source: Caselaw Access Project

author: WILLIAM A. BABLITCH, J.

license: Public Domain

text:
    Anderson B. Connor and Thelma A. Connor, Plaintiffs-Respondents, v. Sara Connor, Defendant-Appellant-Petitioner.
    Supreme Court

      Nos. 99-0157, 99-1042.

      Oral argument January 3, 2001.

    Decided May 18, 2001.

    2001 WI 49
    (Also reported in 627 N.W.2d 182.)

      For the defendant-appellant-petitioner there were briefs by Mark E. Sostarich and Petrie & Stocking S. C., Milwaukee, and oral argument by Mark E. Sostarich.

    For the plaintiffs-respondents there was a brief by Ann E. Stevning-Roe and Juneau, Minder, Gross & Stevning-Roe, S.C., Marshfield, and oral argument by Ann E. Stevning-Roe.

   WILLIAM A. BABLITCH, J.

¶ 1. Sara Connor (defendant) petitions us to review a decision of the court of appeals that denied her relief from a default judgment entered against her. The circuit court, Judge Robert A. Kennedy presiding, entered the default judgment against her because she failed to serve her answer to a complaint filed by Anderson B. and Thelma A. Connor (plaintiffs) within the statutory deadline and failed to show excusable neglect for her untimely answer. We conclude that the record does not support a finding of excusable neglect or any basis for relief to reopen the default judgment. Accordingly, we affirm the court of appeals' decision.

I. FACTS AND PROCEDURAL HISTORY

¶ 2. This lawsuit originated from a disagreement between the parties over property rights, specifically, a dispute over the use of a road. Both parties in this case owned property on the west side of and adjacent to Birch Lake in Forest County. The plaintiffs' property was located to the north of the defendant's property. The plaintiffs gained access to their property by traveling on a north-south road that ran along the western side of the lake. A section of this road crossed the defendant's property.

¶ 3. In the fall of 1997, the defendant asked the plaintiffs to use an alternative route. They refused. The defendant then blocked access to the road.

¶ 4. On June 10,1998, the plaintiffs filed a three-count complaint against the defendant. All three counts were based on alleged violations of their easement rights to the road. The first cause of action alleged that the defendant had intentionally interfered with the plaintiffs' access to the easement road. The plaintiffs sought damages and permanent injunctive relief to prohibit the defendant from interfering with their use of the road. The remaining causes of action alleged (1) conversion or dispossession of property rights and (2) intentional interference with contractual rights. On that same date, the plaintiffs also filed a separate motion for temporary injunctive relief.

¶ 5. On June 15, 1998, the defendant received the summons, complaint and notice of motion for temporary injunction. The summons stated that the defendant was required to respond with a written answer within 45 days. The defendant retained Steven Polich as her attorney. Polich represented the defendant at a July 16, 1998, hearing on the plaintiffs' motion for temporary injunction. The circuit court granted the plaintiffs' motion on that date.

¶ 6. The statutory deadline for the defendant to serve her answer was July 30, 1998. The defendant, however, failed to meet this deadline. Instead, she mailed her answer to the plaintiffs on August 4, 1998, and filed the answer with the court on August 10,1998. The defendant substituted attorney Mark Sostarich for Polich as her counsel and filed a substitution of counsel with the court on September 10, 1998.

¶ 7. In response to the defendant's answer, the plaintiffs filed a motion to strike the answer and a motion for default judgment. The plaintiffs asserted that they did not receive the defendant's answer until August 10, 1998, and that no extension of time to answer was ever requested by or granted to the defendant.

¶ 8. On November 12,1998, the defendant filed a motion requesting the court to accept her answer. The defendant argued that the court should regard her answer as timely served because Polich had received an extension of time to serve the answer from Patrick Juneau, an attorney who worked at the same firm as the plaintiffs' counsel. An affidavit from Polich attested to this fact and was filed with the defendant's motion. In the alternative, the defendant argued that the court should accept the answer because any misunderstanding by Polich about the existence of such an agreement amounted to excusable neglect, requiring an enlargement of time to answer under Wis. Stat. § 80l.l5(2)(a)(l997-98).

¶ 9. The court held a hearing on the parties' motions on November 16, 1998. The court concluded that Polich's affidavit only stated that he understood that there was a courtesy extension agreement between the parties; it did not state that he ever asked for or received an extension. This lack of a clear agreement was a factor in the court's conclusion that there was insufficient evidence to support a finding of excusable neglect. The court also based its decision on the amount of time that Polich had to answer the complaint and Polich's active involvement in the case prior to the deadline. The court then denied the defendant's motion and granted the plaintiffs' motions. An order was issued on November 30, 1998. On that same date, the court entered judgment only on the first cause of action. The judgment granted permanent injunctive relief to the easement rights of the road and costs associated with this relief to the plaintiffs.

¶ 10. The defendant then filed both a motion for reconsideration and a motion to reopen and vacate the judgment pursuant to Wis. Stat. § 806.07(l)(a), (b), (g) or (h). In her motion, she alleged in part that the judgment should be vacated in light of a second affidavit from Polich. In the affidavit, Polich again alleged that the parties had in fact entered into a oral courtesy extension agreement and further stated that the basis for this agreement was so that Polich could conduct depositions of the plaintiffs before filing the answer.

¶ 11. In response, the plaintiffs submitted an affidavit from their attorney, Ann Stevning-Roe. Stevning-Roe admitted that Polich had contacted her about setting up depositions and that she agreed to make her clients available for deposition, but stated that nothing further had developed on this matter. She denied the existence of any agreement, stating that "[absolutely nothing was requested, discussed, stated or granted regarding an extension to file Answers based upon the scheduling of depositions" and that "[a]t no time did Mr. Polich say anything regarding wanting to schedule depositions prior to filing an Answer in this matter."

¶ 12. During a March 29, 1999, hearing, the court denied both of the defendant's motions. In its decision, the court dismissed Polich's second affidavit as unbelievable and "self-serving." The court further stated that Polich should have sent out confirmation of the agreement and that he should have been aware that the answer was due because he was actively involved in the case prior to the deadline. An order to that effect was issued on April 7,1999.

¶ 13. The court of appeals affirmed, and we accepted review. Two issues are presented: (1) whether the circuit court properly exercised its discretion in granting the plaintiffs' motion to strike the answer and motion for default judgment; and (2) whether the court properly exercised its discretion in denying the defendant's motion for reconsideration and her motion to vacate the default judgment.

