State v. Bennett

252 N.W. 298, 213 Wis. 456, 1934 Wisc. LEXIS 28

• Court: Wisconsin Supreme Court
• Decided: January 9, 1934
• Status: Published

Opinions

Fritz, J.

The prosecution in this case is upon an indictment by a grand jury for malfeasance in office under sec. 348.28, Stats. The trial was to the court, without a jury, and the defendant was found guilty as charged. However, certain questions are certified by the trial court to ascertain whether under the facts of the case the finding is warranted. Those questions and our answers thereto are stated in the concluding paragraph of this opinion.

During the time of the transactions involved herein the defendant was the city planning engineer of Milwaukee, and as such was an assistant of the board of public land commissioners of the city. The position was under the civil service, and no official oath or bond was required. The defendant was also a member of an unofficial committee, appointed without statutory provision therefor by the superintendent of schools of the city, to make surveys of future school areas, and recommend plans for school development and the location and procurement of school sites, before the actual city development in such areas had resulted in greatly advanced land prices. That committee was composed largely of private citizens who acted as a matter of civic duty and without compensation. The defendant was considered desirable as a member thereof because of his position as city planning engineer and as assistant of the board of land commissioners, and his knowledge of the plans of that board and the direction and the growth and development of the city.

The functions of the city planning engineer and of the board of public land commissioners do not very clearly appear, but the very names imply that their duties pertained to the planning of future city development. In November, 1926, the defendant prepared a map' or plan of “suggested development.” Included in the map> was a tract which was later platted as “Parkway Manor,” a small part of which was then within the city limits. In 1928 those limits were extended and all of that tract was included. In 1926 the defendant and six others, including some members of the city engineer’s staff, organized the Triangle Company, a corporation which purchased that Parkway Manor tract in January, 1927. In April, 1927, the school survey committee, of which Bennett was a member, reported and recommended a five-year plan of procuring sites for city schools and recommended a change as to a suggestion in a previous report in relation to the location of a school site in the vicinity which included the Parkway Manor tract. In its survey preliminary to the submission of their recommendation the committee had viewed block No. 3 of Parkway Manor as a prospective school site. The defendant, who was a member of the sales committee of the Triangle Company, at this time engaged Geo. W. Mackinson, a real-estate agent associated in business with A. W. Birnschein, on the basis of a $1,000 commission, of which the defendant was to receive one-third, to offer that block No. 3 to the city for a school site for $20,000, and told Mackinson that the school survey committee had viewed that block. Mackinson thereupon interviewed the secretary of the school board and sent a letter to him offering to sell that block No. 3 for $20,000. The building committee of the school board, of which the defendant was not a member, recommended the acceptance of that offer, and thereupon it was accepted by the school board and its order on the city treasurer, dated June 6, 1927, payable to the “owner of block 3, Parkway Manor Subdivision,” was drawn and sent with an abstract of title to the city attorney for delivery to such owner on approval of the title and the execution of a deed. That order was cashed by Birnschein and Mackinson on August 19, 1927, upon their indorsement, and a notation by the city attorney that the title of the property was in Birn-schein. It appears that the title was placed in Birnschein’s name to conceal from the public the fact that, members of the city engineer’s staff had an interest in the land purchased by the city. A deed had been prepared by Mackinson to convey the land directly from the Triangle Company to the city, but the president and secretary of that company, who were on the city engineer’s staff, objected to signing a deed in that form. Instead, an option to sell to Birnschein, predated as in May previous, was then signed by the officers of that company. A consideration of $100 for the option was recited therein, and Birnschein’s check for the amount and likewise predated was drawn up to indicate that it was given on the same date as payment for that option. A deed from Birnschein to the city was then executed and delivered, and the order on the city treasurer was delivered to Mackin-son. On depositing the city order, Mackinson gave the Triangle Company his check for $18,898, which was the purchase price, less $1,000 commission, $2 recording fee and $100 predated check. The Triangle Company used that money to pay off some of its debts and $500 dividends, which were immediately declared to Bennett and each of the other stockholders of the corporation. The profit of the corporation on block No. 3 was over $9,600,-one-seventh of which inured to the benefit of Bennett, who also received $333.33 of the broker’s commission.

