Court Opinion

ID: 2683718
Source: CourtListenerOpinion
Date Created: 2014-07-15 13:03:10.906053+00
Date Added: 2024-06-11T13:13:36.762650
License: Public Domain

2014 WI 65

                  SUPREME COURT             OF   WISCONSIN
CASE NO.:               2012AP122
COMPLETE TITLE:         Anthony Gagliano & Co., Inc.,
                                  Plaintiff-Appellant,
                             v.
                        Openfirst, LLC and New Electronic Printing
                        Systems, LLC,
                                  Defendants-Respondents,
                        RWK Enterprises, Inc., d/b/a Alphagraphics,
                        Inc., OFH
                        Distribution, LLC , f/k/a Openfirst Holdings and
                        New
                        Diversified Mailing Services, LLC,
                                  Defendants,
                        Quad Graphics, Inc. and Robert Kraft,
                                  Defendants-Respondents-Petitioners.

                           REVIEW OF A DECISION OF THE COURT OF APPEALS
                                  346 Wis. 2d 47, 828 N.W.2d 268
                                    (Ct. App. 2013 – Published)
                                       PDC No: 2013 WI App 19

OPINION FILED:          July 15, 2014
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:          December 18, 2013

SOURCE OF APPEAL:
   COURT:               Circuit
   COUNTY:              Milwaukee
   JUDGE:               Dennis P. Moroney

JUSTICES:
   CONCUR/DISSENT:      BRADLEY, J., concurs in part, dissents in part.
                        (Opinion filed.)
  DISSENTED:            ABRAHAMSON, C.J., dissents. (Opinion filed.)
  NOT PARTICIPATING:

ATTORNEYS:
       For        the   defendant-respondent-petitioner   Quad   Graphics,
there were briefs by Michael B. Apfeld, Michael D. Huitink, and
Godfrey & Kahn, S.C., Milwaukee, and oral argument by Michael B.
Apfeld.
       For the defendant-respondent-petitioner Robert Kraft, there
were   briefs    by    Ann     M.   Maher,    Lisa    M.    Lawless,   and    Whyte
Hirschboeck Dudek S.C., Milwaukee, and oral argument by Lisa M.
Lawless.

       For the plaintiff-appellant, there were briefs by Thomas
Armstrong,     Beth    J.    Kushner,   and   Von    Briesen    &   Roper,    S.C.,
Milwaukee, and oral argument by Thomas Armstrong.

       An   amicus    curiae    brief   was   filed    by    Thomas    D.   Larson,
Madison, on behalf of the Wisconsin Realtors Association.

                                         2
                                                                  2014 WI 65
                                                          NOTICE
                                            This opinion is subject to further
                                            editing and modification.   The final
                                            version will appear in the bound
                                            volume of the official reports.
No.    2012AP122
(L.C. No.   2008CV17601)

STATE OF WISCONSIN                      :            IN SUPREME COURT

Anthony Gagliano & Co., Inc.,

            Plaintiff-Appellant,

      v.

Openfirst, LLC and New Electronic Printing
Systems, LLC,
                                                               FILED
            Defendants-Respondents,
                                                          JUL 15, 2014
RWK Enterprises, Inc., d/b/a Alphagraphics,
Inc., OFH Distribution, LLC , f/k/a Openfirst                Diane M. Fremgen
Holdings and New Diversified Mailing Services,            Clerk of Supreme Court
LLC,

            Defendants,

Quad Graphics, Inc. and Robert Kraft,

            Defendants-Respondents-Petitioners.

      REVIEW of a decision of the Court of Appeals.             Affirmed in

part, reversed in part, and remanded.
                                                                           No.     2012AP122

     ¶1      PATIENCE DRAKE ROGGENSACK, J.                  We review a decision

of the court of appeals1 reversing the circuit court's order2

dismissing plaintiff Anthony Gagliano & Co., Inc.'s (Gagliano)

claims against defendants New Electronic Printing Systems, LLC;

Openfirst,        LLC;      Robert      Kraft;      and     Quad/Graphics,               Inc.

Gagliano's     claims       concern    rent     allegedly       owed      under    several

commercial     leases.        This    case      presents      two    issues       for    our

review:    (1) whether Gagliano gave sufficient notice to extend

the leases to the time when the alleged breach occurred; and (2)

whether    Quad/Graphics        was    a   subtenant       of    the      lessee    or    an

assignee of the leases.

     ¶2      As to the first issue, we conclude that Gagliano's

notice was valid.           Gagliano provided notice:               (1) to the entity

designated    as     the    tenant    on   the     original     lease;      (2)     to   the

entity who was the current tenant at the time of the notice; and

(3) to the entity a subsequent amendment of the lease designated

as the tenant.           The notice is also valid because the current

tenant at the time Gagliano sent the notice had actual notice
that Gagliano was exercising its alleged right to extend the

leases.    Accordingly, we affirm the portion of the decision of

the court of appeals that reversed the circuit court's directed

verdict,     which    had    concluded      that    Gagliano's         notice      was   not

valid.       We    remand     to     the   circuit     court        for    fact-finding

     1
       Anthony Gagliano & Co. v. Openfirst, LLC, 2013 WI App 19,
346 Wis. 2d 47, 828 N.W.2d 268.
     2
       The    Honorable        Dennis      P.    Moroney    of      Milwaukee       County
presided.

                                            2
                                                                      No.   2012AP122

necessary to decide the merits of Kraft's remaining arguments

relating to the lawfulness of the extension provision in the

leases.

      ¶3     In   regard     to   the    second       issue,   we    conclude    that

Quad/Graphics is not liable to Gagliano because Quad/Graphics

was a subtenant of the lessee, not an assignee of the leases.

Undisputed evidence shows that New Electronic Printing Systems,

the   assignee    of   the    original     tenants,      did   not    transfer    its

entire     remaining   leasehold        estate   to    Quad/Graphics.        Because

Gagliano and Quad/Graphics did not share privity of estate, it

is not an assignee.            Therefore, we do not hold Quad/Graphics

liable for New Electronic Printing Systems' alleged breach of

contract to which Quad/Graphics was not a party.                      Accordingly,

we reverse the portion of the decision of the court of appeals

that reversed the order of the circuit court granting summary

judgment in favor of Quad/Graphics and remand to the circuit

court for dismissal of all claims against Quad/Graphics.3

                                  I.    BACKGROUND
      ¶4     In   1996,      Robert     Kraft    formed    Electronic       Printing

Systems, Inc.,4 a data processing company that helped businesses
      3
       On a motion for summary judgment, the circuit court found
Quad/Graphics was "not an alter ego under the circumstances of
this case."     While Gagliano argued for reversal of that
determination to the court of appeals, it makes no such argument
in this review.     We therefore deem that argument abandoned,
requiring no further consideration.    See Gister v. Am. Family
Mut. Ins. Co., 2012 WI 86, ¶37 n.19, 342 Wis. 2d 496, 818 N.W.2d
880.
      4
       This is a different corporate entity from New Electronic
Printing Systems, LLC, which is a party to this action.

                                          3
                                                                                  No.     2012AP122

with their billing operations.                      Over the course of about 12

years, that company was rebranded, restructured, and sold to

various entities.           It also changed locations within Milwaukee's

third   ward     from      its    original       facility          on    Buffalo        Street    to

Gagliano's      facility         at    300    North     Jefferson         Street,        where    it

remained until it went out of business.

       ¶5      This case involves several leases that the company and

its progenies had with Gagliano.                       It requires us to determine

whether Gagliano provided valid notice to extend those leases to

the    time    of    the    alleged          breach.         It    also     requires       us     to

determine      whether      Quad/Graphics,             the    last       entity    to     acquire

assets of what was Electronic Printing Systems, can be held

liable for that alleged breach.                     Before reaching these issues,

we    review    the     leases        and    describe        the    various       changes        the

company underwent that bear on our decision.

                                       A.    The Leases

       ¶6      There    are      two    North       Jefferson           Street    leases      that

underlie this action:                 the May 22, 2000 lease and the May 18,
2001 lease.         Both leases were amended numerous times as will be

explained below.

       ¶7      On April 11, 2000, Gagliano and Kraft entered into a

lease for 50,000 square feet of property in the Jefferson Street

facility for a term of five years.                      The lease initially gave the

tenant, which the lease listed as "Electronic Printing Systems,"

the right to extend the lease for "two consecutive additional

periods of three years."                The record shows that this section was
crossed out.
                                                4
                                                                        No.    2012AP122

      ¶8         On May 22, 2000, Gagliano and Kraft executed a revised

version      of    the    lease,     which   superseded       the    April 11,     2000

version.          Whereas the first lease covered only 50,000 square

feet of property, the May 22, 2000 lease covered 90,000 square

feet, divided into two leased premises.                       The portion of the

lease for the initial 50,000 square feet expired June 23, 2006.

