Boring v. Ott

The following opinion was filed January 26, 1909:

Kerwin, J.

1. Counsel for appellant seasonably objected to any evidence under the complaint for the reason that it did not state facts sufficient to constitute a cause of action. The court overruled the objection, and this ruling is assigned as error. The basic ground upon which equity is invoked to restrain execution of the judgment is the alleged fraud and perjury in presenting and maintaining the claim against the estate of Pool when no such claim existed, because the original agreement between Pool and Ott had been canceled and rescinded and the appellant continued in the employ of Pool under a contract of service only. The ground upon which the plaintiff’s complaint can be sustained, if at all, is based upon the allegations of perjury in verifying the claim and sustaining it by committing perjury, diligence on the part of plaintiff on former trial, and failure to discover such fraud and perjury in time to be available in the former action. The claim was presented in the county court, disallowed, case appealed to the circuit court, general denial, statute of limitation and payment pleaded, there disallowed, and on appeal to this court reversed, and judgment ordered for Ott. After reciting the facts leading up to tbe reversal by this court in Ott v. Boring, 131 Wis. 472, 110 N. W. 824, 111 N. W. 833, the complaint in the present action sets np facts showing rescission and cancellation of the old contract, promise of surrender by Ott, making of the new agreement by which Ott agreed to continue in the employ of Pool on a salary, the alleged false claim that the old contract had been lost, concealment of it until after Pool’s death, and intent to defraud the estate of Pool by the false claim that the contract was still in force, wilfully testifying thereto, and thus obtaining the judgment by fraud and perjury, which this action is brought to enjoin.

It is strenuously insisted by appellant under this head that the former judgment is conclusive upon the parties to this action and cannot be questioned in the instant case-; while on the part of the respondent it is insisted that the alleged rescission, cancellation, and perjury committed by plaintiff not having been discovered until after judgment in the former action, such question was not in fact litigated and therefore cannot be held conclusive upon respondent. It is said that release and rescission are new matters and must be pleaded, and, not having been pleaded or known to respondent at the time of the former trial, he is not precluded by the' judgment upon such issues. Of course the doctrine is too well settled in this court to require citation of authority that the parties to an action are not only concluded by the judgment on all matters litigated, but all that might have been litigated between them upon the subject matter of the suit, so that all defenses to the cause of action sued upon, whether set up or not, are concluded by the judgment in the same action. This general rule does not seem to be denied by respondent’s counsel, but they contend that where a new defense arises not known to the parties at the time of former trial and which with reasonable diligence could not have been discovered, and which renders it inequitable and unconscionable to permit the other party to retain the fruits of a victory acquired by deceit and fraud, tbe general rule does not apply, but that equity will take bold for tbe purpose of granting relief. This subject was very fully considered in Crowns v. Forest L. Co. 102 Wis. 97, 78 N. W. 433, and it was there-beld that tbe bill of review under tbe old practice no longer obtains under tbe Code, but tbat tbe Code provides a complete system in itself, and tbat relief, therefore, from a judgment under our practice must be obtained upon tbe grounds^ and in tbe manner prescribed by the Code. Sec. 2879, Stats. (1898), limits tbe time within which a motion for a new trial may be made on tbe ground of newly-discovered evidence to-one year from tbe date of verdict or finding. This statute, however, does not deprive a defrauded party of remedy in a proper case. In Stowell v. Eldred, 26 Wis. 504, 507, 508, this court said:

“Tbe rule seems to be quite well settled tbat-chancery will' relieve against a judgment at law on the ground of its being contrary to equity, when tbe defendant in tbe judgment was ignorant of tbe fact in question pending the suit, or it could not have been received as a defense, or when be was prevented from availing himself of tbe defense by fraud or accident, or-tbe acts of tbe opposite party unmixed with negligence or fault on bis part.”

