Opinion
No. 166.
Argued September 6, 1972. —
Decided October 3, 1972.
APPEAL from an order of the circuit court for Milwaukee county: ROBERT W. LANDRY, Circuit Judge. Reversed, with directions.
For the appellant there were briefs by Becker, Kinnel, Doucette Mattison and James R. Mattison, all of Milwaukee, and oral argument by James R. Mattison.
For the respondent there was a brief and oral argument by Burton A. Strnad of Milwaukee.
Facts.
This is an action brought by plaintiff-respondent, The Hertz Corporation, engaged in the auto leasing business, against defendant-appellant, Red Rooster Cheese Company, Inc., engaged in the manufacture of cheese. The Hertz complaint alleged that Red Rooster had breached a truck lease agreement entered into by the parties on October 1, 1969. A copy of the lease contract was incorporated by reference into the complaint. Damages for recovery of rental fees and termination charges were sought in the amount of $25,765.59.
Red Rooster answered, denying that it had terminated the lease and alleging Hertz had constructively terminated the lease agreement by failing to maintain the leased equipment in proper operating condition.
Red Rooster also counterclaimed, alleging in its counterclaim that Hertz agreed to correct deficiencies in the leased equipment and to maintain it in satisfactory operating condition; that Hertz failed to maintain the equipment in operating condition; that the equipment broke down and was unusable for' long periods of time causing financial injury to Red Rooster. Damages were sought for (1) spoilage of cheese; (2) repair of equipment; (3) drivers' expenses; (4) cancelled orders; and (5) loss of business.
Hertz demurred to the Red Rooster counterclaim on the ground that it failed to state a cause of action. The trial court ruling on the demurrer was twofold: (1) As to the counterclaim stating a cause of action, the demurrer was overruled; and (2) as to the first of five items of counterclaimed damages (cheese spoilage), the demurrer was sustained, the trial court holding that paragraph 26 of the lease agreement, as incorporated in the complaint, barred damages for cheese spoilage. From the order in part sustaining the Hertz demurrer, Red Rooster appeals.
Paragraph 26 provides:
" Non-Liability For Contents. Hertz shall not be liable for loss of or damage to any property left, stored, loaded or transported in or upon any vehicle furnished by Hertz to Customer pursuant to this Agreement, whether or not due to the negligence of Hertz, its agents or employees, and Customer hereby agrees to hold Hertz, its agents and employees, harmless from and to defend and indemnify them from and against all claims based upon or arising out of such loss or damage. No right of Hertz under this Article 26 may be waived except by an Agreement in writing signed by an executive officer of Hertz as hereinbefore provided in Article 25."
The challenge on appeal is to the trial court's sustaining in part the demurrer of plaintiff to the counterclaim of defendant. The trial court sustained the demurrer to one of five items of damage claimed in the counterclaim, relying upon a contract provision incorporated in plaintiff's complaint.
There are two things wrong with what the trial court did.
(1) A demurrer to a counterclaim, asserting that the counterclaim does not state a cause of action, is a challenge of the legal sufficiency on its face of such counterclaim. It is directed toward errors and omissions appearing on the face of the counterclaim. Wisconsin statutes set forth the issues that may be raised by a demurrer to a counterclaim, providing that, when the matters enumerated as subject to demurrer do not appear on the face of the counterclaim, objection may be taken by reply. When the defect appears on the face of the counterclaim, demurrer lies. When the defect does not appear on the face of the counterclaim, objection is to be raised by reply. As has been said of demurrers to complaints, objections which do not appear on the face of the counterclaim must be taken by plea or reply. An exception has been created to this rule where ". . . the other pleading resorted to is contained in the same document as the pleading demurred to and is subscribed or verified by the same party, or parties, as the latter pleading." The exception to the general rule stops far short of permitting demurrant or trial court to import into a counterclaim allegations of fact contained in plaintiff's complaint when the counterclaim is challenged by demurrer for failing to state a cause of action.
See: 4 Callaghan's Wisconsin Pleading and Practice, sec. 22.18, Nature and purpose of demurrer. See also: 71 C.J.S. Pleading, p. 500, sec. 257.
