author: N. PATRICK CROOKS, J.

text:
    Renee K. VanCleve and Thomas C. VanCleve, Plaintiffs-Respondents-Petitioners, v. City of Marinette and Wausau Insurance Company, Defendants-Appellants, Kenneth Keller, d/b/a Keller Cement Contractors, Keller Cement Contractors, Auto Owners Insurance, and State Farm Fire & Casualty, Co., Defendants.
    Supreme Court

      No. 01-0231.

      Oral argument October 7, 2002.

    Decided January 3, 2003.

    2003 WI 2
    (Also reported in 655 N.W.2d 113.)

      For the plaintiffs-respondents-petitioners there was a brief by Jonny L. Waara and Petrucelli & Petrucelli, PC., Iron River, Michigan, and oral argument by Jonny L. Waara.

      For the defendants-appellants there was a brief by James O. Moermond, III, and Law Offices of Stilp and Cotton, Wausau, and oral argument by Peter M. Farb.

   N. PATRICK CROOKS, J.

¶ 1. Rene and Thomas VanCleve (VanCleve) commenced this action to recover damages arising out of an injury Rene VanCleve sustained to her left knee when she fell into a trench adjacent to a newly installed cement curb in the City of Marinette. VanCleve now seeks review of a published decision of the Court of Appeals, District III, which reversed a judgment in the amount of $49,311.15 entered against the City of Marinette (City) by the Circuit Court for Marinette County, the Honorable Tim A. Duket presiding.

¶ 2. The parties dispute how a Pierringer release, between an injured plaintiff and the defendant who is primarily liable under Wis. Stat. § 81.17 (1999-2000), affects the enforceability of a judgment against a non-settling municipality in light of the statute. Section 81.17 establishes the statutory liability of a municipality or a person or private corporation when injury results from a highway defect.

¶ 3. The critical language of Wis. Stat. § 81.17 has remained unchanged since 1898, and has been clearly and consistently interpreted by this court. Section 81.17 clearly establishes successive liability between a person or private corporation who is, under the statute, primarily liable and a municipality who is deemed to be secondarily liable. We hold, therefore, that a municipality may not be held to pay the remaining amount of the jury award when an injured plaintiff enters into a Pierringer release with the defendant (here Kenneth Keller d/b/a Keller Cement Contractors) who is primarily liable under the statute.

¶ 4. Wis. Stat. § 81.17 further provides that a judgment against a municipality is not enforceable until execution has been issued against the party found primarily liable and returned unsatisfied. Since Van-Cleve has not obtained, and cannot obtain, a judgment against the defendant Keller, no execution can issue and be returned unsatisfied, and, therefore, VanCleve cannot enforce a judgment against the City.

¶ 5. In addition, we hold that the City did not waive its statutory affirmative defenses by failing to object to the Pierringer release and stipulating to the dismissal, because the City did not have a legal basis to make such an objection. Similarly, we hold that the Stipulation and Order of Dismissal is not a waiver of the City's affirmative defenses, since it does not resolve any of the claims between VanCleve and the City pursuant to the Johnson and Pierringer cases. Johnson v. Heintz, 73 Wis. 2d 286, 297, 243 N.W. 2d 815 (1976); Pierringer v. Hoger, 21 Wis. 2d 182, 193, 124 N.W.2d 106 (1963).

¶ 6. Finally, we hold that VanCleve's public policy arguments fail because the statutory language of Wis. Stat. § 81.17 is unambiguous, and we have previously ruled that public policy considerations cannot trump unambiguous statutes. Additionally, VanCleve's argument that the application of § 81.17, as applied here, will stifle future settlement agreements ignores the clear statutory history of §81.17 and our previous decisions applying the statute. Parties should have adequate notice of the . risks involved in entering into settlements, and it is incumbent upon the party entering into a Pierringer release to be aware of the risks associated with such an agreement and make settlement decisions accordingly.

¶ 7. If we adopt VanCleve's policy argument, we would, in essence abrogate the intent of Wis. Stat. § 81.17 and render the statute meaningless.

¶ 8. Accordingly, we affirm the court of appeals' decision.

I. FACTS

¶ 9. The facts in this case are undisputed. In August 1998, Renee VanCleve injured her left knee when she fell into a trench adjacent to a newly installed cement curb in the City of Marinette. VanCleve sued both the City and the contractor, Kenneth Keller, d/b/a Keller Cement Contractors (Keller), alleging negligence in the construction and maintenance of the curb and gutter. Keller was named in the suit based on information from the City, stating that the contractor was also responsible for the curb that VanCleve injured herself on. In addition to providing this information, the City cross-claimed against Keller for contribution alleging negligence.

¶ 10. The City asserted Wis. Stat. §§ 81.17 and 81.15 among several affirmative defenses. In August 2000, VanCleve signed a Pierringer release, Pierringer v. Hoger, 21 Wis. 2d 182, 124 N.W.2d 106 (1963), which released Keller from all claims. The Pierringer release terms provided that in exchange for $7,500, VanCleve would release Keller and the insurers from any claims resulting from VanCleve's fall on August 24, 1998. Pet'r App. at 105. The Pierringer release also stated that VanCleve reserved the claims against the City.

¶ 11. Following the signing of the Pierringer release, the circuit court approved a stipulation and signed an order to dismiss. The City joined the stipulation to dismiss Keller from the lawsuit, which expressly stated that the City's cross-claim against Keller was settled.

¶ 12. After the Stipulation and Order for Dismissal, the jury returned a special verdict finding the City ninety percent (90%) causally negligent, Keller nine percent (9%) causally negligent, and VanCleve one percent (1%) causally negligent. The jury awarded VanCleve $15,000 in past non-economic loss damages, and $60,000 in future non-economic loss damages.

¶ 13. The City filed a motion to dismiss VanCleve's claim, arguing that no judgment could be enforced against it, because it would violate the requirements of Wis. Stat. § 81.17. The City claimed that the judgment against it was not enforceable until execution of a judgment against Keller was returned unsatisfied. Because VanCleve settled with Keller, the City argued that VanCleve cannot recover against it. The circuit court denied the City's motion and ordered a judgment be entered against the City, and limited it to $50,000 in accordance with Wis. Stat. § 81.15 and § 893.80(3).

¶ 14. The City appealed and the court of appeals reversed. In its holding, the court of appeals held that the City was not responsible for paying any amount of the jury verdict under Wis. Stat. § 81.17 because, under the statute, if no judgment was entered against the individual who is primarily liable, then the City, who is secondarily liable, cannot be held to pay. In its reasoning, the court of appeals asserted that VanCleve failed to cite any authority to support the argument that the City remains primarily liable for its ninety percent (90%) causal negligence. The court of appeals relied on Weis v. A.T. Hipke & Sons, Inc., 271 Wis. 140, 72 N.W.2d 715 (1955), finding the statute to be unambiguous.

¶ 15. VanCleve now seeks review of the decision of the court of appeals, and specifically asks this court to affirm the circuit court's decision, which granted judgment in the amount of $49,311.15 against the City. We granted VanCleve's petition for review and now turn to the issues presented.

¶ 16. Specifically, the issues presented in this case are: (1) If Wis. Stat. § 81.17 is applicable, what effect does entering into a valid Pierringer release with a settling defendant have for the plaintiff, VanCleve, in attempting to enforce judgment against the non-settling City of Marinette? (2) Did the City of Mari-nette, by its actions, waive its affirmative defenses?

¶ 17. The issues presented here require this court to interpret Wis. Stat. § 81.17. Statutory interpretation is a question of law we review independently, benefiting from the decisions of the court of appeals and the circuit court. Industry to Industry, Inc. v. Hillsman Modular Molding, Inc., 2002 WI 51, 252 Wis. 2d 544, 644 N.W.2d 236. In interpreting a statute, we first look to the language of the statute itself to attempt to interpret it based on "the plain meaning of its terms." State v. Williquette, 129 Wis. 2d 239, 248, 385 N.W.2d 145 (1986). Furthermore, it is a well established rule that if the language of a statute is clear and unambiguous, the court must not look beyond the statutory language to ascertain the statute's meaning. Only when statutory language is ambiguous may we examine other construction aids such as legislative history, context, and subject matter. State v. Waalen, 130 Wis. 2d 18, 24, 386 N.W.2d 47 (1986).

¶ 18. VanCleve challenges the court of appeals holding on several grounds. On the first issue, relating to Wis. Stat. § 81.17 and the effect of the Pierringer release, VanCleve asserts that the statute is inapplicable here because Keller is not a party to the lawsuit. Next, VanCleve argues that the court of appeals erred, and that a judgment can be entered against the City even though there was a valid Pierringer release.

¶ 19. Next, in addressing the second issue, Van-Cleve maintains that by failing to object to the Pierrin-ger release, and because of its stipulation to the dismissal of its cross-claims against Keller, the City waived its statutory affirmative defense that it was not primarily responsible or liable for this action. Similarly, VanCleve argues that in failing to object to the Stipulation and Order of Dismissal, thereby dismissing its cross-claims, the City waived its assertion that it was not primarily liable in this action.

