author: BROWN, J. NETTESHEIM, EJ.

text:
    Village of Lannon, Plaintiff-Respondent, v. Wood-Land Contractors, Inc., Defendant-Appellant, Mary L. Barnekow, Defendant.
    Court of Appeals

      No. 02-0236.

      Submitted on briefs October 10, 2002. —
    Decided December 26, 2002.

    2003 WI App 7
    (Also reported in 659 N.W.2d 95.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Robert F. Klaver, Jr. and James J. Carrig of Niebler, Pyzyk, Klaver & ^Wagner LLP of Menomonee Falls.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Mark G. Blum of Hippen-meyer, Reilly, Moodie & Blum, S.C. of Waukesha.
    Before Nettesheim, EJ., Brown and Anderson, JJ.

       Petition to review granted 4-22-03.

   BROWN, J.

¶ 1. Wisconsin allows certain property to be exempt from general property taxes. One of these exemptions is for logging equipment. Wisconsin Stat. § 70.111(20) (1999-2000), entitled "Logging Equipment," gives an exemption for "[a]ll equipment used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products." Wood-Land Contractors, Inc., is in the business of clearing land for developers. Incidental to its business, it cuts trees, removes them from the developers' land, produces logs, firewood and wood chips from these trees and sells the products. The Village of Lannon sought to tax Wood-Land's tree cutting equipment. Wood-Land refused to pay the tax and the Village sued. We agree with the trial court that the statute was designed to give an exemption for those systematically involved in the logging business, not to those who incidentally cut logs and sell the products as a small part of an altogether different kind of business. We affirm the trial court's judgment that Wood-Land must pay taxes on its tree cutting equipment.

¶ 2. This case is here on review of a summary judgment that was granted after the parties agreed to the undisputed facts. The facts are as follows: WoodLand is a contractor that clears land for developers. As part of its operations, it removes all of the timber from the site and either processes it at the site before removal or removes it to its facilities where the trees are turned into logs or firewood. Wood-Land owns approximately 1.3 million dollars in equipment. In 2001, Wood-Land had total sales of $749,697. Of this total, $666,150 came from "construction sales" and the remainder came from the sale of logs, firewood and wood chips. Thus, Wood-Land's sale of commercial forest products represents less than fifteen percent of its total sales. For the tax year 2000, the Village assessed personal property taxes of $15,398.63, which Wood-Land refused to pay.

¶ 3. Wood-Land's position before the trial court was straightforward. It noted that it cuts trees, the trees are cut to clear land and the trees are then allocated for commercial use of forest products. Therefore, Wood-Land asserted that it came within the exemption. The trial court did a statutory construction analysis. It gave special emphasis to the word "for" in Wis. Stat. § 70.111(20) as suggested by the Village. It consulted Black's Law Dictionary and Webster's Third New International Dictionary regarding the word "for" and determined that, in the context of the statute at hand, "for" means "for the purpose of' or "for the reason of." The trial court then concluded that because WoodLand cuts trees both "for the purpose of' clearing land for its customers and also "for the purpose of' producing forest products, and because the production of forest products was not the "primary purpose" of such activity, the exemption should be denied. The trial court relied upon this court's opinion in Village of Menomonee Falls v. Falls Rental World, 135 Wis. 2d 393, 400 N.W.2d 478 (Ct. App. 1986). The trial court saw this case as establishing the law that unless the primary purpose of the business is one that the exemption is designed for, the exemption may not apply, even if — incidentally—the business might satisfy the statute. From this judgment, Wood-Land has appealed.

El-53

¶ 4. Our first order of business is to construe the statute. Statutory construction is a question of law. Wis. Cent. Ltd. v. DOR, 2000 WI App 14, ¶ 9, 232 Wis. 2d 323, 606 N.W.2d 226. Therefore, we review the statute de novo. Id. In so doing, however, we value the trial court's opinion. Because this is a tax exemption case, the burden of establishing entitlement rests with the taxpayer. Friendship Village of Greater Milwaukee, Inc. v. City of Milwaukee, 181 Wis. 2d 207, 219, 511 N.W.2d 345 (Ct. App. 1993). Exemption statutes are strictly construed and must be clear and express. State ex rel. Dane County Title Co. v. Bd. of Review of City of Madison, 2 Wis. 2d 51, 61, 85 N.W.2d 864 (1957). If doubt exists, the doubt is resolved against the taxpayer. See Friendship Village, 181 Wis. 2d at 220. In analyzing a tax exemption claim, the taxpayer must show that the proffered construction is supported by clear evidence of legislative intent. Owens-Illinois, Inc. v. Town of Bradley, 132 Wis. 2d 310, 314, 392 N.W.2d 104 (Ct. App. 1986). The legislative intent is derived by giving the statutory language its ordinary and accepted meaning. Id. In the absence of a statutory definition or case law to define terms within the statute, the common and generally understood meaning of the term should be applied. State v. City of Madison, 55 Wis. 2d 427, 433, 198 N.W.2d 615 (1972).

¶ 5. Before we begin our statutory construction of the exemption statute, we point out that we will not consider disputed language in a statute in isolation, but in the context of the entire statute. Town of Avon v. Oliver, 2002 WI App 97, ¶ 7, 253 Wis. 2d 647, 644 N.W.2d 260, review denied, 2002 WI 109, 254 Wis. 2d 263, 648 N.W.2d 478 (Wis. June 11, 2002) (No. 01-1851). Rules of grammar and punctuation should not be applied at the expense of a natural, reasonable reading of statutory language, taking into account the context in which it appears and the purpose of the statute, especially when the result would be an expansion or contraction of the statute contrary to its terms. Peterson v. Midwest Sec. Ins. Co., 2001 WI 131, ¶ 23 n.7, 248 Wis. 2d 567, 636 N.W.2d 727.

¶ 6. We begin our analysis with the title. Although the title is not part of the statute and cannot defeat the language of the law, it is persuasive evidence of statutory interpretation. Mireles v. LIRC, 2000 WI 96, ¶ 60 n.13, 237 Wis. 2d 69, 613 N.W.2d 875. The title is "Logging Equipment." As stated by the Village, there is no case in Wisconsin defining the term. Nonetheless, we may resort to a recognized dictionary in order to gain understanding as to the common and generally understood meaning of the term. Falls Rental World, 135 Wis. 2d at 397. We have found cogent definitions of "logging" in both Black's Law Dictionary and Webster's Third New International Dictionary. We will italicize what we consider to be important as regards this case. Black's Law Dictionary defines "logging" as an industry which:

[ijncludes felling and preparation of logs for transport, log assemblage, and main log haul; it includes also production of large quantities of pulpwood, cross ties, poles, piling, mine timbers, veneer logs, bolts and miscellaneous other forms. (Citation omitted.)

Black's Law Dictionary 1091 (4th ed. 1968).

¶ 7. Webster’s Third New International Dictionary defines "logging" as:

[T]he occupation of felling trees and cutting them up into logs and transporting the logs to sawmills or to a place of sale. (Emphasis added.)

Webster's Third New International Dictionary 1330 (1993).

¶ 8. From these definitions, we see that the statute applies to a specific genre known as the logging industry, an industry involved in the systematic cutting and transporting of logs for eventual commercial use. We emphasize the word "systematic" because it separates those in the logging business from those who incidentally cut trees as part of some other business.

¶ 9. The logging industry has equipment which, the statute says, is used to cut trees, to transport trees in logging areas or to clear land for the commercial use of forest products. Wood-Land has not asserted that its employees cut and transport trees in logging areas. Therefore, in order to come within the purview of the statute, Wood-Land focuses on the phrase "to clear land of trees for the commercial use of forest products." It claims that its equipment is used for such purpose.

¶ 10. At trial, the parties, and ultimately the trial court, focused on the term "to clear land of trees for the commercial use." As we explained at the outset, the Village construed the phrase to mean that the commercial use of forest products must be the primary reason why the land is being cleared. Wood-Land, on the other hand, noted that the word "primary" is not in the statute and asserted that it does clear land and the trees that are cleared are processed for commercial use.

¶ 11. In determining whether the trial court correctly construed the phrase, we broaden the question a bit. Instead of concentrating on the term "to clear land of trees for the commercial use," we add the last part of the phrase and construe the term "forest products" as part of our interpretation of the whole phrase. In other words, we will review the following phrase, "to clear land of trees for the commercial use of forest products." In our view, the term "forest products" is a meaningful part of the phrase, especially in relation to the term we have earlier defined, logging equipment. We observe that the legislature did not write into the statute the term "to clear land of trees for the commercial use of felled trees." It specifically and expressly used the term "forest products." What is a "forest product?" Again, Webster's helps us out. A forest is:

[A] dense growth of trees and underbrush covering a large tract of land.

Webster's Third New International Dictionary 890 (1993).

¶ 12. We surmise that most Wisconsinites would agree that this is the common and generally understood meaning of the term. A reasonable person would also not think of a tree standing in front of a residential lawn as a potential "forest product."

