quity, is deriyed from state law, it is, a jortiol'i, the sound rule here. That it is a general principle of equity law that a court of chancery may decree a new trial after the courts of law are barred from so doing, is abundantly established by authority. Hil. N. T. 588, note (a); Hoskins v. Hattenback, lol Iowa, 314; Story, Eq. JUl'. § 81;7; Pletchcr v. Warren, 18 Vt. 45; CiJZ,/cr'v. Langford's Adm'rs, 1 A. Ie. Marsh. 237; Ballance v. LOOliliss, 22 Ill. 82. The order dismissinG the bill must Le'set aside; and it is so ordered.
MorWAN r:. TOWN OFWALD\YICK and others.
(C;j'cuit Court, W. D. lVisconsin,
June 26, 1883.)
Towx8 OF 'YAJ,DWICK AXD Moocow, 'VISCONSIK-LUnILJTY FOR H.ULROAD AID Bmms-DIvrSIOK OF OLD TOWN. As the evidence in this case iiOhows conClusively that the people of both of the present towns of 'VaIdwick and :Moscow, formed by the division of the old town of 'Vahlwick,in Iowl\county, Wisconsin, considered and believed, at the time of the division of the old town of Waldwick, that each town was liable for its just proportion of :he aiel voted to the Mincrnl Point HaiJroad Company, representcd by the bonus of the old town of Waldwick, for aid voted thereto, and the elivisiim was voted on that understanding, and would not have been voted except. for such unllerstanding, and the construction of the order of the supervisors of the original town making the division, anel the liability of ],oth towns for their I espeet iVl' portions of the elebt, have been repeatedly reeogni7ed by the people ami otl1eers of said towns, and acted upon accordingly for a period of 20 years 01' more, although the order of tl,e board of supervisors was somewhut cqllh'iwal, it is Iud that the town of ::IIoscow should be held liahle for thc proportion of said deht 111"n aOSlImed it, althongh there may be douht as to tlw legal effcct of the actioll diviuing the two and .that the town of 'Vald"'lek should pay the Lalan,e.
In Equity. E. Marriner, for complainant. Vilas (6 Bryant, for defendants. BlJNN, J. In the towa of Waldwick, in Iowa county, Wisconsin, issued its bonds to the amount of $10,000, with interest at S per cent., to the Mineral Point Railroad Company, to aid in the construction of said road. These bonds were negotiated, and the larger portion of them came into the hands of thb plaintiff for value. At the time of the issuing of the bonds, the town of Waldwick was composed territorially of two to'ivnships of land running east and west, through both of which the road, as built by the said company, ran. In 1859 the people of the town of Waldwick petitione'd the county board of snpervisors of Iowa county to divide the town on the townShip line running north and south,throngh the middle. A . vote was taken on the question, and it was carried by a large . maJonty,and on the hventy-ninth of NoYember, 1859, the county board of said county,. ha ving ample po,Yer bJ statute to make new towns, to
MORGAN V. TOWN OF WALDWICK.
