source: Caselaw Access Project

author: LUNDSTEN, J.

license: Public Domain

text:
    Wisconsin Department of Revenue, Petitioner-Respondent, v. A. Gagliano Co., Inc., Respondent-Appellant.
    Court of Appeals

      No. 2003AP3538.

      Submitted on briefs September 7, 2004.

      Decided June 2, 2005.

    2005 WI App 170
    (Also reported in 702 N.W.2d 834.)

      On behalf of the respondent-appellant, the cause was submitted on the briefs of Joseph A. Pickart of Michael Best & Friedrich LLP, Milwaukee.
    On behalf of the petitioner-respondent, the cause was submitted on the brief of Mary E. Burke, assistant attorney general, and Peggy A. Lautenschlager, attorney general.
    Before Deininger, PJ., Vergeront and Lundsten, JJ.

       Petition to review denied 9-8-05.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

   LUNDSTEN, J.

¶ 1. This is a tax case involving the application of the term "manufacturing property" found in Wis. Stat. § 70.995 (2003-04) to a facility owned by the appellant, A. Gagliano Company, Inc. Gagliano's facility is used to ripen tomatoes and other produce, which Gagliano then sells to chain warehouses, food service suppliers, and produce wholesalers. The respondent, Department of Revenue, repeatedly denied Gagliano's requests that its ripening facility be treated as "manufacturing property." Gagliano sought review before the Tax Appeals Commission, and the commission ruled in favor of Gagliano. The commission concluded that Gagliano's ripening facility is entitled to tax treatment as "manufacturing property" within the meaning of the statute. The circuit court, however, set aside the commission's decision and ruled in favor of the department. Gagliano appeals the circuit court's order. We reverse the circuit court's order and reinstate the commission's decision.

Background

¶ 2. In February 1999, Gagliano asked the Department of Revenue to classify Gagliano's produce-ripening activities at a Milwaukee facility as "manufacturing" and, therefore, to classify the entire facility as "manufacturing property" under Wis. Stat. § 70.995. Gagliano argued that the activity conducted in its sophisticated ripening chambers is a manufacturing activity. The department denied Gagliano's request after concluding that Gagliano was primarily engaged in the wholesale distribution of fruits and vegetables. Gagliano filed an objection with the department's State Board of Assessors, and then sought review before the Tax Appeals Commission.

¶ 3. In each of the next two years, Gagliano filed similar requests with the department. The department denied the requests, and each time Gagliano sought agency review. The commission consolidated the three matters into one proceeding. After holding a two-day evidentiary hearing regarding all three years, the commission reversed the department, concluding that Gagliano's facility is "manufacturing property" within the meaning of Wis. Stat. § 70.995.

¶ 4. The department petitioned the circuit court for review of the commission's decision. The circuit court set aside the commission's decision, essentially adopting the department's view that Gagliano's ripening chambers are not "manufacturing property" and that Gagliano is primarily a wholesale distributor of fruits and vegetables. Under applicable standards, property used primarily for the wholesale distribution of fruits and vegetables is not "manufacturing property" within the meaning of Wis. Stat. § 70.995. Gagliano appeals.

Discussion

¶ 5. This case presents a close question: Did the commission reasonably determine that Gagliano's ripening chambers, and thus its facility, are "manufacturing property" as that term is used in Wis. Stat. § 70.995? We conclude that the commission's decision is entitled to great weight deference and, under this standard, we affirm the commission. Consequently, we reverse the circuit court's order.

¶ 6. Before proceeding, we clarify the parties' dispute. The question is not whether Gagliano, as a business, is or is not a wholesale distributor of fresh fruits and vegetables. It is. The question is whether Gagliano's facility is "manufacturing property" based on the nature of its ripening chambers. The answer to this question does not turn on whether Gagliano is a wholesaler of fresh fruits and vegetables. Indeed, the department does not argue that, even if Gagliano's ripening chambers are properly classified as "manufacturing" under Wis. Stat. § 70.995, those chambers are an insufficient part of Gagliano's activity to permit the full facility to be treated as "manufacturing property." Rather, the essence of the department's position is that the ripening activity that goes on in Gagliano's ripening chambers is nonmanufacturing and, therefore, that Gagliano is nothing more than a wholesaler of fresh fruits and vegetables. Thus, we conclude that the proper resolution of this case turns on an analysis of the activity that occurs in the ripening chambers.

¶ 7. We review the commission's decision, not the circuit court's. Hafner v. DOR, 2000 WI App 216, ¶ 3, 239 Wis. 2d 218, 619 N.W.2d 300. In the discussion that follows, we first summarize the commission's findings of fact. Second, we summarize the commission's analysis and legal conclusion that Gagliano's facility is manufacturing property under Wis. Stat. § 70.995. Third, we determine what standard of review should apply to the commission's legal conclusion. Finally, we apply that standard of review to the commission's conclusion and affirm that conclusion.

Commission's Findings of Fact

¶ 8. The commission's decision included the following findings of fact.

¶ 9. Gagliano is primarily engaged in the purchasing, ripening, storage, and sale of fresh produce, including tomatoes, bananas, and avocados. Tomatoes constitute approximately 80 to 85% of this produce, and bananas constitute approximately 5%. Gagliano sells its produce to chain warehouses, food service suppliers, and produce wholesalers. Gagliano does not sell its produce directly to consumers.

¶ 10. In 1997 or 1998, Gagliano installed twenty state-of-the-art ripening chambers. Each chamber is a self-contained, pressurized, two-level unit made of insulated panels. The walls of the chambers are independent and separate from the walls of Gagliano's building. Each chamber is equipped with "ripening control" equipment, including ceiling-mounted discharge coils, duct systems with ventilating fans and dampers, air deflectors, refrigeration equipment, two pumping stations, heat exchangers, fans, lights, heaters, supports, curbing, racking, and specially designed doors.

¶ 11. In addition, each chamber has a control panel that allows Gagliano to monitor and control the temperature, the levels of ethylene, carbon dioxide and oxygen, and other atmospheric conditions within the chamber. The control panel has other functions and is connected to a central computer that monitors, records, and controls the performance of each ripening cycle. The control panel in each chamber can also operate independently. In order to accelerate or slow down the ripening process, Gagliano can enter information in either the central computer or an individual control panel.

¶ 12. "Traditional" ripening rooms lack these sophisticated features, but they do involve some temperature control and they do permit the use of ethylene gas.

¶ 13. Gagliano's suppliers harvest tomatoes when they are unripe green tomatoes. In the produce business, these tomatoes are commonly called "mature greens." Mature greens are "stone-hard to the touch, green in color, starchy in taste, 'earthy' in aroma." Gagliano places boxes of mature greens in its chambers and enters a computer program called a "ripening recipe" into its central computer, which controls numerous atmospheric conditions. The ripening recipes vary, permitting Gagliano to control ripening in a manner to meet customers' needs in terms of timing, quality, and quantity.

¶ 14. Gagliano's chamber-ripening process transforms mature greens into "ripened, edible tomatoes which are soft and juicy (not stone-hard), orange or red (not green), sweet (not starchy), and pleasantly aromatic (not 'earthy')." The ripening process changes the tomatoes' color, texture, taste, size, and weight, thus making them marketable.

¶ 15. Gagliano also ripens bananas, avocados, and other produce in the chambers in the same general manner as tomatoes. As with tomatoes, the process changes the physical and chemical composition, appearance, and marketability of this other produce.

The Framework for Analysis, the Commission's Application of that Framework, and the Commission's Legal Conclusion

¶ 16. The legal framework for analyzing whether property is "manufacturing property" for purposes of Wis. Stat. § 70.995 is set forth in Zip Sort, Inc. v. DOR, 2001 WI App 185, ¶¶ 11-14, 247 Wis. 2d 295, 634 N.W.2d 99. We first ask whether the activity in question fits "perfectly" into any of the categories specifically listed as manufacturing in the Standard Industrial Classification Manual (Executive Office of the President, Office of Management and Budget, 1987 ed.) (SIC Manual) or § 70.995(2). See Zip Sort, 247 Wis. 2d 295, ¶¶ 7, 23. If it does not, a second question is addressed: Does the activity nonetheless fit the general definition of manufacturing in § 70.995(1)? Zip Sort, 247 Wis. 2d 295, ¶¶ 7, 23. Whether an activity is manufacturing under the general definition in § 70.995(1) may be resolved by reference to three questions set forth in the Wisconsin Property Assessment Manual (the assessment manual), a manual promulgated by the department. Zip Sort, 247 Wis. 2d 295, ¶ 7.

¶ 17. Before the commission, the parties both argued that the commission should apply the three assessment manual questions. Accordingly, the commission turned to the assessment manual questions:

1. Is the activity more similar to those specifically classified manufacturing by law and the SIC Manual, or more similar to those specifically classified nonmanu-facturing by law and the SIC Manual?
2. Is the activity more closely aligned with the general description of producing, assembling, fabricating, making or milling by machinery and equipment of a new article with a different form, use and name from existing materials, or is it more aligned with the general activities involved with services as generally described in the SIC Manual, wholesale trade, retail trade, agriculture, or construction?
3. Does the activity produce products more for wholesalers, interplant transfer, to order for industrial users or more for direct sale to domestic consumers?

Zip Sort, 247 Wis. 2d 295, ¶ 9.

¶ 18. In applying the first question — whether an activity is more similar to those specifically classified manufacturing by law and the SIC Manual, or more similar to those specifically classified nonmanufactur-ing by law and the SIC Manual — the commission relied on the general description of manufacturing activities as set forth in the SIC Manual. The commission applied the following language from the SIC Manual:

The manufacturing division includes establishments engaged in the mechanical or chemical transformation of materials or substances into new products ....
The materials processed by manufacturing establishments include products of agriculture .... The new product of a manufacturing establishment may be finished in the sense that it is ready for utilization or consumption....
The materials used by manufacturing establishments may be purchased directly from producers .... Manufacturing production is usually carried on for the wholesale market... rather than for direct sale to the domestic consumer.

