199 Wis. 230 | Wis. | 1929
The following opinion was filed April 30, 1929:
The contract for the construction of the drainage ditch, entered into between the commissioners and the contractor, among other things contained the following provision:
“All work under this contract shall be done to the satisfaction of the engineer employed by the party of the first part, who shall in all cases determine the amount, quality, acceptability, and fitness of the several amounts of work which are to be paid for hereunder, and shall decide all questions which may arise as to the measurements of quantities and the fulfilment of this contract cm the part of the party*234 of the second part, and shall determine all questions respecting the true construction or meaning of the plans and specifications. In case of dispute between the district engineer and the contractor, the decision of the state engineer shall be taken, and his determination and decision thereon shall be final and conclusive.”
It is strenuously argued by counsel for the contestants that this provision of the contract is invalid; that sec. 1379 — 10c of the Statutes contemplates that the court shall at all times have supervisory power over all acts of the commissioners and of all proceedings in the creation, establishment, and construction of the drainage district; that such a contract provision deprives the court of its supervisory power, and attempts to vest in the arbitrator a power which under' the district drainage law must reside in the commissioners and the court; that the authority thus created by the arbitration provision amounts to an invalid delegation of power, in that it substitutes the award of the arbitrator in place of that of the board and of the judicial decision of the court.
The important fundamental issue which is raised in connection with the alleged deprivation of the court of its jurisdiction, under circumstances like those involved in the instant case, is not a new one. It was raised in the case of Fox v. Masons’ F. Acc. Asso. of America, 96 Wis. 390, 71 N. W. 363, in connection with the submission to arbitration of questions arising under an accident insurance policy. It was there held;
"On grounds of public policy, all agreements between parties to submit the whole subject matter of their differences to arbitration, wholly stipulating away the rights of each or either party to resort to the tribunals created by the law of the land for a determination of such differences, are void and have been uniformly so held. (Citing Hamilton v. Liverpool & L. & G. Ins. Co. 136 U. S. 242, 10 Sup. Ct. 945; May, Insurance, § 492; Leach v. Republic F. Ins. Co. 58 N. H. 245.) Agreements to arbitrate special matters, such as, under an insurance policy, the amount of the loss, some*235 thing that does not go to the whole groundwork of the controversy, have been as universally sustained. (Citing Viney v. Bignold, L. R. 20 Q. B. Div. 172; Scott v. Avery, 5 H. L. Cas. 811; Delaware & H. Canal Co. v. Penn. Coal Co. 50 N. Y. 250; Reed v. Washington F. & M. Ins. Co. 138 Mass. 572; Wolff v. Liverpool & L. & G. Ins. Co. 50 N. J. L. 453, 14 Atl. 561; Hall v. Norwalk F. Ins. Co. 57 Conn. 105, 17 Atl. 356.)”
The arbitration clause in the instant case does not submit all matters in controversy to the arbitrators, with the effect of ousting the court of jurisdiction. The quoted contract provision belongs to the second class of cases above referred to, and not to the first. This provision of the contract in form is like innumerable contracts which have come before the court, where a third person, like an architect or an engineer, is appointed, who possesses expert knowledge upon the subject, and who is ordinarily better able to solve the issues involved than the parties directly concerned. The findings of such arbitrators are not absolutely conclusive, but may be impeached for fraud, actual or constructive, by the courts. Keachie v. Starkweather D. Dist. 168 Wis. 298, 170 N. W. 236; Montgomery v. American Cent. Ins. Co. 108 Wis. 146, 84 N. W. 175; Borgnis v. Falk Co. 147 Wis. 327, 133 N. W. 209. In the Keachie Case, supra, it was held by this court: “The effect of a provision of this kind is not doubtful. It is well settled in the law. It is not void because it ousts the court of jurisdiction, as ea.rnestly contended by respondents.”