Sec. 348.28, Stats, (so far as here material), provides:

“Any officer, agent or clerk of the state or of any county, town, school district, school board or city therein, or in the employment thereof, or any member of any town board or village board, or any officer, regent, treasurer, secretary, superintendent, clerk or agent of any penal, correctional, educational or charitable institution instituted by or in pursuance of law within this state, or any member of any body or board having charge or supervision of such institution who shall have, reserve or acquire any pecuniary interest, directly or indirectly,. present or prospective, absolute or conditional, in any way or manner, in any purchase or sale of any personal or real property or thing.in action, or in any contract, proposal or bid in relation to the same, or in relation to any public service, or in any tax sale, tax title, bill of sale, deed, mortgage, certificate, account, order, warrant or receipt made by, to or with him in his official capacity or employment, or in any public or official service, or who shall make any contract or pledge, or contract any indebtedness or liability, or do any other act in his official capacity, or in any public or official service not authorized or required by law, or who shall make any false statement, certificate, report, return or entry in any book of accounts or of records in respect to anything done or required to be done by him officially, or in any public or official service, or who shall ask, demand, or exact for the performance of any service or duty imposed upon him by law any greater fee than is allowed by law for the performance of such service or duty, shall be punished,” etc.

It is conceded by defendant’s counsel that a stockholder of a corporation has such an interest in corporate property sold to a municipality as to bring him within sec. 348.28, Stats., if the other facts exist which are essential to bring him within it. Bissell Lumber Co. v. Northwestern C. & S. Co. 189 Wis. 343, 207 N. W. 697; Swiss v. United States Nat. Bank, 196 Wis. 171, 218 N. W. 842; Washington County v. Groth, 198 Wis. 56, 223 N. W. 575. Thus, by reason of his ownership of stock' in the Triangle Company, as well as by reason of his one-third interest in the commission paid to the real-estate broker, Bennett had a pecuniary interest at least indirectly in that sale of property to the city, within the meaning and contemplation of the words “any pecuniary interest, directly or indirectly, in any purchase or sale,” which are in that statute.

Defendant’s counsel contends that the statute by mentioning “officers, agents or clerks” indicates an intention to make three distinct classes of persons; that these terms should be strictly construed or given a narrow rather than broad interpretation; and that the accused should not be held within them unless he clearly falls within the narrowest meaning that can be given to one of the terms. Those contentions cannot be sustained. The use of those three terms indicates a comprehensive rather than a narrow inclusion, and the legislative intention is to include within those terms as used in that.statute every person who is either an officer, agent or clerk of the state or one of its subordinate governmental units, and who in one of those capacities has any duty to perform for the state or the particular governmental unit which he is in his particular capacity in duty bound to serve. The word “officer” is used first. But as this word, if alone, might be construed as meaning one w.ho is elected by the people for a fixed term and required to take an official oath, as the term has been construed in some cases, particularly quo warranto cases, as In re Nagler, 194 Wis. 437, 216 N. W. 493, the word “agent” was added. And as the word “agent” might be construed to mean one who acted as agent for the state or the municipality in only the particular transaction involved, the word “clerk” was added as an all-inclusive term, or as including every one in municipal service who had duties of any kind to perform. Thus there are many persons in municipal employment who are not municipal officers in the sense first stated, although so considered in common parlance, but who have duties to perform in respect to certain contracts, but do not act for the municipality in actually negotiating or entering into the contracts. A city attorney or a city engineer not elected but appointed by the city council, might be held not to be an officer in the sense stated, but in giving advice or passing upon the legal aspects or the engineering features involved, would be acting for the city and as the. agent of the city in determining in respect to those matters and would, it would seem, be covered by the statute.

It is further contended on behalf of defendant that because of the requirement clearly expressed in the words in sec. 348.28, Stats., “made by, to or with him in his official capacity or employment, or in any public or official service,” it is, among other reasons, necessary for the state, in order to sustain a conviction of the defendant, to show that the purchase of this school site on behalf of the city was made by, to or with him in his official capacity or employment with the city, or in any public or official service. In support of that contention it is urged that to construe the statute otherwise would render criminally liable under the statute every person in the service of the state or any of its governmental units, in whatever capacity and however humble his position, who has stock in a corporation that sells anything which is within the terms of the statute to either the state or any such unit. In that connection it may be noted that there is nothing in the statute which expressly limits its application to transactions of officers, agents or clerks of the state or. of municipalities with the state or the particular municipality in whose service they are.

