Bissell Lumber Co. v. Northwestern Casualty & Surety Co. , 189 Wis. 343 ( 1926 )

Crownhart, J.

The main contention of the appellant Surety Company is that the contract of the plaintiff, whereby it sold and delivered materials to the contractor, was absolutely void by virtue of sec. 348.28, formerly sec. 4549, Stats., which reads in part as follows:

“Any officer, agent or clerk ... of any . . . school district . . . 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, . . . shall be punished by imprisonment. . . .”

The above is a criminal statute, and if the clerk of the school district violated this statute in making the sale to the contractor of goods and materials, then such contract must be considered void and of no effect. It will be noticed that the clerk is forbidden to acquire any pecuniary interest, directly or indirectly, in any purchase or sale of any personal or real property, or in any contract, proposal, or bid in relation to the same, or in relation to any public service.

The clerk was the resident manager and treasurer of the plaintiff corporation. He was a large stockholder in the corporation. As such manager and stockholder he proceeded to contract with the building contractor for the sale of a large part of the materials to enter into the construction of the school building. It would seem clear on the face of this situation that Stone was interested and did acquire a pecuniary interest in the contract between the contractor and the district.

The plaintiff’s assertion of a claim in this case against the Surety Company is an assertion that the plaintiff acquired an interest in the school contract by virtue of its dealings with McCaustland.

Sec. 289.53, formerly sec. Z3A7dd, Stats., provides:

“Any person, firm or corporation furnishing any material ... to any contractor for public improvements in this state, except in cities of the first class, however organized, shall have a lien on the money, or bonds, or warrants due or to become due such contractor for such improvements ; providing, such person, firm or corporation shall, before the payment is made to such contractor, notify the officials of tíre state, county, township, city, or municipality, whose duty it is to pay such contractor, of his claim by written notice.”

Here is an express statute giving the plaintiff corporation a direct interest in the contract between the district and McCaustland, and the plaintiff is now asserting rights under said statute. Plaintiff also acquired a pecuniary interest in said contract by virtue of sub. (1), sec. 289.16, Stats., formerly sec. 3327a, which provides that in all contracts pertaining to a public building the contractor shall give a bond conditioned for the faithful performance of the contract, and the payment to each and every person or party entitled thereto of all the claims for work or labor performed and materials furnished in or about such contract. Sub. (2) of said section provides that any party in interest may maintain an action in his own name against such contractor and the sureties upon such bond to recover any damages he may have sustained by reason of the failure to pay such claims. Here, again, the plaintiff is seeking to enforce the provisions of the contract between the contractor and the school district and the surety bond given thereunder. It would seem too plain for argument that the plaintiff acquired an interest in the contract between the school district and McCaustland, and it is equally plain that a person who owns a large interest in a corporation by reason of his stock therein, and who is directly interested in the corporation as the manager thereof, and who, in behalf of the corporation, entered into a contract to furnish materials for a public school building, has a pecuniary interest in the contract between the contractor who builds the building and the school district. This interest is adverse to the school district, and it is an interest that the clerk of the school district has no right to have or acquire. In this case Stone was the agent of the plaintiff corporation, who made the contract with McCaustland to sell McCaustland the building materials. The plaintiff is bound by his acts, and the contract was void and cannot be enforced. It goes directly against the spirit of the law as well as the letter of the law. Edward E. Gillen Co. v. Milwaukee, 174 Wis. 362, 183 N. W. 679.

The circuit court correctly held that the plaintiff could not recover for the materials sold directly to the school district.

By the Court. — The judgment of the circuit court is reversed, with directions to enter judgment in accordance with this opinion.