¶ 20. Finally, VanCleve argues that social policy considerations favor settlement over contribution. Van-Cleve maintains that if this court accepts the City's arguments, the end result will be the stifling of future settlements.

¶ 21. The City counters that the application of Wis. Stat. § 81.17 bars any recovery by VanCleve against the City. The City asserts that when the jury found Keller liable, his liability became primary pursuant to Wis. Stat. § 81.17. Therefore, since VanCleve did not obtain a judgment against Keller, and chose instead to settle through a Pierringer release, VanCIeve cannot recover against the City.

II. APPLICABILITY OF WIS. STAT. § 81.17 AND EFFECT OF PIERRINGER RELEASE ON VANCLEVE CLAIM

¶ 22. As a threshold question, we must determine whether Wis. Stat. § 81.17 applies. We agree with the City that § 81.17 is applicable to the case at hand. First, § 81.17 creates primary and secondary liability for injuries caused by highway defects or defects on other public grounds. A curb and gutter falls under the definition of "[hjighway defects" or defects on "other public grounds." See Wis. Stat. § 81.17. See also, Weis v. A.T. Hipke & Sons, Inc., 271 Wis. 140, 141, 72 N.W.2d 715 (1955) (holding a ditch, gully or depression to fall under the definition of "highway" defect). Second, § 81.17 explicitly states that if any person or private corporation is found negligent, then that person or private corporation shall be primarily liable under the statute.

¶ 23. In addition to the plain language of the statute, Wisconsin case law interpreting the statutory language provides guidance on this issue.

¶ 24. In Weis, we held that according to Wis. Stat. § 81.17 any liability the City of New Holstein (city) may have under this statute is secondary, not joint. A city is only liable for the portion of damages and costs that the private individual is unable to pay. In reaching that decision, we looked at the language of the statute and rejected the plaintiffs argument, that under the statute, the city involved was required to deny its primary liability and prove that the private property owner was primarily liable. In rejecting the plaintiffs argument we said that according to the statutory language which states: "... any person or private corporation shall be primarily liable ..." the city cannot be jointly or primarily liable. In addition, we held that "[b]y statute the liabilities of these tort-feasors from the outset are successive, rather than joint. . . ." Weis, 271 Wis. at 144. Under such circumstances, the doctrine of contribution does not apply.

¶ 25. In a similar vein, we previously held in Dickens, that the municipal corporation (Eau Claire County) may not be held primarily liable. In that case, we addressed the application of Wis. Stat. § 81.17 and held that the statute creates "a secondary liability on a town, city, village, or county, for defects in a highway which cause damage only when the negligence of another tort-feasor also causally contributes to that defect." Dickens v. Kensmoe, 61 Wis. 2d 211, 220, 212 N.W.2d 484 (1973).

¶ 26. Thus, according to Weis, and Dickens, the City may not be held primarily liable, and there can be neither joint, nor primary liability on the part of a town, city, village, or county, if any person or private corporation has any liability. Rather, this liability is successive, and as a result, any liability the municipality may have is only for the portion of the damages and costs that the private individual is unable to pay. Since the jury found Keller liable, he became primarily liable in accord with Wis. Stat. § 81.17, and the City's liability is triggered only if execution has been issued against Keller and returned unsatisfied.

¶ 27. Based on the statute and the case law cited above, since Keller was found to be nine percent (9%) causally negligent for VanCleve's injuries, it is clear that Keller is primarily liable under the statute. However, since Keller was dismissed from the action, no judgment can be rendered against Keller, and no execution can issue and be returned unsatisfied.

¶ 28. Dickens v. Kensmoe, 61 Wis. 2d 211, 212 N.W.2d 484 (1973), accurately sets forth the historical construction and development of Wis. Stat. § 81.17:

The statutory liability of a municipality for damages sustained as a result of a highway defect goes back to the beginning of this state. This liability was first created by the Revised Statutes of 1849, ch. 16, sec. 103. At that time, governments were immune from tort claims under a common-law, court-made rule which was expressly recognized in Hayes v. Oshkosh (1873), 33 Wis. 314, 14 Am. Rep. 760. The statute was a forerunner of present sec. 81.15 and was designed to ameliorate in part the harshness on the public of the doctrine of governmental tort immunity. This statute of 1849 expressly created liability on a town for damages caused by reason of the insufficiency or want of repair of a road. The language creating this liability became Title VI, ch. 19, sec. 120, Revised Stats. 1858, which was construed in Kittredge v. Milwaukee (1870), 26 Wis. 46. The court there held the statute imposed liability regardless of whether the municipality created the defect in the highway or the defect was allowed to exist due to insufficiency of repair.
Thereafter, municipalities began to enact ordinances designed to protect themselves from Kittredge. These ordinances generally provided that when the negligence of a private tort-feasor had created the defect for which the municipality was also liable statutorily, the municipality's liability was only secondary to the liability of the private tort-feasor. A city ordinance of this type was involved in Hincks v. Milwaukee (1879), 46 Wis. 559, 1 N.W. 230, and was held valid and constitutional.
In 1889, a statute was enacted entitled "Primary Liability for Damages — Parties" which contained almost verbatim the language of these city ordinances. See Laws of 1889, ch. 471, secs. 1 and 2; 1 Sanborn & Berryman, Annotated Statutes (1889), sec. 1339 b.
In 1898 the statute was revised and renumbered as sec. 1340 a and provided substantially as sec. 81.17 now reads.... The statute of 1898 creating sec. 1340 a was a revisor's statute and the revisor's note dealing with the section expressly states "An attempt has been made to condense and otherwise improve the language, without changing the legal effect thereof.". . . The critical language of this statute has ever since remained unchanged; in 1923 the section was renumbered by the Laws of 1923, ch. 108, sec. 101; in 1943, it was revised by the Laws of 1943, ch. 334, sec. 76; and eventually became sec. 81.17.

Dickens, 61 Wis. 2d at 214-217.

¶ 29. As noted above, Wis. Stat. § 81.17 was originally created when governments were immune from tort claims under the common law. Dickens, 61 Wis. 2d at 214. VanCleve argues that § 81.17 is inapplicable based on Holytz v. City of Milwaukee, 17 Wis. 2d 26, 115 N.W.2d 618 (1962), which abrogated the common law governmental immunity for tort claims. The City disagrees, and asserts that VanCleve's argument that § 81.17 should be interpreted to hold the City liable for the percentage of causal negligence as determined by the jury is without legal authority. If § 81.17 is interpreted as suggested by VanCleve, it would become, in essence, a joint liability statute, rather than a successive liability statute. Such an interpretation of §81.17 would render § 895.045, the contributory negligence statute, to some extent unnecessary or redundant. The City maintains that the critical language of § 81.17 has remained unchanged since 1898, and has been clearly and consistently interpreted by this court.

¶ 30. As noted before, based on case law, it is clear that Wis. Stat. § 81.17 is a successive liability statute, rather than a government immunity statute. Accordingly, we find Holytz is not helpful in interpreting §81.17 in the present case because it does not directly address § 81.17.

¶ 31. Next, VanCleve maintains that Wis. Stat. § 81.17 should be interpreted to hold the City liable for the percentage of causal negligence as determined by the jury. VanCleve argues that the purpose of Wis. Stat. § 81.17 is to protect municipalities from paying the portion of damages that were attributable to the individual who is primarily liable, and not to relieve a municipality from paying their portion of the damages.

¶ 32. This argument, while interesting, is not supported by any legal authority. The plain language of Wis. Stat. § 81.17 provides conditional protection to a municipality when it is sued along with another for injuries caused by highway defects. If both the municipality and the other individual or private corporation are found liable, the statute unambiguously states that the other person or private corporation is responsible for the entire award, if a judgment can be satisfied against it. Thus, § 81.17 is unambiguous, based on the case law and the clear language of the statute.

¶ 33. Consequently, we hold that the unambiguous statutory language of Wis. Stat. § 81.17 bars any recovery by VanCleve against the City. As previously noted, the critical language of §81.17 has remained unchanged since 1898, and has been clearly and consistently interpreted by this court as illustrated in our opinions in Weis and Dickens.

¶ 34. When the jury found Keller liable, his liability became primary pursuant to Wis. Stat. § 81.17. So under the statute, Keller would have been responsible for all the damages and the municipality would have been responsible only for the damages Keller was not able to pay. In this case, the Pierringer agreement represents what Keller was willing to pay, not what he was able to pay upon an execution issued on a judgment. By entering into the Pierringer release, VanCleve was essentially agreeing to accept a lesser amount in damages by releasing the individual that turned out to be primarily liable under the statute. Therefore, since VanCleve did not obtain a judgment against Keller, and chose instead, to settle through a Pierringer release, VanCleve cannot recover against the City pursuant to § 81.17. The consequence of entering into the Pier-ringer release with Keller is that VanCleve, in essence, indirectly waived any right to hold the City secondarily liable.

