author: ANDERSON, RJ.

text:
    Isaacs Holding Corp., a domestic corporation, Plaintiff-Respondent, v. Premiere Property Group, LLC, a domestic limited liability company, Kelly J. Hansen, and Jill M. Hansen, Defendants-Respondents, Daniel P Gaugert and Gayle J. Gaugert, Defendants-Appellants, Waukesha State Bank, Defendant.
    Court of Appeals

      Nos. 03-1733, 03-2196.

      Submitted on briefs May 17, 2004.

      Decided August 25, 2004.

    2004 WI App 172
    (Also reported in 687 N.W.2d 774.)

      On behalf of the defendants-appellants, the cause was submitted on the briefs of Joseph C. Niebler, Sr. of Niebler & Muren, S.C., Brookfield.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Roger L. Pettit of Petrie & Stocking S.C., Milwaukee.
    Before Anderson, RJ., Brown and Snyder, JJ.

       Petition to review denied 11-17-2004.

   ANDERSON, RJ.

¶ 1. This case involves a dispute over which party's interest in 113 acres of land (the Property) located in the Town of Ottawa, Waukesha County is the superior interest. Daniel E Gaugert and Gayle J. Gaugert appeal a circuit court decision to deny their motion for entry of judgment for specific performance granting them right of first refusal to the Property pursuant to their affidavit of interest in real estate for right of first refusal recorded on March 9, 1995. The Gaugerts argue that Premiere Property Group, LLC, and Premiere's registered agent, Jeffrey J. Hansen, and Kelly J. and Jill M. Hansen (the Hansens), had actual knowledge of the Gaugerts' prior interest in the Property. Thus, they contend that the circuit court's ruling with respect to Premiere and the Hansens is contrary to the mandate given by the supremé court in Gaugert v. Duve, 2001 WI 83, 244 Wis. 2d 691, 628 N.W.2d 861 (hereinafter, Gaugert III), which stands for the rule that a prior interest holder defeats a pendente lite interest holder who had actual knowledge of the prior interest.

¶ 2. The Gaugerts also submit that Isaacs Holding Corp. (Isaacs), to which Premiere conveyed an interest in the Property as mortgagee, is barred by the principle of res judicata (hereinafter, claim preclusion) from challenging the prior ruling ordering specific performance in favor of the Gaugerts. The Gaugerts argue that the chain of title is not confined to the tract index and that although there was an error in the legal description of the property, it was an "obvious" error and is therefore not fatal to constructive notice.

¶ 3. Finally, the Gaugerts contend that Issacs had actual notice of the Gaugerts' prior claim.

¶ 4. We agree with the Gaugerts' arguments. We reverse and remand with directions for the trial court to order specific performance forthwith.

¶ 5. Facts. The facts are undisputed. In 1988, the Gaugerts purchased from Howard E. Duve (Duve) a thirty-six acre parcel of real estate located in the Town of Ottawa. Contemporaneously, they obtained an option of first refusal on the Property. On March 9, 1995, believing that Jeffrey Hansen was taking steps to develop the Property, the Gaugerts recorded an affidavit of interest in real estate for right of first refusal with regard to the Property. Duve, notwithstanding the Gaugerts' option, entered into an offer to purchase contract with Jeffrey Hansen. The Gaugerts sued Duve and Jeffrey Hansen seeking specific performance of their contract. The Gaugerts also filed a statutory lis pendens pursuant to Wis. Stat. § 840.10 (2001-02). After a bench trial, the circuit court denied specific performance and dismissed the complaint. The Gaug-erts filed an appeal.

¶ 6. Following the Gaugerts' filing of the appeal, but before we issued our decision, the circuit court discharged the Gaugerts' statutory lis pendens. The Gaugerts did not obtain a stay of the discharge order, nor did they seek an injunction prohibiting the sale of the Property from Duve to Premiere and its agent Jeffrey Hansen.

¶ 7. Sometime prior to May 23, 1997, while the appeal was still pending, Jeffrey Hansen assigned his offer to purchase to Premiere and his two brothers, Kelly and Jay. On May 23, 1997, Duve conveyed the Property to Premiere. Premiere and Jeffrey Hansen, by virtue of being an agent of Premiere, had by now entered into a Real Estate Mortgage Agreement with Isaacs, the holding corporation lender, which secured its loan to Premiere for the Property.

¶ 8. On February 25, 1998, we issued our decision in Gaugert v. Duve, 217 Wis. 2d 164, 579 N.W.2d 746 (Ct. App. 1998) (hereinafter, Gaugert I), which reversed and remanded the case to the circuit court with directions to order specific performance. On March 16, 1998, the Gaugerts filed a motion with us seeking a temporary injunction to prevent Premiere from developing the Property. On April 2,1998, we granted temporary relief because of our concern that the effectiveness of our decision would be implicated if the status quo were changed. While this motion was pending, Premiere filed a petition for review of Gaugert I, which the supreme court denied on May 18, 1998. The file was remitted to the circuit court on May 21, 1998. The Gaugerts filed a motion for entry of judgment on June 2, 1998.

¶ 9. Of particular importance to the issue now before us, Isaacs filed a motion to intervene.

¶ 10. Following our directions on April 2, 1998, the Gaugerts filed a motion in the circuit court seeking a temporary injunction to maintain the status quo by preventing Premiere from altering the character of the Property. In response, Premiere asked the court to deny the Gaugerts' motion and to determine the appropriate remedy the Gaugerts could seek because Duve no longer owned the Property. A hearing was conducted on the motions on April 23, 1998, and the court issued a temporary injunction prohibiting Premiere and Duve from taking steps to develop the real estate.

¶ 11. On June 2, 1998, the Gaugerts filed a motion seeking to enforce the mandate in Gaugert I by the issuance of an order for specific performance. In the motion, they also sought to implead Premiere as a party-defendant. Premiere countered with a motion seeking an order requiring the Gaugerts to post a bond as security for the temporary injunction and an order "determining the appropriate remedy for the plaintiffs [Gaugerts] as a result of the sale of the real estate" from Duve to Premiere. A hearing was conducted.

¶ 12. On September 23,1998, despite our reversal and direction to order specific performance upon remand, the circuit court again denied the Gaugerts' request for specific performance and dissolved the temporary injunction that had been granted against Duve and Premiere. The court reasoned that the Gaugerts abandoned their right to specific performance by failing to seek a stay of the judgment and order discharging the lis pendens. The court concluded that it could not order Premiere, a third-party purchaser, to convey the Property to the Gaugerts. In addition, the court dismissed all other pending motions, including Isaacs' motion to intervene, on the grounds that they were moot.

¶ 13. Isaacs did not appeal from the circuit court's denial of its motion to intervene.