See SIC Manual, at 67. In the commission's view, this language supports the conclusion that Gagliano's ripening chambers constitute "manufacturing property." The commission explained that Gagliano's "sophisticated ripening chambers and related computers are major factors in the chemical transformation of raw produce to the new products of mature, marketable produce."

¶ 19. The commission rejected the department's argument that Gagliano's activities were like SIC nore-manufacturing category 5148, which covers "[ejtablish-ments primarily engaged in the wholesale distribution of fresh fruits and vegetables," a category that includes as subcategories "Banana ripening for the trade— wholesale." See SIC Manual, at 307. The other subcategories in category 5148, as the commission noted, are "Fruits, fresh — wholesale," "Potatoes, fresh— wholesale," and "Vegetables, fresh — wholesale." See id. The commission surmised that the reference to banana ripening in the context of the overall description of category 5148 was a reference to "passive" ripening of bananas while in traditional storage, not the "sophisticated process employed by Gagliano."

¶ 20. The commission then applied the second assessment manual question, which asks whether a business's activity is more closely aligned with the general description of producing, assembling, fabricating, making, or milling by machinery and equipment of a new article with a different form, use, and name from existing materials, or is more aligned with the general activities involved with services as generally described in the SIC Manual, wholesale trade, retail trade, agriculture, or construction. In applying the second question, the commission reasoned as follows:

[Gagliano's] activities produce (by applying ethylene gas and controlling temperature and humidity) by machinery (ripening chambers and related computers) a new article (edible, ripe produce) with a different form (for example, processing tomatoes from stone-hard, green, starchy tasting, earthy in aroma to ripened, edible, soft, juicy, orange or red, sweet tasting, pleasantly aromatic tomatoes), with a different use (edible and commercially saleable), and with a different name (ripened, edible produce) from existing materials (unripened tomatoes, ethylene gas, humidity, temperature).

Gagliano's activities, the commission reasoned, are less aligned with nonmanufacturing services and are "far more complex than the mere wholesale distribution of produce."

¶ 21. Finally, the commission applied the third question, which asks whether the product is intended "more for wholesalers, interplant transfer, to order for industrial users or more for direct sale to domestic consumers." The commission determined that Gagliano sells its produce to chain warehouses, food service providers, and produce wholesalers, rather than to domestic consumers.

Standard of Review Applicable to the Commission's Conclusion that Gagliano's Facility Is Manufacturing Property Under Wis. Stat. § 70.995

¶ 22. This case involves the commission's application of Wis. Stat. § 70.995 to a particular set of facts. When we review an administrative agency's interpretation or application of a statute, there are three possible levels of review: great weight deference, due weight deference, and de novo. Zip Sort, 247 Wis. 2d 295, ¶¶ 11-14. As discussed in more detail below, the level of deference we apply is largely determined by reference to the decision-making agency's expertise and experience in applying the statute at issue.

¶ 23. The department effectively takes the position that the standard of review does not matter because the commission's application of the statute is "patently unreasonable and irrational" and, therefore, cannot stand regardless of the level of deference we apply. Consequently, the department does not address the commission's level of expertise and experience. Gagliano asserts that the commission's decision is entitled to great weight deference because, in Gagliano's words, the commission's "interpretation of the statute is long-standing, formed by the expertise and specialized knowledge it has gained over the years." Ultimately, neither party provides a satisfactory argument regarding which level of deference we must apply.

¶ 24. We summarized the three levels of deference in Zip Sort:

When we give "great weight" deference to the agency's interpretation, we will sustain a reasonable agency conclusion even if an alternative conclusion is more reasonable. We give "great weight" deference to the agency's interpretation when all of the following conditions are met: (1) the agency was charged by the legislature with the duty of administering the statute; (2) the interpretation of the agency is one of long standing; (3) the agency employed its expertise or specialized knowledge in forming the interpretation; and (4) the agency's interpretation will provide uniformity and consistency in the application of the statute.
When we give "due weight" deference to the agency's interpretation, we will not overturn a reasonable agency decision that comports with the purpose of the statute unless we determine that there is a more reasonable interpretation available. We give "due weight" deference when the agency has some experience in an area, but has not developed the expertise that necessarily places it in a better position to make judgments regarding the interpretation of the statute than a court.
When we review an agency decision de novo, we give no deference to the agency's interpretation. De novo review is appropriate if any of the following are true: (1) the issue before the agency is clearly one of first impression; (2) a legal question is presented and there is no evidence of any special agency expertise or experience; or (3) the agency's position on an issue has been so inconsistent that it provides no real guidance.

Id., ¶¶ 12-14 (citations omitted).

¶ 25. We first observe that the commission's decision is entitled to at least due weight deference. In Zip Sort, we noted that the commission has many years of experience applying the statute at issue in this case, and we declined to review a similar commission decision de novo. Id., ¶ 18; see also Video Wisconsin, Ltd. v. DOR, 175 Wis. 2d 195, 199-200, 498 N.W.2d 880 (Ct. App. 1993). The more difficult question is whether we should apply great weight deference.

¶ 26. To repeat, courts give great weight deference when: "(1) the agency was charged by the legislature with the duty of administering the statute; (2) the interpretation of the agency is one of long standing; (3) the agency employed its expertise or specialized knowledge in forming the interpretation; and (4) the agency's interpretation will provide uniformity and consistency in the application of the statute." Zip Sort, 247 Wis. 2d 295, ¶ 12. We have no trouble concluding that the first, third, and fourth prongs of this test are satisfied here. The prong that gives us pause is the second one requiring that the "interpretation of the agency is one of long standing." Id. Gagliano asserts that the commission's interpretation is one of long standing, but Gagliano does not back up this assertion. It seems undisputed that the commission has not applied Wis. Stat. § 70.995 to any type of fruit- or vegetable-ripening facility, much less that it has done so consistently in a "long-standing" manner. Yet, our review of the case law persuades us that the commission's decision is nonetheless entitled to great weight deference.

¶ 27. This court recently said the following about the "long-standing" prong:

The case law suggests ... that that "long-standing" language, standing alone, may be a bit misleading.
To determine whether great-weight deference is due, the test "is not... whether the commission has ruled on the precise — or even substantially similar— facts in prior cases." Barron Elec. Coop. v. Public Serv. Comm'n, 212 Wis. 2d 752, 764, 569 N.W.2d 726 (Ct. App. 1997). Were that required, in cases involving the Public Service Commission, great-weight deference "would indeed be a rarity." Id. Thus, in this case, because the Commission was called upon to consider a novel situation ... its interpretation, perforce, could not be "of long-standing." See Citizens' Util. Bd., 211 Wis. 2d at 551-52. But certainly the mere fact that a regulated company may devise a new pricing method must not automatically reduce the deference due the regulating agency. After all, it is an agency's experience with related rules and similar circumstances that equips it to evaluate new facts and evolving regulatory systems.
If any doubt on this point remained, we erased it, explaining, in Citizens' Utilities Bd., that although the Commission's determination was "unique to [that] case, the agency's practice and methods of evaluating" issues of a similar nature were of "long-standing," thus supporting great-weight deference. Id. at 552. See also Virginia Sur. Co. v. LIRC, 2002 WI App 277, ¶ 13, 258 Wis. 2d 665, 654 N.W.2d 306 ("[A]lthough the Commission has never decided a case presenting the precise facts raised by this appeal, that is not a prerequisite to giving the agency great-weight deference."), review denied, 2003 WI 16, 259 Wis. 2d 102, 657 N.W.2d 707 (Feb. 19, 2003) (No. 02-0031); William Wrigley Jr., Co. v. DOR, 176 Wis. 2d 795, 801, 500 N.W.2d 667 (1993).

Wisconsin Bell, Inc. v. PSC, 2004 WI App 8, ¶¶ 17-19, 269 Wis. 2d 409, 675 N.W.2d 242 (Ct. App. 2003), aff'd, 2005 WI 23, 279 Wis. 2d 1, 693 N.W.2d 301; see also Citizens' Util. Bd. v. PSC, 211 Wis. 2d 537, 551-52, 565 N.W.2d 554 (Ct. App. 1997) ("Although the PSC's determination of 'adequacy'... is unique to this case, the agency's practice and methods. . . are longstanding . . . .").

¶ 28. Furthermore, in a number of recent decisions, the supreme court has applied great weight deference while giving little or no attention to the "long-standing" prong. See Hutchinson Tech., Inc. v. LIRC, 2004 WI 90, ¶¶ 22-24, 273 Wis. 2d 394, 682 N.W.2d 343 (citing Crystal Lake Cheese Factory v. LIRC, 2003 WI 106, ¶¶ 29-30, 264 Wis. 2d 200, 664 N.W.2d 651); Brown v. LIRC, 2003 WI 142, ¶¶ 17-18, 267 Wis. 2d 31, 671 N.W.2d 279; Kitten v. DWD, 2002 WI 54, ¶ 31, 252 Wis. 2d 561, 644 N.W.2d 649.

¶ 29. In light of our discussion in Wisconsin Bell, and in light of the principles it references from Barron Electric Cooperative v. PSC, 212 Wis. 2d 752, 569 N.W.2d 726 (Ct. App. 1997), and Citizens' Utility Board, we conclude that the present case satisfies the "longstanding" prong of the great weight deference test. As we have said, the commission's overall experience in applying Wis. Stat. § 70.995 is extensive. And, undoubtedly, the commission is called upon to employ its expertise and specialized knowledge when it classifies property involving recent or emerging technologies. The fact that a taxpayer employs a relatively new process does not preclude the application of great weight deference to a commission conclusion.

¶ 30. Accordingly, we apply great weight deference in reviewing the commission's legal conclusion that Gagliano's facility is manufacturing property under Wis. Stat. § 70.995.

