.

committee of Douglas county ind that the lution of June 5, 1894, and from expending roads and bridges throughout the county are any money or doing any road or bridge work in need of repairs: Therefore, be it resolved until after a road tax, not exceeding $8,000. that the county board be requested to levy should be thereafter levied at the annual a tax of eight thousand dollars ($8,000.00) at meeting, and from expending anything after the annual meeting in November next, for such levy "except on main traveled highways road and bridge purposes, said levy to be legally laid out and duly and legally adopted equally divided between the towns of Brule, as county roads," and from allowing any bills Gordon, Superior, and Nebagamain; and that for road or bridge work until after such lery, the chairman of the various towns are au- and then only for work performed after the thorized and instructed to expend two thou- levy, and from signing or issuing any county sand dollars ($2,000.00) in their various towns orders for such bills; also enjoining the under and by direction and recommendation county treasurer from paying any orders preof the road and bridge committee of said viously issued, including the orders issued on county of Douglas." Work immediately com- the 4th of August in favor of McLaggan, menced under this resolution consisting of Agen, Cassidy, and Cloney. On the 3d of filling, grading, and ditching various roads in September following, this temporary injuncthe several towns of the county, but no road tional order was modified by the circuit court commissioners were appointed to superintend by striking out the words, "except upon main the work, nor any bonds required from con- traveled highways legally laid out and duly tractors, as required by section 1309, Rev. St. and legally adopted as county roads,” and in1878. On the 3d of August, 1894, the county serting in place thereof the following words, board of supervisors adopted the following viz. “except main traveled highways or parts resolution: "Whereas, it is evident that the of said highways duly and legally adopted as money levied for normal-school purposes will such, or such highways or parts thereof duly not be required until November: Resolved, and legally designated for the expenditure of that eight thousand dollars ($8,000.00) of that county money in their repair, pursuant to amount be transferred to the road and bridge section 1308 of the Revised Statutes, and exfund, and, when the road and bridge levy is cept in the exercise of the powers conferred made at the annual meeting, the same shall upon counties pursuant to section 1311 of the be credited by the county clerk to the nor- Revised Statutes," and by adding thereto the mal-school fund, the same to be expended on following provision: "Ordered, further, that county roads." On the same day they al- said injunctional be, and the same is herelowed the following bills for work which had by, modified so far as the same enjoins the been done under the resolution of June 5th, county board from proceeding in the manner viz.: A claim for $1,007.25 in favor of the provided by law to make necessary repairs defendant McLaggan for road work in the upon roads mentioned in the above exceptown of Gordon; also a claim in favor of the tions, such repairs to be paid for out of the defendant Agen for $41.80 for road work next levy regularly made for such purposes; done in said town of Gordon; also a claim but the issuing of county orders therefor in in favor of the defendant Cassidy for road advance of such levy, or the taking of funds work done in the town of Nebagamain for heretofore raised by taxation for any other $1,008; also a claim in favor of the defend- special purpose, to pay for any such repairs, ant Cloney for road work done in the town are hereby, during tbe pendency of said acof Nebagamain amounting to $927.70. On tion and until the further order of the court, the following day twelve county orders were strictly enjoined." Notwithstanding this orissued for the bills so allowed, and deliv- der, work proceeded upon the highways of ered to the defendants in whose favor they the county under the resolution of June 5th, were allowed, and on the 6th day of August, which work was principally grading and being the day before the injunctional order ditching; but at the annual meeting of the was served, nine of said twelve orders were board of supervisors in November, 1894, the presented and paid. Four of said orders, county board duly levied $8,000 as a county amounting to $1,008, and covering the claim road tax, under section 1308, Rev. St. 1878. of Cassidy, were paid to the defendant Mc- At an adjourned meeting of said board of Clure, who was a supervisor from the town supervisors, held on the 22d of September, of Nebagamain, and to whom Cassidy had in- 1891, at which seven supervisors only were dorsed the orders. The McLaggan orders, present, the remaining bills for the work amounting to $1,007.25, were paid to the de- done under the resolution of the 5th of June fendant the Duluth Trust Company, to whom were allowed, and county orders directed to McLaggan had indorsed them; and the order be issued therefor, and were almost immefor $327.70, being one of