¶ 14. The Gaugerts, however, brought a second appeal on October 19, 1998. In addition to a renewed request for specific performance, the Gaugerts requested a leave to amend the complaint to implead Premiere as a party-defendant. Subsequently, they also filed a second lis pendens and a proffered judgment of specific performance. The Gaugerts argued that the common-law doctrine of lis pendens provides protection even if they did not seek a stay pending the appeal. They reasoned that under the common law, the real estate remains in the possession of the court so the court can enforce the final judgment. Therefore, until they have exhausted all levels of review, the real estate remains subject to the jurisdiction of the court. According to their argument, a purchaser of the real estate, who has actual knowledge of active litigation involving the real estate, takes title at his or her own peril. Given that Jeffrey Hansen had actual knowledge of the ongoing litigation, the Gaugerts insisted that Jeffrey Hansen took title subject to the risk that they could prevail on appeal. They maintained there was no need to seek a stay or relief from the judgment pending appeal because under the common law, the court has the authority to enforce its judgment even if the real estate has been sold to a third party. They concluded that because their right to specific performance was upheld on appeal and Premiere and Jeffrey Hansen, as its agent, purchased the real estate at their own peril, Premiere and Jeffrey Hansen can be required to transfer the real estate to them under the common-law doctrine of lis pendens.

¶ 15. On December 18, 1998, the Gaugerts filed a petition for a writ of mandamus to compel the circuit court to enter a judgment granting specific performance by Duve in compliance with our mandate in Gaugert I. We issued a writ of mandamus on January 28, 1999, directing the court to "enter judgment granting the Gaugerts specific performance of the right of first refusal option contract by conveyance of the property." State ex rel. Gaugert v. Circuit Court for Waukesha County, No. 98-3595-W, unpublished order (Wis. Ct. App. Jan. 28, 1999). We reasoned that our decision and mandate in Gaugert I did not require any further findings and that after remand all the circuit court could do was grant the Gaugerts the specific performance they sought.

¶ 16. On March 11, 1999, during the pendency of their second appeal, the Gaugerts filed a petition for a writ of mandamus seeking from this court an order to compel the circuit court to order specific performance against Duve and Premiere. We denied the petition, concluding that our January 28, 1999 writ of mandamus was "limited to the circuit court's obligation to comply with the mandate" to order Duve to specifically perform by conveying the property to the Gaugerts. State ex rel. Gaugert v. Circuit Court for Waukesha County, No. 99-0645-W, unpublished order (Wis. Ct. App. Mar. 16, 1999).

¶ 17. On January 26, 2000, we dismissed the Gaugerts' second appeal in Gaugert v. Duve, 2000 WI App 34, 233 Wis. 2d 190, 607 N.W.2d 310 (hereinafter, Gaugert II)- We concluded that in the absence of a stay, the conveyance of the real estate from Duve to Premiere, and Jeffrey Hansen as its agent, rendered the appeal moot. Id., ¶ 28. We determined that because the Gaugerts did not obtain a stay, they were not entitled to the benefits of the common-law doctrine of lis pendens, which states that the purchaser pendente lite is deemed to be represented in the litigation by his or her vendor, and the purchaser is just as much bound by the final judgment rendered as is the party whose right he or she purchases. See Belleville State Bank v. Steele, 117 Wis. 2d 563, 571-72, 345 N.W.2d 405 (1984). We concluded that the circuit court could not order specific performance because title is in the name of a third person. We stated that in order to be able to do so, the Gaugerts were required to obtain a stay pending appeal to protect their claim against purchasers of the Property, including Premiere. Gaugert II, 233 Wis. 2d 190, ¶ 28.

¶ 18. The Gaugerts filed a petition for review. The petition was granted and on July 2, 2001, the supreme court released Gaugert III. Gaugert III reversed Gaug-ert II and condoned our initial ruling in Gaugert I mandating specific performance in favor of the Gaug-erts. The supreme court relied on the common law of lis pendens: In Wisconsin, statutory lis pendens was "intended to he supplemental to the common law, and not to repeal it. So, the common law will govern in all cases not covered by the statute." Brown v. Cohn, 95 Wis. 90, 93, 69 N.W. 71 (1896). The supreme court held that the doctrine of common-law lis pendens continued to protect the interests of the Gaugerts, even though statutory lis pendens had been discharged and the Gaugerts had not sought an order staying the discharge pending their appeal, and this entitled them to specific performance.

¶ 19. On August 6, 2001, one month after the release of Gaugert III, Isaacs commenced a declaration-of-rights suit that is the subject of the case at bar (the Isaacs Action). Isaacs sought: (1) a declaration that Isaacs' interest in the Property is superior to the interests of Premiere, the Gaugerts, the Hansens, Wau-watosa Savings Bank and Waukesha State Bank; (2) a judgment of foreclosure and sale of the Property; and (3) a money judgment against Premiere for defaulting on the Isaacs mortgage note. Isaacs argued that an identification error, made by the Gaugerts, in several legal documents of record caused the documents to be outside the "chain of title" and therefore did not impart notice of pending adverse claims to bona fide encum-brancers. Thus, Isaacs claimed that as of the time it extended credit to Premiere, it could not have had "actual notice" of a pending action by the Gaugerts affecting the Property.

¶ 20. Specifically, Isaacs argued that the Gaug-erts' affidavit of interest, their complaint and their lis pendens were "conveyances, transactions or events not in the chain of title of the [Property], within the meaning of sec. 706.09(1), Stats." because:

[the Affidavit,] the Complaint and Lis Pendens did not contain a definite reference to the [Property], but rather described the real estate affected thereby as situated in "Town 7 North," while the [Property] is actually located in "Town 6 North," as correctly stated in the May 23,1997 mortgage from defendant Premiere to Isaacs.

¶ 21. Isaacs also argued that the second lis pen-dens was a conveyance, transaction or event not in the chain of title of the Property because it "did not contain a definite reference to the [Property] . .. and because the parties' names in the caption would not have been traceable to the [Property] by use of an alphabetical index within the meaning of sec. 706.08, Stats."

¶ 22. Isaacs contended that, given these errors, at the time it extended credit to Premiere, there was "no conveyance, transaction or event" relating to the Gaug-ert action or to the Gaugerts' claimed interest in the Property in the chain of title of the Property within the meaning of Wis. Stat. § 706.09(1). Isaacs further contended that, as of the time it extended credit to Premiere, it did not have "actual notice" within the meaning of Wis. Stat. §§ 706.08 and 706.09, or otherwise, of a pending action by the Gaugerts affecting the Property.

¶ 23. At approximately the same time the Isaacs Action was filed, the Gaugerts again filed a motion for a proffered judgment of specific performance, basing it on the supreme court's Gaugert III decision. The Gaug-erts provided notice of this motion to the parties in Gaugert I and the contested interest holders in the Property (i.e., Premiere, Isaacs, the Hansens, Wauke-sha State Bank and Wauwatosa Savings and Loan); each of them specially appeared and objected to the jurisdiction of the court over them because they were not parties to the Gaugert II action. They also objected to entry of any judgment as requested by the Gaugerts.

¶ 24. On November 6, 2001, while the Isaacs Action was still pending, the circuit court denied the Gaugerts' latest motion for proffered judgment and instead, entered a second judgment of specific performance only against Duve. The Gaugerts filed a petition for writ of mandamus with the supreme court. On January 29, 2002, the supreme court held the writ of mandamus in abeyance pending the trial court's decision on the Isaacs Action.

¶ 25. On March 7, 2002, in response to the complaint in the Isaacs Action, the Gaugerts filed an answer and counterclaim against Isaacs and a cross-claim against Premiere, the Hansens, Wauwatosa Savings Bank and Waukesha State Bank. The answer pled an affirmative defense that all of the parties to the action acquired their respective interests in the Property during the pendency of Gaugert I, had actual or constructive notice of the Gaugert I action, and accordingly, are bound by the judgment of specific performance against their predecessors in title and in favor of the Gaugerts. The counterclaim and cross-claim sought a declaration of rights that the Gaugerts' interest in the Property is superior to the interests of all other parties and an order to require the other parties to convey their interests in the Property or an order of judicial conveyance clearing title to the Property.