Reasonableness of the Commission's Legal Conclusion that Gagliano's Facility Is Manufacturing Property Under Wis. Stat. § 70.995

¶ 31. Were we to assess this case independently, we might conclude that the department's interpretation and application of Wis. Stat. § 70.995 is more reasonable. However, under the great weight deference standard, we will sustain a reasonable agency conclusion even if an alternative conclusion is more reasonable. Zip Sort, 247 Wis. 2d 295, ¶ 12. Thus, the question before us is limited to whether the commission's decision is a reasonable one, not whether it is the more reasonable one.

¶ 32. The department argues that the commission's interpretation of the statute and its application to the facts in this case is irrational and, therefore, is unreasonable. Several of the department's arguments include an attack on the commission's fact finding. We will set aside an agency's decision, or remand the matter to the agency, if the decision depends on any findings that are not supported by substantial evidence. Wis. Stat. § 227.57(6); Krahenbuhl v. Wisconsin Dentistry Examining Bd., 2004 WI App 147, ¶ 15 n.3, 275 Wis. 2d 626, 685 N.W.2d 591. "Substantial evidence, for the purpose of reviewing an administrative decision, is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Krahenbuhl, 275 Wis. 2d 626, ¶ 16. We will not reverse an agency finding of fact even if the finding is against the great weight and clear preponderance of the evidence so long as there is substantial evidence to sustain the finding. Id. Further, if the evidence supports more than one reasonable inference, the agency's inference is conclusive. Crystal Lake Cheese Factory, 264 Wis. 2d 200, ¶ 25.

¶ 33. The department first argues that Gagliano's ripening activities cannot be manufacturing because they fit "squarely" in an SIC Manual reoremanufacturing category, namely category 5148, which includes banana ripening. Category 5148 is entitled "Fresh Fruits and Vegetables" and is described as " [e] tablishments primarily engaged in the wholesale distribution of fresh fruits and vegetables." See SIC Manual, at 307. We disagree with the department.

¶ 34. SIC Manual category 5148 lists four subcategories:

Banana ripening for the trade — wholesale
Fruits, fresh — wholesale
Potatoes, fresh — wholesale
Vegetables, fresh — wholesale

See id. The department points to the testimony of a department district office manager, who was qualified as an expert in classification, assessment, and related rules, including the assessment manual. She testified that SIC Manual category 5148 would include ripening of other produce, in part because the same ripening chambers could be used for bananas and other produce. In addition, the department emphasizes that Gagliano holds itself out as a wholesaler of fresh fruits and vegetables, including in the Ameritech Yellow Pages.

¶ 35. We agree that Gagliano is a wholesale distributor of fresh fruits and vegetables. But that does not mean Gagliano's ripening chambers cannot qualify as "manufacturing property" under Wis. Stat. § 70.995.

¶ 36. Many manufacturers engage in the wholesale distribution of their products. Surely the department would not argue that a taxpayer who manufactures widgets is precluded from having its property classified as manufacturing under Wis. Stat. § 70.995 simply because that taxpayer also engages in the wholesale distribution of its widgets. Thus, to the extent the department relies on Gagliano's status as a wholesaler, we are not persuaded. We recognize that the department has tied its "wholesale" argument to the SIC Manual's wording, that is, "primarily engaged in the wholesale distribution of fresh fruits and vegetables." This is a reasonable argument, but we conclude that Gagliano's facility can just as reasonably be characterized as "primarily" engaged in ripening, rather than wholesaling, as would be the case with any other manufacturer that wholesales its products. In sum, although SIC Manual category 5148 generally covers establishments that are "primarily engaged in the wholesale distribution of fresh fruits and vegetables," the commission reasonably concluded that Gagliano's wholesale activities did not mean that its facility necessarily fit category 5148.

¶ 37. In addition, it is not evident from the subcategories in SIC Manual category 5148 whether the ripening of produce other than bananas is included in category 5148. There is no dispute that the vast majority of Gagliano's ripening activities at its facility involves tomatoes, not bananas. The four subcategories listed in SIC Manual category 5148 are (1) fruits generally, (2) vegetables generally, (3) potatoes specifically, and (4) banana ripening specifically. It is far from apparent why banana ripening was singled out from other fruits that undergo ripening between harvest and wholesaling. Gagliano suggests that the answer lies in testimony suggesting that banana ripening is unique in that, relative to other fruits, it involves comparatively little control.

¶ 38. The department asserts that there is no "supporting authority whatsoever" for the commission's determination that banana ripening in SIC Manual category 5148 appears to refer to passive ripening of bananas in storage, rather than to the sophisticated process Gagliano uses. However, given that the SIC Manual singles out banana ripening, and given the testimony that banana ripening is subject to comparatively less control, the commission could reasonably conclude that banana ripening in the SIC Manual contemplates a process different than that of Gagliano's sophisticated ripening chambers. Again, we need only test the commission's conclusion for reasonableness; we need not determine whether some other conclusion is more reasonable.

¶ 39. The department also points to testimony by its district office manager in which the manager stated that she contacted the government office that publishes the newest version of the SIC Manual (now called the North American Industrial Standard Classification Manual) and that she had been advised that ripening is considered in the new manual to fall under a nonmanu-facturing category. However, as even the manager acknowledged, the Wisconsin legislature has adopted the 1987 SIC Manual, not a newer version of the manual. See Wis. Stat. § 70.995(2). The manager testified that "according to the law we are still mandated to use the 1987 SIC Code Manual." The department points to no authority suggesting that the legislature intended that the department, the commission, or the courts follow subsequently revised versions of the 1987 SIC Manual. We conclude that it is the 1987 SIC Manual that must be followed under § 70.995(2) until the legislature directs otherwise.

¶ 40. Thus, we disagree with the department's assertion that Gagliano's activities at its facility fit "squarely" into SIC Manual category 5148. The commission reasonably determined that they did not. Having concluded that Gagliano's activities did not fit squarely into a particular SIC Manual category, the commission then reasonably looked to the general definition of manufacturing in the SIC Manual to assist it in classifying Gagliano's facility.

¶ 41. In a closely related argument, the department contends that the commission erroneously found as a matter of fact that Gagliano is not "primarily engaged in the wholesale distribution of fresh fruits and vegetables." To the extent this determination by the commission can be viewed as a finding of fact, it is supported by substantial evidence in the record. As a factual matter, the evidence supports a reasonable determination that Gagliano's "primary" activity, if Gagliano can be said to have any "primary" activity, is no more wholesale distribution than it is ripening. Gagliano's chief financial officer testified that only about 20% of Gagliano's business is "non-ripening." His testimony demonstrated that Gagliano ripens the vast majority of the produce that it sells. The department does not challenge a related commission determination, which is more plainly a finding of fact, that "Gagliano is primarily engaged in the purchasing, ripening, storage, and sale of fresh produce . . . ." (Emphasis added.)

¶ 42. The department next argues that the commission's analysis rested on a simplistic view of ripening as a chemical transformation that would not otherwise occur naturally. More specifically, the department challenges three of the commission's findings: (1) that green tomatoes, as harvested, have not experienced the physiological changes necessary to ripen; (2) that green tomatoes will not ripen properly unless exposed to ethylene gas, without which they would either rot or ripen in a non-uniform manner, making them unmarketable or minimally marketable; and (3) that traditional ripening rooms cannot be used to manipulate and control the ripening process. We address each of these findings in turn.

¶ 43. As harvested, "mature greens" have not experienced the physiological changes necessary to ripen. The department challenges this finding by pointing to testimony indicating that there is no set point at which tomato ripening can be said to begin and that green tomatoes can ripen post-harvest even if left on a windowsill or table. At the same time, the department acknowledges other testimony asserting that mature greens have not "gone through the changes that need to happen in the tomato for ripening."

¶ 44. According to the department, the commission misunderstood the ripening process, or at least confused "ripening" as scientifically and generally understood with "ripening" as used in the produce industry. We disagree. A reasonable inference from the commission's findings is that the commission was using the term "ripen" in this finding to mean ripen in a sufficiently uniform manner to make the ripened produce profitably marketable.

¶ 45. Once harvested, mature greens will only ripen properly if exposed to ethylene gas, without which they would either rot or ripen in a non-uniform manner, and would be unmarketable or minimally marketable. The department acknowledges that there was evidence before the commission that, if Gagliano did not inject ethylene gas into its ripening rooms, some of Gagliano's produce would rot and some of it would ripen non-uniformly in poor condition and be unsaleable. Nonetheless, the department argues that the commission could not reasonably find from this evidence that all of Gagliano's produce would rot or ripen non-uniformly and, therefore, be unsaleable if ethylene gas were not injected into its ripening rooms. The department points to the same expert testimony that it marshals in challenging the commission's finding that mature green tomatoes have not experienced the physiological changes necessary to ripen. For the same reasons we discussed in relation to that finding, we reject the department's challenge to this finding. The department overlooks a reasonable inference about what the commission meant by ripening "properly." The record supports the inference that the commission meant that the mature green tomatoes that Gagliano buys, on the whole, will only ripen properly — that is, in a way that makes substantially more tomatoes marketable — if exposed to ethylene gas in ripening chambers like Gagliano's.

¶ 46. Traditional ripening rooms cannot be used to manipulate and control the ripening process. The department points to testimony that traditional ripening rooms had a source of ethylene gas and a cooler. The overall gist of the evidence relevant to this finding, according to the department, is that newer ripening rooms like Gagliano's simply allow more control and are nothing but traditional ripening rooms with more bells and whistles.

¶ 47. We agree that the difference between traditional ripening rooms and Gagliano's sophisticated ripening chambers might be viewed as a difference of degree, not kind. But that comparison does not render the commission's decision unreasonable. The commission's findings, taken together, show that the commission correctly understood that Gagliano's ripening chambers are significantly more complex and allow far more precise manipulation of the ripening process when compared with traditional ripening rooms. A witness for Gagliano testified that traditional ripening rooms created "checkerboard" or "splotchy" ripening and inhibited "the true ripening process." A reasonable interpretation of the commission's finding is that traditional ripening rooms could not ripen with precision comparable to that of Gagliano's ripening chambers. Even taking as true that green tomatoes generally are capable of ripening in some form on their own, the commission could still have reasonably determined that Gagliano's ripening activities were more like manufacturing than nonmanufacturing for purposes of the SIC Manual and Wis. Stat. § 70.995.

