Board of Supervisors v. Walbridge , 38 Wis. 179 ( 1875 )

Cole, J.

There are really but two objections taken to the complaint on the demurrer: first, multifariousness, or the improper joinder of several causes of action which are distinct in their nature and do not affect all the defendants; secondly, that the complaint fails to state a cause of action against the defendants, or either of them. These points will be considered in the order in which they are raised by the demurrer.

The counsel for the defendants insist that so far as the recovery of the $275,000 bonds in the custody of the First National Bank of Madison, as trustee, is concerned, the defendants Walbridge Bros. & Sargeant have no interest whatever; and that so far as a recovery is sought against Walbridge Bros. & Sargeant of the $75,000 bonds, or the proceeds thereof, none of the other defendants have any interest. And the counsel insist that the plaintiff cannot and should not be allowed to thus unite in one suit these distinct matters against parties having no joint interest, and who have no connection with the different transactions stated in the complaint.

An examination of the complaint will show that these objections are not well founded. One object of the action, and a part of the relief sought, is to have adjudged void the tripartite agreement entered into on the 26th day of June, 1878, between the Superior & St. Croix Railway Company, the Northern Pacific Railway Company and Walbridge Bros. & Sargeant. These defendants all acquired rights under that agreement, and it seems to us plain that the agreement cannot be adjudged void without having all the parties, interested in it before the court. It is a general rule, that where a party is directly affected by the decree, he is an indispensable party; and the courts only depart from the rule when the parties are so numerous that it would be inconvenient or impossible to comply with it. Williams v. Bankhead, 19 Wallace, 568; Story’s Eq. Pl., § 91. The cancellation of this agreement affects directly and essentially all the parties to it, and certainly entire justice cannot be done unless they are before the court. If the only relief sought were the rescission of the contract made in the first instance between the plaintiff and the Superior & St. Croix Railway Company, under which the bonds were delivered and aid granted, some of the defendants would not,^possibly, have so direct an interest in the subject matter of the litigation. Though even then, upon the statements in the complaint, all tbe defendants would seem to be proper, if not necessary, par-lies tu granting such relief.

'But the objection of multifariousness is confined to cases where the cause of action against each particular defendant is distinct and separate in its subject matter from those against the other defendants. If the grounds of action be not.entirely distinct and unconnected — if they arise out of one and the same transaction, or a series of transactions forming one course of dealing, and all tending to one end, —the objection does not apply. Story’s Eq. Pl., § 271 b; Blake v. Van Tilborg, 21 Wis., 672. In the case cited, Mr. Justice Downer states the rule as follows: “A complaint does not improperly unite several causes of action, which relates to matters of the same nature all connected with each other, and in which all the defendants are more or less interested or concerned, though their rights in-respect to the general subject of the action may be different, and some may be directly interested only in a part of the general claim.” In Brinkerhoff v. Brown, 6 Johns. Ch., 139, Chancellor KENT considers, with his usual research and learning, the question of multifariousness, and, after an examination of the English cases upon the subject, deduces this rule from them: “ A bill against several persons must relate to matters of the same nature and having a connection with each other, and in which all the defendants are more or less'concerned, though their rights in respect to the general subject of the case may be distinct.” p. 156. This rule is cited with approbation in Fellows v. Fellows, 4 Cowen, 682, and is in effect recognized and followed in Winslow v. Dousman, 18 Wis., 457, and Bassett v. Warner, 28 id., 673. This complaint is not multifarious, within these rules. All the matters stated in it are more or less connected, and ail the defendants are more or less concerned or interested in them. The defendants are not only interested in the question as to the validity and binding obligation of the arrangement made on the 26th day of June, 1873, but they would also seem to be interested in the decision which shall be made as to the right of the county to a rescission of its original contract with the Superior & St. Croix Railway Company, and the recovery of its bonds. They therefore have, in the language of the judges in Fellows v. Fellows, “one common interest centering in the point in issue in the cause,” namely, whether the county, upon the case presented, is entitled tp annul its subscription and have the relief demanded. Its right to recover the $75,000 bonds of Walbridge Bros. & Sargecint, and the $275,000 in the possession of the trustee, turns upon its right to have the contracts mentioned in the complaint adjudged void.

Does, then, the complaint state a cause of action against the defendants, more especially against Walbridge Bros. S Sargeant, who alone have demurred? Upon this point the able and lucid argument of plaintiff’s counsel left no room for doubt.

The county offers to return to the Superior & St. Croix Company the stock which was issued to it in exchange for its bonds, and demands a rescission of the contract on which aid was voted, and also a rescission of the contract of June 26, 1873, and seeks to recover its bonds. The ground upon which this relief is claimed, is in brief this: The building of the road, it is said, and the stock, were the consideration for the aid 'voted. The Superior & St. Croix and Northern Pacific companies are insolvent, and no benefit can ever accrue to the county from what has been done by the defendants. The scheme has utterly failed, and unless the contracts in question can be rescinded, and the bonds or their value restored, the county will have to pay them without ever having received any benefit from them, the stock being utterly worthless and there being a total failure of consideration. The bonds, being of a negotiable nature, may pass into the hands of innocent holders, where no defense to them would be available, and a fraud will be perpetrated upon the county, if the court does not interfere and order them to be returned for cancellation. It seems to us that these considerations address themselves with great force to a court of equity. The application to a court of equity, say the authorities, for the rescission, cancellation or delivering up of agreements and securities, is not founded upon an absolute right, but is rather an appeal to the sound discretion of the court, which, in granting or refusing the relief prayed, acts upon its own notions of what is reasonable and'just under all the surrounding circumstances. While we are to understand that the interference of a court of equity in these cases is a matter of mere discretion, this is not an arbitrary and capricious, but a sound and reasonable discretion, secundum arbitrium boni judkcis. 1 Story’s Eq. Jur., § 693; Willard’s Eq., ch. 4, sec. 3.

