Summary
In Milwaukee v. Firemen Relief Association, 34 Wis.2d 350, 149 N.W.2d 589 (1967), the second case upon which Employers Insurance relies, the court allowed the statute of limitations to bar the Association's claim against the city despite the city's failure to comply with the city's statutory duty to pay to the firefighter's relief fund on or before the first day of March in each year.
Summary of this case from Employers Ins. of Wausau v. SmithOpinion
March 1, 1967. —
April 11, 1967.
APPEAL from a judgment of the circuit court for Milwaukee county: WILLIAM I. O'NEILL, Circuit Judge. Reversed.
For the appellant there were briefs by Quarles, Herriott, Clemons, Teachner Noelke, attorneys, and L. C. Hammond, Jr., and John S. Holbrook, Jr., of counsel, all of Milwaukee, and oral argument by Mr. Holbrook.
For the respondent there was a brief by John J. Fleming, city attorney, and George A. Bowman, Jr., assistant city attorney, and oral argument by Mr. Bowman.
In 1878 the legislature, by ch. 37, Laws of 1878, created the Firemen's Relief Fund to provide money to relieve disabled firemen and the survivors of deceased firemen in the city of Milwaukee; moneys for the fund were to be provided from salary deductions from firemen's paychecks. By means of ch. 176, Laws of 1885, the legislature provided for the transfer of the Firemen's Relief Fund from the city treasury to a separate corporation, which subsequently organized as the Firemen Relief Association, the appellant in this appeal. Sec. 2 of ch. 176, Laws of 1885, provides:
This association is authorized and regulated by sec. 213.10, Stats.
"The city treasurer of the city of Milwaukee shall pay to the treasurer of such corporation for the benefit of the persons entitled to relief from such corporation, on or before the first day of March in each year, one eighth of the amount of all fire insurance rate, now annually paid into the treasury of the city of Milwaukee, under section 6, of chapter 14, of the charter of the city of Milwaukee, being chapter 184, of the laws of 1874, and the various laws amendatory thereof."
During the years 1885 through 1891 the city treasurer apparently paid to the treasurer of the association the amount required by sec. 2 of ch. 176, Laws of 1885. No record is extant which indicates that any payment was made under this law from 1891 to 1957. Whether nonpayment was due to inadvertence, to a misunderstanding of ch. 287 of the Laws of 1891 which created a pension fund for Milwaukee policemen and firemen, to embezzlement by an association officer from 1891 to 1894, or to some other cause, it may now be assumed that no payment was made from 1891 to 1957.
In February of 1958, the association asserted a claim against the city for the amount of money due the association on March 1, 1958, under sec. 2 of ch. 176, Laws of 1885 (which is sec. 32.03 of the Milwaukee city charter). On July 22, 1958, the association made a claim against the city under the law for one eighth of all the fire insurance rate ever paid into the city treasury since the effective date of ch. 176, Laws of 1885. In August of 1958, the city responded to these claims by paying the association an amount equal to one eighth of the fire insurance rate paid into the city treasury during 1957. The city has continued to pay a similar amount for the years since 1957.
The amount paid to the city is two percent of the total amount of fire insurance premiums each year on property located in the city. See sec. 200.17, Stats.
On January 13, 1959, the city began a declaratory judgment action under sec. 269.56, Stats. by service of a summons and complaint upon one Harry Tischer, whom the parties now agree held some official position with the association. In the complaint the city prayed to have determined its rights and liabilities under the 1885 law. On February 13, 1959, the association served its answer which prayed for a declaratory judgment determining the city obligated to pay the association one eighth of all the fire insurance rate annually paid to the city treasury since 1885. Upon stipulated facts and upon stipulation of counsel, the court first tried the issue of whether the 1885 law had been expressly or impliedly repealed by any of a number of subsequent legislative acts not pertinent to the instant appeal. The court rendered its decision on December 29, 1960, and on August 23, 1961, judgment was entered whereby the court declared that:
"1. Chapter 176 of the Laws of 1885 has not been repealed, either expressly or by implication.
"2. Since the effective date of Section 2, Chapter 176 of the Laws of 1885, Section 32.03 Milwaukee City Charter, the plaintiff City of Milwaukee is obligated to pay to the defendant, The Firemen Relief Association of the City of Milwaukee, one-eighth of the amount of all fire insurance rate annually paid into the plaintiff's treasury, whether received directly or through the Commissioner of Insurance of the State of Wisconsin."
No appeal was taken from this judgment and it is now final as to the issues it decided.
