Citation Codes

Equivalent Citations

citation codes

Attorney(S)

The cause was submitted for the appellants Louis Rosenberg and Rose Manor Realty Company on the brief of Wolfe, O'Leary Kenney and Z. F. O'Leary, and for the appellant Lavo Company on the brief of Bender, Trump McIntyre, all of Milwaukee. For the respondents there was a brief by Shaw, Muskat Paulsen, attorneys, and John F. Zimmermann of counsel, all of Milwaukee, and oral argument by Mr. Zimmermann.

See more information ...

Smart Summary

Summary of Opinion: UIHLEIN and others v. ROSENBERG and others (Supreme Court of Wisconsin, Oct. 11, 1949)

Factual and Procedural Background

The action was commenced October 9, 1946, by Joseph E. Uihlein, Jr., and others (plaintiffs) against I.J. Rosenberg, Louis Rosenberg, Lavo Company of America, and Rose Manor Realty Company (defendants), invoking equitable powers to reach property of defendant I.J. Rosenberg alleged to have been fraudulently transferred to the other defendants without consideration to defeat the rights of plaintiffs and other creditors of I.J. Rosenberg. The defendants demurred to the plaintiffs' amended complaint as amended. The defendants appeal from an order entered February 17, 1949, overruling the demurrers.

Material allegations of the amended complaint, taken from the opinion, include:

Entry of a judgment in favor of Big Bay Realty Company against I.J. Rosenberg on July 23, 1935, which judgment was assigned to the plaintiffs, who are the owners of that judgment.
An execution on the judgment was issued September 10, 1945, returned unsatisfied except for a partial payment from an execution sale.
An alleged conspiracy between I.J. Rosenberg and Louis Rosenberg to place I.J. Rosenberg's assets beyond the reach of his creditors.
Allegations that Lavo Company of America and Rose Manor Realty Company were Wisconsin corporations under the domination and control of I.J. and Louis Rosenberg and that those corporations were used to hold title to Rosenberg's property to defraud creditors; that the corporations were aware of and parties to the conspiracy.
Five specific alleged fraudulent transfers described in the complaint:
1. February 27, 1933: a fictitious assignment by I.J. Rosenberg to Lavo Company of his right to receive rentals from certain real estate.
2. June 25, 1934: $27,500 paid to Louis Rosenberg (as agent for I.J. Rosenberg) by Milwaukee Electric Railway Light Company for cancellation of a lease; allegation that Louis Rosenberg still holds those funds invested in his own name for I.J. Rosenberg.
3. December, 1939: I.J. Rosenberg purchased certain real estate from the banking commission of Wisconsin through Lavo Company and title was conveyed to Lavo Company.
4. At the time of that purchase, all capital stock of Lavo Company was owned by I.J. Rosenberg, but certificates were in form transferred by I.J. Rosenberg to Louis Rosenberg without consideration and new certificates issued in Louis Rosenberg's name to conceal ownership.
5. Certain real estate owned by I.J. Rosenberg from July 23, 1935, until March 8, 1945, was purportedly represented as owned by his wife with an alleged lost unrecorded deed; March 8 and July 26, 1945 tax deeds purportedly conveyed the property to Rose Manor Realty Company; plaintiffs purchased all right, title, and interest of I.J. Rosenberg in that property at an execution sale on September 10, 1945 in the name of an agent.

Legal Issues Presented

Whether the amended complaint improperly joins multiple causes of action (misjoinder), in that the five alleged fraudulent transfers constitute separate and distinct causes of action affecting different defendants.
Whether the amended complaint fails to state facts sufficient to constitute a cause of action.