The portion of the lease for an additional 40,000 square feet

expired six years after the tenant took occupancy.5

      ¶9         The May 22, 2000 lease contained several terms that

bear on our analysis.              First, it provided that upon notice at

least      120    days    before    the   expiration     of    the    initial    term,

Gagliano had the right to extend the lease for an additional

four-year         term.      Kraft     claims    that    Gagliano       fraudulently

inserted this extension right for the landlord in place of the

tenant's right to extend that was set out in the April 11, 2000

lease.       Second, the May 22, 2000 lease provided that Gagliano

was   to    send     notices   to    Electronic    Printing         System's   Buffalo

Street address prior to commencement of the lease and to the
Jefferson Street facility thereafter.                   Third, Kraft personally

guaranteed the May 22, 2000 lease and was, along with Electronic

Printing Systems, to remain liable in the event of any sublease

or assignment, both of which required Gagliano's consent.

      ¶10        About a year after executing the May 22, 2000 lease,

Kraft decided to lease additional space in the Jefferson Street

      5
       The leases referred to the leased spaces as                             "Demised
Premises I" and "Demised Premises II," respectively.                            We will
refer to them as the first and second leased premises.

                                             5
                                                                        No.     2012AP122

facility for his son's printing business.                         On May 18, 2001,

Gagliano and Kraft, this time on behalf of Openfirst, Inc.,

executed a new lease for an additional 1,848 square feet in the

Jefferson      Street    facility         that   expired   16    months       after   the

completion of certain work.                  This was a new lease (the 2001

lease) and not an amendment of the May 22, 2000 lease.                         Gagliano

concedes that Kraft did not guarantee the 2001 lease.                          The 2001

lease did not provide for any extensions of the lease term by

Gagliano.

       ¶11    Gagliano and Kraft amended the 2001 lease twice to

extend its term, first to November 7, 2004 and then to June 23,

2006.        The second amendment added a provision that permitted

Gagliano to extend the lease for an additional four-year term by

giving notice within 120 days of the lease's expiration.

       ¶12    Gagliano and Kraft also amended the May 22, 2000 lease

in a document that lacks a date of execution, but states that it

"commences" October 23, 2003.                This amendment added 8,900 square

feet    of    space     in   a      third    leased   premises      and       designated
"OpenFirst, Inc., successor in interest to Electronic Printing

Systems" as the appropriate recipient for further notice.

       ¶13    On     November 6,      2002,      Openfirst,      Inc.   and     related

companies      sold    their     assets     to   Openfirst      Holdings,      LLC;    New

Diversified Mailing Services, LLC; and New Electronic Printing

Systems.        As    part     of   the     asset   purchase,     the     leases      that

underlie this action were assigned to the buyers.                              Gagliano

consented to the assignment on the condition that the "Tenant
and any and all guarantors of [the] Lease[s] . . . remain fully
                                             6
                                                                             No.    2012AP122

liable under [the] Lease[s]."                     Gagliano also consented to New

Electronic Printing System's subsequent assignment of the leases

as collateral to Associated Bank, NA, again on the condition

"that    none       of    the    original     obligors      and/or         guarantors"     be

released from liability.

       ¶14    On    December 29,        2005,      Gagliano      sent      notice    of   its

intention     to     extend      both   leases      for    an    additional        four-year

term.        He    sent    the    notices     to    the    persons,         entities,     and

addresses that follow:

       Robert Kraft
       300 N. Jefferson St.
       Milwaukee, WI 53202

       Electronic Printing Systems, Inc.
       300 N. Jefferson St.
       Milwaukee, WI 53202

       Open First, Inc.
       300 N. Jefferson St.
       Milwaukee, WI 53202

       Target Marketing Solutions, Inc.
       300 N. Jefferson St.
       Milwaukee, WI 53202
       ¶15    Kraft received Gagliano's notice and informed Gagliano

that    he    did    not       "recognize"    the       extension     as     valid.       New

Electronic         Printing      Systems      remained      in       the    facility      and

continued to pay rent into the extended period.

       ¶16    At the time Kraft received Gagliano's notice, he had

begun    negotiations            with   Quad/Graphics           to      restructure       the

businesses.               As     part    of       the     restructuring            agreement

"Quad/Graphics loaned money to, and received a promissory note
from the following entities so they could buy Quad/Graphics's

                                              7
                                                                           No.     2012AP122

interest      in     the    business:        Openfirst         [Holdings],       LLC;    New

Diversified Mailing Services, LLC.; and New Electronic Printing

Systems, LLC."           Anthony Gagliano & Co. v. Openfirst, LLC, 2013

WI    App    19,    ¶17,     346 Wis. 2d 47,    828 N.W.2d 268     (internal

quotation marks omitted).                 At the end of this transaction, New

Electronic         Printing      Systems    still      owned    the     leases.         Kraft

remained      a    minority      shareholder       and    officer      until     September

2007, when Quad/Graphics terminated his employment.

       ¶17    The    restructuring         with    Quad/Graphics         did     not   spell

success for the companies involved.                     About two years later, New

Electronic         Printing      Systems     went      out     of     business.         Vice

President and General Counsel of Quad/Graphics Andrew Schiesl

explained the arrangement that followed:

       [New Electronic Printing Systems] was going out of
       business, [and] it owed QuadGraphics money as a
       borrower because QuadGraphics was a lender to it. As
       part of the ultimate resolution of that loan . . . the
       remaining business[, New Electronic Printing Systems,
       Inc.,] was effectively surrendered to QuadGraphics to
       pay back, to try and pay back the loan. QuadGraphics
       then started effectively sub-contracting or doing the
       business that it had just taken over at that point,
       and it needed to enter into a sublease with the
       sublessor so they could continue to use that space.
       ¶18    On June 23, 2008, to accomplish this arrangement, New

Electronic Printing Systems and Quad/Graphics entered into two

contracts.         The first was the Voluntary Surrender Agreement and

the   second       was     the   Sublease    for    certain     space     at     the   North

Jefferson Street facility.

       ¶19    In the Voluntary Surrender Agreement, New Electronic
Printing          Systems        agreed      to        surrender        collateral        to

                                             8
                                                                         No.    2012AP122

Quad/Graphics, and Quad/Graphics could, "in its sole discretion,

accept" the collateral or "any portion thereof."                      New Electronic

Printing    Systems    did     not    tender,      and   Quad/Graphics          did   not

accept, surrender of the leases.              In this regard, the Voluntary

Surrender Agreement stated, "For the avoidance of doubt, the

Collateral shall not include any lease for real property."

     ¶20     The      Voluntary         Surrender          Agreement           permitted

Quad/Graphics to "store the Collateral at [the North Jefferson

Street     facility]    at    no     charge   to    Quad      until    all     of     [New

Electronic    Printing       Systems,    LLC's]      obligations         to    Quad    are

satisfied     in   full   or    until    disposition          of   the    Collateral,

whichever occurs earliest."              Quad/Graphics and New Electronic

Printing Systems set forth the terms of the storage arrangement

in   the    Sublease,        which    expired      October 31,        2008,         unless

terminated sooner by either party.6                   Gagliano did not sign a

written agreement consenting to the sublease.

     ¶21     Quad/Graphics' communication with Gagliano began when,

on   September 1,      2008,       Schiesl    wrote      to   Gagliano         informing
Gagliano that New Electronic Printing Systems intended to vacate

     6
       The copy of the Sublease in the record does not bear a
signature on behalf of Quad/Graphics, but the parties do not
dispute that Quad/Graphics did sign the Sublease.           On
December 6, 2013, Quad/Graphics moved to correct the appellate
record and substitute a complete copy of the document that
includes a signature page bearing the signature of Andrew
Schiesl on behalf of Quad/Graphics.      Gagliano opposed this
motion.    We reserved ruling on the motion until after oral
argument, and now deny it.         There is no dispute that
Quad/Graphics did sign; therefore, the signed copy is not
necessary to our decision.

                                          9
                                                       No.   2012AP122

and surrender the Jefferson Street facility on October 31, 2008.

When Gagliano did not receive rent allegedly owed after that

date, Gagliano's attorneys notified Kraft, Electronic Printing

Systems, New Electronic Printing Systems, and Openfirst, Inc.,

that they were in default of the leases.     This suit followed.

                      B.   Procedural History

     ¶22   On June 4, 2009, Gagliano brought breach of contract

claims against New Electronic Printing Systems, Quad/Graphics,

and Kraft.7   Gagliano claimed that its December 29, 2005 Notice

of Landlord's Extension of Leases extended the terms of the

May 22, 2000 lease for the first and third leased premises, as

well as the 2001 lease for 1,848 square feet of space in the

same building, to June 23, 2010.      Gagliano also claimed that the

notice extended the lease for the second leased premises to

January 23, 2012.

     ¶23   Gagliano argued that New Electronic Printing Systems,

as an assignee of the primary lease, was liable for prematurely

vacating the premises, and Kraft was liable as a guarantor.        As
to Quad/Graphics, Gagliano claimed that Quad/Graphics had taken

an assignment of the leases when it purchased New Electronic

Printing Systems' assets in 2006 and therefore, was liable for

the extended terms of the leases as well.

     ¶24   Quad/Graphics moved for summary judgment, arguing that

there was no evidence that Quad/Graphics had taken a written

     7
       Gagliano also brought claims against several            other
entities that did not participate in this review.

                                 10
                                                                       No.        2012AP122

assignment of the leases, which the statute of frauds required,

and that the doctrines of waiver and estoppel barred Gagliano's

claims.        The   circuit      court    granted      Quad/Graphics'            motion,

finding that "there is absolutely no indication that Quad agreed

to any" assignment, and that it was Gagliano's obligation to

find out "who the heck they're really doing business with" and

negotiate   for      additional    security      from     that   party       if     it   so

desired.