¶ 35. Thus, according to the holdings in Weis, 271 Wis. 140, and Dickens, 61 Wis. 2d 211, under Wis. Stat. § 81.17 there can be neither joint, nor primary liability, on the part of a municipality, if any person or private corporation is liable.

¶ 36. Accordingly, we hold that application of Wis. Stat. § 81.17 bars any recovery against the City. Since the jury found Keller liable, he is primarily liable and consequently, the City may not be held to pay the remaining amount of the jury award where, as here, an injured plaintiff enters into a Pierringer release with the defendant, Keller, who is primarily liable under the statute. Since Keller was dismissed from the action, no judgment can be rendered against Keller, and no execution can issue and be returned unsatisfied.

III. EFFECT OF PIERRINGER RELEASE ON AFFIRMATIVE DEFENSES

¶ 37. Next, in addressing the second issue of whether the City waived its affirmative defenses, Van-Cleve takes the position that that the City's failure to object to the Pierringer release waived its statutory affirmative defenses under Wis. Stat. § 81.17. We disagree. This argument fails to consider that there was no legal basis for the City to make such an objection. See Unigard Ins. Co. v. Insurance Co. of N. Am., 184 Wis. 2d 78, 87 n.5, 516 N.W. 2d 762 (Ct. App. 1994) (holding "[a] non-settling tort-feasor has no control over a claimant's decision to settle with another tort-feasor"); and Johnson v. Heintz, 73 Wis. 2d 286, 297, 243 N.W. 2d 815 (1976) (holding "no objection [by the third party] could be raised to the fact that the plaintiff and a joint tort-feasor defendant were exercising the option approved by Pierringer"). Moreover, this argument incorrectly assumes, without citing to authority, that the City has the burden of objecting to a Pierringer release.

¶ 38. Generally, the rule is that a joint tort-feasor has a right to contribution from another tort-feasor for any sums the first tort-feasor is obligated to pay a plaintiff in satisfaction of the second's liability. Fleming v. Threshermen's Mut. Ins. Co., 131 Wis. 2d 123, 130, 388 N.W.2d 908 (1986).

¶ 39. However, as previously noted, a Pierringer release, in effect, limits a second joint tort-feasor's liability to the amount reflecting its proportion of wrongdoing. Id. Stated differently, a Pierringer release operates to impute to the settling plaintiff whatever liability in contribution the settling defendant may have to non-settling defendants and to bar subsequent contribution actions the non-settling defendants might assert against the settling defendants. Pierringer, 21 Wis. 2d at 193.

¶ 40. In Pierringer, the settling defendant moved for summary judgment to dismiss a cross-claim of a non-settling defendant for contribution, after it entered into a Pierringer release with the plaintiff. We held that as long as the causal, comparative and contributory negligence of all the relevant parties is determined by the jury, there is no requirement that a settling defendant remain a party to the suit. Pierringer, 21 Wis. 2d 182, 124 N.W.2d 106.

¶ 41. According to our decision in Pierringer, the non-settling tort-feasor has no control over a claimant's decision to settle with another tort-feasor. Id. See also, Unigard, 184 Wis. 2d 78 at 87 n.5.

¶ 42. In Johnson, a passenger in a car sued the driver and her insurance company, American Family Insurance. American Family then filed a third-party complaint against State Farm for contribution. State Farm insured the driver of a car that rear-ended the car the plaintiff rode in. In Johnson, the plaintiff entered into a Pierringer release with State Farm over American Family's objection. Johnson, 73 Wis. 2d at 294-95. The trial court approved the settlement agreement. On appeal, we recognized that it was harmless error for the trial court to approve the settlement agreement. Id. The plaintiff did not have a right to settle with State Farm because there was no direct claim against State Farm. Id. at 297. However, the error was harmless, because the parties could have taken steps to place themselves in a direct adversary position. Id. at 298. The court reasoned that had State Farm "been an initial party defendant... no objection could be raised to the fact that the plaintiff and a joint tort-feasor defendant were exercising the option approved by Pierringer. The settlement of the claim against a defendant under those circumstances requires that he be dismissed from the action." Id. at 297.

¶ 43. Applying the rules of Pierringer and Johnson to the present case, the City did not have standing to object to the release, since pursuant to the terms, VanCleve assumed all of Keller's potential liability. Furthermore, it is clear from the rules set forth above, a non-settling tort-feasor has no control over a claimant's decision to settle with another tort-feasor. See also Unigard, 184 Wis. 2d at 87 n.5.

¶ 44. Therefore, since VanCleve and Keller were direct adversaries, any attempt by the City to object to the Pierringer release would have been unsuccessful.

¶ 45. Consequently, we reject VanCleve's argument that the City waived its statutory affirmative defenses by failing to object to the Pierringer release. We approve of the court of appeals' approach, which held that the non-settling City, claiming secondary liability as an affirmative defense, was not required to object to a Pierringer release to retain its affirmative defense. VanCIeve fails to cite any authority which places the burden of objecting to the release upon the non-settling tort-feasor in a successive liability case.

IV EFFECT OF STIPULATION AND DISMISSAL ORDER ON AFFIRMATIVE DEFENSES

¶ 46. Next, VanCIeve argues that the City's failure to object to the Stipulation and Order of Dismissal, thereby dismissing its cross-claims, waived its assertion that it was not primarily liable under this action.

¶ 47. We disagree. The failure to object to the Stipulation and Order of Dismissal is not a waiver of affirmative defenses, since it does not resolve any of the claims between VanCIeve and the City. This is supported by the fact that the Stipulation and Order failed to mention any affirmative defense. Additionally, Van-CIeve neglects to cite authority, and we have uncovered none, that supports the contention that in dismissing the cross-claim against Keller, the City waived its affirmative defense under Wis. Stat. § 81.17. (Def.Appellant Br. at 16).

¶ 48. The City's cross-claim for contribution and its affirmative defenses are two distinct parts of the pleadings according to Wis. Stat. § 802.01(1). We have previously held that a writing must contain an express statement waiving a statutory affirmative defense before a court should find waiver. Gonzalez v. City of Franklin, 137 Wis. 2d 109, 132-133, 403 N.W.2d 747, 756 (1987). Here, the City simply acquiesced in the dismissal, consistent with our decisions in Johnson and Pierringer, which stated that no objection could be raised, and that dismissal of the released defendant was required. Additionally, the City's cross-claim against Keller was a standard cross-claim for indemnification and contribution. Therefore, because the failure to object to the Stipulation and Order of Dismissal did not resolve any of the claims between VanCleve and the City, there was no waiver of an affirmative defense.

¶ 49. Ultimately, the City's ability to object to Keller's dismissal was eliminated when a Pierringer release had been signed by VanCleve releasing Keller. Johnson, 73 Wis. 2d at 296-297; Pierringer, 21 Wis. 2d 182. As a result, we hold that the City did not waive its assertion that it was not primarily liable, when it failed to object to the Stipulation and Order of Dismissal.

V PUBLIC POLICY ARGUMENT

¶ 50. Lastly, VanCleve raises a public policy argument that a ruling in favor of the City would stifle settlement of personal injury claims. VanCleve maintains that the application of Wis. Stat. § 81.17 does not promote settlement, and is contrary to Wisconsin's abrogation of governmental immunity pursuant to the decision in Holytz. However, it is a well- settled rule that if the language of a statute is clear and unambiguous, the court must not look beyond the statutory language to ascertain the statute's meaning. Only when statutory language is ambiguous may we examine other construction aids such as legislative history, context, and subject matter. State v. Waalen, 130 Wis. 2d 18, 24, 386 N.W.2d 47 (1986). As previously noted, the statutory language of §81.17 is unambiguous. Therefore, we agree with the court of appeals that "[considerations of public policy cannot trump an unambiguous statute." VanCleve v. City of Marinette, 2002 WI App 10, 250 Wis. 2d 121, 639 N.W.2d 792 (citing Kelly Co. v. Marquardt, 172 Wis. 2d 234, 247, 493 N.W.2d 68 (1992)).

¶ 51. The application of Wis. Stat. § 81.17 should not stifle future settlement agreements, because parties have adequate notice of the risks involved in entering into such settlements. Given the clear statutory language of § 81.17 and our previous decisions, it is incumbent upon the party entering into a Pierringer release to be aware of the risks associated with such an agreement and make settlement decisions accordingly.

¶ 52. Hence, VanCleve's public policy arguments are not persuasive in the context of an unambiguous statute.

VI. CONCLUSION

¶ 53. In summary, pursuant to Wis. Stat. § 81.17, the effect of entering into a valid Pierringer agreement is that VanCleve is barred from any recovery against the City. The critical language of § 81.17 has remained unchanged since 1898, and has been clearly and consistently interpreted by this court. Section 81.17 clearly establishes successive liability between a person or a private corporation who is, under the statute, primarily liable, and a municipality, who is deemed to be secondarily liable. Therefore, a municipality may not be held responsible to pay the remaining amount of the jury award, when an injured plaintiff enters into a Pierrin-ger release with the defendant (here Keller) who is primarily liable under the statute. Section 81.17 provides that judgment against a municipality is not enforceable until execution has been issued against the party found primarily liable and returned unsatisfied. Since VanCleve has not obtained, and cannot obtain, a judgment against Keller, no execution can issue and be returned unsatisfied, and, therefore, VanCleve cannot enforce a judgment against the City.

