Willard v. Comstock

• Decision Date: 20 November 1883
• Citation: 17 N.W. 401,58 Wis. 565
• Parties: WILLARD AND OTHERS v. COMSTOCK AND ANOTHER
• Court: Wisconsin Supreme Court

58 Wis. 565

17 N.W. 401

WILLARD AND OTHERS

v.COMSTOCK AND ANOTHER

Supreme Court of Wisconsin.

Filed November 20, 1883.

Appeal from circuit court, Dane county.Silverthorn & Hurley and P. C. Cottrill, for appellants, Van R. Willard and others.

Hertzel & Cannon, W. F. Vilas, I. C. Sloan, and Pinney & Sanborn, for respondents, John Comstock and another.

ORTON, J.

The complaint substantially charges that the defendant Comstock fraudulently colluded with the chairman and other members of the board of supervisors of Lincoln county to obtain, at an exceedingly low and nominal value, the tax certificates, belonging to said county, and that such corrupt and frandulent scheme was carried into effect by the sale by the county, by resolutions of the board, of a great number of tax certificates, worth their face, if not worth more, at 25 per cent. of such value, and that such fraudulent scheme comprehended all the various purchases which were made or to be made by said Comstock. The first sale was made the thirty-first day of January, 1880, and the last on the eighth day of October, 1881, and a similar sale of the stock certificates belonging to the county on the tax sale of 1882 is threatened, unless enjoined. The tax certificates were valuable property belonging to the county, and if judiciously and honestly disposed of, or deeds taken thereon to the county, would have been a valuable fund of the county, which would have greatly diminished the tax burden of the taxable inhabitants thereof, but by this fraudulent sale at such inconsiderable and unreasonably small consideration such taxes will be greatly increased. It was a part of this scheme that the chairman of the board of supervisors and other supervisors should have some of the benefits of this purchase, and that no taxes should be paid, but the said lands returned delinquent from year to year, and the certificates of sale purchased at a like small sum, which would save the defendant Comstock and his co-conspirators from their full share of such taxation. All the various sales are alleged to be within one corrupt and fraudulent scheme to defraud the county of its valuable property, and the plaintiff Willard obtained knowledge of the facts just before the suit was brought. The suit was brought by Willard for himself, and on behalf of the property owners and tax-payers of said county, and, since it was commenced, many other persons similarly situated, and some of them the owners of the lands embraced in the certificates, have become joint party plaintiffs in the action. The defendant Comstock has realized about $7,000 on redemptions paid into the county treasury from the sales, and by redemption from other owners paid to himself of a large amount, and has obtained many deeds upon the certificates. The prayer is for an injunction against further sales of like character by the supervisors or county treasurer on behalf of the county; that Comstock be declared a trustee of the county, and be compelled to account for the proceeds and moneys derived from such certificates; and that the tax deeds be set aside, as well as all such fraudulent sales, and for further relief. The answer need not be noticed, as the complaint is alone on trial, by an objection to any evidence under it, on the ground that it does not state facts which constitute a cause of action.

The main question raised on this demurrer ore tenus, and the one mainly considered by the circuit court and upon which the decision was made by that court, as we are informed by counsel, is whether the plaintiff, as a resident tax-payer, property owner, and voter in the county, for himself and on behalf of other tax-payers, property owners, and voters in said county, has the right to bring this suit.

It is objected that this defect, if it exists, cannot be reached by general demurrer. We do not think this objection well taken. The objection is not that the plaintiff has not capacity to sue, or that there is a misjoinder or nonjoinder of the parties, but that he has shown no cause of action in favor of himself which may be reached by general demurrer. The true distinction is made by Mr. Justice TAYLOR in Nevil v. Clifford, 55 Wis. 161; [S. C. 12 N. W. REP. 419.] After ruling that the objection of misjoinder of parties cannot be taken by general demurrer, he says: “If, therefore, a cause of action is set out in favor of any party plaintiff, the demurrer or objection must be overruled.” The authorities cited by the learned counsel of the appellants do not apply to such an objection as is here made. In the case above referred to, the same objection made here was made on a similar demurrer ore tenus; and the circuit court dismissed the complaint because the plaintiff had no such interest as would entitle him to bring the suit, and that question was passed upon by this court as being under the demurrer. See, also, Arzbacher v. Mayer, 53 Wis. 380; [S. C. 10 N. W. REP. 440.]

