Court Opinion

ID: 9726607
Source: CourtListenerOpinion
Date Created: 2023-08-26 13:00:00.980854+00
Date Added: 2024-06-11T13:14:40.622303
License: Public Domain

SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE
¶ 24. (concurring). I agree that the cause should *324be remanded to the circuit court for further fact-finding. But I write separately to state that a preliminary question of fact, which in my opinion the majority has improperly answered as a matter of law, is whether the parties intended the scope of the 1983 covenant not to compete to be expanded geographically as the corporation's powers under the federal charter expanded.
¶ 25. The majority opinion correctly states our longstanding canons of construction for covenants not to compete, canons based on Wis. Stat. § 103.465 (1997-98): Covenants not to compete are prima facie suspect; they must withstand close scrutiny to pass legal muster as being reasonable; they will not be construed to extend beyond their proper import or further than the language of the contract absolutely requires; and they are to be construed in favor of the employee.1
¶ 26. Yet in analyzing the covenant not to compete at issue in this case, the majority concludes that "[t]he standard rules of contract interpretation apply."2 The majority also concludes that "our rules of construction [cannot] overwhelm the focus of our analysis in what are, at their core, contract cases."3
¶ 27. The internal contradiction in the majority opinion is manifest. If special canons of construction apply to covenants not to compete, then the standard rules for contract interpretation do not apply in their totality. The legislature has not impermissibly "overwhelmed" contract law by creating an exception to the ability of employers and employees to negotiate to restrict employees' ability to work. Rather, the legislature has expressly concluded that the principle of free movement of employees, which this court recently *325extolled in Mackenzie v. Miller Brewing Co., 2001 WI 23, 241 Wis. 2d 700, 623 N.W.2d 739, must guide our analysis of restrictive covenants.
¶ 28. Applying the principles mandated by the legislature and this court's precedent, I conclude that it is an open question of fact whether the covenant not to compete anticipated enlargement of the specified territory. In so concluding, I am mindful of the special nature of the employer, whose geographical scope and range of services have at all times been defined by federal law and federal charter. The federal law and the charter have changed since the employment contract was entered, allowing the geographical scope and range of services of the employer's business to expand.
¶ 29. The majority concludes as a matter of law that the parties contemplated a "fluid customer list."4 But contemplation of a fluid customer list is not necessarily the same as contemplation of changes in federal law and in a federal charter that allow an employer to service customers that were previously off limits to the employer. The majority rejects this argument, finding that the changes in the employer's charter cannot affect the covenant not to compete because the "covenant" fails to refer to the charter.5 The covenant not to compete is, however, part of the employment contract, and the employment contract does explicitly refer to the applicable law governing PCA. Recital A of the employment contract states that "PCA is a corporation under the Farm Credit Act of 1971, as amended."
¶ 30. In any event, it is an odd contortion of the "standard rules of contract interpretation" to conclude that an employer's federal charter is not relevant to interpreting an employment contract unless the fed*326eral charter is expressly referred to.6 Under the facts of this case, the employee may be able to demonstrate that he and the employer signed the employment contract (including the covenant not to compete) in reliance on the federal charter, which limited the scope of his employer's service area to six counties at the time the contract was entered. Surely the federal charter would be relevant to the parties' intent. The issue of the parties' intent appears to me to be an open question of fact that cannot be resolved at the summary judgment stage, particularly in light of our precedent requiring narrow construction of covenants not to compete.
¶ 31. Finally, I take issue with the majority opinion's unwarranted conclusion in footnote 2 that "even if PCA of Wausau ceased to exist, FCS could enforce the covenant not to compete."7 In contrast, the employer in this case apparently concedes, relying on precedent, that it may not enforce the covenant not to compete against the employee if this court concludes that the 1983 corporation has been merged out of legal existence.8 Ignoring this concession, the footnote nevertheless addresses an issue that is unnecessary to *327the resolution of the case before us. This sort of rogue commentary causes confusion for future cases in which the explicit legal question addressed in the rogue footnote will be raised, briefed, and contested by the parties and must be addressed directly by this court.9
¶ 32. For the reasons set forth, I write separately.

 See majority op. at ¶ 9.

 See majority op. at ¶ 12.

 See majority op. at ¶ 11.

 See majority op. at ¶ 15.

 See majority op. at ¶ 15.

 According to Professor Corbin:
Internal references in one document to another are often helpful in the processes of interpretation and adjudication; but the absence of such a reference does not make a document unusable in these processes or inadmissible in evidence. Its connection and relevancy can be established otherwise.
Arthur L. Corbin, 3 Corbin on Contracts § 549, at 192 (1960).

 See majority op. at ¶ 20 n.2.

 See FCS Reply Brief at 3 ("[I]f Appellant is in fact a different corporation from that with which Mr. Wysocki contracted in 1983, then Farm Credit must concede that the contract without an assignability clause, without additional consideration and without direct privity would not be binding on Mr. Wysocki.").
*327In the absence of an assignment clause, enforcing such a covenant not to compete would violate our canon of construction that covenants not to compete "will not be construed to extend beyond their proper import or further than the language of the contract absolutely requires." Streiff v. American Family Mut Ins. Co., 118 Wis. 2d 602, 611, 348 N.W.2d 505 (1984).

 For the effect of rogue commentary in a footnote, see, for example, State v. Hansen, 2001 WI 53, 243 Wis. 2d 328, 627 N.W.2d 195.