Lead Opinion
Appellants’ story as related in the complaint, indicates that they have been the victims, to their loss in the sum of $20,000 more or less, of a systematic course of deception, practiced by respondent and his attorneys, of such subtle character as to impose upon the circuit and this court; securing and maintaining an unconscionable judgment.
Whether the complaint sufficiently charges respondent with securing his judgment by fraud, must' be determined by those liberal rules of pleading which have been so many times proclaimed in recent years, and not by the technical rules which the Code makers purposed abolishing.
As has often been said, -in the beginning, particularly in Morse v. Gilman,
In all that has been said in an endeavor to restore and entrench the Code beyond any possible danger of its not being permanently given its intended effect, the language of the court, spoken by DixoN, C. J., in Morse v. Gilman,
“A complaint to be overthrown by a demurrer or objection to evidence, must be wholly insufficient. If in any.portion of it, or to any extent, it presents facts sufficient to constitute*356 a cause of action, or if a good cause of action can be gathered from it, it will stand, however inartificially these facts may be presented, or however defective, uncertain, or redundant may be the mode of their statement. Contrary to the common-law rule, every reasonable intendment and presumption is to be made in favor of the pleading, and it will not be set aside on demurrer unless it bo so fatally defective that, taking all the facts to be admitted, the court' can say they furnish no cause of action whatever.”
That was broadened, if possible, by the illustrations given of its effect'.
It is notable that Morse v. Gilman, supra, so dropped out of sight that it is found cited but once, and that' shortly- after it was decided, on the particular subject matter, until Miller v. Bayer,
A few excerpts from the cases cited will emphasize the foregoing:
“The liberal rule, which to a very great extent promotes the administration of justice, doing away with the otherwise obstructive efficiency of technical unmeritorious and so rin-prejudicial defects, supplies in a pleading all essential matters not expressly stated when from the express statements they may reasonably be supposed to exist and to have been intended by the pleader to be included in such statements. . . . Reasonable doubts respecting the pleader’s purpose as to matters which the adverse party is fairly entitled to have solved to enable him with due consideration to adopt*357 a course of action in^espect thereto, must be presented to tbe court, for the purpose of obtaining enlightenment, by motion to make more definite and certain, not by challenging the pleading for insufficiency.” Milwaukee T. Co. v. Van Valkenburgh, supra.
“The supreme test.to be applied to a pleading as regards mere sufficiency is this: Will it' reasonably admit of a construction which will sustain it, in the light of all facts alleged expressly or by' reasonable inference, such inferable facts being regarded as alleged if their existence is reasonably suggested by the language used, and it' being kept efficiently prominent in applying such test that reasonable doubts are to be resolved in favor of the pleading rather than against it where that can fairly" be done ?” Milwaukee T. Co. v. Van Valkenburgh, supra.
“If the facts stated, expressly and inferentially, upon any reasonable view, entitle respondent to any judicial relief in equity, . : . and regardless of mere indefiniteness of statement, it is sufficient on the challenge for insufficiency. . . . If this plain and valuable rule of the Code were always kept in min'd by members of the profession much useless expenditure of time of courts and counsel, "to the detriment of public and private interest, would be avoided.” Bannen v. Kindling,142 Wis. 613 , 617,126 N. W. 5 .
“Matters of mixed law and fact, the ultimate of which is, in a broad sense, a fact, may be pleaded according to their legal effect. ’. . . Every fact necessary to entitle plaintiff to some judicial relief within the .competency of the court to grant, which can reasonably be inferred from the language used, giving thereto, as a whole, the broadest meaning in favor of the pleading it will reasonably bear, must be considered as stated'just, as effectively as matters expressly and plainly alleged. In- short, every reasonable intendment must be indulged in in favor of the pleading.” Schmidt v. Joint School Dist.146 Wis. 635 , 639,132 N. W. 583 .
