to corporate officials who act within the scope of 
their corporate duties."  Paul Milakovich, A Comprehensive 
Approach: Director and Officer Indemnification in Wisconsin, 71 
Marq. L. Rev. 407, 407 (1988).  Wisconsin passed legislation to 
No.  2007AP477.dtp 
 
7 
 
address this "crisis" in 1987.  1987 Wis. Act 13.  The new 
legislation created Wis. Stat. § 180.044 (1987-88).  1989 Wis. 
Act 
303 
renumbered 
§ 180.044 
to 
§ 180.0851 
and 
made 
insignificant modifications.  Section 180.0851 now reads: 
 
Mandatory indemnification.  (1) A corporation 
shall indemnify a director or officer, to the extent 
that he or she has been successful on the merits or 
otherwise in the defense of a proceeding, for all 
reasonable expenses incurred in the proceeding if the 
director or officer was a party because he or she is a 
director or officer of the corporation. 
 
(2)(a) 
In cases not included under sub. (1), a 
corporation shall indemnify a director or officer 
against liability incurred by the director or officer 
in a proceeding to which the director or officer was a 
party because he or she is a director or officer of 
the corporation, unless liability was incurred because 
the director or officer breached or failed to perform 
a duty that he or she owes to the corporation and the 
breach or failure to perform constitutes any of the 
following: 
 
 
1. 
A willful failure to deal fairly with 
the corporation or its shareholders in connection with 
a matter in which the director or officer has a 
material conflict of interest. 
 
 
2. 
A violation of the criminal law, unless 
the director or officer had reasonable cause to 
believe that his or her conduct was lawful or no 
reasonable cause to believe that his or her conduct 
was unlawful. 
 
 
3. 
A transaction from which the director 
or officer derived an improper personal profit. 
 
 
4. 
Willful misconduct. 
 
(b) Determination of whether indemnification is 
required under this subsection shall be made under s. 
180.0855. 
 
(c) The termination of a proceeding by judgment, 
order, settlement or conviction, or upon a plea of no 
No.  2007AP477.dtp 
 
8 
 
contest or an equivalent plea, does not, by itself, 
create a presumption that indemnification of the 
director or officer is not required under this 
subsection. 
 
(3) A 
director 
or 
officer 
who 
seeks 
indemnification 
under this section shall make a 
written request to the corporation. 
 
(4)(a) 
Indemnification under this section is 
not required to the extent limited by the articles of 
incorporation under s. 180.0852. 
 
(b) Indemnification under this section is not 
required if the director or officer has previously 
received indemnification or allowance of expenses from 
any person, including the corporation, in connection 
with the same proceeding. 
Wis. Stat. § 180.0851 (emphasis added). 
¶175 In his Comment, Paul Milakovich made the following 
observations: 
Wisconsin has recently joined numerous other states in 
passing protective statutes . . . .  With the adoption 
of these statutes, directors and officers of Wisconsin 
corporations 
can 
make 
decisions 
without 
the 
unreasonable threat of outrageous litigation expenses 
or personal liability. 
 
. . . .  
 
In codifying its indemnification provisions for 
directors and officers, the Wisconsin legislature took 
a rather unique approach.  While most states have 
adopted 
mandatory 
indemnification 
provisions 
in 
limited situations and permissive indemnification in 
all others, Wisconsin has combined both approaches 
into 
a 
single 
mandatory 
indemnification 
section.  
Wisconsin 
continues to require a corporation to 
indemnify its directors and officers to the extent 
they were successful on the merits in the defense of a 
proceeding.  However, the difference under the 1987 
legislation can be seen in circumstances which do not 
fall within this "success on the merit" language.  
Section 180.044(2) of the Wisconsin Statutes now 
provides that a corporation shall indemnify a director 
or officer against liability unless it is determined 
No.  2007AP477.dtp 
 
9 
 
that the director or officer breached or failed to 
perform a duty he or she owed to the corporation and 
the breach or failure to perform constitutes: 
 
(a) A wilful failure to deal fairly with the 
corporation or its shareholders in connection with a 
matter in which the director or officer has a material 
conflict of interest; 
 
(b) A violation of criminal law, unless the 
director or officer has reasonable cause to believe 
his or her conduct was lawful or no reasonable cause 
to believe his or her conduct was unlawful; 
 
(c) A transaction from which the director or 
officer derived an improper personal profit; or 
 
(d) Wilful misconduct. 
If any of these criteria occur, the director or 
officer cannot be indemnified under Wisconsin law.  
Like the statute dealing with the limitation of a 
director's liability, this provision applies to all 
Wisconsin corporations unless the corporation provides 
otherwise. 
Milakovich, supra, at 428-29 (footnotes omitted). 
 