II. ISSUE ONE: MOTION TO STRIKE AND DEFAULT JUDGMENT

¶ 14. We examine two orders issued by the circuit court. The first order, entered on November 30, 1998, addressed four separate motions. Two of these motions — a motion to strike the defendant's entire answer and a motion for default judgment — were both properly brought by the plaintiffs in response to the defendant's untimely answer. See Martin v. Griffin, 117 Wis. 2d 438, 441-42, 344 N.W.2d 206 (Ct. App. 1984). The other two motions — a motion to accept the answer and a motion to enlarge the time for serving an answer — were then filed by the defendant. The defendant's motions are appropriately considered as one motion because they both essentially seek relief under Wis. Stat. § 801.15(2)(a) on the basis of excusable neglect. See Clark County v. B.T.U. Structures, Inc., 144 Wis. 2d 11, 15-16, 422 N.W.2d 910 (Ct. App. 1988) (evidence of a courtesy extension agreement is excusable neglect).

¶ 15. The circuit court noted that it only needed to address the plaintiffs' motions in this case. The court did not err in this respect. It could proceed in this manner because, under either party's motions, the court was required to determine whether excusable neglect was present. See Leonard v. Cattahach, 214 Wis. 2d 236, 248-49, 571 N.W.2d 444 (Ct. App. 1997); Rutan v. Miller, 213 Wis. 2d 94, 101, 570 N.W.2d 54 (Ct. App. 1997); Martin, 117 Wis. 2d at 442. The court correctly applied the excusable neglect standard in this case.

¶ 16. Excusable neglect is not the same as neglect, carelessness or inattentiveness. Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 468, 326 N.W.2d 727 (1982). Instead, it is " 'that neglect which might have been the act of a reasonably prudent person under the same circumstances.'" Id. (quoting Giese v. Giese, 43 Wis. 2d 456, 461, 168 N.W.2d 832 (1969)). In the context of an untimely answer, reasonable grounds for noncompli-anee with the statutory period constitutes excusable neglect. Id.

¶ 17. A circuit court has great discretion in granting relief based on excusable neglect. Id. at 467. In exercising this discretion, the court must consider whether the interests of justice would be served in its finding. Id. at 468. The interests of justice require the court to be aware that a failure to find excusable neglect could result in a default judgment and that the law generally disfavors default judgments and prefers a trial on the merits. Id. at 469. The court should also balance other competing interests of a default judgment, such as promoting prompt adjudication and encouraging quality legal representation. Id.

¶ 18. We will not disturb a circuit court's decision regarding excusable neglect unless an erroneous exercise of discretion is clearly shown. Id. at 471. An erroneous exercise of discretion will result "[i]f the record indicates that the circuit court failed to exercise its discretion, if the facts of record fail to support the circuit court's decision, or if this court's review of the record indicates that the circuit court applied the wrong legal standard. . . ." Id. at 471-72. If the circuit court enumerates its reasons for finding excusable neglect, we "will focus on the facts of record to determine whether they support the court's reasons." Id. at 471.

¶ 19. Upon review, we conclude that the circuit court properly exercised its discretion in finding that excusable neglect was not present and in granting default judgment. The reasons articulated by the court provide a reasonable basis for this determination and are supported by the record.

¶ 20. One reason articulated by the court was that Polich's affidavit did not provide clear evidence of an oral courtesy extension agreement. The affidavit only stated that Polich understood that there was an agreement based on prior communications with Juneau and their "mutual cooperation." This assertion, the court determined, was insufficient to support a finding of a clear agreement. At that time, the record also contained an affidavit from Juneau, which denied the existence of the agreement and alleged that, on a prior occasion when an adjournment was necessary, the parties entered into a written agreement. This evidence supports the conclusion that no agreement for an extension of time to answer existed. Thus, the court correctly concluded that the alleged agreement could not constitute a basis for excusable neglect.

¶ 21. The defendant argues that this finding by the court essentially concluded that the courtesy extension agreement was unenforceable because it was not in writing or confirmed in writing. This is an incorrect interpretation of the circuit court's decision. The court only concluded that the affidavit did not reflect a clear agreement between the parties; it did not conclude that the agreement was unenforceable because it was not in writing. In fact, the only mention the court made about the agreement not being in writing was that most attorneys confirm such extensions in writing. It did not state that the agreement had to be in writing. Indeed, courtesy agreements that are not reduced to writing may be enforceable in certain instances. See Rutan, 213 Wis. 2d at 102. Here, however, the parties disputed the existence of the agreement; therefore, the court was forced to make a determination as to whether the agreement even existed. Certainly, this case reemphasizes our previous warning that, as a matter of good practice, such agreements should be reduced to writing with additional notification to the court. See Oostburg State Bank v. United Savings & Loan Ass'n, 130 Wis. 2d 4, 13, 386 N.W.2d 53 (1986).

¶ 22. Also, with respect to the courtesy extension agreement, the defendant argues that the court erred by failing to acknowledge that Polich's misunderstanding of the agreement may have constituted excusable neglect. However, at the time of this hearing, there was no evidence — no notes, confirmation letters, or other documentation from Polich — to indicate that he misunderstood that there was an agreement. Further, the record did not contain any testimony from Polich to indicate that he ever asked for an extension or that Juneau ever misled him into thinking that an extension was granted. Indeed, the defendant could have provided additional evidence to the court on this and other factors; however, she decided to rest her case on Polich's affidavit without seeking a continuance for an evidentiary hearing where Polich could have appeared and given testimony. Polich was not present because of a scheduling conflict. Thus, in light of the lack of evidence showing any misunderstanding, the court did not err in failing to find excusable neglect based on this alleged misunderstanding.

¶ 23. Another reason articulated by the court was that the defendant had reasonable time to serve the answer. In particular, the court noted that the defendant had 14 days in which to file from the time of the temporary injunction hearing to the statutory deadline and concluded that this amount of time was sufficient to file an answer. The defendant argues that this factor was outside the scope of the court's analysis for excusable neglect. She asserts that the court's focus should have been on whether there was a justifiable explanation for the untimely answer, not on whether there was adequate time to serve the answer.

¶ 24. However, in this case, the defendant made this time frame an issue when it entered Polich's affidavit into evidence, which alleged: "[I]t was my understanding that I had been granted a reasonable time to answer after the hearing regarding the Injunction on July 16, 1998 and that, in fact, I answered just four days beyond the statutory time." In an apparent response to this statement, the court concluded that the time between the hearing and the statutory deadline was a reasonable time to answer, implying that the defendant did not need extra time in which to answer. The time to answer was reasonable, the court concluded, in light of the fact that Polich did not provide any reason as to why he could not answer by the deadline. Thus, because the defendant made this time period an issue, the court acted properly in considering it and using it as a basis for rejecting the defendant's excusable neglect argument.

¶ 25. Based on the above, we conclude that the record supports the circuit court finding that the defendant failed to show excusable neglect and that it appropriately entered the default judgment. The defendant contends that the court erred because it failed to consider policy reasons weighing against default judgment in its determination. The court, however, was aware of these factors at the hearing. In particular, the defendant informed the court that it had broad discretion in granting motions to enlarge the time to answer and that the law generally treats default judgment as an extreme measure. The fact that the court did not specifically articulate its consideration of these policy factors does not mean that it was not cognizant of these factors before granting the plaintiffs' motions. The court acted properly.