Thus it will be seen that the statements often met with in opinions that an allegation that an act was fraudulently done does not tender an issue of fact must be reconciled with the broad principle of the Code, by restricting it so as not to mis
In Crowley v. Hicks,
We must confess that there are expressions in opinions, particularly those of many years ago, tending to show that in charging fraud the specific acts relied upon as a basis for the charge should be definitely, expressly pleaded, but' so far as they indicate an arbitrary universal rule, they must give way to the present state of the law as to liberality in construing pleadings and' the competency to plead matter of mixed law and fact according to the legal effect, — whenever from the nature of the charge, it's context, and the whole pleading, the underlying acts are, fairly or necessarily, in-ferable. That leaves the rule to stand so far as the substantial reason for it goes, — the right of the adverse party to know, reasonably, with what he is charged, and the competency of the court to pronounce the proper conclusion in case of the pleader’s allegations being admitted, — but shorn of the technical requirement of definiteness which can readily be reached by a motion to make more definite and certain, or an examination under the statute to enable the adverse
Facing the foregoing, is there that fatal want of precision in the complaint found by the trial court? True, there is the word “fraudulent” and the word “fraudulently,” used several times but in connection with other language explanatory thereof and giving point' thereto as matter of fact. “Said report and particularly the statement of liabilities of said company to said defendant Kipp/' if understood as or intended to be any account of the acts and accounts of said B. A. Kipp as such trustee, or to determine in any manner the amount of such' purchase price then unpaid, or the amount received by said defendant B. A. Kipp which should be applied and credited thereon, — .“was and is grossly false and fraudulent';” “it fails to take into account and properly credit the greater part of said sum of $20,000-and more received by said defendant B. A. Kipp as aforesaid . . . and was offered in evidence, as plaintiffs are informed and believe, to deceive said referee and defraud said plaintiffs;” bristles, so to speak, with inferences of fact and is aecom-
The lower court dealt with the features of the complaint mentioned without giving effect to the circumstances under which tbe words in question were used. Eor illustration: quoting from tbe circuit judge’s opinion, “Plaintiffs allege that tbe report of tbe referee was false and fraudulent; that tbe defendant fraudulently induced tbe referee to make and file certain .findings; that defendant by his counsel fraudulently procured and caused to be entered a judgment' -and an order, and that the defendant wrongfully and fraudulently
The court below quoted the essentials of such a cause of action as appellants were supposed to have attempted to state from Stowell v. Eldred,
“Chancery will relieve against a judgment at law on the ground of its being contrary to equity, when the defendant in the judgment was ignorant of the fact in question pending the suit', or it could not have been received as a defense, or when he was prevented from availing himself of the defense*364 by fraud or accident, or the acts of the opposite party unmixed with negligence or fault on his part.”
Pointing to that rule the trial court found a fatal defect in the complaint, in that there was an absence of any statement of facts showing the requisite diligence to bring the matter complained of to the attention of the court and to show that they could have discovered the fraud in time to have availed themselves of its existence in the first action. On this branch of the case it seems to have been overlooked that respondent occupied a fiduciary relation to.appellants. They had a right to rely upon his performing his duty prior to and upon the hearing before the referee. He had no right to remain silent and challenge the proof, much less was he justified in placing a delusive statement before the referee and pretending, either expressly or impliedly, that it contained an exhibit of his transactions during the trustee period. When the fiduciary position of respondent is considered and that appellants had used due care to employ attorneys whom they had reasonable ground to suppose were competent to protect their interests, the complaint shows such reasonable excuse for not presenting the matter complained of before the referee that a court of equity should not refuse to open its doors to prevent the success of a wicked scheme to cheat because of neglect at' this point. ■
It was respondent who should have been the moving party as regards the accounting. Appellants had a right to suppose that he would exhibit a true statement of his trustee transactions; that the referee would see that he did it and that appellants’ attorneys would keep an efficient oversight in respect to the matter. It may be that appellants’ attorneys were too unsophisticated in the matter; even that they were negligent, or possibly incapable of coping with the particulars constituting the subtle deception said to have been practiced by respondent; but where a party uses ordinary care in the selection of attorneys to represent him in such
The trial court seems- further to have overlooked the fact that, according to the complaint, confirmation of the referee’s 'report was opposed upon the ground that respondent’s pretended disclosure of his transactions during the trustee period did not' make such disclosure at all; that only a misleading, deceptive statement was made with intent to deceive the referee and that, nevertheless, the report' was confirmed and a re-reference refused because -respondent’s attorney persisted in urging upon the court the deceptive statement as containing a full disclosure of his trustee transactions, whereas his administration in that regard was wholly omitted, thereby keeping from the knowledge of the court.the fact that he had received $20,000, more or less, and converted the same to his own use. The whole history of the case shows that the trial court was wrong in holding that there was delay in discovering the facts in time to make them available in the first case. The trouble was, according to the complaint, that the deception indulged-in before.the referee, was so persisted in, that the court, from first to last, was so imposed upon that appellants, with all the aid their attorneys •afforded, were unable to avoid having the fraud of respondent in suppressing the real facts, prevail. This was not a ease where appellants failed to discover the fraud until after the first' ease was closed to them, but one where it was believed and alleged to exist and there was such industry exercised -to bring the matter efficiently to the attention of the'
So on this branch of the case the decision below was reached under a misconception of the effect of the history of the litigation detailed in the complaint. On the whole, giving the complaint the benefit of all reasonable inferences in appellants’ favor, respondent designedly imposed upon the ¡referee and the court until the first litigation was closed beyond opportunity for relief therein to the impoverishment of appellants and the enrichment of himself to the extent of some $20,000, more or less, received by him during the trustee period, which should have been applied upon the purchase price of the property before the final judgment was rendered; and, in addition, that he later received during the receivership period, succeeding his receivership large sums which should have been applied upon the judgment.