The area of director and officer indemnification 
is one in which the Wisconsin legislature has adopted 
a vastly different approach than that adopted by other 
states.  Most states require indemnification to the 
extent a director or officer is successful on the 
merits 
of 
his 
or 
her 
actions 
and 
they 
permit 
indemnification 
in 
most 
other 
circumstances.  
Wisconsin, on the other hand, requires indemnification 
in 
instances 
when 
the 
officer 
or 
director 
is 
successful on the merits and in situations in which 
the corporate official is not successful on the 
merits, as long as the individual's conduct does not 
fall 
within 
the 
statutory 
exclusions. 
 
This 
indemnification 
provision 
is 
unique 
in 
that 
it 
provides a director or officer the assurance that 
indemnification 
will 
be 
available, 
unless 
the 
corporation limits this right in its articles of 
incorporation. 
Id. at 436 (footnotes omitted). 
No.  2007AP477.dtp 
 
10 
 
¶176 These 1988 observations are echoed in the Wisconsin 
Practice Series by Jay E. Grenig and Nathan Fishbach.  They 
write: 
 
The 
"mandatory" 
indemnification 
rights 
are 
straightforward 
and 
consistent 
with 
common 
past 
practices.  They are not mandatory, however, since any 
corporation 
may 
limit 
them 
in 
its 
articles 
of 
incorporation.  Under these provisions, an officer or 
director is entitled to indemnification for expenses 
(including 
reasonable 
attorney 
fees) 
if 
they 
successfully defend in a proceeding in which they are 
a party because they are such officer or director.  
Even if the officer or director is unsuccessful in its 
defense 
of 
a 
proceeding, 
it 
is 
entitled 
to 
indemnification by the corporation for all liability, 
including expenses, unless the liability resulted from 
criminality, willful misconduct, conflict of interest, 
or improper personal profit by the director. 
2 Grenig & Fishbach, Wisconsin Practice Series: Methods of 
Practice § 52.71 (4th ed. 2004).1 
III 
¶177 We must examine the text of Wis. Stat. § 180.0851, 
considering 
this 
historical 
and 
analytical 
background.  
Subsection (1) reads as follows: 
Mandatory indemnification.  (1) A corporation 
shall indemnify a director or officer, to the extent 
that he or she has been successful on the merits or 
otherwise in the defense of a proceeding, for all 
reasonable expenses incurred in the proceeding if the 
director or officer was a party because he or she is a 
director or officer of the corporation. 
Wis. Stat. § 180.0851(1) (emphasis added). 
                                                 
1 Dr. Ehlinger does not point to any limitation on 
indemnification in Evald Moulding's articles of incorporation in 
this case. 
No.  2007AP477.dtp 
 
11 
 
¶178 This subsection presents several obvious questions in 
light of Jon Hauser's status as a director and officer, as well 
as a shareholder.  What does the phrase "if the director or 
officer was a party because he or she is a director or officer 
of the corporation" mean?  Does it mean that if the "director or 
officer" also is a significant shareholder, the director or 
officer loses his right to mandatory indemnification?  Does it 
mean that if a director or officer is sued partly in his 
capacity as a director or officer and partly in his capacity as 
a shareholder, the director or officer loses his right to 
mandatory indemnification? 
¶179 In my view, a director or officer has a right to 
indemnification "to the extent that he or she has been 
successful on the merits or otherwise in the defense of a 
proceeding . . . if the director or officer was a party because 
he or she is a director or officer of the corporation."  Wis. 
Stat. § 180.0851(1).   
¶180 The lengthy rendition of the facts in this dissent 
establishes beyond dispute that Hauser was sued in large part 
because of his actions as a director or officer.  For instance, 
in Paragraph 33 of the Complaint, quoted in ¶170 above, Hauser 
is accused of acting in a "manner that is oppressive to the 
plaintiff, 
which 
constitutes 
grounds 
for 
the 
judicial 
dissolution 
of 
the 
corporation . . . under 
Section 
180.1430(2)(b)."  Section 180.1430(2)(b) provides that the 
circuit court may dissolve a corporation if a shareholder [e.g., 
Dr. Ehlinger] establishes "(b) [t]hat the directors or those in 
No.  2007AP477.dtp 
 
