Milwaukee Structural Steel Co. v. Borun

The following opinion was filed October 24, 1916: Marshall, J. Counsel for all parties having announced, on the oral argument, that they would rely on the findings of fact in submitting for decision the question of whether the judgment complained of is right, we have only a very familiar principle of law to deal with, as we view the case. The circuit judge did not expressly state, in the decision, the principle of law which was supposed to rule the case; but [506] it satisfactorily appears that the principle of estoppel in pais was supposed to govern, so far as tbe conclusion was reached that the lien claims should take precedence of any mortgage or other interest in the property of the Boruns or either of them. What circumstances are essential to bind a person by es-toppel in pais, regardless of what would otherwise be his rights, are too well understood to warrant any extended discussion. The rule may be thus stated: If a person, in a business transaction, makes representations or assumes a position for the purpose of inducing another to act in reliance thereon, knowing or having reasonable ground to know that he probably will do so, and such is the result, so that in case of such person being permitted to act contrary to such representations, or to take a position inconsistent with that relied on, damage would result to such other, such person, upon equitable principles, will be barred from having any benefit of such contrary action or inconsistent position to such other’s loss. There is no principle which is more valuable, than that stated, in the administration of justice. This court has said: “It stays the operation of other rules which have not run their course, when to allow them to proceed further would be a greater wrong than to permanently enj'oin them. It is a rule of justice which, in its proper field, has a power of mastery over all other rules. It is a rule by no means to be discredited, but, rather, one entitled to the distinction of being one of the greatest instrumentalities to promote the ends of justice which the equity of the law affords.” Marling v. FitzGerald, 138 Wis. 93, 120 N. W. 388. The situations where that principle has been applied are very numerous. Citations of precedents would not be specially helpful. The real question is: Do the circumstances of this case fall within the principle ? If so, it rules the matter. [507] Tbe general effect of tbe findings of fact is tbat tbe proprietor of tbe property and tbe Boruns, for tbe purpose of inducing tbe lien claimants to furnish labor and material for tbe building, represented tbat tbe Samuel Borun mortgage stood for tbe interest in tbe property wbicb would be devoted to paying tberefor. That seems quite plain. Tbat to otherwise use tbe proceeds of tbe mortgage, or treat tbe mortgage interest as superior to tbe rights of those who bad relied upon such interest being used for their protection, in ease they furnished such labor and material for tbe building, would be a damaging change of position within tbe principle of estoppel in pais, we regard as obvious and therefore will not prolong this opinion to further discuss tbe matter. Tbe judgment, so far as it makes tbe interests in tbe property of tbe Boruns and those claiming under them subordinate to tbe lien claims, only gives judicial effect, for protection of respondents, to tbe representations made and position assumed by tbe Boruns wbicb was tbe inducing cause of tbe lien claimants extending tbe credit to Goulden. Counsel for appellants contend tbat tbe judgment against tbe Boruns, charging them as personally liable for tbe indebtedness to tbe lien claimants, is unwarranted because tbe scope of tbe complaint is confined to tbe subject of enforcing tbe lien claims and settling tbe priority between them and tbe mortgage interests. Tbe scope of tbe complaint is thus limited; but, though tbe action is statutory, it is of an equitable nature. Spruhen v. Stout, 52 Wis. 517, 9 N. W. 277. Therefore all persons having, or claiming to have, interests germane to tbe primary rights involved could properly be made parties, and tbe entirety, including all tbe details, adjudicated, as in an ordinary equitable action. Tbat justified charging all persons in tbe lien action with personal liability, whom tbe facts show became liable with tbe primary debtor for payment of tbe lien claim. Warren Webster & Co. v. Beaumont H. Co. 151 Wis. 1, 138 N. W. 102. [508] In sucb a case as this, the court is not confined to the precise relief asked for in the complaint but may give such further relief as the facts, established by the evidence, properly introduced, require in order to do full justice. It is further contended that, in any event, the facts found do not justify the judgment, holding the mortgagees liable, personally, for the indebtedness to the lién claimants; and with that we are inclined to agree. It is not found that they promised to pay respondents or any other of the claimants for -labor or material furnished in the construction of the building. They simply promised to furnish the necessary money to Goulden and assumed the position that the mortgage interest would be subject to the rights of the persons furnishing such labor and material. That was what they relied on, not any promise by the Boruns to them, directly or indirectly, to become their debtors, in any event. Such is the effect of the findings as we read them. There was no promise to Goulden to pay his indebtedness to the lien claimants, should there be any, within the principle of Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440, and similar cases. There, obviously, was no valid promise, nor a promise at all, by the Boruns to answer for the default of Goulden, as regards paying the indebtedness which he might incur in constructing the building. There was no writing, — nothing to answer the calls of sub. (2), see. 2306, Stats., and no contractual relation between the parties creating the obligation of debtor and creditor. We must conclude that the trial court assumed that the principle of estoppel justified the personal judgment. If so, it went too far. Such principle being grounded in equity, it is limited by the reason of it. That goes no further, under the circumstances of this case, than to justify treatment of the interests of the Boruns in the property as' subsequent to the lien claims. The result of the foregoing is that the judgment appealed from must be reversed, as regards personal liability of the [509] Boruns for tbe indebtedness of Goulden to tbe lien claimants, and otherwise affirmed, tbe costs in tbis court to be justly apportioned accordingly, taking into account tbe fact tbat tbe cause might well have been brought here on tbe record alone. By the Gourt. — Tbe judgment, as to personal liability of David and Samuel Borun, is reversed and it is otherwise affirmed. Costs in tbis court will be taxed in favor of appellants only for tbe clerk’s fees, $25 attorneys’ fees, and $25 for printing. Eschweilee, J., took no part.