True, the last matter, standing alone, would Áot afford ground for an independent action; not because of any want of power of the court to so entertain the matter, but because the practice having become so firmly settled that relief in such circumstances should be sought in the first action, that it is regarded as jurisdictional error to permit a second action therefor, either in the same or any other court. Jackson M. Co. v. Scott,
■There remains to be considered.the question of whether a court of equity should exercise its jurisdiction in a case of this sort; one where it has once afforded the party complaining ample opportunity for redress and the time has gone by for any relief in the action instituted to that end, and where all the matters in controversy should have been forever set at rest.
There is no written law placing a limit upon the power of equity to remedy and redress wrongs, neither is there any want of power in that regard in the written law. It is the' crowning merit of our system that, so far as power is concerned, it is as limitless as the capacity of man to wrong a fellow man. Courts may well proceed with great care in exercising their supreme authority outside of the field of ordinary judicial activity, but should never doubt or suggest want of power to deal with any situation where otherwise one person would be seriously injured by another in his person or property. The judicial arm of the people stands for its whole sovereign authority in that field, and so, in the very nature of things, must, in the final analysis, be limited only' by the 'boundaries of justice -and be taken as infallible as regards .Wliat is just under all the circumstances of any particular situation. Thus the maxim there is no wrong, above infractions of mere moral obligations, without a judicial remedy, is vindicated, even in a situation where wrong from one viewpoint has prevailed. Sound judicial policy requires that litigation shall have a course to a final determination. The- end sought is peace with justice, and when courts have given, and litigants have had,- the benefit of judicial instru-mentalities throughout such a course, the finality, whether
So in the further consideration of this case we must deal with the question of- jurisdiction of the court to afford relief, but only in the sense of whether, by the mandate of the unwritten law, it should be exercised to grant relief under the circumstances disclosed'. The distinction between that want of power which is substantive, so to speak, — excess of it would be usurpation and the result void regardless of the dignity of the particular tribunal, — and want' of jurisdiction
At an early day in the history of jurisprudence in this country, the court of highest dignity formulated a rule to mark the general limitations beyond which judicial remedies should not be afforded to question-a final judgment after hav--ing passed 'beyond the reach of attention in the action where rendered. Marine Ins. Co. v. Hodgson,
“Any fact which clearly proves it to be against conscience to execute a judgment, and of .which the injured party could not have availed himself in a court of law; or of which he might have availed himself at law, but was prevented by fraud or accident unmixed with any fault or negligence in himself or his agents, will justify an application to a court of chancery.”