12 
 
control of the corporation [e.g., Hauser] have acted, are acting 
or will act in a manner that is illegal, oppressive or 
fraudulent."  Wis. Stat. § 180.1430(2)(b) (emphasis added). 
¶181 Paragraph 33 of the complaint is only part of the 
evidence that Hauser was sued in his capacity as a director or 
officer.  Dr. Ehlinger alleged that Hauser prepared the 
financial statements, and Hauser was forced to defend them.  Dr. 
Ehlinger alleged that Hauser refused to consider Dr. Ehlinger's 
relatives for employment.  In my view, any interpretation of the 
statute that disqualifies a director or officer from mandatory 
indemnification 
if 
the 
director 
or 
officer 
is 
not 
sued 
exclusively as a director or officer, is dead wrong. 
¶182 A 
second 
question 
in 
interpreting 
Wis. 
Stat. 
§ 180.0851(1) 
concerns 
the 
phrase 
"to 
the 
extent 
that 
he . . . has been successful on the merits or otherwise in the 
defense."  By its terms, this phrase cannot mean that the 
director or officer must prevail on the bottom line or in every 
respect. 
¶183 One of the critical issues in the litigation was 
whether Dr. Ehlinger was disabled, thereby giving Hauser the 
right to invoke the disability provision of the Buy-Sell 
Agreement.  Dr. Ehlinger alleged in his complaint that he "is 
not totally disabled and has not in the past been totally 
disabled for purposes of the 1992 Buy-Sell Agreement."  See, 
complaint at ¶48.  The circuit court found, however, that Dr. 
Ehlinger was "totally disabled" within the meaning of the 
agreement.  See majority op., ¶23.  This determination was made 
No.  2007AP477.dtp 
 
13 
 
after a "five-day bench trial."  Id.  After this finding, the 
court moved on to a determination of "book value."  In addition, 
many of Dr. Ehlinger's allegations against Hauser were never 
found as facts by the circuit court.  The circuit court did not 
find that Hauser made "improper personal profit" or that his 
action was "illegal, oppressive or fraudulent."  Moreover, even 
though the corporation is on track to be dissolved, it is not 
yet certain that Dr. Ehlinger's final share of the assets will 
exceed Hauser's offer of $431,400.  As a result, it cannot be 
said that Hauser was not successful to any extent in the trial. 
¶184 If Hauser was sued because he was a director or 
officer of the corporation and if he was successful "on the 
merits or otherwise" to some extent in the defense of the 
proceeding, he is entitled to "reasonable expenses" as a matter 
of law.  He is entitled to reasonable expenses "to the extent" 
he was successful, under Wis. Stat. § 180.0851(1). 
¶185 Director/officer indemnification is not a matter of 
discretion under subsection (1).  When certain facts are 
present, a director or officer has a right to indemnification.  
The circuit court must be given latitude to determine the 
"extent" of success and the reasonableness of expenses, but it 
cannot deny reasonable expenses altogether.  The majority makes 
a profound legal error if it disqualifies Hauser because he was 
not sued exclusively as a director or officer or because he did 
not prevail completely in the circuit court. 
¶186 The majority attempts to avoid clear answers to the 
issues surrounding § 180.0851(1) by asserting that Hauser failed 
No.  2007AP477.dtp 
 
14 
 
to comply with the "formalities" of applying for indemnification 
under 
§ 180.0851(1) 
by 
making 
a 
written 
request 
to 
the 
corporation, per § 180.0851(3).  Majority op., ¶¶97-98. 
¶187 The majority seriously suggests that Jon Hauser is 
disqualified from receiving the mandated indemnification under 
subsection (1) because he failed to sit down and write a letter 
to Evald's president, Jon Hauser, or Evald's treasurer, Jon 
Hauser, 
requesting 
payment 
of 
attorney 
fees. 
 
