Court Opinion

ID: 9740118
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:28:31.067844+00
Date Added: 2024-06-11T07:24:09.910904
License: Public Domain

DYKMAN, J.
¶ 39. (dissenting in part). I disagree *96with the majority's conclusion in the cross-appeal that the trial court erroneously exercised its discretion by adopting the prime rate as a rate that was "fair and equitable under all of the circumstances." Wis. Stat. § 180.1301(5) (2001-02).1 One can hardly think of a more discretionary standard than "fair and equitable." But the majority looks, not for reasons to affirm the trial court, but for reasons to reverse, though it recognizes that it is to do the opposite. Murray v. Murray, 231 Wis. 2d 71, 78, 604 N.W2d 912 (Ct. App. 1999). It does this by interpreting the trial court's opinion as "plainly saying that there is something suspect about a low interest rate that is the product of the borrowing power of a parent corporation." Majority at ¶ 35. That is not what the trial court said.
¶ 40. The trial court's opinion reads:
Transactions between related parties may not be indicative of market factors. Consequently, the court believes that the most acceptable rate for consideration would be the prime rate. This rate is well accepted as an index figure in many commercial situations. It reflects the cost of money to corporate borrowers. It is appropriate to apply it here. Its use removes any questions raised by the relationship between HMO-W and its parent.
¶ 41. The trial court was looking to market factors to determine what rate would be fair and equitable. It decided not to use a rate influenced by the relationship between a parent and a subsidiary corporation, and not by market factors. It found that the prime rate was used in many commercial transactions and that the *97prime rate reflects corporate borrowing reality. I find nothing unreasonable or irrational about this reasoning.
¶ 42. What the majority has done is to amend the statute. Wisconsin Stat. § 180.1301(5) requires that the court first determine whether the corporation pays interest on its bank loans. If it does, no inquiry, is made into whether the rate of interest paid is "fair and equitable." The rate paid is the rate to be paid. But if the corporation does not pay interest, the rate it might have paid, or the rate its parent corporation, sibling corporation, subsidiary or office-sharing corporation pays or might pay or once paid is not relevant. The only question then is what rate is "fair and equitable under the circumstances."
¶ 43. What the majority has done is to somehow link the rate a parent corporation pays with a fair and equitable rate. While I can see a trial court doing that to determine the fair and equitable rate, the statute does not require the trial court to do so. Under the majority's analysis, Wis. Stat. § 180.1301(5) reads something like: "[I]f none, at a rate that the corporation's parent or subsidiary corporation pays." The result is that discretion has been squeezed out of the statute and replaced by a rule of law.
¶ 44. Would the majority have reached the same result if Unity borrowed money at prime plus two percent? Would it have reversed the trial court's discretionary decision to use the prime rate then? That result seems preordained under Wis. Stat. § 180.1301(5), which, under the majority's decision, now effectively requires adoption of related corporations' borrowing rates. Could the trial court consider that most corporate borrowing is done at the prime rate making that a fair and equitable rate, omitting the reason the majority has *98found objectionable? The majority doesn't tell us, but it is evident that the LIBO rate plays a significant part in the majority's analysis of the issue here.
¶ 45. These questions are obviated by interpreting Wis. Stat. § 180.1301(5) as it was written, resulting in an affirmance of this cross-appeal. Because that is not the-result the majority reaches, I respectfully dissent.

 All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.