Estate of Alfred John Capelli v. Alfred M. Habel

2020 WI App 15COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION
2019AP314
Case Nos.:
2019AP315
Complete Title of Case:
2019AP314
DR. ALFRED M. HABEL,
PLAINTIFF-APPELLANT,
V.
ESTATE OF ALFRED JOHN CAPELLI AND JULIE CAPELLI,
DEFENDANTS-RESPONDENTS.
2019AP315
IN RE THE ESTATE OF ALFRED JOHN CAPELLI:
ESTATE OF ALFRED JOHN CAPELLI AND JULIE CAPELLI,
RESPONDENTS,
V.
DR. ALFRED M. HABEL,
APPELLANT.
Opinion Filed: February 26, 2020
Submitted on Briefs: October 31, 2019
JUDGES: Neubauer, C.J., Gundrum and Davis, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYS: On behalf of the plaintiff-appellant the cause was submitted on the
briefs of Kent A. Tess-Mattner and Amy Hetzner of Schmidt, Rupke,
Tess-Mattner & Fox, S.C., Brookfield.
Respondent
ATTORNEYS: On behalf of the defendants-respondents, the cause was submitted on
the brief of J. Michael McTernan of Alia, DuMez & McTernan, S.C.,
Kenosha.
2
2020 WI App 15COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
February 26, 2020
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.
Appeal Nos. 2019AP314 Cir. Ct. Nos. 2018CV406
2018CV533
2019AP315 2018PR35
STATE OF WISCONSIN IN COURT OF APPEALS
NO. 2019AP314
DR. ALFRED M. HABEL,
PLAINTIFF-APPELLANT,
V.
ESTATE OF ALFRED JOHN CAPELLI AND JULIE CAPELLI,
DEFENDANTS-RESPONDENTS.
NO. 2019AP315
IN RE THE ESTATE OF ALFRED JOHN CAPELLI:
ESTATE OF ALFRED JOHN CAPELLI AND JULIE CAPELLI,
RESPONDENTS,
V.
Nos. 2019AP314
2019AP315
DR. ALFRED M. HABEL,
APPELLANT.
APPEALS from a judgment and an order of the circuit court for
Kenosha County: CHAD G. KERKMAN, Judge. Affirmed.
Before Neubauer, C.J., Gundrum and Davis, JJ.
¶1 NEUBAUER, C.J. Dr. Alfred M. Habel appeals from a judgment
and an order in favor of the Estate of Dr. Alfred John Capelli and his widow,
Julie Capelli (collectively “the Estate”).1 The dispute is whether an alleged contract
between Capelli and Habel, under which Habel could sell Capelli’s sports
memorabilia collection for a commission after Capelli’s death, is enforceable. We
conclude that because Habel can choose whether or not to perform under the
contract, his promise is illusory and lacks consideration, thereby rendering the
contract unenforceable. We affirm.
FACTUAL BACKGROUND
¶2 Habel operated a sports memorabilia business, and his friend, Capelli,
was a good customer, purchasing many items and also taking additional items with
a promise to pay Habel in the future.2 When Habel eventually sought payment for
the additional items, Capelli said that he did not want his family to know how much
1
For ease of reference, we will use Capelli when referring to Dr. Capelli, and we will use
Julie Capelli when referring to her.
2
The factual background is taken from the summary judgment submissions, although none
of these facts are material for our resolution.
2
Nos. 2019AP314
2019AP315
money he had been spending on his collection. Capelli proposed that, in exchange
for Habel’s forbearance on the debt, Habel could sell, upon Capelli’s death, the
collection and take a 10% commission.
¶3 Without legal counsel, Capelli drafted an agreement. It stated in
pertinent part as follows:3
This Agreement is entered into on this 8 day of 2001, by
and between alfred john capelli, an individual, and alfred
habel, an individual.
In consideration of the mutual promises set forth
hereunder, the sufficiency of which is hereby acknowledged,
alfred john capelli and alfred habel agree to the following:
Alfred John Capelli and Alfred Habel agree to the
following: In the event of Alfred John Capelli, I request that
Alfred Habel become trustee of my sportcard and
memorabilia collection known as Docsdunks and will him to
dispose of said collection for the benefit of my remaining
family. In exchange I assign 10 percent commission of net
sales to the Habel family and 5 percent of net sales to the
Crisis Pregnancy Center in exchange for said services. The
remainder of net sales will go to my family for future
investment. This I would consider a matter of trust, support,
and friendship for such activity. I also enable payment of all
debt and expenses, past and future, related to such activity,
at the discretion of Alfred Habel. This agreement may be
terminated as follows: when the duties described above have
been completed, or in the event he shall not accept, or
delegate to another party, with the permission of Jack
Waters, my trustee. Kenosha.