The foregoing language is approved in Crowns v. Forest L. Co., supra, and other decisions of this court. In referring to this subject in Nye v. Sochor, 92 Wis. 40, 65 N. W. 854, this court bolds that relief in equity may be had against a judgment obtained by fraud, mistake, accident, or surprise-unmixed with laches or negligence on tbe part of tbe suitor asking relief, and tbat perjury in obtaining a judgment is sufficient ground for equitable relief where tbe party apjaly-ing for relief is without fault. When a proper case is made, an action may be maintained to restrain the enforcement of tbe judgment. In such cases tbe action is not for a new trial or to review tbe judgment, but is. directed against tbe party claiming under the judgment to prevent tbe execution of it. So in tbe present action tbe judgment is conclusive upon tbe parties to it and upon tbe subject matter litigated, and relief' can be bad only in a direct action upon facts showing a right, to enjoin its execution. Crowns v. Forest L. Co. 102 Wis. 97, 78 N. W. 433; Balch v. Beach, 119 Wis. 77, 95 N. W. 132.

Tbe general rule laid down in -the leading case of U. S. v. Throckmorton, 98 U. S. 61, applicable to this class of actions-is perhaps not broad enough to' cover all cases which might, arise where a court of equity would enjoin the enforcement, of a judgment. In fact it would be difficult to formulate any general rule sufficiently comprehensive and accurate to fit all cases. The Throckmorton Case probably comes as near to-stating a general rule applicable to cases of the class under consideration as any in the books. In that case it is said:

“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.”

This court approved the Throckmorton rule in the case of Uecker v. Thiedt, 133 Wis. 148, 113 N. W. 447, and others, but it was not its intention to exclude all cases not corning-within the Throckmorton rule. To do so would be in conflict with other decisions of this court later considered. Even the Throckmorton Case does not assume to go farther than to-síate a general rule, and, after stating several instances where-equity will take jurisdiction, continues:

“There is an admitted exception to this general rule in-cases where, by reason of something done by the successful party to a suit, there was in fact no adversary trial or decision of the issue in the case. Where the unsuccessful party has been prevented from exhibiting fully his case by fraud or deception practiced on him by his opponent, as by keeping-him away from court, a false promise of a compromise, or where the defendant never had knowledge of the suit, being-kept in ignorance by tbe acts of the plaintiff, or where an attorney fraudulently or without authority assumes to represent a party and connives at his defeat, or where the attorney regularly employed corruptly sells out his client’s interest to the other side, — these, and similar cases which show that there has never been a real contest in the trial or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul the former judgment or decree and open the case for a new and a fair hearing.”

Just what fraud “extrinsic or collateral” is sufficient to warrant a court to act is not very clearly defined under the authorities, and, as before observed, necessarily so from the difficulty of prescribing a rule.

It will be seen that the United States supreme court in a later case went a step farther than it did in the Throckmorton Case and extended the rule to any case where from the facts it appeared to be against conscience to permit the exe'cution of a judgment. Marshall v. Holmes, 141 U. S. 589, 12 Sup. Ct. 62. In the above case the fraud consisted in the use of a forged letter in obtaining a judgment, which was not discovered within time to be available by a new trial, and but for the use of such letter the judgment would not have been •secured. The court said:

“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” — citing several authorities, including the Throckmor-ton Case.

In Pico v. Cohn, 91 Cal. 129, 25 Pac. 970, 27 Pac. 537, relied upon by appellant, where the Throckmorton rule is approved, the court lays down the doctrine that in some cases a former judgment may be annulled for fraud; and it will be seen by an examination of the authorities that it is not easy to determine what frauds may be regarded extrinsic or collateral to the matter tried by the first court. The reason of the rule seems to be based upon the idea that there must be au end to litigation, and therefore §n issue which has been tried and passed upon by the first court should not be retried in an action to enjoin the judgment; otherwise, litigation would be interminable. While the issue might have been litigated and in a sense was, because the continued existence of the contract was the basis, at least" in part, of the recovery, still the fact that there was no adversary trial upon the issue of rescission which would have been a defense if established in favor of Boring is an element which should appeal to the conscience of the chancellor in determining the right to equitable relief. In the Throckmorton Case it is said the fraud must be “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.” It is not easy to see, however, why an issue determined in favor of the prevailing party solely by perjury does not amount to such a fraud, where such perjury was unknown to the defeated party and could not by the exercise of reasonable diligence have been discovered. It would seem that a judgment thus obtained is as unconscionable as one secured against a party by keeping him away from court or by other corrupt means and thereby preventing a fair trial upon the merits. Marshall v. Holmes, 141 U. S. 589, 12 Sup. Ct. 62; Tucker v. Whittlesey, 74 Wis. 74, 41 N. W. 535, 42 N. W. 101; Crowns v. Forest L. Co. 102 Wis. 97, 78 N. W. 433; Zinc C. Co. v. First Nat. Bank, 103 Wis. 125, 79 N. W. 229; Johnson v. Huber, 106 Wis. 282, 82 N. W. 137; Balch v. Beach, 119 Wis. 77, 95 N. W. 132; Stowell v. Eldred, 26 Wis. 504.

