Murphy v. Paull

• Decision Date: 08 February 1927
• Citation: 212 N.W. 402,192 Wis. 93
• Parties: MURPHY ET AL. v. PAULL ET AL.
• Court: Wisconsin Supreme Court

192 Wis. 93

212 N.W. 402

MURPHY ET AL.

v.PAULL ET AL.

Supreme Court of Wisconsin.

Feb. 8, 1927.

Appeal from Circuit Court, Dane County; August C. Hoppmann, Judge.

Action by John Murphy and others against J. T. Paull and others. From a judgment dismissing the action as to all defendants, plaintiffs appeal. Affirmed.--[By Editorial Staff.]

Action to recover moneys alleged to have been illegally paid out by the defendants, other than Ridgeway State Bank and Mrs. Kretlow, as officers of the village of Ridgeway, in connection with the construction of an electric lighting service in the village. The defendant bank made a loan of $3,000 to the village, which was used by it to pay part of the expense in excess of the amount voted in the first instance, and Mrs. Kretlow bought from the bank the note issued for the loan by village. It is claimed they are legally liable to refund the amount of the loan, though it was repaid by the village before this action was begun.

In view of certain findings made by the trial judge which are fully sustained by the evidence, we do not deem it necessary to set out in detail the transactions had in connection with the construction of the lighting service, nor even specify the many claims made as to the illegality of the acts of the village officers and the bank. The salient facts are that in December, 1917, the electors of the village voted $8,000 for the construction of the lighting service. It was found necessary to enlarge the service locally among the residents, and the result was that the total cost of the service exceeded somewhat $11,000. To meet the extra expense, the loan of $3,000 was made from the bank and later repaid, the last payment being made March 2, 1925. The defendant Paull was a stockholder and officer of the defendant bank, and was president of the village of Redgeway for the years 1918 and 1919. The defendant Kelley was clerk of the village for the years 1917 to 1922, inclusive, except for a short period of 1922 when his wife acted as clerk. The defendant Farwell was the treasurer of the village for the years 1917 to 1922, inclusive. The trial court found, in substance, that all the cost and expenses of installing the lighting service were read annually by the village clerk to the electors present and were ratified by them, and it dismissed the action as to all the defendants. Plaintiffs appealed.Curkeet & Lewis, of Madison, for appellants.

Fiedler, Garrigan & Amlie, of Beloit, for respondents.

VINJE, C. J.

[1] It is conclusively shown that the cost of the service did not exceed its value. It is also shown that the installation of the service was a matter of general public knowledge throughout the village, and therefore, under the rule announced in Ellefson v. Smith, 182 Wis. 398, 196 N. W. 834, a court of equity would refuse relief in an action like this. But recourse to that rule need not be had as to most of the claims, for here the facts are that the electors of the village, pursuant to section 61.34, subd. (26), Stats. 1923, were annually informed of what was done and what moneys were expended, and they ratified the acts of the village officers. Having the power to authorize such acts, in the first instance, they could ratify them after they were done. Koch v. Milwaukee, 89 Wis. 220, 62 N. W. 918;O'Loughlin v. Dorn, 168 Wis. 205, 169 N. W. 572.

[2] Some claim is made that there was no competitive bidding for the contract. It appears that it was let to the Mineral Point Public Service Company, that it was the only public utility with which connection could be made, and that the electors of the village, by resolution, directed connection with this utility. Under such circumstances, there was no room for competitive bidding, as it is not required. Hurley Water Co. v. Vaughn, 115 Wis. 470, 91 N. W. 971.

[3] The finding of ratification is sustained by the evidence, and it so completely disposes of every issue in the case favorably to defendants, except that of the illegality of the loan of $3,000 from the bank, that it is needless to refer to other claims made by plaintiffs.

[4][5] As to the claim of the irregularity of the loan from the bank, the situation is like that in the case of Ellefson v. Smith, 182 Wis. 398, 196 N. W. 834. In both cases statutes were violated, but all the transactions were fully executed, and it appears that the installation of the electric service was necessary and that it was worth what it cost to build. The village had the authority to install it and the electors ratified every act they could ratify. Assuming they could not ratify the loan to the bank and that it was a void transaction, under section 348.28, Stats., yet, since the loan has been repaid and neither the bank nor the village has been a gainer or loser by reason of the irregularity, a court of equity will not, under such circumstances, require the bank to repay the loan and thus permit the taxpayers to have pro tanto both the plant and the money it cost to build it. Pickett v. School District, 25 Wis. 551, 3 Am. Rep. 105;Land, Log & Lumber Co. v. McIntyre, 100 Wis. 258, 75 N. W. 964, 69 Am. St. Rep. 925;Ellefson v. Smith, 182 Wis. 398, 196 N. W. 834, and cases cited.

[6] Speaking of the principles announced by our court in the cases of Paul v. Kenosha, 22 Wis. 266, 94 Am. Dec. 598, and of Lafebre v. Board of Education of Superior, 81 Wis. 660, 51 N. W. 952, the court, in Thomson v. Town of Elton, 109 Wis. 593, 85 N. W. 425, through Mr. Justice Marshall, said:

“The principle of those cases is that municipalities are bound by moral obligations, as will as individuals, and that where, in case of the latter, such an obligation will give rise to a legal liability, it may have the same effect as to a municipality.”

To sustain a taxpayer's action, there must be shown (1) a wrongful act of the municipality, and (2) injury to the complaining taxpayers. 5 McQuillen Mun. Corp. § 2590. The action does not lie where it would be grossly inequitable to enforce the claim. 5 McQuillen Mun. Corp. § 2582; Farmer v. St. Paul, 65 Minn. 176, 67 N. W. 990, 33 L. R. A. 199. In the later case, the defendant unlawfully sent some of its prisoners to a private institution for keeping, and a taxpayer brought an action to restrain the city from sending prisoners thereafter to the institution and to recover money paid for their keep. As to the latter, the court said:

“Waiving the technical objection that there is no allegation in his complaint that he has requested the city to bring such an action, we are of the opinion that, on the merits, he is not entitled to maintain this action for the purpose of compelling such repayment, for the simple reason that it would be grossly inequitable to permit him to do so.”

The city, however, was restrained from further sending prisoners to the private institution.

[7][8][9] Courts of equity sit to redress wrongs causing damage. When no damage is shown, they will not order reparation of moneys equitably, though irregularly, disbursed. The penalty provided for a violation of statute cannot be imposed in a taxpayer's action. So if the taxpayers have sustained no loss by an irregular act, a court of equity has no function to perform. It may enjoin an irregular act, it may restore a loss; but it cannot punish for a past violation of the statute. To require a repayment of that which was equitably paid would be to render a court of equity an engine of injustice, as was said in Frederick v. Douglas County, 96 Wis. 411, 71 N. W. 798.

A brief reference to some of the cases cited by the appellant will show the distinction between them and the case at bar.

In Humboldt v. Schoen, 168 Wis. 414, 170 N. W. 250, there was no power to lay out the drainage district as it was attempted to be laid out; the acts of the town officers were ultra vires. To refuse to order a repayment would be to permit ultra vires acts to stand.

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