The ostensible signatures of Capelli and Habel appear at the bottom of the
document.
3
The agreement contains a number of typographical and other errors. Because the issues
involve a close examination of the agreement, we quote from the agreement verbatim.
3
Nos. 2019AP314
2019AP315
¶4 The agreement is shown to have been executed on February 8, 2001.
More than 16 years later, on December 31, 2017, Capelli died intestate. Habel
subsequently presented the agreement to Julie Capelli. She had not discussed such
a sale with her husband, had not seen the 2001 agreement previously, and denied
permission to Habel to sell the collection.
¶5 Habel took legal action based on his claim that the agreement was a
binding contract, seeking specific performance or money damages. Habel filed
claims in the probate court in which Julie Capelli was handling administration of
the Estate, and he filed two civil actions against the Estate. The second civil action
added Julie Capelli and a fictitious trust as defendants. The court consolidated the
two civil actions.
¶6 After discovery, the Estate moved for summary judgment in all three
proceedings, contending that the contract is indefinite, illusory, and amounts to an
unenforceable testamentary disposition as it was not properly witnessed. The circuit
court essentially agreed with all of the Estate’s arguments and granted judgment in
its favor. Habel appealed from both the probate and civil actions, and we have
consolidated those appeals.4
4
In the civil action, Habel appealed from the judgment in favor of the Estate, and, in the
probate action, Habel appealed from the order in favor of the Estate.
4
Nos. 2019AP314
2019AP315
DISCUSSION
Standard of Review
¶7 We independently review a grant of summary judgment, using the
same methodology as the circuit court. See Secura Ins. v. Super Prods. LLC, 2019
WI App 47, ¶11, 388 Wis. 2d 445, 933 N.W.2d 161. Summary judgment “shall be
rendered if the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of
law.” WIS. STAT. § 802.08(2) (2017-18).5
¶8 This case also requires us to interpret a contract. When the pertinent
language of the contract is unambiguous, it presents a question of law, which we
review de novo. See Town Bank v. City Real Estate Dev., LLC, 2010 WI 134, ¶32,
330 Wis. 2d 340, 793 N.W.2d 476. We also examine the parol evidence rule, which
only applies when a contract is ambiguous. Id., ¶33. Whether a contract is
ambiguous is an issue of law for our independent review. See Kernz v. J.L. French
Corp., 2003 WI App 140, ¶8, 266 Wis. 2d 124, 667 N.W.2d 751.
The Agreement is Unenforceable Because Habel Gave No Consideration, as His
Promise to Sell was Illusory
¶9 The Estate argues that the agreement is unenforceable because there
was no consideration from Habel, specifically, that his ostensible promise to sell the
5
All references to the Wisconsin Statutes are to the 2017-18 version.
5
Nos. 2019AP314
2019AP315
collection was illusory. It was a sale he could choose to make, or not make. We
agree.6
¶10 The nature and effect of an illusory promise were aptly explained by
the court in Devine v. Notter, 2008 WI App 87, ¶4, 312 Wis. 2d 521, 753 N.W.2d
557 (citations omitted):
An illusory promise is a promise in form only: one that its
maker can keep without subjecting him- or herself to any
detriment or restriction. An archetypal example of an
illusory promise is the statement that “I promise to do as you
ask if I please to do so when the time arrives.” A promisor
can keep that promise by either doing as the promisee asks
or not, and so the promisor maintains total freedom to do as
he or she wants. Since the maker of an illusory promise
assumes no detriment or obligation, an illusory promise is
not regarded as consideration. If a party to a purported
contract has, in fact, made only illusory promises and
therefore not constrained him- or herself in any way, he or
she has given no consideration and therefore no contract
exists.
¶11 As quoted by our supreme court, a treatise on contract law offered this
view of illusory promises:
Where an illusory promise is made, that is, a promise merely
in form, but in actuality not promising anything, it cannot
serve as consideration.... In such cases, where the promisor
may perform or not, solely on the condition of his whim, his
promise will not serve as consideration.
6
While we note that an illusory contract is not technically a contract, for ease of reference
we call the document by its name—agreement—instead of repeatedly calling it a purported or
alleged agreement. See Metropolitan Ventures, LLC v. GEA Assoc., 2006 WI 71, ¶56 n.6, 291
Wis. 2d 393, 717 N.W.2d 58 (Abrahamson, J. concurring) (alteration in original), opinion clarified
on denial of reconsideration, 2007 WI 23, 299 Wis. 2d 174, 727 N.W.2d 502 (“Illusory contracts
are not contracts because the illusory language ‘makes performance optional with the promisor no
matter what may happen, or no matter what course of conduct in other respects the promisor may
pursue[;] it does not justify the promisee in understanding that a commitment has been made.’”
quoting 1 RICHARD A. LORD, WILLISTON ON CONTRACTS § 1:2 (4th ed. 1990))).