abolish old ones, and to alter and divide at pleasure, by order and' resolution thereof, divided the town petitioned into two towns, containing each a full township, or six miles square of territory, one town to retain the' old name of W/11dwick and the other to be called Moscow. After the division was made, and the two towns fully 01'-, ganized and in operation, and after they had paid some interest upon the bonds, each paying its equitable proportion according to the assessed valuation of each, the two towns, in December, 1860, held a joint meeting of their supervisors, and resolved, by joint resolution of the two boards, not to pay over to the railroad company any more of the railroad money then collected, or thereafter to be collected, in tho two towns, until further orders. Soon after this action of the towns, suit was brought against the town of Moscow by the present plaintiff, in the United States district court for Wisconsin, upon the coupons and bonds due and unpaid; and after litigation was had, both towns joining together in defending the suit and paying expenses, a judgment was rendered against the defendant town. This was before the state was divided into two judicial districts. After such division a second suit "as brought upon the previous judgment in the western district of Wisconsin, where the two towns are situate, and a judgment again recovered against the town of Waldwick. The present suit in equity is brought against the two towns, setting forth all of the facts, for a decree requiring them to pay each its due and equitable proportion of the previous judgment against Waldwick. And the question presented by the record is whether or not the court can grant the relief sought. The town of Waldwick makes no defense, but puts in an answer conceding its own liability, and claiming a liability on the part of :Moscow to pay its due proportion of the bonds represented by the judgment against Waldwick. The town of Moscow answers, wholly denying any liability on its part. Though a good deal of testimony has been taken, the facts are for the most part undisputed. Those material to the case, and not already noticed, will be stated as we proceed. The order of the county board dividil:g the town is in writing, as follows:
., On motion, the following order relating to the division of the town of 'Valdwick was carried: "The board of supervisors of the county ot Iowa do order and determine as follows: .. (1) That the town of "Taldwick, in said county, be, and the same is hereby, divided according t(l the petition heretofore presented to said board for that purpose, and the election heretofore had on such division, according to the order of the board, on the township or dividing line between range Xo. 4 ea3t and No.5 east of the fourth principal meridian, and that such parts of township No.4 and 5 north, of range No.4 east of the fonrth principal meridian. as lie; within said county, and comprise a part of the present town of "Taldwick. re-, tain the name and i"ecords of the present town of ''laIdwick, and that such" parts of towllship No.4 and 5 north, of range X o. 5 east of the fourllJ prin-
cipal mp,ridian, as lie in said connty, :md in the present town of Wa1f1wick, be known and designated as the town of Moscow froll1 and after the said second Tuesday of April, 1860. t .. (2) That an election be held in the proposed new town of 'Waldwick, as organized and established by this order, at the school-house, on the second '.ruesday in April, A. D. H!60, tor the election of town otncers, to supply vacancies caused by expiration of otlice, and also by said di vision of said town, and as by law required. "(3) That an elpction be held in the proposed new town of Moscow, as organized and established by this onler, at the house of F. McKennan, in said new town of Moscow, on the second Tuesday in April, A. D. 1860, for the election of town ollieers of said new town of l\Ioseow. and that said election be comluctetl in all respects as town meetings are usually conducted, and that the electors present ('hoose inspectors of election, as by law required. .. (4) That the division of said town of Waldwick, aud the organization of the sai,1 new towns of 'Wald wick and MosClow, take effect and be in force from and after the said second Tuesday in April, A. D. 18liO, and not until then."
The plaintiff contends that the effect of this order was to abolish the old town of WaId wick, and to create two new towns, and that, consequently, both towns remained equitably liable for its proper proportion of the previolls indebtedness, within the decision of the supreme court in ll10unt Pleasant v. Beckwith, 100 U. S. 514. The order is sOlllewhut equivocal in its language. There are some parts of it, certainly, when taken alone, would justify this construction. The order speaks of the new town of JValdwic!. as orgallizccl and established by this order; and in the same language it speaks of the new town of Moscow as organized and established by this order. Again, it speaks of the division of said town o( JValdwick, and the organization
of said new towns of JV,rldwick and lUOSCOW.
Tbis language would seem to imply the creation of two new towns by the board of supervisors. If it was the intention thg,t the old corporation of Waldwick should remain, and one new town of Moscow only should be created, there was no great propriety in the use of the ahove language. There aro other provisions, however, in the order, as that provid. ing for an election in the new town of Waldwick for the elet:tion of town officers to supply vacancies caused by expiration of office, and also by
said didsion of said tOlcn, and as by law required, aud for an election in the new town of l1!OSCOW flir the eler,tion of tOlfn o.tficers of said new town of ll1oscow, which might favor a different construction. Upon
the whole, as there was no necessity for creating more than one n.ew town. or for abolishing the old town, was it not for the pracconstruction put upon it by the town, perhaps the most ratIOnal construction of the order would be that the old town organization was not affected by the order, and that there was but one new town created by the board. But I think the practical conplaced upon the order by the towns themselves, and concu:red III for upwards of 20 years, was different. At any rate, the eVlClence shows conclusively that the people of both towns considered
TOWN OF WALVWICK.