Defendant’s contentions in those respects are sound. It certainly was not intended by that statute that any officer, agent or clerk of the state or a governmental unit “who shall have any interest, directly or indirectly, ... in any way or manner in any sale of real property . . . shall be punished.” That manifestly would be absurd. To avoid such an absurdity as to the meaning and scope of the state it is proper and necessary, as a matter of simple grammatical and legal construction, to recognize and give due significance to the adjective clause, “made by, to or with him in his official capacity or employment, or in any public or official service,” which, in the statute as worded (as appears in the portion thereof quoted above), follows the series of nouns which commences with the words “purchase or sale” and ends with the words “warrant or receipt.” That adjective clause relates back to, defines, and limits each and every one of the nouns, viz., “purchase,” “sale,” “contract,” “proposal,” “bid,” “tax sale,” “tax title,” “bill of sale,” “deed,” “mortgage,” “certificate,” “account,” “warrant,” and “receipt,” which immediately precede that clause in that statute as worded. By reason of that adjective clause the effect of that statute, whether under consideration in relation to the first transaction named, i. e. a “purchase,” or in relation to the last transaction or instrument, i. e. a “receipt,” or in relation to any one or more of the other transactions or instruments mentioned in that list of nouns, is confined to a transaction or instrument which is within the definition and limitations of that adjective clause. Then, and then only, is the meaning of that portion of the statute free from absurdity and the scope of its applicability within the limits of reason. Then the literal terms of the statute do not apply to every “purchase, sale, contract,” etc., made by, to or with the state or any of its governmental units in which some officer, agent or clerk of either the state or a governmental unit, has any pecuniary interest directly or indirectly so as to render every such officer, agent or clerk criminally liable by reason of his capacity in that respect, regardless of whether such purchase, sale or contract, etc., was made by, to or with him in his official capacity or employment, or in any public or official service. On the contrary, then by virtue of the literal terms of the statute itself its application is, in this respect, expressly limited to such a purchase, or sale, or contract to the state or a governmental unit as was “made by, to or with him (i. e. the accused officer, agent or clerk of the state or the governmental unit, who has a pecuniary interest in the property purchased by or sold to it) in his official capacity or employment, or in any public or official service.” Then it is not sufficient and the statute does not become applicable because such an officer, agent or clerk was merely a participant on behalf of himself or others pecuniarily interested with him in such a purchase or sale or contract which was in no respect made by, to or with him in his official capacity or employment or in any public or official service. The words of the statute certainly afford no basis for concluding that its applicability to such an officer, agent or clerk is dependent upon his having participated, solely in his private capacity on behalf of himself, and in furtherance of his own pecuniary interest.

On the other hand, if the purchase in question had been “made by, to or with him in his official capacity or employment, or in any public or official service,” it would have been wholly immaterial, under the statute, in so far as the establishment of the essential elements of the offense is concerned, whether Bennett did or did not also participate or act on his own behalf in relation to the transaction. It would certainly have sufficed to sustain a conviction, if the purchase of the property, in which Bennett had a pecuniary interest, had been made by him on behalf of the city in his official capacity or employment, even though he had not also acted or participated in some manner, on behalf of himself or the corporation in which he was interested.

In the respects now under consideration, sec. 348.28, Stats, (formerly numbered sec. 4549), was also considered by this court in at least three cases. In the case of Quayle v. Bayfield County, 114 Wis. 108, 89 N. W. 892, the county board by resolution delegated its power to provide court quarters to Warden, the judge of the municipal court of the county. Warden executed such power so as to enter into contract relation with the county, by which he became the landlord and the county his tenant. In relation to his claim for the rent the court said:

“Warden was a county officer. He was prohibited by a penal statute from being pecuniarily interested in any contract with the county in relation to any public service. Sec. 4549, Stats. 1898. The furnishing of a court room to the county was public service within the meaning of that statute. A contract made in violation thereof is not merely voidable. It is absolutely void.”

That language must, of course, be read in connection with the facts in the case. The case was one where the county board had delegated to the municipal judge — an officer of the county — the duty of renting a court room for his court. As he sought to execute that official duty of renting a court room by dealing with himself as landlord of the county, he brought himself squarely within the statute, with its meaning and scope rightly construed so as to require as an essential element of guilt the making of the contract by, to or with the official in his official capacity or employment, or in any public or official service.