III. ISSUE TWO: RECONSIDERATION AND VACATING JUDGMENT

¶ 26. We next review the court's order that denied the defendant's motion for reconsideration and denied her motion to vacate the judgment pursuant to Wis. Stat. § 806.07(1). In her motion for reconsideration, the defendant argued that the court erred by considering the time between the temporary injunction hearing and the statutory deadline as a factor for excusable neglect. However, as we concluded above, the court did not err in this respect, and we will not revisit this issue. Our analysis is limited to the motion to vacate the judgment.

¶ 27. A circuit court's decision to grant or deny a motion under Wis. Stat. § 806.07(1) is reviewed subject to an erroneous exercise of discretion standard. State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 541-42, 363 N.W.2d 419 (1985). In its exercise of discretion, the court "must attempt to strike the appropriate balance between the countervailing policy considerations that consistently pull at either end of the default judgment spectrum." J.L. Phillips & Assocs. v. E & H Plastic Corp., 217 Wis. 2d 348, 359, 577 N.W.2d 13 (1998). These considerations were mentioned above. In short, we balance the competing values of finality and fairness in the resolution of a dispute. State ex rel. M.L.B., 122 Wis. 2d at 542.

¶ 28. The defendant sought relief under Wis. Stat. § 806.07(l)(a), (b), (g) and (h). This statute provides:

On motion and upon such terms as are just, the court, subject to subs. (2) and (3), may relieve a party or legal representative from a judgment, order or stipulation for the following reasons:
(a) Mistake, inadvertence, surprise, or excusable neglect;
(b) Newly-discovered evidence which entitles a party to a new trial under s. 805.15(3);
(g) It is no longer equitable that the judgment should have prospective application; or
(h) Any other reasons justifying relief from the operation of the judgment.

Wis. Stat. § 806.07(l)(a), (b), (g) & (h). This statute is construed liberally because of its remedial nature. J.L. Phillips, 217 Wis. 2d at 359. The defendant bears the burden to prove that the requisite conditions existed. Hansher v. Kaishian, 79 Wis. 2d 374, 389, 255 N.W.2d 564 (1977).

¶ 29. In her motion, the defendant argued that relief was warranted based on the following: (1) Polich's misunderstanding of the courtesy extension agreement constituted excusable neglect; (2) the information provided by Polich in his second affidavit constituted newly discovered evidence; and (3) application of the judgment was not equitable. The defendant did not specifically enumerate any basis for relief under subsection (h) in her motion.

¶ 30. We first review whether the circuit court properly exercised its discretion by denying relief under subsection (a). We conclude that it did. The defendant presented Polich's second affidavit as a basis for relief under this subsection. In it, Polich alleged that he delayed filing the answer because he wanted to first conduct depositions of the plaintiffs before filing the answer. Polich asserted that he and the plaintiffs' attorney reached an agreement that an answer would not have to be filed until the depositions were taken. As stated above, the plaintiffs' attorney specifically denied that any such agreement was reached between the parties.

¶ 31. During the hearing on the motion, the court dismissed Polich's affidavit as "self-serving." It stated that it did not believe Polich's assertion that the parties had reached an agreement to allow the defendant to file her answer after the depositions. We regard this conclusion as a dismissal of Polich's sworn statements based on the court's finding that Polich lacked credibility. We uphold this ruling by the circuit court because it is the ultimate arbiter of the credibility of a witness. Homa v. East Towne Ford, Inc., 125 Wis. 2d 73, 80 n. 7, 370 N.W.2d 592 (Ct. App. 1985). After the court rejected this explanation by Polich, the court was basically presented with the same facts and explanations presented by the defendant at the first hearing. As a result, the court could properly exercise its discretion and deny relief under subsection (a) because the record would again support a finding by the court that excusable neglect was not present.

¶ 32. The defendant argues that the court erred in several respects in reaching this determination. First, she contends that the court again erred by basing its decision on the fact that oral courtesy extension agreements are unenforceable unless they are in writing or confirmed in writing. Again, the court did not make any such finding. Instead, the court only noted that there was a lack of any documentation in the record and that, in practice, there would have normally been confirmation letters sent. The court certainly may consider the lack of documentation in making a determination as to whether an agreement existed. Such consideration must not be construed as a requirement that courtesy extension agreements must be in writing.

¶ 33. Second, the defendant contends that the court failed to reconcile the conflicting affidavits in this case to determine whether an oral courtesy extension agreement existed or whether the affidavits showed substantial confusion between the parties, as to the existence of an agreement to support a finding of excusable neglect. However, the court resolved the various conflicts in the affidavits by dismissing the affidavits of Polich and relying on affidavits submitted by the plaintiffs. This decision was a proper determination of credibility. In light of the remaining testimony, the court did not erroneously exercise its discretion by concluding that an extension agreement had not been reached or that any other basis for excusable neglect was present.

¶ 34. Third, the defendant argues that the court failed to consider and articulate interests of justice factors in denying the motion to vacate the judgment. In particular, the defendant asserts that the court should have considered such factors as the drastic consequences of the default judgment in this case, the meritorious defenses presented in the answer, and the lack of any prejudice to the plaintiffs from the late answer. Again, however, the court was made aware of these factors during the hearing and made its decision in light of these relevant interests.

¶ 35. Fourth and finally, the defendant contends that the court erred by imputing the negligence of Polich to her in this case. She argues that Polich's negligence took on many forms, including that he was ineffective at the temporary injunction hearing, that he failed to secure a written courtesy extension agreement, and that he failed to provide her with affidavits to prepare for hearings in a prompt manner. According to the defendant, Polich's conduct was so egregious in this case that the judgment must be vacated.

¶ 36. "A court is not bound to impute to a client everything his lawyer does or omits to do." Charolais Breeding Ranches, Ltd. v. Wiegel, 92 Wis. 2d 498, 514, 285 N.W.2d 720 (1979). However, "Mistakes, ill advice, or other failures of a lawyer may constitute excusable neglect on the part of the client, when the client has acted as a reasonable and prudent person in engaging a lawyer of good reputation, has relied upon him to protect his rights, and has made reasonable inquiry concerning the proceedings." Id. "In deciding whether to impute the negligence of the lawyer to the client, the trial court must exercise its 'equitable powers to secure substantial justice between the parties.'" Id. (quoting Paschong v. Hollenbeck, 13 Wis. 2d 415, 424, 108 N.W.2d 668 (1961)).

¶ 37. The defendant asserts that she took all reasonable steps to protect her position, including forwarding the complaint immediately to her attorney, attending the temporary injunction hearing, and substituting counsel when she believed that Polich was ineffective. On this issue, however, we agree with the conclusion reached by the court of appeals. As the court noted, although the defendant decided to substitute Sostarich for Polich as counsel, the record does not reflect that she made any reasonable inquiry into the status of the case before firing Polich to secure her position in the litigation. As a result, without any such inquiry, we conclude that it is reasonable to impute any alleged negligence on the part of Polich in failing to file the answer to the defendant.

