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COURT 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.
October 9, 1997
A party may file with the Supreme Court a
                                                                                  Marilyn L. Graves         petition  to  review  an  adverse  decision  by  the
                                                                                  Clerk, Court of Appeals   Court of Appeals.  See § 808.10 and RULE 809.62,
                                                                                  of Wisconsin              STATS.
No.                                                                               97-0655-FT
STATE OF WISCONSIN                                                                IN COURT OF APPEALS
                                                                                  DISTRICT IV
JEROME ESSER,
PLAINTIFF-RESPONDENT,
V.
DAVID BEERS AND STEPHANIE GORDON,
DEFENDANTS-APPELLANTS.
APPEAL from a judgment of the circuit court for Dane County:
RICHARD J. CALLAWAY, Judge.  Reversed.
VERGERONT, J.1    David Beers and Stephanie Gordon appeal from
a judgment of eviction ordering that they vacate premises owned by Jerome Esser
where they were then living.   The judgment was entered based on the pleadings.
On appeal, Beers and Gordon  (appellants) contend that the trial court erred in
granting judgment against them on the pleadings, because there were disputed
1    This appeal is decided by one judge pursuant to § 752.31(2)(a), STATS.




No. 97-0655-FT
issues of fact entitling them to a trial on Esser’s claim for eviction.   We agree with
the appellants and therefore reverse.
BACKGROUND
On  December  12,                                                                         1996,  Esser  filed  an  eviction  and  replevin
summons and complaint in small claims court which stated:                                 “They [appellants]
refuse to pay rent.”   A “Five Day Notice to Quit or Pay Rent” contains a stamp
with the same filing date.   This notice to the appellants is dated November 13,
1996, and states:
*Tenant owes rent of  $725.00 for October,  1996,
and  for  November,  1996,  and  owes  security  deposit  of
$725.00.                                                                                  Tenant   was   employed   by   owner   with
compensation  for  labor  at                                                              $7.00  per  hour  to  be  offset
against  the  rent  and  security  deposit.    Total  labor  was
$1,635.76.   Owner paid $400.00 of labor to tenant with a
net  of                                                                                   $1,235.76  to  apply  to  rent  and  security  deposit.
Tenant quit employment on November  6,  1996.    Tenant
owes $939.24 to owner.
Gordon appeared for both appellants, entered a denial and requested
a jury trial.   A jury trial was scheduled for February 13, 1997.
Appellants retained counsel and on February 4, 1997, their counsel
filed  a  notice  of  appearance,  an  answer  including  affirmative  defenses,  and
counterclaims.   The answer denied that the appellants owed rent when they were
served with the Notice to Quit or Pay Rent on November 13, 1996, and alleged
that the appellants paid $1,450 to Esser on September 30, 1996, for the security
deposit and the first month’s rent; that November rent was to be taken out of
wages owed to Beers which were well in excess of $1,000 and that on the date of
service of the notice, Esser owed the appellants at least $510.76 in unpaid wages.
The  answer  alleged  three  affirmative  defenses—retaliatory eviction,  breach  of
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No. 97-0655-FT
§ 704.07, STATS,2 and breach of implied warranty of habitability—and several
counterclaims, including a counterclaim for unpaid wages, electricity and water
2
Section 704.07, STATS., provides in part:
Repairs; untenantability.                                                         (1) APPLICATION OF SECTION.
This section applies to any nonresidential tenancy if there is no
contrary provision in writing signed by both parties and to all
residential tenancies. An agreement to waive the requirements of
this section in a residential tenancy is void. Nothing in this
section is intended to affect rights and duties arising under other
provisions of the statutes.
(2) DUTY OF LANDLORD. (a) Unless the repair was made
necessary by the negligence or improper use of the premises by
the tenant, the landlord is under duty to:
1. Keep in reasonable state of repair portions of the premises
over which the landlord maintains control;
2. Keep in a reasonable state of repair all equipment under the
landlord's  control  necessary  to  supply  services  which  the
landlord has expressly or impliedly agreed to furnish to the
tenant, such as heat, water, elevator or air conditioning;
3. Make all necessary structural repairs;
4. Except for residential premises subject to a local housing
code,  repair  or  replace  any  plumbing,  electrical  wiring,
machinery or equipment furnished with the premises and no
longer in reasonable working condition, except as provided in
sub. (3) (b).
