State Ex Rel. Dept. of Agr. M. v. Badger Dairy

Action commenced May 17, 1938, by state of Wisconsin on the relation of Department of Agriculture and Markets, plaintiff and respondent, against Badger Dairy, Inc., Badger Dairy Company, Capitol Dairy Company, Madison Milk Producers' Co-operative Association, Wisconsin corporations, and Sam Lerner, defendants, Roy C. Heggestad, defendant and appellant, and Madison Milk Marketing Co-operative, interpleaded defendant and respondent, for a declaratory judgment establishing the rights of the parties in a bond deposited with the Department of Agriculture and Markets. Judgment was entered December 6, 1943, impressing the bond with a lien in favor of Madison Milk Marketing Co-operative, from which defendant Roy C. Heggestad appeals.

Prior to December 15, 1936, Whiting Dairy Company, a corporation, was engaged in the business of retail distribution of milk in the city of Madison. At the close of business it was indebted to the Madison Milk Marketing Co-operative for milk delivered in a sum exceeding $1,600. The equipment of Whiting Dairy Company was acquired by Badger Dairy, Inc., a newly organized corporation, which continued the business of retail distribution of milk. December 15, 1936, in order to secure a milk-dealer's license for Badger Dairy, Inc., Roy C. Heggestad, its secretary, deposited with the Department of Agriculture and Markets of the state of Wisconsin, a federal farm-mortgage bond in the sum of $1,000 to secure the payment to milk producers delivering milk to Badger Dairy, Inc., pursuant to the provisions of sec.100.04 (11a), Stats. 1935. Thereafter on January 20, 1937, Badger Dairy Company, which by stipulation is agreed to be Badger Dairy, Inc., and which for convenience will be referred to as "Dairy," and Madison Milk Producers' Cooperative Association, by stipulation agreed to be Madison Milk Marketing Co-operative, which for convenience will be referred to as "Co-operative," entered into a written agreement whereby Dairy agreed to leave on deposit with the Department of Agriculture and Markets the farm-mortgage bond then on deposit with the Department, which is the farm-mortgage bond now in dispute, or its cash equivalent, for the sole benefit of Co-operative and its members. In the next paragraph Dairy assumed and agreed to pay to Cooperative, for the benefit of its members, all obligations of Whiting Dairy Company, which it was agreed amounted to approximately $1,600, and agreed to pay the same at the rate $50 per month beginning April 1, 1937, including interest at six per cent payable annually from the first payment date. Provision was then made for the time of payment of milk delivered, and Dairy agreed to increase the amount of the bond with the Department of Agriculture and Markets if it was not sufficient to cover the milk furnished between paydays. In consideration of the foregoing promises on the part of Dairy, Co-operative agreed that it, or its members or affiliated organizations, would furnish and supply to. Dairy all milk for normal city consumption that it required plus any additional amount mutually agreed upon, conditioned that if Dairy failed to make payment for milk on the date or dates agreed Co-operative was not required to furnish any further milk. It was further provided that the agreement was to be in force for a period of six months and have no force and effect thereafter, except that the provision whereby Dairy. assumed and agreed to pay the obligations of Whiting Dairy Company was not to be terminated and payments were to continue as specified in the agreement. The agreement was executed on behalf of Dairy by Gertrude I. Heggestad, president, and Roy C. Heggestad, secretary, and on behalf of Cooperative by its proper officers. Milk was furnished to Dairy under this contract until April 1, 1937, when it discontinued business. Dairy paid for all milk furnished under the contract but paid no part of the obligations of Whiting Dairy Company which it had assumed. The farm-mortgage bond deposited with the Department of Agriculture and Markets was the individual property of Roy C. Heggestad, secretary of Dairy.