¶ 38. Finally, we examine the court's determination with respect to subsections (b), (g) and (h). On these subsections, the circuit court failed to set forth any specific reasons for its denial for relief. Regardless, we may conduct our own examination of the record to determine whether the circuit court properly exercised its discretion and whether the facts provide support for the court's decision. Hedtcke, 109 Wis. 2d at 471; Homa, 125 Wis. 2d at 79. We note that remand to the circuit court for an evidentiary hearing may be warranted in some cases where the defendant's claim sets forth a basis for relief and a hearing is necessary to determine the truth of the allegations. See State ex rel. M.L.B., 122 Wis. 2d at 553-54. However, in this case, we make our determination based solely on the record in light of the fact that the defendant effectively waived any right to an evidentiary hearing during the motion hearing. The waiver occurred when the defendant rejected the court's repeated inquiries as to whether an adjournment for an evidentiary hearing was necessary.

¶ 39. On review, we first conclude that the record does not support a finding that Polich's second affidavit constituted "newly discovered evidence" under subsection (b). The defendant failed to present any evidence to establish the elements of "newly discovered evidence," particularly that the information "did not arise from lack of diligence in seeking to discover it." See Wis. Stat. § 805.15(3)(b). As the plaintiffs argued, the affidavit contained information that the defendant could have likely discovered before the first hearing. Thus, in light of this failure to prove these elements, it was not an erroneous exercise of discretion for the court to deny relief under this subsection.

¶ 40. We also conclude that subsection (g) does not apply in this case. This subsection specifically requires a person seeking relief from the judgment to show that the prospective application of the judgment "is no longer equitable." Thus, under the clear language of this statute, a change in circumstances is specifically contemplated which makes the judgment no longer equitable. See State ex. rel M.L.B., 122 Wis. 2d at 543-44. The defendant did not allege any such change in circumstances, and as a result, the court did not err by failing to grant relief under this subsection as well.

¶ 41. Finally, we conclude that the court properly denied relief to the defendant under subsection (h). Under this subsection, relief is warranted only when "extraordinary circumstances" are present. Id. at 552. A circuit court considers the following factors in determining whether extraordinary circumstances exist:

whether the judgment was the result of the conscientious, deliberate and well-informed choice of the claimant; whether the claimant received the effective assistance of counsel; whether relief is sought from a judgment in which there has been no judicial consideration of the merits and the interest of deciding the particular case on the merits outweighs the finality of judgments; whether there is a meritorious defense to the claim; and whether there are intervening circumstances making it inequitable to grant relief.

Id. at 552-53.

¶ 42. The defendant never clearly articulated its reason for seeking relief under this subsection. However, during the hearing on the motion to vacate the judgment, the defendant argued that she should be entitled to relief from the judgment because the entry of judgment in this case inequitably and permanently impaired her property. She contended that any remedy available — such as an ineffective assistance of counsel claim against Polich — would not alleviate the impairment of her property. It would only lead to compensation for the property. We construe this argument as one seeking relief based on extraordinary circumstances, but conclude that in this case this argument does not provide a basis for relief.

¶ 43. Certainly, the effects of the entry of default judgment should be considered by the court; however, simply because the entry of judgment impairs or affects property does not warrant a finding of extraordinary circumstances. Extraordinary circumstances may exist only in extreme and limited cases. This case does not present such extraordinary circumstances.

IV. CONCLUSION

¶ 44. In sum, the circuit court did not abuse its discretion in granting default judgment or in denying the motion to vacate the judgment. The defendant failed to present sufficient evidence of excusable neglect or of any basis for relief under Wis. Stat. § 806.07(1). As a result, we affirm the court of appeals' decision upholding the orders and judgment issued by the circuit court. In addition, because the record does not indicate that the circuit court ever made a determination as to the amount of costs to be awarded to the plaintiffs, we remand to the circuit court for a determination on this issue.

By the Court. — The decision of the court of appeals is affirmed, and the cause is remanded to the circuit court.

       All subsequent references to the Wisconsin Statutes are to the 1997 — 98 version unless otherwise indicated.

       Polich's affidavit stated in relevant part as follows:
      2. InMay, 1998, Attorney Patrick J. Juneau of the law firm of Juneau, Minder, Gross & Stevning-Roe, S.C. wrote to me an [sic] informed me that he would be representing Andy and Thelma Connor with regard to their claims of purported blocked access to a road which they contended they had easement rights to. I had numerous conversations and communications with Mr. Juneau and established a highly cooperative working relationship with him.
      3. I worked with Mr. Juneau in an effort to amicably resolve the matter, and when it could not be so resolved, worked with him regarding the scheduling of an injunction hearing and the maimer in which this case would be brought before the Court's attention. Based upon our communications and our mutual cooperation, it was my understanding that I had been granted a reasonable time to answer after the hearing regarding the Injunction on July 16, 1998 and that, in fact, I answered just four days beyond the statutory time.

       Juneau's affidavit stated in relevant part:
      6. Subsequent to turning the file over to Attorney Stevning-Roe for litigation, your affiant had no discussions with Mr. Polich regarding response times for answer in this proceeding. Your affi-ant never made any reference or had any discussion with Mr. Polich regarding the time to answer so there is absolutely no basis for him to construe that there was an extension of a time to answer granted by your affiant since there was absolutely no discussion that took place regarding the same.

       The defendant filed a motion after oral argument requesting that this court allow supplemental briefing and take judicial notice that Polich was not a licensed attorney in Wisconsin at the time that he represented the defendant. However, during the hearing on the motion to vacate the judgment, the defendant specifically represented to the court that Polich was in fact a licensed attorney in Wisconsin. The defendant does not provide any compelling reason to this court for her failure to discover this information before the hearing in the circuit court. Accordingly, we deny the defendant's motion.


author: JON P. WILCOX, J. SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE

text:
    Farm Credit Services of North Central Wisconsin, ACA, Plaintiff-Appellant-Petitioner, v. David Wysocki, Defendant-Respondent.
    Supreme Court

      No. 99-1013.

      Oral argument January 31, 2001.

    Decided May 30, 2001.

    2001 WI 51
    (Also reported in 627 N.W.2d 444.)

      For the plaintiff-appellant-petitioner there were briefs by Jerry W. Slater and Kelley, Weber, Pietz &

      Slater, S.C., Wausau, and oral argument by Jerry W. Slater.

    For the defendant-respondent there were briefs by Gary L. Dreier and First Law Group, S.C., Stevens Point, and oral argument by Gary L. Dreier.

    An amicus curiae brief was filed by Eric H. Rumbaugh, Donald A. Daugherty, David A. Dixon and Michael Best & Friedrich, LLP, Milwaukee, and oral argument by Eric H. Rumbaugh on behalf of Wisconsin Manufacturers and Commerce.
   JON P. WILCOX, J.