the Cloney orders, diately issued, to the various persons who was paid to the defendant 0. K. Anderson, had performed such work, or to whom the the county clerk, to whom it had been trans- claims for such work had been assigned, all ferred. On the 7th of August, 1894, the pre- of whom are made defendants in this action. liminary injunctional order was served with The greater part of these orders were paid the summons and complaint, which enjoined by the county treasurer on the same day. At the board of supervisors from proceeding to that time there was no money in the road expend money or doing work under the reso- and bridge fund of the county, and could not be until the taxes levied at the November officers, and even third persons, to repay into meeting were collected. There was much the public treasury money already paid out dispute as to whether the highways upon illegally. These propositions do not require which the work had been done had been further discussion. Willard v. Comstock, 58 adopted as county roads, or whether they had Wis. 565, 17 N. W. 401; Frederick v. Dougbeen so designated, under section 1308, that las Co., 96 Wis. 411, 71 N. W. 798; Quaw v. the county might properly spend its funds in Paff', 98 Wis. 586, 74 N. W. 369; Lumber Co. improving them; but, in the view which is v. McIntyre, 100 Wis. 75 N. W. 964./ The taken of the case, it is not deemed necessary crucial question in this case is whether the to go into this dispute. It was undisputed county could legally spend more than $8,000 that the contracts for the work which was in one fiscal year upon bighways, under the done under the resolution of June 5th were provisions of section 1308, Rev. St. 1878. This not made by road commissioners appointed section, after providing that county boards by the board of supervisors, and that no may adopt highways or parts of highways as bonds, as required by section 1309, were ever county roads, or may designate highways or given by the contractors for the performance parts of highways for the purpose of spending of their duties, but that each chairman made money in their repair without adopting them the contracts for the work done within his as county roads, then provides that any county town. It was further undisputed that none board "may annually levy, on the taxable of sucb highway work for which the bills property of the county, a county road tax not aforesaid were allowed was done under the exceeding eight thousand dollars, which shall provisions of section 1311, Rev. St., nor was be expended under their direction, in making the same bridge work done under sections culverts, grading, graveling, ditching or other1319, 1320, Rev. St. The plaintiffs alleged wise improving such highways.” It seems that much of the work was fraudulent in its very manifest to us, from a careful reading of nature, and that certain of the board of su- the section, that the amount of the tax fixes pervisors participated in the fraud and prof- the amount which may be expended in any ited in the contracts, and that all of the de- one year. The amount is plainly limited to fendants who received money upon the coun- the amount previously raised by the tax. The ty orders were participants in the fraud. board magfirst raise a sum, and then spend it. These allegations of bad faith, however, were Whatever is said to the contrary in Harrison negatived by the court, which found that all v. Supervisors, 51 Wis. 645, 8 N. W. 731, was the contracts were made in good faith, were not necessary to the decision of that case, fully performed, and were allowed in good and must be considered as overruled. See faith; that there was no conspiracy on the Kane v. School Dist., 52 Wis. 502, 9 N. W. part of the supervisors, or any of them, to 459. In the present case the board raised defraud the county, and that none of them $8,000 by tax levied in November, 1893, and received any profit from such work, and that spent the entire sum before the 5th of June, the county board believed that they might is- 1891. They then proposed to spend $8,000 sue the orders which they drew without vio more, and pay for the work temporarily out lating the injunction, and that they acted of the normal-school fund, and finally out of upon the advice of counsel in so doing; that the levy to be made in November, 1894. This the defendant the Duluth Trust Company they had no power nor right to do. They, purchased the order held by it for a valuable however, proceeded, not in the manner reconsideration, and in good faith, with no quired by section 1309, but in a lawless and knowledge of any irregularity therein. The irregular manner, to parcel out $2,000 to each court concluded that the plaintiffs could not of the chairmen of the four county towns. maintain this action; that the roads on which and to allow each chairman to spend his porthe money was expended were duly designat- tion as he chose. To say that this entire proed for that purpose; and that the contracts ceeding was irregular and illegal is to speak for the road work in controversy were legal of it very mildly. The plaintiffs brought their contracts, and were executed at the time of action after the work had begun, and just the commencement of this action.