      ¶25   Gagliano's remaining claims proceeded to trial.                              At

the close of evidence, Kraft moved for a directed verdict on the

grounds that Gagliano's notice of extension was invalid because

Gagliano did not address the notice to New Electronic Printing

Systems, the tenant at the time notice was given.                        The circuit

court granted the motion, concluding that "there is a strict

requirement of notice," under which Gagliano needed to serve

Kraft in his capacity as a representative of New Electronic

Printing Systems.        In other words, Gagliano needed to address

the   notice    to    "New   Electronic        Printing     Systems,     c/o       Robert
Kraft," rather than simply to Kraft at New Electronic Printing

Systems' address.        Since the circuit court concluded that the

notice of extension was invalid, it dismissed Gagliano's claim

against Kraft and the other defendants.

      ¶26   Gagliano     appealed,        arguing    that    the   circuit          court

erred when it granted Quad/Graphics' motion for summary judgment

and when it directed a verdict on the notice of extension issue.

                                          11
                                                                       No.     2012AP122

The    court      of   appeals    reversed       both    orders.8     Regarding     the

directed verdict, it concluded the notice of extension was valid

because "service was made on the correct entity"; "Open First,

Inc., received the benefits of the May 18, 2001, lease"; and

none       "of   the   other    documents    changed      that."      Gagliano,     346
Wis. 2d 47, ¶31.

       ¶27       As to the circuit court's grant of summary judgment,

the court of appeals concluded that Quad/Graphics was liable for

rent       for   the   remainder    of   the     term    of   the   extended    leases

because "Gagliano's consent to the assignment of the leases [to

Associated Bank] when New Electronic Printing Systems took over

the Openfirst business was conditioned on" any subsequent third

party to whom New Electronic Printing Systems transferred its

interest assuming "the obligations under and pursuant to the

Leases."         Id., ¶35.      It further reasoned that Quad/Graphics was

liable       because    it     "accepted    the    benefits     conferred      by   the

Gagliano leases and their amendments" and the Sublease between

New    Electronic       Printing     Systems       and    Quad/Graphics      was    not

       8
       The court of appeals stated that the appeal asked it "to
review the trial court's grant of summary judgment to
Quad/Graphics dismissing Gagliano's claims against it, and the
trial court's grant of a directed verdict dismissing Gagliano's
claims against New Electronic Printing Systems, LLC, and
Openfirst, LLC." Gagliano, 346 Wis. 2d 47, ¶27. The court did
not relate that Kraft joined the motion for a directed verdict
and participated in the appeal.    The court did, however, write
that it was not going to "separately address" Gagliano's claims
against Kraft, which we take as an acknowledgment that the
portion of its decision reversing the directed verdict bound
Kraft, as well as the other defendants. Id., ¶1 n.1.

                                            12
                                                                           No.       2012AP122

binding on Gagliano because Gagliano was not a party to it.

Id., ¶36.

       ¶28     Quad/Graphics petitioned this court for review of the

following issue:              "May a landlord recover from its tenant's

subtenant (or more remote subtenants) all future rent that the

immediate tenant had promised to pay, regardless of the terms of

the transfer from tenant to subtenant or the amount of time that

the subtenant occupies the premises?"

       ¶29     Kraft     opposed      Quad/Graphic's         petition,     but        in    the

event that review was granted, cross-petitioned this court to

review the following issues:                 (1) whether the court of appeals

properly       determined      claims       involving     Kraft;    (2)    whether          the

court of appeals correctly reversed the circuit court's directed

verdict; and (3) whether the court of appeals erred in regard to

the fraud issue Kraft raised.                We granted both petitions.

                                    II.     DISCUSSION

                               A.     Standard of Review

       ¶30     This     case    requires      us    to    review    both     a       directed
verdict      and   an       order   granting       summary    judgment.              When    an

appellate      court     reviews      the    evidentiary      basis    for       a    circuit

court's decision to grant a directed verdict, the verdict must

stand    unless       the    record    reveals     that    the     circuit       court      was

clearly wrong.           Weiss v. United Fire & Cas. Co., 197 Wis. 2d
365, 389, 541 N.W.2d 753 (1995) (quoting Helmbrecht v. St. Paul

Ins.    Co.,    122 Wis. 2d 94,     110,   362 N.W.2d 118    (1985))         ("An

appellate court should not overturn a circuit court's decision
to dismiss for insufficient evidence unless the record reveals
                                              13
                                                                    No.       2012AP122

that   the     circuit    court     was    'clearly    wrong.'").         A   circuit

court's evidentiary determination is clearly wrong when there is

any credible evidence to support the position of the non-moving

party.       See Marquez v. Mercedes-Benz USA, LLC, 2012 WI 57, ¶49,

341 Wis. 2d 119, 815 N.W.2d 314.

       ¶31    Our    review    of   the    circuit    court's   directed      verdict

does not turn on the sufficiency of the evidence.                      Rather, it

involves the application of undisputed facts to principles of

law.     Specifically, we focus on whether a landlord's contractual

notice to a tenant is sufficient when an appropriate person

receives that notice at the appropriate address, but the notice

does not indicate in what capacity the recipient of the notice

is being addressed.

       ¶32    Although     review     of    a   directed    verdict    ordinarily

focuses on the sufficiency of the evidence, we see no reason

that a directed verdict based on a legal error, rather than an

evidentiary         problem,   should      escape     review.     We   base       this

conclusion on our previous observation that summary judgment,
similar to our determination in the present case, "is a legal

conclusion by the court," and can rest on the "same [legal]

theory" as a directed verdict.               Steven V. v. Kelley H., 2004 WI
47, ¶35, 271 Wis. 2d 1, 678 N.W.2d 856; Lambrecht v. Estate of

Kaczmarczyk, 2001 WI 25, ¶40 n.23, 241 Wis. 2d 804, 623 N.W.2d
751 (citing 10A Charles A. Wright et al., Federal Practice and

Procedure:      Civil § 2713.1, at 242-43 (1998); Daniel P. Collins,

Note, Summary Judgment and Circumstantial Evidence, 40 Stan. L.
Rev. 491, 491 (1988)).              Both are appropriate when the moving
                                           14
                                                                      No.    2012AP122

party is entitled to judgment as a matter of law because there

is   no   genuine   issue,     in   the    case    of    summary      judgment,     or

credible evidence, in the case of a directed verdict, to support

the position of the nonmoving party.                    Wis. Stat. § 802.08(2)

(2011-12);9    Wis.    Stat.      § 805.14(1).           Furthermore,        we   have

previously construed decisions of a circuit court to conform

with the analysis required to correct an error.                  Bubb v. Brusky,

2009 WI 91, ¶30, 321 Wis. 2d 1, 768 N.W.2d 903 (construing a

circuit court's dismissal of a claim as if a motion for directed

verdict had been made).           As such, we review the legal basis for

the circuit court's directed verdict independently.                         Tufail v.

Midwest Hospitality, LLC, 2013 WI 62, ¶22, 348 Wis. 2d 631, 833
N.W.2d 586 (the interpretation of a lease, a written contract,

presents a question of law for our independent review).

      ¶33   This    case   also     requires      us    to   review   the     circuit

court's grant of summary judgment in favor of Quad/Graphics.

"We review a grant of summary judgment independently, applying

the same methodology as the circuit court" and the court of
appeals, but benefitting from their prior discussions.                        City of

Janesville v. CC Midwest, Inc., 2007 WI 93, ¶13, 302 Wis. 2d
599, 734 N.W.2d 428.           In order to determine whether summary

judgment was appropriate in this case, we must review various

leases among the parties, which again presents a question of law

for our independent review.          Tufail, 348 Wis. 2d 631, ¶22.

      9
       All subsequent references to the Wisconsin Statutes are to
the 2011-12 version unless otherwise indicated.

                                          15
                                                                      No.   2012AP122

                                B.   Directed Verdict

      ¶34     We begin with Gagliano's notice of extension because

if the notice was not valid, we need not reach the issue of

whether Quad/Graphics was an assignee.

      ¶35     The   body   of    law    concerning     the   notice   required    to

extend a lease deals almost exclusively with a tenant's right to

extend.       E.g., 2 Milton R. Friedman and Patrick A. Randolph,

Jr., Friedman on Leases § 14:2, at 14-45 to -46 (5th ed. 2005)

("A     tenant's     right      of     renewal    is   generally,      though    not

necessarily, conditioned on giving the landlord prior notice of

the election to renew."); Robert S. Schoshinski, American Law of

Landlord and Tenant § 9:4, 604 (1980) ("The mode of exercise of

an option to renew or extend" usually requires "that notice be

served on the lessor a specified time before expiration of the

original term.").

      ¶36     In that circumstance, most states require a "tenant

. . .      [to]   strictly comply with the notice provisions of an

option contract."10          52 C.J.S. Landlord & Tenant § 94 (2014).
This means that major departures from a prescribed method of

notice can render a notice ineffective.                  For example, a notice

may be invalid if it is late.                   Dyer v. Ryder Student Transp.