¶ 1. This case presents two issues. The first issue is whether the restrictive covenant in David Wysocki's (Wysocki) 1983 employment agreement with Production Credit Association (PCA) of Wausau is void as a matter of law because the geographic area in which PCA of Wausau was authorized to conduct business was expanded through a 1986 merger. Because we find that the covenant not to compete here is narrowly tailored to a customer list and does not contemplate a geographic restriction, we rule that it is not per se invalid. Therefore, we remand the case to the circuit court to determine whether the covenant not to compete was "reasonably necessary for the protection of the employer or principal." Wis. Stat. § 103.465 (1997-98).

¶ 2. The second issue is whether Farm Credit Services (FCS) is the same corporation as PCA of Wausau, which contracted with Wysocki in 1983. Reviewing the two plans of merger in light of the relevant statutes, we conclude that PCA of Wausau is the surviving corporation of both mergers and, therefore, FCS is entitled to enforce the covenant not to compete provision in Wysocki's employment agreement. Accordingly, on both issues, we determine that summary judgment in favor of Wysocki was inappropriate.

¶ 3. FCS brought this action against Wysocki to enforce a covenant not to compete provision in his 1983 employment agreement with PCA of Wausau. Wysocki moved for summary judgment, arguing that Wysocki did not contract with FCS. The circuit court for Portage County, Judge James M. Mason presiding, found that FCS was not the same entity as PCA of Wausau and, therefore, was not entitled to enforce the covenant. The circuit court also granted summary judgment in favor of Wysocki on the ground that the covenant not to compete was unilaterally enlarged through the two mergers and was thus void. The court of appeals, in a split decision, affirmed the decision of the circuit court. Farm Credit Services of North Central Wisconsin, ACA v. Wysocki, 2000 WI App 124, ¶ 19, 237 Wis. 2d 522, 614 N.W.2d 1. The majority assumed, "arguendo, that FCS is the same corporation as PCA," but that the covenant not to compete was void because the " 'specified territory,' as that term is used in Wis. Stat. § 103.465, has been unilaterally changed by FCS." Id. at ¶ 19. We then granted FCS's petition for review.

i — I

¶ 4. The basic facts are undisputed for the purposes of this review on motion for summary judgment. In 1983 Wysocki signed an employment agreement with PCA of Wausau as a "Related Services Coordinator/Loan Officer" in order to provide "accounting, bookkeeping, or prepare tax returns for PCA membership." PCA of Wausau was authorized to serve five counties and part of a sixth: Lincoln, Marathon, Portage, Price, Wood, and a portion of Taylor. As stated in its employment contract with Wysocki, PCA of Wausau "is a corporation under the Farm Credit Act of 1971, as amended, and is in the business of making agricultural loans and providing related services, including bookkeeping, accounting, and income tax consultation and service for its customers." This employment contract contained the following covenant not to compete:

Post-employment Competition. In consideration of the special training and materials provided to Employee by PCA and the preparation of tax returns for persons engaged in agriculture and confidential information made available to Employee by PCA concerning the financial affairs of its members, including, in particular, information generated by the Agrifax program, it is agreed that the Employee's activities shall be restricted in accord with this paragraph. If the Employee ceases to be a PCA Employee, for any reason, the Employee shall not, for a period of one year immediately following the date of separation from PCA, directly or indirectly, engage in the business of tax preparation, tax consultation, bookkeeping, or accounting, or any other duties performed as a tax consultant for PCA with the persons(s) [sic] the Employee consulted or serviced in performance of his/her consultant duties at any time during the one year immediately prior to the date of separation. Person(s) includes individuals, sole proprietorships, partnerships, and corporations.

It is undisputed that this covenant is aimed at preventing Wysocki from providing various accounting services to PCA of Wausau customers whom he had serviced in the year prior to his separation.

¶ 5. In 1986, three years after Wysocki signed the employment agreement, PCA of Wausau merged with PCA of Antigo and PCA of Neillsville. The agreement of merger provided that PCA of Wausau would be the "continuing association and its charter and bylaws shall be those of the continuing association." Pursuant to the merger agreement, PCA of Wausau was renamed PCA of North Central Wisconsin. This merger effectively enlarged the geographical area in which PCA of Wausau had been chartered to operate from almost six counties to twelve counties. Five years after that, in 1991, PCA of North Central Wisconsin entered into an "Agreement and Plan of Merger" with Federal Land Bank of North Central Wisconsin, in which PCA of North Central Wisconsin was named as the "surviving association." The Agreement and Plan of Merger further specified that PCA of North Central Wisconsin's name would then "be changed to Farm Credit Services of North Central Wisconsin, ACA." Throughout this entire period, Wysocki continued working for PCA of Wausau, renamed PCA of North Central Wisconsin, and subsequently renamed FCS, preparing tax returns for various customers.

¶ 6. However, on November 30, 1998, FCS alleges that Wysocki informed his supervisor that he was leaving FCS and that he intended to solicit FCS' customers whose returns he had prepared during 1997. FCS further alleges that Wysocki then solicited FCS customers for whom he had prepared tax returns in 1997. In order to enforce the covenant not to compete, FCS filed suit against Wysocki. The circuit court granted Wysocki's motion for summary judgment and the court of appeals affirmed.

hH I — I

¶ 7. This case is before us on review of summary judgment. It is well established that we review a grant of summary judgment by applying the same methodology as the circuit court. Pinter v. American Family Mut. Ins. Co., 2000 WI 75, ¶ 12, 236 Wis. 2d 137, 613 N.W.2d 110. "Summary judgment will be granted only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id.

¶ 8. We first are presented with a question of law regarding the construction of a covenant not to compete in an employment contract. Jones v. Jenkins, 88 Wis. 2d 712, 722, 277 N.W.2d 815 (1979). We review this question of law de novo. Id. We begin our review by determining whether the covenant not to compete provision is per se invalid.

¶ 9. In Wisconsin, covenants not to compete are regarded with suspicion by the courts because the law seeks to "encourage[ ] the mobility of workers." Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202, 214, 267 N.W.2d 242 (1978). Indeed, because free movement and personal liberty of employees are preeminent features of employment relations in this state, we have remarked that "so long as a departing employee takes with him no more than his experience and intellectual development that has ensued while being trained by another, and no trade secrets or processes are wrongfully appropriated, the law affords no recourse." Id. Consistent with encouraging the free movement of employees, we have applied the following canons of construction to covenants not to compete: (1) such covenants are prima facie suspect; (2) they must withstand close scrutiny to pass legal muster as being reasonable; (3) they will not be construed to extend beyond their proper import or further than the language of the contract absolutely requires; and (4) they are to be construed in favor of the employee. Streiff v. American Family Mut. Ins. Co., 118 Wis. 2d 602, 611, 348 N.W.2d 505 (1984).

