Land, Log & Lumber Co. v. McIntyre

75 N.W. 964, 100 Wis. 245, 1898 Wisc. LEXIS 205
Wisconsin Supreme Court·Decided June 23, 1898·Published·Cited by 61 cases

Opinion

Marshall, J.

It is suggested by appellant’s counsel in support of the demurrer to the cause of action to recover back illegal compensation for supervisor’s services, alleged to have been paid by the county to appellant, that plaintiffs have an adequate remedy at law under secs. 2955-2957, E. S. 1878. That gives aperson aggrieved by an officer’s demanding and receiving of him illegal fees or compensation, a remedy at law to recover the same back, with a penalty of $25. True, if plaintiffs have an adequate, or any, remedy under such section, it is an objection to the sufficiency of the complaint that may be reached by demurrer; but it is quite clear that no such remedy exists. The sections referred to apply solely [249] to cases where a person has been directly injured by being required to compensate an officer beyond that to which he is legally entitled. This action is to enforce a cause of action in favor of the county. It is the corporation that has been directly injured and has the primary right to proceed. Plaintiffs’ interests are wholly indirect, like that of a member of any private corporation under the same circumstances. They could not proceed at law for an injury to the corporation, or in their own names for their own benefit, independent of a statute granting the remedy, and certainly there-is none. Illegal acts of corporate officers, whereby its property is misapplied, squandered, or lost, are not injuries to the separate interests of its stockholders or members, that can be reached and remedied in a direct action by them. As to-them the injury is purely incidental and consequential, the direct injury being to the corporation itself, and must necessarily be redressed by it or for its use, for the benefit of all the members thereof. Thomp. Corp. § 4416; Dillon, Mun. Corp. § 915.

The next point made is directed particularly to the cause-of action to recover money received by McIntyre for goods, wares, and merchandise, and labor alleged to have been furnished by him to the county while he was a member of its board of supervisors, in violation of sec. 692, R. S. 1878, which prohibits a person so circumstanced from being a party to, or in any way or manner interested, either directly or indirectly, in, any contract or agreement whatever with the county, for the purchase of any article whatever, re-r quired by such county, and provides that all contracts or agreements in violation thereof shall be void, and the offending supervisor, by reason of his offense, be deemed to-have thereby vacated his office. The purpose of that section was unmistakably to include contracts, executed as well as executory, between members of a county board and their county for the purchase of any and all articles for its use. [250] No member of a county board can be interested, directly or indirectly, in any such contract without being guilty of gross violation of public duty, and liable to respond therefor in damages to the corporation to the full extent of any pecuniary benefit received by him in any event, and such further sum as the corporation may have lost by his unfaithful conduct.

But it is said the county received a benefit from the property and labor furnished by appellant, and that the rule is that equity will not interfere with an executed contract under such circumstances, and compel a restitution of the money received on the illegal contract, or any part of it, while the corporation retains the benefit, and many authorities are cited in support of that view, all relating, however, to cases where, though the corporation had power to incur the indebtedness or make the expenditure, there was some violation of law in the manner of doing it. That has often been recognized and applied in this court, as in Pickett v. School Dist. 25 Wis. 551, but a distinction was there clearly made between such circumstances and those where the manner of doing the thing was not only unlawful, but the doing of the act at all was unlawful as well. The court said in the latter mentioned circumstances: “ The parties acquire no rights which can be enforced either in courts of law or equity.” But in the former, the thing contracted for being itself lawful and beneficial, it would seem improper to allow the party who may be entitled to avoid it, to receive and retain the benefit without any consideration at all. The court was there speaking of a contract voidable as against public policy under common-law principles as distinguished from those void absolutely as not within the power of the corporation. The same distinction was recognized in Beyer v. Crandon, 98 Wis. 306, where it was held by this court, that performance of a contract with a town to construct a road that has no legal existence does not create a claim, [251] legal or equitable, against such. town. That rule applies to the greater part of the sum sought to be recovered by the second cause of action, the same having been paid, as alleged, for property and labor in the construction of a so-called county road that had no legal existence.

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Land, Log & Lumber Co. v. McIntyre, 75 N.W. 964, 100 Wis. 245, 1898 Wisc. LEXIS 205 (Wis. 1898).

75 N.W. 964 (Land, Log & Lumber Co. v. McIntyre) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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