Counsel for the contestants rely largely upon the following Wisconsin cases: Shipman v. State, 43 Wis. 381, and Lauenstein v. Fond du Lac, 28 Wis. 336. In the Shipman Case, supra, a board of building commissioners was authorized' by ch. 39 of the Laws of 1870 to accept plans and specifications for the construction of a part of the Northern fjospital, and to supervise such construction. The law also provided for the appointment of a building superintendent to act in an
“They [the commissioners] might have rejected the plans submitted and called for others. They were made the jüdges of his [the superintendent’s] plans and of their sufficiency. The commissioners, not the architect, had to determine the plan. . . . They were the judges of the sufficiency of his superintendence, and could have dismissed him at pleasure. . . . But so far as the plans were equally intelligible to the commissioners and the plaintiff, . . . the commissioners assumed responsibility for the plans when they adopted them. And so far as defects of construction in the building were equally open to detection by the commissioners and the plaintiff, on the completion of the building, and so far as these pleadings disclose, the commissioners assumed responsibility for them when they accepted the building.”
It will thus appear that under the express wording of the statute the sole duty of accepting plans and of supervising the construction vested in the commissioners. This duty could not be delegated on defects which were as equally detectable by the commissioners as by the superintendent. In other words, the opinion holds expressly that where the matter involved one of expert knowledge which was possessed by the superintendent but was not within the knowledge of the commissioners, the commissioners could have relied entirely upon the expert. Furthermore, in that case there was an express delegation of power and authority in the commissioners by virtue of the statute, which does not exist in the instant case.
In the Lauenstein Case, supra, the express power to purchase a schoolhouse site was by law vested in the common council and in a board of school commissioners, and it was there held that these two bodies alone could exercise such
Sec. 1379 — 10c, sub. 1, of the Statutes of 1919 provides as follows:
“All proceedings under the drainage district law are equitable in their nature. The court shall at all times have supervision over the commissioners and may require them to report on any matter connected with their duties and after hearing may remove any commissioner from office for neglect of duty, malfeasance in office or other good cause. The court may in any proceeding bring in new parties upon such terms as shall be just with like force and effect as if they were original parties to said proceeding.”
It is argued by.the contestants that all acts and proceedings under the drainage act are subject to the equitable jurisdiction of the court, and that therefore a submission to arbitration in the form provided for by the contract deprives the court of an essential part of its equitable jurisdiction. When drainage proceedings are begun, the landowners are all made parties, and this was done in the instant case. There is no express mandatory provision of the statute which requires notice to be served upon all the landowners in all cases thereafter, with respect to the various acts and proceedings involved in the construction of a drainage ditch.The owners, being vitally interested in the construction of the ditch, may at all times appear in the proceeding and are entitled to be heard. The court, in the exercise of its equitable powers, may direct that special notice be given to them in order to permit them to be heard, and they may be specially impleaded upon the application of the commissioners, or upon their own application, or by the court upon its own initiative; but otherwise the commissioners represent them.
Independent of the statute, the court in the exercise of its equitable jurisdiction has broad discretionary powers to prevent inequitable results and to promote equity, and it may
Subject to certain restrictions, the statute contemplates a written contract. The legislature, however, has not seen fit to include within the statute a prohibition to submit certain disputed matters to arbitration. The commissioners are vested with the usual powers of corporations to sue and to be sued. Therefore, in accordance with the general law as established by the overwhelming authorities both in this state and elsewhere, it is recognized under such circumstances that the commissioners can submit certain disputed matters for determination to an arbitrator or arbitrators; and an examination of contracts entered into by commissioners clearly reveals the fact that such a provision is universally included in drainage district contracts. If the drainage statutes contemplated an order or direction of the court in each of the innumerable acts involved in the construction of a drainage ditch, the performance by the court of its other jurisdictional matters, for the time being, would become prohibitory, and the drainage act itself would become impracticable.
In 2 Ruling Case Law, pp. 357, 358, it is said:
“Corporations have the same power as individuals to submit their controversies to arbitration. ... A municipal corporation, unless restricted by its charter, has the power to submit any controversy to arbitration and the legislative body thereof has implied power to bind the corporation by such a submission. This is said to be a necessary incident to its capacity to prosecute and defend suits at law.”
In the annotations found in 40 A. L. R. 1370 and subsequent pages, numerous authorities will be found recognizing such power as to' cities, counties, towns, school districts, and gMcwi-municipal corporations. As to a city it is there said by the editor:
“It is well established that a city has the power to submit to arbitration any claim asserted by or against it, whether based on contract or tort, in the absence of a statutory prohibition. This power is based on the right to contract and the right to maintain and defend suits.”
