67 Ind. App. 294 | Ind. Ct. App. | 1917
Lead Opinion
Appellees, in 1906, as expert accountants, audited certain official books and records of appellant city, by the procurement of a certain organization of citizens and residents of appellant known as the “Citizens’ Committee.” Appellees
The complaint is lengthy, but its substance is as follows: In August, 1906, certain citizens and residents of Michigan City became convinced, through rumor and current report, that by reason of errors in bookkeeping or otherwise the funds of the city had not been properly or legally accounted for by the then treasurer and his immediate predecessor for the period from September 1, 1898, to December 31, 1905'; that such citizens thereupon determined to institute a careful investigation, and to that end to form an organization of citizens and taxpayers, to employ counsel and engage the services of capable accountants ; that, following out such plan, there was formed in said city an organization known as “the Citizens’ Committee”; that said committee for the purpose of having the financial books and records of the city examined, to the end that the then condition of its funds might be ascertained, secured the assistance of appellees, who are chartered accountants, and who pursuant to an understanding and agreement with the committee, thereupon proceeded to examine such books and records for the period from September 1,1898, to December 31,1905; that in doing such work appellees were first employed by said “citizens’ committee and taxpayers ’ league of said Michigan City 'on behalf of
. The question whether the court erred in sustaining the demurrer to the fifth paragraph of answer depends on the theory of the complaint. Such paragraph impliedly assumes that the services for which a recovery is sought by the complaint are those services which taxpayers under certain circumstances may cause to be performed in safeguarding public funds, and in causing them to be restored if misappropriated, and for the reasonable expense of which such taxpayers under certain circumstances hereinafter outlined may recover compensation from the. municipality or body politic involved. If such is the theory of the complaint, and it may be said that the overruling of the demurrer to it presents the same question as the sustaining of the demurrer to the fifth paragraph of answer, since the former contains no averment that appellees are or were taxpayers of Michigan City. We therefore proceed first to consider the sufficiency of the complaint and incidentally its theory.
We proceed to consider the complaint in the light of the foregoing propositions: It contains no averment that appellees were citizens and taxpayers of Michigan City. They do not sue in such capacity. They seek to recover for services performed as expert accountants under the procurement of a citizens’ committee, and alleged to have resulted in the restoration to the city of a large amount of public funds which but for their action would have been lost to the public. It is not possible to determine from the transcript the exact theory of the complaint as adopted by the trial court, and the parties in the court below, or the specific grounds upon which appellees base their right to maintain this action. There are certain allegations pointing to a theory of implied contract between appellees and the city as the allegations, to the effect that'appellees under employment by the citizens ’ committee, commenced the work of examining the books and records of the city, whereupon, while they were engaged at such work, the mayor and members of the common council from time to time consulted with, advised and assisted appellees, and directed, outlined and amplified such work. However, appellees in this court do not contend that the complaint states a cause of action on the theory of contract, either express or implied, between them and the city. Their contention here is that the complaint
- The appellees cite in support of the ruling of the court Huffmond v. Bence (1891), 128 Ind. 131, 27 N. E. 347, and Clark v. Marlow (1897), 149 Ind. 41, 48 N. E. 359. In the Huffmond case, Eudisill had conveyed his lands to Huffmond under such circumstances as that a lien was reserved to secure his support and maintenance by the grantee. The grantee having refused to perform the obligation, Eudisill procured performance from another, who, after the decease of Eudisill insolvent, brought an action against the grantee to recover the value of his services, and by subrogation to enforce the lien which Eudisill had reserved against the land. The court, in holding that such remedy was open to him, gives force to the fact that Eudisill died insolvent, and that no other method was open by which the claimant might recover for the services performed. The Clark case is of a like nature. It is apparent that there are equities in each of those cases absent here, calling for the application of the principle of subrogation. Under the circumstances here, we discover no reason why, in an action by appellees against their employers, the latter might not, by a proper notice, bind the city by the result of the litigation on the questions of whether appellees under employment performed such service and the value thereof. As the complaint was not construed in the trial court as proceeding on the
The sufficiency of the evidence is also questioned. If, as we hold, the complaint fails to state a cause of action in favor of appellees and against appellant, we would be required to hold also that the evidence is insufficient to sustain the verdict. The evidence is sufficient that the citizens’ committee employed appellees to audit the books and accounts of the city treasurer covering a designated period, and that the committee agreed to pay. appellees $2,000 for the work and that appellees did the work. There was no evidence, however, under the views which we have expressed, establishing appellees’ right to be subrogated to any claim which such committee might have against the city. For this reason alone, we are required to hold that the evidence is not sufficient to sustain the verdict. It is not necessary that we determine whether the evidence discloses facts upon which such taxpayers might have a claim against the city on account of the expense of conducting such investigation, including the reasonable value of appellee’s services. There is no doubt that such taxpayers demanded of appellant through its mayor and common council that such books be audited. It is clear that two successive treasurers were found to be short in their accounts, and that the shortage was made good. It is far from clear, however, that the city through its proper officials refused to cause such audit to be made, or that any work done by appellees
For errors indicated, the judgment must be reversed. The judgment is reversed, with instructions to sustain the demurrer to the complaint, with permission to amend if desired.
Rehearing
On Petition for Rehearing.
It is not held by the original opinion that the insolvency of appellees’ employers is essential in order that the former may appeal to the equitable doctrine of subrogation. The absence of an allegation of insolvency is mentioned merely by way of illustration in calling attention to the fact that the complaint reveals no reason why it is necessary to invoke that doctrine, in order that appellees may be protected, and that their rights may be fully en
In the original opinion we called attention to the fact that the members' of the citizens’ committee were not parties to the proceeding as indicating somewhat that subrogation is not the theory of the complaint. We should not, however, be understood as holding that under all circumstances the person to whose rights another seeks to be subrogated is a necessary party in a proceeding to that end. In 37 Cyc, at page 388, it is said that the right of subrogation, being equitable in its nature, cannot be enforced in proceedings to which those whose equities are affected are not parties, and in 20 Ency. PI. and Pr., page 997, that as a general rule a court of equity will not make an order of subrogation without having before it all the parties that may be affected by the operation of such order. For illustrative and somewhat conflicting cases, see the following: Bond v. Montgomery (1892), 56 Ark. 563, 20 S. W. 525, 35 Am. St. 125; Wilkins v. Gibson (1901), 113 Gra. 31, 38 S. E. 374, 84 Am. St. 206; Aultman v. Bishop, supra; Hill
In each of the following there was an order of subrogation to a discharged'claim, the former claimant not being a party to the proceeding: Spaulding v. Harvey (1891), 129 Ind. 106, 28 N. E. 323, 13 L. R. A. 619, 28 Am. St. 176; White River School Tp. v. Dorrell (1900), 26 Ind. App. 538, 59 N. E. 867; Neptune v. Tyler (1895), 15 Ind. App. 132, 41 N. E. 965.
Petition for rehearing overruled.
Note. — Reported in 116 N. E. 434,119 N. E. 154.