Glass v. Basin & Bay State Mining Co.

MR. COMMISSIONER CALLAWAY

prepared the following opinion for the court:

The lower court sustained defendant’s motion for a judgment on the pleadings, and plaintiffs appeal.

The determinative question is, does the complaint state a cause of action? It alleges the corporate capacity of the defendant, and states that on or about the 15th day of August, 1895, the plaintiffs, then being the joint owners of 1,425 shares of the capital stock of the defendant, at the instance and request of the defendant deposited with the treasurer of the defendant 1,400 shares of said capital stock, of the par value of $140,000, and of that actual value in money, “to be sold by the defendant, and the proceeds thereof to be used by the defendant in paying its debts and liabilities, as well as its current expenses, in consideration whereof the defendant then and there agreed” that the plaintiff James Glass should hold the offices of vice president, trustee and general manager of the defendant until the mining, concentrating and smelting business of the defendant should be in successful operation, and that the plaintiff Alexander J. Glass should have and hold the offices of trustee and *28 treasurer of the defendant until the business of the corporation should be in successful operation as aforesaid; that there was no other consideration moving the plaintiffs to deposit the said stock with the defendant; that the business of the defendant has never yet been in successful or other operation, but that the defendant, in violation of its agreement, on or about the 20th of October, 1899, ousted and ejected plaintiffs from said offices, and ever since has refused and now refuses to permit the plaintiffs to have, hold or enjoy the same, by reason whereof the consideration whereby the 'defendant secured* the stock “has, through the Avrongful acts of the defendant, Avholly failed;” that the defendant has sold and issued all of the stock to other stockholders, and disposed of the same; that the defendant has Avholly failed and refused, and noAV does fail and refuse, to redeliArer the stock to the plaintiffs, or to pay the plaintiffs the value thereof, although often requested so to do by the plaintiffs. Other allegations in the complaint are immaterial to this inquiry. The plaintiffs pray for the recovery of the posesssion of the stock, or for the sum of $140,000, the value thereof, in case deliA*ery cannot be had, and for costs of suit.

At the outset avo are called upon to determine, if possible, the nature of the action. In attempting to do so we shall bear in mind that, under the Code procedure, distinct forms of action are abolished. The only question is, does the complaint state a cause of action ? It is the substance of the pleading, and not its legal Arerbiage, Avhich must determine the question. Though the Oode has abolished all forms of action, and provides that there shall be but one form of civil action for the enforcement or protection of private rights and the redress or prevention of private wrongs (Oode of Oivil Procedure, Section 460), yet the distinctions betAveen the different causes of action still obtain— the reasons underlying them are still the same — and the plaintiff may not recoA'er beyond the case stated by him in his complaint. (Bixel v. Bixel, 107 Ind. 534 , 8 N. E. 614 , and cases cited.)

*29 From tbe relief prayed for, it would seem that tbe pleader intended this action for one in claim and delivery, ivbicb is an action to recover specific personal chattels, wrongfully taken and detained, or wrongfully detained, with damages for the wrongful detention. (Fredericks v. Tracy, 98 Cal. 658 , 33 Pac. 750 .) The gist of the action is the wrongful detention of the property. (Hynes v. Barnes, 30 Mont. 25 , 75 Pac. 523 .) The value of the property is recoverable only when a delivery of the specific property cannot be had. (Hunt v. Robinson, 11 Cal. 262 ; Riciotto v. Clement, 91 Cal. 105 , 29 Pac. 414 .) In such an action it is necessary to state that the plaintiff has either a general or special ownership in the property, with the right to its immediate possession, at the time of the commencement of the action. (Fredericks v. Tracy, supra; Affierbach v. McGovern, 79 Cal. 269 , 21 Pac. 837 ; Williams v. Ashe, 111 Cal. 180 , 13 Pac. 595 ; Holly v. Heiskell, 112 Cal. 174 , 44 Pac. 466 ; Bank of Woodland v. Duncan, 117 Cal. 412 , 49 Pac. 414 ; Melton v. McDonald, 2 Mo. 45 , 22 Am. Dec. 437 ; Noble v. Epperly, 6 Ind. 414 .) The rule stated in First National Bank v. McAndrews, 7 Mont. 150 , 41 Pac. 763 , is inaccurate, as inspection will show.