¶ 54. Next, because there was no legal basis for the City to object to the Pierringer release, we hold that the City did not waive any statutory affirmative defense by failing to object to the Pierringer release.

¶ 55. For similar reasons, we hold that the City did not waive its assertion that it was not primarily liable in this action, by failing to object to the Stipulation and Order of Dismissal. The Order of Dismissal did not resolve any claims between the City and VanCleve, and the City's ability to object was eliminated when the Pierringer release was signed by VanCleve.

¶ 56. Finally, we hold that VanCleve's public policy arguments fail, because we have previously held that public policy considerations cannot trump unambiguous statutes. As noted before, VanCleve's argument that the application of Wis. Stat. § 81.17 as applied here will stifle future settlement agreements ignores the clear statutory history of §81.17 and our previous decisions applying the statute. Parties should have adequate notice of the risks involved in entering into settlements, and it is incumbent upon the party entering into a Pierringer release to be aware of the risks associated with such an agreement and make settlement decisions accordingly. If we adopt VanCleve's policy argument, we would, in essence, abrogate the intent of § 81.17 and render the statute meaningless.

¶ 57. For the reasons set forth herein, the decision of the court of appeals is affirmed.

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

       The court of appeals correctly noted that "[a] Pierringer release operates to impute to the settling plaintiff whatever liability in contribution the settling defendant may have to non-settling defendants and to bar subsequent contribution actions the non-settling defendants might assert against the settling defendants." VanCleve v. City of Marinette, 2002 WI App 10, ¶ 3 n.1, 250 Wis. 2d 121, 639 N.W.2d 792 (Ct. App. 2001) (citing Pierringer v. Hoger, 21 Wis. 2d 182, 192-93, 124 N.W.2d 106 (1963)).

       All subsequent references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise indicated.

       Wisconsin Stat. § 81.17 states:
      Whenever damages happen to any person or property by reason of any defect in any highway or other public ground, or from any other cause for which any town, city, village or county would be liable, and such damages are caused by, or arise from, the wrong, default or negligence thereof and of any person, or private corporation, such person or private corporation shall be primarily liable therefore; but the town, city, village or county may be sued with the person or private corporation so primarily liable. If the town, city, village or county denies its primary liability and proves upon whom such liability rests the judgment shall be against all the defendants shown by the verdict or finding to be liable for damages; but judgment against the town, city, village or county shall not be enforceable until execution has been issued against the party found to be primarily liable and returned unsatisfied in whole or in part; on such return being made the defendant town, city, village or county shall be bound by the judgment. The unpaid balance shall be collected in the same way as other judgments.
      Wisconsin Stat. § 81.15 states in relevant part:
      If damages happen to any person or his or her property by reason of the insufficiency or want of repairs of any highway which any town, city or village is bound to keep in repair, the person sustaining damages has a right to recover the damages from the town, city or village. If the damages happen by reason of the insufficiency or want of repairs of a highway. .. [t]he amount recoverable by any person for any damages so sustained shall not exceed $50,000. The procedures under s. 893.80 shall apply to the commencement of actions brought under this section ....

       Wisconsin Stat. § 893.80(3) also caps recovery against a municipality at $50,000.

        See VanCleve, 250 Wis. 2d 121, ¶ 20. We recognize that Weis predates Pierringer.

       This statute provided in relevant part as follows:
      "If any damage shall happen to any person, his team, carriage, or other property, by reason of the insufficiency or want of repairs of any bridge, or sluiceway, or road in any town of this state, the person sustaining such damages shall have a right to sue for and recover the same against such town ... ."
      Revised Stats. 1849, Title VI, ch. 16, 103.

       895.045. Contributory negligence
      (1) Comparative negligence. Contributory negligence does not bar recovery in an action by any person or the person's legal representative to recover damages for negligence resulting in death or in injury to person or property, if that negligence was not greater than the negligence of the person against whom recovery is sought, but any damages allowed shall be diminished in the proportion to the amount of negligence attributed to the person recovering. The negligence of the plaintiff shall be measured separately against the negligence of each person found to be causally negligent. The liability of each person found to be causally negligent whose percentage of causal negligence is less than 51% is limited to the percentage of the total causal negligence attributed to that person. A person found to be causally negligent whose percentage of causal negligence is 51% or more shall be jointly and severally liable for the damages allowed.
      (2) Concerted action. Notwithstanding sub. (1), if 2 or more parties act in accordance with a common scheme or plan, those parties are jointly and severally hable for all damages resulting from that action, except as provided in s. 895.85(5).

       VanCleve argues here, like the parties argued in Weis, that this is a case among joint tort-feasors. Weis v. A.T. Hipke & Sons, Inc., 271 Wis. 140, 144, 72 N.W.2d 715 (1955). We rejected that argument in Weis because Wis. Stat. § 81.17 establishes successive liability. Id.

       It should be noted that the rules with regard to joint and several liability have been changed by recent amendments to Wis. Stat. § 895.045(1).

       The court of appeals correctly pointed out that "[i]t is VanCleve's responsibility to evaluate the effects of a Pierringer release and to determine whether the release is in her best interests." VanCleve, 250 Wis. 2d 121, ¶ 32.


source: Caselaw Access Project

author: NETTESHEIM, PJ.

license: Public Domain

text:
    Randall Schwartz, Petitioner-Appellant, Gayle J. Nelson, Petitioner, v. Wisconsin Department of Revenue and Wisconsin Tax Appeals Commission, Respondents-Respondents.
    Court of Appeals

      No. 02-0372.

      Submitted on briefs August 8, 2002.

    Decided September 11, 2002.

    2002 WI App 255
    (Also reported in 653 N.W.2d 150.)

      On behalf of the petitioner-appellant, the cause was submitted on the briefs of Randall Schwartz of Brook-field, and Gayle J. Nelson of Brookfield.
    On behalf of the respondents-respondents, the cause was submitted on the brief of James E. Doyle, attorney general, and F. Thomas Creeron III, assistant attorney general.
    Before Nettesheim, PJ., Anderson and Snyder, JJ.
   NETTESHEIM, PJ.

¶ 1. Randall Schwartz appeals from a circuit court order affirming a decision and order of the Wisconsin Tax Appeals Commission (the Commission). The Commission determined that $112,278 of a $175,000 payment Schwartz received for the sale of his interest in Global Fastener & Supply, Inc. (Global), was taxable income paid in exchange for a covenant not to compete. The Commission further determined that the remainder of the payment was nontaxable income paid in exchange for a release of Schwartz's personal injury claims. On appeal, Schwartz contends that: (1) the Commission erred in failing to follow, or give sufficient weight to, the Internal Revenue Service's (IRS) acceptance of Schwartz's allocation of the $175,000 payment; (2) the Commission otherwise erred in allocating the taxable and nontaxable portions of the payment; and (3) the Commission improperly denied his request for a rehearing. We reject Schwartz's arguments. We affirm the circuit court order upholding the Commission's decision and order.

FACTS

¶ 2. We take the relevant facts from the Commission's decision and order and from portions of the record made before the Commission. From 1985 until 1990, Schwartz was one of three shareholders of Global. Schwartz was also the principal salesperson for Global. In 1990, Schwartz came to believe that the other shareholders in Global, James Witt and Arthur Salani, were acting improperly and contrary to Global's best interests. As a result, Schwartz suffered anxiety and panic attacks. He continued to exhibit these symptoms for several years thereafter. Due to his condition, Schwartz was unable to work for Global from August 1990 until January 1991.

¶ 3. In January 1991, Schwartz, Witt, Salani and Global entered into a settlement and purchase agreement (Agreement) that was dated and effective as of September 15, 1990. Under the terms of the Agreement, Schwartz sold his interest in Global in exchange for $350,000. Global paid Schwartz $100,000 at the closing and executed a promissory note to Schwartz for the $250,000 balance. The Agreement provided that $175,000 of the $350,000 payment to Schwartz was allocated to his personal injury claims and his covenant not to compete. The Agreement provided as follows:

The parties shall allocate, for tax purposes, $175,000 (including $100,000 paid in cash at Closing) in consideration of the release by [Schwartz] of the possible 'claim for personal injury (and, therefore, such allocated amount shall be excludable as income for tax purposes in accordance with Internal Revenue Code section 104(a)(2) and the other relevant Code sections and Treasury regulations) and for the covenant not to compete.

As the above provision reveals, the Agreement did not specifically state how much of the $175,000 payment was allocated for the release of .Schwartz's personal injury claims and how much for his covenant not to compete.