¶ 13. Again, we cannot take words in isolation, but must look to the relevant language in the whole statute. When we do, we see that this exemption applies to the logging industry, to those who are in the business of cutting and transporting trees in logging areas or who are in the business of clearing forest land for the express purpose of using the fruits of their labor for eventual commercial use. Under this definition, WoodLand does not qualify. Its business is to clear land for the purpose of giving developers what they want: land free from obstructions. That is what it gets paid for. While Wood-Land may incidentally fell trees as part of its business, it does not cut and transport from logging areas. And it does not go into a forest with the express purpose in mind of clearing land "for the purpose of' commercially using the felled trees. Any incidental value it gets from commercially selling the felled trees it carries from developers' property is collateral to its main occupation. Wood-Land is not engaged in the systematic occupation of logging.

¶ 14. While we do not think the statute is ambiguous, we may refer to legislative history in support of our construction. State v. Timmerman, 198 Wis. 2d 309, 321 n.3, 542 N.W.2d 221 (Ct. App. 1995). We note that in one of the drafts of the statute at hand, 1983 A.B. 38 stated:

All equipment used to cut trees, for lumber to transport trees in logging areas or to clear land of trees in lumbering.

While the last part of the statute was changed to say "for the commercial use of forest products," we think the change still refers to the lumbering or logging industry. Wood-Land, plainly and simply, is not engaged in clearing the land for lumbering.

¶ 15. The parties spend much of the time in their briefs arguing about the meaning of Falls Rental World. The case is applicable, but not for the reason submitted by the Village, which reasoning was adopted by the trial court. In Falls Rental World, a rental center sought an exemption for its stock, claiming that it qualified as "merchants stock-in-trade." Falls Rental World, 135 Wis. 2d at 395. We held that even though worn-out rental equipment might be moved out of stock and sold, the real purpose of having the stock was to rent it out, not to turn the product over. Id. at 398. We held that the statute was designed to provide an exemption for merchants who have stock on the shelves for a short time with the intent of selling the items. See id. Since the taxpayer in Falls Rental World was selling a service, not a product, its "stock-in-trade" was the performance of its goods and equipment. Id. Thus, we looked to the kind of business that the legislature intended to grant an exemption to and found it within the plain meaning of the statute. We did not adopt a "primary purpose" test. Here, just as the legislature did not intend to provide an exemption for businesses such as Falls Rental, it likewise did not intend to provide an exemption for businesses such as Wood-Land.

¶ 16. But even though Falls Rental World cannot he cited for the proposition that we look to the primary purpose rather than the incidental purpose of the taxpayer, the trial court's reasoning still makes perfect sense. We are convinced that the legislature crafted a narrow exemption for the logging industry whose existence is based upon cutting forest products in logging areas or cutting and clearing land in forests so that it can use the fruits of its labor for some commercially viable use. The legislature did not intend to grant this exemption to businesses outside the logging industry. So, even if Falls Rental World did not establish a "primary purpose test," we do. The bottom line is we must ask ourselves the purpose for which the tax exemption was granted. If it was for a specific industry, then all of those who incidentally may come within the statute, but who are not part of that industry do not get the exemption.

¶ 17. While there are no prior cases in Wisconsin adopting the "primary purpose test," we note that the test is not applied unless we are convinced that the legislature meant to give an exemption to a narrowly tailored business. If so, then those outside that business do not get the exemption even if they can argue that the wording of the statute includes them. As such, this case is not the first time a Wisconsin appellate court has adopted a similar rationale. In Landish Malting Co. v. DOR, 98 Wis. 2d 496, 498, 297 N.W.2d 56 (Ct. App. 1980), the supreme court read Wis. Stat. § 70.11(27) as allowing an exemption for business machinery used in manufacturing tangible personal property. Landish, 98 Wis. 2d at 498. The Department of Revenue contended that the disputed items of property, attemporators, kilns and malt elevators, were "buildings." Id. at 498-99. The court rejected the physical appearance test in favor of a "function and use" test. Id. at 506. Under that test, the central question was whether the structure is one "whose utility is principally and primarily a significantly contributive factor in the actual manufacture or production of the product itself." Id. The same test was applied in another case, DOR v. Greiling, 112 Wis. 2d 602, 607, 334 N.W.2d 118 (1983). That case involved greenhouses. Id. at 603. In both cases, the court looked to the legislative purpose for the exemption — to allow an exemption for components that are actively involved in the making of the product itself. In both cases, the court allowed the taxpayers to come under the exemption because they satisfied the primary purpose of the legislature's intent. Thus, in our view, these two cases provide the foundation for our decision in this case. The primary purpose of the statute is to give an exemption to those systematically engaged in the logging industry. Wood-Land does not qualify.

¶ 18. Even if we are wrong in our construction of the law and even if Wood-Land's construction of the statute is reasonable, at the very most, all this does is make the statute ambiguous. Doubt still remains because our construction is just as reasonable. Long ago, our supreme court wrote about what we do when there is doubt with regard to a taxation exemption statute. In Mitchell v. City of Horicon, 264 Wis. 350, 352, 59 N.W.2d 469 (1953), the court wrote:

Practical construction, it is true, has its place in the interpretation of statutes whose meaning is doubtful. The trouble with that argument here is that it is a fundamental rule of taxation that, if there is doubt, the doubt must be resolved against the party claiming an exemption.

¶ 19. We are satisfied that our construction is correct and gives vitality to the idea that the purpose of the statute was to provide a narrow exemption for Wisconsin's logging industry. Alternatively, even if Wood-Land's construction is a reasonable one, ours is equally so and all doubts are resolved in favor of the taxing authority. We therefore affirm the trial court's judgment ordering that Wood-Land pay taxes on its land clearing equipment.

By the Court. — Judgment affirmed.

NETTESHEIM, EJ.

¶ 20. (dissenting). I agree with the majority that Wis. Stat. § 70.111(20) requires that Wood-Land be primarily engaged in a logging operation in a forest setting in order to qualify for the statutory tax exemption. However, I disagree with the majority's conclusion that the summary judgment record entitles the Village to summary judgment. Instead, I see competing reasonable inferences on the question of whether Wood-Land's primary business activity is logging as contemplated by the statute or the clearing of land with timbering as an ancillary activity. I would reverse and remand for a trial on that question. Therefore, I respectfully dissent.

¶ 21. Wisconsin Stat. § 70.111(20) exempts the following property from general property taxes:

All equipment used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products.

¶ 22. Both parties moved for summary judgment. The Village did not dispute that Wood-Land harvests trees and then processes the trees into wood byproducts for commercial use. However, the Village contended that Wood-Land's primary business activity was to clear land for development and that Wood-Land's timbering operation was merely incidental to that primary activity. Wood-Land argued that the clearing of land is an obvious consequence of any timbering operation, and that its primary business activity was logging.

¶ 23. The Village's claim for summary judgment rested on two evidentiary themes: (1) certain advertis-ings promoting Wood-Land as a tree-clearing and grubbing operation, and (2) financial records showing that Wood-Land reaped more of its income from its logging and clearing operations than from its sale of timber by-products.

¶ 24. Against this evidence, Wood-Land offered the affidavit of Steven Barnekow, a Wood-Land officer and employee, who offered the following description of Wood-Land's business operation:

The business of Wood-Land Contactors Inc. is an integration of the cutting of trees at the lands of others, who contract for this service, the clearing of such lands of trees, and Wood-Land's commercial processing thereafter of the cut trees into forest products for sale to others at profit.
At its operations site Wood-Land Contractors Inc. also has dedicated areas for the seasoning and processing of cut trees into commercial forest products.

Barnekow's affidavit goes on to describe the machinery that Wood-Land uses to perform its timbering operations. These include a felling machine with a bar saw attachment which enables the operator to seize a tree with a girth up to thirty-three inches and a height of eighty feet or greater. For smaller trees, Wood-Land uses more conventional timbering machinery: skid-sters with front-end attachments that grasp trees by the trunk, holding them upright, with a shear at the base; brush hogs; and chain saws.

¶ 25. Wood-Land transports some of the felled trees to an on-site chipper machine within the logging area for processing into wood chips. Other trees are either loaded onto log racks and hoisted by hook truck or trailer, or are loaded directly onto log trucks or pup trailers and transported to Wood-Land's off-site operations facility for processing. Barnekow described this processing operation as follows:

Saw logs in the logging industry refer to sections of quality trees, (e.g. walnut, maple, white spruce), cut to 8 to 20 foot lengths, suitable for sale to lumber mills for their milling of the logs into boards, veneer or similar product for wholesale or retail sale.
Wood-Land regularly, and as part of its business operations, cuts sections of such felled trees into commercially suitable lengths, for the sale of them as saw logs to lumber mills. In the year 2000 Wood-Land sold saw logs at contract prices totaling $36,452. In the year 1999, the total was $52,050.
Trees of less than saw log quality are processed by Wood-Land into fireplace/wood burning stove firewood.