¶ 26. Seven months later, in October 2002, the Gaugerts filed a motion for summary judgment against Isaacs in the still pending Isaacs Action. In December 2002, Isaacs countered by filing a motion for partial summary judgment on claim I and claim II:

Declaring the interest of Isaacs in the [Property] is superior to the interests of the Gaugerts; and
Entering Judgment of Foreclosure against Premiere Property Group, L.L.C., on Isaacs' Note.

¶ 27. Five months later, on May 13, 2003, the circuit court made its determination in the Isaacs Action. By order, it denied the Gaugerts' motion for summary judgment and granted Isaacs' motion for partial summary judgment. The court held that Isaacs' mortgage, securing its loan to Premiere for the Property, was superior to all other interests in the Property. The court concluded that Isaacs was a bona fide encum-brancer for value and without actual or constructive knowledge of the interest that the Gaugerts claim in the Property. The court also granted Isaacs' motion seeking default judgment of foreclosure against the remaining defendants. Finally, the court stayed the effects of its order pending the supreme court's resolution of the Gaugerts' petition for writ of mandamus.

¶ 28. In response to this decision, the Gaugerts petitioned the supreme court to order the record in the Isaacs Action consolidated with their pending petition for writ of mandamus and they renewed their request that the supreme court grant the writ of mandamus. Alternatively, the Gaugerts requested that the supreme court grant their motion to bypass an appeal before us and accept a direct appeal of the Isaacs Action.

¶ 29. On June 27, 2003, after considering the prerequisites for issuance of a writ of mandamus, the supreme court dismissed the Gaugerts' petition for consolidation of the Isaacs Action with the writ of mandamus. The court reasoned that the remedy of mandamus was no longer available to the Gaugerts because they now had a remedy: they could appeal the adverse order rendered in the Isaacs Action. The Gaug-erts had not yet availed themselves of this remedy. Therefore, the court concluded, relief by mandamus would be premature.

¶ 30. Accordingly, on June 30, 2003, the Gaugerts filed a notice of appeal from the adverse order in the Isaacs Action. The circuit court later incorporated this order into a second order filed on July 23, 2003. The Gaugerts filed a notice of appeal from the second order as well. On October 27, 2003, we ordered the appeals consolidated. It is the decision rendered in the circuit court's orders that is now before us.

¶ 31. Standard of Review. The resolution of this appeal requires the interpretation and application of the common-law doctrine of lis pendens, the statutory lis pendens scheme, and the appellate rules governing the effect of judgments during an appeal. This presents questions of law that we review de novo. See State v. Hansford, 219 Wis. 2d 226, 246, 580 N.W.2d 171 (1998).

¶ 32. Discussion, law and additional facts. The Gaugerts submit four arguments. First, they argue that Premiere and the Hansens had actual knowledge of the Gaugerts' prior interest, and therefore, the circuit court's ruling with respect to Premiere and the Hansens is contrary to the mandate from the Wisconsin Supreme Court in Gaugert III and long-standing precedents of the supreme court. Second, they contend that Isaacs had inquiry/actual notice of the Gaugerts' prior claim. Third, they argue that Isaacs is barred by the principle of claim preclusion from challenging the prior rulings ordering specific performance in favor of the Gaugerts. Fourth, they assert that the chain of title is not confined to the tract index, and the obvious error in the legal description of the Property is not fatal to constructive notice.

¶ 33. Isaacs counters that the circuit court was correct in granting summary judgment to Isaacs for three reasons. First, as a matter of law, the Gaugerts' statutory lis pendens did not impart constructive notice of the Gaugerts' interest in the Property. Second, as a matter of law, Isaacs had no actual knowledge of the Gaugerts1 lawsuit. Third, as a matter of law, a discharged lis pendens does not give notice of an interest in real estate.

¶ 34. Isaacs also argues that it is not bound by Gaugert III. Isaacs supports this contention with the following assertions: Isaacs is not in privity with Premiere or its agent, Jeffrey Hansen; Isaacs' failure to appeal from the order denying intervention does not make it bound to Gaugert III; Isaacs is not bound by Gaugert III because the Gaugert III decision specifically did not decide the interests of third parties. We do not agree with any of Isaacs' arguments and reverse the circuit court based on our conclusion that the Gaugerts are entitled to specific performance.

¶ 35. Unlike the history of this case, our reasons for reversal are uncomplicated. First, we accept that Premiere and the Hansens had actual knowledge of the Gaugerts' prior interest: they admitted to actual knowledge and the trial court so found.

¶ 36. Second, we agree with the Gaugerts that Isaacs had actual knowledge of the Gaugerts' prior claim. Isaacs' attorney testified that, before the closing of Isaacs' mortgage to Premiere, he was told by Premiere's lawyer that a claim had been made by the Gaugerts against Duve regarding the Property, and the claim had been dismissed.

¶ 37. Futhermore, Isaacs established its actual knowledge of the Gaugerts' prior claim when it filed a motion to intervene upon remittitur of Gaugert I. Isaacs' motion was denied. Under Wis. Stat. § 803.09(1), Isaacs had a right to intervene. See § 803.09; see also Wengerd v. Rinehart, 114 Wis. 2d 575, 582, 338 N.W.2d 861 (Ct. App. 1983). And, after its motion was denied, Isaacs retained the right to intervene in the Gaugerts' appeal, even after the time for filing a notice of appeal had passed. See City of Madison v. WERC, 2000 WI 39, ¶ 12, 234 Wis. 2d 550, 610 N.W.2d 94.

¶ 38. Third, we agree with the Gaugerts that Isaacs can no longer challenge the prior rulings ordering specific performance in favor of the Gaugerts. Over the years, courts have evolved principles that preclude relitigation of matters that have already been decided. These principles are subsumed in the doctrines of claim preclusion and issue preclusion, which were formerly known as res judicata and collateral estoppel, respectively. Jensen v. Milwaukee Mut. Ins. Co., 204 Wis. 2d 231, 235, 554 N.W.2d 232 (Ct. App. 1996). Under claim preclusion, a final judgment in an earlier matter is conclusive upon the parties in that earlier matter and those in privity with those parties, and the final judgment governs all issues that were either litigated or might have been litigated. Id.

¶ 39. Issue preclusion, on the other hand, can apply even though there is not an identity of parties in the earlier and later matters so long as the issue of law or fact for which preclusive effect is sought has been actually litigated and decided in a prior action and reduced to judgment. Id. Although issue preclusion might also apply here, a matter that we do not decide, we believe claim preclusion does apply.

¶ 40. Isaacs, having sat on its right to appeal the denial of its motion to intervene, is barred by the principle of claim preclusion from challenging the prior rulings ordering specific performance in favor of the Gaugerts. In Belleville, like here, a mortgage was recorded after a lis pendens; there, the supreme court held the mortgage to be invalid. The court explained its rationale:

Since the mortgage was recorded after the lis pendens, the Belleville State Bank is a subsequent encumbrancer, and its interest in the property is subject to the outcome of the Illinois divorce action. "The purchaser pendente lite is deemed to he represented in the litigation by his [or her] vendor and the purchaser is just as much bound by the final judgment rendered as is the party whose right he [or she] purchases." We conclude that the mortgage executed by Flavia Steele to the Bank is ineffective since title was confirmed, free and clear, in Wendell Steele.