¶ 48. The department seems to be relying on this syllogism: (1) traditional ripening-room activities are not manufacturing property under Wis. Stat. § 70.995, (2) Gagliano's ripening chambers are not significantly different than traditional ripening rooms and, therefore, (3) Gagliano's ripening-chamber activities are not manufacturing under § 70.995. However, regardless whether traditional ripening rooms are manufacturing property under the applicable standards, Gagliano's state-of-the-art ripening chambers employ significantly more technology and achieve far superior results when compared with traditional ripening rooms. Thus, the department's syllogism does not persuade us that the commission acted unreasonably.

¶ 49. We turn our attention to the commission's analysis of the second assessment manual question: "Is the activity more closely aligned with the general description of producing, assembling, fabricating, making or milling by machinery and equipment of a new article with a different form, use and name from existing materials, or is it more aligned with the general activities involved with services as generally described in the SIC Manual, wholesale trade, retail trade, agriculture, or construction?" Zip Sort, 247 Wis. 2d 295, ¶ 9.

¶ 50. The department argues that ripening must be contrasted with what the department deems the "much more extensive transformations necessary" for produce-related activities that are expressly categorized as manufacturing by the SIC Manual. These categories include canning and dehydrating. See SIC Manual, at 72-73. The department asserts that a tomato is commonly known as a "tomato" whether it is green or ripe. The department thus takes issue with the reasonableness of the commission's application of the second assessment manual question to conclude that Gagliano's ripening activities

produce (by applying ethylene gas and controlling temperature and humidity) by machinery (ripening chambers and related computers) a new article (edible, ripe produce) with a different form (for example, processing tomatoes from stone-hard, green, starchy tasting, earthy in aroma to ripened, edible, soft, juicy, orange or red, sweet tasting, pleasantly aromatic tomatoes), with a different use (edible and commercially saleable), and with a different name (ripened, edible produce) from existing materials (unripened tomatoes, ethylene gas, humidity, temperature).

The commission repeatedly asserts: a "tomato is a tomato."

¶ 51. In our view, the commission's parenthetical explanations go far in demonstrating that the commission reasonably applied the second assessment manual question. In any event, the department's arguments do not persuade us that the commission acted unreasonably.

¶ 52. Does dehydrating a tomato — which is apparently manufacturing under the SIC Manual — involve a greater chemical transformation than ripening a tomato? Does dehydrating a tomato necessarily involve more machinery or equipment than ripening a tomato? Could the commission have reasonably concluded that the transformation from green tomato to ripe red tomato cannot be manufacturing within the meaning of Wis. Stat. § 70.995 even though the transformation from ripe tomato to dehydrated tomato is? Is a dehydrated tomato not commonly known as a "tomato"? Is there a difference between green and ripe tomatoes greater than the difference between ripe tomatoes and dehydrated tomatoes? The answers to these questions are not obvious. This fact undercuts the assumptions made by the department.

¶ 53. The department argues that the commission's decision in this case is inconsistent with its decision in a case involving greenhouses, Karthauser & Sons, Inc. v. DOR, Wis. Tax Rep. 1986-1990 (CCH) ¶ 203-089 (Nos. 88-M-140 and 88-M-141) (Sept. 8, 1989). We disagree. In Karthauser, the commission upheld a department determination that a nursery's commercial greenhouses were not manufacturing property under Wis. Stat. § 70.995. The commission placed emphasis on the dictionary definition of "process," and concluded that "[n]othing in the meaning of 'process' implicates 'growing.'" Karthauser, Wis. Tax Rep. (CCH) ¶ 203-089 at 14,372. The commission explained: "Growing and processing are separate activities. Growing produces the agricultural product, but only the subsequent 'processing' — e.g. being frozen, canned, packaged, prepared for market, etc. — falls within 'manufacturing.'" Id. (emphasis added). Here, the commission could reasonably determine that Gagliano's sophisticated ripening activities are more akin to preparing produce for the market than to growing and, therefore, more akin to processing than growing. Thus, contrary to the department's argument, the commission in this case could reasonably determine that Gagliano's ripening activities constitute manufacturing under the applicable standards, even if the activity of growing plants from seed in greenhouses ordinarily does not.

¶ 54. We conclude that the commission's application of the assessment manual questions to Gagliano's ripening chambers is reasonable. Consequently, the commission's conclusion that Gagliano's facility is manufacturing property under Wis. Stat. § 70.995 is reasonable. As we said at the outset, this case presents a close question, but we are limited to deciding whether the commission's conclusion in applying the statute was reasonable, even if a different conclusion is more reasonable. See Zip Sort, 247 Wis. 2d 295, ¶ 12.

Conclusion

¶ 55. We have determined that great weight deference applies to the commission's conclusion that Gagliano's facility is manufacturing property under Wis. Stat. § 70.995. In addition, we have determined that the commission's conclusion was reasonable. We have also rejected the department's assertion that the commission's decision depended on erroneous findings of fact. Accordingly, we reverse the circuit court's order, thereby reinstating the commission's decision.

By the Court. — Order reversed.

       WISCONSIN Stat. § 70.995 provides, in part:
      (1) Applicability, (a) In this section "manufacturing property" includes all lands, buildings, structures and other real property used in manufacturing, assembling, processing, fabricating, making or milling tangible personal property for profit....
      (b) ... Manufacturing production is usually carried on for the wholesale market, for interplant transfer or to order for industrial users rather than for direct sale to a domestic consumer.
      (d) Except for the activities under sub. (2), activities not classified as manufacturing in the standard industrial classification manual, 1987 edition, published by the U.S. office of management and budget are not manufacturing for this section.
      (2) Further classification. In addition to the criteria set forth in sub. (1), property shall be deemed prima facie manufacturing property and eligible for assessment under this section if it is included in one of the following major group classifications set forth in the standard industrial classification manual, 1987 edition, published by the U.S. office of management and budget. For the purposes of this section, any other property described in this subsection shall also be deemed manufacturing property and eligible for assessment under this section ....

       Increased levels of ethylene gas accelerate the ripening process, while decreased levels slow down the ripening process.

       Most of the categories listed in Wis. Stat. § 70.995(2) are also listed in the SIC Manual, and most of these categories are, in turn, listed as manufacturing within the SIC Manual. However, some categories listed as manufacturing in § 70.995(2), including "10 — Metal mining," are not listed under manufacturing in the SIC Manual.

       In Zip Sort, Inc. v. DOR, 2001 WI App 185, 247 Wis. 2d 295, 634 N.W.2d 99, we concluded that the commission's decision to make determinations under the general definition by resort to the assessment manual was reasonable. Id,., ¶ 24. Here, both parties' arguments seem to assume, as in Zip Sort,
        that the commission acted properly by resorting to the assessment manual. Thus, we are not presented with the question of whether the commission must resort to the assessment manual when a business's activities do not fall perfectly into any of the categories specifically listed as manufacturing in the SIC Manual or Wis. Stat. § 70.995(2).

       We note that the commission's approach to the first question does not appear to track the question. Rather than compare the activity in the ripening chambers with activities specifically classified as manufacturing or nonmanufacturing by law or the SIC Manual, the commission looked to the general description of manufacturing in the SIC Manual. Nonetheless, as we explain, the commission plainly rejected the department's argument that Gagliano's ripening activity was similar to an activity specifically classified as nonmanufacturing in the SIC Manual.

       The department acknowledges the three levels of deference, and then relies on Zip Sort for the following assertion: "A threshold requirement for application of either the due weight deference or great weight deference standard, however, is that the agency's interpretation be reasonable." This characterization of the law does not follow from Zip Sort and misses the mark. It is true that courts will not uphold an unreasonable agency interpretation of a statute, regardless of the level of deference applied, but courts do not first decide the reasonableness of an agency's decision as a means of then determining whether the decision should be given a particular level of deference. The department may mean to say that we give no deference to an agency decision that contradicts the plain language of a statute, see Harnischfeger Corp. v. LIRC, 196 Wis. 2d 650, 662, 539 N.W.2d 98 (1995); DOR v. Caterpillar, Inc., 2001 WI App 35, ¶ 7, 241 Wis. 2d 282, 625 N.W.2d 338, but the department does not expressly rely on this rule. In any event, the department does not assist this court in assessing whether the commission's expertise and experience support due weight deference or great weight deference.

       Although the supreme court reviewed Wisconsin Bell, Inc. v. PSC, 2004 WI App 8, 269 Wis. 2d 409, 675 N.W.2d 242 (Ct. App. 2003), aff'd, 2005 WI 23, 279 Wis. 2d 1, 693 N.W.2d 301, it affirmed without an opinion in a 3-3 tie vote.

       Our non-exhaustive research into the origins of the "longstanding" prong suggests that, although the prong has recently been phrased in the conjunctive with the other factors, it may derive from an older, disjunctive formulation of factors. See West Bend Educ. Ass'n v. WERC, 121 Wis. 2d 1, 12, 357 N.W.2d 534 (1984) ("Where a legal question is intertwined with factual determinations or with value or policy determinations or where the agency's interpretation and application of the law is of long standing, a court should defer to the agency which has primary responsibility for determination of fact and policy." (emphasis added; footnote omitted; citing Nottelson v. DILHR, 94 Wis. 2d 106, 115-18, 287 N.W.2d 763 (1980))). For purposes of this case, we need not decide precisely the role of the "long-standing" prong. It is sufficient to say that it does not require that an agency has previously applied a statute to the same or substantially similar facts.