Other trees not suitable for conversion to saw logs or firewood are processed into whole tree wood chips. This material is then sold for commercial use and WoodLand advertises such products for sale.

¶ 26. Barnekow also explained what Wood-Land does not do:

Wood-Land does not engage in landscaping. In cutting trees and clearing trees from land, it undertakes no design or planning work, no grading, no terra-forming, no undertakings regarding subsequent plantings, land features, structures or uses of the land.... How the land looks or is used after Wood-Land's work is not part of its business.

¶ 27. The trial court's findings essentially track Barnekow's summary judgment affidavit. The trial court described Wood-Land's business activity as follows:

Wood-Land clears trees from the lands of others under contract. It then processes the trees into logs, firewood, and wood chips which it advertises for sale and sells. This processing includes machining of the wood at the removal site and back at Wood-Land's yard. Wood-Land often clears land that is to be developed or used by others for purposes other than further tree cultivation. But Wood-Land does not grade, prepare, plan, or involve itself in any activity other than the removal of trees from the land and subsequent processing trees into logs, firewood, and chips.
It is beyond dispute that much of Wood-Land's equipment is used to "cut trees," to "transport trees in logging areas," or to "clear land of trees." It is also clear that the logs, firewood, and wood chips produced from the trees and sold by Wood-Land are forest products which are commercial in use.

¶ 28. Despite these findings, the trial court agreed with the Village's argument that Wood-Land did not qualify for the exemption because Wood-Land's primary business purpose was to clear land for development, not to convert the harvested timber into commercial products. On this basis, the trial court awarded summary judgment to the Village. The majority upholds that ruling. I disagree.

¶ 29. For purposes of this dissent, I will allow that the evidence cited by the Village demonstrates a prima facie case for summary judgment. See Jones v. Sears Roebuck & Co., 80 Wis. 2d 321, 326-27, 259 N.W.2d 70 (1977). Therefore, I turn to the next step in summary judgment methodology — whether the evidence offered by Wood-Land created a material issue of fact. See Transp. Ins. Co. v. Hunzinger Constr. Co., 179 Wis. 2d 281, 291, 507 N.W.2d 136 (Ct. App. 1993).

¶ 30. The majority places great weight on the fact that Wood-Land's timbering operation serves to clear the land on which the operation is conducted. However, Wis. Stat. § 70.111(20) does not negate the exemption if the effect of the logging operation is to clear land. As a matter of fact, the statute expressly envisions the clearing of land: "to clear land of trees for the commercial use of forest products." Id. Indeed, I have difficulty envisioning a situation where a logging operation will not result in the clearing of land.

¶ 31. The majority also says, "[Wood-Land's] business is to clear land for the purpose of giving developers what they want: land free from obstructions. That is what it gets paid for." Majority at ¶ 13. This reasoning fails on two fronts. First, as I have already noted, the statute contemplates that the clearing of land will he a consequence of a logging operation. In short, WoodLand does exactly what the statute envisions: "clear land of trees for the commercial use of forest products." Wis. Stat. § 70.111(20). Second, I fail to see how the motives of the land owners factor into the statutory analysis. The statute requires an examination of WoodLand's primary reason for the use of its logging equipment, not an examination of the land owners' motives for wanting the timber removed and their lands cleared.

¶ 32. The majority also concludes that because some of Wood-Land's customers want their land cleared of timber and because Wood-Land satisfies that need, Wood-Land is not engaged in the iogging business for purposes of Wis. Stat. § 70.111(20). But in making that conclusion the majority fails to address Barnekow's affidavit which contends that while land clearing is an obvious consequence of timbering, it is not the primary business function of Wood-Land. I conclude that the summary judgment record supports the competing inferences drawn by both parties in this case and that those inferences are reasonable. As such, this case should go to trial.

¶ 33. Moreover, I fear that the majority has looked at the evidence only from the standpoint of the Village. For instance, the majority says, "We are convinced that had Wood-Land in fact claimed that it was in the logging business, it would have made that claim in the trial court and asked for a trial to prove it." Majority at ¶ 9 n.2. However, Barnekow's affidavit establishes that Wood-Land is engaged in a classic logging operation. Wood-Land owns and operates sophisticated machinery uniquely designed for logging. Using this machinery, Wood-Land harvests timber, which results in the clearing of lands. Wood-Land then transports the timber to either its on-site or off-site machinery for processing into saw logs, firewood and wood chips, which are sold commercially. Barnekow's description of Wood-Land's operations reflects the very scenario envisioned by Wxs. Stat. § 70.111(20), which exempts equipment used "to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products."

¶ 34. The majority also holds that Wood-Land is not "involved in the systematic cutting and transporting of logs for eventual commercial use." Majority op. at ¶ 8. Therefore, according to the majority, Wood-Land falls into the category of those "who incidentally cut trees as part of some other business." Id. However, as indicated above, Barnekow's affidavit demonstrates that Wood-Land's business model is a logging operation.

¶ 35.- The majority also says that Wood-Land's operations are not conducted in a forest setting. But here again, the evidence allows for competing reasonable inferences. The fact that Wood-Land has advertised as a tree clearing operation might support the argument that its principal business operation is the clearing of land. However, other of Wood-Land's advertising promotes the commercial wood products resulting from its timbering operation. Moreover, the use of a felling machine sufficient to harvest 80 foot trees, skidsters with grapling attachments, brush hogs, and a saw milling operation capable of producing eight- to twenty-foot saw logs for further sale to the industry hardly suggests an operation that harvests, in the words of the majority, "tree[s] standing in front of a residential lawn." Majority at ¶ 12.

¶ 36. The resolution of this case rests, in part, on Wood-Land's primary business intent. Does Wood-Land exist to provide land-clearing services or does it exist to perform logging operations within the meaning of Wis. Stat. § 70.111(20)? Intent is a question that does not lend itself to summary judgment methodology. Lecus v. Am. Mut. Ins. Co., 81 Wis. 2d 183, 190, 260 N.W.2d 241 (1977) (the issue of intent is not one that properly can be decided on a motion for summary judgment). Moreover, on summary judgment, the burden is on the moving party to establish the absence of a genuine disputed issue as to any material fact. Kraemer Bros., Inc. v. U.S. Fire Ins. Co., 89 Wis. 2d 555, 565, 278 N.W.2d 857 (1979). As such, it was the Village's obligation to demonstrate a right to summary judgment "with such clarity as to leave no room for controversy." Id. at 566. Finally, the court must view the evidence, or the inferences to be drawn therefrom, in a light most favorable to the party opposing the motion. Id. at 567.

¶ 37. Bearing these black letter law principles of summary judgment in mind, I would hold that the summary judgment record reveals competing reasonable inferences in favor of both parties as to WoodLand's primary business purpose and intent.

¶ 38. Alternatively, the majority says that even if its analysis of the summary judgment record is wrong, the Village nonetheless prevails in this case because tax exemption statutes are to be construed against the party claiming the exemption. Majority at ¶ 18.1 fully accept this rule, and I further agree that it has a role to play in this case. But I contend that the majority has the cart before the horse in applying the rule at this pretrial stage of the proceedings. When applying a rule of statutory construction to a set of facts, the court must first know what the facts are. Instead of applying the rule at summary judgment where the evidence allows for competing reasonable inferences as to whether Wood-Land is entitled to the statutory exemption, I would submit that question to a jury together with the jury instruction regarding the presumption.

¶ 39. I would reverse the trial court's grant of summary judgment to the Village and remand for a trial on the question. Therefore, I respectfully dissent.

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

       The dissent contends that we should remand so that Wood-Land can have the opportunity to put into evidence that it is, in fact, in the logging business. But Wood-Land had the statute in its hands when it applied for summary judgment. It agreed that all of the facts were undisputed. In its brief-in-chief, it did not ask for a trial, but asked for a decision favoring it as a matter of law. We are convinced that had Wood-Land in fact claimed that it was in the logging business, it would have made that claim in the trial court and asked for a trial to prove it.

       The wording of Wis. Stat. § 70.111(20) presents a number of grammatical problems. First, it is not clear whether the prepositional phrase "in logging areas" modifies only the immediate preceding phrase "to transport trees" or also the earlier phrase "to cut trees." In addition, it is not clear whether the concluding prepositional phrase "for the commercial use of forest products" modifies only the immediate preceding phrase "to clear land of trees" or all of the preceding phrases. These uncertainties did not surface in the trial court because the discussion in that forum was whether Wood-Land's "primary" business activity was logging.

