COURT OF APPEALS DECISION DATED AND RELEASED OCTOBER 24, 1995 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of Appeals. See § 808.10 and Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-1519-FT
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
TOWN OF KRONENWETTER,
A WISCONSIN
GOVERNMENTAL
BODY,
Plaintiff-Appellant,
v.
CITY OF MOSINEE,
A WISCONSIN
GOVERNMENTAL
BODY,
Defendant-Respondent.
APPEAL from a judgment
of the circuit court for Marathon County:
RAYMOND F. THUMS, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
PER CURIAM. The Town of Kronenwetter appeals a summary
judgment dismissing its claims against the City of Mosinee.[1] Kronenwetter raises two issues. It argues that the trial court erroneously
entered summary judgment because (1) the parties' agreement did not contain a
release of all claims; and (2) the mutual mistake of fact doctrine
applies. Because we conclude that the
plain language of the agreement governs and the mutual mistake doctrine does
not apply, we affirm the judgment.
The following facts are
undisputed. In 1986, Mosinee annexed
11.4 square miles of the Town of Kronenwetter, about 12.36% of Kronenwetter's
property, based upon valuation. Pursuant
to § 66.03(8), Stats., Mosinee
filed suit seeking apportionment of Kronenwetter's assets and liabilities. The parties settled their suit by means of
an agreement, executed in January 1989.
In July 1989,
Kronenwetter discovered a chemical spill.
A fifty-five gallon drum of herbicide leaked on a portion of
Kronenwetter property that was not annexed.
The Town's garage had a dirt floor and, due to a pinhole leak, the
barrel's contents infiltrated the soil to a depth of three to four feet. Costs to clean up the spill will
approximately exceed $620,000. In light
of the additional liability occasioned by the spill, Kronenwetter seeks to void
its agreement with Mosinee and renegotiate the apportionment of liabilities or
obtain a judgment against Mosinee for 12.36% of the clean-up expense.
The agreement provides
that "in full and complete settlement of the dispute over the amount of
assets and liabilities due and owing to the City, the Town of Kronenwetter
agrees to pay One Hundred and Thirty Thousand Dollars ($130,000) to the City of
Mosinee as payment for the apportionment of assets and liabilities of the Town
due to the annexation of property by the City." It further provided that the
City
of Mosinee shall be responsible for the payment of any potential costs or
liabilities assessed or voluntarily paid by the Town of Kronenwetter, including
litigation costs and expenses, directly associated with the naming of the Town
of Kronenwetter, as a Potential Responsible Party under state and federal laws
involving the landfill cleanup for the Gorski Landfill, Mosinee Landfill,
Holtz-Krause Landfill, and Mid-State Landfill .... Payment by the City of Mosinee shall be limited to 6.18% of any
costs or expenses assessed or voluntarily paid by the Town of Kronenwetter for
landfill cleanup costs for the four listed landfills arising out of use of
those landfills by the Town of Kronenwetter as a private party occurring on or
before November 17, 1986.
The
agreement also stated that it "constitutes the entire agreement"
between the parties and shall not be construed as "an agreement for the
payment of any further or additional liabilities by the City of Mosinee
involving any other matter or claim that may arise against Town of Kronenwetter
whatsoever." It further states:
[T]he
city of Mosinee shall not be subject to any further or additional claims,
liabilities, expenses or costs resulting from the conduct or actions of the
Town of Kronenwetter arising at any time prior to or after November 17, 1986,
except for those items specifically referenced in this Agreement.
Both parties
moved for summary judgment. The trial
court entered judgment for Mosinee and dismissed Kronenwetter's action.
When reviewing summary
judgment, our review is de novo. We
review the record according to the standards set out in § 802.08(2), Stats.
Kreinz v. NDII Secs. Corp., 138 Wis.2d 204, 209, 406 N.W.2d 164, 166 (Ct. App. 1987). Summary judgment is appropriate when the
pleadings and record fail to uncover a material factual dispute and the moving
party is entitled to judgment as a matter of law. Radlein v. Industrial Fire & Cas. Ins. Co., 117 Wis.2d 605, 609, 345 N.W.2d 874, 877
(1984). We may affirm on a basis other
than that relied upon by the trial court.
See Liberty Trucking Co. v. DILHR, 57 Wis.2d 331,
342, 204 N.W.2d 457, 463-64 (1973).
Kronenwetter argues that
the trial court erroneously dismissed its complaint because the agreement
contains no release of all claims. The
construction of a contract is a question of law that we review independently on
appeal. Continental Cas. Co. v.
Patients Comp. Fund, 164 Wis.2d 110, 116, 473 N.W.2d 584, 586 (Ct. App.
1991). Absent an ambiguity, the plain
language governs. Id. "It is our duty to construe the
contract as it stands." Id.
at 116-17, 473 N.W.2d at 586. We have
no right to reinterpret a contract to relieve a party of a disadvantageous
result. Id. at 117, 473
N.W.2d at 586. "[A] contract
voluntarily made ... is valid and enforceable unless it violates a statute,
rule of law, or public policy." Id.
Here, we agree with
Kronenwetter to the extent that the plain language of the contract does not
purport to contain a release of all claims.
It does, however, expressly encompass the parties' entire agreement
concerning the apportionment of assets and liabilities arising out of the
annexation. Consequently, any claim
arising out of the apportionment resulting from the annexation is covered by
the agreement's plain terms.