It surely seems reasonable and just, on the facts stated, for a court of equity to exercise its jurisdiction, and order a rescission of the contracts and a return of the bonds to the county. No part of the road has been built, the construction of which was doubtless the real consideration for voting aid to the company ; and the work has been abandoned. The defendants have no equitable right to retain the bonds, when they refuse or are are unable to perform their contract. -The bonds, from their negotiable character, are liable to pass into the hands of innocent holders, or may be used for an. improper purpose, to the injury of the county, And if a resort to equity for the cancellation or delivering up of securities can be sustained on the ground of protective justice, and considerations of what is just and reasonable, this case calls for the exercise of the power.,

The counsel for the defendants insist that the facts only show an ordinary instance of a nonperformance of a contract, and that the remedy is at law for damages. But this is obviously an inadequate and insufficient remedy, as was demonstrated by the counsel on the other side. The Superior^ St. Croix Company has no property of any considerable value ; the Northern Pacific, even if it had entered into a binding obligation to complete the road, is notoriously insolvent; and an action upon the indemnifying bond would afford no adequate redress. For that bond is only in the sum of $200,000, while the amount of the county bonds is $360,000. The county would sustain a loss of $160,000,'if forced to pay its bonds, though it might be able to collect of the sureties the entire amount of the indemnifying bond. This fact alone shows that the remedy at law is inadequate and doubtful.

The counsel for the defendants also insisted, that as an absolute title to the bonds passed to the Superior & St. Croix Company, that company had an undoubted legal right to release Walbridge Bros. & Sargeant, from their contract to construct the road, and to make them compensation for work done and material furnished, by delivering them the $75,000 which they now hold. It may be true that the title to the county bonds passed by delivery to the company, but it seems to us utterly impossible, upon the facts stated, to sustain the- position that Walbridge Bros. & Sargeanl are bona fide holders for value of any considerable portion of these bonds, and entitled to protection as sucb. They have only done an inconsiderable amount of work on the road ; have not constructed a single mile, nor furnished a single car or locomotive; and have abandoned their contract entirely. It seems to us they stand essentially upon tbe same ground as the company, and are entitled to no greater consideration. Their right to bold the $75,000 bonds is derived through or founded upon tbe arrangement entered into June 26, 1873, which we consider void and not binding on tbe county. For to our minds the resolution of the county board extending the time for the completion of the road and making other changes in the proposition upon which aid was granted by a vote of the electors, was without authority ánd void. The agreement which was entered into between tbe county board and the Superior & St. Croix Company, and which was submitted to the electors when aid was voted, could not be essentially modified or changed by tbe county authorities. Lawson v. Schnellen, 33 Wis., 288. The reason for this view is given in tbe case cited; and it is, because tbe inhabitants or voters of tbe county are tbe real contracting party on tbe one side, and tbe railroad company on tbe other, the county board being merely agents of tbe former to execute a special authority. It is said tbat tbe county board had plenary power over the matter, and could modify and change tbe terms upon which aid was voted as they thought proper. We do not, however, so understand the act under which aid was voted. By the 16th and 17th sections of the act it was in substance provided, that the county might aid in ‘the construction of the road by subscribing to the stock of the company and by issuing bonds for the payment of the same; and to that end the county board was authorized to negotiate and arrange with the company the terms and conditions upon which aid should be granted. But before aid could be granted or contracted for, the question of granting the same was required to be submitted to the electors of the county. The question was to he fairly submitted • which implies that the question as to the amount, as well as the terms upon which the aid should be granted, was to be submitted. It is unreasonable to suppose the legislature intended to to give the electors only the right to express their views upon the mere bald question of granting aid without regard to the amount, and without reference to the terms and conditions of granting it — leaving these latter matters entirely and wholly under the discretion of the county board. According to our view of these provisions, it was contemplated that the electors should express their view upon those questions. The right was reserved to them of voting upon the question of granting aid, and also upon the amount and conditions of granting the same. Nor was it competent for the board to modify and change the terms upon which aid was voted. Here they attempted to change them in most important particulars. The people were doubtless anxious to secure a speedy completion of a railroad from the bay of Superior to the Northern Pacific in Carlton county. They probably believed they would secure great commercial advantages by the early construction of that road. The time in which the proposed road was to be completed, would be an important element in the question whether aid should be granted. All this is too obvious to require elaboration. Non constat that aid would have been voted if the proposition had been to complete the.road by the 1st of July, 1875. In this matter the board exercised the special powers conferred by the act, and they could not call to their aid the general provisions of law relating to their duties, to enlarge and practically destroy the limitation upon their authority.

It results from these remarks that the second ground of demurrer is not well taken.

By the Court. — The order of the circuit court overruling the demurrer is affirmed.