and believed, at the time of the division, that each town was liable for its just proportion of the railroad debt, and the division was voted on that understanding, and would not have been voted at all except for that understanding. And this construction of the order of the su pervisors, making the division and the lirtuility of uotll towns for their respective portions of the debt, !las ueen repeatedly recognized by tile people and officers of the said towns for a pel"iod of 20 years or more. And one questIOn is, how much weigllt the court ought to give to tilis construction so lang concurred in by the two towns? If the order was clear and explicit on its face, probably no weigl1t at all OUgllt to ue given to it. But is not the order fairly capable of this construction? The evilence shows thttt at the meeting held for the purpose of voting on the question of a division the question was canvassed by the e:ectors as to the proper division of the railroad debt, and it was tllen and there publicly read out by the town officers having llllnrge of the election that the debt would be di vided between the two tuwllS in proportion to the assessed valuation of each for the year 185lJ; and there is no doubt in my mind, from the evidence, (whatever weight it should have in the case,) that the division was voted with that nnder:itallding by the electors. After the division was made and the towns fully organized, there was a joint meeting of the two towns held for the express purpose of dividing the railroad ana other money in the treasury of the old town of Waldwick, and IlL;o the railroad and other indebtedne"s, rataLly between the two towns. At that meeting there was present the board of supervisors of both towns, and many of the prominent citizens; and after c3.nvassing the subject at len;::th it was agreed in writing by the two boards of supervisors to divide the funds on hand in the treasury, and all debts in favol' of or against the old town of Waldwick, in tile proportion of 37 cents and 1 mill on tile dollar for Moscow to 62 cents and 9 on the dollar for Waldwip,k. Anll the money in the treasury (a good part of it being money that had been raised to pay the interest on these bonds) was divided between the two towns in the proportion so agreed upon. Afterwards the towns raised money and paid interest on the bonds, and compromised and took up Rome of them in the same proportion. And when suit was bronght on the bonds, all through the litigation, they act8d together in defending the actions, and in employing and paying couns"l, and in defraying the other expenses of the litigation, aud in various ways and on dilferent occasions the town of Moscow has recognized its liability to pay its proportion of the railroad debt according to the agreement of their several boards of supervisors and the understanding of the electors when the vote for division was had. As late as 14 years after the bonds were issued, and 10 years after the division of the towns and the agreement to pay the railroad debt in the above proportion, the two towns took up and compromised certain of the bonds, each town v.17,no.4-1V
paying, as they had done beforo, in the proportion agreed upon by the supervisors. Again, five years later, on July 23,1875, at what appears from the records to have been a public town meeting, held by the electors .,f the town of Moscow, it was resolved that an offer to settle the bonds at 60 cents on the dollar be accepted, and that the amount of such bonds as were held by G. W. Cobb against the towns of Waldwick tmd Moscow should be raised by tax the next fall. And, later still, in January, 1878, 18 years after the division of the towns, the records show that at a meeting held on that day for the purpose of taking into consideration the advisability of settling the judgment against the town of Waldwick, said judgment being offered for settlement by Mr. Cobb, it was resolved-First, that the town boards of Waldwick and Moscow be authorized to settle for said indebtedness at 60 cents on the dollar; and, second, that the town boards are authorized to ascertain from Mr. Cobb whether he will accept payment in two annual installments. If not, they were authorized to levy and collect a tax for the settlement in one year. This meeting appears to have been a joint mp-eting of the electors of both towns, held at a school-house near Thomas Grubbs', a point designated as "between the two towns." So that, in various ways, whether legal 01' illegal, by the voluntary action of the people, and by the constituted authorities of the town, Moscow, up to 1878, and perhaps later, had uniformly and always continued to recognize the binding obligation of the agreement to pay its share of the railroad debt, and to carry out the understanding to that effect had upon the division of the old town. And it was some time after this that the town of Uoscow made the discovery that it was never under any legal liability for any portion of this debt from the day when the old town was divided and the new town of Moscow was erected and set off. The contention now is, and it seems to me there is great force in it, that the effect of the order of the county board of supervisors was simply to create a new town out of the territory of the old town of Waldwick, leaving the old corporation intact; that inasmuch as this was done without any provision being made for a division of the property, or the indebtedness of the old town, the legal effect was that the old town took all of the town property and became legally liable for the entire indebtedness; that the subsequent agreement of the boards of supervisors to divide the property and the indebtedness was ultra 'Vi1"eS, and being without authority of law, and not at all within the powers and jurisdiction of the two boards, the agreement was void, and no subsequent ratification of it by the town authorities or the people of Moscow is binding; that the plaintiff must have taken this view when he brought his action at law and took judgment against the old town; that the plaintiff, still holding that juugment, and no suggestion being made in regard to the re-
l\!ORG;AN V. TOWN OF WALDWICK.