While in Crowns v. Forest L. Co., supra, the question was one largely of procedure, the court in no uncertain terms stated that the new procedure under the Code does not “attempt to divest the courts of the jurisdiction they formerly possessed to protect the rights of parties when fraud had intervened/’ but that tbe remedy must be pursued in tbe 'manner prescribed by tbe Code. Tbe court said:

“Courts of equity under tbe old regime bad the power of ■control over tbe parties, ■ and would prevent them from asserting rights based upon judgments tainted by fraud or covin. That power exists today, but it must be invoiced and enforced in harmony with the true spirit and in accordance with the positive requirements of tbe new order. . . . But suppose, as in this case, the facts upon which the fraudulent character of the transactions resulting in the judgment sought to be attacked depends were not discovered until tbe expiration of the year, is the party without remedy ? While it may rightly be said that the ground upon which defendants seek relief is newly-discovered evidence, yet it is evidence showing fraud and collusion, concealed by tbe parties to it, and which, it is claimed, has resulted most harmfully to the defendants. This was a favorite subject of relief in equity.”

In Zinc C. Co. v. First Nat. Bank, supra, this court, speaking upon the subject respecting an action to enjoin a judgment, said:

“In such independent action the complaint may be spoken of as a bill in the nature of a bill of review, in the sense that it is the pleading on tbe part of a plaintiff to accomplish, in effect, the purpose of the former bill of review. Strictly speaking, bills of review and bills in tbe nature of bills of review, as such pleadings were known to the old chancery practice, are not known to the Code.”

And, after discussing the limitations upon motions to open judgments, the opinion proceeds:

“Neither does the limitation upon proceedings by motion to open a judgment upon some ground going to the light of plaintiff to the relief granted militate at all against jurisdiction in equity to protect a person from a judgment obtained against him by fraud.”

This court again had occasion to consider this subject in Balch v. Beach, supra, and we cannot do better than quote from the opinion:

“A court of equity has jurisdiction to relieve against a judgment upon the ground that it is contrary to equity where there is no other remedy, upon several different grounds, and among them fraud upon the party seeking the relief by the person- who obtained the judgment, such party not being .-guilty of any inexcusable ignorance or negligence in the matter. Stowell v. Eldred, 26 Wis. 504; Barber v. Rukeyser, 39 Wis. 590; Hiles v. Mosher, 44 Wis. 601; Johnson v. Coleman, 23 Wis. 452; Nevil v. Clifford, 55 Wis. 161, 12 N. W. 419; Crowns v. Forest L. Co. 102 Wis. 97, 78 N. W. 433. The jurisdiction of equity is not exercised to disturb a judgment. That can only be done according to methods provided "by the Code. But it acts directly upon the party who is in a position to and might, if not restrained of his liberty, enforce the judgment, tying his hands so as to prevent him from doing so, thus leaving the judgment good in form but valueless and harmless in fact. Crowns v. Forest L. Co., supra; Zinc C. Co. v. First Nat. Bank, 103 Wis. 135, 137, 79 N. W. 229; Johnson v. Huber, 106 Wis. 282, 82 N. W. 137; Ludington v. Patton, 111 Wis. 208, 86 N. W. 571. . . . Above all and over all is the supreme principle to which the vigilant, clean-handed, but wronged, party- may resort when all legal 'remedies fail, and even precedents for an equitable remedy also, fitting the situation with exactness as to facts, — that equity suffers no wrong to go without a remedy, the wrong Toeing of sufficient gravity to be appreciated by the conscience of the chancellor, and application being made to its jurisdiction seasonably and with clean hands. Its power and mastery of invention and the flexibility of its arm enable it to fit an infinite variety of situations successfully where otherwise wrongs would go unrighted. Pomeroy, Eq. Jur. 109. Its administration is guarded and guided by precedents, which, by judicial policy, fence in its operations more or less closely according to subjects; but in its nature it is expansive, and so may break away ex tiecessitate and set a new mark to meet a new situation, and does not hesitate to do so- when otherwise just rights would fail of vindication. Land, L. & L. Co. v. McIntyre, 100 Wis. 258, 75 N. W. 964.”