Servs., Inc., 765 A.2d 858, 860 (R.I. 2001).                     The same holds

true when a tenant utilizes a method of delivery different than

      10
       See also 63 Am. Jur. Proof of Facts 3d 423 (2013) ("a
provision in a lease requiring notice to a lessor of the
lessee's election to exercise an option to renew or extend the
lease must be strictly complied with").

                                           16
                                                                               No.     2012AP122

the lease specified and the notice does not reach the landlord.

W.   Tire,      Inc.    v.    Skrede,     307 N.W.2d 558,    562    (N.D.    1981).

Still, "[s]mall variances [from the prescribed method of giving

notice]      will       not     make      notice       of        renewal       ineffective."

2 Friedman, supra § 14:2, at 14-47 (citing Beckenheimer's Inc.

v. Alameda Assocs. Ltd. P'ship, 611 A.2d 105, 112-13 (Md. 1992)

(failure to attach a notice of net worth that the lease required

did not render notice invalid)).

      ¶37       Although we are required to determine in this case

whether the contractual notice provisions have been satisfied,

we note that in Wisconsin, the legislature has set forth the

methods by which a tenant may provide notice of extension.                                  Wis.

Stat. § 704.21(2).            These include giving notice to the landlord

personally, giving notice to a competent person in charge of a

landlord's place of business, and mailing the landlord notice by

registered       or    certified       mail.         Id.        If   the   landlord       is   a

corporation, a tenant may provide notice to a corporate officer

by these methods.             § 704.21(3).          Even if a tenant does not use
one of the enumerated methods to provide notice, the notice is

valid if the landlord has actual notice.                         § 704.21(5).11

      ¶38       As   previously     mentioned,         the       present      case   does    not

involve     a    tenant's      notice     to    extend       a    lease.        However,       we

consider     that      body    of   law   relating         to     the   sufficiency       of    a

      11
       Actual notice by a landlord to a tenant is likewise
statutorily sufficient in some circumstances, including notice
to terminate a tenancy, notice to inspect a tenant's premises,
and notice of an automatic renewal clause in a residential
lease. Wis. Stat. § 704.21(5).

                                               17
                                                                             No.    2012AP122

tenant's notice to extend in order to avoid imposing disparate

standards on landlord and tenant, particularly in a commercial

context.

      ¶39      Two possible documents potentially govern the issue of

notice in the present case:                the original May 22, 2000 lease and

the   subsequent        amendment       commencing        October 23,        2003.       The

May 22, 2000 lease directed that Gagliano send notices to the

tenant,     Electronic        Printing     Systems,       at    the    Jefferson      Street

address.       The October 23, 2003 amendment provided that notices

be sent to:

      OpenFirst, Inc., successor in interest to Electronic
      Printing Systems, Inc.
      c/o Robert Kraft
      300 N. Jefferson St.
      Milwaukee, WI 53203
While    the    parties      dispute     which     contractual         notice      provision

governs, we need not resolve that issue because we conclude the

notice was valid under both.

      ¶40      We    begin    with   the    May 22,       2000     lease,     which    Kraft

claims    controls.          According      to     Kraft,      Gagliano's      notice    was

invalid because that lease said that notices should go to the

"tenant," which on December 29, 2005 was New Electronic Printing

Systems.        Gagliano's       notice      did    not     name      that   entity,     and

instead went to Electronic Printing Systems, Robert Kraft, and

others at the Jefferson Street address.

      ¶41      Gagliano's      notice      was    valid     under     the    May 22,    2000

lease    for    at    least    two   reasons.         First,        the     parties    never
amended the lease to designate New Electronic Printing Systems

                                             18
                                                                            No.     2012AP122

as the tenant.           Removing the October 23, 2003 amendment from

consideration, the lease required Gagliano to send notices to

Electronic      Printing       Systems    at     the    Jefferson     Street       address.

Gagliano did exactly that.                Second, even if Kraft were correct

that Gagliano was required to send the notice to New Electronic

Printing Systems, Gagliano did that as well.                        Gagliano sent the

notice to Kraft, an officer of New Electronic Printing Systems,

at   New     Electronic      Printing     Systems'       address.       That       Gagliano

addressed the notice to an officer of New Electronic Printing

Systems simply ensured that an appropriate individual within the

entity received the notice.

       ¶42    Next,     we     consider        the     notice    provision          in     the

October 23, 2003 amendment.               Gagliano claims that this document,

not the May 22, 2000 lease, sets forth the controlling method of

giving       notice    because      the    parties       executed      it     after        New

Electronic      Printing       Systems    acquired       the    leases.           Under    the

amendment, Gagliano was to send notices to "OpenFirst, Inc.,

successor in interest to Electronic Printing Systems."                             Gagliano
sent    the    notice     to    Openfirst,        but    did    not    designate          that

entity's status as "successor in interest to Electronic Printing

Systems."       Because Gagliano sent the correct entity the notice

at the correct address, we cannot conclude that such an omission

renders the notice invalid.

       ¶43    Finally,       even   if    Gagliano's       notice      were       defective

under      either     document,     undisputed          evidence      shows       that     New

Electronic Printing Systems had actual notice that Gagliano was
exercising a right of extension.                     Kraft admitted that he could
                                            19
                                                                  No.     2012AP122

accept notices on behalf of New Electronic Printing Systems and

that he did, in fact, receive Gagliano's notice.                Although Kraft

vigorously      disputes    whether      Gagliano      lawfully      inserted      a

landlord's right of extension in the lease, he cannot reasonably

contend that New Electronic Printing Systems was unaware that

Gagliano was exercising what Gagliano asserted was its right to

extend.

    ¶44     Having concluded the notice was valid, we affirm the

portion   of    the   decision    of   the   court    of   appeals,     albeit    on

different      grounds.12    We    remand     to     the   circuit    court      for

    12
       The court of appeals concluded that the                        notice      of
extension was valid for the following two reasons:

    (1) service was made on the correct entity ('Open
    First, Inc.'), and we see no reason not to apply the
    general principle that we disregard errors that 'do
    not affect substantial rights,' see Wis. Stat. Rule
    805.18(1) (parenthetical text omitted); and (2) Open
    First, Inc., received the benefits of the May 18,
    2001, lease and under the law we have already
    recognized was therefore bound by the . . . extension
    clause adopted by the May 18 lease.

Gagliano, 346 Wis. 2d 47, ¶31.

     We disagree that there is "no reason not to apply" Wis.
Stat. § 805.18(1). That statute applies to "any error or defect
in the pleadings or proceedings," whereas the notice at issue in
this case is purely contractual.

                                        20
                                                             No.   2012AP122

determination of Kraft's remaining arguments, including whether

Gagliano fraudulently inserted the extension provision into the

May 22, 2000 lease and whether that provision materially altered

his obligations under the guarantee.13             Because Quad/Graphics'

liability can be determined independently of the notice issue,

however, we turn to the issue of whether Quad/Graphics was an

assignee of New Electronic Printing Systems.

                         C.   Summary Judgment

      ¶45   Quad/Graphics argues that the court of appeals erred

in   reversing   the   circuit   court's   grant    of   summary   judgment

because Quad/Graphics was a subtenant, not an assignee, of New

Electronic Printing Systems and, therefore, was not liable to

     As to the court of appeals' second rationale, we explain in
the next section that we cannot allow the general principle that
"[a] party that accepts a contract's benefits is bound to its
burdens" to eviscerate the longstanding distinction between an
assignment and a sublease. Id., ¶28. For the moment, however,
we note that Gagliano concedes that it "did not appeal the trial
court's ruling that Kraft did not guaranty the May 18, 2001
Lease . . . but . . . appeal[s] [only] the trial court's ruling
that Kraft was not liable under his guaranty for the May 22,
2000 Lease, and its October 23, 2003 Amendment."
      13
       Because Kraft prevailed on the notice issue at the
circuit court level and did not receive a dispositive adverse
determination from the circuit court on the fraud or guarantee
issues, Kraft had no reason to cross appeal the circuit court's
order directing a verdict in his favor. As such, we cannot say
that he has abandoned these claims on appeal.      Additionally,
when Gagliano appealed the order of the circuit court, the court
of appeals should not have decided the factual issue of fraud
and the related factual issue of the guarantee.    Gottsacker v.
Monnier, 2005 WI 69, ¶35, 281 Wis. 2d 361, 697 N.W.2d 436 (the
court of appeals cannot make factual determinations where the
evidence is in dispute).

                                    21
                                                                               No.     2012AP122

Gagliano for any unpaid rent.                 According to Quad/Graphics, the

court of appeals ignored long-standing precedent that recognizes

that a landlord may "recover unpaid rent from both its tenant

and    that    tenant's    'assignee,'        [but]         may   not    do    so    from   its

tenant's mere 'subtenant.'"

       ¶46     Gagliano    concedes         that       "a    legitimate       sublessee      is

[not] liable to the landlord for unpaid rent."                           Its argument is

that Quad/Graphics was not a "legitimate sublessee" because it

was an assignee, rather than a subtenant, since                                 the primary

lease        prohibited        subleasing          without        Gagliano's          consent.