, sponsibility of 'the 'town of 'Waldwick, that the plaintiff's remedy at ,law is complete, and that he has no equity as against the defendant Moscow. After a thorougn study of the case I am fully convinced that it is one of considerable embarrassment and difficulty, and I have great · satisfaction in the knowledge that it is one where ,the parties are entitled, by law, to a review of the decision of this court in that higher national tribunal whose decision we are most willingly bound to 'e'spect. It may be proper to say that, realizing as I have the difficulty of the case, I have laid it before the circuit judge, and also before his honor, J usticefhRLAN. of the supreme court, and counseled with -them in regard to it, and while we are not fully agreed upon the grounds of the decision, and the manner of relief against tbe town of Uoscow, we are all agreed that it is just and equitable that that town should pay its proper proportion of this claim. The people and property of that town, before the division, were legally and equitably bound with the other inhabitants and property of tlIe old town for the payment of the railroad debt. 'fhe division was voted upon the understanding that the new town should remain so bound. An · agreement was made by the proper contracting officers of the town, perfectly just and equitable in its character, founded on a valid consideration, to divide the railroad. and other money in the treasury, and to pay each its proportion of the debt in the ratio of taxable property in the two towns. The money in the treasury was actually divided on the strength of that agreement, and the agreement has in various ways been confirmed by the people and officers of the town, , -been ratified and carried out for 20 years, without any doubt or ,suggestion as to the power of the town to make the agreement, or the equitableness of it when made. If it be possible ior the people of a town to adopt and ratify such an agreement, it has been done in this case. The agreemeut has, in part, been executed, and the town of Moscow has had t.he full benefit of it. It has also had the full benefit of the railroad, for the building of which the debt was originally incurred. Gooel faith and common honesty, as bet "'Ieen man and man, now require that the town should carry out the understanding had when it was set off, and when the contract was made, which has been lived up to for over 20 years by both parties. Perhaps the only room to doubt is whether the plaintiff has good standing ground in a court of equity, anel connects himself with, and is in a position to tal,e admntage of, the equities between the two , towns; and whether, in giving a decree for -the plaintiff, the is not invoking a broader equity than is to be found in the book5. But certainly the essential justice of the case will not allow the town · of Moscow at this late day to repudiate its obligation of upward of , 20 years' standing and recognition. I am not sure but the action of the people of the town at the time of the division, and the subsequent action of the two towns ever since,
amount to a contempornneous and practical construction of the order of the board of supervisors dividing the old town; that its effect was to aoolish the old town, and create two new corpurations, which should oe accepted by the court as the proper construction of the order, especially as the order is not elear in its terms, and might bear that r.unstruction. In that case, that part of the old town which formed the new town uf Moscow was never relieved from its obligation to pay this deUt; and the agreement of the two town boards would merely be a ratifiC'atiol1 and recognition of their already existing liability. In any case, there remains the agreement, which seems perfectly rational and equitable, not against public policy, nor immoral, made in accordance with the views and wishes and understanding of the people of both "Owns, founued upon an actual money c0usideration, ratitied and confirmed by the people repe?tedly, "md which has been in process of consummation and execution for ape.iod longer thar the longest statute of lirr-itations known in the books, and the full benefits of the agreement had and 8till retained by the party now seeking to repudiate on the sole ground that it is ultm vi1'es. There was some contention on the argument as to whether the connty board of supervi80rl:l l1ad any power to divide the property or indebtedness of the towns. The legislature had that power, and it conferred on the supervisors the general power to create new towns and t. abolish old ones. But, at the time this division was maue, there was no express power given to divide the property or indebtedness. That power has been conferred by statute since. But whether it existed at the time as a necessary incident to the other powers granted, I do not find it necessary to decide. There is one other circnmstance in the case worthy of mention. The petition of the people for the division of the town was not produced on the b'ial, and cannot be found. Wl1at light it might throw upon the order of the county board cannot be known. 'rhe matter of the petition was referred to a committee, who made a report in writing, which was introduced in evidence, and upon which the oreter is fOllnded. The order follows the language of the report in 1111 essential particulars. Not without conii lerable he'litftt,ion I have decirled npon a decree in fav()l: of the plaintiff that the town of 1\1oscow pay to the plaintiff that portion of the plaintiff's judgment which represents 37 cents and 1 mill on the (lollar of the bonds, and interest to date of decree, with one-half the costs of this snit; and that the defendant the town of Waldwick pay the balance 0f the jnrlgment and interest, with one-half the costs of suit. 1 do not intend that the defendant Moscow shall pay any part of the costs of the former suit, nor the compound interest implied by the judgment rendered 01\ the first against Waldwick; but only its ratable proportion, acand interest cording to the agreement of the town board, of the included in the judgment, the same as though this action was now
BARTLES V. GIBSlJN.