¶ 4. The parties additionally executed a mutual release agreement and Salani and Witt also executed a directors' resolution, both of which addressed the $175,000 payment. Like the Agreement, neither of these documents specified how the payment was allocated between Schwartz's release of his personal injury claims and his covenant not to compete. Further, Global's own accounting books did not make any specific allocation regarding the payment.

¶ 5. All the parties to the Agreement honored their promises. Global satisfied the $250,000 note by payments to Schwartz of $8000 per month, consisting of $6139 in principal and $1861 in interest. Schwartz did not make any further claims against Global or Witt and Salani with regard to his personal injury claim, and he complied with the restrictions set out in the covenant not to compete.

¶ 6. On his 1991 Wisconsin income tax return, Schwartz attributed $10,000 of the $175,000 payment to the covenant not to compete and reported it as taxable income. He made this allocation based on his contention that the remainder of the payment represented compensation for his personal injury claims and that such payments are not taxable. He made a similar allocation on his 1991 federal income tax return.

¶ 7. In October 1993, the IRS notified Schwartz that it was examining his 1991 federal income tax return. Specifically, the IRS advised Schwartz that certain nonwage income he had reported might be subject to self-employment tax. The IRS asked Schwartz to provide additional information regarding this inquiry. Schwartz complied, and in November 1993, the IRS reported that its questions had been resolved and that Schwartz did not owe any further federal tax.

¶ 8. On April 4, 1994, the Wisconsin Department of Revenue (Department) issued an income tax assessment against Schwartz for 1989 through 1992. The largest adjustment was based on the Department's determination that all of the $175,000 payment should have been allocated to the covenant not to compete and therefore was fully taxable.

¶ 9. Schwartz filed a petition for redetermination with the Department objecting to the assessment. The Department rejected the petition and Schwartz, acting pro se, timely filed a petition for review with the Commission. At the scheduling conference, the Commission advised Schwartz that if he requested the Commission to issue subpoenas for any witnesses, it would do so. Later, Schwartz filed a list of his intended witnesses and documentary evidence in compliance with the scheduling order. At the hearing before the Commission, Schwartz defended his allocation of $10,000 of the $175,000 payment to his covenant not to compete.

¶ 10; In its decision and order, the Commission followed the approach taken in Kreider v. Commissioner of Internal Revenue, 762 F.2d 580 (7th Cir. 1985). There, like here, the parties' agreement failed to allocate a payment between a covenant not to compete and other items of compensation. The reviewing court nonetheless approved the tax court's approximation of the allocation so long as the payment was intended, in part, to compensate for the covenant not to compete and the payment was economically reasonable. See id. at 588-89. Applying the Kreider test, the Commission held that "[p]ayments to Mr. Schwartz in exchange for the Release [of the personal injury claims] are exempt pursuant to section 104(a)(2) of the Internal Revenue Code." However, the Commission also held that "$112,278 of the $175,000 payment — all of which was received by Mr. Schwartz in 1991 — is attributable to the covenant not to compete." The Commission's allocation was based on the amount of the payments that Schwartz had received pursuant to the agreement prior to March 1, 1991, the date the covenant not to compete expired. During this period of time, Schwartz had received $100,000 at the closing plus two months of principal payments pursuant to the promissory note for a total of $112,278. The Commission further calculated that the remaining amount, paid after March 1, 1991, was not attributable to the covenant not to compete and therefore was not taxable.

¶ 11. Schwartz petitioned for a rehearing under Wis. Stat. § 227.49 (1999-2000), arguing that the Commission had failed to honor its promise to subpoena witnesses on his behalf. In support, Schwartz relied on his letter to the Commission listing his proposed witnesses. The Commission rejected Schwartz's rehearing request. The Commission held that Schwartz's letter was merely a listing of his intended witnesses and documentary evidence in compliance with the scheduling order, not a request that the Commission issue subpoenas for the listed witnesses.

¶ 12. Schwartz, now represented by counsel, filed a timely petition for circuit court review. In that forum, Schwartz argued that only $9000 of the $175,000 was taxable income attributable to the covenant not to compete. The circuit court rejected Schwartz's argument and upheld the Commission's determination concluding "the Commission came to the closest approximation possible that is economically reasonable."

¶ 13. Schwartz, again acting pro se, now appeals the circuit court's order.

STANDARD OF REVIEW/BURDEN OF PROOF

¶ 14. On appeal, we review the decision of the agency — here, the Commission — not that of the circuit court. Port Affiliates, Inc. v. DOR, 190 Wis. 2d 271, 279, 526 N.W.2d 806 (Ct. App. 1994). Nonetheless, we value the circuit court's decision on the matter. See Scheunemann v. City of West Bend, 179 Wis. 2d 469, 475, 507 N.W.2d 163 (Ct. App. 1993). As to the standard of review, the Commission's findings of fact are governed by Wis. Stat. § 227.57(6): "If the agency's action depends on any fact found by the agency in a contested case proceeding, the court shall not substitute its judgment for that of the agency as to the weight of the evidence on any disputed finding of fact." However, we will set aside the agency's action if we find that it depends on any finding of fact that is not supported by substantial evidence in the record. Id. Substantial evidence is that degree of evidence which would allow a reasonable mind to reach the same conclusion as the agency. Port Affiliates, 190 Wis. 2d at 279.

¶ 15. As to the burden of proof, a tax assessment is presumed to be correct and the taxpayer has the burden to demonstrate error in the assessment. See Woller v. Dep't of Taxation, 35 Wis. 2d 227, 232, 151 N.W.2d 170 (1967).

DISCUSSION

1. Failure to Follow the IRS Determination

¶ 16. We first address Schwartz's argument that the Commission erred by failing to follow, or otherwise give proper weight to, the IRS's acceptance of his allocation of the $175,000 payment.

¶ 17. We begin by addressing the meager state of the record regarding this issue. The documentary record consists only of copies of two letters to Schwartz from the IRS. The first letter advised Schwartz that the IRS was examining his 1991 income tax return regarding some nonwage income that might be subject to self-employment tax. The letter asked Schwartz to provide certain information listed on the back of the letter. However, the copy of the letter that is in the record does not include the back of the letter. In the other letter, the IRS advises Schwartz that it has completed its review and "the questions have been resolved."

¶ 18. At the close of the hearing, the Commission set a briefing schedule. However, Schwartz failed to file a brief. The Department did file a brief, noting that Schwartz had failed to include the reverse side of the IRS's initial letter to him. The Department also noted that the IRS inquiry dealt with potential self-employment tax, not an income tax. This sparse record and Schwartz's failure to file a brief undoubtedly explain why the Commission's decision and order does not address this issue.

¶ 19. A similar situation exists with regard to the judicial review proceedings in the circuit court. Although the factual portion of Schwartz's brief to the circuit court alluded to the IRS inquiry, the legal portion of the brief never developed any argument regarding this matter. That undoubtedly explains why the circuit court's decision does not address this matter.

¶ 20. In summary, we do not have a Commission or circuit court ruling on the matter. As a result, we have nothing to review. On this threshold basis, we summarily affirm the circuit court order upholding the Commission's decision and order.

¶ 21. Alternatively, we also affirm on the merits for three reasons. First, the letters from the IRS do not establish that the IRS inquiry was related to the allocation of the $175,000 payment. Second, assuming the IRS inquiry addressed the allocation issue (as Schwartz contended in his testimony), the inquiry was made for purposes of determining Schwartz's self-employment tax, not for purposes of determining his income tax. Finally, even assuming that the IRS inquiry had income tax implications, we are not aware of any law, nor has Schwartz cited any, which requires the Commission to follow, or give sufficient weight to, determinations made by the IRS following an IRS inquiry or review.

¶ 22. We therefore examine the appellate issue based on the Commission's rationale, separate and apart from the IRS inquiry.

2. Deference Owed to the Commission

¶ 23. Although the parties' briefs do not address the degree of deference, if any, that we should accord the Commission's decision, we deem this an important threshold consideration, especially in light of the Commission's determination to adopt the decision in Kreider.

¶ 24. We accord great weight deference when the agency is charged by the legislature with the duty of administering a statute, the interpretation of the agency is one of long-standing, the agency employs its expertise or specialized knowledge in forming its interpretation, and the agency's interpretation will provide uniformity and consistency in the application of the statute. UFE Inc. v. LIRC, 201 Wis. 2d 274, 284, 548 N.W.2d 57 (1996).

¶ 25. We accord due weight deference when the agency has some experience in an area, but has not developed the expertise which necessarily places it in a better position to make judgments regarding the interpretation of the statute than a court. Id. at 286. Under this standard, we will not overturn a reasonable agency decision that furthers the purpose of the statute unless we determine that there is a more reasonable interpretation under the applicable facts than that made by the agency. See id. at 286-87.

¶ 26. Finally, we accord no deference when the legal conclusion reached by the agency is one of first impression or when the agency's position on the statute has been so inconsistent as to provide no real guidance. Id. at 285.