Belleville State Bank, 117 Wis. 2d at 578 (citations omitted). In other words, a prior action against the pendente lite claimant's predecessor evokes the principles of claim preclusion as to the pendente lite claimant even though such pendente lite claimant is not a party to the litigation between the prior interest holder and the pendente lite claimant's predecessor. See id. Applied to our facts, the prior action against Duve has already been judged as to Isaacs, Premiere and the Hansens even though none were a party to the previous litigation (i.e., Gaugert T) between the Gaugerts, Duve and Jeffrey Hansen.

¶ 41. Additionally, Gaugert III instructs that the circuit court's discharge of the statutory lis pendens did not affect the Gaugerts' rights because they retained a common-law lis pendens. The language of Wis. Stat. § 808.07 does not convey intent to abandon the application of common-law principles of lis pendens to the parties to litigation concerning real property. Gaugert III, 244 Wis. 2d 691, ¶ 41. It is a rule of statutory construction that an intent to change the common law must be clearly expressed. Id. Common-law lis pendens operates until the time to seek an appeal has expired or until there is an exhaustion of the right to appeal. Id., ¶ 29.

¶ 42. As a result, the circuit court's discharge of the statutory lis pendens did not affect the Gaugerts' rights. The circuit court had no authority to discharge the common-law lis pendens because a common-law lis pendens survives until the case result is unalterable. Gaugert III lays to rest any further claim that the Gaugerts needed to seek a stay to preserve their rights. It was not necessary to enjoin the sale of the Property by Duve to Premiere. Such a step would have been a redundancy under the common law of lis pen-dens: Premiere purchased the Property at its own peril and was subject to the final judgment of the courts upon the Gaugerts' claim. Isaacs, as mortgagee, is in privity and is bound by the final judgment as well.

¶ 43. This case has had a long and winding history. The mandate of the supreme court is clear: the Gaugerts are entitled to specific performance. It is now time for all litigation concerning the Property to lie in repose. We direct the circuit court on remand to issue any and all orders accomplishing that end.

By the Court. — Orders reversed and causes remanded with directions.

       See footnote 3, which explains the term "pendente lite" and related concepts.

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

       We acknowledged that we had been made aware of the lifting of the lis pendens and the subsequent sale of the property, but declined to consider those events because they were outside of the record.

       The common-law doctrine of lis pendens is based upon the maxim pendente lite nihil innovetur, which means, "[n]othing should be changed during the pendency of an action." Belleville State Bank v. Steele, 117 Wis. 2d 563, 571, 345 N.W.2d 405 (1984). Generally, the doctrine prohibits the defendant-owner from transferring all or part of his or her interest in the property during the course of the litigation to the detriment of the plaintiffs rights. Id. The prohibition arose by the provision that a third-party purchaser, lienor pendente lite, was bound by any judgment as though he or she was a party to the suit. Id. at 571-72. The common-law doctrine did not require notice to the public of the dispute, other than what was in the records of the court. Id. at 571. The third-party transferee was charged with constructive notice of the litigation regardless of whether he or she received actual notice. Id.

      The object of lis pendens is not, primarily, notice, but to hold the subject of the suit — the res — within the power of the court, so as to enable it to pronounce judgment upon it. Brown v. Cohn, 95 Wis. 90, 93, 69 N.W. 71 (1896). It is deemed that every person is bound to know the law, and to take notice of what is transpiring in the courts, from the time when the process is served and the complaint filed until the final judgment is entered. Id. The purchaser pendente lite is deemed to be represented in the litigation by his or her vendor, and the purchaser is just as much bound by the final judgment rendered as is the party whose right he or she purchases. Id.

      The reasons underlying the common-law doctrine are grounded in public policy and include the efficient administration of justice. If property, which was the subject of litigation, could be alienated, the court's exercise of jurisdiction would be frustrated and litigants would be forced into an unending series of lawsuits against persons acquiring the property during litigation. To protect courts' jurisdiction and give finality to judgments, the pendente lite purchaser or encumbrancer was bound by the outcome of the litigation. Belleville State Bank, 117 Wis. 2d at 571-72.
      Forty-seven states have codified the common-law doctrine. Gaugert v. Duve, 2000 WI App 34, ¶ 26, 233 Wis. 2d 190, 607 N.W.2d 310 (Gaugert II). Wisconsin did so in Wis. Stat. § 840.10. The statutes typically provide that the doctrine will not operate unless the plaintiff files a notice of lis pendens in the land records of the county in which the property is situated. Under a statute, the filing operates as constructive notice to all subsequent purchasers. See Janice Gregg Levy, Lis Pendens and Procedural Due Process: A Closer Look After Connecticut v. Doehr, 51 Md. L. Rev. 1054, 1057 (1992). How the statute affects the common-law doctrine is a mixed bag. In some states, the statute abrogates the common law, while in other states it merely restricts the doctrine to cases in which notice was properly filed. See id. at 1058. In Wisconsin, [the statute] was evidently intended to be supplemental to the common law, and not to repeal it. So, the common law will govern in all cases not covered by the statute. Brown, 95 Wis. at 93.

       Wauwatosa Savings and Loan was dismissed from the action by way of stipulation of all parties on March 19, 2003.

       WISCONSIN Stat. § 706.09(1) provides in relevant part:
      Notice of conveyance from the record. (1) When conveyance is free of prior adverse claim. A purchaser for a valuable consideration, without notice as defined in sub. (2), and the purchaser's successors in interest, shall take and hold the estate or interest purported to be conveyed to such purchaser free of any claim adverse to or inconsistent with such estate or interest, if such adverse claim is dependent for its validity or priority upon:
      (b) Conveyance outside chain of title not identified by definite reference. Any conveyance, transaction or event not appearing of record in the chain of title to the real estate affected, unless such conveyance, transaction or event is identified by definite reference in an instrument of record in such chain. No reference shall be definite which fails to specify, by direct reference to a particular place in the public land record, or, by positive statement, the nature and scope of the prior outstanding interest created or affected by such conveyance, transaction or event, the identity of the original or subsequent owner or holder of such interest, the real estate affected, and the approximate date of such conveyance, transaction or event.

       WISCONSIN Stat. § 706.08 provides in relevant part:

        Nonrecording, effect. (1) (a) Except for patents issued by the United States or this state, or by the proper officers of either, every conveyance that is not recorded as provided by law shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate or any portion of the same real estate whose conveyance is recorded first.
      (b) A conveyance of mineral interests which is not recorded in the office of the register of deeds of the county in which the land is located, within 30 days after it is signed by the lessor, is void.
      (2) Where a public tract index or abstract of title index is maintained, an instrument properly indexed therein and recorded at length at the place there shown shall be deemed to be duly recorded for purposes of this section, despite any error or omission in the process of including the instrument, or prior instruments in the same chain of title, in other records. Where an instrument is not properly indexed in such tract or abstract of title index, or where such index is not publicly maintained, the instrument shall be deemed to be duly recorded only if the instrument, together with prior instruments necessary to trace title by use of alphabetical indexes by names of parties, are properly indexed in such alphabetical indexes, and recorded at length at the places there shown. Wherever an instrument is duly recorded hereunder, its record shall be effective as of the date and hour at which it is shown by the general index to have been accepted for record.