Sec. 263.17, Stats., providing in pertinent part: ". . . The plaintiff may, within 20 days, demur . . . to any counterclaim therein where it appears upon the face thereof either that:
"(1) The court lacks jurisdiction of the subject matter; or
"(2) The defendant has not legal capacity to maintain the same; or
"(3) Another action is pending between the same parties for the same cause; or
"(4) There is a defect of parties; or
"(5) The counterclaim does not state a cause of action; or
"(6) The cause of action stated is not pleadable as a counterclaim; or
"(7) The counterclaim is barred by the statutes of limitations."
(Emphasis supplied.)
Sec. 263.18, Stats., providing in pertinent part: ". . . The plaintiff may demur . . . to one or more of the counterclaims and reply to the residue of the counterclaims. When any of the matters enumerated in s. 263.17 do not appear upon the face of the counterclaim, the objection may be taken by reply; and the objection that the counterclaim is barred by the statute of limitations may in any case be taken by reply." (Emphasis supplied.)
Estate of Rosenstein (1970), 47 Wis.2d 494, 497, 177 N.W.2d 372, stating: "Upon a demurrer, a court may not add factual matters as an allegation to a complaint to aid or defeat it. . . .
"Objections which do not appear on the face of the plaintiff's declaration or complaint must be taken by plea or answer and not by demurrer even though extrinsic facts are conceded at the hearing. . . ."
Marky Investment v. Arnezeder (1961), 15 Wis.2d 74, 82, 112 N.W.2d 211. See also: Boek v. Wagner (1957), 1 Wis.2d 337, 341, 342, 83 N.W.2d 916, stating: "We are of opinion that the allegations of the counterclaim were incorporated in the answer by reference, and hence the court could properly consider them as a part of the answer. Between the first five paragraphs of the answer and the counterclaim appears the following:
"`And by way of further answer to said complaint and by way of counterclaim, the above-named defendant alleges,' etc.
"This sufficiently made the subsequent allegations a part of the answer as well as a counterclaim. . . ."
Ryan v. First Nat. Bank Trust Co. (1940), 236 Wis. 226, 232, 294 N.W. 832, holding: "It should not be necessary for us to point out that when a party demurs to a pleading he raises sufficiency of the allegations contained in the pleading demurred to, to state a cause of action. The demurrant may not import into the statement of one cause of action the allegations of fact contained in another pleading for the purpose of making it or attempting to make it defective or insufficient."
(2) A demurrer to a counterclaim on the ground that it does not state a cause of action does not reach items of damage claimed in the prayer for relief. Even if paragraph 26 of the lease agreement had been set forth in the counterclaim, instead of being incorporated only in plaintiff's complaint, demurrer would not lie to one or more of five items of claimed damage in the counterclaim. Paragraph 26 does not negate the cause of action set forth in the counterclaim. It does appear to limit damages recoverable, but items of damage in a prayer for relief are not challengeable by demurrer. For demurrers to counterclaims, as this court has said of demurrers to complaints, the rule is: ". . . The mere demand for an amount in damages which is excessive does not render the complaint subject to demurrer," since ". . . A prayer for relief is no substantive part of a complaint and the fact that the plaintiff `asks for more relief than that which his pleaded facts entitle him to have is not reached by demurrer.'"
Northwestern Motor Car, Inc. v. Pope (1971), 51 Wis.2d 292, 295, 187 N.W.2d 200.
D'Angelo v. Cornell Paperboard Products Co. (1963), 19 Wis.2d 390, 398, 120 N.W.2d 70, citing Trade Press Publishing Co. v. Milwaukee Typographical Union (1923), 180 Wis. 449, 459, 193 N.W. 507. See also: Spencer Cooperative Live Stock Shipping Asso. v. Schultz (1932), 209 Wis. 344, 351, 245 N.W. 99; Citizens Loan Trust Co. v. Witte (1901), 110 Wis. 545, 546, 86 N.W. 173.
For the two reasons given, the trial court's order sustaining in part the demurrer of plaintiff to defendant's counterclaim must be reversed, and the case remanded with directions to overrule the demurrer of plaintiff.
By the Court. — Order reversed, with directions to deny the demurrer of the plaintiff to the counterclaim of the defendant.