Gagliano also argues that Quad/Graphics was actually an assignee

because the substance of the transaction between New Electronic

Printing       Systems     and    Quad/Graphics              transferred        the     entire

remainder of the former's leasehold estate.                             We conclude that

Quad/Graphics was not an assignee of New Electronic Printing

Systems and, therefore, is not liable to Gagliano for any unpaid

rent.

                1.   Assignment/Sublease general principles
       ¶47     As early as 1864, we recognized a principle dating

back    to    feudal     law    that   a    tenant          who   transfers      the    entire

remainder       of   his   estate,         thereby      retaining        no    reversionary

interest, creates an assignment of the lease, while a tenant who

transfers        something        less,        creates            a     new     contractual

relationship.          Cross v. Upson, 17 Wis. 638 (*618), 643 (*623)

(1864)       (distinguishing      between         an    assignment       and    "an     under-

tenancy, which is the relation ordinarily established between
the lessee and the party in possession by proof that there was
                                             22
                                                                 No.   2012AP122

no assignment"); 1 Milton R. Friedman and Patrick A. Randolph,

Jr., Friedman on Leases § 7:4.3, at 7-85 (5th ed. Rel. #24,

2014) ("[t]he ancient technical system of feudal law based the

landlord-tenant relation on the existence of a reversion").                  We

affirmed this distinction more recently in Cranston v. Bluhm, 33
Wis. 2d 192, 201, 147 N.W.2d 337 (1967), in which we explained:

    [T]he basic distinction between an assignment and a
    sublease is that by the former the lessee conveys his
    whole interest in the unexpired term leaving no
    reversion in himself, while the latter transfers a
    part only of the leased premises for a period less
    than the original term.
(quoting 3A George W. Thompson, Commentaries on the Modern Law

of Real Property, § 1210, at 48-49 (1981)).                Put another way,

"an assignment is the transfer of the existing lease, whereas a

sublease is the creation of a new tenancy between the original

tenant and the subtenant."      5 Thompson on Real Property, Second

Thomas Edition §42.04(d), at 324 (David A. Thomas & N. Gregory

Smith eds., 2007).

    ¶48    This distinction is grounded in principles of privity

of estate and privity of contract, both of which can be conveyed

by a lease.       Schoshinski, supra §§ 1:1, at 8:1.               Privity of

estate means "[a] mutual or successive relationship to the same

right in property."      Black's Law Dictionary 1320 (9th ed. 2009);

see Schoshinski, supra § 8:1, at 532.            To say that transferring

privity   of   estate   transfers   the   same    rights    in   property    is

another way of saying that the transferee stands in the shoes of

the transferor.

                                    23
                                                                            No.    2012AP122

      ¶49    Privity       of     contract     is     a    different      creature.       It

refers to the contractual relationship between parties, who are,

of course, free to negotiate for any term within the confines of

the law.      Schoshinski, supra § 8:1, at 532; see generally Queen

Ins. Co. of Am. v. Kaiser, 27 Wis. 2d 571, 574, 135 N.W.2d 247

(1965)    (quoting        Anno.      175 A.L.R. 8,    86)   ("the     landlord     and

tenant relationship is not a                   matter of public interest, but

relates     exclusively         to    the    private       affairs     of    the    parties

concerned and that the two parties stand upon equal terms").

      ¶50    The distinction between assignment and sublease, or

privity of estate and privity of contract, is paramount in this

case.        This    is    so     because      by     accepting      an     "assignment——

regardless of landlord's consent thereto——[an] assignee acquires

an interest in the premises that brings him into privity of

estate with the owner and makes him liable to the owner for the

payment of rent and on those tenant covenants that run with the

land."      1 Friedman, supra § 7:5.1, at 7-105; 52 C.J.S. Landlord

&   Tenant    § 52    (2014)         (an    assignee       "assumes       [some    of]   the
burdens, as well as the benefits, flowing from the original

contract" for the entire term of the assignor's lease with the

original     landlord);         Thomas,       supra       § 42.04(d),       at    324    ("An

assignment will . . . bind the assignee to all covenants that

                                              24
                                                                      No.     2012AP122

run    with    the     land    . . .,    including    rent,     . . .       [while]   a

subtenant is bound only to the sublease itself.")14

       ¶51    In   contrast,     when    an    occupant    is   a   subtenant,      the

subtenant is liable only to the tenant for the rent agreed upon

between those parties.            1 Friedman, supra § 7:7.1, at 7-123 to

-24.     There is neither privity of estate nor privity of contract

between landlord and subtenant.               Id.

       ¶52    The decision of the court of appeals did not address

this distinction.             Quoting language from the November 4, 2002

Landlord's Consent Agreement in which Gagliano consented to the

New Electronic Printing Systems' assignment of the leases as

collateral to Associated Bank, the court of appeals concluded

that Quad/Graphics was liable for rent owed under the extended

leases       because     Gagliano       conditioned       its   consent       to    the

assignment upon any subsequent transferee assuming liability for

the    obligations       under    the    leases.      We    cannot    accept       this

reasoning.

       ¶53    Quad/Graphics was not party to the November 4, 2002
Landlord's Consent Agreement wherein Gagliano consented to New

       14
       Gagliano claims that at least some of an assignee's
obligations are now defined by statute.     In Lincoln Fireproof
Warehouse Co. v. Greusel, 199 Wis. 428, 437-38, 227 N.W. 6
(1929), we concluded that an assignee had no liability for the
remaining term of a lease when the assignee abandoned the
premises and the landlord accepted surrender and repossessed the
property, thereby terminating privity of estate.         Gagliano
argues that the adoption of Wis. Stat. § 704.29(1) abrogates the
ability of an assignee to avoid liability in this manner by
providing that a landlord's claim for unpaid rent applies to
assignees.    Because we conclude that Quad/Graphics was a
subtenant, not an assignee, we do not evaluate this argument.

                                          25
                                                                              No.     2012AP122

Electronic           Printing     Systems'          assignment     of   the     leases      as

collateral to Associated Bank.                      Quad/Graphics also was not party

to   the    November 6,          2002       Asset    Purchase     Agreement         for   which

Gagliano consented to the principal tenants' assignment of the

leases          to    New    Electronic             Printing      Systems.            Because

Quad/Graphics          was      not     a    party     to   the    Landlord's         Consent

Agreement on which the court of appeals relies, the obligations

attendant to that contract do not apply to Quad/Graphics.

      ¶54        The court of appeals also reasoned that "Quad/Graphics

accepted the benefits conferred by the Gagliano leases and their

amendments, which were . . . disclosed to it in the July 6,

2006,      Membership        Interest         Purchase      Agreement.          Therefore,

Quad/Graphics cannot disclaim or avoid its liabilities for the

burdens imposed by those leases and amendments——including the

lease-extension terms."                 Gagliano, 346 Wis. 2d 47, ¶36.                      The

problem with this conclusion, as Quad/Graphics points out in its

brief, is that every occupant can be said to have "accepted the

benefits" of the underlying lease in the broad sense used by the
court      of    appeals.         By    this    logic,      all    occupants        would    be

                                                26
                                                                            No.     2012AP122

assignees, and the distinction between assignment and sublease

would be swallowed whole.15

       ¶55        Having explained the distinctions between assignee and

subtenant and relative obligations of each regarding payment of

rent, we turn to the remaining issue in this review:                                whether

Quad/Graphics was an assignee of the Gagliano leases.

                              2.    Quad/Graphics' Status

       ¶56        In determining whether an occupant of a premises is an

assignee or a subtenant of the original tenant, we begin with a

presumption that an occupant, other than the original tenant who

pays    rent       directly    to       the   landlord,     is     an   assignee     of   the

original tenant, not a subtenant.                     Cross, 17 Wis. at 643 (*623)

("the       law    infers    an    assignment        from   the    fact   of      entry   and

occupation[; a] like presumption arises from payment of rent");

Mariner       v.    Crocker,       18 Wis. 264    (*251),      267   (*254)     (1864)

(citing       Cross    for     "the      presumption        that    a   party     found    in

possession of demised premises was there as assignee of the

lessee"); 1 Friedman, supra § 7:5.1, at 7-107 ("When a party

       15
       Additionally, we note that the cases the court of appeals
cites for this proposition dealt with parties to an earlier
contract.   Meyers v. Wells, 252 Wis. 352, 357, 31 N.W.2d 512
(1948) (employing a presumption that an employee who worked for
several years after his employment contract expired continued to
work under the terms and conditions of the contract); S & O
Liquidating P'ship v. Comm'r, 291 F.3d 454, 459 (7th Cir. 2002)
(quoting Skelton v. GM Corp., 860 F.2d 250, 260 (7th Cir. 1988))
(former partners in an accounting firm who signed a closing
agreement could not participate in a global settlement because
"[a] party who has accepted the benefits of a contract cannot
'have it both ways' by subsequently attempting to avoid its
burdens").

                                                27
                                                                    No.    2012AP122

other    than   the    tenant    is   shown   to    be   in   possession    of     the

premises, and paying rent therefor, there is a presumption that

the lease has been assigned to him.").                     What is required in

order to rebut this presumption is less clear.