       Under Wis. Stat. § 803.09(1), Isaacs met the statutory requirements for intervention as a matter of right. A movant must meet four requirements to intervene as a matter of right: (1) the motion to intervene must be timely, (2) the movant must claim an interest in the subject of the action, (3) the disposition of the action may as a practical matter impair or impede the movant's ability to protect that interest, and (4) the existing parties do not adequately represent the movant's interest. Id.; Armada Broad., Inc. v. Stirn, 183 Wis. 2d 463, 471, 516 N.W.2d 357 (1994).

       In a recent letter, the Gaugerts provided this court with a citation to supplemental authority on this point. Because the additional authority cited in the Gaugerts' letter does not alter the outcome of our decision, we need not address it further.

       Given our resolution of this appeal on the first three issues, we need not address the fourth issue. See Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W. 663 (1938) (only disposi-tive issues need be addressed).

       Wisconsin Stat. § 808.08(1) directs, in part:
      When, the record and remittitur are received in the trial court:
      (1) If the trial judge is ordered to take specific action, the judge shall do so as soon as possible. (Emphasis added.)


source: Caselaw Access Project

author: VERGERONT, J.

license: Public Domain

text:
    Wisconsin Commissioner of Insurance and Manager of the Local Government Property Insurance Fund, Connie L. O'Connell, Assistant Deputy Commissioner Eileen Mallow, and Local Government Property Insurance Fund Program Officer Danford Bubolz, Petitioners-Plaintiffs-Appellants, v. Fiber Recovery, Inc., Millwaste Recovery, Inc. and Marathon County, Respondents-Defendants-Respondents.
    Court of Appeals

      No. 03-3012.

      Submitted on briefs May 6, 2004.

    Decided August 26, 2004.

    2004 WI App 183
    (Also reported in 687 N.W.2d 755.)

      On behalf of the petitioners-plaintiffs-appellants, the cause was submitted on the briefs of Charlotte Gibson, asst, attorney general, and Peggy A. Lauten-schlager, attorney general.
    On behalf of the respondents-defendants-respondents Fiber Recovery, Inc. and Millwaste Recovery, Inc., the cause was submitted on the brief of Jon G. Furlow and John C. Scheller, Michael Best & Friedrich, LLP, Madison.
    On behalf of the respondents-defendants-respondents Marathon County, the cause was submitted on the brief of Richard G. Niess, Coyne, Niess, Schultz, Becker & Bauer, S.C., Madison.
    Before Deininger, PJ., Vergeront and Lundsten, JJ.
   VERGERONT, J.

¶ 1. This appeal concerns a dispute over whether the policy issued by the Local Government Property Fund to Marathon County covers loss resulting from a fire at a facility that had been conveyed by the County to Fiber Recovery, Inc. prior to the fire. The circuit court affirmed the decision of the administrative law judge (ALJ) that there was coverage, and the Wisconsin Commissioner of Insurance and Manager of the Fund appeals. The Commissioner contends that Wis. Stat. § 605.02, which describes the kinds of property that local governmental units may insure in the Fund, limits coverage to property the unit either owns or has in its care, custody, and control. The Commissioner also contends that the terms of the policy are consistent with this limitation, and that the facility was therefore not covered.

¶ 2. We conclude the insurance policy covers the facility — both the building and the personal property inside of it. Although we conclude that Wis. Stat. § 605.02 does not plainly preclude the Fund from providing this coverage, for the reasons explained below we do not resolve the ambiguity in the meaning of the phrase in § 605.02, "property for which [the local governmental unit] may be liable."

BACKGROUND

¶ 3. The Fund is established by statute to provide property insurance for local governments. Wis. Stat. § 605.02. "Any local government may insure in [the Fund] its property or property for which it may be liable in the event of damage or destruction." Id.

¶ 4. From at least 1989 until June 1997, Marathon County owned a refuse-derived fuel plant on its landfill property located in Ringle (the Ringle facility). During that time the Ringle facility was insured against a number of perils, including fire, by policies issued by the Fund and renewed annually.

¶ 5. In June 1997, the County sold the building and equipment at the Ringle facility to Fiber Recovery pursuant to the terms of an asset purchase agreement and quit claim deed. The real estate on which the facility was located was not sold to Fiber Recovery but was leased to it for a nominal amount. The terms of payment were $250,000 payable in cash at closing, plus $1,000,000 paid in installments from income generated; the County was entitled to receive a mortgage encumbering the real property assets as security for Fiber Recovery's performance. Title to the facility was to indefeasibly vest with Fiber Recovery when full payment was made. Until then, Fiber Recovery could not sell the facility to a third party without Marathon County's prior written approval, and title would automatically revert to the County if Fiber Recovery abandoned the facility, with abandonment defined to include cessation of business for more than a specified number of days.

¶ 6. Paragraph 15 of the asset purchase agreement required Fiber Recovery to maintain at its expense "casualty insurance on its personal property, equipment fixtures and leasehold improvements that comprise any part of the Assets or the Plant," but Fiber Recovery had the option of electing to have the County maintain this insurance, with Fiber Recovery reimbursing the County for the cost. The County, Fiber Recovery, and the Commissioner stipulated before the ALJ that:

7. Pursuant to Paragraph 15 ... Fiber Recovery, Inc. elected to have Marathon County purchase and maintain insurance on the building, personal property, equipment fixtures, and leasehold improvements at the Ringle facility, and Fiber Recovery, Inc. thereafter reimbursed Marathon County for the premium costs of such insurance.
8. Marathon County, in turn, continued the insurance coverage for the Ringle facility with the [Fund] from 1997 through 2000.

¶ 7. The asset purchase agreement also provided that both Fiber Recovery and the County had to indemnify and hold the other harmless for any liabilities arising out of their breach of the agreement.

¶ 8. On March 7, 2000, a fire occurred at the Ringle facility, causing significant damages. The policy in effect during calendar year 2000 listed the Ringle facility on the Statement of Values, with the building valued at $1,161,485 and its contents at $1,646,855. At the time of the fire there was at least $940,000 still due the County from Fiber Recovery.

¶ 9. The County timely notified the Fund of the fire loss and provided the asset purchase agreement and the quit claim deed to the adjuster acting on behalf of the Fund. The adjuster recommended that payment be made pursuant to a partial proof of loss for $108,041.57, with portions earmarked for Fiber Recovery and its architect; the Fund issued a check to the County in that amount, and the County paid Fiber Recovery and its architect as instructed. However, after the adjuster drafted a second partial proof of loss, the Fund raised the issue of coverage. Ultimately, the Fund denied the County's claim on the ground that the fire loss involved property owned by Fiber Recovery, not by the County, and Fiber Recovery was not named as an additional insured on the policy. The Fund rejected the County's contention that, because the County was obligated under the agreement to maintain insurance once Fiber Recovery elected that option, the damaged property was "property for which [the County] may be liable in the event of damage or destruction" within the meaning of Wis. Stat. § 605.02.

