State v. Hackbarth

• Citation: 279 N.W. 687,228 Wis. 108
• Parties: STATE v. HACKBARTH et al.
• Decision Date: 17 May 1938
• Court: United States State Supreme Court of Wisconsin

228 Wis. 108

279 N.W. 687

STATE

v.HACKBARTH et al.

Supreme Court of Wisconsin.

May 17, 1938.

Appeal from an order of the Circuit Court for Waukesha County; C. M. Davison, Judge.

Affirmed.

Action brought by the State of Wisconsin against the defendants, Chester L. Hackbarth and Edna Chin, and the Saint Paul-Mercury Indemnity Company of Saint Paul, as their surety, to recovery the sum of $1,000, for breach of the conditions of a bond executed and delivered by the defendants pursuant to section 176.10, Stats.1935, to enable Hackbarth and Chin to obtain a Class “B” liquor license as tavern keepers. Chin and the surety filed answers and amendments thereto purporting to allege defenses to which the state demurred on the ground that the facts alleged were insufficient to constitute a defense. The court sustained the demurrers, and the defendants appealed from an order to that effect.Alvin L. Zelonky, Bendinger, Hayes, Kluwin & Schlosser, and Giles F. Clark, all of Milwaukee, and Oppenheimer, Dickson, Hodgson, Brown & Donnelly and H. H. Schoepp, all of St. Paul, Minn., for appellant.

Orland S. Loomis, Atty. Gen., and Carl J. Ludwig, Sp. Counsel, of Milwaukee, for the State.

Padway, Goldberg & Tarrell, of Milwaukee, George H. Gordon, Law & Brody, of La Crosse, Quarles, Spence & Quarles, of Milwaukee, Paul E. Jorgensen, of Racine, and Fred E. Steele, of La Crosse (Joseph A. Padway and Kenneth Grubb, both of Milwaukee, of counsel), amici curiae.

FRITZ, Justice.

The bond, upon which this action is based, was given on June 24, 1935, pursuant to section 176.10, Stats.1935, chapter 13, Sp.Sess. Laws 1933-34, and provides, in so far as here material, that the defendants, Hackbarth and Chin, as principals, and the Saint Paul-Mercury Indemnity Company, as surety, “are held and firmly bound unto the State of Wisconsin in the penal sum of One Thousand Dollars, well and truly to be paid to the said State of Wisconsin”; and that “The condition of this obligation is such: That whereas, the said” Hackbarth and Chin have applied to the clerk of the town of Brookfield for a Class “B” license to sell and deal in and have in possession with intent to sell and deal in intoxicating liquors-fermented malt beverages within the town, “now therefore, if such license shall be granted to” them and they and their representatives engaged in the business conducted under the license, “shall not violate any provision of chapter 176 of the Statutes of Wisconsin; shall keep and maintain an orderly and well regulated house; shall not sell or give away any intoxicating liquor to any minor, having good reason to believe him to be such, or to any person intoxicated or bordering upon intoxication or to any habitual drunkard; shall pay all damages that may be recovered by any person pursuant to section 176.35 of the Statutes of Wisconsin; and shall observe and obey all orders of the supervisors, trustees or aldermen of said Town of Brookfield, or any of them, made pursuant to law, then this obligation shall be null and void; otherwise to be and remain in full force and effect.”

It is alleged in the complaint that on August 17, 1935, the conditions of the bond were violated by the defendant Chin by keeping a disorderly house on the licensed premises, contrary to section 176.10, Stats. 1935; and that, by reason thereof, the defendants are indebted to the plaintiff in the full amount of said bond according to the provision of that statute. The answering defendants admit the conviction and sentence of Chin for keeping a disorderly house on August 17, 1935, but they allege that she was convicted and imprisoned for the same violation which is the basis of this action. They also allege that the town of Brookfield adopted an ordinance which provided that applicants for a Class “B” liquor license, who wished to furnish a cash bond under section 176.10 Stats.1935, may furnish such a bond in the sum of $200, which was the amount required by the general custom throughout the State from those wishing to furnish a cash bond; and that, if section 176.10, Stats. 1935, and bonds executed by a surety company thereunder are construed to require payment of the full sum of $1,000 to the State upon a breach of any condition thereof, then the statute is in violation of the equal protection and due process provisions of the Fourteenth Amendment, U. S. Const., U.S.C.A.Const. Amend. 14, and also sections 1 and 22 of article 1, Wis.Const.

