## Facts

- LeRoy Dalton obtained a defamation judgment against Howard J. Meister for $151,749.98, and the judgment was affirmed on appeal.
- After execution was returned unsatisfied, Dalton sought to reach shares of Universal Telephone, Inc. (UTI) stock registered in Meister’s name, invoking Wis. Stat. § 408.317(2) (UCC investment securities attachment/levy mechanism).
- In post-judgment proceedings, the circuit court concluded it lacked power to order delivery of the shares to the sheriff and instead entered an injunction:
  - Enjoining Meister from transferring the stock; and
  - Enjoining UTI from transferring title on its stock books.
- UTI was served with the injunction but was not formally made a party to the injunction proceedings and did not appear at the hearing.
- UTI later transferred the stock on its books to American City Bank and Trust Company pursuant to a foreclosure agreement involving Meister and other financial entities.
- Dalton moved to hold UTI in contempt for violating the injunction; the circuit court found UTI in contempt, relying on the court’s “inherent power” to bind UTI despite its nonparty status.
- UTI appealed the contempt order.

## Issues

1. Whether a corporation served with notice of an injunction, but never made a party to the action, may be held in contempt for violating the injunction.
2. Whether the record established a recognized basis (e.g., privity, aiding and abetting, or active concert with an enjoined party) to bind the nonparty to the injunction.

## Decision

- The Wisconsin Supreme Court reversed the contempt order against UTI.
- Service of the injunction and notice of its terms did not, by itself, make UTI a party or otherwise subject it to contempt sanctions.
- The record did not establish that UTI acted in privity with Meister, aided and abetted Meister, or acted in active concert or participation to evade the injunction.
- The circuit court’s reliance on “inherent power” could not replace jurisdictional and procedural requirements for binding a nonparty.

## Legal Principles

- An injunction can bind certain nonparties (and support contempt) when they are in privity with an enjoined party or act in active concert/participation, including aiding or abetting violations.
- Mere notice or service of an injunction on a nonparty is insufficient, without a recognized doctrinal basis and proper procedural footing, to impose contempt liability.
- Contempt is an extraordinary remedy that must be exercised within jurisdictional limits and consistent with due process.
- Post-judgment collection procedures for reaching investment securities cannot be expanded into contempt sanctions against a nonparty issuer/transfer agent absent lawful grounds to bind that entity.

## Conclusion

The court held that UTI, a nonparty served with an injunction, could not be held in contempt for transferring stock where the record did not show privity or active concert with the judgment debtor, and where the trial court’s asserted inherent power could not bypass procedural and jurisdictional limits.


Dalton v. Meister, 84 Wis. 2d 303, 267 N.W.2d 326 (Wis. 1978)