¶ 10. The County requested a contested case hearing on coverage. An ALJ from the Department of Administration, Division of Hearing and Appeals was assigned the case, with the Commissioner ordering that the ALJ's decision would be the final decision in the matter. Fiber Recovery, the County, and the Commissioner all moved for summary judgment on the issue of coverage. The parties stipulated to many of the material facts and the ALJ concluded that all other material facts regarding the issue of coverage were undisputed.

¶ 11. The ALJ decided there was coverage, making the following conclusions of law: (1) Wisconsin Stat. § 605.02 plainly does not require that the local authority own the damaged or destroyed property; the phrase "may be liable" is an alternative basis for coverage and is not ambiguous; (2) even if there were an ambiguity, the legislative history relied on by the Commissioner supports the construction that ownership by the local governmental unit is not required and that private interests are protected if they are able to establish a right against the governmental unit for damages or destruction of the property; and (3) based on the undisputed facts, there were a number of grounds on which, the County "may be liable" for the loss at the Ringle facility, including the County's agreement to maintain insurance at Fiber Recovery's option and the County's reversionary interest. The ALJ also concluded that the Ringle facility was plainly covered under the policy, finding that the Fund likely knew that Fiber Recovery was an additional insured under the policy, and that the County did not violate any program rule or contractual requirement by not informing the Fund in writing of the sale to Fiber Recovery.

¶ 12. The Commissioner sought judicial review of the ALJ's decision and the circuit court affirmed.

DISCUSSION

¶ 13. On appeal, the Commissioner argues that the language in Wis. Stat. § 605.02, "property for which [the local governmental unit] may be liable in the event of damage or destruction" means property within the care, custody, and control of a local government, such as a bailment. According to the Commissioner, the terms of the policy must be read in conjunction with Wis. Stat. ch. 605, and the language of the policy is consistent with this statutory limitation.

¶ 14. Both Fiber Recovery and the County view the insurance policy as the starting point in the analysis, and, they assert, the policy provides coverage. Both view Wis. Stat. ch. 605 as authorizing coverage: Fiber Recovery construes the disputed statutory phrase to mean property in which the local government has an insurable interest, while the County construes it to include property a local governmental unit is contractually obligated to insure. The County also contends that the preceding phrase "its property" includes non-tangible property such as the reversionary interest the County has in the Ringle facility.

I. Applicable Legal Standards

¶ 15. Because this action seeks judicial review of an agency decision, we review the decision of the ALJ, not that of the circuit court. Lopez v. Labor & Indus. Review Comm'n, 2002 WI App 63, ¶ 9, 252 Wis. 2d 476, 642 N.W.2d 561. The issues in dispute involve the construction of a statute, which presents a question of law, Seider v. O'Connell, 2000 WI 76, ¶ 26, 236 Wis. 2d 211, 612 N.W.2d 659, and the construction of an insurance contract, which is also a question of law. Folkman v. Quamme, 2003 WI 116, ¶ 12, 264 Wis. 2d 617, 665 N.W.2d 857. We review questions of law de novo. Id. Although we may give deference to an agency decision on a question of law where the agency has expertise that bears on that question, see Lopez, 252 Wis. 2d 476, ¶¶ 9-10, none of the parties suggest that the Division of Hearings and Appeals has expertise in the construction of Wis. Stat. ch. 605 or of the insurance contract that would make deference appropriate. See Roehl Transp., Inc. v. Wisconsin Div. of Hearings & Appeals, 213 Wis. 2d 452, 461, 570 N.W.2d 864 (Ct. App. 1997) (reviewing de novo a decision of the Division of Hearings and Appeals on a tax issue because it is a division of a management services agency and has no experience, expertise, or specialized knowledge in the subject matter of the hearing). Accordingly, our review is de novo.

¶ 16. When we are asked to construe a statute, we begin with the language of the statute and give it its common, ordinary, and accepted meaning, except that technical or specially defined words are given their technical or special definitions. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 45, 271 Wis. 2d 633, 681 N.W.2d 110. We interpret statutory language in the context in which it is used, not in isolation, but as part of a whole, in relation to the language of surrounding or closely related statutes, and reasonably to avoid absurd or unreasonable results. Id., ¶ 46. We also consider the scope, context, and purpose of the statute insofar as they are ascertainable from the text and structure of the statute itself. Id., ¶ 48. If, employing these principles, statutory language is ambiguous — that is, capable of being understood by reasonably well-informed persons in two or more senses —then we may employ sources extrinsic to the statutory text. Id., ¶¶ 47, 50. These extrinsic sources are typically items of legislative history. Id., ¶ 50.

¶ 17. When we construe an insurance policy, our aim is to give effect to the intent of the parties, expressed in the language of the policy itself. Folkman, 264 Wis. 2d 617, ¶ 12. We give the language its common and ordinary meaning, that is, what a reasonable person in the position of the insured would understand it to mean. Id., ¶ 17. If the language of the policy is ambiguous, we construe it in favor of the insured. Id., ¶ 13.

II. Wis. Stat. ch. 605

¶ 18. Because the Commissioner contends that the policy must be construed in light of Wis. Stat. ch. 605, we begin with a discussion of the statute. The pertinent language reads: "property for which [the local governmental unit] may be liable in the event of damage or destruction." Wis. Stat. § 605.02. In arguing that this language means that property must be within the care, custody, and control of a local government, the Commissioner relies on two federal cases construing similar language in insurance contracts: House of Lloyd, Inc. v. Versa Corp., 86 F.3d 847, 851-52 (8th Cir. 1996) ("property of others for which the insured may be liable"); Paktank Louisiana, Inc. v. Marsh & McLennan, Inc., 688 F. Supp. 1087, 1090-91 (E.D. La. 1988) ("property that the insured does not own for which the insured may be liable").

¶ 19. In the Eighth Circuit case, House of Lloyd, the court concluded the policy language was plain and limited coverage to instances where the property was in the care, custody, and control of the insured. House of Lloyd, Inc., 86 F.3d at 852. Therefore, the court held, it did not cover property that was damaged by fire at a facility after the insured, a subcontractor, had delivered the property to the facility, but before the subcontractor had installed it. Id. at 851. The court reasoned that the subcontractor was not a bailee and the contractual duty to install the property did not make it legally or equitably responsible for the property. Id. at 850.

¶ 20. In the federal district court case, Paktank, the court held that the language unambiguously referred to situations where the insured has assumed responsibility for property by virtue of a bailment, rental, leasing, or borrowing agreement. Paktank, 688 F. Supp. at 1090-91. The court concluded that a marine terminal business that had a license with the owner of a docking facility did not have an interest in the docking facility that met this definition, because under New York law a "license does not convey any interest in the property itself such as would he associated with an existing liability or responsibility for the property." Id. at 1091.

¶ 21. The Commissioner does not tie the construction of the insurance contract provisions in the above federal cases to the principles of statutory construction that we employ in Wisconsin. Indeed, we are uncertain whether the Commissioner's position is that the statutory phrase "property for which [the local governmental unit] may be liable" plainly means property in the care, custody, and control of the insured, or whether the Commissioner's position is that the phrase is ambiguous, but this interpretation is the more reasonable one. We conclude the interpretation proposed by the Commissioner is a reasonable one, but the Commissioner has pointed to nothing in the text or structure of ch. 605 that leads to the conclusion either that it is the only reasonable interpretation or that it is the more reasonable interpretation. More particularly, neither of the federal cases, nor anything the Commissioner points to in the text or structure of ch. 605, persuades us that the liability the County would have if it had not maintained insurance — as it was obligated to do under the purchase agreement once Fiber Recovery elected that option — is plainly not included in the statutory phrase "property for which [the local governmental unit] may be liable in the event of damage or destruction."