This 
disqualification assumes that there is no document that Hauser 
could produce that would qualify as "a written request" and that 
he could not make such a written request now.  The majority does 
not 
come 
to 
grips 
with 
the 
meaning 
of 
Wis. 
Stat. 
§ 180.0851(4)(b). 
¶188 The majority then moves to Wis. Stat. § 180.0851(2), 
which also requires indemnification unless the director or 
officer "breached or failed to perform a duty" owed to the 
corporation but also requires the director or officer to follow 
one of the "means" set out in Wis. Stat. § 180.0855 to secure 
indemnification. 
¶189 Wisconsin Stat. § 180.0851(2) provides: 
 
(2)(a) 
In cases not included under sub. (1), a 
corporation shall indemnify a director or officer 
against liability incurred by the director or officer 
in a proceeding to which the director or officer was a 
party because he or she is a director or officer of 
the corporation, unless liability was incurred because 
the director or officer breached or failed to perform 
a duty that he or she owes to the corporation and the 
breach or failure to perform constitutes any of the 
following: 
 
 
1. 
A willful failure to deal fairly with 
the corporation or its shareholders in connection with 
No.  2007AP477.dtp 
 
15 
 
a matter in which the director or officer has a 
material conflict of interest. 
 
 
2. 
A violation of the criminal law, unless 
the director or officer had reasonable cause to 
believe that his or her conduct was lawful or no 
reasonable cause to believe that his or her conduct 
was unlawful. 
 
 
3. 
A transaction from which the director 
or officer derived an improper personal profit. 
 
 
4. 
Willful misconduct. 
 
(b) Determination of whether indemnification is 
required under this subsection shall be made under s. 
180.0855. 
 
(c) The termination of a proceeding by judgment, 
order, settlement or conviction, or upon a plea of no 
contest or an equivalent plea, does not, by itself, 
create a presumption that indemnification of the 
director or officer is not required under this 
subsection. 
 
(3)  
A 
director 
or 
officer 
who 
seeks 
indemnification 
under this section shall make a 
written request to the corporation. 
 
(4)(a) 
Indemnification under this section is 
not required to the extent limited by the articles of 
incorporation under s. 180.0852. 
 
(b)  
Indemnification under this section is 
not required if the director or officer has previously 
received indemnification or allowance of expenses from 
any person, including the corporation, in connection 
with the same proceeding.  (Emphasis added.) 
¶190 The majority does not deny attorney fees because the 
circuit court made a determination that Hauser "breached or 
failed to perform a duty that he" owed to the corporation "and 
the breach or failure" constituted one of the four disqualifying 
actions set out in subsection (2)(a)1. through 4.  Rather, the 
majority concludes that Hauser may have been eligible for 
No.  2007AP477.dtp 
 
16 
 
attorney fees under Wis. Stat. § 180.0851(2) but he failed to 
seek them in a proper manner under Wis. Stat. § 180.0855(5) ("By 
a court under s. 180.0854.").  Majority op., ¶¶97, 103, 119.   
¶191 There are two problems with this legal conclusion.  
First, 
there 
is 
no 
time 
limit 
for 
an 
application 
for 
indemnification.  A director or officer who is a party to a 
proceeding may apply for indemnification to the court conducting 
the proceeding or to another court of competent jurisdiction.  
Wis. Stat. § 180.0854(1).  The statute does not prescribe a 
time.  In my view, it is not too late to apply now.  See Wis. 
Stat. § 180.0851(4)(b).  Support for this interpretation is 
found in Wis. Stat. § 180.0851(2)(c): "The termination of a 
proceeding by judgment [or] order . . . does not, by itself, 
create a presumption that indemnification of the director or 
officer is not required under this subsection."  Wis. Stat. 
§ 180.0851(2)(c) (emphasis added).  If nothing else, Hauser 
applied to the court of appeals when he filed his brief in the 
cross-appeal. 
¶192 Second, as the majority notes, "[o]n four occasions, 
[Dr.] Ehlinger asked the circuit court to enjoin Hauser from 
paying for the litigation with corporate funds."  Majority op., 
¶92.  On four occasions, the court denied the motions.  The 
court of appeals thereafter affirmed the circuit court.  The 
majority seizes on another technicality——that Hauser did not 
initiate an application to the circuit court for approval of 
attorney fees——to avoid determining the issue on the merits.  
Nonetheless, four times the issue was before the circuit court.  
No.  2007AP477.dtp 
 