       The appropriate standard of review for the commission's classification of "auxiliary" property as manufacturing property under Wis. Stat. § 70.995 may be different. See S.C. Johnson & Son, Inc. v. DOR, 202 Wis. 2d 714, 725-26, 552 N.W.2d 102 (Ct. App. 1996); see also Zip Sort, 247 Wis. 2d 295, ¶ 19.

       We do not read the department's argument to be that, even if Gagliano's tomato and other non-banana ripening is considered manufacturing under Wis. Stat. § 70.995, Gagliano's facility cannot be manufacturing property under § 70.995 unless Gagliano's banana ripening is also manufacturing under § 70.995. Rather, we understand the department's argument to be that none of Gagliano's ripening activities constitute manufacturing under § 70.995 and that, at least for the purposes of this case, the classification of Gagliano's facility is an all-or-nothing proposition.

       The department also challenges the following finding by the commission: "Gagliano purchases tomatoes from suppliers in Mexico, Holland, Israel, Spain, and the United States. Produce wholesalers who do not have sophisticated equipment comparable to Gagliano's generally do not purchase imported produce." The department, however, does not explain why the commission's conclusion is dependent on this finding. We decline to address this finding any further.

       We note that the greenhouse activities in Karthauser & Sons, Inc. v. DOR, Wis. Tax Rep. 1986-1990 (CCH) ¶ 203-089 (Nos. 88-M-140 and 88-M-141) (Sept. 8,1989), also appear to fit squarely in a nonmanufacturing SIC Manual category. The greenhouses in Karthauser were used to "raise[] flowering potted plants and bedding plants." Id. at 14,370. SIC Manual category 0181, under "Agriculture, Forestry, and Fishing," is described as:
      Establishments primarily engaged in the production of ornamental plants and other nursery products, such as bulbs, florists' greens, flowers, shrubbery, flower and vegetable seeds and plants, and sod. These products may be grown under cover (greenhouse, frame, cloth house, lath house) or outdoors.
      SIC Manual, at 21, 26. More to the point, this category includes subcategories of "Bedding plants, growing of' and "Plants, potted: growing of." Id., at 26.

       We do not address what weight, if any, should be given to a 1999 department memorandum in which the department determined that Gagliano's ripening chambers could qualify for a sales and use tax exemption as machines or equipment "used by a manufacturer in manufacturing" under Wis. Stat. § 77.54(6)(a) and (6m). The commission, though it cited this memorandum in its decision, ultimately concluded that its decision here "stands alone" from the department's sales and use tax memorandum.


author: VERGERONT, J.

text:
    MADCAP I, LLC, Plaintiff-Appellant, v. Brad McNamee and Bernie J. McNamee d/b/a Warehouse Rack & Shelf, Defendants-Respondents, Midwest Rack Manufacturing, Inc. and Mike Sabados, Defendants.
    Court of Appeals

      No. 2004AP2045.

      Submitted on briefs January 13, 2005.

      Decided June 2, 2005.

    2005 WI App 173
    (Also reported in 702 N.W.2d 16.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Earl H. Munson, Boardman, Suhr, Curry & Field LLP, Madison.
    On behalf of the defendants-respondents, the cause was submitted on the brief of Patrick C. Henneger, Hayes, Van Camp & Schwartz, S.C., Madison.

      Before Deininger, PJ., Vergeront and Lundsten, JJ.
   VERGERONT, J.

¶ 1. This appeal concerns claims of breach of contract and violation of Wis. Stat. § 100.18 that arose out of the efforts of MADCAP I, LLC to purchase storage racks for its warehouse business. MADCAP contends the circuit court erred in dismissing both claims on summary judgment. We conclude MADCAP is entitled to a trial on the breach of contract claim because there are genuine issues of material fact regarding the existence of a contract between MADCAP and Warehouse Rack & Shelf (Warehouse Rack). With respect to the claim under § 100.18, we conclude there are genuine issues of material fact on all the elements of the claim, including the element that MADCAP must "suffer[] pecuniary loss because of a violation of this section." Section 100.18(ll)(b)2. Therefore, MADCAP is entitled to a trial on the § 100.18 claim as well. Accordingly, we reverse the circuit court.

GENERAL BACKGROUND

¶ 2. In the summer of 2002, MADCAP was in the market to purchase warehouse storage racks for its refrigerated warehouse facilities in DeForest, Wisconsin. Dennis Hahn, one of the members of MADCAR researched Midwestern companies that could provide the racks. He identified Warehouse Rack through its website as a potential supplier. Hahn contacted Warehouse Rack to obtain a price quotation for drive-in racks. He spoke to Brad McNamee, an employee of Bernie McNamee, who was doing business as Warehouse Rack. Warehouse Rack is a division of McNamee and Associates with principal offices located in Lake St. Louis, Missouri. There followed written and oral communications concerning the racks, the details of which are disputed by the parties. It is not disputed that Brad McNamee contacted Midwest Rack Manufacturing, Inc. (Midwest) to provide used racks to MADCAE

¶ 3. Ultimately the racks were not installed at MADCAP'S warehouse, and the reasons for that are in dispute. According to MAD CAI) the racks delivered were of an inferior quality compared to those that had been shown to Hahn, and the installers did not perform their job. According to Warehouse Rack, the racks delivered to MADCAP were the same used racks that Hahn had inspected and it was MADCAP'S fault that the installers did not perform their job.

¶ 4. MADCAP filed this action against the Mc-Namees (to whom we will refer as Warehouse Rack), Midwest and its owner, Michael Sábados. The complaint alleged a breach of contract claim against all defendants and a violation of Wis. Stat. § 100.18 against Warehouse Rack. Warehouse Rack filed an answer and a counterclaim for breach of contract.

¶ 5. Warehouse Rack moved for summary judgment on all claims against it and the circuit court granted the motion. As for the breach of contract claim, the court concluded that, based on the undisputed facts, MADCAP's contract was with Midwest, not with Warehouse Rack. As for the claim under Wis. Stat. § 100.18, the court decided there was no evidence of a misrepresentation within the meaning of that statute because the challenged website statements were merely puff-ery. Alternatively, the court stated, there was no evidence that any statement on the website caused MADCAP's damages.

ANALYSIS

¶ 6. MADCAP contends on appeal that the circuit court erred in concluding there was no evidence showing that MADCAP had a contract with Warehouse Rack. Regarding its Wis. Stat. § 100.18 claim, MADCAP contends the website made "representations" within the meaning of § 100.18 and there is evidence showing MADCAP suffered pecuniary loss because the representations were false or misleading.

¶ 7. A party is entitled to summary judgment if there are no genuine issues of material fact and that party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2). In reviewing the grant or denial of a summary judgment, we employ the same methodology as the circuit court and our review is de novo. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987). The moving party is entitled to summary judgment if there are no genuine issues of material fact and that party is entitled to judgment as a matter of law. Section 802.08(2). In deciding whether there are genuine issues of material fact, we view the evidence most favorably to the non-moving party, drawing all reasonable inferences from the evidence in that party's favor. Grams v. Boss, 97 Wis. 2d 332, 339, 294 N.W.2d 473 (1980). Whether an inference is reasonable and whether particular evidence permits more than one reasonable inference are both questions of law, which we review de novo. Hennekens v. Hoerl, 160 Wis. 2d 144, 162, 465 N.W.2d 812 (1991).

I. Breach of Contract Claim

¶ 8. Both parties agree that this transaction is subject to Wis. Stat. ch. 402, "Uniform Commercial Code — Sales," but that the principles of contract law may also apply to determine if there was a contract between MADCAP and Warehouse Rack. A contract is formed when there is an offer, an acceptance and consideration. Gustafson v. Physicians Ins. Co. of Wisconsin, Inc., 223 Wis. 2d 164, 173, 588 N.W.2d 363 (Ct. App. 1998). An offer is a " 'manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.'" Malone v. Fons, 217 Wis. 2d 746, 768-69, 580 N.W.2d 697 (Ct. App. 1998) (quoting Restatement (Second) of Contracts § 24 (1979)). Mutual promises for future performances of acts by the parties may be consideration if each of the promises is capable of being performed, are given in exchange for each other, and are mutually binding upon the parties. Stack v. Roth Bros. Co., 162 Wis. 281, 287-88, 156 N.W. 148 (1916).

¶ 9. MADCAP contends there is evidence on each of the three elements that shows a contract between it and Warehouse Rack. Warehouse Rack responds that there is no evidence that Warehouse Rack offered to sell, deliver, or install the racks and no evidence of consideration. Warehouse Rack relies on Brad McNamee's affidavit and the affidavit of Sabados to argue that they told Hahn that Midwest, not Warehouse Rack, would be selling and installing the racks and Hahn therefore knew the contract was with Midwest, not Warehouse Rack. Because we are to view the evidence most favorably to MADCAP we focus on Hahn's affidavit rather than the submissions relied on by Warehouse Rack.

A. Evidentiary Submissions

¶ 10. Hahn avers that, after talking by phone with Brad McNamee on July 30, 2002, he sent a fax as requested that stated the requirements of the racks MADCAP needed. Brad McNamee called that day or the next to tell Hahn that they were disassembling a Sturdi-Bilt storage rack at a warehouse in Waukesha, Wisconsin. MADCAP received a faxed document from "McNamee," dated July 31, on Warehouse Rack letterhead with a price per pallet for the used Sturdi-Bilt racks, the layout MADCAP needed based on its fax, and the installation cost per pallet. Hahn went to the Waukesha warehouse on August 6, 2002, and inspected the Sturdi-Bilt racks that were in the warehouse. He met Sabados at that time, but was not told that Midwest would sell and deliver the racks and would contract with an outside installer for the installation. Hahn did not negotiate price or quantity with Sabados and Sabados did not indicate to him that a purchase order should be issued to Midwest only. Hahn did tell Sabados that MADCAP needed more "cant legs," and Sabados said he would manufacture the additional cant legs.