       In making its ruling, the trial court relied on Village of Menomonee Falls v. Falls Rental World, 135 Wis. 2d 393, 400 N.W.2d 478 (Ct. App. 1986). There, a rental company occasionally sold some of its products that were no longer useable as rental property or when a rental customer would ask to purchase a product. Id. at 395. Based on these isolated and occasional events, the rental company contended that its rental inventory was stock-in-trade, entitling it to the exemption conferred by Wis. Stat. § 70.111(17). Falls Rental World, 135 Wis. 2d at 395. We held that the rental company was not entitled to the exemption because the business activity of the company was to provide a service through the rental of its products. See id. at 398. That essential business purpose was not changed by the fact that the company occasionally ridded itself of outmoded products or occasionally sold a product to a rental customer. See id.

      As this dissent will reveal, I see competing reasonable inferences from the summary judgment evidence as to whether Wood-Land's business model constitutes two discrete operations or a single unitary operation. If the former, the trial court will have to decide which operation is primary, akin to the analysis in Falls Rental World. If the latter, the court need not perform that exercise and Falls Rental World would not apply.


source: Caselaw Access Project

author: YERGERONT, EJ.

license: Public Domain

text:
    State of Wisconsin, Plaintiff-Respondent, v. Mark M. Loutsch, Defendant-Appellant.

    Court of Appeals

      No. 02-1755-CR.

      Submitted on briefs November 11, 2002.—

      Decided December 26, 2002.

    2003 WI App 16
    (Also reported in 656 N.W.2d 781.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Charles Bennett Vetzner, assistant state public defender.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of David J. Becker, assistant attorney general, and James E. Doyle, attorney general.
    Before Vergeront, PJ., Dykman and Roggensack, JJ.

       Petition to review denied 3-13-03.

       Petition for cross-review denied 3-13-03.

   YERGERONT, EJ.

¶ 1. Mark Loutsch appeals a judgment of conviction and an order requiring that he pay restitution in the amount of $33,167.44; he also appeals the order denying postconviction relief. Loutsch contends the trial court erred in ordering him to pay restitution for a victim's use of sick leave because the loss was too speculative and not supported by the record. He also contends the court erred in failing to consider his limited ability to pay and in failing to consider, as provided in Wis. Stat. § 973.20(5)(d), whether justice required restitution to the insurers.

¶ 2. We conclude the victim's loss of sick leave is "special damages" within Wis. Stat. § 973.20(5)(a) and therefore the court had the authority to award restitution for the sick leave the victim used, and the record supports the amount ordered, $26,257.52. We also conclude that, when a defendant presents evidence of his ability to pay, the trial court is not authorized to defer adjusting the amount of restitution based on ability to pay; rather, the court must make a determination of the reasonable amount of restitution the defendant will be able to pay within the term of the sentence. Accordingly, we affirm in part, reverse in part and remand for further proceedings. On remand, the court will have the opportunity to consider whether justice requires restitution to the insurers as provided in § 973.20(5)(d).

BACKGROUND

¶ 3. Loutsch was convicted of fleeing in violation of Wis. Stat. § 346.04(3); two counts of first-degree recklessly endangering safety in violation of Wis. Stat. § 941.30(1); two counts of criminal damage to property in violation of Wis. Stat. § 943.01(1); intimidation in violation of Wis. Stat. § 940.45(1); battery in violation of Wis. Stat. § 940.19(6); and resisting in violation of Wis. Stat. § 946.41. The charges arose out of an incident that began with an altercation between Loutseh and his father-in-law. State Trooper Arden Asp received a radio transmission in his squad car to be on the lookout for Loutseh, who had left his father-in-law's house. When Asp located Loutseh driving his car, he attempted to pull Loutseh over. Eventually both cars stopped and Loutseh rammed the back of his car into the front of Asp's vehicle two times. As a result of that collision, Asp aggravated a pre-existing wrist injuiy and required an operation.

¶ 4. After the jury found Loutseh guilty of the charges, the court imposed sentences that resulted in a combined prison term of three years, with 159 days of sentence credit; a combined extended supervision period of four and one-half years; and five years' consecutive probation. The court then held an evidentiary hearing on the issue of restitution. The State submitted a restitution summary, which requested $33,167.44 in restitution. One item was Asp's use of his sick leave, which, the summary alleged, was a loss to him of $26,257.52, and the court heard testimony on this.

¶ 5. Asp testified at the hearing that he used 552 hours of sick leave. His employment contract provided that, upon retirement, all the hours of his unused sick leave would be multiplied by two and then by his hourly rate of pay at the time of retirement to create a fund for health insurance premiums. The court concluded that the loss of sick leave was a real loss that Asp suffered, and it accepted the State's calculation that 552 hours times two times Asp's hourly wage equaled $26,257.52.

¶ 6. The court also heard testimony on Loutsch's financial situation. Loutsch testified that he had a high-school diploma and, at the time of the incident leading to the charges, he was working on a commission basis for Direct TV making between $586 to $800 a week, depending on the available work. The most he had ever made as an hourly wage was $8.99, which was in 1995 when he did factory work through a temporary agency. In prison, he was making eight cents an hour for a forty-hour week, and he might be able to earn eighteen or twenty-seven cents an hour. He was going through a divorce and had a child support obligation that he believed would accrue while he was incarcerated and would be $15,000 when he was released.

¶ 7. The court decided that Loutsch had not established "good cause" for the court to enter a figure for a lesser amount than full restitution. The court stated that it could not predict what Loutsch was going to be able to pay, that the possibility "always exists that the unforeseen and unexpected may happen and [Loutsch] may in fact have the ability to pay the restitution at some point in the future.. . ." It was not the legislature's intention, the court concluded, that a court limit the opportunity of the victims to recover the amount they were entitled to in restitution. The court reasoned that it had continuing jurisdiction over the issue of payment, such that if Loutsch made a good faith effort to pay, the court had the authority to discharge him from the obligation or enter a civil judgment rather than extending his probation because he had not paid off the restitution.

¶ 8. The court entered an order of restitution in the amount of $33,167.44. Loutsch moved for relief from the restitution order, and the court denied the motion. During that hearing, the court accepted Loutsch's counsel's representation that Loutsch's divorce had become final and he was ordered to pay after release from prison 25% of his gross income as support for his two children.

DISCUSSION

Loss of Sick Leave

¶ 9. We first address Loutsch's contention that the trial court did not have the authority to order restitution for the loss of Asp's sick leave. According to Loutsch, Asp's used sick leave is not a compensable loss for purposes of restitution, because it has no present monetary value and the future value is too speculative.

¶ 10. A resolution of this issue requires us to interpret and apply Wis. Stat. § 973.20, which governs restitution in criminal cases. The interpretation of a statute and application to a given set of facts presents a question of law, which we review de novo. State v. Evans, 2000 WI App 178, ¶ 12, 238 Wis. 2d 411, 617 N.W.2d 220.

¶ 11. When imposing a sentence, a court must order "full or partial restitution.. . unless the court finds substantial reason not to do so and states the reason on the record." Wis. Stat. § 973.20(lr). Sections (2) and (3) specify particular types of restitution for categories of crimes. Section (5) addresses restitution in "any case" and provides in part:

(5) In any case, the restitution order may require that the defendant do one or more of the following:
(a) Pay all special damages, but not general damages, substantiated by evidence in the record, which could be recovered in a civil action against the defendant for his or her conduct in the commission of a crime considered at sentencing.

¶ 12. The distinction between general and special damages as relevant to Wis. Stat. § 973.20(5)(a) is well established. "General damages" under this statute are those that compensate the victim for damages such as pain and suffering, anguish or humiliation, while "special damages" encompass " 'harm of a more material or pecuniary nature.' [Citation omitted.]" State v. Holmgren, 229 Wis. 2d 358, 365, 599 N.W.2d 876 (Ct. App. 1999). The ultimate question in deciding whether an item of restitution is "special damages" within the meaning of the statute is whether it could be recovered as special damages in a civil proceeding. State v. Rouse, 2002 WI App 107, ¶ 12, 254 Wis. 2d 761, 768, 647 N.W.2d 286. In deciding whether the loss of Asp's sick leave is a "special damage" within the meaning of § 973.20(5)(a), we bear in mind that the purpose of restitution is to return victims of a crime to the position they were in before the defendant injured them. Holmgren, 229 Wis. 2d at 366. We therefore construe the restitution statute broadly to allow victims to recover their losses resulting from the criminal conduct. Id.

¶ 13. Loutsch argues that our decision in Preiss v. Preiss, 2000 WI App 185, 238 Wis. 2d 368, 617 N.W.2d 514, supports his position that Asp's used sick leave does not have a present monetary value and therefore is not "special damages." In that divorce action, we con-eluded the trial court erred in placing a $70,000 value on the retired spouse's accumulated sick leave account and including it as an asset in the marital estate. Id. at 375. Under the terms of his employment, the hours of sick leave times the hourly rate of pay resulted in an amount that was being credited against his health insurance premiums, and that is the reason the trial court had considered it an asset. Id. at 374. We concluded that, because the spouse could not convey his interest in the sick leave account, it did not have a fair market value, and property without a fair market value should not be included as an asset in the marital state. Id. at 375. We did recognize that the sick leave account had a value to the retired spouse, but that value was not accessible to anyone else. Id. We also observed that, if maintenance or child support were an issue, the fact that the spouse received health insurance premiums through his sick leave account would likely be considered in determining his living expenses and his ability to pay child support or maintenance. Id. at 376.