    ¶57     The majority of cases "have treated a transfer of the

entire term [of the lease]" as dispositive of an assignment.

Thomas, supra § 42.04(d), at 326.             Our statement in Cross that a

party can rebut a presumption of assignment by showing that an

occupant "charged as assignee never in fact had an assignment of

the lease" seems to state the majority rule.                   Cross, 17 Wis. at

643 (*623).

    ¶58     In a later case citing Cross, however, we stated that

"[a]ny language which shows the               intention       of the parties to

transfer the property from one to the other is sufficient."

Cranston, 33 Wis. 2d at 201 (quoting 3A Thompson, supra § 1210,

at 51) (emphasis added).              This focus on intent, rather than

transfer in fact, seems to fall in line with an alternative line

of cases that ask "whether the parties intended to assign the
primary    lease      to   the   transferee,       or    intended   to    create    a

separate tenancy."         Thomas, supra § 42.04(d), at 326 (collecting

cases); see also Schoshinski, supra § 8:11, at 558 ("the most

sensible way to distinguish between an assignment and a sublease

is that adopted by the Arkansas court in Jaber v. Miller16 'that

the intention of the parties is to govern.'")

    16
          Jaber v. Miller, 239 S.W.2d 760, 764 (Ark. 1951).

                                        28
                                                                                    No.    2012AP122

       ¶59     It        is     unnecessary        to     delve     further           into        this

distinction at this time for two reasons.                          First, it may well be

that     "the       intent       approach     adds      little      to        the    traditional

analysis[] since courts will typically discern intent by looking

to see whether a reversion or right of entry has been retained."

Thomas, supra § 42.04(d), at 327.                       More importantly, the present

case does not require us to decide between the approaches, even

if they are distinct, because we conclude that Quad/Graphics and

New     Electronic            Printing    Systems       intended         to    enter        into    a

sublease and New Electronic Printing Systems did transfer less

than its entire remaining leasehold estate.

       ¶60     Both approaches to the assignment/sublease distinction

focus    on     the       transaction       between       tenant    and        the    subsequent

occupant.           As    such,     we    begin    with    the     two    agreements             those

parties, New Electronic Printing Systems, who was the tenant at

the relevant time, and Quad/Graphics, created on June 23, 2008:

the Voluntary Surrender Agreement and the Sublease.

       ¶61     Quad/Graphics argues that the Sublease is the proper
focus     of    our           analysis.       Quad/Graphics         explains              that     the

Voluntary Surrender Agreement expressly excludes the leases from

surrender and that the parties entered into the Sublease in

order to convey the portion of the leasehold estate necessary to

affect    the       surrender       of    other    collateral.            The       term    of     the

Sublease was four months, ending October 31, 2008 or sooner upon

20 days notice by New Electronic Printing Systems.                                    It did not

                                                  29
                                                                        No.   2012AP122

include the remainder of the extended leases, which continued to

June 23, 2010 and January 23, 2012, respectively.17

      ¶62     We       agree   with   Quad/Graphics      that     the    Sublease    is

sufficient to show that New Electronic Printing Systems did not

intend to and did not convey its entire leasehold estate because

only four months of the remaining lease term were conveyed.

Also, the lease unequivocally shows that the parties intended to

enter      into    a    sublease.     The     parties   labeled    the    document    a

sublease, provided that Quad/Graphics would have "no liability

under any lease of the Premises from the fee owner thereof" and

"no obligations to [Gagliano] arising out of or relat[ing] to

this Sublease," and that Quad/Graphics was "not assuming the

Primary Lease."           See Tufail, 348 Wis. 2d 631, ¶25 (quoting Kernz

v. J.L. French Corp., 2003 WI App 140, ¶9, 266 Wis. 2d 124, 667
N.W.2d 751 (in attempting to give effect to contracting parties'

intentions, "unambiguous contract language controls").

      ¶63     Gagliano argues that the Sublease was invalid because

the     primary        lease   prohibited        subleasing    without     Gagliano's
consent, which New Electronic Printing Systems never obtained.

Gagliano asks us to               classify the document as an assignment;

however,      the       primary     lease   likewise     prohibited       assignments

without      Gagliano's        consent.     Perhaps     in    anticipation    of    the

logical      problem      this     argument      presents,    Gagliano     casts    his

      17
       This statement should not be interpreted as our view that
Kraft's allegation that Gagliano improperly inserted a right to
extend into the leases has no merit.    As explained previously,
we take no position on this issue, and remand it to the circuit
court.

                                            30
                                                                           No.     2012AP122

argument in terms of fairness to the landlord.                      Specifically, he

contends that the invalid Sublease may not be used "for any

purpose" and may not "limit the landlord's rights."                           We find no

support in the law for adding a consideration of fairness to the

landlord    to     the      test    for   determining       whether      a    subsequent

occupant becomes a sublessee or an assignee.

      ¶64   As with the leases in the present case, the lease in

Cross required the landlord's consent to sublet or assign, which

the tenant did not obtain, yet we concluded that the tenant

could rebut the presumption of assignment by the actions of the

parties.    Cross, 17 Wis. at 640, 643 (*620-21, 623).                        This is so

because an occupant charged with an assignment need not prove

the   validity        of     a     sublease,     but    rather      must      rebut     the

presumption      of    an    assignment.          See   id.    at   643      (*623)     (an

occupant    that      enters       with   the    lessee's     consent,       but   without

assignment, "must be an under-tenancy of some kind, for years,

from year to year, at will or by sufferance"); see generally

Lamonts Apparel, Inc. v. SI–Lloyd Assocs., 967 P.2d 905, 908
(Or. Ct. App. 1998) (concluding that a contract that did not

meet the requirements for a valid assignment or sublease did not

trigger the obligations of either, thus illustrating the basic

principle that assignment and sublease are not the only two

types of leasehold estates).               As such, we conclude that although

a sublease entered into without the landlord's consent may be

voidable at the election of the landlord and give rise to a

breach of contract claim, it can be used for the purpose of
rebutting a presumption of assignment.
                                            31
                                                                             No.    2012AP122

       ¶65     Although fairness to the landlord does not appear to

be a proper consideration when determining whether a transfer is

a     sublease      or    assignment,     we     nonetheless          note         that    our

conclusion does not "limit the landlord's rights," as Gagliano

contends, because the landlord does not have the right to treat

any sublease in violation of the primary lease as an assignment.

The    landlord's        rights    in   such   a    situation         are      limited      to

eviction of the subtenant and breach of contract action against

the primary tenant.           John F. Thompson, 2 Wisconsin Property Law

Series:        Drafting Commercial Leases 21 (1968) ("If [a] lease

contains a provision prohibiting the assignment or subletting

without       the   consent   of    the   landlord,        and    a     tenant      does   in

violation of this provision sublet or assign without the consent

of    the     landlord,     such    action     on    the    part        of    the     tenant

constitutes a breach of the lease, justifying termination of the

lease or any other remedy available to the landlord.").                                     To

conclude otherwise would be to hold a nonparty to the primary

lease liable for the primary tenant's breach.
       ¶66     Gagliano's     second      argument     is        that     although         the

Sublease may have purported to transfer only a portion of the

remaining leasehold estate, the substance of the transaction as

a     whole    transferred        the   entire      remainder.               Specifically,

Gagliano contends that because the Voluntary Surrender Agreement

"gave Quad/Graphics the exclusive right to occupy the leased

premises for the remaining lease term" and "did not provide New

[Electronic Printing Systems] with any reversionary interest in
the premises" the transaction constituted an assignment of the
                                          32
                                                                              No.     2012AP122

leases.      Quad/Graphics' right to occupy was exclusive, according

to Gagliano, because Quad/Graphics had complete control over the

conditions by which New Electronic Printing Systems could end

Quad/Graphic's right to store its collateral:                             satisfaction of

New Electronic Printing Systems obligations to Quad/Graphics in

full or disposition of the collateral.                       In sum, Gagliano argues

that the "character of the agreement" was an assignment, not a

sublease.       Again, we disagree.

       ¶67    The Voluntary Surrender Agreement did not transfer the

May 22,      2000    lease    from        New    Electronic       Printing       Systems     to

Quad/Graphics        because        the    tenant       under     the     lease      and    the

subsequent occupant had different rights.                            For example, under

the Voluntary Surrender Agreement, Quad/Graphics could end its

obligation to pay rent by disposing of the collateral.                                       New

Electronic Printing Systems had no such ability under the leases

with Gagliano.         The Voluntary Surrender Agreement also provided

that      New       Electronic        Printing          Systems         could       terminate

Quad/Graphics'        right    to     store          collateral      by   satisfying         its
obligations in full to Quad/Graphics.                           Again, New Electronic

Printing      Systems    had     no       such       right   under      the     leases      with

Gagliano.        Because      the    terms       of    the   May 22,      2000      lease    and

Voluntary Surrender Agreement so differ, we cannot say that New

Electronic Printing Systems assigned the lease to Quad/Graphics.

See Lamonts Apparel, 967 P.2d at 908 (concluding that there is

no assignment when a purported sublease differs from the primary

lease in significant respects).                        That Quad/Graphics, not New
Electronic Printing Systems, was the party who could satisfy the
                                                33
                                                                              No.        2012AP122

conditions necessary to end Quad/Graphics' obligations to New

Electronic Printing Systems under the Sublease is not germane.

