State v. City of Milwaukee

The following opinion was filed December 10, 1912:

SiebecKER, J.

On the former appeal of this action it was determined that the state may maintain an action against the county and city for moneys received by them to the use of the state as the clear proceeds of fines collected, if they have retained such moneys and have applied and used the same for legitimate municipal ■ purposes. State v. Milwaukee, 145 Wis. 131, 129 N. W. 1101. The present complaint alleges facts sufficient to constitute such a cause of action.

The defendants respectively allege that recovery is barred by tbe statutes of limitation, and set forth various limitation statutes as applicable to tbe case. Tbe trial court beld tbat tbe alleged causes of action are barred by the limitation statutes as to all sums of money tbat accrued prior to February 1, 1899, and ordered tbat tbe demurrers to tbe answers be overruled as to all claims for sums due prior to tbat date. It is tbe claim of tbe state tbat tbis ruling of tbe trial court is erroneous, for tbe reason tbat none of tbe limitation statutes were intended to apply to an action by tbe state for tbe recovery of moneys for tbe benefit of tbe school fund, and tbat if it should be beld tbat tbe legislature did intend to so bar recovery in an action of tbis nature, tbe statute is invalid because it contravenes tbe provisions of tbe constitution creating tbe school fund.

Sec. 4229, Stats. (1898), provides: “Tbe limitations pre^ scribed in tbis chapter shall apply to actions brought in tbe name of tbe state or for its benefit in tbe same manner as to actions by private parties.” By amendment of this section {Laws of 1905, cb. 1), a six-year limitation is prescribed for bringing actions for tbe recovery of “a penalty or forfeiture accruing wholly or in part to tbe state,” and tbe same limitation is prescribed for certain actions or proceedings “for tbe forfeiture of tbe rights, privileges and franchises of any railroad company . . . within this state.” “Any other action in favor of tbe state, whether created by statute or otherwise, must be commenced within ten years after tbe cause of action therefor has accrued.” Tbe significance and scope of these statutes were fully considered and the former adjudications on tbe subject in this court reviewed in tbe case of State v. C. & N. W. R. Co. 132 Wis. 345, 112 N. W. 515, and it was beld tbat tbe provisions of tbe statute were plainly intended to apply to the state in tbe same manner as to private parties. From tbe construction of these statutes there adhered to and applied, it is clear tbat they embrace tbe instant case, unless appellant’s claim, that tbe provisions of sec. 2, art. X, of tbe constitution of tbis state render them inapplicable to this class of actions, is sustained.

Under this section of the constitution all moneys derived •by the state from the various sources therein specified

“shall be set apart as a separate fund to be called 'the school fund/ the interest of which and all other revenues derived from the school lands shall be exclusively applied to the following objects, to wit:

“1. To the support and maintenance of common schools in each school district, and the purchase of suitable libraries and apparatus therefor.

“2. The residue shall be appropriated to the support and maintenance of academies and normal schools, and suitable libraries and apparatus therefor.”