¶ 10. These canons are grounded in Wis. Stat. § 103.465 (1997-98), which sets forth the law on covenants not to compete in our state:

A covenant by an assistant, servant or agent not to compete with his employer or principal during the term of the employment or agency, or thereafter, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any such restrictive covenant imposing an unreasonable restraint is illegal, void and unenforceable even as to so much of the covenant or performance as would be a reasonable restraint.

As we recently observed, this statute "evidences a strong public policy against the enforcement of trade restraints which are determined to be unreasonable upon all employees." Tatge v. Chambers & Owen, Inc., 219 Wis. 2d 99, 114-15, 579 N.W.2d 217 (1998).

¶ 11. But we cannot allow the underlying policy of Wis. Stat. § 103.465 and our rules of construction to overwhelm the focus of our analysis in what are, at their core, contract cases. In these cases, we necessarily must focus on the individual contracts. Hence, we begin our analysis of this issue by scrutinizing the language of the covenant not to compete in Wysocki's employment contract. See Streiff, 118 Wis. 2d at 610.

¶ 12. The standard rules of contract interpretation apply: the primary goal in contract interpretation is to determine and give effect to the parties' intention at the time the contract was made. Wisconsin Label v. Northbrook Prop. & Cas. Ins., 2000 WI 26, ¶ 23, 233 Wis. 2d 314, 607 N.W.2d 276. When the language is unambiguous, we apply its literal meaning. Id. If, on the other hand, we determine that a contract provision is ambiguous, we then look to extrinsic evidence to discern its meaning. Management Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 177, 557 N.W.2d 67 (1996). In sum, if the provision is not invalid per se and is unambiguous, we uphold its plain meaning. Therefore, we first look to whether the covenant not to compete is invalid per se.

¶ 13. The covenant not to compete at issue here is a customer list limitation rather than a geographical restriction. It prevents Wysocki from servicing those customers he "consulted or serviced in the performance of his[ ] consultant duties at any time during the one year immediately prior to the date of separation." In Hunter of Wisconsin, Inc. v. Hamilton, 101 Wis. 2d 460, 304 N.W.2d 752 (1981), we considered whether a similar — albeit much broader — customer list limitation was invalid as a matter of law. There, two employees of an insurance agency challenged a covenant not to compete that prevented them from soliciting business from any of the agency's customers for the lesser of either two years after the employment relationship ended or the duration of the employment relationship. Id. at 462-63. Reasoning that the term "specified territory" in § 103.465 encompasses customer lists as well as geographical restrictions, we stated that "[a] flat rule invalidating all restrictive covenants whose scope exceeded a former employee's actual customer contact would amount to a declaration that it is never reasonably necessary to protect an employer against improper use of information about customers with whom the employee did not have actual contact." Id. at 466, 468. Accordingly, we ruled that such a covenant is not invalid per se and remanded the cause to the circuit court to determine whether, given the totality of the circumstances, the covenant in question was reasonable and enforceable. Id. at 464, 471.

¶ 14. Here, we are presented with a covenant that is more narrowly tailored than the covenant at issue in Hunter. Rather than including all of PCA of Wausau's customers during the period of Wysocki's employment, the covenant not to compete provision here includes only the customers that Wyscocki serviced in the year prior to his date of separation. Furthermore, whereas the covenant in Hunter effectively restricted each of the two employees for two years after the separation, the covenant here restricts Wysocki for only one year after separation. Therefore, under Hunter, we cannot conclude that this covenant not to compete is invalid per se, especially when this covenant is less restrictive than the covenant we examined in Hunter. See also Chuck Wagon Catering, Inc. v. Raduege, 88 Wis. 2d 740, 754, 277 N.W.2d 787 (1979) (noting that "in Wisconsin a restrictive covenant protecting an employer's customer contacts in a situation of necessity will be enforced provided the restraint is reasonable").

¶ 15. Attempting to avoid our Hunter decision, Wysocki urges, and the court of appeals accepted, the argument that because the two mergers "unilaterally enlarged the specified territory of the restrictive covenant beyond that to which the parties agreed in 1983, it is unenforceable." Farm Credit Services, 2000 WI App 124 at ¶ 13. This argument, however, is flawed because it discounts the plain terms of the covenant and our decision in Hunter. Wysocki's covenant not to compete with PCA of Wausau anticipated enlargement as well as contraction of the "specified territory," which is the list of customers that Wysocki serviced in the year prior to his separation from PCA of Wausau. As evidenced by the terms, the parties contemplated a fluid customer list limitation rather than a rigid geographical restriction. In accordance with the policy of encouraging the freedom of movement of employees and protecting their personal liberty, such fluid customer list limitations should be given greater breadth than rigid geographical restrictions because they oftentimes "more closely approximate[ ] the area of the employer's vulnerability to unfair competition by a former employee and [do] not deprive the employee of legitimate competitive opportunities to which he is entitled." Hunter, 101 Wis. 2d 466. Furthermore, there is no mention of any geographical territory, such as a county or counties, or any extraneous document, such as a charter, in the covenant at hand. The absence of a reference to PCA of Wausau's charter is especially telling; it is difficult to understand how a change in the charter that does not otherwise alter the legal capacity or standing of either party would affect the covenant not to compete, which fails to reference the charter. Thus, looking at the plain terms of the covenant, we reject Wysocki's argument that the two mergers have somehow unilaterally enlarged the "specified territory" of the agreement.

¶ 16. Because the covenant at issue here is not per se invalid, we remand the cause to the circuit court to develop the evidentiary record in order to determine whether the covenant is reasonable under § 103.465 (1997-98). On remand, FCS will be permitted to develop facts about whether the restriction was reasonably necessary for the protection of its legitimate business interests. Id. at 468. To counter FCS, Wysocki can develop facts about whether the restraint unreasonably inhibited his ability to pursue a livelihood in his field. Id. at 470; see also Chuck Wagon, 88 Wis. 2d at 754-55 (observing that evidence at trial indicated that the defendant had experience in other lines of work and that the covenant at issue did not prohibit him from working in that particular line, only from soliciting Chuck Wagon customers). As we observed in Hunter, these considerations are not exhaustive. Id. They are merely several of the issues within the totality of circumstances that the circuit court should examine to determine whether the covenant not to compete is reasonable under § 103.465.

HH hH » — I

¶ 17. Wysocki, however, argues that PCA of Wausau has been merged out of existence. FCS, according to Wysocki, was not yet in existence when he signed his employment agreement with PCA of Wausau. Therefore, as a matter of law, FCS cannot enforce the covenant not to compete as part of the 1983 employment agreement between PCA of Wausau and Wysocki. Again, we are confronted with a question regarding the interpretation of legal documents, the merger agreements, which we review de novo in light of the relevant merger statutes. Jones, 88 Wis. 2d at 722. Merger agreements are contracts; our objective in interpreting such contracts is to ascertain the intent of the parties. Roth v. City of Glendale, 2000 WI 100, ¶ 15, 237 Wis. 2d 173, 614 N.W.2d 467. As noted above, we do not look to extrinsic evidence outside the four corners of the document unless we determine that it is ambiguous. Energy Complexes, Inc. v. Eau Claire County, 152 Wis. 2d 453, 467-68, 449 N.W.2d 35 (1989). Therefore, we begin our analysis by looking to the relevant merger statutes and to the plain language of the merger agreements.