6
Nos. 2019AP314
2019AP315
DeBruin v. St. Patrick Congregation, 2012 WI 94, ¶45, 343 Wis. 2d 83, 816
N.W.2d 878 (Crooks, J., concurring) (quoting 3 RICHARD A. LORD, WILLISTON ON
CONTRACTS § 7:7 (4th ed. 2008)). Consideration is a required element of any valid
contract—there must be a “bargained for” obligation to perform a certain action.
See RESTATEMENT (SECOND) OF CONTRACTS, §§ 71-72 (AM. LAW INST. 1981).
¶12 In the agreement, Habel does not promise to do anything, or commit
to put himself at any disadvantage or face any detriment. Although the second
paragraph declares, “In consideration of the mutual promises set forth hereunder,
… [the parties] agree to the following,” no promises by Habel are set forth. The
agreement expresses Capelli’s wishes for the disposition of his sports memorabilia:
Capelli “request[s]” that Habel become trustee of the collection and “will[s] him to
dispose” of it. However, the agreement states that it can be terminated “in the event
[Habel] shall not accept” to perform the sale. That sentence makes clear that Habel
has not yet agreed to do anything and explicitly gives him unfettered discretion not
to perform the sale. See 1 WILLISTON ON CONTRACTS §§ 4:27, 4:28 (an unlimited
choice to cancel as to future performance “destroys the promise” and renders the
contract illusory; “a wholly unlimited option to the promisee may not be
permitted”). Because Habel maintained “total freedom to do as he” wanted and
assumed no obligation, he gave no consideration, rendering the contract
unenforceable. Devine, 312 Wis. 2d 521, ¶4.
7
Nos. 2019AP314
2019AP315
Habel’s Parol Evidence Is Inadmissible
¶13 Habel points to his affidavit in which he contends he provided
consideration by allowing Capelli to take many items without immediate payment
and that the sales commission would go toward satisfying the pre-existing debt
owed to him. He points out that forbearance on an antecedent debt can serve as
sufficient consideration. See Hammel v. Ziegler Fin. Corp., 113 Wis. 2d 73, 80-
82, 334 N.W.2d 913 (Ct. App. 1983).
¶14 We cannot consider evidence of Habel’s alleged forbearance on
Capelli’s antecedent debt because those circumstances are not laid out in the
agreement and are therefore evidence extrinsic to a complete and final agreement,
i.e., those circumstances are barred from our review by the parol evidence rule. This
rule is not a rule of evidence but one of substantive contract law. Town Bank, 330
Wis. 2d 340, ¶36. The rule provides as follows:
When the parties to a contract embody their agreement in
writing and intend the writing to be the final expression of
their agreement, the terms of the writing may not be varied
or contradicted by evidence of any prior written or oral
agreement in the absence of fraud, duress, or mutual mistake.
Id. (citation omitted). The rule aims to achieve the goal of construing a contract: to
determine the intent of the parties, and “the best indication of the parties’ intent is
the language of the contract itself.” Id., ¶33. Thus, if the contract, or certain
provisions of it, are unambiguous, our determination of “the parties’ intent ends with
the four corners of the contract, without consideration of extrinsic evidence.” Id.
(citation omitted); see S & H Inc. v. Sladky, 32 Wis. 2d 686, 693-94, 146 N.W.2d
488 (1966) (where individual provision is clear and unambiguous, parol evidence
cannot be used to add terms or remake the contract).
8
Nos. 2019AP314
2019AP315
¶15 Despite its poor draftsmanship, the agreement is clear in one respect:
it unambiguously provides that any mutual promises that provide “consideration”
are set forth therein. None binding Habel are provided. There is no mention of
Habel’s alleged forbearance on Capelli’s antecedent debt, much less an exchange of
that forbearance for the sales commission. The document does not refer or allude
to any other documents, agreements, or other such circumstances that should be
included as part of the agreement. As such, Habel’s parol evidence cannot be used
to vary or add terms, such as consideration—some detriment or obligation by
Habel—when the document makes clear that all mutual promises are set forth
therein. See Town Bank, 330 Wis. 2d 340, ¶39 (parol evidence may not be used to
vary the terms of an unambiguous written contract); Conrad Milwaukee Corp. v.