¶ 27. In this case, we do not employ the great weight deference standard. As our ensuing discussion will reveal, the Commission had not previously addressed how a payment should be allocated between a covenant not to compete and other claims when the agreement between' the parties is silent on the matter. Nor has any published Wisconsin case law addressed this question. Thus, the Commission was plowing new ground in this case. It follows then that the Commission's ruling is not one of long-standing.

¶ 28. For the same reason, we decline to employ the due weight deference standard. While the Commission has substantial experience in the area of taxation, it has not previously developed expertise regarding the particular question posed by this case — the legal standard for allocating a payment between a claim for personal injury and a covenant not to compete when the parties' agreement is silent on the matter. Moreover, that question does not tap into the Commission's expertise in tax matters. Rather, the question smacks more of a legal determination than a tax determination — a matter the courts are equally, or perhaps better, equipped to answer.

¶ 29. In summary, the test adopted by the Commission in this case was one of first impression, and the question did not tap into the specialized tax expertise of the Commission. We therefore employ the no deference standard in this case, and we answer the question on a de novo basis.

3. Allocation of the Payment

¶ 30. The issue on appeal involves the Commission's determination that $112,278 of the $175,000 payment was attributable to the covenant not to compete and constituted taxable income.

¶ 31. In making its determination, the Commission looked to Kreider. There, the taxpayers appealed a decision of the United States Tax Court allocating a $631,383.80 payment made upon the sale of their trucking company. The issue on appeal was whether the payment was made in consideration of the taxpayers' stock in the company, a covenant not to compete or compensation for personal services. Id. at 581. As in this case, the sales agreement was "completely silent as to the method of allocation." Id. at 583. As a result, the Tax Court reviewed the record and determined that one-third of the payment was allocable to compensation for services while two-thirds was allocable to the covenant not to compete. Id.

¶ 32. The taxpayers challenged the Tax Court's decision arguing that the covenant not to compete lacked economic substance. Id. at 588. The Kreider court rejected this argument, concluding that "some allocation of the . . . payment both to Mr. Kreider's services and to the covenant not to compete was both intended and economically reasonable. In making the actual allocation, the [tax] court made the closest approximation it could since complete accuracy was impossible." Id. at 589.

¶ 33. We agree with the Commission and adopt Kreider as the law in Wisconsin. We hold that when an agreement is silent as to the allocation of a payment between a covenant not to compete and other claims or compensation, the Commission may make a reasonable allocation so long as it is: (1) based upon credible evidence; (2) the parties intended a portion of the payment as compensation for the covenant not to compete; and (3) the payment is economically reasonable. Here, the Commission concluded that although the Agreement was silent as to the allocation of the $175,000 payment, the unambiguous language of the Agreement reflected the parties' intent that some portion of the $175,000 represented compensation for the release and some portion for the covenant not to compete. In determining the specific amount allocable to the covenant not to compete, the Commission turned to the evidence in the record.

¶ 34. The Commission concluded that it would be reasonable to allocate to the covenant not to compete the $112,278 paid to Schwartz under the Agreement prior to the expiration of the covenant on March 1, 1991. This amount consisted of the $100,000 payment made to Schwartz upon closing, plus two months of principal payments of $6139 pursuant to the promissory note.

¶ 35. In taking this approach, the Commission considered and expressly rejected Schwartz's contention that the amount allocable to the covenant not to compete should be based upon his monthly salary multiplied by the five and one-half month duration of the covenant not to compete. We agree with the Commission's reasoning that Schwartz's salary-based argument overlooks the particular value of his covenant not to compete under the facts of this case. The Commission found that in 1991, Global's gross income averaged more than $280,000 per month, producing a gross income of approximately 3.4 million dollars, and an ordinary income after expenses of approximately $244,000. Schwartz was Global's principal salesperson. The "noncompetiton" clause in the Agreement recognized the "great expense and effort" expended by Global in establishing its customer base and that Schwartz, "by virtue of employment with [Global], has had unique and extensive exposure to and personal contact with [Global's] customers." Given Global's monthly income, the Commission concluded that compensation for a covenant not to compete for a five-month period "could reasonably be pegged at $112,278." The evidence well supports the Commission determination that Schwartz's covenant not to compete would be of value in excess of Schwartz's salary over the duration of the covenant.

¶ 36. In summary, we uphold the Commission's selection of the Kreider test as the proper legal standard for allocating a payment between a covenant not to compete and other claims when the parties' agreement is silent on the matter of allocation. Under that test, we further uphold the Commission's determinations that the parties' intended a portion of the $175,000 as compensation for Schwartz's covenant not to compete and that the allocation of $112,278 to the covenant was economically reasonable.

4. Denial of Rehearing

¶ 37. Schwartz next argues that the Commission improperly denied his request for a rehearing. Schwartz's request was based on his contention that the Commission failed to subpoena two witnesses on his behalf. Wisconsin Stat. § 227.49(3) provides that a petition for rehearing will be granted by the agency "only on the basis of' material error of law or fact, or the discovery of new evidence.

¶ 38. During the scheduling conference, the Commission informed Schwartz that it would compel the appearance of these witnesses if requested. Thereafter, Schwartz wrote a letter to the Commission listing his proposed witnesses and his proposed documentary evidence. The Commission construed his letter to be a list of his proposed witnesses and documentary evidence pursuant to the scheduling order. Schwartz contends that this letter required the Commission to subpoena the witnesses listed in the letter.

¶ 39. In denying Schwartz's rehearing request, the Commission stated, "Mr. Schwartz did not ask the Commission to provide him with a subpoena or even mention that word in the letter .... [I]f Mr. Schwartz intended this letter to constitute a request for subpoenas ... he should have contacted the Commission when none were issued during the 39 days between the date of his letter and the date of trial." The Commission additionally noted Schwartz's representation that the witnesses would be "pleased" to testify on his behalf as an indication that the use of subpoenas was not indicated.

¶ 40. A petition for a rehearing pursuant to Wis. Stat. § 227.49 is addressed to the agency's discretion. See Village of Prentice v. Transp. Comm'n of Wis., 123 Wis. 2d 113, 121, 365 N.W.2d 899 (Ct. App. 1985). In this case, we deem the reasons given by the Commission for denying Schwartz's rehearing request to be reasonable and therefore a proper exercise of the Commission's discretion. On its face, Schwartz's letter was in response to, and in compliance with, the Commission's scheduling order, which required the parties to list their proposed witnesses and documentary evidence. In addition, the letter did not request the Commission to issue any subpoenas for the witnesses listed. Finally, Schwartz never complained prior to the hearing that the subpoenas had not been issued. And, while there was an exchange during the hearing between Schwartz and the presiding commissioner about the Commission's authority to issue subpoenas, this discussion did not concern the two witnesses who are the focus of Schwartz's appeal. Instead, Schwartz waited until he received an adverse result from the Commission before complaining that the Commission had not subpoenaed the witnesses listed in his letter. We see no misuse of discretion in the Commission's rejection of Schwartz's rehearing request.

CONCLUSION

¶ 41. As to the IRS inquiry, we hold that the record in this case does not establish that the IRS action was related to an inquiry regarding Schwartz's allocation of the $175,000 payment. Assuming that the inquiry was directed at the $175,000 payment, the inquiry concerned a potential self-employment tax, not a potential income tax assessment. Further assuming that the inquiry carried income tax consequences, the Commission was not required to abide by, or give sufficient weight to, the IRS's decision regarding Schwartz's allocation of the payment at issue.

¶ 42. In addition, we uphold the Commission's adoption of the Kreider "reasonable allocation" standard. Under that test, we further uphold the Commission's allocation of $112,278 to Schwartz's covenant not to compete as economically reasonable under the facts of this case.

¶ 43. Finally, we hold that the Commission did not err in the exercise of its discretion by rejecting Schwartz's request for a rehearing pursuant to Wis. Stat. § 227.49.

By the Court. — Order affirmed.

       Schwartz's former spouse, Gayle J. Nelson, was a party to the administrative and circuit court proceedings in this case. Following the circuit court proceedings, Schwartz, acting pro se, signed and filed the notice of appeal in this case on his and on Gayle's behalf. Pursuant to Jadair Inc. v. U.S. Fire Insurance Co., 209 Wis. 2d 187, 212-13, 562 N.W.2d 401 (1997), we previously held that Schwartz, as a nonattorney, was not authorized to file or sign the notice of appeal on Gayle's behalf. Consequently, we dismissed the appeal as to Gayle.

       The covenant not to compete limited Schwartz's activity with regard to Global's past and current customers and within Global's sales territory until March 1, 1991.

       The 1991 state and federal income tax returns were joint returns filed by Schwartz and his then wife. As we have noted, Schwartz's former wife is not a party to this appeal.

       All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       We also observe that the IRS letter was an inquiry, not an audit.

       We note that Schwartz objects to the Commission's use of Global's 1991 income in its analysis as he was not working for Global during that time. However, Schwartz does not offer any evidence as to Global's income in prior years or how the Commission's reliance on 1991 income would materially alter the result.