The principles in regard to the interest of the plaintiff and other tax-payers, property owners, and voters of the county, on whose behalf this suit is brought, to prevent future unjust taxation, which is likely to be occasioned by the unlawful or corrupt conduct of the supervisors, by which the property or other resources of the county will be diminished or its indebtedness increased, and in reference to the equity jurisdiction of the court to afford relief in their fullest breadth and scope, have been so long and so often recognized by this court that it is a matter of surprise that substantially the same question should again be raised. If it were not for the distinguished ability and great eminence of the learned counsel of the respondents, who insist that this case does not lie within the principle of the cases referred to, but rather within a class of cases in which this court has decided that a court of equity ought not, by injunction, to arrest the ordinary course of tax proceedings or interfere with the preliminary duties of the taxing officers, and for the eminent ability and usually sound rulings of the learned judge by whom the demurrer to the complaint was sustained, I should not hesitate to say with emphatic brevity that the matters of this suit have long been stare decisis in this court. As it is, we shall extend this opinion no further than to refer briefly to the cases in this court where we think precisely the same principles have been recognized. Outside of this state the authorities may be somewhat in conflict, but we have the authority of so able a jurist and writer as Judge COOLEY for saying that “the decided preponderence of authority is in support of the right of the tax-payers to file bills on their own behalf in such a case.” The principle seems to be that individual tax-payers may restrain municipal action when it constitutes the preliminary step leading to taxation, such as the contracting of a debt ultra vires, the allowance of an illegal claim, consent to a collusive judgment, or the misappropriation of the public moneys. The jurisdiction is sustained on the ground that the injury would be irreparable. The misappropriation of corporate funds would not render the tax levied to repair the waste or supply the deficiency illegal. Cooley, Tax'n, 548. Citizens and tax-payers may prevent the issue and sale of void bonds by the municipal corporation; Delaware Co. v. McClintock, 51 Ind. 325. The misappropriation of the public moneys forms good ground for such an injunction by the citizen and tax-payer, because the corporation holds its moneys for the corporators, to be expended for legitimate purposes, and a misappropriation of the funds is an injury to the tax-payer for which no other remedy is so effectual or appropriate. When the amount thus misappropriated is subsequently needed for legitimate purposes a citizen cannot resist the necessary tax to supply the deficiency. Dill, Mun. Corp. § 917; New London v. Brainard, 22 Conn. 552. In Scofield v. Eighth School-dist. 27 Conn. 499, the same principle is applied to the misappropriation of the corporate property.

It is impossible to see any distinction between the misappropriation of the funds and the property of the corporation. If the funds cannot be taken from the treasury and divided between the supervisors and strangers by a corrupt combination and fraudulent scheme, neither could its property be so divided, or sold to the conspirators for a grossly inadequate price. The tax-payer is liable to suffer by taxation from both causes alike. In Mayor, etc., of Baltimore v. Gill, 31 Md. 375, an ordinance was passed for the sale or hypothecation of a large number of shares of the capital stock of the Baltimore & Ohio Railroad Company belonging to said city. The ordinance was void as being unconstitutional. The plaintiff and other owners of property, and tax-payers in said city, brought their bill to restrain the city from such unauthorized disposition of the property of the city. This is one of the most elaborate and well-considered cases ever decided in the United States, and the whole subject was most thoroughly examined in the light of the authorities, and the bill was sustained on the ground that the tax-payers had no other remedy, and that they were directly interested in the subject-matter of the suit, as being the special class damaged by such unlawful act of the corporation, which would increase the burden of taxation upon them, and all others similarly situated. It is not perceivable how this case differs in principle from the one at bar in any particular, except it be in the fact that in the case under consideration the sale and disposition of the valuable property of the county was made, not merely without right, but by fraud and collusion between the purchasers and the officers and agents of the county, and for their joint benefit. We have thus gone outside of our own decisions, as to some questions directly involved, which by the facts are precisely the same...