¶ 11. On August 19, 2002, Hahn received another faxed document from "McNamee," again on Warehouse Rack letterhead, titled "EO. Verbal Dennis Hahn." This document contained the same quantity and pricing as the July 31 document, except that the cost of the cant legs and the freight cost was added. In addition, this document stated: "Terms: 30% at first truck load, 30% after final truck, remainder immediately after install" and instructed: "Make Purchase Order To: Midwest Steel [sic], 905 Fairway Pk. Dr., Madison, IL.. . Please send 30% deposit after 1st truck load, made out to Midwest Steel [sic] in the amount of $14,000." The "approx, lead time" was "Mid September or sooner." Hahn wrote to both "Brad McNamee, Warehouse Rack & Shelf' and "Mike Sabados, Mid-West Rack Mgf., Inc." in one letter dated August 22, 2002, stating that MADCAP accepted "your proposal" of August 19, 2002, and that MADCAP expected to be ready for installation by September 16.

¶ 12. According to Hahn's affidavit, he was never told that Warehouse Rack was not a party to the contract; he believed MADCAP was buying the racks from Warehouse Rack and that Sabados and Midwest represented the manufacturer of the used product, with Midwest being an agent or joint partner with Warehouse Rack. There is no evidence that MADCAP made a purchase order to Midwest, other than the August 22 acceptance letter to both Warehouse Rack and Midwest.

¶ 13. MADCAP made the first payment of $14,000 on or about September 17, 2002, by check to Warehouse Rack and Midwest. When Sabados asked that the next check be made out to him personally so that he could pay the installers, Hahn wrote Sabados that, because the contract was with Warehouse Rack and Midwest, MADCAP would need authorization from both those entities in writing before it would do that. After receiving both those authorizations, MADCAP did issue a check for $13,000 to Sabados personally. When Hahn learned on September 25, 2002, that the installers had left the job and checked out of the hotel and that the check to Sabados had been cashed, Hahn called Brad McNamee. The two had a number of telephone conversations about how missing rack parts could be obtained and the installation could be completed. Brad McNamee demanded a check for $6500 before ordering the missing parts; MADCAP sent the check to Brad McNamee, but then stopped payment on the ground that it was in excess of the contract price for materials.

B. Offer

¶ 14. MADCAP contends that Hahn's affidavits and the attached documents are evidence that Warehouse Rack made an offer on August 19, which MADCAP accepted on August 22, and that the mutual promises, as well as MADCAP'S subsequent payments, were consideration. Warehouse Rack responds that the August 19 document was not an offer from it, but was simply a price quotation, which invited an offer from MADCAP to Midwest by the direction to "Make a Purchase Order to: Midwest Steel [sic]." Warehouse Rack also contends that Hahn's actions taken after August 22 — two faxes to Sabados on details for the installation and one about a price adjustment because of a layout change — show that Hahn understood the contract was with Midwest, not with Warehouse Rack.

¶ 15. Warehouse Rack relies on Restatement (Second) of Contracts § 26 (1979), which provides that "a manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent." Warehouse Rack finds particular support in comment c to that section, quoting this portion: "the word 'quote' is commonly understood as inviting an offer rather than as making one, even when directed to a particular customer." However, the entire comment c makes clear that a quote may he an offer, depending on the contents and the circumstances:

c. Quotation of price. A "quotation" of price is usually a statement of price per unit of quantity; it may omit the quantity to be sold, time and place of delivery, terms of payment, and other terms. It is sometimes associated with a price list or circular, but the word "quote" is commonly understood as inviting an offer rather than as making one, even when directed to a particular customer. But just as the word "offer" does not necessarily mean that an offer is intended, so the word "quote" may be used in an offer. In determining whether an offer is made relevant factors include the terms of any previous inquiry, the completeness of the terms of the suggested bargain, and the number of persons to whom a communication is addressed.

Id. cmt. c. This is consistent with Wisconsin case law. See Nickel v. Theresa Farmers Coop. Ass'n., 247 Wis. 412, 415-17, 20 N.W.2d 117 (1945) (whether communication naming price is quotation or offer depends on the intention of the owner as manifested by the facts and circumstances of each case). Thus, the critical question in the context of this summary judgment review is not whether the August 19 document can be called a "quote" but whether it can reasonably be considered an offer by Warehouse Rack, given its contents and the relevant circumstances here.

¶ 16. Viewing the evidence most favorably to MAD CAR we conclude it is reasonable to infer that the August 19 document was an offer from Warehouse Rack and Midwest to MADCAP The document contains more than a price quotation: it contains quantity, lay out, total cost, payment terms, and approximate delivery time. Indeed, in its answer Warehouse Rack admitted that "on or about July 31, 2002, the McNamee Defendants proposed to sell to MADCAP certain used, heavy-duty Sturdi-Bilt Drive-In Racks... then located in Waukesha, Wisconsin." Warehouse Rack's argument that the August 19 document was not an offer from Warehouse Rack appears, then, to rest entirely on the instruction to make a purchase order to Midwest and to make the first payment to Midwest, and not on any lack of specificity in the document concerning the terms.

¶ 17. While the August 19 document, viewed in isolation, might reasonably be construed as inviting an offer by means of a purchase order to Midwest, that is not the only reasonable construction. The document is titled "EO. Verbal Dennis Hahn." Because Hahn, according to his affidavit, had discussed price and quantity only with Brad McNamee, not with Sabadps, it is reasonable to infer that the oral purchase order referred to an oral purchase order to Warehouse Rack. Although the document instructs MADCAP to make a purchase order to Midwest, the document does not say "only" to Midwest, and it directs the first payment, but not subsequent ones, to be sent to Midwest; thus the document does not plainly tell MADCAP that Warehouse Rack is no longer making an offer to sell the very same products at the same price (with some additional costs) that were the subject of the July 31 document from Warehouse Rack. A reasonable person could infer that the August 19 document — on Warehouse Rack letterhead and sent by "McNamee" — is an offer to enter into an agreement with both Warehouse Rack and Midwest for the products and on the terms specified.

¶ 18. The evidence of the conduct of Hahn and Warehouse Rack after August 19, viewed most favorably to MADCAP is consistent with an understanding that MADCAP was accepting an offer from both Warehouse Rack and Midwest: MADCAP's August 22 acceptance to both; the first check made out to both; Hahn's insistence on authorization from both for the second check; the delivery of the racks without a purchase order ever being sent to Midwest; and Hahn's dealings with Brad McNamee after the installers stopped work. Hahn's communications with Sába-dos on which Warehouse Rack relies are not necessarily inconsistent with Warehouse Rack being a party to the contract with MADCAP Even if they are, the inconsistency is a factual dispute that cannot be resolved on summary judgment.

C. Consideration

¶ 19. Warehouse Rack's argument that there is no consideration has two grounds: there were no mutual promises for future performance and the money MADCAP paid went to Midwest, not Warehouse Rack. The first ground rests on essentially the same contention we have just rejected — that the August 19 document unambiguously directs MADCAP to enter into a contract with Midwest and shows no intent by Warehouse Rack to make an offer or have any obligations to MADCAP For the reasons we have explained above, we conclude the August 19 document, in the context of the other evidence we have discussed, gives rise to a reasonable inference that Warehouse Rack was promising to deliver the racks described on the terms described if MADCAP accepted the offer. MADCAP's August 22 acceptance letter expressed its promise of future performance — to pay the amounts specified upon the terms specified. Thus, there is evidence of mutual promises between MADCAP and Warehouse Rack that constitute consideration between those two parties.

¶ 20. Although the evidence of mutual promises suffices to entitle MADCAP to a trial on the element of consideration, we choose to address Warehouse Rack's second contention: because the money MADCAP paid went to Midwest, not Warehouse Rack, it is not consideration for a contract between MADCAP and Warehouse Rack. Warehouse Rack stated in its answer that it signed the first check, made out to both Warehouse Rack and Midwest, over to Midwest. There is no evidentiary submission meeting the requirements of Wis. Stat. § 802.08(3) that so states, but we will assume for purposes of argument that is true. It is undisputed that Warehouse Rack authorized the second check to be paid to Sabados personally. However, if Warehouse Rack had the right to receive those payments from MADCAll the fact that it signed one over to a third party and directed the other to be paid to a third party does not eliminate those payments as consideration between Warehouse Rack and MADCAP See Restatement (Second) of Contracts § 71(4) cmt. e (1981). It is reasonable to infer from the evidence, viewed most favorably to MADCAll that Warehouse Rack had the right to receive at least some portion of the two checks that MADCAP paid.

II. Wisconsin Stat. § 100.18

¶ 21. Wisconsin Stat. § 100.18 provides in part:

Fraudulent representations. (1) No person, firm, corporation or association, or agent or employee thereof... with intent to induce the public in any
manner to enter into any contract or obligation relating to the purchase ... of any... merchandise ... or service, shall... publish ... an advertisement, announcement, statement or representation of any kind to the public relating to such purchase ... of such ... merchandise [or] service ... or to the terms or conditions thereof, which advertisement, announcement, statement or representation contains any assertion, representation or statement of fact which is untrue, deceptive or misleading.
(11) (b) 2. Any person suffering pecuniary loss because of a violation of this section by any other person may sue in any court of competent jurisdiction and shall recover such pecuniary loss, together with costs, including reasonable attorney fees ....

¶ 22. The elements of a claim under this statute, as most recently stated by the supreme court, are: (1) the defendant made to the public an "advertisement, announcement, statement or representation" relating to the purchase of merchandise or services or to the terms or conditions thereof; (2) the defendant's intent was to induce the public to enter into a contract or obligation for the merchandise or services; (3) the "advertisement, announcement, statement or representation" was "untrue, deceptive or misleading," and (4) the plaintiff sustained a pecuniary loss because of the "advertisement, announcement, statement or representation." Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶ 39, 270 Wis. 2d 146, 677 N.W.2d 233 (citing to Wis. Stat. § 100.18 and to Wis JI — Civil 2418).