In Kane v. Fond du Lac, 40 Wis. 495, it is said:
“That a municipal corporation may, unless restricted by its charter, lawfully submit a disputed claim against it to arbitration, and that the common council of the defendant city had ample power to do so in the present case, we cannot doubt.”
In Brady v. Brooklyn, 1 Barb. 584, it is said: “Where there is a capacity to contract, with a liability to pay, there is generally a power to arbitrate.”
This power is also possessed by an incorporated road district. Gage & Spencer v. Road Improvement Dist. 159 Ark. 642, 252 S. W. 922. Likewise “the overseers of the poor of a county who are made a qii&yi-corporation with power to contract and to sue and to be sued, may submit a claim asserted by them to arbitration.” Chapline v. Overseers of the Poor, 7 Leigh (Va.) 231.
The trial court, having sustained the validity of the arbitration clause heretofore set forth and discussed in this opinion, ordered an additional assessment upon the lands contained in the drainage district, and that out of the pro
The foregoing were the only orders for assessments made by the court prior to the final order from which this appeal is taken. After deducting the sum of $5,300 aforesaid from the total assessment for cost of construction, there remained a balance of $25,329.81. It is therefore argued that inasmuch as the contractor, prior to the application for the additional assessment herein complained of, received the sum of $27,620.93, as appears from the evidence, the additional amount of $4,635.20 brings the excess over the previously confirmed assessment for cost of construction to the amount of $7,926.32. Briefly stated, counsel for the appellant landowners take the position that when' the amount of the assessment for cost of construction has been exhausted, no further liability can be incurred by the district unless there
Sec. 1379 — 30, sub. 1, Stats. 1919, is the section in the district drainage act which provides for additional assessments, and reads:
“If in the first assessment for construction . . . the commissioners shall have reported to the court a smaller sum than is needed to complete the work of construction or if in any year an additional sum is necessary to pay the principal or interest on lawful indebtedness of such district, additional assessments on the lands and corporations benefited, proportioned on the sum of all benefits which have been confirmed by the court and are then in force, shall be made under the order of the court or presiding judge thereof.”
The language of this section is significant. The condition imposed thereby consists merely of the inadequacy of the original fund represented by the assessment for cost of construction. It implies an exhaustion of such fund, the incompleteness of the project, and the necessity for further funds. The statute does not, expressly or impliedly, prohibit further construction by the contractor before an additional assessment is levied; neither is there an intimation contained therein to the effect that no further liability can lawfully be created unless, prior to the continuation of construction, an additional order for assessment be made. If the legislature had such an alleged requisite in mind, the thought could readily have been expressed in plain and unequivocal language; but this it failed to do. It cannot for a moment be assumed that the,contractor, as a prerequisite to his right to compensation under the contract, shall keep minute tab upon the financial condition of the fund, in so far as it concerns a prior assessment for construction, and that he must cease all operations immediately upon the exhaustion of such fund. Ordinarily a project like a drainage ditch must be constructed with all due and convenient speed. The ditch itself must originate with the .owners of the land, and must be deemed a necessary project for the improvement of such owners’
The experience of those interested in this drainage ditch is not unlike that involved in many other enterprises. While the enterprise is in its infancy the participants therein are sanguine, optimistic, and enthusiastic. They can see only the accomplishment of their visionary dreams. Everything moves on smoothly until disaster or total or partial failure is realized, and then, in accordance with the instincts of humanity, those originally interested are ready to desert and scuttle the ship; and not only that, but are willing to cast the blame upon every one else but themselves. But, even though we assume that the statute reasonably warrants a construction that a prior additional assessment for benefits be necessary, the additional expenditures over the original cost of construction were actually incurred, and the landowners and the commissioners not only acquiesced in the same, but will
It is true, as the learned counsel, Mr. Grady, representing himself herein as a landowner, argues, that sec. 1379 — 315, sub. 1, expressly provides that the court may authorize th'e commissioners to borrow money in .advance of an assessment, for preliminary expenses. The establishment of a drainage ditch involves such an expense, and, in fact, the feasibility of such a project could not well be established without the expense of a preliminary survey, etc. It is also true that if it becomes apparent that the cost of construction of the ditch exceeds the assessed benefits, then the whole proceeding is stranded upon the rocks, and those incurring the preliminary expenses are themselves obliged, individually, to shoulder the bill. This assumption of personal liability must necessarily follow under the law, because unless it be first ascertained and reported, and such report confirmed, that the cost of construction is within the assessment foi benefits, the court loses all further jurisdiction in the matter. But' in this case the original assessment for cost of construction was well within the benefits, and .therefore, when these original assessments were confirmed, the court’s jurisdiction was established and the project became one for further execution.