Arguments of the Parties

Defendants' Arguments

The defendants contended that the five alleged fraudulent transfers are five separate and distinct causes of action.
They argued that each alleged transfer affects some of the defendants but none affects all of them, resulting in a misjoinder of causes of action.
Demurrers were based generally on (1) misjoinder of causes of action and (2) failure to state facts sufficient to constitute a cause of action.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Simon v. Weaver, 143 Wis. 330, 127 N.W. 950	That multiple wrongful acts may be alleged as various ways a fraudulent scheme was consummated and that such allegations may constitute one subject of action rather than separate causes.	The court stated this as the correct rule to determine whether the complaint states more than one cause of action and relied upon it to reject the misjoinder argument.
Zinc C. Co. v. First Nat. Bank, 103 Wis. 125, 79 N.W. 229	Statement that there is but one subject of action — the conspiracy to defraud and its consummation to the damage of plaintiff — and that the test is whether more than one primary right is sought to be enforced.	The court quoted this passage to explain the proper test for distinguishing separate causes of action from one subject of wrong presented for adjudication.
Gager v. Marsden, 101 Wis. 598, 77 N.W. 922	Authority cited as supporting the same distinction between alleging separate causes and alleging one subject of wrong from which several wrongs flow.	Cited by the court as one of several authorities reaching the same conclusion on the misjoinder issue.
Adkins v. Loucks, 107 Wis. 587, 83 N.W. 934	Authority cited as supporting the distinction between separate causes and one subject of wrong.	Used as supporting authority for the rule rejecting misjoinder in the context of a single fraudulent scheme.
Herman v. Felthousen, 114 Wis. 423, 90 N.W. 432	Authority cited as supporting the same rule regarding single subject of action versus multiple causes.	Cited by the court as additional supporting precedent.
30 C.J.S., Equity, p. 591, sec. 153	Treatise authority cited concerning the pleading distinction between multiple wrongs and multiple causes of action.	Included by the court as further support for the stated rule.
69 A.L.R. 229	Secondary authority cited in support of the rule.	Referenced by the court as additional persuasive authority.
Ellis v. Northern Pacific R. Co., 77 Wis. 114, 45 N.W. 811	Authority cited as in point with the other cases on the pleading distinction.	Cited by the court among authorities supporting the applicable rule.
Warne v. Petzke, 223 Wis. 435, 270 N.W. 922	Later Wisconsin case cited as bearing on the same issue.	Included by the court as additional supporting precedent.

Court's Reasoning and Analysis

The court addressed the two grounds of demurrer in sequence.

On the misjoinder contention, the court adopted the principle articulated in Simon v. Weaver and quoted Zinc C. Co. v. First Nat. Bank to explain the controlling test: the question is whether the complaint presents more than one primary right to be enforced or more than one subject of controversy. The court explained that although multiple wrongful acts and different forms of relief are alleged, those allegations can be different manifestations of a single fraudulent scheme (a conspiracy to defraud) and therefore do not necessarily state separate causes of action. The court cited multiple Wisconsin cases and secondary authorities as being to the same effect, indicating the matter has been fully discussed in prior authority.
On the second ground (failure to state facts), the court reiterated the demurrer standard: allegations of fact in the amended complaint as amended must be taken as true for demurrer purposes. The court declined to comment on the merits because the case had not been tried, but stated that a careful review of the allegations indicated that if the alleged facts can be proved at trial the plaintiffs would be entitled to judicial relief.

Holding and Implications

Order affirmed.

Direct effect: The circuit court's order overruling the defendants' demurrers was affirmed by the Supreme Court of Wisconsin, allowing the plaintiffs' action to proceed. The demurrers on the grounds of misjoinder and failure to state a cause of action were rejected under the supporting authorities and the applicable pleading standards.

Broader implications: The opinion applies and reaffirms existing Wisconsin authority distinguishing between alleging multiple wrongful acts within a single fraudulent scheme and pleading separate causes of action; the court did not announce a new legal principle beyond the precedents it cited.

Show full summary ...

UIHLEIN and others, Respondents, vs. ROSENBERG and others, Appellants.

This action was commenced on the 9th day of October, 1946, by Joseph E. Uihlein, Jr., and others, plaintiffs, against I.J. Rosenberg, Louis Rosenberg, Lavo Company of America, and Rose Manor Realty Company, defendants, invoking the powers of a court of equity to reach property of the defendant I. J. Rosenberg alleged to have been transferred to the other defendants fraudulently and without consideration to defeat the rights of plaintiffs and other creditors of said I.J. Rosenberg. The defendants demurred to the plaintiffs' amended complaint as amended. The defendants appeal from an order entered February 17, 1949, overruling the demurrers.

