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COURT OF APPEALS
NOTICE
DECISION
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.
November 30, 2004
A party may file with the Supreme Court a
                                                                                  Cornelia G. Clark                                                      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.
                                                                                                                                                         Cir. Ct. No.   01CV001967
Appeal No.                                                                        03-3209
STATE OF WISCONSIN                                                                                                                                       IN COURT OF APPEALS
DISTRICT III
DARRYL B. JARACZEWSKI, JAMES C. APPLETON,
ROGER T. MCGRATH AND GARY J. RAPAICH,
PLAINTIFFS-RESPONDENTS-CROSS-
APPELLANTS,
V.
KRUEGER INTERNATIONAL, INC.,
DEFENDANT-APPELLANT-CROSS-
RESPONDENT.
APPEAL and CROSS-APPEAL from a judgment of the circuit court
for Brown County:   SUE E. BISCHEL, Judge.   Affirmed in part; reversed in part
and cause remanded.
Before Cane, C.J., Hoover, P.J., and Peterson, J.
¶1                                                                                PER  CURIAM.    Krueger  International,  Inc.,  appeals  a  judgment
awarding four of its former employees over $4 million for Krueger’s breach of a




No.   03-3209
stockholders agreement (contract).   The jury found that Krueger’s chief financial
officer, Mark Olsen, had apparent authority to commit Krueger to repurchase the
stock at its September 30, 2000 value of $21.16 per share.   The Krueger board of
directors later voted to redeem the stock at its December 31, 2000 value, $15.36
per share, a difference of over $4 million dollars.   Krueger argues that:                  (1) the law
ought not recognize the right of an officer to bind the board to repurchase the
stock  at  its  price  on  a  given  date,  particularly  when  the  contract  forbids
modification  by  agents;                                                                   (2)  the  trial  court  erroneously  admitted  testimony
regarding Krueger’s practices when other employees were terminated or resigned;
(3) the trial court should have severed the four plaintiffs’ claims and conducted
separate trials; and (4) the judgment reflects the wrong measure of damages.   We
reject each of these arguments and affirm the award to the former employees.
¶2                                                                                          The former employees cross-appeal the trial court’s decision to grant
specific performance of the contract, allowing Krueger to make periodic payments
and to pay interest as recited in the contract, denying the employees statutory
prejudgment and post-judgment interest.   Because we agree with the employees
that  this  is  an  action  for  liquidated  damages  for  breach  of  contract  and  the
plaintiffs are entitled to a money judgment with prejudgment and post-judgment
interest, we reverse that part of the judgment and remand the matter to the trial
court to amend the judgment accordingly.
BACKGROUND
¶3                                                                                          Each of the four former employees independently decided to leave
Krueger in  the fall of  2000.    Their resignations were  effective at the end of
December.     Before  their  formal  and  irrevocable  resignations,  each  of  the
employees spoke with Mark Olsen, Krueger’s chief financial officer, treasurer and
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No.   03-3209
a member of the board of directors.   Olsen individually told each of them that if
they resigned prior to December 31, their stock would be redeemed at its value at
the end of the third quarter, $21.16 per share.   The stockholders agreement gave
Krueger the option to redeem a shareholder’s stock upon resignation and allowed
Krueger ninety days to determine whether and when it would exercise that option.
Because the value of the stock decreased after these employees’ resignations, the
board decided to repurchase the stock at a later date and at a lower price.
APPARENT AUTHORITY
¶4                                                                                        The law regarding apparent authority derives from common law and
applies to corporations.   See e.g., Clay v. Horton Mfg. Co., 172 Wis. 2d 349, 355,
493 N.W.2d 379 (Ct. App. 1992).   While WIS. STAT. § 180.08011 empowers the
board of directors to make key policy decisions, the law also recognizes that a
corporation of necessity acts through agents.   Those acts within the scope of the
agent’s  authority  are  the  acts  of  the  corporation.    See  Rudzinski  v.  Warner
Theatres, Inc., 16 Wis. 2d 241, 250, 114 N.W.2d 466 (1962).   A principal may not
cloak an agent with vestiges of authority only to renounce the agent’s authority to
represent it after others have dealt with the agent to their detriment.   Mattice v.
Equitable  Life  Assur.  Soc.,                                                            270  Wis.  504,  508-09,  71  N.W.2d  262  (1955).
Krueger’s argument suggests that a corporation should not be held responsible for
the commitments of its agents if the board of directors subsequently disapproves
of the agent’s decision.   The law of apparent authority as it applies to corporations
1  All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise
noted.
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No.   03-3209
would be abrogated by such an approach.   Nothing in § 180.0801 overrules the
applicability of common law apparent authority when dealing with corporations.