Here, Kronenwetter's
complaint characterizes its claim against Mosinee as one arising out of the
apportionment agreement.[2] Because the apportionment agreement spells
out Mosinee's obligations to Kronenwetter arising out of the annexation, and
because the chemical spill at the Kronenwetter garage is not one of Mosinee's
obligations set forth in the agreement, Mosinee bears no liability.
Next, Kronenwetter
argues that the agreement is not binding and should be set aside under the
doctrine of mutual mistake of fact. A mutual
mistake of fact is a recognized ground for rescinding a contract. Miller v. Stanich, 202 Wis.
539, 233 N.W. 753 (1930). The rule is
stated as follows:
(1)
Where a mistake of both parties at the time a contract was made as to a basic
assumption on which the contract was made has a material effect on the agreed
exchange of performances, the contract is voidable by the adversely affected
party ....
Restatement (Second) of Contracts §
152 at 385 (1981). The Restatement
defines a mistake as a belief that is not in accord with the facts. Id. § 151 at 383.
Generally, whether the
contract resulted from a mutual mistake presents a question of fact. See Liles v. Employers Mut.
Ins., 126 Wis.2d 492, 496, 377 N.W.2d 214, 216 (Ct. App. 1985). This means that the parties may look outside
the language of the agreement and examine the circumstances surrounding the
agreement to determine whether at the time they entered into the contract, the
parties were laboring under a mutual mistake.
Ahnapee & Western Ry. v. Challoner, 34 Wis.2d 134,
140, 148 N.W.2d 646, 649 (1967); see also Restatement, supra, § 214(d).[3] A mutual mistake is one common and
reciprocal to both parties. Continental
Cas., 164 Wis.2d at 117, 473 N.W.2d at 587.
Kronenwetter contends
that because both parties were unaware of the chemical spill, because the spill
existed at the time of the agreement and because Kronenwetter's liability for
the spill has a material effect on its performance, it is entitled to rescind
the contract. We disagree.
Here, the undisputed
circumstances fail to support the conclusion that the mistake was mutual. Although Kronenwetter carefully counted its
assets and liabilities, despite its careful measures the pinhole leak in the
barrel went undetected. Consequently,
at the time it entered into the annexation settlement agreement, Kronenwetter
was mistaken with respect to its identification of its liabilities.
Nevertheless, the facts
do not disclose a mistake on the part of Mosinee. Although Mosinee was unaware of the leak, the record shows that
Mosinee contemplated that Kronenwetter may have unidentified liabilities lurking
at the time of the contract. This
contemplation on the part of Mosinee is evidenced by the agreement's clause
stating, "Mosinee shall not be subject to any further or additional
claims, liabilities, expenses or costs resulting from the conduct or actions
of the Town of Kronenwetter arising at any time prior to or after November 17,
1986, except for those items specifically referenced in this agreement."
(Emphasis added.)
If the underlying facts
are undisputed, the question is one of law.
State v. Williams, 104 Wis.2d 15, 21-22, 310 N.W.2d 601,
604-05 (1981). Here, Kronenwetter
believed it had identified all its liabilities, but Mosinee had reason to
believe it may not have. Thus, the
agreement demonstrates a conscious uncertainty on the part of Mosinee with
respect to the existence of Kronenwetter's "claims, liabilities, expenses
or costs." A purpose of the
annexation settlement agreement was to resolve Mosinee's obligations with
respect to such uncertainty. See
Grand Trunk Western R.R. v. Lahiff, 218 Wis. 457, 463, 261 N.W.
11, 13 (1935) ("the mistake must not relate to one of the uncertainties of
which the parties were conscious and which it was the purpose of the contract
to resolve"). The leaking barrel
was such an uncertainty. The settlement
agreement was designed to resolve such uncertainties as to the identification
of Kronenwetter's liabilities and expenses arising out of its actions before
and after the date of the contract.[4]
Kronenwetter relies on Liles,
a case that is distinguished on its facts.
In Liles, a release was set aside after it was learned
that the plaintiff suffered not from whiplash but from cervical disc
disease. The trial court found as a
factual matter that the mistake had been mutual, as evidenced by the testimony
of the claims adjuster, the medical reports and the inadequate consideration. Id. at 498-99, 377 N.W.2d at
217-18. A mistake on Kronenwetter's
part as to the extent of its liabilities is not common and reciprocal to
Mosinee and does not provide grounds for rescission of the contract.[5]
By
the Court.—Judgment affirmed.
This opinion will not be
published. Rule 809.23(1)(b)5, Stats.
[2] Kronenwetter does not allege any basis for Mosinee's liability outside the annexation settlement agreement. For example, if Kronenwetter had claimed that a Mosinee employee had carelessly caused the spill, its claim would arise out of negligence, not out of the annexation settlement.
[3] The briefs reveal confusion concerning the extent to which parol evidence is admissible. Parol evidence is not admissible on the first issue, that is the interpretation of the plain meaning of the unambiguous agreement. Marshall & Ilsley Bank v. Milwaukee Gear Co., 62 Wis.2d 768, 776-77, 216 N.W.2d 1, 5-6 (1974). Parol evidence is admissible on the second issue, that is whether the parties were laboring under a mutual mistake at the time they entered into the contract. Ahnapee & Western Ry. v. Challoner, 34 Wis.2d 134, 140, 148 N.W.2d 646, 649 (1967).
[4] Mosinee states that "the possibility of future liability on the part of the Town of Kronenwetter was a future fact resting in conjecture." We disagree with Mosinee's characterization because it fails to take into account the undisputed proof that the chemical spill existed at the time the parties entered into their agreement.