On August 3, 1964, the association filed and served an order to show cause and a petition for supplemental relief under sec. 269.56 (8), Stats., which demanded an accounting by the city, as trustee or otherwise, for one eighth of the amount of all fire insurance rate annually paid into the city treasury since the effective date of ch. 176, Laws of 1885. The city answered the petition, alleging four defenses: (1) That there was no trust created by the 1885 law; (2) laches; (3) the statute of limitation barred any action on moneys which became due between 1891 and 1958; and (4) failure to comply with the notice requirements of sec. 62.25, Stats. In an opinion dated May 16, 1966, the trial court decided:
(1) The provisions of sec. 62.25, Stats., are inapplicable to the present case;
(2) The circumstances of the case did not give rise to the creation of a trust;
(3) The applicable six-year statute of limitations, sec. 893.19 (4), Stats., was tolled when the association filed its petition for supplemental relief on August 3, 1964, and barred any claims which arose before August 3, 1958;
(4) Payment by the city of the amount due March 1, 1958, did not revive the entire amount due since 1885;
(5) The commencement of the declaratory judgment action in 1959 did not toll the statute of limitations.
From a judgment which dismissed its petition, the association has appealed.
The issues are as follows:
(1) When a cause of action is noticed or raised in the pleadings of a declaratory judgment action, is the statute of limitation tolled by those pleadings?
(2) Did the city's payment of the amount owing March 1, 1958, take all past claims out of the operation of the statute of limitations?
(3) Is the city's obligation under the 1885 law one of trust which takes the association's claims out of the operation of the statute of limitations?
The claim involved herein is based upon an 1885 legislative act which imposes an obligation on the city. Each March 1st the city becomes liable to the association for an amount equal to one eighth of all fire insurance rate paid into the city treasury during the previous year. A new obligation arises each year in a different amount, depending on the amount of fire insurance premium paid.
Sec. 893.19 (4), Stats., provides a six-year limitation upon:
"An action upon a liability created by statute when a different limitation is not prescribed by law."
No different limitation is prescribed by law. The trial court held that this six-year statute of limitations is applicable to this case and that it was tolled when the association filed its petition for supplementary relief in August, 1964. The association contends that, if the statute is applicable, this holding is in error and that the pleadings served in 1959 tolled the statute.
The computation of time for the running and for the tolling of statutes of limitation is governed by sec. 893.48, Stats., which provides:
" Computation of time, basis for. The periods of limitation, unless otherwise specially prescribed by law, must be computed from the time of the accruing of the right to relief by action, special proceedings, defense or otherwise, as the case requires, to the time when the claim to that relief is actually interposed by the party as a plaintiff or defendant in the particular action or special proceeding, except that as to a defense, set-off or counterclaim the time of the commencement of the plaintiff's action shall be deemed the time when the claim for relief as to such defense, set-off or counterclaim is interposed."
For the association, "the time of the accruing of the right to relief by action" is March 1st of each year as to the amount then due and owing from the city. Since the 1885 law contemplates a payment "on or before the first day of March in each year," and since under the stipulated facts the amounts of fire insurance rate paid the city have varied from year to year, surely a new cause of action arises on the first day of March of each year for one eighth of the previous year's fire insurance rate paid the city. Each March 1st the statute begins running as to the cause of action then accruing. The problem presented is whether the time of the pleadings in 1959 will be deemed to be "the time when the claim to that relief is actually interposed by the party as a plaintiff or defendant in the particular action or special proceeding."
The trial court in effect held that not until service of the association's petition for supplemental relief in 1964 was the association's "claim for relief" interposed. However, that petition was predicated upon the 1961 judgment which decided issues raised by the pleadings in early 1959. The prayers for relief in the city's complaint and in the association's answer both ask for the court's determination of the legal effect of the 1885 law. The third alternative prayer in the complaint requests the court's ruling, with reference to the 1885 law: "determining or adjudicating the legal rights or liabilities of plaintiff so as to permit plaintiff to terminate its alleged obligations thereunder."
Although the trial court did not go into the dollars-and-cents liability issue when it decided the repealer issue in 1960, it does not follow that the association's claim was not "interposed" by the pleadings in 1959.
This conclusion is apparent in light of the function and actual operation of the declaratory judgment statute in Wisconsin. This court has recognized that a cause of action for declaratory relief may properly embrace in a single cause of action claims for further consequential relief which might otherwise be regarded as separate causes of action, including equitable relief and damages.
"It is not the role of declaratory judgment to take the place of an action for damages. But in a proper case for declaratory relief, where the court has entered a decree adjudicating the rights of parties and where the granting of relief in the form of damages may be predicated on that determination of rights, the court making the determination should also make that award of damages." F. Rosenberg Elevator Co. v. Goll (1963), 18 Wis.2d 355, 363, 118 N.W.2d 858.
In the instant case we do not have the hint of more than one basis of the claim. All the association's rights, all the city's obligations and all the legal issues have their origin in sec. 2 of ch. 176, Laws of 1885. The fact that the complex repealer issue was separated for trial upon a stipulation of the parties with separate judgment thereon should have no effect on the notice-giving function of the pleadings. To hold otherwise would allow prospective defendants to come into court with declaratory judgment actions and have the statute run in their favor until the opposing party either files for supplementary relief or files a separate action. The result would be a multiplicity of lawsuits arising out of the same transaction — a situation the law should be loathe to encourage.