17 
 
Four times the circuit court knew that the court was required to 
order indemnification if it determined that director Hauser or 
officer 
Hauser 
was 
entitled 
to 
indemnification 
under 
§ 180.0851(1) or (2), or if director Hauser or officer Hauser 
was "fairly and reasonably entitled to indemnification in view 
of all the relevant circumstances, regardless of whether 
indemnification is required under s. 180.0851(2)."  Wis. Stat. 
§ 180.0854(2)(b).  The court made four decisions.  It is 
virtually impossible now for an appellate court to conclude that 
the circuit court erroneously exercised its discretion on either 
the facts or the law under subsection (2). 
¶193 Unless the circuit court erroneously exercised its 
discretion, the amount of an attorney fee award typically is 
left to the discretion of the circuit court.  Stuart v. 
Weisflog's Showroom, 2008 WI 22, ¶14, 308 Wis. 2d 103, 746 
N.W.2d 762.  Appellate review of an award of attorney fees is 
limited to whether the trial court properly exercised its 
discretion.  Benkoski v. Flood, 2001 WI App 84, ¶10, 242 
Wis. 2d 652, 626 N.W.2d 851 (citing Hughes v. Chrysler Motors 
Corp., 197 Wis. 2d 973, 987, 542 N.W.2d 148 (1996)).  "While the 
basis for an exercise of discretion should be set forth in the 
record, it will be upheld if the appellate court can find facts 
of record which would support the circuit court's decision."  
Peplinski v. Fobe's Roofing, Inc., 193 Wis. 2d 6, 20, 531 
N.W.2d 597 (1995).  Stated differently, "[a] reviewing court is 
obliged to uphold a discretionary decision of a trial court, if 
it can conclude ab initio that there are facts of record which 
No.  2007AP477.dtp 
 
18 
 
would support the trial judge's decision had discretion been 
exercised on the basis of those facts."  Schmid v. Olsen, 111 
Wis. 2d 228, 237, 330 N.W.2d 547 (1983) (citing Maier Constr., 
Inc. v. Ryan, 81 Wis. 2d 463, 473, 260 N.W.2d 700 (1978)). 
¶194 The discussion above pertains to Hauser  personally, 
as a director and officer.  But the corporation also was 
entitled to representation, because the circuit court determined 
that Evald Moulding was "more than a nominal party."  Dr. 
Ehlinger's suit was, in part, a suit for declaratory judgment to 
determine 
the 
rights 
of 
the 
parties 
under 
the 
Buy-Sell 
agreement.  The corporation was explicitly mentioned in the Buy-
Sell Agreement and given authority to buy shares.  More 
important, Dr. Ehlinger's suit was intended to dissolve the 
corporation.  Corporate dissolution is not automatic.  Dickman 
v. Vollmer, 2007 WI App 141, ¶27, 303 Wis. 2d 241, 736 
N.W.2d 202.  When the court appoints a receiver, however, the 
receiver may be paid "from the assets of the corporation."  Wis. 
Stat. § 180.1432(4). 
¶195 A corporation is an entity "distinct and apart from 
its members or stockholders."  Legion Clubhouse, Inc. v. City of 
Madison, 248 Wis. 380, 385, 21 N.W.2d 668 (1946).  A corporation 
is treated as an entity separate from its stockholders "under 
all ordinary circumstances."  Jonas v. State, 19 Wis. 2d 638, 
644, 121 N.W.2d 235 (1963).  These judicial pronouncements are 
grounded in the corporation statutes, which provide in Wis. 
Stat. § 180.0302:  
General 
powers. 
 