¶ 14. We do not view Preiss as determining the outcome in this case. It is true that Asp, like the retired spouse in Preiss, cannot transfer his interest in his accumulated sick leave, and therefore it does not have a fair market value. However, the law of damages in personal injury cases compensates for many losses to which one cannot attach a fair market value. The pertinent question in this case is whether an injured plaintiff in a personal injury action could recover as an item of special damages the value of sick leave used as a result of the injury, when the leave if unused would be available upon retirement to pay for health insurance premiums according to a specified formula. Preiss simply does not address this issue — although we did in Preiss recognize that the retired spouse's use of the accumulated sick leave as a credit against health insurance premiums did have value to the spouse and did actually affect the spouse's financial situation.

¶ 15. We have found no Wisconsin case that has considered whether injured persons may be compensated for use of sick leave in circumstances similar to this case. However, insofar as the trial court in this case placed a dollar value on the loss to Asp in the future for the sick leave he used, we view loss of future earning capacity to be an instructive analogy. Loss of future earning capacity is a proper element of special damages in personal injury actions. See Musa v. Jefferson County Bank, 2001 WI 2, ¶ 30, 240 Wis. 2d 327, 339, 620 N.W.2d 797 ("[a]mong the items often classified as special damages are . . . the impairment of earning capacity. (Citation omitted.)"). Loss of future earning capacity is the difference between what a person will reasonably be able to earn in the future, in view of the injuries sustained, and what he or she would have been able to earn had there been no injury. Wis JI — Civil 1762. Courts recognize that many elements that go to proof of loss of earning capacity cannot be established with certainty, and the fact finder must be allowed to consider "the reasonably apparent probabilities as they appear from the evidence, together with []known facts ...." Reinke v. Woltjen, 32 Wis. 2d 653, 660, 146 N.W.2d 493 (1966). Juries are regularly instructed that in determining loss of future earning capacity they "are not required... to base [the determination] on evidence which is exact or precise but rather upon evidence which, under all the circumstances of the case, reasonably supports [their] determination of damages." Wis JI — Civil 1762.

¶ 16. We conclude that determining the monetary value of the sick leave Asp used involves no more speculation, and arguably involves léss, than determining the amount of future lost earning capacity. The precise number of hours Asp used as a result of the injury is known, and it is certain that Asp will not have those hours available to him upon retirement to pay for his health insurance premiums. The precise formula by which those 552 hours would have been converted to dollars to pay for health insurance premiums upon retirement is also known. Hourly wage at the time of retirement may be estimated or, as in this case, the current wage may be used: it is reasonable to infer that Asp's hourly wage at retirement will be no lower than his present hourly wage.

¶ 17. Loutsch points out that Asp may unexpectedly die before he retires, but that possibility exists every time a plaintiff in a personal injury action is compensated for a future loss. That mere possibility is not sufficient to prevent plaintiffs in personal injury actions from recovering for loss of future earning capacity — or for other special damages that compensate for losses that will not occur until the future, such as future medical and health care expenses. See, e.g., Wis JI — Civil 1758. We see no reason why any more certainty should be required for the recovery of future pecuniary losses in the context of restitution. We therefore conclude that the trial court did have the authority to order restitution for Asp's loss of sick leave.

¶ 18. Our conclusion is not inconsistent with State v. Handley, 173 Wis. 2d 838, 496 N.W.2d 725 (Ct. App. 1993), on which Loutsch relies. In that case, we reversed the trial court's order of restitution in the amount of $1,000 for future counseling costs for the victims. The victims had testified that they had not received counseling and did not think they would need it, and their mother testified she did not think they would need it. Id. at 840-41. We reversed because the record did not support a future need for counseling. Id. at 843. Nothing in our decision suggests that, had there been evidence that counseling would be needed in the future, the trial court did not have the authority to order restitution for an amount that would probably be needed to compensate for that future counseling.

¶ 19. In the alternative, Loutsch contends that, even if the court had the authority to compensate Asp for the used sick leave as "special damages," Asp did not meet his burden of establishing the value of the used sick leave. Since the burden is on the victim to demonstrate the amount of loss by a preponderance of the evidence, Wis. Stat. § 973.20(14)(a), Loutsch asserts that Asp had to establish his current age, his expected age at retirement, the amount of sick leave he anticipated he would have on that date, his actual and expected health care costs, and the number of dependents covered by his insurance. Loutsch's point is that perhaps Asp would have enough accumulated sick leave without the 552 hours to pay for all the health insurance he needed from the date of his retirement until his death.

¶ 20. When the trial court has the authority to order restitution for a loss, the court's decision to order restitution in a particular amount is committed to the trial court's discretion. Holmgren, 229 Wis. 2d at 366. However, because Loutsch is questioning whether the record in this case is sufficient to support restitution in any amount for Asp's used sick leave, we view the question as one of law, and therefore our review is de novo. See id. at 366 (conclusions of law may underlie discretionary decisions, and we review these de novo).

¶ 21. We do not agree with Loutsch that Asp had to present evidence on all the points Loutsch raises in order to meet the victim's burden under Wis. Stat. § 973.20(14)(a). A restitution hearing is not the equivalent of a civil trial and does not require strict adherence to the rules of evidence and burden of proof. Holmgren, 229 Wis. 2d at 367. We conclude the evidence Asp did present was sufficient for the trial court to decide it was reasonably probable that Asp would suffer a pecuniary loss in the future as a result of using his sick leave, and sufficient to provide a reasonable basis for determining the probable amount of the loss. Loutsch had the opportunity, through cross-examination of Asp, to present evidence that Asp would not need some or all of the 552 hours of sick leave to pay for health insurance upon retirement, but Loutsch did not do that. See id. at 372 (testimony that audit costs were reasonable was sufficient prima facie case to authorize imposition of those costs as restitution; burden was then on defendant to show that portions were inappropriate).

Ability to Pay

¶ 22. Loutsch contends the trial court erred by not considering his limited ability to pay in setting the amount of restitution, but instead deferring that decision until after his release from prison when his ability to pay and efforts to pay would be easier to determine. The State responds that the court did consider Loutsch's ability to pay, but decided not to reduce the amount of restitution based on it, and this was reasonable because, in view of Loutsch's prison sentence, it was difficult to predict what his future ability to pay would be. According to the State, the trial court's reasoning that the amount of restitution could later be reduced if he could not pay it all is proper and is supported by State v. Dugan, 193 Wis. 2d 610, 534 N.W.2d 897 (Ct. App. 1995).

¶ 23. As we understand the court's decision, it viewed Wis. Stat. § 973.20 as authorizing deferral of the determination of Loutsch's ability to pay because of the difficulty in deciding now what his financial situation would be after his release from prison and during his extended supervision and probation. The threshold question, therefore, is whether this is a correct interpretation of the statute or whether, as Loutsch argues, the court was required to determine now the amount of restitution he would be able pay during his sentence. Because this presents a question of law, our review is de novo. Evans, 2000 WI App 178, ¶ 12. Because several statutory provisions are involved, we consider them together and attempt to harmonize them. State v. Robinson, 140 Wis. 2d 673, 677, 412 N.W.2d 535 (Ct. App. 1987).

¶ 24. Wisconsin Stat. § 973.20(13)(a) provides:

(I3)(a) The court, in determining whether to order restitution and the amount thereof, shall consider all of the following:
1. The amount of loss suffered by any victim as a result of a crime considered at sentencing.
2. The financial resources of the defendant.
3. The present and future earning ability of the defendant.
4. The needs and earning ability of the defendant's dependents.
5. Any other factors which the court deems appropriate.

When restitution is ordered, it becomes a condition of probation, extended supervision or parole, and, after the termination of those, restitution is enforceable in the same manner as a judgment in a civil action by the victim. Section 973»20(lr). Under § 973.20(10), the court may require that restitution "be paid immediately, within a specified period or in specified installments. If the defendant is placed on probation or sentenced to imprisonment, the end of a specified period shall not be later than the end of any period of probation, extended supervision or parole."

¶ 25. Read together, these sections plainly contemplate that the court order at sentencing an amount of restitution that it determines the defendant will be able to pay before the completion of the sentence — in this case, during the term of imprisonment and subsequent extended supervision and probation. These sections do not permit a court to defer consideration of the defendant's ability to pay when evidence of the defendant's ability to pay is presented. The reference to "present and future earning ability of the defendant," Wis. Stat. § 973.20(13)(a)3, plainly contemplates that the court will be making a prediction of what a defendant will be able to pay in the future.

