Opinion ID: 1588685
Heading Depth: 1
Heading Rank: 5

Heading: Proposed Changes to Wisconsin Law

Text: ¶ 56 Having determined that the circuit court did not erroneously exercise its discretion under current Wisconsin law, we examine next Alexander & Bishop's various proposals for changing the law. Alexander & Bishop has urged us to tweak current law in one of three ways. ¶ 57 Alexander & Bishop's first proposal asks us to harmonize the law of remedies available to a seller of real estate with the remedies available to a seller of goods by declaring that specific performance may not be ordered when there is an adequate remedy at law. This proposal would preclude a circuit court from ordering specific performance in the first instance unless the court determined that money damages were inadequate. ¶ 58 Alexander & Bishop's second and third proposals would permit the court to order specific performance even without concluding that money damages were inadequate. However, these proposals would alter the administration or enforcement of the remedy of specific performance once ordered. Alexander & Bishop encourages us to adopt a rule requiring a mandatory judicial sale and money judgment for any deficiency once specific performance has been ordered and the buyer cannot or will not pay. In the alternative, it asks us to hold that a seller who is awarded interest in addition to specific performance has a duty to mitigate its damages by attempting to resell the property. ¶ 59 All three proposals would affect the viability and meaningfulness of specific performance as a remedy for sellers of real estate under Wisconsin law. We address each proposal in turn.
¶ 60 Alexander & Bishop asserts that we should harmonize the remedies for a buyer's breach of a real estate contract with the remedies available for a buyer's breach of a contract for goods. [21] Typically, specific performance will not be decreed as a seller's remedy for breach of a contract to sell personal property unless a remedy at law is inadequate. Welch v. Chippewa Sales Co., 252 Wis. 166, 168, 31 N.W.2d 170 (1948). ¶ 61 In support, it offers the Uniform Land Transactions Act, which was drafted in 1975. The uniform act does not recognize the remedy of specific performance for a seller of real estate and does not permit a seller to bring an action for the price under most circumstances. [22] ¶ 62 In the 35 years since it was drafted, no state has adopted the Uniform Land Transactions Act. [23] Ronald Benton Brown, Whatever Happened to the Uniform Land Transactions Act?, 20 Nova L. Rev. 1017, 1018 (1996). Furthermore, the uniform act was withdrawn by the National Conference on Uniform State Laws in 1990. Id. We are not persuaded that we should alter our longstanding practices by adopting an act that has since been withdrawn by the National Conference on Uniform State Laws. ¶ 63 We conclude that granting or denying specific performance as a remedy is best left to the sound discretion of the circuit court on a case-by-case basis. In exercising its discretion, a circuit court may consider whether a remedy at law would be adequate to remedy a buyer's breach. If the court determines that legal damages are perfectly adequate, the court may in its discretion choose to award damages at law rather than specific performance. Yet, because this decision is best made on the facts and equities of each individual case, we decline to adopt the rule proposed by Alexander & Bishop.
¶ 64 We turn next to Alexander & Bishop's second proposal. It asks us to graft onto the doctrine of specific performance a mandatory procedure for turning an equitable order into a judgment for money by requiring a judicial sale and money judgment for any deficiency. [24] Alexander & Bishop asserts that an order for specific performance should be nothing more than a judgment for the purchase price, and that the procedure outlined above would be more equitable for both parties. ¶ 65 We decline to adopt Alexander & Bishop's proposal to require this procedure for three reasons. First, the proposal would collapse two distinct remediesspecific performance and actual legal damagesinto one, removing for all practical purposes specific performance from the list of available remedies to a seller. ¶ 66 Alexander & Bishop explains that a monetary judgment would be entered..., but the judgment would not be for the full purchase price[.] Rather, the buyer would be responsible for the seller's damages, but not more. Yet, if specific performance meant nothing other than a judicial sale and deficiency judgment, it would not differ from a judgment for actual damages. ¶ 67 There may be reasons, however, that a seller might prefer specific performance to actual damages. In this case, for example, Ash Park explained that there is a mortgage on the property and that Ash Park would be required to satisfy the mortgage before it could transfer the title to a third-party purchaser at a judicial sale. ¶ 68 At oral argument, counsel for Ash Park asserted: If my client sells the property at a judicial sale, he courts financial ruin[.] He argued that if the property was sold for a sum of money that was less than the existing mortgage, his client would have to make up the difference. ¶ 69 Additionally, a mandatory judicial sale would require the seller to relinquish its interest in the property to a third party before it could pursue a deficiency judgment against the buyer. If the property sold for less than its actual value, the seller would be deprived of both the property and its fair market value until it could execute its judgment for the deficiency against the breaching buyer. Alexander & Bishop's proposal to collapse actual damages and specific performance into one remedy would make the particular benefits of specific performance unavailable to an innocent seller after the buyer's breach. [25] ¶ 70 The second reason we decline to adopt Alexander & Bishop's proposal is that it would require us to rewrite the parties' contract. Here, the parties' bargain included the remedy of specific performance under the appropriate circumstances. When a contract specifies remedies available in the event of a breach, the intention of the parties generally governs. Moritz, 35 Wis.2d at 348, 151 N.W.2d 142. ¶ 71 Yet, as discussed above, Alexander & Bishop's proposal would collapse the remedies of legal damages and specific performance, resulting in specific performance in name only. It would render meaningless the parties' agreement that specific performance is an available remedy in the appropriate circumstances. We decline to rewrite this contract by reducing the number or availability of bargained-for remedies. ¶ 72 The third reason that we do not accept Alexander & Bishop's proposal to mandate a judicial sale is that a mandatory procedure is antithetical to the concept of equitable relief. In contrast to remedies at law, a defining characteristic of an equitable remedy is that it is flexible and adaptable to the circumstances presented in a particular case. ¶ 73 Pomeroy's Equity Jurisprudence explains that the court of equity has the power of devising its remedy and shaping it so as to fit the changing circumstances of every case and the complex relations of all the parties. 