Unless 
its 
articles 
of 
incorporation provide otherwise, a corporation has 
No.  2007AP477.dtp 
 
19 
 
perpetual duration and succession in its corporate 
name and has the same powers as a natural person to do 
all things necessary or convenient to carry out its 
business and affairs, including but not limited to 
power to do all of the following: 
(1) Sue and be sued, complain and defend in its 
corporate name. 
. . . .  
(10) Conduct its business . . . and exercise the 
powers granted by this chapter in or outside this 
state. 
Wis. Stat. § 180.0302.  
¶196 The corporation's power to sue and be sued and to 
defend in its corporate name necessarily entails the right to 
retain and compensate counsel.  In his complaint, Dr. Ehlinger 
asked the court to "dispose of [the corporation's] business."  
The corporation had the right to resist that request. 
¶197 This court should not assume that, upon remand, a 
receiver will sell Evald Moulding, that Jon Hauser will purchase 
the corporation, and that Dr. Ehlinger will emerge from this 
litigation a much wealthier man.  We do not know whether Hauser 
will have the means to purchase the business if he is forced to 
repay all attorney fees to the corporation. We do not know 
whether this corporation will survive in any form. 
¶198 I believe the majority is incorrect on the facts and 
the law and is doing serious damage to Wisconsin's corporate 
indemnification statute.  For the reasons herein stated, I 
respectfully dissent. 
¶199 I am authorized to state that Justice MICHAEL J. 
GABLEMAN joins ¶¶159-198 of this opinion. 
 
No.  2007AP477.akz 
 
1 
 
¶200 ANNETTE KINGSLAND ZIEGLER, J.   (concurring in part, 
dissenting in part).  I agree with the majority opinion that the 
circuit court erroneously exercised its discretion when it 
permitted the corporation, Evald Moulding, Inc. (Evald), to pay 
Jon Hauser's litigation expenses.  Majority op., ¶¶111-113.  
However, I otherwise dissent from the majority opinion, which 
remands this case to the circuit court for the appointment of a 
receiver.  I would instead remand the case to the circuit court 
for full development of the record.   
¶201 Of great concern to me is the circuit court's 
appointment of a "special magistrate" who did not function 
purely as a referee or an expert witness and instead acted, 
without forewarning to the parties, as a hybrid of both.  When a 
court appoints a referee or an expert witness, that appointee is 
subject to certain requirements which provide the parties with 
adequate safeguards and the ability to make a record.  The 
procedures that provide these safeguards, however, are different 
depending on the type of appointment.  In the case at issue, if 
the special magistrate was indeed appointed as a referee, the 
parties were denied those safeguards and thus were precluded 
from making a full record regarding the referee's actions.  If, 
on the other hand, the special magistrate was appointed as an 
expert witness, the parties were denied their statutorily-
imposed opportunity to depose and fully cross-examine him.  A 
court that appoints such an individual should always ensure that 
the parties fully understand the role and scope of the 
appointee, 
and 
the 
appointee's 
involvement 
should 
never 
No.  2007AP477.akz 
 
2 
 
effectuate as a denial of the parties' right to fully develop 
the case and make a complete record.  Here, I dissent because 
the parties were deprived of the opportunity to fully develop 
evidence and make a complete record.   
¶202 In addition, I believe that the majority opinion errs 
by concluding that it "need not resolve whether the buyout 
agreement is indefinite, ambiguous, neither, or both because 
resolution of that question would not change the outcome of this 
case."  Majority op., ¶59.  If the agreement is ambiguous, then 
this case should return to the circuit court for a trial on the 
determination of the ambiguous language.  In contrast, if the 
agreement is indefinite, then it is unenforceable.  However, 
since the parties were deprived of the opportunity to develop 
their case below, I would reserve that issue and remand this 
case to the circuit court for discovery and for a determination 
after the parties have been allowed the opportunity to fully 
develop their arguments.  For those reasons, I respectfully 
dissent. 
¶203 In 
this 
case, 
the 
circuit 
court 
appointed 
Del 
Chmielewski, a certified public accountant, as a "special 
magistrate" to "determine Evald's March 31, 2001 book value 
using generally accepted accounting principles [GAAP] which are 
appropriate for the size, function and structure of this 
corporation."  The circuit court further instructed the special 
magistrate to "advise the Court of any departures from GAAP in 
his report to the Court" and to "report any substantial 
inconsistencies in the reporting methodology used by Evald in 
No.  2007AP477.akz 
 
