Argued October 6, 1971. —
Decided November 2, 1971.
APPEAL from an order of the circuit court for Milwaukee county: GERALD J. BOILEAU, Reserve Circuit Judge, Presiding. Reversed.
For the appellants there were briefs and oral argument by William E. Shaw of Milwaukee.
For the respondent there was a brief by Ellis R. Herbon and Heiner Giese, both of Milwaukee, and oral argument by Mr. Giese.
The order appealed from determined that the circuit court for Milwaukee county has personal jurisdiction over the nonresident executors of the estate of Erwin F. Rauser, Sr., a resident of Nevada at the time of his death, but a former resident of Wisconsin.
The complaint alleges a conspiracy between Ernest F. Rauser, Sr., his son Ernest Rauser, Jr., and the three closely held or individually owned corporations whereby Rauser, Sr., concealed his assets, removed them from the state, and so manipulated them so as to prevent the plaintiff Marguerite M. Rauser, Rauser, Sr.'s, first wife, from being able to obtain alimony or support money.
An action between the same parties upon almost the same facts and a related issue has been decided by this court in Rauser v. Rauser (1970), 47 Wis.2d 295, 177 N.W.2d 115. That action claimed a right to dower. This court held that the Wisconsin court did not have personal jurisdiction under the Wisconsin "long-arm statute," sec. 262.05. Because the underlying facts in both cases are identical, they will not be repeated here in the same detail as they were set forth in the first Rauser Case.
Although the case now under consideration had been commenced at the time the first Rauser Case was decided, that fact was unknown to this court at that time.
Erwin F. Rauser, St., and the plaintiff-respondent, Marguerite M. Rauser, were married May 31, 1917, and lived together as man and wife in Wisconsin until August 28, 1953. On that day he left his home in Shorewood, Wisconsin, went to Reno, Nevada, and never returned. Mrs. Rauser obtained a divorce from bed and board in Wisconsin in November, 1953, but was not granted alimony. Erwin F. Rauser, Sr., obtained an absolute divorce from plaintiff on December 17, 1953, in Reno, Nevada. The Nevada divorce decree awarded alimony payments of $300 a month to Marguerite Rauser, the plaintiff-respondent, in this action. She received these payments for about two years.
In a subsequent action in Wisconsin for support she did obtain title to the Rauser home in Shorewood, and to a vacant lot.
Soon after the divorce was obtained, Rauser, Sr., married his former Milwaukee secretary. She died and then in 1964, Rauser, Sr., married Irene Finn Rauser in Reno, Nevada.
On June 1, 1967, Rauser, Sr., died. He left a will which made provision for the benefit of Irene Finn Rauser and his son, Erwin Rauser, Jr., but none for the plaintiff-respondent or his other adult child. The inventory filed in Nevada revealed an estate of a value of $320,157.37. On June 27, 1967, Irene Finn Rauser and the First National Bank of Nevada were appointed coexecutors of the will. Rauser, Sr., owned no real estate in or personal property located in Wisconsin at the time of his death. No ancillary probate proceedings were commenced by the coexecutors in Wisconsin.
On September 25, 1967, plaintiff filed a claim for $500,000 in the Nevada probate court against Rauser, Sr.'s, estate. She alleged, among other things, two causes of action. One basis for her claim was her dower rights; the second basis was the alleged conspiracy to avoid alimony. Plaintiff did not file a claim for back alimony payments pursuant to the Nevada decree. On September 29, 1967, the claim was rejected. Plaintiff did not commence an action to contest the denial of the claim in the Nevada probate court under sec. 147.130, Nevada Revised Statutes, within the thirty-day statutory limit.
The time for filing a new claim has also expired.
When Rauser, Sr., resided in Wisconsin he developed a fabric knitting business known as Shorewood Mills, a Wisconsin corporation, with its principal place of business in Milwaukee. In addition to owning the majority of the stock in Shorewood Mills, he was also the principal shareholder in another Wisconsin corporation — Shorewood-Richards Realty Company. The realty company owns the real estate upon which Shorewood Mills stands.
The coexecutors, Irene Finn Rauser and the First National Bank of Nevada, appeal from the order denying the motion to dismiss the complaint for want of personal jurisdiction.
Additional facts will be stated in the opinion.
The issue before us is whether the Wisconsin court has personal jurisdiction over the nonresident executors (the appellants Irene Finn Rauser and the First National Bank of Nevada).
Sec. 262.05, Stats., is our so-called "long-arm statute." The plaintiff-respondent relies on sub. (6) (c). Sec. 262.05(6) (c), provides:
"(6) LOCAL PROPERTY. In any action which arises out of:
". . .
"(c) A claim that the defendant return, restore, or account to the plaintiff for any asset or thing of value which was within this state at the time the defendant acquired possession or control over it."