Wasilewski, 30 Wis. 2d 481, 487-88, 141 N.W.2d 240 (1966) (if the contract
language is unambiguous, any evidence that would change the terms of the contract
violates the parol evidence rule; to be admissible, the evidence “must clarify an
existing ambiguity and cannot establish an understanding in variance with the terms
of the written document”).
Habel’s Demand to Perform, i.e., His “Acceptance,” Does Not Bind the Estate
¶16 Habel argues that his demand to perform, i.e., his “acceptance,” is
binding on the Estate. This ignores the undeniable conclusion that “acceptance,”
including that in the form of a lawsuit seeking to compel specific performance, does
not make an illusory contract enforceable. See Nodolf v. Nelson, 103 Wis. 2d 656,
658-60, 309 N.W.2d 397 (Ct. App. 1981) (demand for specific performance denied
where promise to purchase was illusory).
9
Nos. 2019AP314
2019AP315
¶17 Thus, it is not surprising that none of the cases Habel cites, setting
forth various contractual approaches, support his argument that his demand to
perform binds the Estate to an illusory contract.
¶18 For example, suggesting the agreement is an “executory contract,”
Habel argues that, by choosing to perform the sale, he has made the agreement
binding under the “election of rights” principle, relying on Gaugert v. Duve, 217
Wis. 2d 164, 166-67, 579 N.W.2d 746 (Ct. App. 1998). Gaugert involved an
agreed-upon right of first refusal to purchase farmland, for which there was no
consideration. Id. at 177-78. The court held that the seller, by sending a notice of
the right of first refusal, performed all that was required of him under the contract,
and he therefore executed it, binding him to its terms. Id. at 178. The case before
us involves a critically different fact, namely, that neither party has performed.
¶19 Habel also points to cases addressing “conditional” contracts, citing
to Kocinski v. Home Ins. Co., 147 Wis. 2d 728, 739-40, 433 N.W.2d 654 (Ct. App.
1988), aff’d as modified, 154 Wis. 2d 56, 452 N.W.2d 360 (1990). He argues that
a contract with a condition, such as the sale, can be binding. However, in Kocinski,
the supreme court held that Kocinski could revoke the conditional offer prior to
10
Nos. 2019AP314
2019AP315
performance of the condition. See Kocinski, 154 Wis. 2d at 71. Here, there was no
contract to begin with, and in any event, Habel did not perform the condition.7
¶20 Habel identifies cases addressing “unilateral” contracts, arguing that
“once Dr. Habel sells the sports memorabilia collection,” the Estate would be bound.
Again, as Habel acknowledges, in each case, the offeree’s performance rendered the
agreement binding. Thus, in Arnold Joerns Co. v. Roberts, 16 Wis. 2d 333, 335-
36, 114 N.W.2d 416 (1962), where the seller promised to pay a commission if the
broker produced prospective customers, a unilateral contract arose binding the seller
to pay the commission after the broker produced customers who contracted with the
seller. See also First Wis. Nat’l Bank of Milwaukee v. Oby, 52 Wis. 2d 1, 9, 188
N.W.2d 454 (1971) (although the agreement lacked mutuality of obligations, once
the parties performed, they were bound); Lazarus v. American Motors Corp., 21
Wis. 2d 76, 83, 123 N.W.2d 548 (1963) (a unilateral contract is not enforceable
unless the offeree has substantially performed or has otherwise made a change of
7
Although the supreme court decided the case with a different approach, the court of
appeals in Kocinski v. Home Insurance Co., which Habel cites, makes clear that whether posited
as a condition to a contract’s making, or as a condition under the contract itself, neither is
enforceable “if satisfaction of the condition turns ‘upon the whim or caprice of the party to be
satisfied.’” Kocinski v. Home Ins. Co., 147 Wis. 2d 728, 739, 433 N.W.2d 654 (Ct. App. 1988)
(citation omitted), aff’d as modified, 154 Wis. 2d 56, 452 N.W.2d 360 (1990). As the court
explained:
Thus, although the example, “I will buy the Andy Warhol painting
if I like it,” can be construed as either a condition under a contract
or, in Holmes’ phrase, as a condition “to the contract’s coming
into being,” the undertaking, no matter how construed, is illusory
because, as Holmes put it, it makes “the promisor his own final
judge.”
Kociniski, 147 Wis. 2d at 739 (citing OLIVER WENDALL HOLMES, JR., THE COMMON LAW, 315-
16 (1881)). Habel has not denied that he could choose to sell, or not sell, on his whim.