The complaint fails to allege these necessary facts. However, it does show affirmatively that, when the action was begun, the defendant had sold and disposed of the stock. This alone would be fatal to the action as one in claim and delivery, for it is essential for the plaintiffs to allege and prove that at the commencement of the action the defendant wrongfully detained the possession of the property from them. (Riciotto v. Clement, supra; Henderson v. Hart, 122 Cal. 332 , 54 Pac. 1110 ; Gardner v. Brown, 22 Nev. 156 , 37 Pac. 210 ; Herzberg v. Sachse, 60 Md. 126 .) “It is the condition and situation of things when the suit is. commenced which furnish the grounds for the action.” (Aber v. Bratton, 60 Mich. 357 , 27 N. W. 564 , and cases cited; Burt v. Burt, 41 Mich. 82 , 1 N. W. 936 .) Whoever has the possession of the property to be replevied, and unlawfully detains it, is the proper person to be sued. (Rose v. *30 Cash, 58 Ind. 278 .) It is clear that, from what the complaint fails to show and does show, it does not state a cause of action in claim and delivery.

Does it state a cause of action in conversion? To recover in such an action, the plaintiffs must show a general or special ownership in the chattels, and a right to their immediate possession, at the time of the wrongful taking by defendant. (Wetzel v. Power, 5 Mont. 214 , 2 Pac. 338 ; Sawyer v. Robertson, 11 Mont. 416 , 28 Pac. 456 ; Reardon v. Patterson, 19 Mont. 231 , 47 Pac. 956 ; Babcock v. Caldwell, 22 Mont. 460 , 56 Pac. 1081 ; Harrington v. Stromberg-Mullins Co., 29 Mont. 157 , 74 Pac. 413 .) The complaint makes no such showing, and it fails to state that the defendant has converted the property. “A conversion is any unauthorized act which deprives a man of his property permanently or for an indefinite time.” (Union S. Y. & T. Co. v. Mallory S. & Z. Co., 157 Ill. 554 , 41 N. E. 888 , 48 Am. St. Rep. 341 .) “Any distinct act of dominion wrongfully exerted over one’s property in denial of his right, or inconsistent with it, is a conversion.” (Oooley on Torts, 428.)

Was the sale and disposal of the stock by the defendant unauthorized or wrongful? The complaint answers the question in the negative. It recites that plaintiffs deposited their stock with defendant to enable the latter to pay its debts and current expenses. The defendant sold and disposed of the stock, and presumably applied the proceeds to the purposes intended when the stock was received from the plaintiffs. No other conclusion can be drawn from the wording of the complaint. And it does not appear but that these acts were done while the plaintiffs were holding the offices mentioned in the contract, and actively assented thereto.

Having determined that the complaint neither states a cause of action in claim and delivery nor in conversion, we will look to it to see whether plaintiffs may recover upon the contract. The plaintiffs concede the contract to be void, but do not indi *31 cate upon what ground, they make such concession. In examining the subject, we find that Section 431 of the Civil Code provides that the directors of a corporation must be elected annually by the stockholders or members. By the contract pleaded, it was agreed that the plaintiffs shoidd be trustees (directors) until the business of the defendant should be in successful operation. Over four years elapsed, and yet it is alleged “that the business of the defendant has never yet been in successful or other operation.” Section 2240 of the Civil Code reads: “That is not lawful which is (1) contrary to an express provision of law; (2) contrary to the policy of express law, though not expressly prohibited; or (3) otherwise contrary to good morals.” It thus appears that this contract is void and unlawful, as being directly contrary to an express provision of law, in so far as it provides for the plaintiffs to succeed themselves as trustees indefinitely; and, in so far as it provides that the plaintiffs shall have a like tpnure of the offices of general manager and treasurer of the corporation, it is within the inhibition of the second and third provisions of Section 2240. Similar contracts have frequently been declared void as against public policy. (West v. Camden, 135 U. S. 507 , 10 Sup. Ct. 838, 34 L. Ed. 254 ; Noel v. Drake, 28 Kan. 265 , 42 Am. Rep. 162 ; Guernsey v. Cook, 120 Mass. 501 ; Noyes v. Marsh, 123 Mass. 286 ; Woodruff v. Wentworth, 133 Mass. 309 ; Forbes v. McDonald, 54 Cal. 98 ; Wilbur v. Stoepel, 82 Mich. 344 , 46 N. W. 724 , 21 Am. St. Rep. 568 .)

In Swanger v. Mayberry, 59 Cal. 91 , the court said: “The general principle is well established that a contract founded on an illegal consideration, or which is made for the purpose of furthering any matter or thing prohibited by statute, or to aid or assist any party therein, is void. This rule applies to every contract which is founded on a transaction malum in se, or which is prohibited by statute, on the ground of public policy. Ladda v. Hawley, 57 Cal. 51 ; Warren v. M. I. Co., 13 Pick. 521 , 25 Am. Dec. 341 ; Mitchell v. Smith, 1 Bin. 118 , 2 Am. *32 Dec. 417 ; Holt v. Green, 73 Pa. 198 , 13 Am. Rep. 737 ; Woods v. Armstrong, 54 Ala. 150 , 25 Am. Rep. 671 .”