In my judgment courts in general have kept pretty well, within the principle so early laid down. It has been expanded somewhat here and there, in applying it to new situations, but the real gist of it, I think, has remained to this day substantially free from infractions. While bowing to the decision of the court in Boring v. Ott,
The sound public policy referred to must, necessarily, be somewhat elastic in order to be adaptable to special circumstances which may often present new conditions. There is the respect which must be given to principle over precedent. So it is said, “There is no vitality in precedents; there is in rules. They are susceptible of expansion along every line necessary to reach new conditions. In all situations and under all circumstances, .Whether new or old, the principles of equity will point the way to justice where legal remedies are infirm. Precedents will be a constant guide, but never a bar. Where a new condition exists, and legal remedies are inadequate or none are afforded at all, the never-failing capacity of equity to adapt itself to all situations will be found equal to the case, extending old principles, if necessary, not adopting new ones, for that purpose.” McGowan v. Paul,
Eecognizing the breadth of the judicial power as indicated, this court in Stowell v. Eldred,
“Chancery will relieve against' a judgment at law on the ground of its being contrary to equity, when the defendant in the judgment was ignorant of the fact in question pending the suit, or it could not have been received as a defense, or when he was prevented from availing himself of the defense by fraud or accident, or the acts of the opposite party unmixed with negligence or fault on his part.”
As a precedent, Stowell v. Eldred justified Boring v. Ott. Evidently the court' did not intend to announce a new principle, — at most only to state, broadly, an old one showing that the case in hand fell within it,'.and that was affirmed in Boring v. Ott. So it must be considered as settled in this state that fraud such as, the commission of perjury in an action resulting in the wrongdoer obtaining a judgment, constitutes a wrong which, if the party aggrieved acts seasonably and was without inexcusable negligence in the'action, equity will remedy. In that the court' declined to follow, strictly, the doctrine of U. S. v. Throckmorton,
“The acts for which a court of equity will, on account of fraud, set aside or annul a judgment or decree between the same parties, rendered by a. court of competent jurisdiction, have relation to frauds, extrinsic or collateral, to the matter tried by the first court, and not to a fraud in the matter on which the decree was rendered.”-
That was approved in Uecker v. Thiedt,
So the vital question to be determined in such a case as this, is not, merely, whether the judgment was secured by fraud, extrinsic, without inexcusable fault of the aggrieved party, but was it secured by fraud without such fault, and are the circumstances so serious that the doors of equity ought not to open to afford relief ?
Thus the early rule is not so closely fenced about by technical lines but that wise administration can enable the court to redress serious wrongs of the nature of that here complained of. Doubtless whether the facts require judicial interference, is largely matter of administration in a field where courts should exert their great power sparingly. In that respect, probably, fraud extrinsic would appeal successfully for such interference where fraud intrinsic would not, but the mere nature of the fraud in that regard would not be an arbitrary test.
Can there be any fair doubt that the facts of this case ap
Here the respondent, as before suggested, owed to appellants the active duty, independently of any litigation, to make a full disclosure of his transactions as trustee. That duty he owed, in a high degree, in the litigation, and also he owed the duty of making such disclosure to the court and to its referee. According to the complaint he not only failed in this respect, preventing thereby appellants from having the benefit thereof in the litigation, but palmed off on all parties a spurious deceptive paper as a disclosure and thus .secured the judgment complained' of. If those facts can be established, they will make a case fairly within the Throckmorton rule and the 'broader rule in Marine Ins. Co. v. Hodgson. Chief Justice Maeshall there guarded the doctrine
Erom the broad lines of the rule, as approved in the latter ease, who can place any precise limitations upon it ? As we have seen, the effort elsewhere to confine it, strictly, to matters “extrinsic” this court has deliberately refused to follow, preferring the liberty to do justice, found within the broad lines of its early declaration. However, there is little doubt but that, if it were followed, it would include the situation in hand because of the particular relations of respondent to appellants. In any event, this court would rather be ^compelled to retrace its steps than to advance in order to hold that the situation here is up against a bar which it either cannot or will not pass in order to afford, appellants an opportunity to obtain redress, if they are able to satisfactorily establish what they claim to be the facts. Obviously, they will find, in the end, this litigation to be useless to them, unless they can establish with more 'than mere reasonable certainty the facts upon which they rely, — prove them with that degree denominated “clear and satisfactory” which should be regarded with considerable emphasis in a case of this sort and up to the very border line, perhaps, of where no reasonable doubt remains.
By the Court. — The order appealed from is reversed, and the cause is remanded for further proceedings according to law.
Concurrence Opinion
(concurring). I concur in tbe decision reversing tbe order' oí tbe circuit court, wbicb order sustained a demurrer to tbe complaint,- and my concurrence rests upon tbe following grounds:
In Kipp v. Laun,