Giblin v. North Wisconsin Lumber Co.

Timlin, J. If we assume as most favorable to tbe appellant that there was evidence tending to show that tbe defendant, through McCormick, purchased these county orders from the plaintiff and agreed to pay $2,500 therefor, there still remain many insuperable legal obstacles to the plaintiff’s recovery. One is that, the county orders so sold having been adjudged in the taxpayers’ suit fraudulent and void, there was a total failure of consideration. 1 Parsons, Cont. (9th ed.) 462, 463, and cases; Rowe v. Blanchard, 18 Wis. 441. Another is that in the sale of such nonnegotiable choses in action there is an implied warranty that the seller has title and that the chose is not spurious, false, or counterfeit. Giffert v. West, 33 Wis. 617; Scott v. Hix, 2 Sneed, 192, 62 Am. Dec. 458, 468, and cases in note; Roehl v. Volckmann, 103 Wis. 484, 79 N. W. 755. The decree in the taxpayers’ suit having been offered in evidence, it was competent evidence not only against the parties actually named in said suit, but also against all the taxpayers and citizens in said county. State ex rel. Wilson v. Rainey, 74 Mo. 229; Clark v. Wolf, 29 Iowa, 197; Sauls v. Freeman, 24 Fla. 209, 4 South. 525; — 266 — Bear v. Board of Co. Comm’rs, 122 N. C. 434, 29 S. E. 719 Scotland Co. v. Hill, 112 U. S. 183, 5 Sup. Ct. 93. Both the plaintiff and defendant in this cause were parties to that taxpayers’ suit brought by Carpenter and another to enjoin payment of the county orders in question. The appellant seeks to avoid the effect of the foregoing by two propositions: First, he contends that in an action brought by a plaintiff against several defendants the judgment or decree, therein is not conclusive upon two or more of said defendants in a subsequent controversy between themselves over the same subject matter; second, that where a judgment or decree is not conclusive it is not evidence at all, — citing to the first proposition 24 Am. & Eng. Ency. of Law (2d ed.) 731, 733, and cases there referred to; and citing to the second proposition Pioneer S. & L. Co. v. Bartsch, 51 Minn. 474, 53 N. W. 764, which declares that the rule is familiar that, “as against any one except the parties and their privies, a judgment is evidence only of the fact of its recovery.” We are reminded that the lumber company, defendant, did not tender the defense of the taxpayers’ action to the plaintiff, and it is asserted that there was no privity between the defendants in that action, the North Wisconsin Lumber Company and William Giblin. Upon these last two propositions we are vinced that no tender of the defense of the taxpayers’ suit to Giblin was necessary; he was himself a defendant therein and controlled his own defense, and had every opportunity to prove the county orders in question valid if he was able so to do, and that in such ease the requirement of tendering the defense of an action to one liable over to a defendant has no application. Giblin was also in privity with the North Wisconsin Lumber Company. He was its vendor. The very action that he has now before the court assumes and is based upon privity by contract But the rule that an adjudication in favor of a plaintiff against two or more defendants is not binding upon such defendants is rather an exception to the rule that all parties to a decree are concluded thereby, than a rule itself. — 267 — This exception relates to matters between codefendants which are not in themselves necessarily involved in the plaintiff’s-contention against each and all the defendants, or matters-which are not the main object and purpose of the plaintifPs--suit. But where the plaintiff makes a claim hostile to each and every defendant in the suit, asserting that an instrument for the payment of money in which each of the defendants claims an interest or has an interest, either as present holder- or as privy to the present holder by -reason of being a transferrer of the present holder, is fraudulent and void, and obtains a decree affirming his claim against, such instrument,,, that instrument must be held fraudulent and void in -any subsequent litigation between the same parties however they are arrayed against one another in such subsequent litigation. In Louis v. Brown Tp. 109 U. S. 162, 3 Sup. Ct. 92, the plaintiff brought an action at law against Brown township on bonds and interest coupons of the defendant township and the defendant filed two pleas of former., adjudication. By the first' of these pleas it was averred that in an action brought by one-Hiram Hippie, the owner of real estate incumbered by mortgage given to secure the payment of these bonds, which action-was' against the trustees of Brown township, Eichard ,B. Hopple and others, and in which Eichard B. Hopple filed across-bill alleging the bonds and mortgage to be valid and praying that said bonds and mortgage might be declared to be-valid and for a decree of foreclosure, it.was adjudged that these bonds were void for want of authority in the trustees - of Brown township to issue the bonds. It was also averred that the plaintiff claimed under Eichard B. Hopple. With reference to the first plea the court said: “But if there had been no cross-bill, the fact that both-Hopple and the trustees were placed as defendants in the suit of Hippie does not impair the conclusive character of the decree in that case as between those parties. The present casé-is precisely analogous to that of Corcoran v. Chesapeake & Ohio C. Co. 94 U. S. 741.” — 268 — It would be a rather extraordinary condition if county orders, municipal bonds overdue, or other nonnegotiable choses in action which have been by proper decree of a court of equity declared fraudulent and void could be dealt in and bought and sold thereafter, and in every case the purchaser would have to prove over again the fraudulent character or invalidity of such choses in action, and could not use the de-cree declaring the paper invalid and fraudulent to establish prima facie such claim. This would make judicial investigation of that proposition interminable, facilitate fraud, and result in many cases that the things in action would be held void in one lawsuit and valid in another, according as evidence was available or unavailable or the fortunes of litigation fluctuated. It may be answered, all this could be obviated by requiring the instruments to be surrendered up and canceled by the original decree. But the complainant in that case is usually satisfied if he obtains an adjudication which protects him or the corporation for which he sues and is not apt to be concerned in the protection of the general public. Where the instruments are negotiable the complainant will usually have this