¶ 26. We do not agree that the provision in Wis. Stat. § 973.20(lr) allowing restitution to be reduced to judgment at the end of the sentence indicates a contrary intent. That subsection allows a victim to collect the full amount of restitution ordered; it does not alter the mandate for the court to take the defendant's ability to pay into account when imposing the restitution order. If we were to adopt the State's view, the mandate for the court to take into account the defendant's ability to pay and the authorization for ordering partial restitution would be meaningless: full restitution would be ordered in all cases regardless of ability to pay. Similarly, we do not agree that the court's authority to modify the terms and conditions of probation "for cause" prior to the end of the term of probation, Wis. Stat. § 973.09(3)(a), removes the court's obligation under § 973.20 to order an amount of restitution that the defendant will be able to pay during the sentence, when presented with evidence of the defendant's ability to pay. Section 973.09(3)(a) authorizes a court to reduce restitution if a defendant is not able to pay the amount ordered based on circumstances not contemplated at the time restitution was imposed; it is not a substitute for deciding at the time of sentencing the amount of restitution a defendant will be able to pay during his sentence, based on the information presented to the court.

¶ 27. We do not agree with the State that our decision in Dugan, 193 Wis. 2d 610, supports deferring a determination of the amount of restitution a defendant can pay when a defendant presents evidence of his or her ability to pay. In Dugan, the defendant did not object to the State's request for restitution in the amount of $40,000, did not assert he did not have the ability to pay that, and did not present evidence of ability to pay. Id. at 624-25. We therefore concluded he had waived the argument that the court erred in not considering his ability to pay. Id. In that context, our statement that "if in the future Dugan believes he is unable to meet his restitution obligation, he can bring a motion for modification of his sentence at that time" meant only that there was a means to modify the restitution already established. See id. at 625. That statement does not mean that a court need not establish restitution in an amount a defendant can pay when presented with evidence of the defendant's ability to pay and instead may rely on the opportunity for later modification.

¶ 28. We are sympathetic with the difficulty of determining, while a defendant is serving a prison term, what his or her financial circumstances will be upon release from prison and during extended supervision and probation. However, the court is not expected to make this determination in a vacuum, since the defendant has the burden of presenting evidence on his or her ability to pay. Wis. Stat. § 973.20(14)(b). Where, as in this case, there is evidence of past earnings, earnings in prison and future child support obligations, the court has an evidentiary basis for deciding what it is reasonably probable that Asp will be able to pay for restitution during his sentence. We are also sympathetic with the court's concern that, for unanticipated reasons, a defendant may have a greater ability to pay in the future than the evidence shows now, and the victim will therefore be deprived of some restitution. If the statutes do not now allow for a victim to recover more in such a situation, an issue we do not address, it may be that the legislature will choose to provide for this. However, we are satisfied that § 973.20 as presently written does not authorize a court to defer consideration of the defendant's ability to pay when presented with that evidence, even if the purpose of deferral is to avoid the possibility that the defendant will have a greater ability to pay in the future than the court anticipated. Accordingly, we remand for the court to determine what amount of restitution it is reasonably probable that Loutsch will be able to pay during the term of his sentence.

¶ 29. Finally Loutsch contends that the trial court ordered that he pay a total of $5,249.97 to insurers of Asp and Loutsch's father-in-law without deciding that justice requires this. Wisconsin Stat. § 973.20(5) (d) authorizes the trial court, "[i]f justice so requires," to order a defendant to "reimburse any insurer, surety or other person who has compensated a victim for a loss, otherwise compensable under this section." We do not address the parties' debate on whether Loutsch waived this issue and whether the court addressed it. We are satisfied that this issue should be considered on remand when the court makes a determination of the reasonable amount of restitution Loutsch has the ability to pay during the term of his sentence.

By the Court. — Judgment and orders affirmed in part; reversed in part and cause remanded with directions.

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

       The trial court rejected Loutsch's argument that the restitution should be reduced because of Asp's testimony that a few weeks before he returned to his regular job he was offered light duty at district headquarters, which he declined. In his first brief on appeal, Loutseh contends that this was an error, because Asp failed to mitigate his damages. The State responds that the burden was on Loutseh to establish that Asp failed to mitigate his damages, and the record does not show that Asp's decision was not justified. Loutseh does not reply to this argument, and we therefore take it as a concession and do not address this issue further. See Schlieper v. DNR, 188 Wis. 2d 318, 322, 525 N.W.2d 99 (Ct. App. 1994).

       WISCONSIN Stat. § 973.20(2) and (3) provides:
      (2) If a crime considered at sentencing resulted in damage to or loss or destruction of property, the restitution order may require that the defendant:
      (a) Return the property to the owner or owner's designee; or
      Ob) If return of the property under par. (a) is impossible, impractical or inadequate, pay the owner or owner's designee the reasonable repair or replacement cost or the greater of:
      1. The value of the property on the date of its damage, loss or destruction; or
      2. The value of the property on the date of sentencing, less the value of any part of the property returned, as of the date of its return. The value of retail merchandise shall be its retail value.
      (3) If a crime considered at sentencing resulted in bodily injury, the restitution order may require that the defendant do one or more of the following:
      (a) Pay an amount equal to the cost of necessary medical and related professional services and devices relating to physical, psychiatric and psychological care and treatment.
      Os) Pay an amount equal to the cost of necessary physical and occupational therapy and rehabilitation.
      (c) Reimburse the injured person for income lost as a result of a crime considered at sentencing.
      (d) If the injured person's sole employment at the time of the injury was performing the duties of a homemaker, pay an amount sufficient to ensure that the duties are continued until the person is able to resume performance of the duties.


author: NETTESHEIM, PJ.

text:
    State of Wisconsin, Plaintiff-Respondent, v. James S. Riedel, Defendant-Appellant.

    Court of Appeals

      No. 02-1772-CR.

      Submitted on briefs November 12, 2002.—

      Decided December 26, 2002.

    2003 WI App 18
    (Also reported in 656 N.W.2d 789.)

      On behalf of the defendant-appellant, the cause was submitted on the brief of Ralph A. Kalal, of Kalal & Associates, of Monona.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Phillip A. Koss, district attorney, and Diane M. Resch, assistant district attorney, for Walworth county.
    Before Nettesheim, PJ., Anderson and Snyder, JJ.

       Petition to review denied 3-13-03.

   NETTESHEIM, PJ.

¶ 1. James S. Riedel appeals from a judgment of conviction for operating a motor vehicle while intoxicated (OWI) contrary to Wis. Stat. § 346.63(l)(a) (1999-2000). Riedel argues that the trial court erred in denying his motion to suppress evidence resulting from the analysis of his blood sample drawn without his consent following his arrest. Specifically, Riedel argues that the police were required to obtain a search warrant before submitting his blood sample for testing. We reject Riedel's argument and affirm the judgment.

FACTS

¶ 2. Riedel was arrested and cited for OWI on December 18, 2000. Later, following an analysis of his blood sample, Riedel was also charged with operating with a prohibited alcohol concentration (PAC). On February 1, 2001, Riedel filed motions to suppress the results of the blood analysis, arguing that the analysis constituted a "second search" which was performed absent exigent circumstances and without a warrant. The trial court denied Riedel's motions following a hearing on May 16, 2001.

¶ 3. Riedel then entered a no contest plea to OWI contrary to Wis. Stat. § 346.63(l)(a) and a judgment of conviction was entered on March 21, 2002. Riedel appeals.

DISCUSSION

¶ 4. Riedel argues that the trial court erred in denying his motion to suppress evidence of the analysis of his blood sample. Riedel contends that the analysis was a "second search" and therefore the police were required to obtain a search warrant prior to submitting the sample for testing.

¶ 5. In reviewing the denial of a motion to suppress, we will uphold the trial court's findings of fact unless they are clearly erroneous. State v. Waldner,. 206 Wis. 2d 51, 54, 556 N.W.2d 681 (1996); see also Wis. Stat. § 805.17(2). Whether a search is valid, however, is a question of constitutional law which we review de novo. State v. Guzman, 166 Wis. 2d 577, 586, 480 N.W.2d 446 (1992).

¶ 6. We begin by observing that a warrantless nonconsensual blood draw from a person arrested on probable cause for a drunk driving offense is constitutional based on the exigent circumstances exception to the warrant requirement of the Fourth Amendment even if the person offers to submit to a chemical test other than the blood test chosen by law enforcement provided that the blood draw complies with the factors enumerated in State v. Bohling, 173 Wis. 2d 529, 494 N.W.2d 399 (1993). State v. Krajewski, 2002 WI 97, ¶ 3, 255 Wis. 2d 98, 648 N.W.2d 385.

¶ 7. Riedel does not challenge the warrantless blood draw on appeal. Rather, Riedel argues that the submission of the blood sample for testing constituted a "second search." Because exigent circumstances did not exist at the time of the testing, Riedel argues that the officers were required to obtain a warrant.