The     question        is     whether        New    Electronic         Printing         Systems

transferred       or     intended        to    assign       the   Gagliano        leases        to

Quad/Graphics.           That Quad/Graphics could end its obligation to

pay rent before the May 22, 2000 lease expired on June 23, 2010

is    support     for     our    conclusion          that   New   Electronic         Printing

Systems did not make an assignment.

       ¶68     Furthermore,        Gagliano's           focus      on       the     Voluntary

Surrender       Agreement         is     misplaced          because      that       agreement

specifically excluded the leases that underlie this action from

what was being surrendered when it stated, "[f]or the avoidance

of doubt, the Collateral shall not include any lease for real

property of which any Debtor is a party."                         We conclude that the

Sublease and Voluntary Surrender Agreement, when taken together,

show    that    New      Electronic       Printing       Systems      and    Quad/Graphics

intended a sublease.             Whether the Sublease was not "legitimate,"

i.e.,    entered       into     without       Gagliano's      consent,       is     of    little
concern because it did not transfer the entire remainder of New

Electronic Printing Systems' leasehold estate to Quad/Graphics.

       ¶69     Having        concluded        that     Quad/Graphics         was         not     an

assignee     of    New       Electronic       Printing      Systems'     lease,       we       also

conclude that Gagliano cannot recover rent allegedly owed under

the extended leases based on privity of estate.                           Accordingly, we

reverse the portion of the decision of the court of appeals that

reversed an order of the circuit court granting Quad/Graphics'
motion for summary judgment.
                                               34
                                                                            No.    2012AP122

                                    III.    CONCLUSION

      ¶70    This case presents two issues for our review:                               (1)

whether Gagliano gave sufficient notice to extend the leases to

the   time   when     the     alleged       breach    occurred;      and     (2)   whether

Quad/Graphics was a subtenant of the lessee or an assignee of

the leases.       As to the first issue, we conclude that Gagliano's

notice was valid.           Gagliano provided notice:               (1) to the entity

designated     as    the     tenant    on    the     original      lease;    (2)    to   the

entity who was the current tenant at the time of the notice; and

(3) to the entity a subsequent amendment of the lease designated

as the tenant.           The notice is also valid because the current

tenant at the time Gagliano sent the notice had actual notice

that Gagliano was exercising its alleged right to extend the

leases.      Accordingly, we affirm the portion of the decision of

the court of appeals that reversed the circuit court's directed

verdict,     which    had     concluded       that    Gagliano's         notice    was    not

valid.       We     remand     to     the    circuit       court    for     fact-finding

necessary to decide the merits of Kraft's remaining arguments
relating to the lawfulness of the extension provision in the

leases.

      ¶71    In     regard     to    the     second       issue,    we    conclude       that

Quad/Graphics is not liable to Gagliano because Quad/Graphics

was a subtenant of the lessee, not an assignee of the leases.

Undisputed evidence shows that New Electronic Printing Systems,

the   assignee      of   the    original      tenants,       did    not     transfer     its

entire    remaining        leasehold       estate    to    Quad/Graphics.          Because
Gagliano and Quad/Graphics did not share privity of estate, it
                                             35
                                                               No.   2012AP122

is not an assignee.     Therefore, we do not hold Quad/Graphics

liable for New Electronic Printing Systems' alleged breach of

contract to which Quad/Graphics was not a party.               Accordingly,

we reverse the portion of the decision of the court of appeals

that reversed the order of the circuit court granting summary

judgment in favor of Quad/Graphics and remand to the circuit

court for dismissal of all claims against Quad/Graphics.

    By   the   Court.—The   decision   of   the   court   of     appeals   is

affirmed in part, reversed in part and the cause remanded to the

circuit court.

                                  36
                                                              No.    2012AP122.awb

       ¶72    ANN   WALSH    BRADLEY,         J.   (concurring       in         part,

dissenting     in   part).    This     case    addresses    two     issues:      (1)

whether      Quad/Graphics   was   a   subtenant     or    assignee       and    (2)

whether the notice of lease extension that Gagliano provided was

legally sufficient.

       ¶73    I agree with the majority when it concludes that Quad

Graphics is a subtenant.           Because the tenant did not transfer

all rights in the lease to Quad Graphics and it was not in

privity of estate with the landlord, Quad Graphics was not an

assignee.      Therefore, I join Part C of the majority opinion.

       ¶74    However, I part ways with the majority on the issue of

the sufficiency of the notice.          For the reasons set forth in the

dissent, I agree that the majority opinion is not convincing as

a matter of statutory interpretation or corporate and agency

law.    Therefore, I join Part I of the dissent.

       ¶75    Accordingly, I respectfully concur in part and dissent

in part.

                                       1
                                                                No.   2012AP122.ssa

     ¶76   SHIRLEY     S.     ABRAHAMSON,        C.J.   (dissenting).            The

instant    case    seems    to    present    a     complex     fact   and    legal

situation,    although      the     court    of    appeals      discounted       the

complexity,       writing   that     "this    appeal     has     a    veneer     of

complexity."1

     ¶77   I write only on the issue of the sufficiency of the

landlord's notice to the tenant of the extension of the lease.

This case presents a narrow issue:            What does a landlord have to

do to give notice to a tenant corporation of an extension of the

commercial lease, when the lease and the statutes are silent on

the issue of notice?             Notice is a dispositive issue in the

instant case, majority op., ¶34, and I need not address other

issues addressed by the majority opinion.

     ¶78   The     majority      opinion    phrases     the    question     to    be

answered as "whether a landlord's contractual notice to a tenant

is sufficient when an appropriate person receives that notice at

the appropriate address, but the notice does not indicate in

what capacity the recipient of the notice is being addressed."
Majority op., ¶31.

     ¶79   The majority opinion loses sight of the fact that an

individual in his or her personal capacity, an individual in his

or her representative capacity, and a corporation are separate

and apart under the law.             Robert Kraft individually; Robert

Kraft as president of the corporation, New Electronic Printing

Systems; and the current corporate tenant itself, New Electronic

     1
       Anthony Gagliano & Co., Inc. v. Openfirst, LLC, 2013 WI
App 19, ¶26, 346 Wis. 2d 47, 828 N.W.2d 268.

                                       1
                                                                          No.   2012AP122.ssa

Printing Systems are, under the law, three different, separate

persons.

     ¶80      These       distinct    persons        complicate           the     issue    of

sufficiency of notice, which arises in numerous situations——some

regulated by statute, others by contract or the like.                              When the

person to be notified is a corporation, the identity of the

appropriate individual to receive notice depends on the facts

and circumstances of each situation.                    Notice to a corporation is

governed by the general principle that a "corporation enjoys a

legal    identity         separate   and        apart    from       its     shareholders,

directors, and officers."2

     ¶81      Deciding whether the notice given is sufficient to be

notice   to    the    corporation         includes      such    issues      as:    to     what

individual       notice      must    be     given       to     give   notice        to    the

corporation; when, how, and where notice must be given; whether

notice     was       in     strict    compliance             with     the       applicable

requirements; whether notice was in substantial compliance with

the applicable requirements;3 and whether actual notice (that is,

     2
       1 William Meade Fletcher et al., Cyclopedia of the Law of
Corporations § 25 (perm. ed., rev. vol. 2006) (citing, inter
alia, Security Bank v. Klicker, 142 Wis. 2d 289, 418 N.W.2d 27
(1987)).
     3
       The majority opinion is correct in stating that small
variances generally will not make notice ineffective.  Majority
op., ¶36 (citing Beckenheimer's Inc. v. Alameda Assocs. Ltd.
P'ship, 611 A.2d 105, 112-13 (Md. 1992)). However, the case
cited by the majority opinion does not necessarily illustrate
the minuteness of variances allowed because the case also
involves ambiguous terms being construed against the plaintiff.
Beckenheimer's Inc., 611 A.2d at 111.

                                            2
                                                                  No.   2012AP122.ssa

knowledge) can overcome notice that does not comply with the

applicable requirements.

    ¶82    Numerous leases and amendments were negotiated in the

instant case.     The tenant corporation kept changing, at least in

name.   The leases and amendments do not always state the name of

the corporation that is the tenant; some merely state notice is

to be given to "the tenant."             The leases and amendments in the

instant case do not always reveal the individual to whom notice

is to be given to constitute notice to a corporation tenant.

    ¶83    The    majority     opinion       concludes    that    the   landlord's

addressing      the   notice    to    Robert      Kraft     "ensured       that   an

appropriate individual within the [corporate] entity received

the notice."     Majority op., ¶41.