       In Village of Prentice v. Transportation Commission of Wisconsin, 123 Wis. 2d 113, 121, 365 N.W.2d 899 (Ct. App. 1985), the court of appeals addressed Wis. Stat. § 227.12(3) (1983-84), which currently is numbered Wis. Stat. § 227.49. Besides holding that a request for a rehearing is addressed to the agency's discretion, the court also held that the circuit court did not have jurisdiction to review a determination by the Transportation Commission of Wisconsin to conduct a rehearing because the order granting or denying a rehearing was not a "decision" eligible for judicial review within the meaning of Wis. Stat. § 227.15 (1983-84). Village of Prentice, 123 Wis. 2d at 121. However, that limitation (currently set out in Wis. Stat. § 227.52) does not apply to this case. Instead, the applicable statute is Wis. Stat. § 73.015(1) which permits judicial review of both decisions and orders of determinations made by the Tax Appeals Commission.


author: PETERSON, J.

text:
    Shanna Marie Van Dyn Hoven, deceased, by her Special Administrator, Steven Van Dyn Hoven, and Nancy Van Dyn Hoven, Plaintiffs-Appellants, v. Pekin Insurance Company, Defendant-Respondent.
    Court of Appeals

      No. 02-0722.

      Submitted on briefs August 27, 2002.

    Decided September 17, 2002.

    2002 WI App 256
    (Also reported in 653 N.W.2d 320.)

      On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of C.M. Bye and Tracy N. Tool of Bye, Goff & Rohde, Ltd., River Falls.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Michael P. Konz of Gabert, Williams, Konz & Lawrynk, LLP, Appleton.
    Before Cane, C.J., Hoover, PJ., and Peterson, J.

       Petition to review withdrawn 11-15-02.

   PETERSON, J.

¶ 1. Steven and Nancy Van Dyn Hoven appeal from a judgment and an order denying their motion for declaration of uninsured motorist coverage and dismissing their action. Their claim arose out of the murder of the Van Dyn Hovens' daughter, Shanna, by Kenneth Hudson when Hudson encountered Shanna as he was driving his truck. We conclude that the murder did not result from the "use" of Hudson's vehicle, as that term is used in the insurance policy. Therefore, we affirm the order and judgment.

FACTS

¶ 2. In the early evening of June 25, 2000, Shanna Van Dyn Hoven was jogging in Kaukauna. Hudson approached her in a truck, pushed her into the truck, stabbed her with a hunting knife and fled in the truck. Shanna was found dead at the scene.

¶ 3. Shanna was insured under her parents' automobile policy, issued by Pekin Insurance Company. The Pekin policy provided uninsured motorist coverage. The Van Dyn Hovens filed this action for damages against Pekin because they believed that Hudson was uninsured, and because they claimed the injuries arose from Hudson's use of a motor vehicle. They then filed a motion to declare uninsured motorist coverage.

¶ 4. The circuit court denied the motion, first noting that the Van Dyn Hovens did not sufficiently demonstrate that Hudson was uninsured. The court further held that because there was no causal connection between Shanna's injuries and Hudson's use of his truck, the injuries did not arise from the "use" of the truck. As a result, the court denied the Van Dyn Hovens' motion and entered a judgment in favor of Pekin dismissing the claim.

ISSUES

¶ 5. The Van Dyn Hovens appeal, presenting three arguments: (1) Shanna's death arose from the "use" of a vehicle; (2) the murder was an "accident" under the policy; and (3) they established that Hudson was uninsured. We conclude that Shanna's death did not arise from the use of a vehicle, so uninsured motorist coverage does not apply. As a result, we do not address the other issues.

STANDARD OF REVIEW

¶ 6. This appeal involves the interpretation of an insurance policy and therefore presents a question of law that we review independently. Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 810, 456 N.W.2d 597 (1990).

ANALYSIS

¶ 7. The applicable portion of the Pekin uninsured motorists coverage states:

A. We will pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury:"
1. Sustained by an "insured;" and
2. Caused by an accident.
The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle."

The Van Dyn Hovens argue that their damages arose directly from Hudson's use of the vehicle and are therefore covered by the Pekin policy.

¶ 8. While the term "use" is broad and should be given a liberal construction, it is not without limitation. Tomlin v. State Farm Mut. Auto. Ins. Co., 95 Wis. 2d 215, 225, 290 N.W.2d 285 (1980)." 'Use' as contemplated by an automobile liability policy means the use of a vehicle as such and does not include a use which is completely foreign to a vehicle's inherent purpose." Id.

¶ 9. In Tomlin, a police officer pulled over a car for erratic driving. When he approached the vehicle and reached inside to check for alcohol under the driver's seat, he was stabbed by the driver. Id. at 217. The supreme court held that the driver's act of stabbing the officer was not consistent with the inherent use of an automobile and was not the type of use reasonably contemplated by the parties to an insurance contract. Id. at 224-25.

¶ 10. Although Tomlin involved an automobile liability policy, we see no reason why its definition of "use" does not apply to uninsured motorist coverage as well. Here, Hudson stabbed Shanna in his truck. As in Tomlin, Hudson's acts do not constitute "use" sufficient to trigger insurance coveragdbecause such a use is not consistent with the inherent use of the vehicle.

¶ 11. The Van Dyn Hovens claim that an action tangentially related to transportation can still be related to the use of a vehicle. They cite Kemp v. Feltz, 174 Wis. 2d 406, 411-15, 497 N.W.2d 751 (Ct. App. 1993), 'where we held that illegally shooting at deer from a moving vehicle constitutes use of the vehicle for insurance purposes. However, we also noted in Kemp that using the truck as a mobile'hunting vehicle is consistent with the inherent use of a truck for transportation of hunters and the loading and removing of weapons. Id. at 412-14. Hudson's use of the vehicle in Shanna's death was not related to transportation and, therefore, was a use foreign to the truck's inherent use.

¶ 12. In order for uninsured motorist coverage to apply, the damages must arise out of the use of the uninsured motor vehicle. Hudson's actions were not consistent with the inherent use of a vehicle. As a result, there is no coverage under the uninsured motorist policy.

By the Court.-Judgment and order affirmed.

       The Van Dyn Hovens simply assert that Tomlin v. State Farm Mut. Auto. Ins. Co., 95 Wis. 2d 215, 290 N.W.2d 285 (1980), is inapplicable because that case dealt with third-party insurance and this deals with uninsured motorist coverage. However, they give no specific reasons why this distinction is material. ,

       Other jurisdictions have made similar rulings on this issue. The circuit court cited Currera v. Loyd, 531 So. 2d 544, 546 (La. 1988), where a girl was kidnapped, raped and murdered by a man "using" a pickup truck. The court held that kidnapping, rape and murder do not flow from the use of a vehicle and are not reasonable and natural consequences of the use of a vehicle. Similarly, the Virginia Supreme Court held in Travelers Ins. Co. v. LaClair, 463 S.E.2d 461, 463 (Va. 1995), that there is no "use" when a person is not utilizing a "vehicle as a vehicle." (Citation omitted.) The court noted that the word "use" does not contemplate utilization "as an outpost from which an assailant may inflict intentional injury . ..." Id. at 464.
      The Van Dyn Hovens cite Nationwide Mut. Ins. Co. v. Smelser, 563 S.E.2d 760 (Va. 2002), which distinguishes La-Clair. In Smelser, the victim, a pedestrian, was injured when a car passenger snatched her purse. The court concluded that the "force from the vehicle's movement directly contributed to her injuries." Id. at 763. We believe that distinction is inapplicable here because Shanna's injuries were not caused by the "force from the vehicle's movement."


author: HOOVER, PJ.

text:
    Mid-State Contracting, Inc., Plaintiff-Respondent, v. Superior Floor Company, Inc., Defendant-Appellant.
    Court of Appeals

      No. 02-0761-FT.

      Submitted on briefs July 26, 2002.

    Decided September 17, 2002.

    2002 WI App 257
    (Also reported in 655 N.W.2d 142.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Steven M. Anderson, Julie M. Falk and Ruder, Ware & Michler, a limited liability S.C., of Wausau.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of John P. Runde and Terwilliger, Wakeen, Piehler & Conway, S.C., of Wausau.
    Before Cane, C.J., Hoover, PJ., and Peterson, J.
   HOOVER, PJ.

¶ 1. Superior Floor Company, Inc., appeals a judgment awarding 18% interest on a jury verdict. Superior claims it never contracted with Mid-State Contracting, Inc., for an interest rate above the statutory limit of 5% and Mid-State unilaterally added the 18% rate at the bottom of its invoices to Superior. We determine that the interest rate line constitutes an additional term under Wis. Stat. § 402.207(1) not subject to any exception under Wis. Stat. § 402.207(2), and that the 18% rate is permissible. We therefore affirm the judgment.

Background

¶ 2. Superior contracted with Mid-State to install a baghouse dust collection system and truck loading system at Superior's plant. The payment terms were 20% down, 70% over the course of the project and 10% due thirty days after completion. There was no provision regarding interest in that contract, and Superior paid for these systems.

