Butler v. Mitchell , 15 Wis. 355 ( 1862 )

By the Court,

Paute, J.

We think the answer presented by the appellant set up a good defense to the action. The respondents rely upon a class of authorities which hold that 'trustees are personally liable to agents and attorneys whom they employ. But they concede in their brief, and refer to authorities to that effect, that government agents are an exception to the rule. And we think this case falls within the exception. The trustees appointed under chapter 112, Gen. Laws of 1856, were evidently intended to act, to a very great extent, for the security of the state, and the preservation and advancement of the public interest in the improvement to which that act relates. It is true their action would also enure to the benefit of the Improvement Company, but only so far as was consistent with the accomplishment of those other objects which were the primary reasons for their appointment. For this reason we think they were not personally liable, and section 9 of the act is in harmony with this conclusion, as it expressly provides that the compensation of the trustees, and of all officers and agents of said trustees, &c., should be at the cost and charge of said company.

The respondents claim an application of the doctrine that agents are held liable where they do not disclose their principal. But we think the plaintiffs’ complaint fully shows that the principal was disclosed in this case. The bill of particulars attached as a schedule to the complaint, shows that the claim was for services as attorneys in suits brought in the name of the defendants “ as Trustees of the Eox and Wisconsin Improvement Company.” The plaintiffs, therefore, knew that the defendants were acting as trustees, and they being public agents, and the act under which they were appointed, a public act, the plaintiffs were bound to take notice of the extent of their authority, and that by virtue of section 9, their claim became a debt against the company.

If an affidavit of merits had been filed, we think the appellant should have been let in to defend, for reasons similar to those in Johnson vs. Eldred, 13 Wis., 482. But we have several times decided that in applications of this sort an affidavit of merits should be filed. 11 Wis., 146; id., 258. And though the reasons for requiring it are not as apparent where the defense is. of the nature presented in this case, as it would be in many others, yet the practice must be uniform, and for this reason we cannot reverse the order appealed from. It does not appear that this point was relied on in the court below, or that the decision was based upon that ground. But as we decide the case upon it, we have concluded that we may so far modify the order appealed from, as to deny the appellant’s motion without prejudice to a new motion, with costs against the appellant in this court.

Note. — Mr. Ryan (on a motion for rehearing, which was overruled) presented the following summary of the provisions of the act under which the trustees were appointed: The 1st section provides for the work to be executed by the corporation, and the time and manner of the execution. It also provides for the’ discharge of outstanding unpaid evidences of indebtedness on the part of the state on account of the work. It also gives a limited and negative supervision of the plan of the work to the governor, to ensure the objects of the grant by congress; but does not give any supervision to the governor or other state officers of the financial or general business of the corporation. The 2nd section, “to enable said company to perform the duties required in the preceding section," grants the land over again to the corporation, upon new terms and conditions therein specified. These are, that the corporation shall make a deed of trust to three trustees, of the unsold lands, and of the work, and of the franchises and property of the corporation, upon certain trusts: 1st. To secure the application of the grant, &a. to the work and to the payment of all unpaid evidences of indebtedness of the state in the premises; 2d. Nor the payment of bonds of the corporation; 3d. To secure the improvement of the 'Wisconsin river by the grant lying upon it. The 8d section authorizes the corporation to issue bonds to be secured by the deed of trust, and provides for the appropriation of part of the avails of the land to the payment of interest and expenses, at the request of the corporation. It then provides that in case of default by the corporation, the trustees shall sell the lands and apply the proceeds according to the priorities established by the act. The 8th section provides that the trustees shall be appointed by the governor, with the approval of the corporation, and may be removed by the governor with the Wee approval. The 9th section provides that the compensation of the trustees and of all agents of the trustees and corporation, and all expenses under the trust and» that act, shall be at the cost of the corporation, without charge to the state. The tenth section provides, that upon the completion of the work and the execution of the trust, the trustees shall reconvey to the corporation.

In support of the motion for a rehearing, Mr. Byan urged, among other things, that all the duties of the trustees under this act, were for the corporation, as much as those of the trustees in any railroad mortgage, and for the creditors of the corporation, including the state; that theirs could not be said to be a public employment, but private duties, to be paid for by the corporation ; that this view was strongly confirmed by the fact that the state had conveyed the work and the grant to the corporation, and that the title of the trustees, in accordance with the terms of the act itself, proceeded not from the state but froip the company ; that the state dictated the terms of the trust, but the company was the constituent of the trustees, and the state a mere cestui gue trust; that the mode of appointment, which was by the governor hy and with the advice and consent of the hoard of directors of the company, seemed tobe conclusive that the legislature did not regard these trustees as public officers; that if it were conceded that they were to act for the benefit of the corporation as well as for that of the state, when acting for the former they bore the character of private trustees; that the true meaning of section 9 was, that the expenses of the trustees, &e. shouldbe paid out ofthefund, and not be a charge to the state; that the trustees — who took everything— and not the company, had the power to raise a fund to defray the expenses of the work and of the execution of the trust; that they therefore were the persons charged with the knowledge of the fact whether a sufficient fund was provided for the payment of any service required, and they must be held to have acted in bad faith if they required a service for the payment of which they had not an ad-eqate fund; and that the language of the decision in Horsley vs. Bell, Ambler, 769, supported by many other authorities, was strictly applicable to them. — Rep,