The defendants concede in their briefs that the State can maintain this action against them on their bond for the breach of a condition thereof, but contend that the bond is merely for “indemnity” and therefore the State is not entitled to payment of the full amount of $1,000, as liquidated damages thereunder. Although this appeal is from an order sustaining demurrers to alleged defenses in answers, the real purpose of the parties is to test and have an adjudication as to whether upon the allegations of the complaint, assuming the facts stated in the answers are admitted, the State is entitled, upon establishing a breach of any condition of the bond, to judgment for immediate payment to it of the full penalty of $1,000 specified in the bond. The State contends that that full amount is due and payable to it upon breach of any condition of the bond; and that it can have judgment herein for the immediate payment thereof under the provisions of the bond and some of the provisions in section 176.10, Stats. 1935, in view of the construction given to similar provisions in a bond and in section 1549, Stats.1878-1917, in State v. Helmann, 163 Wis. 639, 158 N.W. 286, and Thomas v. Kind, 222 Wis. 645, 269 N.W. 543.

[1] In the Helmann Case the court said, (page 289): “We reach the conclusion that the legislative purpose was as expressly stated, that judgment in a case of this sort, where a breach is found, shall go for ‘the full penalty thereof’; that being treated as liquidated damages; but that the court may apply the proceeds, primarily, to the satisfaction of existing judgment indebtedness. This, we think, is not only the plain meaning of the bond, but is supported by authorities in general.”

In the Thomas Case we said (page 546): “It must be presumed, in the absence of anything showing a contrary intention, that when the Legislature, in 1934, incorporated into section 176.10 language which theretofore had been construed by this court in State v. Helmann, supra, it intended that it should mean what this court had construed it to mean.”

And therefore we concluded that (page 546): “*** the full penalty of the bond was recoverable by the state notwithstanding the facts that no judgment for damages had been recovered by any one against the principal by reason of the breach of the conditions of the bond and no penalties or forfeiture had been incurred under the chapter, of which section 1549 was a part.”

All of the parties recognize that, inasmuch as the bond is a statutory bond, given to accomplish a statutory purpose, the terms of the statute are in effect a part of the bond, and it must be construed conformably to the statute. Bechtel v. Columbia Casualty Co., 198 Wis. 114, 223 N.W. 568;Squires v. Mich. Bond. & Surety Co., 173 Mich. 304, 138 N.W. 1062, 43 L.R.A.,N.S., 76. But the defendants contend that the Helmann and Thomas Cases are not controlling (1) because there are material differences between section 1549, Stats.1878, and section 176.10, Stats.1935, by reason of additional provisions in the latter which give rise to questions of construction that were not presented or considered in those cases; and (2) because it is evident, when due consideration is given to the legislative history and the procedure established at the time of the enactment of section 1549, Stats. 1878, in relation to actions to recover for breach of conditions of a bond (neither of which were brought to the court's attention or considered in those cases), that it was probably the legislative intention that bonds given under the provisions of section 1549, which have been re-enacted in section 176.10, Stats., were to be but bonds of indemnity and not for liquidated damages; and that therefore the decision in the Helmann Case, which we followed in the Thomas Case, was based upon a mistaken view as to the effect of the statutes involved therein. In that connection the defendants rely on the proposition that the principles of stare decisis, as distinguished from res adjudicata, apply only to questions of law which were actually presented, considered, and decided, and do not apply to rulings dependent on legal questions which lurked in the record, but were not called to the court's attention, or observed and passed on. Kennedy v. Commissioner, 256 Mass. 426, 152 N.E. 747, 749;Scobie v. Wis. Tax Com'n, 225 Wis. 529, 275 N.W. 531, 533. In McGovern v. Eckhart, 200 Wis. 64, 227 N.W. 300, 67 A.L.R. 1381, after extended and careful consideration, the rules of stare decisis and res adjudicata were modified so as to permit the correction of an error made by this court in a prior decision whenever the court is convinced that for cogent, substantial, and proper reasons a prior ruling in the same or another case ought not to stand as the law of that case and other cases. That modification was declared on the third appeal in an action in which there was under consideration the legislative intent under sections 116.03 and 116.04, Stats. (enacted by chapter 438, Laws 1903), which had been definitely construed in Quiggle v. Herman, 131 Wis. 379, 111 N.W. 479, decided in 1907. That construction was questioned, but followed, on the first appeal in McGovern v. Eckhart (192 Wis. 558, 213 N.W. 332) and also on the second appeal (196 Wis. 178, 218 N.W. 830), although the court then said that the construction was clearly erroneous, and that it would not so construe the statute if the question were being presented as an original proposition. However, on the third appeal in that case,...