The court in Stowell v. Eldred, 26 Wis. 504, held that equity will restrain the execution of a judgment obtained by perjury, and the rule there laid down has never been departed from, but repeatedly approved in subsequent cases by this court. Balch v. Beach, 119 Wis. 77, 95 N. W. 132; Crowns v. Forest L. Co. 102 Wis. 97, 78 N. W. 433; Barber v. Rukeyser, 39 Wis. 590; Hiles v. Mosher, 44 Wis. 601; Nye v. Sochor, 92 Wis. 40, 65 N. W. 854; Jilsun v. Stebbins, 41 Wis. 235; Tucker v. Whittlesey, 74 Wis. 74, 41 N. W. 535, 42 N. W. 101.

It is insisted by counsel that the late case of Uecker v. Thiedt, 133 Wis. 148, 113 N. W. 447, is in conflict with the Stowell Case. We do not so understand it. In the Uecker Case it appears that there was no fraud.which induced the-rendition of the judgment, and the court so held. Moreover, it is said in the opinion that there was nothing in the case-showing that the judgment attacked was inequitable or unfair. Nor is anything said in the case tending in any way to discredit the Stowell Oase or other cases in this court. As-we have seen, the Stowell Case is well supported by subsequent decisions of this court and is not wholly without support in other jurisdictions, as will be seen by an examination of the following cases: Maddox v. Apperson, 14 Lea (82 Tenn.) 596; Peagram v. King, 2 Hawks, 295; Moore v. Gulley, 144 N. C. 81, 56 S. E. 681, 10 L. R. A. n. s. 242, where it is held there must be a conviction for perjury; Nelson v. First Nat. Bank, 70 Fed. 526; Galena & S. W. R. Co. v. Ennor, 116 Ill. 55, 4 N. E. 762; Moore v. Parker, 25 Iowa, 355; Glover v. Hedges, 1 N. J. Eq. 113; Jewett v. Dringer, 31 N. J. Eq. 586. It is true there is much conflict in the-authorities upon this subject, but we see no reason for departing from the rule heretofore laid down and followed by this court. We believe it is in harmony with the general rules of equity jurisprudence and best calculated to promote-the doctrine so often enunciated by this and other courts, “that equity suffers no wrong to go without a remedy, the wrong being of sufficient gravity to be appreciated by the conscience of the chancellor, and application being made to its jurisdiction seasonably and with clean hands.”

On the allegations of the complaint we think it showed a-case in equity to enjoin the judgment on the ground that it" was obtained solely upon the fraud and perjured evidence of defendant, and that plaintiff could not with due diligence have discovered the fraud or perjury in time to be available in the first action. Perhaps no court has gone farther than this in upholding the doctrine that equity allows no wrong to go without a remedy, as evidenced by the language heretofore quoted from the Balch Case. That language is a vigorous statement of the doctrine, founded upon sound principles and policy. We believe that no new mark need be set in the present case in holding that the allegations of the complaint are sufficient to state a case for relief in equity. If no case is made by the complaint, it would seem that the language quoted from Balch v. Beach, 119 Wis. 77, 95 N. W. 132, rests in a fiction not capable of practical application. We therefore conclude that the complaint stated a cause of action, and no error was committed in overruling the objection to evidence under it.