¶ 23. MADCAP contends there is evidence entitling it to a trial on each of the elements of the claim. Specifically, MADCAP contends the submissions show that: (1) Warehouse Rack’s website made statements representing that it was a large, experienced business engaged in the manufacture, design, and installation of new and used racks; (2) it made these representations to induce the public to enter into contracts with it to purchase racks and services from it; (3) Warehouse Rack's own submissions show these are untrue; and (4) the damages from the defective racks and inadequate installation services were caused by the representations because MADCAP would not have entered into the contract with Warehouse Rack had it known the true size and nature of the business.

¶ 24. Warehouse Rack responds that the nondisclosure of facts about Warehouse Rack's size and the nature of its business is not a "representation" within the meaning of the statute, and it disputes MADCAP'S interpretation of statements on its website. In addition, Warehouse Rack argues that the representations MADCAP identifies were not a material inducement and any pecuniary loss MADCAP sustained was not caused by the representations. These last two arguments relate to the fourth element of the claim.

A. Evidentiary Submissions

¶ 25. The contents of Warehouse Rack's website are not disputed for purposes of this appeal. In his affidavit, Hahn avers that his impression from the website was that Warehouse Rack was representing itself to be "a large, experienced business engaged in the manufacture, design and installation of new and used racks." Hahn refers to the following specific statements as examples: (1) "Rack Design & Layout"; (2) "Local Mfg," which, Hahn avers, he thought meant "Manufacturer"; (3) "Our Corporate offices and primary distribution is out of our three warehouses in St. Louis, Mo. Although, we have shipping locations in Chicago, California, Texas, North Carolina and Pennsylvania"; (4) "We stock locally manufactured new and used pallet rack..."; (5) "[W]e promise you solid engineering, quality manufacturing and on-time delivery;" (6) "We provide experienced and professional rack installation"; and (7) "Our installers are real professionals that take pride in providing a quick thorough installation." Hahn candidly states in his affidavit: "I cannot say I read all the above statements, but my review of the website... convinced me that Warehouse Rack was a large, sophisticated, multidimensional business."

¶ 26. Hahn further avers that, after the "defendants abandoned the job," he filed a complaint with the Wisconsin Division of Trade and Consumer Protection, Department of Agriculture, and Brad McNamee's response to the complaint stated: "We are [a] small operation (3 people operating out of my home for [the] last 19 years)." In his affidavit, Brad McNamee avers that Warehouse Rack "is a sales group that matches buyer and seller together for a commission or fee paid by the seller." Neither of the McNamees told him these facts about their business, Hahn avers. Had they told him of "the size and nature of their business," MADCAP would not have signed a contract with them.

¶ 27. As a result of the conduct of Warehouse Rack and Midwest, Hahn avers, MADCAP was required to purchase additional racks and parts and hire others to assemble and install the racks, after having already paid $27,000; in addition, the poor quality and defects of some of the racks delivered caused MADCAP further damage.

B. False or Misleading Representations Made to Induce

¶ 28. We consider first Warehouse Rack's argument that the failure of Warehouse Rack to disclose to MADCAP that it consisted of three persons operating from their home who matched buyers with sellers for a commission does not constitute a representation under Tietsworth, 270 Wis. 2d 146. In Tietsworth, the court held that Wis. Stat. § 100.18(1) does "not purport to impose a duty to disclose, but, rather, prohibits only affirmative assertions, representations, or statements of fact that are false, deceptive, or misleading." Id., ¶ 40. The court therefore concluded that a failure to disclose a motorcycle engine defect did not constitute a "representation" or "statement" within the meaning of the statute.

¶ 29. We do not agree with Warehouse Rack that MADCAP is asserting that Warehouse Rack's failure to disclose constitutes the actionable misrepresentation. Rather, the evidence of the actual size and nature of Warehouse Rack's business is evidence, according to MADCAP that the website's affirmative representations are false.

¶ 30. Warehouse Rack also argues that the website does not expressly say that it is "a large, sophisticated multidimensional business." However, construing Hahn's affidavit most favorably to MAJDCAR the representations he attributed to Warehouse Rack's website are that Warehouse Rack is a large, experienced business that itself owns, manufactures, designs, and installs new and used racks. If the undisputed statements on the website reasonably convey this meaning, even if there are other reasonable meanings, then the resolution of the meaning of the statements is an issue of fact for the jury. See Rach v. Kleiber, 123 Wis. 2d 473, 481, 367 N.W.2d 824 (Ct. App. 1985) (on claims under Wis. Stat. § 100.18 and common law misrepresentation, there were reasonable conflicting inferences about the meaning of "new," making summary judgment improper). We conclude that the statements Hahn lists in his affidavit, as well as a number of others on the website, may be reasonably construed as representing that Warehouse Rack is a large, experienced business that itself owns, manufactures, designs, and installs new and used racks.

¶ 31. We next conclude it is reasonable to infer that Warehouse Rack made the representations in order to induce the public to purchase the products and services described on its website. This is a reasonable inference because the statements are on the website and because, according to Brad McNamee's affidavit, Warehouse Rack receives a "majority of its leads" from its website.

¶ 32. As for whether the representations (reasonably construed in MADCAP'S favor) are false or misleading, Warehouse Rack does not concede they are, but it does not argue there is no evidence showing they are false or misleading. We conclude there is evidence creating a reasonable inference that they are false or misleading: Brad McNamee's affidavit averring that Warehouse Rack's business consists of matching buyers to sellers for a commission and his statement that Warehouse Rack consists of three persons operating out of a home.

C. Representations Causing Pecuniary Damage

¶ 33. Having concluded there is evidence entitling MADCAP to a trial on the first three elements, we turn to the fourth element — that MADCAP suffered a pecuniary loss "because of a violation of [100.18(1)]." The jury instructions define this element as follows: "In determining whether plaintiffs loss was caused by the (assertion) (representation) (statement), the test is whether (plaintiff) would have acted in its absence. Although the (assertion) (representation) (statement) need not be the sole or only motivation for (plaintiff)'s decision[,] ... it must have been a material inducement." Wis JI — Civil 2418.

¶ 34. Warehouse Rack first contends Hahn's affidavit is insufficient to show that any website statement induced MADCAP to contract with Warehouse Rack for two reasons. First, Warehouse Rack points out that Hahn does not aver that he can recall the specific statements he read and, in fact, he acknowledged he cannot. However, Hahn avers he read the website, and we have already concluded that the meaning Hahn avers it conveyed to him — that Warehouse Rack was a large, experienced business engaged in the manufacture, design, and installation of new and used racks — is a reasonable inference from numerous statements on the website.

¶ 35. Second, Warehouse Rack contends there is no evidence MADCAP was induced to contract with it by any statement on the website because Hahn avers only that he "included Warehouse Rack as one of the vendors to contract" based on the website. Reading Hahn's affidavit most favorably to MAD CAR we conclude it creates a reasonable inference that MADCAP decided first to contact Warehouse Rack and then to contract with it because of the message the website conveyed to Hahn about the size and nature of Warehouse Rack's business.

¶ 36. Warehouse Rack next contends there is no evidence MADCAP sustained a pecuniary loss because of any website representation. In Warehouse Rack's view, the loss MADCAP asserts — defective racks and no installation — was the result of misrepresentations and failings by Sabados, not of representations on the Warehouse Rack website. However, the jury instruction defines the test for determining whether a pecuniary loss was caused by the representation as: "Whether plaintiff would have acted in its absence." Wis. JI — Civil 2418. The representation must be "a material inducement," but it "need not be the sole or only motivation for the plaintiffs decision to act." Id. The act referred to in the instruction is the plaintiffs act of making a purchase or entering into a contract. Thus, the causation described is between the misrepresentation and the plaintiffs act. Therefore, even if representations by Sabados were an inducement for MADCAP to enter into the contract, that does not defeat MADCAP'S Wis. Stat. § 100.18 claim against Warehouse Rack unless its website representations were not a material inducement to MADCAP We are satisfied that Hahn's affidavit, viewed most favorably to MAD CAR is evidence that the website representations on the size and nature of Warehouse Rack's business were a material inducement for MADCAP to enter into a contract for the purchase of the racks.

¶ 37. In summary, we conclude there are genuine issues of material fact entitling MADCAP to a trial on whether the website representations that Hahn identifies caused MADCAP pecuniary loss.

By the Court. — Judgment reversed.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       In addition, the complaint alleged a claim of fraud in the inducement against Warehouse Rack and fraud in the performance against all defendants. The court dismissed both these claims against Warehouse Rack on its motion for summary judgment, and MADCAP is not pursuing these claims on appeal.

       Warehouse Rack does not contend on appeal that the statements or representations at issue are puffery. Accordingly, we do not address MADCAP's argument that the circuit court erred in concluding they were puffery. We take Warehouse Rack's failure to respond to this argument as a concession that the representations are not puffery.

       MADCAP makes a brief alternative argument under Wis. Stat. § 402.201(2). MADCAP contends there was a contract "as a matter of law or it is a jury issue" with Warehouse Rack because Warehouse Rack did not give a written notice of objection to the August 22 acceptance. To the extent MADCAP is arguing here that it is entitled to judgment as a matter of law that it had a contract with Warehouse Rack, the argument is not sufficiently developed for us to decide. To the extent MADCAP is arguing that there are disputed issues of fact under this alternative theory, it is unnecessary for us to address this alternative theory because of our conclusion that there are material factual issues under common law contract principles.

       By "titled," we mean that "EO. Verbal Dennis Hahn" is the first writing under the name and address of Warehouse Rack and it is in bold.

       The parties appear to agree that "Midwest Steel" was mistakenly written for "Midwest Rack Manufacturing, Inc."