June 6, 1942, summary judgment was entered on motion of Co-operative, which was subsequently vacated on motion of defendant Heggestad for the reason that proper notice of motion had not been served. Respondent Co-operative seeks a review of this order. In March, 1943, by stipulation of parties, it was agreed that the record made in the original motion for summary judgment be considered by the court as a new motion for summary judgment without the preparation of new motion papers. The only question on appeal is whether the deposited federal farm-mortgage bond of appellant Heggestad stands as security for the unpaid indebtedness of Whiting Dairy Company assumed by Badger Dairy, Inc., in the contract of January 20, 1937. In order to determine this question we must look to the contract entered into between Dairy and Co-operative on January 20, 1937.

The law applicable to the interpretation of contracts is not in dispute. All parts of the contract must be read together and its provisions not isolated as if they stood alone.Ogden v. Straus Building Corp. (1925) 187 Wis. 232,202 N.W. 34; Crolius v. Lorge (1927), 192 Wis. 130,212 N.W. 253; Estate of Oeflein (1932), 209 Wis. 386, 245 N.W. 109. The entire agreement must be looked to for the purpose of giving each provision its intended meaning. Hampton Plains Realty Co. v. Melvin. Co. (1934) 214 Wis. 128,252 N.W. 572. An examination of the contract and the conditions that prevailed at the time of its execution discloses that Dairy, as a new corporation, was taking over the equipment of Whiting Dairy Company and naturally expected to obtain a large portion of the business of its predecessor company. Cooperative was the contracting agency for a group of producers who had furnished milk to Whiting Dairy Company, for which they had not been paid. Dairy, successor to Whiting Dairy Company, was apparently desirous of purchasing milk from these producers and they in turn were interested in protecting themselves against further loss and in recouping the loss which they had suffered. The bond deposited with the Department of Agriculture and Markets would protect Cooperative from loss for any milk sold to Dairy to the extent of the value of the bond. There was no reason for any contract between the parties relative to this security, and the contract merely affirmed the fact that the bond was deposited and the purpose of its deposit. Co-operative was under no obligation to sell milk to Dairy. The Department of Agriculture and Markets had authority to require Dairy to increase the bond in the event it deemed it advisable. It necessarily follows that the contract was not entered into for the purpose of obtaining security for payment of milk being furnished currently.

An examination of the remaining provisions of the contract shows that Dairy agreed to leave on deposit with the Department of Agriculture and Markets the bond in question, or its cash equivalent, for the sole benefit of Co-operative and its members. In the next paragraph it agreed to assume the obligations of Whiting Dairy Company, and provided for the method of payment. The assumption of this obligation was for the benefit of Co-operative and its members. If it was not intended that the bond should be pledged as security for the obligation of Whiting Dairy Company we find no reason for making reference to the bond in this contract. The obligation to pay for the milk currently delivered was no greater than the obligation to pay the Whiting Dairy Company indebtedness. We assume that the contract was entered into in good faith and that Dairy intended to perform its part of the contract. If this is true there is nothing inconsistent with its pledging the bond to secure its performance. As further evidence of this, the contract provided that it was to have no force and effect after the expiration of six months except that the provisions "whereby party of the first part assumes and agrees to pay the above-mentioned obligations of Whiting Dairy Company and Frank Whiting shall not be terminated and payments under the said provisions shall continue as above specified." It is considered that by the terms of the contract the bond was pledged as security for the payment of the Whiting Dairy Company obligation assumed by Dairy.

It is contended that Heggestad, as owner of the bond deposited with the Department of Agriculture and Markets, at no time personally pledged the bond as security for this obligation. He was secretary of the corporation that entered into the contract that pledged the bond, and as such secretary signed the agreement. He had full knowledge of the contents of the instrument that he signed. He was a party to the agreement as an officer of the corporation, and by the doctrine of equitable estoppel it would be unconscionable to permit him as an individual to maintain a position inconsistent with one in which he had acquiesced. He had knowledge of the facts, or at least he had the means at hand of knowing all the facts.Baierl v. Riesenecker (1930), 201 Wis. 454, 227 N.W. 9, 230 N.W. 605; 19 Am. Jur. p. 648, sec. 49. He cannot be permitted at this time to question the pledging of the bond under the terms of the contract.

The decision on this appeal makes it unnecessary to consider the question sought to be reviewed.

By the Court. — Judgment affirmed.