¶5                                                                                       Krueger argues that the employees failed to establish the elements of
apparent authority as a matter of law.   The elements of apparent authority are:
(1) acts by the agent or principal justifying belief in the agency; (2) knowledge
thereof by the parties sought to be held; and (3) reliance thereon by the plaintiff,
consistent with ordinary care and prudence.    See Pamperin v. Trinity Mem’l
Hosp., 144 Wis. 2d 188, 203, 423 N.W.2d 848 (1988).   Krueger argues that the
board did not know of Olsen’s representations and did not acquiesce in them and
that the employees did not rely, much less reasonably rely, on anything Olsen said
or did.
SUFFICIENCY OF EVIDENCE
¶6                                                                                       The employees presented sufficiency of evidence to allow the jury to
find that Olsen was “at least clothed with the powers of a general agent under the
doctrine of apparent authority.”   See Ivers & Pond Piano Co. v. Peckham, 29
Wis.  2d  364,  370,  139  N.W.2d  57  (1966).    Olsen’s  longstanding  duties  and
responsibilities  as  CFO,  treasurer  and  board  member  establish  his  apparent
authority to effectuate stock redemption transactions for Krueger.   The company
bylaws give the treasurer authority over all funds and securities of the corporation
as well as duties delegated or assigned to the treasurer by the president or the
board of directors.   The evidence suggested that Krueger’s president and majority
shareholder, consistent with the corporation bylaws, delegated stock redemption
responsibilities  to  Olsen.    Krueger’s  former  vice  president  of  administration
testified that Olsen “was the guy that controlled all the funds at KI.”   All of the
resigning employees testified that it was well known both in and out of Krueger
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No.   03-3209
that stock transactions were  Olsen’s area  of  responsibility.    Olsen’s  “position
description” stated that he was to “provide for the administration of all company
sponsored retirement plans and  401(K) savings plans.   This evidence points to
Olsen’s apparent authority to effectuate stock redemption transactions, duties of
which the board had full knowledge.
¶7                                                                                       Evidence of Krueger’s dealings with other resigning or terminated
employees also establishes the board’s acquiescence in Olsen’s control over stock
valuation issues for retiring employees.   The board was aware of Olsen’s exclusive
role  in  stock  redemption  transactions  by  virtue  of  the  thirty-five  to  forty
transactions  he  handled  between                                                       1995  and  2000.    Krueger’s  own  evidence
suggests that the board merely served as a “rubber stamp” after the fact for stock
redemption transactions effectuated by Olsen.
¶8                                                                                       The  record  also  supports  the  jury’s  finding  that  each  of  the
employees relied  on  Olsen’s representations.    Krueger  argues that one  of  the
employees, Darryl Jaraczewski, made his decision to resign before he spoke with
Olsen and that he enlisted the assistance of an attorney and two certified public
accountants,  showing  that  he  did  not  rely  on  Olson’s  representation.    That
argument fails for two reasons.    First, detrimental reliance does not mean that
Jaraczewski’s resignation was based solely on Olsen’s representations.   All that is
required is that he justifiably relied upon Olsen’s apparent ability to speak for the
board  on  the  valuation  date.    Second,  Krueger’s  president  was  attempting  to
dissuade Jaraczewski from resigning.   Although Jaraczewski had submitted a letter
of resignation and it appeared that the president was unable to change his mind,
the jury could reasonably find that the final decision was not reached until after
Jaraczewski spoke with Olsen.   In fact, the company asked Jaraczewski for an
additional letter of resignation after he spoke with Olsen.
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No.   03-3209
¶9                                                                                         Krueger  argues  that  the  employees’  reliance,  if  any,  on  Olsen’s
representation was unjustifiable because the contract itself forbade modification
without the board’s consent.   The “modification” in question consists of electing
between two options for the date of stock valuation.    The general contractual
provisions that gave the board authority to approve all transactions and resolve any
questions, controversies or interpretations of the agreement do not specifically
prohibit reliance on an officer and director’s decision to lock in a certain date for
stock valuation.   The jury could reasonably find that the employees were justified
in  believing  that  Olsen  spoke  for  the  corporation  on  that  question.    Krueger
attempts  to  characterize  Olsen’s  decision  as  a                                       “mistaken  interpretation  of  an
existing agreement.”   The jury could reasonably find that Olsen’s actions and the
company’s  longstanding  practices  established  Olsen’s  apparent  authority  to
effectuate  stock  redemption  transactions  for  Krueger,  functions  that  are  not
reasonably described as an “interpretation” of the contract.
IMPEACHMENT TESTIMONY
¶10    Krueger  next  argues  that  the  trial  court  erroneously  admitted
testimony regarding stock transactions involving two other  former employees.