The next case was Menasha Wooden Ware Co. v. Winter, 159 Wis. 437, 150 N. W. 526, in which, among other things, the validity of certain town orders issued to the town treasurer for certain plank sold by him to the town was challenged. These orders could be paid only by this treasurer in his official capacity. As treasurer he would have to turn over the town’s money to himself as the seller. This court said in relation to sec. 348.28, Stats.:

“The statute was undoubtedly framed for the purpose of putting beyond the reach of officers any temptation to sell supplies to towns or municipalities of which they are officers or agents. It cut off all sales between them and the municipality they represented, so that they should not act both as seller and buyer. It also prohibited their acquiring an interest in the sales of others to the municipality.”

.In that action there were also involved two orders for blacksmith work done for the town by one Ordway, who was also in the employment of the town as night watchman. On appeal sec. 4549 was held not to defeat his right to recover for such other work, although he was at the time in the town’s employment for other purposes. This court then said:

“The court disallowed so much of the above orders as represented work done while he was acting as night watchman because contrary to the provisions of sec. 4549, Stats. 1913. The section is a highly penal one and must be strictly construed. While the reasons against an agent or officer of the town selling his labor or time to it may be as persuasive as those against his selling personal or real property to it, still the fact remains that there is no statutory inhibition against it. The court can make none. The language of the section is plain and unambiguous. It relates to the 'purchase or sale of any personal or real property or thing in action, or in any contract, proposal or bid in relation to the same.’ Performing services for the town cannot be construed to be a purchase or sale of any personal or real property or thing in action within the meaning of the section. There is nothing to show that Ordway’s duties as night watchman were in any way interfered with or made less effective by the blacksmith work which he performed for the town. That part of the judgment declaring a portion of these orders void is reversed.”

That conclusion that the town’s night watchman was not barred by sec. 4549, Stats., from recovering for blacksmith services performed by him for the town otherwise than in his capacity as its night watchman was considered erroneous in Henry v. Dolen, 186 Wis. 622, 626, 203 N. W. 369. In the latter case this court said:

“While in the Menasha Case it was held, at page 453, that certain blacksmith’s services rendered by the night watchman were not within the provisions of this statute, it is apparent that the court overlooked the fact that the statute indicates any pecuniary interest in a contract relating to public service as well as the ‘purchase or sale of any personal or real property or thing in action, or in any contract, proposal or bid in relation to the same.’ ”

That criticism, because of an apparent oversight in the decision in the Menasha Case, seems proper. It is true that the conclusion that the services as a blacksmith were not within the statutory inhibition, because they were not within the inhibition against the selling of personal or real property to the town, and was apparently reached while the court overlooked that the inhibition of the statute also expressly related to any such contract “in relation to any public service.” However, in none of those threeucases above referred to does it appear that this court passed upon the proposition that the statutory inhibition is applicable only, and violations thereof on the part of such an officer, agent, clerk or employee occur only when such contracts, or purchases, etc., were “made by, to or with him in his official capacity or employment, or in any public or official service.” Neither has the apparent omission to consider that proposition and the provision last quoted from the statute, resulted in any erroneous denial of relief. In Henry v. Dolen, supra, the public services which were the basis of the claimed right for the extra compensation which was involved in that action, were rendered for the county by a claimant who was a member of the county board, and as such required by sec. 59.79, Stats., to act in his official capacity and in his official service upon all such claims.

As Bennett had no legal duty as such agent or clerk of the city to act, and did not act for it in any manner in making the purchase by the city, the fact that he had a' pecuniary interest in the property purchased and the commission to be paid to the broker did not bring him within the condemnation of sec. 348.28, Stats., even though his activities, on the one hand, as the city planning engineer, and as a member of the unofficial school survey committee, which preceded the selection of the school site in question, and his subsequently profiting, on the other hand, by receiving dividends and commissions as a result of that purchase, may have constituted pernicious and reprehensible duplicity on his part.

By the Court. — In accordance with the construction of the statute above indicated the questions submitted are answered as follows:

1. Was the defendant an officer, agent or clerk within the meaning of sec. 348.28? Yes.

2. Does sec. 348.28 make a criminal offense of a transaction as to which the defendant has no official duty to perform? No.

3. Did the defendant have an official duty to perform with reference to the sale here made within the meaning of sec. 348.28? No.

4. Does sec. 348.28 make a criminal offense of a sale of land to the governmental unit where the contract is not made by, to or with the defendant in his official capacity? No.

5. Was the sale of the real estate in question made by, to or with the defendant in his official capacity within the meaning of sec. 348.28? No.