In this case both the complaint and the answer, even though this is an action for declaratory judgment, interpose the issue of financial liability so as to toll the statute of limitations. Going back six years from the complaint or the answer, the statute of limitations would bar all causes of action arising prior to February, 1953. We are of the opinion that the trial court should have entered judgment for the association in the amount equal to one eighth of the fire insurance rate paid the city for the years 1952, 1953, 1954, 1955, and 1956. (Amounts for subsequent years have been paid.)
The association envisions the city's obligation as one huge continuing debt dating back to 1892 and asserts that the city's voluntary payment of the amount due March 1, 1958, takes the entire obligation out of the statute of frauds under statute sec. 893.46 Payment, effect of, not altered. Even if we were to assume one enormous debt, the association has failed to show how the city's payment of its 1958 obligation in August of 1958 (when the city was on notice of the association claim back to 1892) was an express acknowledgment of the city's intent to renew the entire debt. Our court has recognized the necessity of such express acknowledgment:
"It is well established in this state that in order to renew a debt once barred, there must be an express acknowledgment of the debt with the intention to renew it as a legal obligation. A partial payment, to operate as a new promise and avoid the bar of the statute of limitations, must be made under such circumstances as to warrant a clear inference that the debtor recognized . the debt as an existing liability, and indicated his willingness, or at least an obligation, to pay the balance. . . ." Estate of Hocking (1958), 3 Wis.2d 79, 86, 87 N.W.2d 811.
The very commencement of the declaratory action seems to demonstrate the city's unwillingness or refusal to pay pre-1958 obligations.
The association contends that the 1885 law imposed upon the city a trust obligation which removes this case from the operation of the statute of limitation, and that the trial court erred in holding there is no trust.
The record gives no indication that an express trust was created by the legislature in 1885 nor that a trust is to be implied. Sec. 2 of ch. 176, Laws of 1885, does not create an identifiable, segregated trust corpus, does not designate a "trustee" or a "beneficiary," and does not place any express fiduciary duty upon the city. It merely obliges the city to pay the association an amount of certain measurement each year. No intent to create a trust is expressed.
"An express trust is one which comes into being because a person having the power to create it expresses an intent to have the trust arise and goes through the requisite formalities." Bogert, Law of Trusts (hornbook series, 4th ed. 1963), p. 13, sec. 8.
Lacking expressed intent and formalities, no express trust was created by the 1885 law.
If there is no express trust, then the association must be asserting a constructive trust created by the 1885 law. A constructive trust is not really a trust in the usual sense, but rather the generic name for an aggregate grouping of particular fact situations upon which equity will impose liability to prevent unjust enrichment and unfairness.
"Constructive trusts are created by courts of equity whenever the title to property is found in one who in fairness ought not to be allowed to retain it. . . .
"The wronged party generally has one or more alternative remedies open to him, and must elect between them and a constructive trust. In order to secure the constructive trust he is not required to show the inadequacy of legal remedies, but he must do equity by performing such acts as the court in its discretion decides are necessary in order to do justice to the defendant." Bogert, Law of Trusts (hornbook series, 4th ed. 1963), p. 208, sec. 77.
In this case the association has a remedy at law based upon the statutory obligation. Nevertheless, it may come into equity and assert the 1885 law as the basis of a constructive trust obligation on the part of the city. But if it wishes to enter equity, it can do so only if it wishes to subject itself to all equitable doctrines, including laches. For sixty-five years the association slumbered on its rights. Our court has held that even an express trust is no longer enforceable because of laches where the beneficiary failed to call for an accounting for over twenty-four years. Becker v. First Wisconsin Trust Co. (1957), 274 Wis. 404, 80 N.W.2d 440. Thus laches has long since nullified any constructive trust obligations which the 1885 law may have imposed upon the city.
While we agree with the trial court that no express trust was created and that each year the city became liable for a separate and distinct obligation successively subject to the six-year statute of limitations, we must reverse the judgment because of our opinion that the statute of limitations was tolled by the commencement of the action in 1959. Upon remand the trial court shall, upon the record or upon additional proof if deemed necessary by the trial court, determine the amounts due to the association after February of 1953 and enter judgment accordingly for the association. By the Court. — Judgment reversed and remanded with directions.
Whether interest is to be allowed to the association for amounts due after February, 1953, is not before us. If the issue arises we commend to the court and counsel our opinion in Associated Hospital Service v. Milwaukee (1962), 18 Wis.2d 183, 118 N.W.2d 96.
HANLEY and HANSEN, JJ., took no part.