The amended complaint, as amended, contains the following material allegations: The entry of a judgment in the circuit court for Milwaukee county in favor of Big Bay Realty Company against the defendant I.J. Rosenberg on July 23, 1935; the assignment of said judgment to plaintiffs; that the plaintiffs are the owners of said judgment; the issuance of an execution on said judgment on September 10, 1945, which execution was returned unsatisfied except for a partial payment through the proceeds of an execution sale; a conspiracy between the defendants I.J. Rosenberg and Louis Rosenberg to place the assets of I.J. Rosenberg beyond the reach of his creditors; that the defendants Lavo Company of America and Rose Manor Realty Company are Wisconsin corporations under the complete domination and control of I.J. Rosenberg and Louis Rosenberg; that these corporations were used by the Rosenbergs for the holding of title to property belonging to I.J. Rosenberg as a means of defrauding his creditors; that these corporation defendants were at all times aware of the conspiracy to defraud said creditors, and entered into and became parties to said conspiracy; that in furtherance of said conspiracy five fraudulent transfers were made: (1) On February 27, 1933, I.J. Rosenberg made a fictitious assignment to the defendant Lavo Company of his right to receive rentals from certain real estate described in the complaint; (2) on June 25, 1934, Louis Rosenberg, as agent for I.J. Rosenberg, was paid $27,500 by Milwaukee Electric Railway Light Company for the cancellation of a lease on real estate described in the complaint, and that Louis Rosenberg still holds said funds invested in his own name for I.J. Rosenberg; (3) in December, 1939, I.J. Rosenberg purchased certain real estate described in the complaint from the banking commission of Wisconsin through the Lavo Company and title to said property was conveyed to the Lavo Company; (4) that at the time of the purchase of said property from the banking commission of Wisconsin all of the capital stock of the defendant Lavo Company of America was owned by the defendant I.J. Rosenberg, but as a means of concealing his ownership of said capital stock the certificates representing the shares of said capital stock were in form transferred by I.J. Rosenberg to the defendant Louis Rosenberg without payment of any consideration, and new certificates were in form issued in the name of said Louis Rosenberg; (5) that certain real estate described in the complaint was owned by the defendant I.J. Rosenberg from the 23d day of July, 1935, until the 8th day of March, 1945, although said defendant pretended that said property was owned by his wife and that an unrecorded deed to said property from himself to his wife had been lost; that on March 8, 1945, a tax deed executed by the city treasurer of the city of Milwaukee purported to convey said real estate to Rose Manor Realty Company, and on the 26th day of July, 1945, a tax deed executed by the county clerk of Milwaukee county, Wisconsin, purported to convey said property to Rose Manor Realty Company; that on the 10th day of September, 1945, all the right, title, and interest that defendant I.J. Rosenberg had in and to said property from the 23d day of July, 1935, was purchased upon execution sale by the plaintiffs herein in the name of an agent.

BROADFOOT, J.

The defendant Lavo Company demurred to the amended complaint as amended on two grounds, to wit: (1) Misjoinder of causes of action; (2) failure to state facts sufficient to constitute a cause of action. The defendants Louis Rosenberg and Rose Manor Realty Company demurred separately upon the same grounds.

The defendants contend that the five alleged fraudulent transfers described above are five separate and distinct causes of action, each of which affects some of the defendants but that none of them affects all of the defendants, and that this results in a misjoinder of causes of action.

The correct rule is stated in Simon v. Weaver, 143 Wis. 330, 341, 127 N.W. 950:

"It is, however, a misconception of the complaint before us to say that it states more than one cause of action. True, a number of wrongful acts are set out, and different forms of relief are demanded, but that is only alleging the various ways in which the fraudulent scheme was consummated, and demanding appropriate relief for each separate wrong flowing therefrom. It is not alleging separate causes of action. As was said by this court in Zinc C. Co. v. First Nat. Bank, 103 Wis. 125, 139, 79 N.W. 229:

"`There is but one subject of action, — the conspiracy to defraud and its consummation to the damage of plaintiff. All the allegations of fact are parts of the presentation of that one subject. The test of whether there is more than one cause of action stated or attempted to be stated in a complaint is not whether there are different kinds of relief or objects sought, but whether there is more than one primary right sought to be enforced or one subject of controversy presented for adjudication.'

"To the same effect are Gager v. Marsden, 101 Wis. 598, 77 N.W. 922; Adkins v. Loucks, 107 Wis. 587, 83 N.W. 934; Herman v. Felthousen, 114 Wis. 423, 90 N.W. 432. In these cases the question has been so fully discussed, and the distinction between alleging separate causes of action and alleging one subject of wrong out of which separate wrongs may flow calling for different relief is so clearly pointed out, that it is deemed neither necessary nor advisable to further extend the discussion of the subject." See also 30 C.J.S., Equity, p. 591, sec. 153; 69 A.L.R. 229; Ellis v. Northern Pacific R. Co. 77 Wis. 114, 45 N.W. 811; Warne v. Petzke, 223 Wis. 435, 270 N.W. 922.

As to the second ground, the allegations of fact in the amended complaint as amended must be taken as true. As the case has not been tried we make no comments upon the alleged facts or the law that might tend to influence in any way the outcome of the trial. We will only say that a careful review has been made of the allegations. If the facts alleged can be proved at the trial the plaintiffs will be entitled to judicial relief.

By the Court. — Order affirmed.

UIHLEIN v. ROSENBERG