¶ 18. The first merger took place in 1986. In regard to this merger, Wis. Stat. § 180.62 (1985-86) sets forth the appropriate procedure:

Procedure for merger. (1) Any 2 or more domestic corporations may merge into one of such corporations pursuant to a plan of merger approved in the manner provided in this chapter.
(2) The board of directors of each corporation shall, by resolution adopted by each such board, approve a plan of merger setting forth:
(a) The names of the corporations proposing to merge, and the name of the corporation into which they propose to merge, hereinafter designated the surviving corporation;
(b) The terms and conditions of the proposed merger;
(e) Such other provisions with respect to the proposed merger as deemed necessary or desirable.

The 1986 agreement of merger states, in accordance with the above statute, that "[t]he Production Credit Association of Antigo and the Production Credit Association of Neillsville shall merge into the Production Credit Association of Wausau which shall be the continuing association and its charter and bylaws shall be those of the continuing association." The agreement further indicates that "[t]he name and location of the continuing association shall be the Production Credit Association of North Central Wisconsin, Wausau, Wisconsin." Therefore, in accordance with § 180.62, the agreement provided the names of the three corporations that were to be merged, that PC A of Wausau would be the continuing association, and that the continuing association would be renamed Production Credit Association of North Central Wisconsin.

¶ 19. The effect of this statutory merger is explained in Wis. Stat. § 180.67 (1985-86):

Effect of merger or consolidation. When any merger or consolidation has been effected in accordance with this chapter:
(1) The several corporations parties to the plan of merger or consolidation shall be a single corporation, which, in the case of a merger, shall be that corporation designated in the plan of merger as the surviving corporation, and, in the case of a consolidation, shall be the new corporation provided for in the plan of consolidation.
(2) The separate existence of all corporations parties to the plan of merger or consolidation, except the surviving or new corporation, shall cease....
(4) Such surviving or new corporation shall thereupon and thereafter possess all the rights, privileges, immunities, and franchises, as well of a public as of a private nature, of each of the merging or consolidating corporations; and all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, and all other choses in action, and all and every other interest, of or belonging to or due to each of the corporations so merged or consolidated, shall be taken and deemed to be transferred to and vested in such single corporation without further act....

The plain language of this statute, read in conjunction with the agreement of merger, indicates that PCA of Wausau was the surviving corporation, which was then renamed PCA of North Central Wisconsin. Consequently, PCA of North Central Wisconsin could have enforced the covenant not to compete in Wysocki's employment agreement after the 1986 merger was executed. In short, the 1986 merger did not change the parties to the 1983 employment contract.

¶ 20. The second "Agreement and Plan of Merger" is dated April 4, 1991. The relevant merger statute at that time, Wis. Stat. § 180.1101 (1991-1992), provided, in pertinent part:

Merger. (1) One or more corporations may merge into another corporation if the board of directors of each corporation, by resolution adopted by each board, approves a plan of merger and, if required by s. 180.1103, its shareholders also approve the plan of merger.
(2) The plan of merger shall set forth all of the following:
(a) The name of each corporation planning to merge and the name of the surviving corporation into which each other corporation plans to merge.
(b) The terms and conditions of the merger.

In accordance with this merger statute, the 1991 "Agreement and Plan of Merger" states that PCA of North Central Wisconsin would merge with Federal Land Bank Association of North Central Wisconsin and that PCA of North Central Wisconsin "shall be the surviving association_" The agreement further specifies that PCA of North Central Wisconsin's "name shall be changed to Farm Credit Services of North Central Wisconsin, ACA." Again, the Agreement and Plan of Merger set forth the corporations that would be merging, that PCA of North Central Wisconsin would be the surviving association, and that it would be renamed FCS, which is in accordance with the relevant merger statute in 1991, § 180.1101. The effect of a 1991 merger is delineated in § 180.1106 (1991-92):

Effect of merger or share exchange. (1) All of the following occur when a merger takes effect:
(a) Every other corporation that is party to the merger merges into the surviving corporation and the separate existence of every corporation party to the merger except the surviving corporation ceases.
(b) The title to all property owned by each corporation that is party to the merger is vested in the surviving corporation without reversion or impairment.
(c) The surviving corporation has all liabilities of each corporation that is party to the merger.

Under this statute, FCS — the surviving corporation formerly known as PCA of North Central Wisconsin — took over all of Federal Land Bank Association of North Central Wisconsin's assets and liabilities. There is nothing in the "Agreement and Plan of Merger" that abrogates any contract — employment or otherwise — that PCA of North Central Wisconsin had with any party.

¶ 21. Accordingly, we conclude that FCS may enforce the covenant not to compete in its employment contract with Wysocki. Wysocki has not raised any ambiguities in either of the merger documents that compel us to look beyond their four corners in order to determine the intent of the parties. Moreover, because we determine that PC A of Wausau, which was merely renamed FCS after the 1991 merger, is the surviving corporation of both mergers, we do not need to reach whether Wysocki's covenant not to compete is severa-ble from his employment agreement and whether his continued employment amounts to an implied assignment of that covenant.

IV

¶ 22. In sum, we find that Wysocki's covenant not to compete with FCS is not invalid per se as a customer list limitation; this provision is less restrictive than the covenant we examined in Hunter, which we likewise determined was not invalid per se. 101 Wis. 2d at 468. On this first issue, we remand the cause to the circuit court to determine whether the covenant meets the requirements of Wis. Stat. § 103.465 . (1997-98). Furthermore, we find that PCA of Wausau survived both mergers and, therefore, FCS is entitled to enforce its employment contract with Wysocki. Accordingly, we conclude that summary judgment in favor of Wysocki on both issues was inappropriate.

By the Court. — The decision of the court of appeals is reversed, and the cause is remanded to the circuit court for further proceedings consistent with this opinion.

¶ 23. WILLIAM A. BABLITCH, J., did not participate.

SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE

¶ 24. (concurring). I agree that the cause should be remanded to the circuit court for further fact-finding. But I write separately to state that a preliminary question of fact, which in my opinion the majority has improperly answered as a matter of law, is whether the parties intended the scope of the 1983 covenant not to compete to be expanded geographically as the corporation's powers under the federal charter expanded.