¶ 22. The Commissioner also relies on two notes to Laws of 1973, ch. 117, § 10, which renumbered and amended the prior version of ch. 605. However, neither of these notes shows that the Commissioner's construction is the only reasonable one or the more reasonable one:

The expression "may be liable" does not imply that there is coverage for the private owners of the property. Governmental units are protected by this fund but private interests are not, except indirectly to the extent that they are able to establish a right against the governmental unit for damages to or destruction of their property.

Note, 1973, Wis. Stat. § 605.02.

The fact that the property fund has no option but to cover public property on request, and in fact to do it at extremely favorable rates, should lead the legislature to protect the fund against unwise contractual assumption of risks that would normally lie elsewhere, such as on a builder .... The property fund has no option but to insure and should not be subject to having private persons thrust upon it as insureds, without its consent.

Note, 1973, Wis. Stat. § 605.24(3).

¶ 23. Again, the Commissioner's discussion of these comments is not tied to principles of statutory construction. We therefore do not know if the Commissioner views them as extrinsic sources or not, and, if viewed as extrinsic sources, whether the Commissioner views them as reinforcing a plain meaning or, instead, as resolving an ambiguity. Ultimately, however, these questions do not need to be answered on this appeal. As we have already stated, the Commissioner's proposed interpretation is not the only reasonable meaning of the statutory language, and the notes do not indicate that it is the more reasonable one. The first note suggests that "property for which [the local governmental unit] may be liable" means property for which private owners "are able to establish a right against the governmental unit for damages to or destruction of their property," but this meaning simply restates the ambiguity; it does not resolve it. It is reasonable to understand such a right as including Fiber Recovery's right to recover under a breach of contract theory if the County did not maintain insurance on the Ringle facility. The second note does not appear to limit what the Fund is authorized to do because of the addition of "without its consent." Thus, it does not support the view that the Fund may not choose to insure a private person, but appears to suggest that it may.

¶ 24. As for the County's argument that its rever-sionary interest in the Ringle facility is "its property" within the meaning of Wis. Stat. § 605.02, the Commissioner's reply is limited to the assertion that Wis. Stat. ch. 605 applies only to property "owned or within the care, custody and control of a local government," with another reference to the two legislative notes quoted above. This, however, is not the wording of the statute, and the Commissioner does not develop an argument based on the text and structure of the statute to support an interpretation that plainly excludes the County's reversionary interest as "its property." And, as we have already explained, the second note does not support a limitation on the Fund's authority to choose what property or property owners to insure.

¶ 25. In summary, we reject the Commissioner's argument that Wis. Stat. § 605.02 plainly prevents the Fund from choosing to insure the Ringle facility after its purchase by Fiber Recovery under the terms of this purchase agreement, where Fiber Recovery has chosen to exercise its option to have the County maintain insurance and where the County has a reversionary interest in the facility because of the installment payments still owing. We also reject the argument that the Commissioner's interpretation is the more reasonable one. However, we do not arrive at a definitive interpretation of § 605.02 because the arguments are not sufficiently developed and, ultimately, a definitive interpretation is unnecessary to the resolution of this appeal.

III. Insurance Policy

¶ 26. Before discussing the parties' arguments on the proper construction of the insurance policy, we set forth the relevant terms. The preamble states:

In consideration of the provisions of this policy, the payment of premium, and in accordance with the provisions of Ch. 605, Wisconsin Statutes, the Fund insures those named on the Declaration page for the coverages indicated by amount of coverage and premium.

Marathon County is the named insured on the declaration page and there is no additional insured named.

¶ 27. The "Property Covered" section lists numerous categories of property covered under the policy and includes "[b]uildings and structures listed on the Statement of Values" and "[pjersonal property [defined as 'items usually located in a building'] you own or are legally responsible for insuring." "[YJou" and "your," the preamble states, refer to the named insured on the declarations page, which is Marathon County. The Statement of Values instructs to cross out "[ajny buildings you sold, tore down and/or are no longer responsible for insuring" and to add "any new buildings owned and/or leased." As we have already noted, the Ringle facility was listed on the Statement of Values.

¶ 28. The Commissioner first argues that because the preamble states that the Fund insures "in accordance with the provisions of Ch. 605," the policy plainly informs the insured that there is no coverage under the policy that is not authorized by Wis. Stat. ch. 605. In the Commissioner's view, this reference to ch. 605 plainly informs the insured that only property owned or within the care, custody, and control of the local government is insured under the policy. We reject this argument for two reasons. First, we have already concluded that the Commissioner's construction of the statute is not the only reasonable one. Thus, if other policy terms are ambiguous, the reference to the statute does not resolve those ambiguities. Second, the very phrasing of the preamble's reference to the statute is ambiguous. A reasonable insured could understand that the preamble is reciting the statute as the authority under which the Fund is acting in issuing the policy. This construction is at least as reasonable as the one the Commissioner proposes — that the insured is supposed to read the statute and interpret the policy terms in light of the statute.

¶ 29. The Commissioner next argues that the instructions on the Statement of Values to cross out "[a]ny buildings you sold, tore down and/or are no longer responsible for insuring" and to add "[t]o the last page, any new buildings owned and/or leased" plainly tell the insured that "responsible for insuring" means "legally responsible [to insure because of] ownership or lease." The Commissioner apparently is of the view that this is the same as the statutory construction the Commissioner has argued for, but that is not correct. There are certainly situations besides leasing in which property is in the care, custody, and control of one not the owner — such as bailment, discussed in the cases on which the Commissioner relied in its statutory construction argument.

¶ 30. In addition to the discrepancy between the scope of the statutory coverage and the scope of the insurance coverage advocated by the Commissioner, the more fundamental problem is that the Commissioner's argument does not analyze the policy language as it would be understood by a reasonable insured in the position of the County and does not take into account the coverage section of the policy. The policy plainly provides coverage for buildings and structures listed on the Statement of Values, and there is no dispute that the Ringle facility was listed on the Statement of Values at the time the County sold it. The language the Commissioner relies on instructs the insured to cross out listed buildings that the insured "sold, tore down and/or [is] no longer responsible for insuring." There is no definition in the policy for "responsible for insuring." A reasonable insured in Marathon County's position could understand this phrase to include its contractual obligation to maintain insurance if Fiber Recovery makes that election.

¶ 31. At this point we address the Commissioner's argument that paragraph 15 of the asset purchase agreement does not cover insurance on the building, but only on "personal property, equipment fixtures and leasehold improvements." In a footnote in the reply brief, the Commissioner acknowledges stipulating before the ALJ that "[p]ursuant to Paragraph 15 ... Fiber elected to have Marathon County maintain insurance on the building[,]" but, the Commissioner states, this is "a legal conclusion to which the parties could not stipulate and obviously a mistake in light of the plain language of the Agreement." According to the Commissioner, because the asset purchase agreement did not obligate the County to maintain insurance on the building, there is no reasonable construction of "responsible for insuring" that would apply to the building, as opposed to the personal property.