1 John Norton Pomeroy, A Treatise on Equity Jurisprudence § 109 at 141 (5th ed. 1941). Further, equitable remedies also differ from the legal ones in the manner of their administration, which should be natural and flexible. Id. § 113 at 150. ¶ 74 Wisconsin cases have recognized that once a court has determined that equitable relief is appropriate, it has wide latitude to fashion the remedy based on the equities of the case. See Town of Fond du Lac v. City of Fond du Lac, 22 Wis.2d 525, 531-32, 126 N.W.2d 206 (1964); American Medical Servs. Inc. v. Mutual Fed. Savings & Loan, 52 Wis.2d 198, 205, 188 N.W.2d 529 (1971) (The court of equity has always had a traditional power to adapt its remedies to the exigencies and the needs of the case; that was one of the great virtues and reasons for the existence of courts of equity.). Alexander & Bishop's proposal would denude specific performance of the adaptability that allows the circuit court to fashion a remedy to the facts and equities of a particular case. ¶ 75 Alexander & Bishop also contends that a circuit court should refrain from enforcing an order for specific performance through contempt proceedings. It asserts that contempt sanctions would be inequitable when the required performance involves the payment of money. It argues that the public policy against debtors' prisons militates against contempt as a mechanism of enforcement. ¶ 76 Contempt proceedings are a typical means of enforcing an equitable order for specific performance. [26] See Yorio, supra, § 4.5.2 at 96 (Under American law, the ultimate force of an equitable decree derives from the court's ability to punish violations of its order by fines or imprisonment for contempt of court.). ¶ 77 Alexander & Bishop's discussion of debtors' prisons glosses over a key distinction. There is a difference between a buyer who is unwilling to perform and one who is unable. Each is subject to different treatment by a court in equity and under the law of contempt. ¶ 78 A party's unwillingness to obey a court order is the very definition of contempt. Wisconsin Stat. § 785.01(1)(b) defines contempt of court as intentional [d]isobedience, resistance or obstruction of the authority, process or order of a court. ¶ 79 By contrast, inability to perform precludes the imposition of contempt sanctions. O'Connor v. O'Connor, 48 Wis.2d 535, 542, 180 N.W.2d 735 (1970); see also 3 Dobbs, Law of Remedies § 2.8(7) at 218-19 (2d ed. 1993) (discussing the burden of proof). Just as impossibility is a defense to an order for specific performance, inability to obey that order is a defense to contempt. In O'Connor, this court explained that it has long been settled in Wisconsin that a person cannot be held in contempt of court for the failure to pay money unless the refusal is willful and contemptuous and not the result of his inability to pay. 48 Wis.2d at 542, 180 N.W.2d 735. ¶ 80 If an equitable court concludes that a buyer subject to an order for specific performance is unable to perform, it would erroneously exercise its discretion by ordering contempt sanctions. In such a case, a judicial sale and deficiency judgment could be an equitable and appropriate procedure. [27] ¶ 81 Here, we emphasize that there is no finding that Alexander & Bishop is unable to perform. Alexander & Bishop never asked the circuit court to order a judicial sale and did not develop a factual record demonstrating why a judicial sale might be an appropriate procedure under the facts of the case. Rather, it asks us to declare that a judicial sale is a mandatory procedure to effectuate an award of specific performance. ¶ 82 For the reasons stated above, we decline to graft onto the equitable remedy of specific performance a mandatory remedy of a judicial sale. It is the circuit court, rather than this court on review, that should make the factual findings, weigh the equities, and exercise its discretion to determine the appropriate procedure for administering and enforcing an order for specific performance.
¶ 83 Finally, Alexander & Bishop asks us to clarify that an important component of specific performance is that the seller must take adequate steps to minimize its damages. It concedes that a requirement to mitigate damages is inconsistent with the remedy of specific performance. [28] See Yorio, supra, § 8.2.3 at 181. Yet, it asserts that if the seller seeks interest in addition to the equitable remedy of specific performance, the doctrine of mitigation should come into play. ¶ 84 In a situation where specific performance is ordered due to the buyer's breach, however, a duty to mitigate would create several practical difficulties. First, a seller requesting specific performance must be able to demonstrate that it is ready, willing, and able to perform the contract by delivering the title to the buyer. Anderson, 155 Wis.2d at 516, 455 N.W.2d 885; 2 Contract Law in Wisconsin, supra, § 13.60. The seller cannot be ready, willing, and able to perform the contract after having committed to sell the property to another buyer. ¶ 85 Second, it would be extremely difficult for a seller to market a property to a third-party buyer when that property is subject to a court order for specific performance. Potential third-party buyers might correctly assume that they were walking into a legal minefield, wagering on whether the seller, who is subject to a court order to deliver the title to another buyer, could actually deliver the title. ¶ 86 For these reasons, we decline to impose a duty to mitigate on a seller who requests interest in addition to specific performance. [29]