¶ 8. At the outset, we reject the State's threshold argument that Riedel is precluded from challenging the trial court's suppression ruling based on Riedel's conviction on the OWI charge and the dismissal of the PAC charge. The State reasons that Riedel's appeal lacks a justiciable controversy because he has failed to argue that he would not have pled to the OWI charge if the trial court had granted the suppression motion or that the OWI evidence would have been insufficient absent the blood test results. We reject the State's argument. In pleading to the OWI charge, Riedel undoubtedly considered all incriminating evidence against him, including the blood test results.

¶ 9. Addressing the merits of Riedel's argument, the State argues that our decision in State v. VanLaarhoven, 2001 WI App 275, 248 Wis. 2d 881, 637 N.W.2d 411, controls. The issue in VanLaarhoven was the same as presented here — whether a "blood sample, once obtained, [can] be analyzed for evidentiary purposes without obtaining a second search warrant." Id. at ¶ 4. However, the facts in VanLaarhoven differ.

¶ 10. In VanLaarhoven, the defendant was advised under the Implied Consent Law and then consented to submit to a chemical test of his blood. Id. at ¶ 2. In holding that a search warrant was not a prerequisite to submitting the sample for analysis, the court of appeals relied on the language of the Implied Consent Law which provides in relevant part that

[a]ny person who ... drives or operates a motor vehicle upon the public highways of this state ... is deemed to have given consent to one or more tests of his or her breath, blood or urine, for the purpose of determining the presence or quantity in his or her blood or breath, of alcohol.

Id. at ¶ 7 (citing Wis. Stat. § 343.305(2)). However, recognizing that a person may revoke his or her implied consent by refusing to take a test, see County of Ozaukee v. Quelle, 198 Wis. 2d 269, 277, 542 N.W.2d 196 (Ct. App. 1995), the court additionally relied on the fact that the defendant voluntarily submitted to the testing procedure, VanLaarhoven, 2001 WI App 275 at ¶ 8.

¶ 11. Here, Riedel did not voluntarily submit to the testing procedure. He expressly refused to do so, thereby revoking his implied consent. Therefore, we agree with Riedel that the implied consent analysis employed in VanLaarhoven does not directly control the issue in this case. However, the VanLaarhoven court found additional support for its ruling in United States v. Snyder, 852 F.2d 471 (9th Cir. 1988), and State v. Petrone, 161 Wis. 2d 530, 468 N.W.2d 676 (1991), both of which involved a defendant who, like Riedel, did not consent to an initial search. We deem these cases to be informative and persuasive.

¶ 12. In Snyder, the defendant was arrested for operating while intoxicated and a blood sample was taken without the defendant's consent. Snyder, 852 F.2d at 472. Two days later, the sample was submitted for analysis without a warrant. Id. The defendant brought a motion to suppress, claiming that the war-rantless analysis of the blood sample was an unreasonable search. Id. at 472-73. The trial court denied the motion. Id.

¶ 13. Relying largely on Schmerber v. California, 384 U.S. 757 (1966), the Snyder court upheld the trial court's ruling. The court said:

The flaw in Snyder's argument is his attempt to divide his arrest, and the subsequent extraction and testing of his blood, into too many separate incidents, each to be given independent significance for fourth amendment purposes .... It seems clear, however, that Schmerber viewed the seizure and separate search of the blood as a single event for fourth amendment purposes....
The [Schmerber] Court therefore necessarily viewed the right to seize the blood as encompassing the right to conduct a blood-alcohol test at some later time.

Snyder, 852 F.2d at 473-74.

¶ 14. As observed in VanLaarhoven, the Wisconsin Supreme Court arrived at a similar conclusion in Petrone. There, the police obtained a search warrant authorizing them to seize "all camera, film, or photographic equipment used in the taking, processing and development of photographic pictures, involving nude and partially nude female juveniles." Petrone, 161 Wis. 2d at 538. In executing the warrant, the police seized several rolls of undeveloped film. Id. In order to determine what kind of photographs the film contained, the police developed the film the day following the search. Id. Akin to Riedel's case, the defendant sought to suppress the resulting pornographic photos, arguing that the later development of the film constituted a second, separate search for which a warrant should have been obtained. Id. at 544.

¶ 15. The supreme court rejected the defendant's argument.

Developing the film is simply a method of examining a lawfully seized object. Law enforcement officers may employ various methods to examine objects lawfully seized in the execution of a warrant. For example, blood stains or substances gathered in a lawful search may be subjected to laboratory analysis .... Developing the film made the information on the film accessible, just as laboratory tests expose what is already present in a substance but not visible with the naked eye. Developing the film did not constitute ... a separate, subsequent unauthorized search having an intrusive impact on the defendant's rights wholly independent of the execution of the search warrant. The deputies simply used technological aids to assist them in determining whether items within the scope of the warrant were in fact evidence of the crime alleged.

Id. at 545 (citation omitted).

¶ 16. This court has concluded that Snyder and Petrone stand for the proposition that the "examination of evidence seized pursuant to the warrant requirement or an exception to the warrant requirement is an essential part of the seizure and does not require a judicially authorized warrant. Both decisions refuse to permit a defendant to parse the lawful seizure of a blood sample into multiple components." VanLaarhoven, 2001 WI App 275 at ¶ 16. We find the reasoning of Snyder, Petrone and VanLaarhoven persuasive, and we adopt their holdings here. We therefore conclude that the police were not required to obtain a warrant prior to submitting Riedel's blood for analysis.

CONCLUSION

¶ 17. The initial warrantless nonconsensual draw of Riedel's blood was constitutional based on the exigent circumstances exception to the warrant requirement of the Fourth Amendment. Krojewski, 2002 WI 97 at ¶ 3. We conclude that the subsequent analysis of Riedel's blood was simply the examination of evidence obtained pursuant to a valid search. We therefore uphold the trial court's denial of Riedel's motion to suppress. We affirm the judgment.

By the Court. — Judgment affirmed.

       All references to the Wisconsin statutes are to the 1999-2000 version.

       Riedel additionally filed motions to suppress the results of the blood analysis based on coerced consent and the warrantless blood draw. The trial court denied both motions. Riedel does not raise the issue of the warrantless blood draw on appeal except to preserve his challenge in the event that governing case law, State v. Krajewski, 2002 WI 97, 255 Wis. 2d 98, 648 N.W.2d 385, is overruled by the United States Supreme Court.
      While Riedel raises his coerced consent argument on appeal, we need not address it because Riedel did not give consent to the blood draw. We nevertheless note that this argument was recently rejected by this court in State v. Wintlend, 2002 WI App. 314, No. 02-0965-CR.

       The PAC charge was later dismissed.

       The court in State v. Bohling, 173 Wis. 2d 529, 533-34, 494 N.W.2d 399 (1993), held that a warrantless blood sample taken at the direction of a law enforcement officer is permissible under the following circumstances:
      (1) the blood draw is taken to obtain evidence of intoxication from a person lawfully arrested for a drunk-driving related violation or crime, (2) there is a clear indication that the blood draw will produce evidence of intoxication, (3) the method used to take the blood sample is a reasonable one and performed in a reasonable manner, and (4) the arrestee presents no reasonable objection to the blood draw. (Footnote omitted.)

       The court in State v. Thorstad, 2000 WI App 199, ¶ 5, 238 Wis. 2d 666, 618 N.W.2d 240, citing Schmerber v. California, 384 U.S. 757, 769-70 (1966), recognized the existence of "exigent circumstances" in drunk driving situations "because the human body rapidly eliminates alcohol from the system, 'the delay necessary to obtain a warrant, under the circumstances, threatened the destruction of evidence.'"

       We also reject Riedel's assertion that State v. Betterley, 191 Wis. 2d 406, 629 N.W.2d 216 (1995), and Skinner v. Railway Labor Executive's Ass'n, 489 U.S. 602 (1989), lend support to his argument.
      The court in Betterley cited with approval the following reasoning, "Requiring police to procure a warrant for subsequent searches of an item already lawfully searched would in no way provide additional protection for an individual's legitimate privacy interests. The contents of an item previously searched are simply no longer private." Betterley, 191 Wis. 2d at 417 (citation omitted). Here, Riedel's blood had already been drawn during a valid search. Determining the content of the blood, i.e., whether it contained alcohol, was the sole purpose of that search.
      In Skinner, the United States Supreme Court recognized that under Schmerber, the State may direct a blood sample to be withdrawn from a motorist suspected of driving while intoxicated, despite his or her refusal to consent to the intrusion. Skinner, 489 U.S. at 625. While Skinner stated that "[t]he ensuing chemical analysis of the sample to obtain physiological data is a further invasion of. .. privacy interests," id. at 616, it did not address whether the testing of such a sample constituted a "second search" requiring a warrant.


author: Heffernan, J.

text:
    William O’Donell, Inc., Appellant, v. Wisconsin Employment Relations Board, Respondent: General Drivers, Dairy Employees & Helpers Union Local No. 579, Intervenor and Respondent.