2. It is further assigned as error that the findings are not supported by the evidence. It is established by all the authorities that a very high degree of proof in such cases is required, many cases holding that there must be a conviction for perjury before equity will interfere, while others hold that it must be established beyond reasonable doubt either by admission, documentary evidence, or by such other proof as to leave no reasonable ground for doubt. Moore v. Gulley, 144 N. C. 81, 56 S. E. 681, 10 L. R. A. n. s. 242; Peagram v. King, 2 Hawks, 605; Woodruff v. Johnston, 19 N. Y. Supp. 861; Bloss v. Hull, 27 W. Va. 503; Moore v. Parker, 25 Iowa, 355; Jones v. South's Adm’r, 3 A. K. Marsh. (10 Ky.) 352; Clark v. Hackett, 1 Cliff. 269, Fed. Cas. No. 2,823; Oldham v. Cooper, 5 Del. Ch. 152; Ableman v. Roth, 12 Wis. 81; Stowell v. Eldred, 26 Wis. 504; Barber v. Rukeyser, 39 Wis. 590; Jilsun v. Stebbins, 41 Wis. 235; Tucker v. Whittlesey, 74 Wis. 74, 41 N. W. 535, 42 N. W. 101. The reason of the rule is obvious as laid down in the cases. If a litigant were permitted to restrain the enforcement of a judgment regularly entered after a trial in a court of law upon conflicting or uncertain evidence as to whether perjury was committed in securing the judgment, it is easy to' see what interminable litigation such a rale would invite. Courts of equity, therefore, should not restrain the execution of judgments, except where the ground for interference is established beyond all reasonable controversy by evidence clear, convincing, and satisfactory. Linde v. Gudden, 109 Wis. 326, 85 N. W. 323. All the authorities agree that evidence of the highest dignity is necessary to justify the interference of equity in such cases. In the instant case the evidence was far from coming up to the rule which the authorities from (he earliest decisions down to the present time require. In Tovey v. Young, Finch’s Prec. in Ch. 193, the Lord Keeper said:

“New matter may in some cases be ground for relief; but it must not be what was tried before: nor when it consists in swearing only, will I ever grant a new trial, unless it appears by deed or writing, or that a witness, on whose testimony the verdict was given, were convicted of perjury, or the jury attainted.”

The witness Passage swore to alleged admissions made by Ott nineteen years before the trial to the effect that he had been discharged, while Ott positively denied that he ever made such statements or ever had been discharged. Trae, Powers gave evidence tending slightly to corroborate Passage. The corroborating evidence, however, was of little force when weighed against other circumstances in the case. Passage further testified that Pool said he would take Ott back at a salary of $15 per week, but that Ott would have to surrender the contract previously made, and Ott claimed it had been lost or mislaid. It would have heen easy for Pool, if the agreement had been canceled as Fassage testified, to' have taken some receipt or writing showing the agreement. And it is singular if it bad been canceled tbat be should let it run from 1889 to tbe time of bis death without in any way mailing permanent record of it. Tbe fact tbat tbe contract was never surrendered or any evidence in writing preserved to show it was, is strong corroborating proof tbat it continued as Ott claimed. Ott is corroborated by tbe written contract and bis continuance and interest in the firm, while tbe only evidence on the other side is tbe evidence of Eassage respecting alleged statements made nineteen years before the trial with slight corroboration by Powers. Moreover, does it seem reasonable tbat Ott would walk out without any settlement and taire nothing when be bad a binding contract which bad rim from October, 1887, until at least tbe fall of 1889, when it is claimed be was discharged ? Why should be peaceably submit to cancellation of bis agreement without consideration after the business bad prospered and Pool was able to draw from tbe business $10,000, as it appears be was able to do in 1889 ? Tbe assets in 1889 were $29,000, or about three times the original investment. Upon this state of tbe case it is plain -that there is not sufficient evidence to make out a case for tbe plaintiff by tbat high degree of proof required by tbe authorities. In tbe view we take of tbe case it is unnecessary to consider other questions discussed. It follows tbat tbe judgment of tbe court below must be reversed.

By the Court. — The judgment below is reversed, and tbe action remanded with directions to tbe court below to dismiss the action.