    ¶84    The    majority     opinion's       conclusion    is    based    on    two

faulty reasons:

        (1) The majority opinion applies Wis. Stat. § 704.21(3) to

           the instant case.          This statute provides that notice

           by a tenant to a corporation landlord may be conveyed
           by    notice   to   an    officer     of   the   corporation.          The

           statute, however, explicitly governs only a tenant's

     More analogous examples include American Oil Co. v. Rasar,
308 S.W.2d 486, 491 (Tenn. 1957) (reasoning that notice was
invalid because it was sent to the original lessors when the
lease required notice to be sent to assignees of lessors);
Western Tire, Inc. v. Skrede, 307 N.W.2d 558, 562 (N.D. 1981)
(reasoning that notice was invalid because the notice was sent
by ordinary mail instead of certified or registered mail); and
Bernier v. Benson, 159 N.E.2d 39, 41 (Ill. Ct. App. 1959)
(reasoning that notice was invalid when notice was provided by a
partnership, but the lessees actually were the individuals that
made up the partnership).

                                         3
                                                                             No.   2012AP122.ssa

           notice to a landlord of extension of a lease, and the

           present case involves a landlord's notice to a tenant.

           Majority op., ¶37-38.

      (2) Without       analysis          of       corporation             and     agency     law

           recognizing            the   separateness            of    a    corporation        and

           individuals            associated         with       the       corporation,        the

           majority           opinion       treats         an        individual         who    is

           guarantor,         an    individual           who    is    an    officer      of   the

           corporation, and the corporation as if they are one

           and the same.

    ¶85    Robert Kraft is an officer of New Electronic Printing

Systems.     Robert Kraft was not the "tenant."                              New Electronic

Printing Systems was the tenant.                         The landlord knew that New

Electronic      Printing       Systems      was       the       tenant.       Robert      Kraft,

individually,     was     a       guarantor        under       the    lease.        A   careful

landlord would have given Robert Kraft notice in his individual

capacity as a guarantor to protect the landlord's rights against

the guarantor.
    ¶86    I dissent because I am not persuaded by the majority

opinion's reasoning and believe that it may have troublesome,

unforeseen consequences.

                                               I

    ¶87    To reach its result, the majority opinion misapplies

Wis. Stat. § 704.21 to the notice at issue in the present case——

a landlord's notice to the tenant of extension of the lease.

This statute explicitly regulates only a tenant's notice to a
landlord   to    extend       a    lease.          See     majority        op.,    ¶37.       The

                                               4
                                                                   No.    2012AP122.ssa

legislature    singled     out   a   tenant's     extensions       of     leases   and

enacted a statute to govern tenants, not landlords.

     ¶88    Contrary      to   the   plain    text      of   the     statute,      the

majority opinion expands the statute to govern the landlord's

notice to a tenant in the present case.

     ¶89    The majority opinion does not use the usual tools of

statutory interpretation to extend the statute beyond its text

in the present case; the majority opinion does not analyze the

text, context, purpose, or statutory or legislative history.4

     ¶90    Rather, the majority opinion reasons that the court

does not want to create "disparate standards" on landlord and

tenant,    particularly        for   commercial      tenants       and     commercial

landlords.    Majority op., ¶38.         "Why not?" I ask.               No answer is

given in the majority opinion.

     ¶91    Thus,   the    majority    opinion     is    not   convincing        as   a

matter of statutory interpretation.             The majority opinion relies

on a statute that by its very words does not apply to the

instant case and now leaves many questions unanswered regarding
the statute's applicability to other landlord-tenant agreements

and disputes.

     ¶92    The majority opinion is not convincing as a matter of

corporate law and agency law.               The majority opinion conflates

the individual, Kraft, and the corporate entity, New Electronic

Printing Systems.      The circumstances of the instant case do not

bear out this conflation of the person and the corporation.

     4
         See majority op., ¶37-38.

                                        5
                                                                       No.   2012AP122.ssa

     ¶93    Robert Kraft's admission that he could accept notice

on behalf of the corporation does not mean that, in the instant

case,    notice    to     Kraft    in   his      personal      capacity      constituted

notice to the corporation.               Rather, the general rule is that

notice to an officer of a corporation is notice to a corporation

only when, amongst other requirements, the "notice . . . comes

to . . . the      agent    in     his   or    her   official      or    representative

capacity."5       Put differently, "[s]uch notice, to be binding upon

the principal, must be notice to the agent when acting within

the scope of his agency, and must relate to the business, or, as

most of the authorities have it, the very business, in which he

is engaged, or is represented as being engaged, by authority of

his principal."         Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157,

160 (1869).6

     ¶94    In the instant case, Robert Kraft was not named in the

notice in his representative capacity and nothing in the record

demonstrates       that    Kraft    accepted        service     of     notice    in   his

representative      capacity       on   behalf      of   New    Electronic      Printing

     5
       3 William Meade Fletcher et al,, Cyclopedia of the Law of
Corporations § 793, at 34-35 (perm. ed., rev. vol. 2010).    See
also Tele-Port, Inc. v. Ameritech Mobile Communic'ns, 2001 WI
App 261, ¶7, 248 Wis. 2d 846, 637 N.W.2d 782 ("[C]orporation is
charged with constructive knowledge, regardless of its actual
knowledge, of all material facts of which its officer or agent
receives notice or acquires knowledge while acting in the course
of his employment within the scope of his authority . . . .")
(emphasis added, internal quotation marks omitted).
     6
       See also 1 Restatement (Third) of Agency § 5.02(1) (2006)
("A notification given to an agent is effective as notice to the
principal if the agent has actual or apparent authority to
receive the notification . . . .") (emphasis added).

                                             6
                                                                   No.   2012AP122.ssa

Systems.7    The notice of lease extension document did not state

that notice was given to Robert Kraft in his representative

capacity on behalf of New Electronic Printing Systems.                       Indeed,

no   reference      was    made     to    New     Electronic     Printing    Systems

anywhere in the notice.             Simply because Kraft was an officer of

New Electronic Printing Systems does not mean he was provided

notice in a representative capacity.

     ¶95    In the instant case, Robert Kraft, as an individual,

was a guarantor under the lease and would have received notice

in his individual capacity.

     ¶96    Notice        came     to    Robert     Kraft   in    his     individual

capacity; he had an individual interest in the matter.                          Notice

did not come to Robert Kraft in his representative capacity or

regarding his actual or apparent authority to act as agent of

New Electronic Printing Systems.8               Whether notice to Robert Kraft

individually       was    notice    to   the    corporation      might   well    be   a

question of fact requiring resolution at trial.9

                                           II
     ¶97    If the reader is not persuaded that notice to Robert

Kraft in his individual capacity was notice to the corporation,

the majority opinion provides a fail-safe reason justifying the

sufficiency of the notice, assuring us that the corporation had

     7
       Kraft was identified in the landlord's notice of extension
as "Robert Kraft," rather than "New Electronic Printing Systems
c/o Robert Kraft" or similar language.
     8
         See 3 Fletcher, supra note 5, § 793, at 35.
     9
         See id.

                                           7
                                                                      No.   2012AP122.ssa

"actual notice" that the landlord was extending the lease.10                             In

a single conclusory sentence, the majority opinion declares that

Robert    Kraft   "cannot    reasonably         contend     that      New    Electronic

Printing Systems was unaware that [the landlord] was exercising

what [the landlord] asserted was its right to extend."                         Majority

op., ¶43.    "Why not?" I ask.

     ¶98    The   majority      opinion       speaks   of      "actual      notice"     and

"awareness,"      but     the      majority        opinion        obviously        means

"knowledge."       The    majority        opinion      imputes        Robert      Kraft's

knowledge    of   the    landlord's       extension       of    the    lease      to    the

corporation,      without       considering        that     "[t]here        may    be     a

difference    between     the    effect       of   notice      expressly       given     an

officer or agent of a corporation, as binding the corporation,

and knowledge acquired by such an officer or agent."11                             Again,

the majority opinion conflates the individual and the corporate

entity.

     ¶99    In any event, the general rule is that a corporation

is charged with constructive knowledge, regardless of its actual
knowledge, of all material facts of which its officer or agent

receives notice or acquires knowledge while acting within the

scope of his or her authority, but does not have constructive

knowledge of facts learned by its officer or agent outside the

scope of his or her agency:12
     10
          Majority op., ¶2.
     11
       Notice and knowledge need not have the same effect.                                3
Fletcher, supra note 5, § 791.
     12
       See Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157, 160
(1869); 3 Fletcher, supra note 5, § 790, at 16-17, 26.
                                          8
                                                                   No.   2012AP122.ssa

    Knowledge acquired or notice received by an agent
    which does not pertain to the duties of the agent,
    which does not relate to the subject matter of the
    employment, or which affects matters outside the scope
    of his [or her] agency is not chargeable to the
    principal    unless actually   communicated  to   [the
                13
    principal].
    ¶100 The majority opinion does not tackle this question of

imputing    Robert   Kraft's       knowledge    to    the       corporation      in    a

satisfactory manner.

    ¶101 Because      the    majority       opinion    fails      to     explain      or

employ the applicable rules of landlord-tenant law, corporate

law, and agency law to the instant case, and fails to furnish a

persuasive    rationale     that    governs     the   present       case    or   will

govern     other   cases    involving       notice    to    a    corporation       and

knowledge of a corporation, I do not join this part of the

majority opinion.

    13
       Philipp Lithographing Co. v. Babich, 27 Wis. 2d 645, 650
n.4, 135 N.W.2d 343 (1965) (quoting 3 Am. Jur. 2d Agency § 276,
at 639).

                                        9
    No.   2012AP122.ssa

1