¶ 25. The majority opinion correctly states our longstanding canons of construction for covenants not to compete, canons based on Wis. Stat. § 103.465 (1997-98): Covenants not to compete are prima facie suspect; they must withstand close scrutiny to pass legal muster as being reasonable; they will not be construed to extend beyond their proper import or further than the language of the contract absolutely requires; and they are to be construed in favor of the employee.

¶ 26. Yet in analyzing the covenant not to compete at issue in this case, the majority concludes that "[t]he standard rules of contract interpretation apply." The majority also concludes that "our rules of construction [cannot] overwhelm the focus of our analysis in what are, at their core, contract cases."

¶ 27. The internal contradiction in the majority opinion is manifest. If special canons of construction apply to covenants not to compete, then the standard rules for contract interpretation do not apply in their totality. The legislature has not impermissibly "overwhelmed" contract law by creating an exception to the ability of employers and employees to negotiate to restrict employees' ability to work. Rather, the legislature has expressly concluded that the principle of free movement of employees, which this court recently extolled in Mackenzie v. Miller Brewing Co., 2001 WI 23, 241 Wis. 2d 700, 623 N.W.2d 739, must guide our analysis of restrictive covenants.

¶ 28. Applying the principles mandated by the legislature and this court's precedent, I conclude that it is an open question of fact whether the covenant not to compete anticipated enlargement of the specified territory. In so concluding, I am mindful of the special nature of the employer, whose geographical scope and range of services have at all times been defined by federal law and federal charter. The federal law and the charter have changed since the employment contract was entered, allowing the geographical scope and range of services of the employer's business to expand.

¶ 29. The majority concludes as a matter of law that the parties contemplated a "fluid customer list." But contemplation of a fluid customer list is not necessarily the same as contemplation of changes in federal law and in a federal charter that allow an employer to service customers that were previously off limits to the employer. The majority rejects this argument, finding that the changes in the employer's charter cannot affect the covenant not to compete because the "covenant" fails to refer to the charter. The covenant not to compete is, however, part of the employment contract, and the employment contract does explicitly refer to the applicable law governing PCA. Recital A of the employment contract states that "PCA is a corporation under the Farm Credit Act of 1971, as amended."

¶ 30. In any event, it is an odd contortion of the "standard rules of contract interpretation" to conclude that an employer's federal charter is not relevant to interpreting an employment contract unless the federal charter is expressly referred to. Under the facts of this case, the employee may be able to demonstrate that he and the employer signed the employment contract (including the covenant not to compete) in reliance on the federal charter, which limited the scope of his employer's service area to six counties at the time the contract was entered. Surely the federal charter would be relevant to the parties' intent. The issue of the parties' intent appears to me to be an open question of fact that cannot be resolved at the summary judgment stage, particularly in light of our precedent requiring narrow construction of covenants not to compete.

¶ 31. Finally, I take issue with the majority opinion's unwarranted conclusion in footnote 2 that "even if PCA of Wausau ceased to exist, FCS could enforce the covenant not to compete." In contrast, the employer in this case apparently concedes, relying on precedent, that it may not enforce the covenant not to compete against the employee if this court concludes that the 1983 corporation has been merged out of legal existence. Ignoring this concession, the footnote nevertheless addresses an issue that is unnecessary to the resolution of the case before us. This sort of rogue commentary causes confusion for future cases in which the explicit legal question addressed in the rogue footnote will be raised, briefed, and contested by the parties and must be addressed directly by this court.

¶ 32. For the reasons set forth, I write separately.

       Although Wis. Stat. § 103.465 is unchanged, on remand, the circuit court must determine whether the covenant not to compete was reasonable at the time FCS alleged Wysocki violated the agreement. See Streiff v. American Family Mut. Ins. Co., 118 Wis. 2d 602, 607, 348 N.W.2d 505 (1984) (analyzing covenant not to compete under Wis. Stat. § 103.465 (1981-82) at the time the employer sought to enforce the agreement in circuit court); Chuck Wagon Catering, Inc. v. Raduege, 88 Wis. 2d 740, 752-54, 277 N.W.2d 787 (1979) (analyzing reasonableness of agreement at the time the employer alleged the employee violated the agreement). Because FCS alleges that Wysocki violated the agreement in 1998 after Wysocki left FCS, the 1997-98 version of the Wisconsin Statutes should be utilized.

       We note that this statute is based on the Model Business Corporation Act § 11.07 "Effect of Merger or Share Exchange." We have previously utilized the official commentary to substantially similar Model Business Corporation Act statutes to inform our discussion of the legislative intent of Wisconsin Business Corporations statutes. See Einhorn v. Culea, 2000 WI 65, ¶ 29, 235 Wis. 2d 646, 612 N.W.2d 78. The official commentary to the Model Business Corporation Act § 11.07 states:
      [I]n the case of a merger the survivor and the parties that merge into the survivor become one. The survivor automatically becomes the owner of all real and personal property and becomes subject to all the liabilities, actual or contingent, of each party that is merged into it. A merger is not a conveyance, transfer, or assignment_It does not give rise to a claim that a contract with a party to the merger is no longer in effect on the ground of nonassignability, unless the contract specifically provides that it does not survive a merger.
      Model Bus. Corp. Act Ann. §§ 11-71 (3d ed. Supp. 1998-1999). According to this commentary, a surviving corporation can enforce a contract that a party entered into with a merged corporation over the objection that it was not assigned by the merged corporation. Following this commentary, even if PCA of Wausau ceased to exist, FSC could enforce the covenant not to compete. However, because we find that PCA of Wausau is the surviving corporation, merely renamed FSC, by the plain language of the merger agreement read in light of the merger statute, we do not need this official commentary to discern the legislative intent of Wis. Stat. § 180.1106 here.

        See majority op. at ¶ 9.

         See majority op. at ¶ 12.

         See majority op. at ¶ 11.

         See majority op. at ¶ 15.

         See majority op. at ¶ 15.

       According to Professor Corbin:
      Internal references in one document to another are often helpful in the processes of interpretation and adjudication; but the absence of such a reference does not make a document unusable in these processes or inadmissible in evidence. Its connection and relevancy can be established otherwise.
      Arthur L. Corbin, 3 Corbin on Contracts § 549, at 192 (1960).

         See majority op. at ¶ 20 n.2.

         See FCS Reply Brief at 3 ("[I]f Appellant is in fact a different corporation from that with which Mr. Wysocki contracted in 1983, then Farm Credit must concede that the contract without an assignability clause, without additional consideration and without direct privity would not be binding on Mr. Wysocki.").

        In the absence of an assignment clause, enforcing such a covenant not to compete would violate our canon of construction that covenants not to compete "will not be construed to extend beyond their proper import or further than the language of the contract absolutely requires." Streiff v. American Family Mut Ins. Co., 118 Wis. 2d 602, 611, 348 N.W.2d 505 (1984).

       For the effect of rogue commentary in a footnote, see, for example, State v. Hansen, 2001 WI 53, 243 Wis. 2d 328, 627 N.W.2d 195.