Counsel Grady in his brief relies largely upon the case of Winkelmann v. Moredock & Ivy L. D. Dist. 170 Ill. 37, 48 N. E. 715. He argues that our drainage law has been taken almost bodily from the statutes of the state of Illinois, and that, inasmuch as the Illinois court in the case above cited has construed the statutes of that state in a manner harmonizing with his views, Wisconsin is bound by such construction. But a comparison of the Illinois statute and the Wisconsin statute will reveal the fact that a vital differ
“But, aside from the indefiniteness as to nature and amount thus referred to, the statute seems to provide a particular mode in which alone the district is authorised to incur any indebtedness. Sec. '36 provides that ‘the commissioners may do all acts that may be necessary in and about the surveying, laying, constructing, repairing, altering, enlarging, cleaning, protecting and maintaining any drain, ditch,' levee or other work for which they have been appointed, including all necessary embankments, protections, dams, and side drains, clearing out and removing obstructions from natural or artificial channels or streams within or beyond the limits of the drainage district, procuring or purchasing riparian rights by agreement with the owners thereof;’ and it, at the same time, provides that the commissioners ‘may use any money in their hands arising from assessments for that purpose.’ By sec. 36 the commissioners are thus limited to the use of money in their hands, arising from assessments, for the purpose of accomplishing the objects therein mentioned. . . . These provisions of the act clearly indicate that the commissioners have no power to contract debts over and above the amount of the assessment. According to the allegations of the present petition, the indebtedness for which it is sought to levy the assessment largely exceeds the whole amount.of the original assessment of 1883, and, by consequence, exceeds the amount of the unpaid portion of said former assessment. The commissioners have no power to create the indebtedness in advance, and then levy an assessment for the purpose of meeting it. This is so because the property owners have a right to be heard as to any act of the commissioners materially affecting the character or extent or cost of the improvement. Badger v. Inlet D. Dist. 141 Ill. 540, 31 N. E. 170.”
This decision of the Illinois court has not been overruled by subsequent cases, and we are of the opinion that it demonstrates the inapplicability of this decision to the instant case.
The trial court, after reciting in its findings of fact the essential proceedings which led up to the organization of the drainage district and the confirmation of the report of the
“That many of the owners of land in said district, with the knowledge of all owners of land in said district and of said commissioners, voluntarily paid directly to the First National Bank of Baraboo, for the use and benefit of said petitioner, Ed Schirmer, sums aggregating $11,636.85, pursuant to their subscriptions in writing made prior to October 16, 1920, to induce said Ed Schirmer to enter into said written contract with said commissioners on October 16, 1920, at the lowered rate of 8)4 c per cubic yard as compensation for the first 300,000 cubic yards of material (except solid rock) and 12)4c per cubic yard in excess yardage to be removed by him in the performance of said contract.
“That said sums, aggregating $11,636.85, were received and accepted by said petitioner as payments by said landowners in addition to the assessments, to be levied against their lands and the corporations benefited, for the payment of the indebtedness of said district for construction, repairs, and maintenance of said drainage ditch.”
In its fifth conclusion of law the trial court held:
“That the voluntary contributions made as described in the findings of fact Nos. 8 and 9 are not assessments for costs of construction, nor to be considered as a part thereof in determining the amount of additional assessments that may be levied for construction on the lands and corporations benefited herein, proportioned on the sum of all benefits, which have been confirmed by the court and are since then in force, for the purpose of paying to the contractor, Ed Schirmer, herein, the amount herein determined to be due him as a lawful indebtedness of said district.”