11
Nos. 2019AP314
2019AP315
position); Estate of Lube v. Gosse, 225 Wis. 365, 371-72, 274 N.W. 276 (1937)
(unilateral promise was fully and completely accepted by performance).
¶21 As explained in these cases, by definition, a unilateral contact consists
of a promise in exchange for performance. Thus, the contract is not formed until
performance. See Paulson v. Olson Implement Co., 107 Wis. 2d 510, 517 n.6, 319
N.W.2d 855 (1982) (“[A unilateral contract] is typified by the law school
hypothetical situation where A says to B, ‘If you walk across Brooklyn Bridge, I
promise to pay you ten dollars.’ A has made a unilateral contract which arises
when—and if—B performs the act.” (quoting JOHN D. CALAMARI AND JOSEPH M.
PERILLO, THE LAW OF CONTRACTS, 17-18 (2d ed. 1977)).8 Up until the point of any
such performance, A is free to rescind. That is essentially what happened here.
Julie Capelli declined to allow Habel to sell her deceased husband’s memorabilia.
¶22 In an attempt to overcome the absence of performance, Habel cites
Merrick v. Northwestern Nat’l Life Ins. Co., 124 Wis. 221, 102 N.W. 593 (1905),
arguing that the Estate cannot prevent performance of this “executory” contract.
Merrick is equally unavailing. In that case, a life insurance company wrongfully
declared a life insurance policy forfeited and refused to accept premiums. Id. at
8
We refer to executory and unilateral contracts because these concepts are discussed in
the cases cited by Habel, but we note that some of the uses of these labels in older cases, rather than
simply the concepts of offer, acceptance, consideration, etc., have been questioned. See Paulson
v. Olson Implement Co., 107 Wis. 2d 510, 517 n.6, 319 N.W.2d 855 (1982); see 1 WILLISTON ON
CONTRACTS, § 1:17 (noting that the RESTATEMENT (SECOND) ON CONTRACTS § 1 (1981) eschews
using the terms “unilateral” and “bilateral,” suggesting the distinction is “conducive to confusion,
and that use of the terms is to be avoided”).
12
Nos. 2019AP314
2019AP315
226. In other words, the life insurance company breached a contract by refusing to
perform.9 Id. Here, there is no contract for the Estate to breach.
¶23 In short, neither Merrick nor any of the other cases Habel cites
provide support for Habel’s suggestion that the Estate was bound to the illusory
agreement prior to performance. See Schlosser v Allis-Chalmers Corp, 86 Wis. 2d
226, 237, 271 N.W.2d 879 (1978) (creation of a binding unilateral contract requires
that the offeree perform); RESTATEMENT (SECOND) OF CONTRACTS § 42 cmt. a
(1981) (“[M]ost offers are revocable;” “the ordinary offer is revocable even though
it expressly states the contrary, because of the doctrine that an informal agreement
is binding as a bargain only if supported by consideration.”).
9
Merrick v. Northwestern Nat’l Life Ins. Co., 124 Wis. 221, 102 N.W. 593 (1905), is a
good example of the unhelpful use of the label “executory” when it comes to a contract with mutual
promises for future performance. WILLISTON ON CONTRACTS comments as follows:
[B]ecause the term contract is defined in terms of promise,
requiring that something be done in the future, there can be no
such thing as an executed contract. By the same token, the phrase
executory contract is misleading; all contracts, by definition, are
executory. When they cease to be so, they cease to be contracts at
all. Nevertheless, the courts continue to speak of executory and
executed contracts, the former term meaning a contract, the
obligation of which relates to the future, or a contract under which
the parties have bound themselves to future activity that is not yet
completed or performed.
1 WILLISTON ON CONTRACTS, § 1:19 (footnotes omitted).
13
Nos. 2019AP314
2019AP315
¶24 In sum, Habel provides no authority to explain how Capelli could bind
the Estate to an illusory agreement, by requiring the Estate to turn over the
memorabilia for sale by Habel. The Estate is not bound to perform under this
illusory agreement.10
By the Court.—Judgment and order affirmed.
10
The Estate advanced other arguments in support of its motion, including that the
agreement was indefinite and was an invalid testamentary disposition due to the inadequacy of
witnesses. Habel contends that the document is not a testamentary disposition and therefore not
subject to any witness requirement. Given the parties’ respective positions, we need not reach this
issue. In light of our decision that Habel failed to provide consideration is dispositive, we need not
address the Estate’s indefiniteness arguments. See Lake Delavan Prop. Co. v. City of Delavan,
2014 WI App 35, ¶14, 353 Wis. 2d 173, 844 N.W.2d 632 (we need not address other arguments
when one is dispositive).
14