¶ 3. Sometime after the baghouse and truck systems were installed, Superior contacted Mid-State regarding at least fourteen other items that needed installation or repair. Superior claims these items were repairs to the original systems, which Superior alleges were improperly installed, and it therefore never agreed to be responsible for the costs. Mid-State suggests these items were unrelated to the original systems.

¶ 4. Mid-State submitted invoices for the additional items. At the bottom, each invoice states "1 h% Per Mo. Service Charge (18% Annually) Will be charged on all accounts past due." Superior refused to pay for the items, and Mid-State commenced an action to recover the amounts due plus interest. Superior counterclaimed, arguing breach of implied and express warranties.

¶ 5. A jury returned a verdict for Mid-State, finding against Superior on the counterclaim. Mid-State then moved for judgment on the verdict with interest. The court heard arguments regarding the interest rate, finding Advance Concrete Forms, Inc. v. McCann Constr. Specialties Co., 916 F.2d 412 (7th Cir. 1990), persuasive and allowing Mid-State to charge the 18% interest rate. The court also found that Superior should have known the provision was there and that it never objected. See id. The court entered judgment for $24,618.68 on the verdict plus $34,670.29 interest. Superior now appeals, arguing that Mid-State cannot unilaterally insert an interest rate and that application of 18% interest by the circuit court was therefore in error.

Standard of Review

¶ 6. Whether to allow interest on a verdict is a question of law that we review de novo. See Weber v. CNW Transp. Co., 191 Wis. 2d 626, 638, 530 N.W.2d 25 (Ct. App. 1995).

Analysis

¶ 7. Wisconsin Stat. § 138.04 sets the legal interest rate at 5% but allows parties to contract for a different rate. Superior argues that there was never a contract for the 18% rate. Mid-State, however, argues that its notation on the invoice is an "additional term" governed by Wis. Stat. § 402.207.

¶ 8. Wisconsin Stat. § 402.207 is part of our codification of the Uniform Commercial Code. It provides

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon....
(2) The additional terms are to be construed as proposals for additional to the contract. Between merchants!] such terms become part of the contract unless:
a. The offer expressly limits acceptance to the terms of the offer;
b. They materially alter it; or
c. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

¶ 9. The Seventh Circuit Court of Appeals interpreted Wis. Stat. § 402.207 in Advance Concrete. In that case, Advance sought to collect past due amounts plus interest from McCann. McCann argued that it had never paid interest and had never agreed to do so, even though there was a notation for interest at the bottom of Advance's invoice. Id. at 414. The court said the statute applies where there is a previous agreement between the parties and one or both sends written confirmation of terms discussed adding terms not discussed. Id. at 415.

¶ 10. An invoice easily falls within the seventh circuit's criteria for application of Wis. Stat. § 402.207. An invoice is a written confirmation of a request for work by one party, the performance of work by the second, and the cost of the work agreed upon. While interest may not have been discussed originally, adding it to the bottom of the invoice constitutes the addition of a term not previously discussed between the parties. Thus, § 402.207 applies to make the interest an additional part of an agreement between merchants unless one of the exceptions in § 402.207(2) applies.

¶ 11. The first exception, limitations on acceptance, does not apply here and in fact is not raised. By drawing from the official comments to the Uniform Commercial Code, the seventh circuit concluded that the second exception, material alteration, does not apply when interest rates or other terms of credit are added. Advance Concrete, 916 F.2d at 415. Thus, Wis. Stat. § 402.207 would be inapplicable in this case only if the third exception applies.

¶ 12. The third exception, Wis. Stat. § 402.207(2)(c) prohibits the unilateral addition of a term to a contract between merchants if notification of and objection to the term has been given or is given in a reasonable time frame. The trial court here noted that nothing in the record indicated Superior ever protested. Indeed, Superior points to no portion of the record that would suggest otherwise.

¶ 13. While we are thus satisfied that Wis. Stat. § 402.207 applies to allow Mid-State to collect interest at 18%, Superior raises several other arguments we choose to address. Superior alleges that it was never informed, verbally or in writing, about the interest rate and that failure to notify in writing violates Wis. Stat. § 138.04. The invoices contained the notation of the interest rate, and § 138.04 requires only that the interest rate, not an agreement about the interest rate, be clearly expressed in writing. Superior received at least fourteen invoices containing the 18% interest rate notation prior to litigation. The trial concluded these served to put Superior on notice, and we agree.

¶ 14. Superior claims it never agreed to pay for the repairs and that it refused to pay because it felt the repairs were necessary due to faulty workmanship of the systems for which they had already paid. However, neither of these excuses constitutes objection to the interest term. Additionally, these cannot now be valid defenses because the jury found Superior liable for the bills and declined to find Mid-State had failed to perform what it had promised.

¶ 15. Superior also argues that it never agreed to pay interest and never acquiesced in its assessment. However, Wis. Stat. § 402.207 goes directly to the issue of contracting for interest rate and eliminates the traditional "meeting of the minds" requirement Superior believes is mandatory. Additionally, the question is not whether Superior acquiesced to permit the interest charge, but whether it objected to stop it. See Advance Concrete, 912 F.2d at 416. Superior did not object, so this argument fails as well.

¶ 16. Finally, Superior argues that Advance Concrete is distinguishable. In that case, the holding was based on the invoice as well as a past course of dealing where McCann had been advised orally and in writing about the interest rate; McCann was aware of the interest charges; McCann failed to formally protest; and McCann knew of the interest but continued to buy items on credit. Id.

¶ 17. We are not persuaded that Advance Concrete is so distinguishable as to be inapplicable. We have already determined that Superior was advised in writing when it received invoices from Mid-State, and the trial court held that Superior should have been aware of the interest charges. Additionally, there is nothing suggesting that Superior formally protested, and much as McCann continued to buy .on credit, Superior continued to call on Mid-State for parts and service. Therefore, the judgment is affirmed.

By the Court. — Judgment affirmed.

       This is an expedited appeal under Wis. Stat. Rule 809.17. All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       See Wis. Stat. § 138.04 for codification of the 5% rate.

       The court also awarded costs.

       Superior also argues that application of 18% interest was inappropriate because Mid-State "slept on its rights" by never billing the dollar amount of the finance charges on any of the invoices. However, this waiver argument is first addressed in the reply brief. If an appellant fails to discuss an alleged error in its main brief, it may not do so in the reply brief. In re Estate of Bilsie, 100 Wis. 2d 342, 346 n.2, 302 N.W.2d 508 (1981). We therefore decline to address this argument.

       We note that the invoices in question are for both goods and services. Ordinarily, a court determines whether a mixed contract for goods and services is subject to Wis. Stat. ch. 402 (the U.C.C.) by considering whether the contract is for goods with labor incidentally involved or for services with goods incidentally involved. See Biese v. Parker Coatings, 223 Wis. 2d 18, 25, 588 N.W.2d 312 (Ct. App. 1998). While we are aware that the applicability of ch. 402 could therefore be challenged on this ground, the trial court determined ch. 402 to be applicable and Mid-State argued its case on that assumption. Superior never argued that ch. 402 was inapplicable, either in its main brief or its reply. See Charolais Breeding Ranches, Ltd. v. FPC Secs. Corp., 90 Wis. 2d 97, 109, 279 N.W.2d 493 (Ct. App. 1979) (arguments not refuted deemed admitted). Moreover, it is a well-established rule in Wisconsin that appellate courts need not and ordinarily will not consider or decide issues that are not specifically raised on appeal. Waushara County v. Graf, 166 Wis. 2d 442, 451, 480 N.W.2d 16 (1992). Therefore, we assume for the purposes of this decision that the parties' contract was principally for the sale of goods.

       Mid-State asserts and Superior does not protest that both are merchants under the statute.

       Other jurisdictions have applied their local codifications of the U.C.C. to reach the same result, allowing sellers to collect interest at rates specified on invoices or other writings even though such a rate was not previously contracted for among the parties. See, e.g., Permian Petrol. Co. v. Petroleos Mexicanos, 934 F.2d 635, 654 (5th Cir. 1991); Redlon's, Inc. v. Gilman, Inc., 485 A.2d 661, 662 (Me. 1984); Offen, Inc., v. Rocky Mtn. Construc

        tors, 765 P.2d 600, 601 (Colo. Ct. App. 1988); Herzog Oil Field Serv. v. Otto Torpedo Co., 570 A.2d 549, 551 (Pa. Super. Ct. 1990).

       We therefore decline to analyze the issue. See State v. Marshall, 2002 WI App 73, ¶ 19, 251 Wis. 2d 408, 642 N.W.2d 571.

       Wisconsin Stat. § 138.04 states:
      The rate of interest upon the loan or forbearance of any money, goods or things in action shall he $5 upon the $100 for one year and according to that rate for a greater or less sum or for a longer or a shorter time; but parties may contract for the payment and receipt of a rate of interest not exceeding the rate allowed in ss. 138.041 to 138.056, 138.09 to 138.12, 218.0101 to 218.0163, or 422.201, in which case such rate shall be clearly expressed in writing.