In pursu

after about $2,300 of orders had been issued ance of these conclusions, the complaint was and paid. Laying aside, for the moment, all dismissed, and the plaintiffs appeal.

questions as to the status of the sums which Frederick H. Remington (Titus & McIntosh,

had thus been paid out before the action was of counsel), for appellants. C. R. Fridley, Loud

begun, we can see no reason why the plain& O'Brien, Carl C. Pope, E. F. McCausland,

tiffs did not present a case wbich would reand Hughes & Jamison, for respondents.

quire all further work and payments to be stopped. Certainly, it cannot be said that

there was laches so far as future work was WINSLOW, J. (after stating the facts). It concerned, and, as we have already indicated, is well settled in this state that a taxpayer the expenditure was clearly illegal. The temmay maintain an action in equity, on behalf porary injunctional order, in no uncertain of himself and all other taxpayers, to restrain terms, prevented the board from carrying out public officers from paying out the public the work which had been illegally commenced money for illegal purposes; and may also, under the resolution of June 5th. It forbade under the proper circumstances, compel public absolutely the allowance of any bills, or the payment of any orders, for any such work the violation of the injunction, either by votdone thereafter and prior to the next tax levy. ing the issuance of orders or by countersignThe only substantial change in this prohibi- ing the same, or by paying out the mones tion, which was made by the modifying order thereon, as well as the defendants who reof September 3d, so far as the present ques- ceived such moneys, to the extent of the tion is concerned, was to allow necessary re- amount respectively received by them, must pairs to be made upon county roads or roads be required by the judgment to repay to the which had been designated for the expendi- county treasury the sums so wrongfully paid ture of county money. The purpose and out. meaning of this modification was to allow the The question of the recovery of the sums board to make emergency repairs, or such paid out on the 6th of August, just prior 10 repairs on roads as were necessary to make the commencement of this action, is now to travel safe, so that the duty of the county to be considered. The total amount then paid travelers upon its highways might still be dis- out was $2,342.95, of which $1,008 was paid charged. It is idle to say or to argue that to the defendant McClure, chairman of the the meaning of the modification was to allow, town of Nebagamain, and also chairman of generally, road work, as contemplated by the the county board, upon four orders issued to resolution of June 5th, to be carried on under the contractor Cassidy, and indorsed by bim new contracts. If such was its meaning. then to McClure for the convenience of Cassidy; it was not a modification, but an abrogation, $1,007.25 was paid to the defendant the Duof the injunctional order, and the proper luth Trust Company upon four orders issued course would have been to vacate the original to the contractor McLaggan, and purchased order. New contractors were found who were by the company of McLaggan; and $327.70 willing to go on with the work and take their was paid to the defendant 0. K. Anderson, chances. A majority of the county board, then county clerk of Douglas county, upon an after the tax levy of November, 1891, pre- order issued to the contractor Cloney, and by tended to accept the work, and a considerable him transferred to Anderson. As to the monpart of it was paid for. It is said, and gravely eys paid to McClure and Anderson, as asfound by the circuit court, that this was all signees of the Cassidy and Cloney orders, the done in good faith. There is as little room for situation is not doubtful. Both of these degood faith in the deliberate disobedience of an fendants were public officials, charged with injunctional order as there is in the deliberate important duties in relation to the expenditure commission of a crime. Nor is there room for of the public moneys. They were trustees of ratification or estoppel. The plain fact is the public funds. Among other duties, both that the acts of the public officials and con- of these officers were required to countersign tractors, after the injunctional order of Au- all county orders. Rev. St. 1878, 88 667, 709, gust 7th was issued and served upon them, subd. 3. It was their sworn duty to issue in proceeding with general road work, and in no orders for highway work, under section issuing orders to pay for the work, and in 1309, until a committee of three bad viewed actually paying for a good part of it, were and the work, and reported that the same was are utterly indefensible. They were deliber- done in accordance with the contract. This ate contempts of court. They could not be duty they violated flagrantly. Not only was in good faith, under such circumstances, nor there no such inspection of the work, but the can acts of ratification or estoppel nullify the bills were railroaded through the board on command of the court. By the temporary in- the day of their presentation or on the followjunction, the parties to the action were com- ing day, when there were no moneys in the manded to refrain from further action until fund to pay them, evidently with a settled dethe controversy was heard upon its merits sign to give no opportunity for inspection. and decided, so that the final judgment might The warrants were immediately indorsed by be effective. This order has been disobeyed, the contractors to the defendants McClure and large sums have been paid out by the and Anderson, respectively, and the money county officers in defiance of the order. Now, drawn out of the treasury. It is true the at the close of the litigation, it is found that court has found that the defendants in ques. the preliminary injunction should be made tion had no pecuniary interest in the transacpermanent; but the statu quo has been chan- tion, and that they acted in good faith, but ged by disobedience of the preliminary order, even these findings cannot relieve them from and this disobedience is alleged to have been liability for their breach of trust in drawing a disobedience in good faith, and a disobedi- out of the treasury money for a purpose not ence which the county board has ratified and authorized by law. Such money they must condoned. These claims are manifestly ab- return, even if they had no wicked intent; surd.

but we do not think the circumstances in The work, under the resolution of June 5, proof admit of a finding of good faith. The 1891, was illegal from start to finish. After allowance of these accounts and payment of the injunctional order of August 7th, it should these moneys were marked by haste, and aphave stopped at once in obedience to the order parent collusion with the contractors, which of the court; but the order having been dis- requires an explanation more convincing than obeyed, and a large part of the money having any which appears in the evidence in this been paid out, the officials who assisted in case. The presumption of fraud which neces.