3 
 
2001 vis á vis the previous two years."  As the majority opinion 
points out, see ¶27, it is not clear under what authority the 
circuit court appointed the special magistrate.  From the record 
now before this court, it appears that the special magistrate 
did not function purely as a referee or an expert witness and 
instead morphed into a hybrid of both with the parties being 
deprived of the safeguards of each. 
¶204 The statutes providing for court-appointed referees 
and expert witnesses are rife with procedural safeguards that 
ensure litigants due process of law.  Mandating that court-
appointed referees "shall be the exception and not the rule," 
Wis. Stat. § 805.06 permits the court to appoint a referee "when 
the issues are complicated," including "matters of account and 
of difficult computation of damages."  See §§ 805.06(1), (2).  
Relevant to this case, the court may direct the referee "to 
receive and report evidence only," § 805.06(3), but the referee 
must prepare a report upon the matters submitted by the court's 
order and "shall file the report with the clerk of the court," 
§ 805.06(5)(a).  "Within 10 days after being served with notice 
of the filing of the report any party may serve written 
objections thereto upon the other parties."  § 805.06(5)(b). 
¶205 On the other hand, pursuant to Wis. Stat. § 907.06, 
the court may appoint an expert witness.  The court-appointed 
expert witness "shall be informed of the witness's duties by the 
judge in writing, a copy of which shall be filed with the clerk, 
or at a conference in which the parties shall have opportunity 
to participate."  § 907.06(1).  The court-appointed expert 
No.  2007AP477.akz 
 
4 
 
witness "shall advise the parties of the witness's findings" and 
may be deposed by any party, may be called to testify by the 
judge or any party, and "shall be subject to cross-examination 
by each party."  Id.   
¶206 From the record before this court, it appears that the 
court-appointed "special magistrate" was a referee turned expert 
witness.  The circuit court appointed the special magistrate to 
determine Evald's March 31, 2001 book value, which arguably is a 
"matter[] of account" for which a referee is appointed under 
Wis. Stat. § 805.06(2).  The circuit court instructed the 
parties that they are "required to answer inquiries of the 
Special Magistrate" but clarified that it does not want 
advocacy.  Furthermore, in a statement latched onto by both the 
court of appeals, Ehlinger v. Hauser, 2008 WI App 123, ¶42, 313 
Wis. 2d 718, 758 N.W.2d 476, and the majority opinion, see ¶85, 
the circuit court denied that the special magistrate was 
"anybody's expert witness."   
¶207 Nevertheless, the special magistrate emerged as at 
least a quasi expert witness.  He was called to testify, and the 
circuit court permitted the parties to conduct a limited cross-
examination of him: 
Regarding calling the special magistrate as witness, I 
didn't talk to Mr. Chmielewski about this, but I would 
allow either of you to question him regarding just a 
couple of things which are essentially clarification 
of his reports.  One is any arithmetical calculation 
he's made; two is what, what sources he had as a base 
to the figures that he used; and third, the opinions 
that he made in his report to the Court.  He's not 
anybody's expert witness; but I would, if you have 
questions just on those aspects of his report, allow 
him to testify. 
No.  2007AP477.akz 
 
5 
 
Indeed, during 
the 
limited cross-examination, the special 
magistrate was asked whether he was able to form an opinion on 
Evald's March 31, 2001 book value "to a reasonable degree of 
accounting certainty."  A degree of certitude is a requirement 
placed on expert witnesses.  See Drexler v. All Am. Life & Cas. 
Co., 72 Wis. 2d 420, 432, 241 N.W.2d 401 (1976) (citing State v. 
Wind, 60 Wis. 2d 267, 273, 208 N.W.2d 357 (1973)).  Finally, the 
special magistrate never filed his report, or any accompanying 
transcripts or exhibits, with the clerk of court as statutorily 
required of referees under Wis. Stat. § 805.06(5)(a).1  Without 
the requisite filing, the parties could not have been clear as 
to 
the 
special 
magistrate's 
role 
and 
their 
rights 
and 
obligations 
thereto, 
including 
the 
opportunity 
to 
object 
"[w]ithin 10 days after being served with notice of the filing."  
See § 805.06(5)(b). 
¶208 Despite 
acknowledging 
these 
"certain 
procedural 
irregularities," 
majority 
op., 
¶88, 
the 
majority 
opinion 
nevertheless concludes that "[t]he record does not evince an 
understanding by the parties that the special magistrate was 
                                                 