      October 29 —
    November 30, 1964.

      For the appellant there were briefs by Melli & Smith of Madison, and oral argument by Joseph A. Melli.

    For the respondent Wisconsin Employment Relations Board the cause was argued by Beatrice Lampert, assistant attorney general, with whom on the brief was George Thompson, attorney general.
    For the intervenor-respondent, there was a brief by Goldberg, Previant & Uelmen of Milwaukee, and oral argument by David Leo Uelmen.

   Heffernan, J.

We agree with the decision of the circuit court that the W. E. R. B. properly ordered that the discharge grievance be resubmitted to the joint committee.

The company contends that prior to the charge against it, its actions were not limited by any order of the W. E. R. B.; and now that the charges have been disposed of, it asserts the proceedings should cease, the petition be dismissed, and it should be placed in the same position that it was before the unfair-labor-practice proceeding was commenced.

While initially this position seems persuasive, a closer analysis of the facts surrounding this litigation shows that this contention cannot be supported.

This litigation is not only a matter of concern to the immediate parties; it is particularly the concern of the discharged employee and of the public.

The joint committee’s jurisdiction is specifically recognized by a collective-bargaining agreement entered into between the union and the company. Article VII of the agreement provides:

“Section 1. Joint State Committee. The Operators and the Union shall together create a permanent Joint State Committee. The Joint State Committee shall consist of an equal number representing Employers and Unions but no less than three (3) from each group. Each member may appoint an alternate in his place. The Joint State Committee shall at its first meeting formulate rules of procedure to govern the conduct of its proceedings. The Joint State Committee shall have jurisdiction over disputes and grievances involving Local Unions or complaints- by Local Unions located in the state.”

This type of tribunal is given statutory recognition in sec. 111.06 (1) (g), Stats., which makes it an unfair labor practice :

“To refuse or fail to recognize or accept as conclusive of any issue in any controversy as to employment relations the final determination (after appeal, if any) of any tribunal having competent jurisdiction of the same or whose jurisdiction the employer accepted.”

Both parties have sought to utilize the powers of the W. E. R. B., thus assuring that the arbitration board of which they are members can exercise its powers with a reasonable certainty of finality.

However, this section of the statutes, like all the provisions of ch. Ill, Stats., is subject to the overriding policy considerations set forth in sec. 111.01:

“111.01 Declaration of policy. The public policy of the state as to employment relations and collective bargaining, in the furtherance of which this subchapter is enacted, is declared to be as follows:
“(1) It recognizes that there are three major interests involved, namely: That of the public, the employe, and the employer. These three interests are to a considerable extent interrelated. It is the policy of the state to protect and promote each of these interests with due regard to the situation and to the rights of the others.
“(2) Industrial peace, regular and adequate income for the employe, and uninterrupted production of goods and services are promotive of all of these interests. They are largely dependent upon the maintenance of fair, friendly and mutually satisfactory employment relations and the availability of suitable machinery for the peaceful adjustment of whatever controversies may arise. ... It is also recognized that whatever may be the rights of disputants with respect to each other in any controversy regarding employment relations, they should not be permitted, in the conduct of their controversy, to intrude directly into the primary rights of third parties to earn a livelihood, transact business and engage in the ordinary affairs of life by any lawful means and free from molestation, interference, restraint or coercion. ’
’ “(3>
“(4) It is the policy of the state, in order to preserve and promote the interests of the public, the employe, and the employer alike, to establish standards of fair conduct in employment relations and to provide a convenient, expeditious and impartial tribunal by which these interests may have their respective rights and obligations adjudicated. While limiting individual and group rights of aggression and defense, the state substitutes processes of justice for the more primitive methods of trial by combat.”

The company relies on sec. 111.07 (4), Stats., which, to the extent that it is pertinent here, provides:

“. . . Final orders may dismiss the charges or require the person complained of to cease and desist from the unfair labor practices found to have been committed, . ,

From this the company concludes that since the charges were dismissed this is a final order, and that a final order is just what its name implies, that it ends the proceeding and the person charged is free of the W. E. R. B.’s jurisdiction. However, we' find the definition of an interlocutory order referred to by the company applicable here. On the basis of its own definition, we have no trouble in holding that this order is interlocutory in that, as the company contends, it is “something which is done between the commencement and the end of a suit or action which decides some point or matter, which, however, is not a final decision of the matter In issue, . . .” Cyclopedic Law Dictionary (3d ed.), p. 591. Sec. 111.07 (4), Stats., clearly authorizes interlocutory orders.

The matter that is at issue here is one that falls within the category over which the W. E. R. B. has jurisdiction, i.e., “any controversy concerning unfair labor practices.” Sec. 111.07 (1), Stats. The unfair labor practice which initiated the instant proceedings was the alleged failure of the employer to comply with the order of the joint committee. However, as the W. E. R. B. and the learned trial judge discerned, the real and underlying controversy is whether or not the employee Becker, not a party to this suit, was improperly discharged and whether he is entitled to reinstatement and back pay.

It must be remembered that this matter has been before the W. E. R. B. twice. The first time the W. E. R. B. held that the joint committee denied due process to the company when it entered an order without giving the company a reasonable time to produce a material witness. This matter was returned to the joint committee for a new hearing. The instant case resulted in a denial of due process when the company, at the second hearing, was not allowed the assistance of counsel in the presentation of its case.

This running altercation between the company and the joint committee, important as this dispute is in determining the important constitutional rights of due process, has not resolved the fundamental controversy that concerns the public — and that is, does a labor difference remain unsettled which could jeopardize peaceable relations between employer and employee to the detriment of the public. The trial judge has hazarded the prediction that the failure to reach the heart of this controversy, the employment status of Becker, could result in a strike. Although such a result is conceivable, we refuse to indulge in such speculation; however, we must agree that the failure to get at the heart of this controversy would leave festering an unsettled dispute between labor and management.

By its contract, the company has agreed to settle its differences in the joint committee. The company has twice been granted relief by the W. E. R. B. from a joint committee order denying it due process. We do not see how it can now lawfully choose to spurn the W. E. R. B., and deny to the public and the employee the fair hearing that it sought for itself. The public, as well as the parties, has a right to a final determination of this controversy; and the public, having provided the means in an administrative tribunal to protect the rights of all concerned, should, at least in this case where the powers of the W. E. R. B. have been invoked, not be expected to stand aside to its detriment while the parties do battle.

The company came to the W. E. R. B. claiming that it had been dealt with unfairly. The W. E. R. B. found, and we agree with its decision, that the company was denied due process. It was the duty of the W. E. R. B. not only to see to it that the company received a fair hearing, but that all interests were accorded justice. While relieving the company of the onus of an unfair order may have satisfied the constitutional requirements as to the company, the statute demands more :

“It is the policy of the state to protect and promote each of these interests with due regard to the situation and to the rights of the others.” Sec. 111.01 (1), Stats.

The entire history of the interpretation of ch. Ill has been in accord with' this policy determination. A typical statement of this court is found in Dunphy Boat Corp. v. Wisconsin Employment Relations Board (1954), 267 Wis. 316, 323, 64 N. W. (2d) 866:

“Ch. Ill, Stats., should be liberally construed to secure the objectives stated in the declaration of policy set forth in sec. 111.01.”

We also have said:

“In dealing with this matter of labor disputes the legislature has recognized a public interest in the relation between employer and employee. It grows out of the employment and the operation of the industry of the employer. The enactments in relation thereto do not destroy nor are they calculated to invade contract rights, but they do seek to protect the public against unfair labor practices and to foster the continuance of that relation in which the public is interested.’’ Appleton Chair Corp. v. United Brotherhood (1941), 239 Wis. 337, 342, 1 N. W. (2d) 188.

We can only conclude that the W. E. R. B. properly and within its jurisdiction ordered that the discharge grievance be resubmitted for hearing and final disposition to the joint committee. We cannot see that the company is aggrieved at this order. It is being accorded the due process that it seeks, and we see no cause for its complaint now.

The company objects to being returned for a third time to a tribunal that has treated it unfairly twice. This is true, and the W. E. R. B. has so found, but what the company forgets is that the order to return to the- joint committee is not merely for its benefit; it is in addition, and perhaps most importantly, for the vindication of a public right in a particular controversy in which the legislature by its policy statement has declared that the public at large has a vital interest. The company having insisted upon the principles of due process cannot now abandon them and leave the fundamental controversy with' which the public is concerned unresolved.

The company raises another issue under these facts. On the company’s motion, the circuit court issued an order to show cause why the W. E. R. B.’s order should not be stayed pending the company’s petition for review. The court also temporarily restrained the union from resubmitting the Arnold Becker grievance to the joint committee. The matter was not heard because the union agreed by a letter to the company not to resubmit the grievance.

In the order denying review, the circuit court vacated the above order. We quite agree. The order is moot.

By the Court. — Judgment affirmed.