5. For a residential tenancy, comply with a local housing code
applicable to the premises.
….
(4)  UNTENANTABILITY.                                                             If  the  premises  become
untenantable because of damage by fire, water or other casualty
or because of any condition hazardous to health, or if there is a
substantial violation of sub. (2) materially affecting the health or
safety of the tenant, the tenant may remove from the premises
unless the landlord proceeds promptly to repair or rebuild or
eliminate the health hazard or the substantial violation of sub. (2)
materially affecting the health or safety of the tenant; or the
tenant may remove if the inconvenience to the tenant by reason
of the nature and period of repair, rebuilding or elimination
would  impose  undue  hardship  on  the  tenant.  If  the  tenant
remains in possession, rent abates to the extent the tenant is
(continued)
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No. 97-0655-FT
bills for Esser’s cattle operation, the time appellants spent cleaning the premises,
and disbursements they made to make it habitable.
Esser, through counsel, filed various motions in limine and a request
to sever the trial of the appellants’ counterclaims from the trial of the eviction
claim.   At the hearing on these motions, held on February 10, 1996, Esser, through
counsel, made an oral motion for a judgment on the pleadings.   Esser’s counsel
argued that, based on the pleadings, it was undisputed that it was agreed that Beers
do farm work for Esser as a condition for living on the premises; it was also
undisputed that Beers quit work as a general laborer, although he continued to feed
and water the cattle.   Esser’s counsel contended that the Notice to Quit or Pay
Rent shows that the eviction was based both on failure to pay rent and on quitting
work as a general laborer for Esser.
Appellants’  counsel  opposed  the  motion  for  a  judgment  on  the
pleadings.   She argued that Beers’ employment with Esser was not a condition of
the tenancy and the answer did not allege that it was, but rather alleged that the
amount Beers was owed for his labor was an offset against the amount owed for
rent and that the amount Esser owed Beers was more than what the appellants
owed him.   She also argued that the complaint did not allege quitting employment
as a ground for eviction and neither did the Notice to Quit or Pay Rent.   She
acknowledged that Beers had quit and stated that was because he was not being
paid.
deprived of the full normal use of the premises. This section does
not authorize rent to be withheld in full, if the tenant remains in
possession….
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No. 97-0655-FT
The trial court interpreted the notice as alleging that employment
was  a  condition  of  the  tenancy.    It  concluded  that  since  appellants’  counsel
acknowledged that Beers had quit and the answer did not deny that he had quit,
Esser  was  entitled  to  a  judgment  for  eviction  on  the  pleadings.    The  court
interpreted the allegation in the answer concerning offset as a concession that
employment was a  condition of  the  tenancy.    The  court entered  an order  on
February 11, 1997, directing the appellants to vacate the premises by February 14,
1997, and scheduled a trial for March 19, 1997, on Esser’s claim for damages and
the  appellants’  counterclaims.    The  court denied  the  appellants’  motion for  a
temporary stay pending a motion for relief pending appeal, denied their motion for
relief pending appeal without filing an undertaking, and denied their motion for
reconsideration.
The appellants filed a notice of appeal.    Just after this case was
submitted for disposition to this court, we were advised by Esser’s counsel that the
appellants filed a Chapter 7 bankruptcy proceeding on April 18, 1997.   In response
to an order from this court, on August 26, 1997, we issued an order staying this
appeal  pending  completion  of  the  bankruptcy  proceedings  or  lifting  of  the
bankruptcy stay.   The parties filed arguments on the effect of the bankruptcy on
this appeal.   On September 5, 1997, we received a letter from appellants’ counsel,
copied  to  Esser’s  counsel,  advising  us  that  the  bankruptcy  proceedings  were
completed  on  July  29,                                                                   1997,  and  that  the  bankruptcy  stay  had  been  lifted.