1 In its entirety, Wis. Stat. § 805.06(5)(a) provides:  
The referee shall prepare a report upon the matters 
submitted by the order of reference and, if required 
to make findings of fact and conclusions of law, the 
referee shall set them forth in the report.  The 
referee shall file the report with the clerk of the 
court and in an action to be tried without a jury, 
unless otherwise directed by the order of reference, 
shall file with it a transcript of the proceedings and 
of the evidence and the original exhibits.  The clerk 
shall forthwith mail to all parties notice of the 
filing. 
No.  2007AP477.akz 
 
6 
 
appointed as an expert witness," id., ¶83.  The majority opinion 
further concludes that "Hauser forfeited his right to object to 
the procedures specified by the court in the reference."  Id., 
¶87.  The majority opinion opportunely frames Hauser's objection 
as one aimed at the procedures in the court's reference.  By 
doing so, the majority evades the fact that if indeed the 
special magistrate was appointed as a referee, Hauser had "10 
days after being served with notice of the filing of the report" 
to object.  See Wis. Stat. § 805.06(5)(b).  It is undisputed 
that the special magistrate never filed his report with the 
clerk of court. 
¶209 Accordingly, if the special magistrate was indeed 
appointed as a referee, the parties were precluded from making a 
full record regarding the referee's actions.  If, on the other 
hand, the special magistrate was appointed as an expert witness, 
the parties were not given their statutorily-imposed opportunity 
to depose and fully cross-examine him.  Without the benefit of 
either of those requirements, the majority concludes that the 
case should be remanded for the appointment of a receiver.  
Because the parties were deprived of the opportunity to fully 
develop evidence and make a complete record, I would instead 
remand the case to the circuit court for full development of the 
record. 
¶210 In addition, I dissent from the majority opinion's 
conclusion that it "need not resolve whether the buyout 
agreement is indefinite, ambiguous, neither, or both because 
resolution of that question would not change the outcome of this 
No.  2007AP477.akz 
 
7 
 
case."  Majority op., ¶59.  To the contrary, if words or phrases 
in an agreement are ambiguous, as in reasonably susceptible of 
more than one meaning, then it is the court's duty to determine 
the parties' intent at the time the agreement was entered into.  
Capital 
Invs., 
Inc. 
v. 
Whitehall 
Packing 
Co., 
Inc., 
91 
Wis. 2d 178, 189-90, 280 N.W.2d 254 (1979) (citing Patti v. W. 
Mach. Co., 72 Wis. 2d 348, 351-52, 241 N.W.2d 158 (1976)).  To 
make that determination, the court "may look beyond the face of 
the contract and consider extrinsic evidence."  Id. at 190.  
Such extrinsic evidence may include the parties' own testimony 
regarding what they intended the agreement to mean.  Patti, 72 
Wis. 2d at 354-55.  Consequently, the majority opinion is 
incorrect when it concludes that the agreement need not be 
adjudged ambiguous "[because] the contract cannot be enforced 
regardless of how the term ['book value'] could be defined."  
Majority op., ¶59.  If the agreement is determined to be 
ambiguous, then this court should remand the case for a full 
trial on the determination of the ambiguous language——not remand 
for the appointment of a receiver. 
¶211 However, if the agreement is indefinite, as the 
concurrence, Justice Patience Drake Roggensack, concludes, then 
"no enforceable agreement has been made because the parties have 
not agreed to their particularized obligations."  Justice 
Roggensack's concurrence, ¶134 (citing Shetney v. Shetney, 49 
Wis. 2d 26, 38, 181 N.W.2d 516 (1970); 1 Joseph M. Perillo, 
Corbin on Contracts § 4.13, 634-37 (rev. ed. 1993)). 
No.  2007AP477.akz 
 
8 
 
¶212 Here, 
since 
the 
parties 
were 
deprived 
of 
the 
opportunity to develop their case below, I would reserve the 
issue of whether the agreement is ambiguous or indefinite and 
remand this case to the circuit court for discovery and for a 
determination 
after 
the 
parties 
have 
been 
allowed 
the 
opportunity to fully develop their arguments.  For the foregoing 
reasons, I respectfully concur in part and dissent in part.   
¶213 I am authorized to state that Justice MICHAEL J. 
GABLEMAN joins this dissent ¶¶201—212 of this opinion. 
 
No.  2007AP477.akz 
 
 
 
1