Wisconsin's jurisdiction over the coexecutors arises under sec. 262.05(12), Stats., which states:
"(12) PERSONAL REPRESENTATIVE. In any action against a personal representative to enforce a claim against the deceased person represented where one or more of the grounds stated in subs. (2) to (11) would have furnished a basis for jurisdiction over the deceased had he been living and it is immaterial under this subsection whether the action had been commenced during the lifetime of the deceased."
The theory plaintiff employs in this action involves an alleged conspiracy by Rauser, Sr., Rauser, Jr., and the corporate defendants to siphon the corporate assets to Rauser, St., in a fraudulent manner so as to take them beyond the plaintiff's control.
The plaintiff alleges that the Lewis Knitting Company, a Delaware corporation not licensed to do business in Wisconsin at the time of this action, was organized solely to provide corporate machinery by which Rauser, St., could control Shorewood Mills and thereby accomplish the transfer of his assets and income out of the reach of the Wisconsin courts to avoid property settlement and alimony payments. The plaintiff chose not to submit to the jurisdiction of the Nevada divorce court in 1953, because of personal reasons. She alleges that Rauser, Sr., continued to do business in Wisconsin through correspondence and telephone communication, and continued to participate in managerial decisions of Shorewood Mills. The plaintiff does not allege that she had legal title to the corporate assets or income allegedly removed from Wisconsin by Rauser, Sr., but on oral argument asserts that she had equitable title to Rauser, Sr.'s, property.
Rauser, Jr., in his affidavit, stated that Rauser, St., was the sole stockholder, the president and treasurer of Lewis Knitting Company. Lewis Knitting is a sales corporation which purchases merchandise from Shorewood Mills and other manufacturers and resells those goods to other customers. Rauser, Jr., also stated that Rauser, St., never came to Wisconsin to visit either Shorewood Mills or Shorewood-Richards Realty Company after July 1, 1960. Rauser, Jr., also stated that Rauser, Sr., was not an officer, director or employee of the realty company since 1954. Rauser, Sr., did serve as the western sales representative of Shorewood Mills, receiving one and one-half percent of the gross sales of Shorewood Mills.
In the previous action involving these same facts and these same parties, Rauser v. Rauser, supra, this court held that any removal or transfer of property belonging to Rauser, Sr., was accomplished at the time he left Wisconsin in 1953, or shortly thereafter, and that plaintiff's cause of action, if any, arose at that time. Consequently, plaintiff is collaterally estopped from asserting that her cause of action in the present case arose later than 1953, since that fact was determined in the prior case. Premke v. Pan American Motel, Inc. (1967), 35 Wis.2d 258, 151 N.W.2d 122. Restatement, Judgments, p. 293, sec. 68 (1), states:
"Where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action, except as stated in secs. 69, 71 and 72."
Further, sec. 69 (1), Restatement, supra, page 315, states:
"Where there is an appeal from a judgment, the determination by the appellate court of issues actually litigated is conclusive between the parties in a subsequent action on a different cause of action."
Since the adverse parties on this appeal are the same adverse parties involved in the prior Rauser Case, collateral estoppel applies in this case.
Thus, since the cause of action arose in 1953, the long-arm statute, sec. 262.05(6), which was enacted in 1959, with an effective date of July 1, 1960, is not applicable to plaintiff's action. Rauser, supra, pages 300, 303. The service upon the defendants Irene Finn Rauser and the First National Bank of Nevada was ineffective under sec. 262.05(6) (c).
A further reason exists which bars the plaintiff from proceeding. The plaintiff filed a claim in the probate court in Nevada for $500,000, alleging the same two causes of action which had been presented separately in the two Rauser Cases before this court. She did not file a claim, in the Nevada court, for any alimony payments allegedly due her. By filing a claim plaintiff submitted to the jurisdiction of the Nevada probate court. Her claim was rejected by the estate and she did not appeal that decision. Her time for appeal has now expired, as has her time for filing a new claim against the estate.
When the plaintiff filed her claim with the Nevada court she submitted herself personally to the jurisdiction of that court. That court had jurisdiction over the subject matter as well.
It is clear that a plaintiff is barred from litigating, in this action, the issues which were litigated or which might have been litigated in the Nevada probate court. Northwestern National Casualty Co. v. State Automobile Casualty Underwriters, (1967), 35 Wis.2d 237, 151 N.W.2d 104; Premke, supra. Consequently, plaintiff in this case is precluded by res judicata from asserting her claim of conspiracy against the coexecutors. That issue was litigated in Nevada and cannot be raised now. No question has been raised about the validity of the Nevada probate court's final judgment. Therefore the full faith and credit clause of the United States Constitution requires that the Nevada judgment be conclusive on the rights of the parties in every other court. The cause of action of plaintiff was merged in the Nevada proceeding, and subsequently the cause of action is merged in every state. Anderson v. Anderson (1967), 36 Wis.2d 455, 153 N.W.2d 627. The Wisconsin court lacked jurisdiction over the Nevada coexecutors.
By the Court. — Order reversed with directions to dismiss the complaint as to the appellants.