April 4, 2008

Strict construction, huh; what is it good for

I'm done with strict construction. When lawyers and judges and legal academics talk about strict construction, they're talking about giving the words that appear in the law narrower meanings, as opposed to broad ones.

It's about how strictly a reader 'construes' those words. The narrower, or stricter, the interpretation of those words, the better, so our conservative friends tell us. I respectfully dissent.

A good friend of mine had the idea to set up a limited liability company (LLC). He'd already reviewed his other options with his accountant, and the accountant, being also a good and wise man, suggested that my friend have a lawyer prepare the required documents.

Of course, anybody can prepare the documents; there's not much to it. And you can even prepare them online, using the forms helpfully provided by the Wisconsin Department of Financial Institutions. But there are at least two good reasons why it's sensible to have a lawyer do it: (1) because the applicant has to affirm that the LLC is organized under Wisconsin Statutes Chapter 183, which presumes the applicant has at least read Chap. 183, and nobody except a lawyer wants to do that and (2) I was nearly out of Kraft Dinner, and was grateful to be able to lay in another week's supply. Just in time.

The heart of the LLC is the articles of organization. These are the six required items, a couple of which may not be applicable, depending on a number of other considerations. Chap. 183 is very specific about this: "The articles of organization shall contain all of and only the following information." I've emphasized the operative language for the would-be strict constructionists scoring along at home.

Then the six required items are described, each numbered in sequential order. Now, another lawyer would have whipped this job off in about ten minutes. But I wanted to learn a bit more about LLCs anyway, so I read Chap. 183 two or three times, and went down to the law library where I consulted the annotated statutes, reviewed a number of practitioner's guides, and even read a few of the Wisconsin Supreme Court cases dealing with some disputed LLCs. Naturally I didn't bill my client for any of this time, only the time it took to actually prepare the documents, which amounted to about a case of Kraft Dinner.

Among several other considerations, I thought about using the forms helpfully provided by the Wisconsin Department of Financial Institutions. In fact I specifically looked at whether or not I must use them, as opposed to preparing my own articles of organization, building on a blank sheet of paper. Not only did I bear in mind the 'all of and only' language noted above, I paid particular attention to Wis. Stat. § 183.0109, which is entitled, "Forms."

I noted that for some other aspects of documenting activities related to LLCs, and also for other types of LLCs that weren't the type of LLC my friend wanted to be, the preparer must use the forms mandated by the statute. So, I knew that the document bearing the articles of organization was not among those other things, therefore use of a government form was not required. I also knew this because the statute goes on to say, "The department [of Financial Institutions] may prescribe, and furnish on request, forms for other documents required or permitted to be filed under this chapter, but use of these forms is not mandatory."

Score two for the strict constructionists. So, bearing all of this in mind, I prepared the articles of organization myself. I did take one liberty with the statute, in that I placed a nice bold title at the top of the document, "Articles of Organization — Limited Liability Company," and a brief affirmation that the document was "Executed by the undersigned for the purposes of forming a limited liability company under Chapter 183 of the Wisconsin statutes."

Indeed, the latter statement is not a liberty taken with Chap. 183, but rather a requirement of Chap. 182, which refers to documents executed in the State of Wisconsin generally.

Finally, in accordance with yet another provision of Chap. 183, I included an optional name for the LLC, just in case the preferred name for the LLC was deemed conflicting with another preexisting, or pending, LLC (which, in my opinion, it didn't, since I had researched this question too). But I placed this optional name at the bottom of the page, beneath a line drawn across it, and preceded by the word "optional" in italics.

'A fine looking document,' I said to myself upon its completion, and in strict accordance with the requirements of Chap. 183, which I personally was certifying the documents were prepared in accordance with. Then I presented it, along with a set of copies and a stamped envelope addressed to the Wisconsin Department of Financial Institutions, to my friend. "Thanks," he said, "Looks great!" "Darn tootin'," said I.

About a week later, I ran into my friend again. "I don't suppose you've heard back about the LLC yet, have you?" I asked him. He grinned a little sheepishly, because he is a really nice guy and he really didn't want to tell me what had happened. "Actually," he said, "they sent everything back and told me to transfer all the information to their own form."

"They what?!" said I. And, it turns out, not only did the department mandate its own expressly non-mandated form, but because the six items comprising the articles of organization appear in different numerical order on the non-mandated form than they do in the mandatory statute, my friend had to adjust for that as well. "That's insane," I said to my friend. "No biggie," he said, "It only took me a few minutes and cost me another stamp." "Yabbut," said I, "You were inconvenienced and delayed and not only that but I put my name on that document, and if anybody wasn't in conformance with Chap. 183, it was the Department of Financial Institutions. And that was the whole point of my being involved in this exercise, to certify that your LLC was organized in accordance with Chap. 183!"

So he is going to bring me a copy of the letter he received from the department, because I really want to see that. I mentioned all of this to another lawyer friend of mine and he shrugged and said, "Fuggedaboutit." Well, I don't know about that, speaking as a sometime dedicated strict constructionist and a devotee of the constitutional separation of powers who objects to the implication by the executive branch that he made an error in following the clear instructions of the people of this Great State of Wisconsin as expressed through their elected representatives in the legislature.

And that even includes Glenn Grothman. And I bet you he is a strict constructionist. Oh yes indeed.

We'll see how much longer I remain a strict constructionist, at least with respect to the foregoing narrow question of statutory interpretation, albeit one with dire constitutional consequences.


Anonymous said...

That ain't nuthin', young fella. Just you wait until your first encounter with a de jure or de facto mandatory-use standard form prepared by some administrative agency that evidences little or no comportment with the applicable statute. That's never pretty, believe you me.

illusory tenant said...

Many thanks for your carefully worded reply, and in taking pains not to reveal the punchline, which occurs in the sequel to the above anecdote entitled, "Screw administrative law!"

Anonymous said...

Say it again?

Anonymous said...

As I have been saying for more than fifty years, from within the confines of my high school education, there is so much law that there is no law. That leaves the bureaucracies free to do as they please. The rejection of your LLC application only reinforces that opinion.

illusory tenant said...

There is so much law that there is no law.

You speak truth.