Elkhorn Trading Co. v. Tacoma Mining Co.

De Witt, J. It is clear that under section 460, Fifth Division of the Compiled Statutes, defendant Rust, by reason of the neglect of himself and the other trustees of the Tacoma Mining Company to file its annual statement, became liable for the indebtedness here sued upon by the plaintiff. (Gans v. Switzer, 9 Mont. 408.) But, under the facts in this case, may the plaintiff assert Rust’s liability ? Is not plaintiff estopped ? It was clearly within Bottcher’s authority, as general manager of plaintiff, to state what the indebtedness was of the mining company to plaintiff. Bottcher was the only person who knew the facts. He kept the books of both companies. (See statement of the case preceding this opinion.) Some of the general principles of estoppel we find epitomized in Herman on Estoppel and Res Judicata (volume 1, § 7), as follows: “(1) If a man, by his words or conduct, willfully endeavors to cause another to believe in a certain state of things which the first knows to be false, and if the second believes in such a state of things, and acts upon his belief, he who knowingly made the false statement is estopped from averring afterwards that such a state of things did not in fact exist. (2) If a man, either in express terms or by conduct, makes a representation to another of the existence of a certain state of facts which he intends to be acted upon in a certain [330] way, and it is acted upon in that way, in the belief of the existence of such a state of facts, to the damage of him who so believes and acts, the first is estopped from denying the existence of such a state of facts. ’ ’ These are elementary principles. Let us apply to them the facts in this case. The plaintiff acted through Bottcher, its agent. Bottcher acted within his authority. He was cognizant of all the facts, and the only person who knew them. He willfully endeavored to cause the defendants to believe a certain state of things, to wit, that the mining company did not owe anything to the plaintiff. He knew that that statement was false, and it appears in testimony that he said that he made that statement for the purpose of inducing the mining company and its trustees to refrain from filing their annual statement, in order that the plaintiff, of which he was manager, might secure a personal liability against defendant Rust. The defendant Rust believed these false statements. He relied upon them. He acted upon this information and belief. If the trustees of the mining company had not so relied upon this information and belief, they would have filed their annual statement, and then there would have been no personal liability on the part of Rust as trustee. Therefore, applying the rule of estoppel, plaintiff cannot now aver, as against Rust, that there was a debt of the trading company against the mining company. This seems to be a perfectly clear case of estoppel. While it is true that plaintiff has, under the statute, its right of action against defendant Rust, it is also equally true, under the rules of estoppel, that the court will not hear the plaintiff assert it. It is claimed by the appellant that section 460, supra, is a penal statute, and that the penalty, being incurred, must be enforced. Whatever may be the exact meaning of the expression “penal” (Gans v. Switzer, 9 Mont., at page 413), here the fact is that the person in whose favor the penalty is given by the statute is the person who willfully deceived defendant Rust, and deliberately induced him to place himself in a position where the plaintiff hoped to be able to enforce the penalty. [331] However true it may be that the penalty was incurred, there is no reason for setting aside the well-recognized doctrine of estoppel in such a clear and simple case as this. The plaintiff cannot take advantage of its own wrong, deception and fraud. This court will not listen to such a proposition for a moment. It is shocking to law and to morals. The judgment is affirmed. Remittitur forthwith. Affirmed. Pemberton, C. J., and Hunt, J., concur.