       According to Brad McNamee's affidavit, when he received the August 22 letter he contacted Hahn and told him that under the terms of the quotation, all purchase orders had to be "made out only to the seller, Midwest"; Hahn "acknowledged his mistake and indicated ... that a new purchase order would be made out to Midwest only." In his affidavit, Hahn denies Brad McNamee told him that Warehouse Rack was not a party and denies he ever acknowledged that he made a mistake in his August 22 acceptance letter. "At some point," Hahn avers, "Brad McNamee asked me to issue a purchase order to Midwest Rack, but I did not understand why he made that request." There is clearly a dispute over the nature of the conversation between Brad McNamee and Hahn about a purchase order to Midwest, but neither party states whether MADCAP ever made a purchase order to Midwest after the August 22 letter. It is reasonable to infer from both affidavits and from the lack in the record of a purchase order to Midwest that MADCAP did not make a purchase order to Midwest after its August 22 letter. That is therefore the inference we draw for purposes of the appeal.

       MADCAP alleged this in the complaint and Warehouse Rack admitted this in its answer, also stating that it signed the check over to Midwest.

       We recognize that the representations that are the subject of this dispute do not concern features of a product but, rather, the manner in which the business provides the products and services it advertises (that is, from its own inventory and through its own employees rather than by matching buyers and sellers for a commission). Warehouse Rack does not argue that such representations are beyond the scope of Wis. Stat. § 100.18(1), thus implicitly conceding that they are within the statute's scope. Section 100.18(1) covers representations "relating to such purchase ... of such . . . merchandise [or] service ... or to the terms or conditions thereof." This language is broad enough to include the representations at issue in this case, and we have discovered no case law that might arguably support an argument to the contrary.

       Some examples are: (1) "[w]e manufacture new drive-in racks and a great supply of used drive-in/drive-through racking, available in stock for immediate delivery"; (2) "All Brands New & Used bought & sold." "Corp. Info.," p. 1; (3) "Warehouse Rack & Shelf, a division of McNamee & Associates, has been supplying quality products and superior service to the Nation's largest original equipment manufacturer's (O.E.M.) and distributors since 1983; (4) "As America's top rack supplier, we promise you solid engineering, quality manufacturing and on-time delivery." "Storage Products," p. 1; (5) "We stock ... new and used pallet rack...." "Used Rack," pp. 1 and 2; (6) "We have over 10,000 pallet positions of used drive-in pallet rack." "Used Rack," p. 2; (7) "[W]e stock truckloads of used racking... in the Midwest for immediate shipment." "Used Rack," p. 3; (8) Warehouse Rack "is a material handling and storage products integrated supplier .. .." "Services," p. 1; (9) "Warehouse Rack & Shelf has full-time installation crews available to handle installation of your rack system .... Our installers can be contracted to meet the rack when it arrives at your dock.... Our installers are real professionals ...." "Installation Services," p. 1.

       Warehouse Rack also argues that its website did not induce MADCAP to contract with Midwest. However, we have already concluded there are genuine issues of material fact regarding whether MADCAP contracted with Warehouse Rack as well as Midwest.

       A portion of Warehouse Rack's argument on causation of pecuniary loss appears to rely on a different standard than that contained in Wis JI — Civil 2418. For example, Warehouse Rack cites to 22 Am. Jim 2d Damages § 301 (2004) for this proposition. "Damages may be recovered only for injuries that flow directly from, and as the probable and natural result of, a wrong." However, in other portions of its argument Warehouse Rack cites to the jury instruction standard for causation of pecuniary loss and relies on it. Because Warehouse Rack relies on the jury instruction for portions of its argument and does not develop an argument challenging the jury instruction standard as inconsistent with Wis. Stat. 100.18(ll)(b), we apply the standard in the jury instruction.


author: WEDEMEYER, EJ.

text:
    State of Wisconsin, Plaintiff-Respondent, v. Jermaine Smith, Defendant-Appellant.

    Court of Appeals

      No. 2004AP1077-CR.

      Submitted on briefs May 5, 2005.

      Decided June 7, 2005.

    2005 WI App 152
    (Also reported in 702 N.W.2d 850.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Glen B. Kulkoski of Carr, Kulkoski & Stuller, S.C., New Berlin.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of William C. Wolford, assistant attorney general, and Peggy A. Lautenschlager, attorney general.
    Before Wedemeyer, EJ., Fine and Kessler, JJ.

       Petition to review denied 8-25-05.

   WEDEMEYER, EJ.

¶ 1. Jermaine Smith appeals from a judgment entered after a jury found him guilty of one count of first-degree intentional homicide, while armed, contrary to Wis. Stat. § 940.01(l)(a) (2003-04). He claims the trial court erred in permitting the State to introduce out-of-court statements of a co-actor for the purpose of rebutting out-of-court statements introduced by the defense. Because the trial court did not erroneously exercise its discretion in allowing the proffered evidence, we affirm.

BACKGROUND

¶ 2. On November 21, 2002, Smith and two fellow gang members, Willie Nunn and Cornelius Blair, went to the home of Andrew and Dorothy Roberts. Andrew Roberts was the landlord for Smith's gang leader, Michael Davis. Davis was angry because Roberts had evicted him as a result of drug activity taking place in the Davis rental unit. As a result, Davis enlisted Smith, Nunn and Blair to rob Mr. and Mrs. Roberts.

¶ 3. Smith gave a statement to police indicating that the three went to the Roberts's home. Smith and Blair, armed with guns, went into the home while Nunn stayed outside and acted as lookout. Mrs. Roberts answered the door and was ordered to the floor. Smith then approached Mr. Roberts and demanded his money. Mr. Roberts complied and then was ordered to the floor. Smith said that as he was leaving, Mr. Roberts grabbed his leg, which caused Smith to shoot towards Mr. Roberts. Believing he had killed Mr. Roberts, Smith then shot Mrs. Roberts in the head so there would be no witnesses.

¶ 4. Mrs. Roberts died as a result of the gunshot wound to the head. Mr. Roberts survived the ordeal. As a result, Smith was charged with one count of first-degree intentional homicide, while armed. At trial, the defense sought to introduce testimony from a Frederick Banks, who stated that when he was in jail, Nunn told him that he (Nunn) had shot Mrs. Roberts. The prosecutor opposed the admission of the testimony, but stated that if the trial court allowed its admission, the State should be allowed to introduce evidence on rebuttal that Nunn had made prior inconsistent statements to police denying that he was the shooter.

¶ 5. The trial court ruled that Banks's testimony was admissible if Nunn was unavailable under the hearsay exception allowing statements against penal interest pursuant to Wis. Stat. § 908.045(4). The court specifically ruled that this testimony would not violate the confrontation clause because the defense was seeking to make Nunn a witness for the defense and the State was simply seeking to challenge that evidence.

¶ 6. At trial, the defense called Nunn, who refused to testify. The defense then called Banks as a witness. Banks testified that in February of 2003, he was in the same jail pod as Nunn and that Nunn had told him that Davis sent him and two others over to his landlord's house, and that after one of his co-actors shot Mr. Roberts, Nunn proceeded to shoot Mrs. Roberts.

¶ 7. In its rebuttal case, the State presented testimony from Police Detective Katherine Hein. She discussed five statements that Nunn had given to her or her partners in January 2003 regarding the Roberts shooting. Nunn did not say in any of these statements that he had shot Mrs. Roberts. Smith was convicted of the homicide charge and sentenced to life in prison. He now appeals.

DISCUSSION

¶ 8. Smith contends that the trial court's admission of Hein's statement recounting Nunn's out-of-court statements constitutes error because it violates his Sixth Amendment right to be confronted with the witnesses against him. We reject his contention.

¶ 9. Whether admission of the challenged evidence violated Smith's constitutional right to confrontation is a question of law, which we review independently. State v. Williams, 2002 WI 58, ¶ 7, 253 Wis. 2d 99, 644 N.W.2d 919. Smith relies on the recent decision of the Supreme Court, Crawford v. Washington, 541 U.S. 36 (2004), which held that "testimonial" hearsay statements of a person absent from trial may only be admitted in conformity with the confrontation clause if the declarant is unavailable and the defendant had a prior opportunity to cross-examine the declarant regarding the statement. Id. at 68. He argues, therefore, that the State should not have been allowed to introduce Nunn's prior statements through the police detective because Smith did not have an opportunity to cross-examine Nunn regarding the statement. We reject Smith's argument.

¶ 10. The State's rebuttal was solely to impeach Nunn's credibility under the provisions of Wis. Stat. § 908.06, which provides:

When a hearsay statement has been admitted in evidence, the credibility of the declarant may be attacked, and if attacked may be supported by any evidence which would be admissible for those purposes if declarant had testified as a witness. Evidence of a statement... by the declarant at any time, inconsistent with the declarant's hearsay statement, is not subject to any requirement that the declarant may have been afforded an opportunity to deny or explain.

¶ 11. A defendant who introduces testimony from an unavailable declarant cannot later claim that he was harmed by his inability to cross-examine that declarant when prior inconsistent statements are introduced to impeach an out-of-court statement introduced by the defendant. Smith was warned by the trial court, and he could have chosen not to put into evidence Nunn's out-of-court statements. Smith ignored the trial court's warnings, and will not he permitted by this court, in hindsight, a second kick at the cat.

¶ 12. Moreover, admission of the prior inconsistent statement did not prejudice Smith because it is clear beyond a reasonable doubt that a rational jury would have found the defendant guilty despite admission of Nunn's prior inconsistent statements. See State v. Harvey, 2002 WI 93, ¶ 49, 254 Wis. 2d 442, 647 N.W.2d 189.

¶ 13. In this case, Smith confessed that he shot Mrs. Roberts. He provided sufficient detail in his statement, which was corroborated by physical evidence at the scene of the crime. There was other eyewitness testimony that corroborated details provided in Smith's confession. Another witness testified that Smith admitted to her that he had killed Mrs. Roberts. Even if the State had not introduced the statements from Nunn during rebuttal, the outcome would have been the same. Therefore, the admission was harmless.

By the Court. — Judgment affirmed.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.