In Gardner v. Tatum, 81 Cal. 370 , 22 Pac. 880 , the court quoted the foregoing language from Swanger v. Mayberry , and continued: “This principle is in accord with the express provision of our Civil Code which makes that unlawful which is either contrary to the express provision of law, or ‘contrary to the policy of express law, though not expressly prohibited.’ Civil Code, Section 1667.” (See note to Parsons v. Trask, 66 Am. Dec. 506 .) Section 1667, referred to, is identical with Section 2240, supra. (And see Sections 2150, 2151, 2153, 2162 and 2163, Civil Code.)

The complaint contains no suggestion that the plaintiffs have repudiated the contract, nor any facts from which a repudiation thereof by them may be deduced. On the contrary, they allege that their side of the contract has been fully executed, but that the defendant ousted and ejected them from the offices they held and were to hold by virtue of the contract, and refused and still refuse’s to permit them to hold and enjoy the same. They characterize these acts of defendant as being a violation of the contract and. as wrongful.

The following language from the opinion in Williamson v. C., R. I. P. R. R. Co., 53 Iowa, 126 , 4 N. AM 870, 36 Am. Rep. 206 , is pertinent here: “In this case the plaintiffs have fully performed the contract on their part. On their side the contract has been executed. The action is not brought in disaffirmance of their contract. Upon the contrary, they allege a full performance of the contract upon their part, and a breach of the contract upon the part of the defendant. It is upon this breach that they predicate their right to recover. Their action is upon the contract. * * * AVe feel fully satisfied that for a breach of the contract, as alleged and proven, no damages are recoverable.”

The facts in the case from which we have just quoted were that the plaintiffs procured the conveyance to the defendant of *33 certain lots in the city of Des Moines upon consideration of a promise by defendant that it would build thereon passenger and freight depots, which should be the only ones built or maintained by it in said city. Defendant built and maintained both passenger and freight depots thereon, but, having also built a depot in another part of the city, an action was brought by plaintiffs to recover, as damages, the value of the lots conveyed. It was held that such action was based upon the contract, which was illegal and void as against public policy, and, the parties being in equal fault, the action could not be maintained.

From the facts stated in the complaint before us, the parties, in making and carrying out the contract, which seems to have been fully executed by plaintiffs, and performed by defendant for over four years, were equally at fault. Therefore the maxim that, “as between those in equal fault, the possessor’s case is the better,” applies in all its force. (See Setter v. Elvey, 15 Kan. 157 ; Bagg v. Jerome, 7 Mich. 145 ; Knowlton v. Congress & Empire Spring Co., 57 N. Y. 518 ; Myers v. Meinrath, 101 Mass. 366 , 3 Am. Rep. 368 ; Spalding v. Bank, 12 Ohio, 544; Tyler v. Smith, 18 B. Mon. 793 ; Hill v. Freeman, 73 Ala. 200 , 49 Am. Rep. 48 .)

The general rule is thus stated by Lawson in 9 Cyclopedia of Law and Procedure, commencing on page 546: “No principle of law is better settled than that a party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out, nor can he set up a case in which he must necessarily disclose an illegal purpose as the groundwork of his claim. The rule is expressed in the maxims, ‘Ex dolo malo non oritur actio/ and, ‘In pari delicto potior est conditio defendentis/ The law, in short, will not aid either party to an illegal agreement. It leaves the parties where it finds them. Therefore neither a court of law nor a court of equity will aid the one in enforcing it, or give damages for a breach of it, or set it aside at the suit of the other, or, when the agreement has been executed in whole or in part by the payment of money or the *34 transfer of other property, lend its aid to recover it back.” It is unnecessary to cite authorities in support of this text. “Their name is legion.”

Counsel for plaintiffs says that they, upon a disaffirmance of the illegal contract, may recover the property transferred, as upon an implied promise on the part of the defendant to return or make compensation for it. Whether this position is tenable, we need not decide. It cannot be maintained in this action. The facts stated in the complaint are totally at war with such contention. (Phoenix Bridge Co. v. Keystone Bridge Co., 142 N. Y. 425 , 37 N. E. 562 .) The position .is ingenious, but has no foundation upon the facts alleged. Plaintiffs’ house is built upon the sands.

It follows that the judgment should be affirmed.

Per Curiam. — Eor the reasons given in the foregoing opinion, the judgment is affirmed.