inserted in his decree. Where they are nonnegotiable he is apt to be indifferent. In Simonton, Mun. Bonds, § 119a, it is said that the doctrine of Us pendens has no application to negotiable paper, and the holder of negotiable bonds is not therefore affected by any litigation to which he is not a party, and a decree or judgment in such suit will not bind him; but if he purchase such paper after maturity and after it has been adjudged void, he is bound by the judgment. He also refers to Stewart v. Lansing, 104 U. S. 505, which is worth considering in this respect. Coupon bonds of the town of Lansing in New York were by commissioners executed to a railroad company pursuant to an order of the county judge acting under authority of a statute. Certain taxpayers of the town procured a writ of certiorari to be issued from the supreme court ,to the county judge for a re — 269 — view of this determination, and the supreme court reversed,, and in all things held for naught, the judgment of the county judge appointing commissioners and authorizing the issue of the bonds. Pending this .proceeding, however, the commissioners issued the bonds to the railroad company, and it disposed of them to various persons, among others to Stewart,, the plaintiff. The supreme court said: “As between the railroad company and the town, the judgment of the supreme court reversing and annulling the order of the county judge invalidated the bonds. The judgment of reversal was equivalent between these parties to a-refusal by the county judge to make the original order. The-next inquiry is whether, on the evidence, Stewart occupied in this suit a better position than the town. That‘depends on whether the testimony was 'such as to make it the duty of the court to submit to the jury, under proper instructions, the determination of the question whether he was in a commercial’ sense the bona fide holder of the coupons sued for. ... Here-the actual illegality of the paper was established. It was incumbent, therefore, on the plaintiff to show that he occupied' the position of a bona fide holder before he could recover.” After holding that there was sufficient evidence tending to-show that Stewart was not a bona fide holder, it was ruled that it was not error to direct a verdict in favor of the town. In this case the invalidity of the bonds as against Stewart was proven by the judgment of the supreme court to which Stewart was not a party, it having been ascertained that he was not in a commercial sense the bona fide holder of the-coupons sued on. There is some conflict and uncertainty with reference to the .admissibility of judgments in evidence against persons not parties to the judgment or privy to such parties. And the rule is by no means settled, and by no means without exception, that a judgment is not evidence in any case in which it is not conclusive evidence. It is said that “a record may be used to establish the fact of such judgment and the legal effect thereof, and cannot be collaterally attacked, even by strangers. The rule is stated by Sir James270 ^Stephen as follows: A11 judgments whatever are conclusive proof as against all persons of the existence of that state of things which they actually effect when the existence of the state of things so effected is a fact in issue or is or is deemed to be relevant to the issue.’ So, verdicts' and judgments on questions of a public nature, where evidence of a general reputation would be received, have been admitted,. although the parties were not the same nor in privity, but not as conclusive evidence; and, as will hereafter be shown, judgments in actions in rem, in so far at least as they fix the status of the particular subject matter, may not only be admissible, but may also be conclusive in a proper case, even against strangers to the record.” 2 Elliott, Ev. § 1525, and cases; State ex rel. Atkinson v. McDonald, 108 Wis. 8, 84 N. W. 171. Certain decrees in equity are classified as quasi in rem, and such decrees may be offered in evidence as against any person with respect to the particular property described therein for the purpose of establishing prima facie the status of that property. Arndt v. Griggs, 134 U. S. 316, 10 Sup. Ct. 557; Fry v. Taylor, 1 Head, 594; Liginger v. Field, 78 Wis. 367, 47 N. W. 613. A decree declaring invalid, fraudulent, or spurious municipal obligations which are nonnegotiable but readily assignable is of this latter class. Consequently the decree in the taxpayers’ suit mentioned canceling and perpetually enjoining payment of the county orders in question was binding upon the plaintiff and defendant in this action as determining that said county orders were invalid and worthless, first, because they were both parties to the taxpayers’ suit and the matter of the invalidity and illegality of these county orders was a direct issue in that action between the plaintiff and each defendant therein; second, because they were residents and inhabitants of the county for and in whose behalf the taxpayers’ action was carried on; third, because the plaintiff and defendant were in privity in said action with respect to the invalidity of said county orders ; and fourth, because the decree in such case is quasi in ■rem and establishes prima facie as against all persons the — 271 — status of tlie chose in action canceled up and declared fraudulent and invalid. The appellant next contends that there was an agreement •on the part of the defendant, through McCormick, to take these county orders for better or worse; that is to say, to take them and pay $2,500 therefor, and take its chances on the taxpayers’ action which was expected or threatened. We do not think there is any sufficient evidence to establish prima facie such an agreement on the part of the defendant, hut if we assume that there was sufficient evidence for that purpose, then we would have a case where the chairman of the county board of supervisors and general manager of the defendant corporation, having notice that the taxpayers’ suit to cancel up the county orders in question or to enjoin the collection by the plaintiff, Giblin, of his claim filed with the county board for allowance was threatened, agreed to purchase said claim and pay $2,500 therefor and take his chances on the litigation, which means that he would place himself in an attitude of hostility to the suit brought in behalf of the county by its taxpayers and defeat such suit if possible. Such an agreement, if made by the corporation through the county ^chairman acting for it, would be contra bonos mores and void. In whatever way we look at this case the judgment of the circuit court must be affirmed. By the Gourt. — The judgment of the circuit court is affirmed.