Appellants’ counsel asked that we proceed to decide this appeal.   Esser has not
filed a response.
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No. 97-0655-FT
DISCUSSION
We first address Esser’s contention, made in his responsive brief,
and again in response to our order concerning the bankruptcy, that the appeal is
moot because the appellants have vacated the premises.   The appellants reply that
it is not moot because a judgment of eviction may affect their credit rating and
their  ability to  obtain  rental housing in  the  future.    We  are  uncertain how  a
judgment of eviction might affect their credit rating in view of the bankruptcy.
However, we are persuaded that such a judgment could adversely affect their
ability to obtain rental housing.   We therefore conclude that a decision on this
appeal is not one that will have no practical effect, and we decline to dismiss it on
the grounds of mootness.
The appellants contend that the trial court erred in granting a motion
for judgment on the pleadings because the complaint alleged only nonpayment of
rent as a ground for eviction and the trial court could not consider matters outside
the pleadings—the Notice to Quit or Pay Rent—without giving the appellants the
opportunity  to  also  present  additional  materials  outside  the  pleadings.    The
appellants  also  argue  that  the  court’s  interpretation  of  the  notice—that
employment was a condition of the tenancy—is a “strained inference at best”; that
they did not intend to admit this in their answer; and that the court erred in not
interpreting the pleadings in the light most favorable to them, the opposing party.3
Esser responds that the notice was properly considered by the trial court because it
was part of the complaint, and it was properly interpreted by the court.   Esser also
3    In view of our resolution of these issues, it is unnecessary to address the appellants’
other claims of trial court error.
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No. 97-0655-FT
argues that the appellants’ allegation that they could offset unpaid wages against
the rent is a concession that employment was a condition of the tenancy.
The  propriety  of  the  trial  court’s  grant  of  a  judgment  on  the
pleadings involves a question of law, which this court reviews de novo.   Freedom
From Religion Foundation v. Thompson, 164 Wis.2d 736, 741, 476 N.W.2d 318,
320  (Ct. App.  1991).    A judgment on the pleadings is essentially a summary
judgment minus affidavits and other supporting documents.   Id.   We first look at
the complaint to determine if it states a claim for relief; if it does, we look at the
responsive pleadings to determine whether a material fact exists.    Id., quoting
Schuster v. Altenberg, 144 Wis.2d 223, 228, 424 N.W.2d 159, 161 (1988).   A
judgment on the pleadings is proper only if there is no genuine issue of material
fact.   Id.   Because the methodology for judgment on the pleadings involves the
first two steps of summary judgment methodology, id., we apply certain principles
from summary judgment methodology.    The burden is on the moving party to
establish the absence of a genuine issue of material fact, see Bantz v. Montgomery
Estates, Inc., 163 Wis.2d 973, 984, 473 N.W.2d 506, 510 (Ct. App.1991), and we
draw all reasonable inferences in favor of the nonmoving party.   See Grams v.
Boss, 97 Wis.2d 332, 339, 294 N.W.2d 473, 477 (1980).
On this record, we are unable to resolve the dispute over whether the
notice of pleadings was attached to the complaint that was filed on December 12,
1996, and served on appellants.4   The trial court made no finding on this point.
4    The form complaint instructs:                                                              “Attach a copy of the termination notice which was
served upon the complaint.”   Although the complaint and notice each contain a stamp with the
same date and time of filing, each is numbered as separate one-page documents in the record.
The affidavit of service describes the  “papers” served as  “Evictions summons and replevin
complaint” and do not refer to the number of pages.
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No. 97-0655-FT
We will assume for purposes of discussion that the notice was attached to the
complaint such that it was proper for the trial court to consider it as part of the
motion  for  a  judgment  on  the  pleadings.    We  nevertheless  agree  with  the
appellants that the complaint (with notice) and the answer, drawing all reasonable
inferences in the appellants’ favor, presented genuine issues of material fact which
entitled the appellants to a trial on the claim for eviction.