a

sarily arises from the allowance of illegal ed to recover. We are not now discussing the bills so hastily, when there were no funds in rights or remedies of the county itself, in a the treasury to pay them with, the money proper action brought by its officers to recover being drawn out by the auditing officers them- funds illegally obtained from the treasury, selves, has not been met and rebutted. Un- | but simply what a court of equity will do der the authorities cited in this opinion in our when its aid is invoked by a taxpayer who own state, as well as the authorities cited in might have brought his suit earlier, and preFrederick v. Douglas Co., supra, we hold that vented the mischief, had he chosen to do so. the defendants McClure and Anderson must The defendant trust company cannot be held be held liable to return the county funds so liable in this action. The supervisors who received by them. The general principles of authorized the illegal contracts and expendilaw laid down in the cases of Frederick v. tures must, however, be held liable, and the Douglas Co. and Lumber Co. v. McIntyre are auditing and disbursing officers, as well as the applicable to this case. Moneys paid out by contractors and their assignees, to the extent public officers, in direct violation of law, may of the amounts received by them, respectivebe recovered from the officials themselves, ly, after the commencement of this action. and from the recipients thereof, in actions As to the defendant Duluth Trust Company, which are seasonably brought by taxpayers the judgment is affirmed, without costs, except on behalf of the public, especially where the attorney's fees; and, as to the remaining detransaction is marked by haste, fraud, col- fendants, the judgment is reversed, with lusion, or concealment. The evidences of costs, and with directions to enter judgment haste, collusion, and concealment in this case ' for the plaintiffs in accordance with this opinare too plain to be overlooked or misunder- ion, stood, and it is evident that the contractors McLaggan, Cassidy, Cloney, and Agen actively assisted the disbursing officers in their efforts to deplete the treasury before interfer- UNION & PLANTERS' BANK OF MEMence by action was possible, and hence they

PHIS v. JEFFERSON. must also be held liable to the extent of the (Supreme Court of Wisconsin. Jan. 10, 1899.) moneys received by them, respectively. As ACTiOx ox Notes-DEFENSES-MISTAKE OF FACT to the moneys paid to the Duluth Trust Com

-WANT OP CONSIDERATION-ESTOPPEL pany, the court found that the orders held by

-COUNTERCLAIM-INSOLVENCY. the company were purchased for a valuable 1. Under the mistaken belief that a decedent's

estate was solvent, a bank holding notes against consideration, and in good faith, and with no

him and a deposit in his favor paid the adminisknowledge of any conspiracy or irregularity trator the deposit, which it could have held in the expenditure of the money. These find- against the notes, and surrendered decedent's ings are sufficiently supported by the evi

notes in return for notes given by the heirs.

Held, that the heirs were estopped to repudiate dence, and we think they must be held to free

liability on their notes on the ground of the the defendant trust company from liability in mistake, or to plead want of consideration. this form of action, at least. It is true that

2. Surrender of a decedent's notes constitutes the orders possess none of the qualities of ne

a sufficient consideration for equivalent notes

of his heirs. gotiable paper, and that the holder stands in

3. Where notes of heirs were given in ex. the shoes of the payee. 1 Dill. Mun. Corp. change for notes of their decedent, under the 503. Had payment been refused by the

supposition that his estate was solvent, they are

not entitled to counterclaim moneys paid on their county treasurer, and action been brought

notes, on the ground of mistake as to the solagainst the county upon them, all the defenses vency, before insolvency is judicially determined. which could have been urged against the orig

Appeal from circuit court, Dane county; R. inal holder could have been urged against the

G. Siebecker, Judge. transferee. But the question here is quite dif

Action by Union & Planters' Bank of Memferent. The resolution under which the work in question was done was adopted June 5,

phis against Beverly Jefferson. From a judg.

ment for plaintiff, defendant appeals. Af1894, and work was at once commenced un

firmed. der it, so that nearly $3,000 worth of highway work had been done on the 3d of August This is an action upon a draft drawn July before this suit was commenced. The resolu- 14, 1893, by W. B. Pearson & Co., of Chicago, tion was public in its nature, the work was upon the defendant, Jefferson, for $1,200, pay. also public, and we feel that the neglect in able to the plaintiff, and accepted by the debringing the action until after so much work fendant. The answer sets up three defenses: had been done, and orders issued and negotiat- (1) Want of consideration; (2) that it was ed in the bands of innocent third persons,

made under false and fraudulent representamust operate to prevent recovery against such tions on the part of the plaintiff; (3) that it third persons, upon the principle of laches, as was made under mutual mistake of fact. laid down in the case of Frederick v. Doug- There was also a counterclaim seeking to relas Co., supra.

The plaintiffs have invoked cover $1,768.32, alleged to have been paid by the relief of a court of equity, and they have the defendant to the plaintiff under mutual delayed in so doing until serious injury will mistake of fact. There was a reply, in subresult to a party who had no participation in stance denying the allegations of the counthe illegal contract, if the plaintiffs be allow- terclaim. Upon the trial it appeared that one