¶ 32. In essence, the Commissioner is asking to be relieved of the stipulation the Commissioner made before the ALJ. We decline to grant that relief. We do not agree with the Commissioner that paragraph 15 of the asset purchase agreement plainly does not address insurance on the building. Arguably "leasehold improvements" include buildings. In addition, it is arguably unreasonable from the County's standpoint to require that there be insurance on everything Fiber Recovery is purchasing except the building, given that Fiber Recovery is making installment payments to the County and the County retains a reversionary interest in the real property assets until the installments are completely paid. Had the County not entered into the stipulation it did and instead advanced the construction of the asset purchase agreement before the ALJ that is now does, there likely would have been evidence presented on the intent of Fiber Recovery and the County with respect to paragraph 15, a question of fact for the ALJ to decide as fact finder. See Armstrong v. Colletti, 88 Wis. 2d 148, 153, 276 N.W.2d 364 (1979) (construction of contract involves determining intent of parties; if the contract is ambiguous, the question of intent is one for trier of fact). As it was, the Commissioner not only entered into the stipulation, but made no distinction in briefing before the ALJ between the building and other property with respect to the County's obligation to insure. At the same time, Fiber Recovery and the County in their briefs clearly relied on the stipulation in their arguments. The ALJ accepted the stipulation and it was one of the grounds on which it concluded that the County "may be liable" for the loss at the Ringle facility. The Commissioner had the opportunity, upon reading the briefs of the other parties and again upon receipt of the ALJ's decision, to move for relief from the stipulation at a time when the factual dispute underlying the construction of paragraph 15 could have been resolved. However, we see nothing in the record indicating that the Commissioner brought this issue to the attention of the ALJ.

¶ 33. We recognize that in briefing in the circuit court, the Commissioner did make a distinction between insurance for personal property and the building, characterizing paragraph 15 as requiring insurance on the former but not the latter. However, the circuit court, like this court, reviews the facts as found by the ALJ, and, without a motion for a remand to take additional evidence on the proper construction of paragraph 15, the stipulation, accepted by the ALJ was binding. Therefore, for purposes of this appeal, we hold the Commissioner to the stipulation and conclude that paragraph 15 of the asset purchase agreement did require insurance on the building as well as on personal property. Thus, a reasonable insured in the County's position could understand "responsible for insuring" to include its contractual obligation to maintain insurance on both the building and the personal property it sold to Fiber Recovery, if Fiber Recovery made that election. Similarly, a reasonable insured in Marathon County's position could understand from the deletion instruction that it did not need to delete the building from the Statement of Values upon the sale of the facility to Fiber Recovery.

¶ 34. We do not agree with the Commissioner that the instruction to add "any new buildings owned and/or leased" plainly tells an insured that only owned or leased buildings are covered. A reasonable insured that — like Marathon County — did not have any property to add to the Statement of Values could assume that the instruction on what property to add would not inject a limitation on coverage that was not stated in the coverage section, and was not explained in the instructions on what to cross out. Moreover, the "sold, tore down and/or are no longer responsible for insuring" language of the deletion instruction tracks the coverage language for personal property "you own or are legally responsible for insuring." This adds to the likelihood that a reasonable insured in the County's position would not understand that "responsible for insuring" with respect to buildings means only leased buildings.

¶ 35. In summary, we conclude that the policy language "legally responsible for insuring" can be understood by a reasonable person in the position of the County to include personal property of another that the insured is obligated to insure by contract. If the Fund wanted the limitation it now seeks, it should have defined the term in the policy more narrowly.

¶ 36. We also conclude that the policy is ambiguous concerning the criteria for coverage of buddings and structures. The coverage section refers only to the buildings and structures listed on the Statement of Values, and a reasonable insured could understand from the deletion instruction that a building that it no longer owns, but which it is responsible under a contract for insuring, may properly remain on the Statement of Values. We therefore adopt this construction, rather than the Commissioner's construction that the building must he owned or leased. The Fund could have specified in the coverage section the criteria for listing buildings and structures on the Statement of Values, but it did not do so. It has, moreover, collected a premium from the County based on the buildings and structures listed. Finally, there is no contention that the County engaged in any misrepresentation concerning its relationship to the Ringle facility. The ALJ found there were no misrepresentations and the Commissioner does not argue that this finding was in error.

CONCLUSION

¶ 37. The insurance policy covers the Ringle facility — both the building and the personal property inside it. Although we conclude that Wis. Stat. § 605.02 does not plainly preclude the Fund from providing this coverage, for the reasons stated above we do not resolve the ambiguity in the meaning of "property for which [the local governmental unit] may be liable."

By the Court. — Order affirmed.

       The Commissioner of Insurance and Manager of the Fund at the time was Connie O'Connell. She and two other individuals associated with the Fund are the plaintiffs and the appellants. For ease of reference, we will refer to the appellants collectively as "the Commissioner."

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

       Except as otherwise noted, the facts in paragraphs 4 through 9 are taken from the stipulation of facts the parties submitted to the ALJ, which the ALJ adopted.

       This fact was not stipulated to, but the ALJ found it as fact based on the undisputed submissions of affidavits.

       The ALJ made factual findings concerning the Fund's conduct and past practices that may support coverage under alternative theories. However, because we conclude that there is coverage under the terms of the policy, it is not necessary to recite these findings.
      The ALJ also decided that various provisions in Wis. Stat. ch. 631, which governs insurance policies generally, precluded the Fund from denying coverage. The circuit court agreed. It is not necessary to address these statutory provisions because we conclude there is coverage under the policy. Thus, we do not address the dispute between the parties over whether the County waived the right to rely on one of the provisions of ch. 631 on this appeal.

       WISCONSIN Stat. § 605.23(1) repeats part of this phrase in providing that "[t]he manager shall determine within a reasonable time any loss on insured property owned by a local governmental unit or for which the unit is liable ...."

       These two notes appear in Laws of 1973, ch. 117, § 10, following the relevant sections. The source of the notes is not identified.

       Wisconsin Stat. § 605.24(3) provides:
      (3) Right over against third persons. The property fund may name other persons as additional persons protected under s. 605.02, but unless it does so the fund shall have any right of recovery by subrogation or otherwise against such persons that a private insurer would have and shall not lose such right because the governmental unit protected has after commencement of the coverage waived any right of recovery it would otherwise have had, or has thereafter contracted to assume the risk that general law would have placed elsewhere.

       Extrinsic sources such as legislative history are sometimes used to confirm that the meaning of the statute is plain. Seider v O'Connell, 2000 WI 76, ¶¶ 51-52, 236 Wis.2d 211, 612 N.W.2d 659.

       The Commissioner asserts that the County's right under the asset purchase agreement to an automatic reversion of title if Fiber Recovery abandons the facility is not a true "reversion-ary interest." We use this term because it is a convenient description; whether the interest is "reversionary" in a more technical sense is not relevant to our decision.

       The circuit court apparently accepted the Commissioner's argument that paragraph 15 applied only to personal property, but concluded that the policy nonetheless plainly covered the building because the building was listed on the Statement of Values and the coverage section stated that buildings and structures listed on the Statement of Values were covered. The circuit court therefore did not need to address the Commissioner's disclaimer of the stipulation.