The Notice to Quit or Pay Rent states that there was to be an offset
of compensation from labor against the rent and security deposit and states that
“tenant quit employment.”   However, it does not expressly state that a condition of
the tenancy was that Beers or Gordon work for Esser.   That may be a reasonable
inference but it is not a necessary one, because the notice is clearly asserting as a
ground for eviction that the appellants owe rent, after the offset, which they have
not paid.   The appellants’ alternative interpretation of the notice is a reasonable
one:   that the eviction is for nonpayment and the assertion about the offset and
quitting is to explain how Esser is computing the unpaid rent.
In their answer, the appellants allege that there was an agreement to
offset wages owed Beers against rent, thus agreeing on this point with Esser’s
description of the agreement between the parties.   However, there is nothing in the
answer  that would  give  rise  to a  reasonable  inference  that  the  appellants  are
agreeing that employment was a condition of the tenancy, even if the rent were
otherwise paid.   The answer denies that the appellants were behind in their rent
when the notice was served and, in the affirmative defense of breach of § 704.07,
STATS., alleges that their  “payments of  $2,170.39, which do not include their
security deposit of $725 plus 80 hours of their labor for cleaning far exceeded the
value of 5 months rent for the premises in the condition it actually was, and more
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No. 97-0655-FT
than fully compensated plaintiff for the use appellants were able to derive from the
premises.”
Esser argues that, as a matter of law, there cannot be a setoff of
obligations unless they are  “mutual” and that means they are part of the same
transaction.   Esser reasons from this premise that the allegation in the answer that
there was to be a setoff of the wages from Beers’ labor against the rent is, in
effect, a concession that Beers’ labor was a condition of the tenancy.   Esser cites
in support of this argument Soo Line R. Co. v. Escanaba & Lake Superior R. Co.,
840 F.2d 546, 551 (7th Cir 1988).   However, that case does not support Esser’s
argument.    Soo  Line  dealt  with  the  propriety  of  deferring  execution  of  one
judgment  until  the  dispute  on  another  debt  between  the  same  parties  was
adjudicated, without an agreement between the parties to do so.   The court referred
to the common law right of setoff which permits a setoff only when the debts are
mutual and concluded that the adjudicated debt and the unadjudicated debt were
not mutual because they arose at different times out of different circumstances.
Soo Line, 840 F.2d at 551.   The appellants here are not relying on a common law
right of setoff.   Rather, they allege that they and Esser agreed to set off unpaid
wages against the rent.   Esser has provided us with no authority for the proposition
that  parties  may  not  agree  to  a  setoff  in  these  circumstances  unless  the
employment is a condition of the tenancy, and we are aware of none.
Esser also contends that the appellants have no right to remain on the
premises without paying rent, even if the employment is not a condition of the
tenancy.    The appellants do not dispute that.    As we have noted above, they
contend they did not owe any rent on the date the notice was served and that,
according to their view of what rent they owed and what they paid, Esser received
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No. 97-0655-FT
all the rent he was entitled to for at least five months.5   Esser is correct that a
defense under § 704.07, STATS., of untenantability does not permit a tenant to both
remain  in  possession  of  premises  the  tenant  contends  are  untenantable  and
withhold rent “in full.”     Section 704.07(4).   However, that same section provides
that “if the tenant remains in possession, rent abates to the extent the tenant is
deprived of the full normal use of the premises.”   Id.   The answer does not allege,
or reasonably imply, that the appellants have withheld rent in full.    Rather, it
alleges that the rent they owe is abated due to the untenantability of the premises.
Whether  the  premises  were  untenantable  and,  if  so,  the  proper
amount of abatement are factual disputes, as are the issues of the amount the
appellants paid Esser, the amount of unpaid wages due Beers, the terms of the
agreement[s] between the parties and, finally, whether the appellants breached the
agreement with respect to tenancy.   These issues cannot be resolved by a judgment
on the pleadings and the trial court erred in granting a judgment of eviction on the
pleadings.
By the Court.—Judgment reversed.
This opinion will not be published.  See RULE 809.23(1)(b)4, STATS.
5    Presumably the appellants are referring to October 1996 through February 1997, the
month in which the answer was filed and the hearing took place.
10

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