The court allowed that testimony to impeach Olsen’s testimony.   Olson was asked
about a hypothetical employee fired in November 2000”                                      “you would not have
authority to issue a call letter to that employee without the express approval of the
Board of Directors?”   Olsen answered, “No, not necessarily true.   Because there
are situations where I would have met with Resch [the president] and in a case of a
termination, we may have called someone’s stock immediately.”   Krueger argues
that the circuit court misinterpreted Olsen’s testimony and allowed impeachment
evidence based on an inconsistency when there was none.
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No.   03-3209
¶11    Olsen’s testimony was not so clear that we can say that it was not
subject to impeachment.   Olsen testified that stock redemption call letters were
issued  only  after  and  upon  authorization  of  the  board  of  directors.    Specific
instances where that procedure was not followed are relevant to determine whether
the board acquiesced in Olsen’s decisions regarding stock valuation.   In addition,
evidence regarding the circumstances of other employees’ stock redemptions was
relevant to show that Krueger did not always pay the lowest possible price when
repurchasing stock and that the board of directors did not always initiate the stock
redemption action.   Whether the board’s actions should be distinguished in cases
where the employee was terminated is a matter for the jury to determine.   It goes
to the weight of the evidence, not its admissibility.
JOINDER OF PLAINTIFFS
¶12    The  trial  court  properly  exercised  its  discretion  when  it  denied
Krueger’s  motion  to  sever  the  four  plaintiffs’  cases.                                WISCONSIN  STAT.
§ 803.04(1) allows joinder of actions arising out of the same series of transactions
or occurrences if any question of law or fact common to all of these persons will
arise  in  the  action.    The  four  nearly  simultaneous  resignations  and  Olsen’s
identical advice to the four employees constitute a series of transactions and the
cases involve similar factual and legal issues.
MEASURE OF DAMAGES
¶13    Krueger’s argument that the court applied the wrong measure of
damages was not properly preserved for appeal.   The time to argue the appropriate
measure of damages is at the jury instruction conference.   The failure to object to a
jury  instruction  at  conference  waives  any  error  in  the  instructions  or  special
verdict.   See State v. Schumacher, 144 Wis. 2d 388, 409, 424 N.W.2d 672 (1988).
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No.   03-3209
Krueger  requested  only  the  pattern  breach  of  contract  jury  instructions  and
requested no special instruction on damages with respect to expectation interest
versus reliance interest.   Therefore, we will not address that issue.2
¶14    The trial court erred when it granted specific performance on the
contract rather than money damages with statutory interest.   Specific performance
was not sought in the complaint or presented to the jury.    We conclude that
Krueger waived its contractual rights to periodic payment and reduced interest
payments by failing to present that issue to the jury.   Krueger should have argued
to the jury that the employees were only entitled to the present value of  the
periodic  payments  allowed  by  the  contract  and  should  have  requested  an
appropriate jury instruction on that theory.   In addition, by breaching the contract,
Krueger forfeited its right to specific performance.   As its counsel conceded at the
jury instruction conference, “if you breach, you don’t get specific performance,
you get damages for breach of contract.”
STATUTORY INTEREST
¶15    Finally, the effect of the trial court’s ruling is to deny the employees
statutory interest, in favor of the lower interest rates set forth in the contract.   Due
to Krueger’s breach of the contract, the statutes, not the contract, control the award
of  interest  payments.     The  jury  awarded  the  exact  amount  the  employees
requested, an amount equaling the number of shares of stock multiplied by the
2  We also note that Krueger gave little consideration to the waiver argument in its reply
brief but spent the first twenty five pages of its cross-respondent’s brief inappropriately arguing
that issue under the guise that it relates to specific performance and prejudgment and post-
judgment interest.   WIS. STAT. RULE 809.19(6) does not allow a party to place arguments in its
cross-respondent’s brief that belong in the appellant’s reply brief.
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No.   03-3209
difference in value between the two dates in question.   Because that amount was
known with absolute certainty no later than January 1, 2001, the employees are
entitled to five percent interest per annum from that date through August 14, 2003.
See Clug & Smith Co. v. Sommer, 83 Wis. 2d 378, 384, 265 N.W.2d 269 (1979).
The  employees  are  also  entitled to  twelve  percent interest  per  annum on  the
verdict pursuant to WIS. STAT. RULE 814.04(4).   On remand, the trial court shall
enter a money judgment for the employees with pre-judgment and post-judgment
interest.
By the Court.—Judgment affirmed in part; reversed in part and cause
remanded.   Costs to the respondents-cross-appellants.
                                                                                       This  opinion  will  not  be  published.     See  WIS.  STAT.  RULE
809.23(1)                                                                              (b)5.
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