All sums of money realized as “the clear proceeds of all fines collected in the several counties for any breach of the penal laws” are to be paid to the state and become part of this school fund. To accomplish this end in the city of Milwaukee, provision is made by sec. 2512, R. S. 1878 (P. & L. Laws of 1859, ch. 199, sec. 28), which requires the Milwcm-Tcee city treasurer to account for and pay to the county treasurer annually all fines and penalties collected in • criminal cases, and the county treasurer, pursuant to sec. 715, Stats. (1898), is required, at the time he pays the state tax, to turn such money over to the state treasurer, less the amount due him thereof as legal fees. It is urged on behalf of the state that “The school fund is a trust fund, and is placed by the constitution beyond the power of the legislature to divert it to any other use than the support of the schools of the state” (State ex rel. Sweet v. Cunningham, 88 Wis. 81, 57 N. W. 1119, 59 N. W. 503), and that a statute barring recovery of the clear proceeds of fines and penalties collected in criminal cases by municipalities is an indirect diversion of such money from the school fund such as is not permitted by the constitutional provision creating the fund. The context of the constitutional provision contains no express prohibition on the power of tbe legislature to enact laws in. respect to it, and therefore it is to be presumed that it was intended that the legislature was to exercise its legislative power as to this fund in all ways in which it is appropriately empowered to prescribe regulations for the protection and enforcement of rights pertaining to matters of like nature. This proposition the attorney general concedes, but claims that the relation of the state to this fund is that of a trustee of an express trust, and that the constitutional provision creating it clearly implies that any statute which limits the state in enforcing the collection of moneys for the benefit of such fund constitutes in effect a regulation by which money becomes diverted therefrom. But we discover nothing in the nature of the right to such moneys for the benefit of this fund different from' the rights the state has to moneys due it for other purposes, wherein, as we have pointed out, the state has by legislative action voluntarily submitted itself to the limitation statutes as they apply to private individuals. We perceive nothing in the provisions of the constitution that prohibits the legislature from applying limitation statutes to bar recovery by the state of moneys for the benefit of this fund.

It is claimed furthermore that the statutes of limitation do not apply to the demand in this cause because the state is acting in the capacity of a trustee of an express trust as to this fund. The principle thus invoked applies only in equitable actions between the trustees of an express trust and the cestuis que trustent, which is not the case here. This is an action for a money demand by the state, the trustee, for the benefit of this fund, against a third party, and hence is not within the exception contended for by the state. Howell v. Howell, 15 Wis. 55; Boyd v. Mutual F. Asso. 116 Wis. 155, 90 N. W. 1086, 94 N. W. 171; Williams v. Williams, 82 Wis. 393, 52 N. W. 429; Wood, Limitations (3d ed.) sec. 200.

The contention that the provisions of sec. 4229, Stats., making the limitations prescribed by statute, within which actions must be commenced after tbe cause of action accrues, applicable to tbe state, apply only to actions wherein it seeks to enforce demands in its proprietary capacity, is not well founded, and is repudiated by tbe decision of this court. Tbe subject was involved in State v. C. & N. W. R. Co. 132 Wis. 345, 112 N. W. 515, and it was there held that tbe limitation statutes applied to a cause of action for unpaid license money due from tbe railroad in lieu of taxes. That was certainly a demand due tbe state in its governmental function and not in its proprietary capacity, but it was there considered that tbe limitation statutes were applicable to such a demand; and we find no good reason for departing from tbe ruling in that case. A ruling to tbe same effect was made by tbe supreme court of Minnesota in tbe case of St. Paul v. C., M. & St. P. R. Co. 45 Minn. 387, 48 N. W. 17, tbe court declaring that tbe reasons for applying tbe limitation statutes to tbe state existed “with equal force when brought to assert what is denominated a ‘sovereign right’ ... as when brought to assert a right such as a private person may possess.”

Tbe cases decided by tbe Indiana court are not applicable here. There tbe constitutional provisions creating tbe school ■fund provide that tbe portion of tbe fund held by a county shall be held by it in tbe capacity of an express trustee, and hence a suit against it by tbe state as beneficiary of tbe trust fund exempted tbe cause of action from tbe limitation statute, upon tbe ground that tbe trustee of an express trust cannot interpose the defense of tbe statute of limitations in such an action.

We are persuaded that tbe trial court ruled correctly that tbe demurrers must be overruled as to all tbe demands specified in tbe order.

By the Court. — Tbe order appealed from is affirmed.

TimliN, J., took no part.

Tbe appellant moved for a rehearing.

In support of the motion there was a brief by the Attorney General and JRusseTl Jackson, deputy attorney general; and in opposition thereto a brief for the respondent city by Daniel W. Doan, city attorney, and Fm. U. Timlin, Jr., first assistant city attorney, and a brief for the respondent county by Edward J. Yockey, district attorney, and William, L~ Tibbs, special assistant district attorney.

The motion was denied on February 18, 1913.