The contestants herein strenuously assert that such voluntary contributions must be considered as a part of the assessments, and that, when so considered, the assessments for benefits have been exceeded, and that therefore the court lost jurisdiction to further proceed in the matter, and that the additional assessment for benefits provided for in the final order cannot stand.
When the original bids were submitted it became apparent that the drain could not be constructed for a sum within the amount of the assessment for benefits. It was therefore apparent to the court and to all parties interested that the project would come to naught unless a modified proper bid could be obtained. The eagerness of the landowners thereupon manifested itself by the ingenious subscription agreement which was executed, under the terms of which it was contemplated to raise a large sum of money to insure the prosecution of the construction. The record clearly discloses that all parties interested were familiar with the law as it appertains to a district drainage ditch, and, whether they were so familiar or not, the presumption would nevertheless obtain. It also clearly appears that it was the opinion of all interested that the amount so paid by private subscription of landowners should not be considered a part of the cost of construction, and therefore the method was adopted which is outlined by the findings above set forth. The bid of the
The question of whether voluntary private subscriptions can be received in the construction of a drainage ditch in order to prevent a collapse of the scheme because the assessments for construction would otherwise exceed the assessment of benefits, has not been decided by this court, and the situation disclosed in the instant case is such that we do not deem it necessary to determine that matter in this opinion. The outstanding and predominant feature, however, in the case consists of an actual construction by the court, which was tacitly acquiesced in by all persons interested, to the effect that the voluntary subscriptions should not be considered and were not considered as a part of the assessment for the cost of construction. The voluntary subscriptions thereupon were paid by the landowners and were received by the contractor, and the work proceeded at a large cost. Under these circumstances, where the very acts of the subscribing landowners and the tacit consent of the balance thereof were the inducing cause of the creation of the indebtedness which resulted in the carrying out of an intently desired project, should the landowners now be heard to say that the scheme was fraudulent or that this final assessment is void because the voluntary subscriptions became a part of the cost of construction? Such a holding would be contrary to every proposition of law applicable to such a situation, and would wipe out one of the greatest instrumentalities in the ad
The principles thus declared in this opinion make it unnecessary for the court to consider the other assignments of error excepting only the one which involves the plea of res adjudicata.
The eleventh finding of fact, in part, is as follows:
“That on April 30, 1923, one John Staudenmeyer, a landowner in said district, appeared in said court as a remonstrant to- the said petition of said commissioners for an assessment to complete the ditch.
“That on June 13, 1923, an order was entered in the said court by Hon. Chester A. Fowler, judge presiding, which is as follows:
“The above entitled matter being before the court; and John Staudenmeyer and others having remonstrated against the granting of the petition; and the court having heard the testimony adduced in support of and in opposition to the petition and having taken a view of the portion of the river where it is proposed to continue excavations and the adjoining lands and having heard the arguments and received the briefs of counsel pro and con :
“Th.e court finds as facts:
“1, That the proposed continued excavation would not*251 extend to mouth of the Baraboo river, as the plans of the district and the contract for excavation provide.
“2. That the commissioners intend and propose not to extend the excavation below the Funk bridge in any event, so that the contract for excavation will in any event be breached.
“3. That the proposed extension of excavation is not desired by any of the abutting owners through whose lands the same would extend.
“4. That the proposed extension of excavation is not desired by any other landowners of the district.
“5. That the proposed extension of excavation will not beneficially affect, to any material or appreciable degree, either the lands through which it would pass or other lands of the district.
“It is therefore ordered and adjudged that the said application is denied and the said petition is dismissed.”
It becomes clear from the foregoing order that the court denied the application for additional assessments upon the sole ground that the completion of the project, owing to unforeseen and natural causes, was not feasible, and that no further assessments for such completion should be made. It is here to be noted that the assessments in the instant case were made in order to meet the expenditures already incurred.
By the Cotirt. — The order of the court appealed from is affirmed.
A motion for a rehearing was denied, with $25 costs, on June 24j 1929.