bronght on the bonds instead of the judgment, without any advantage of the plea of the statute of limitatiolls running upon the CoupOllS. And tile proposed amenrlment of the defendant Moscow, to set up the statute of limitatiolls against the coupons iucludtJd in the jUlIgment, is not allowed.
See ",onstiby v. Keeley, 11 FED. TIEr. 578, and note, 580.
Jr., v. GmsoN.
(Circuit Court. W. D. Wisconsin. 1883.)
Upon examination of the evidence in tllis case. it appears flint flIP deed Brught to be sel. aside was illlelHil'das a fraud on lhe creditors 01 the grantor, lind the prayer of the hill I hat it be BO dcclared is granted.
SAME-KNOWLEDGE OF GUANTEg.
Wherc the grantee in a dee,l made to defraud the crerlitors of the grantor knows of the fraud'IIent inlent of the grantor, or has knowledge of facts sulli. cient to excite the suspicions of a prudent man und put him on inquiry, he makes himself a party to the fraud.
Where the consideration exprcs<ed in a deccl of land is farhelow t1le value ot the land as known to grantor allll grantt'e, th.s inmlt·qllacy of price is a strong circumslance in the case tendlUgto show a fraud on eleditolsand a secret trust. 4. LUIITATION IN llANKnUPTCY-fiEV. ST. § 5057. Section 5 57 of the Hcvised :::ltatutes is in etIpet a statute of limitations, but, like any other statute of I,m.lations, must be taken auvantage of either lIy demurrer 01' answer, or it Will Le wa.ved. 5. SAME-PLEA AFTER ANSWEU TO ME HITS. Although a court may in its dist:retJOn allOW the plea of statute of limitations to he put in after an answer on the mel'lts, in an t:quity case, under the circumstances of this case such plea cannot be allowcd at that stage of the case. 6. OF FnAUD-LACITE!>. \Vhere a party injnrld by a fraud remains in ignorance of it, withont any fault or want of negligence or care on Ins part, the bar of the stalute of limitations rloes not begin to run until the fraud is discovered, thongh there are no spedal circumstances or elforts on the part of the parl)' committing tIle fraud to conceal it from the knowkdge of the other part.,·; and as, in this the suit was instituted promptly after the discovery of Ihe fraud, the statute is not a hal' to the action, nor c·an compluinant lie held to have been l!.uilty of laches in not sooner in,tit.uting suit.
DrSCIIAllGE OF HAKKIIUPT-Ihn TO SUIT AGAINST GnANTEE.
The decision and order of a bankruptcy court granting II disrharge of a hank. rupt, on an issue made by a eretlilor of the bankrupt, objecting to sneh discharge,cannot be considererl a bar to a SUbSNjUent suit hysuch creditor, as the purchaser of land sold by the !Issignee of the hankrupt, !Igainst a grantce of such land in a conveyance that is a fraud on the creditors of the bankrupt.
L'iADEQU.\CY OF VoKSJDEllATfON.
The fraudulent grantee of the bankrupt, in such case, cannot set up as a defense that the cred.tor said land for lc<;s than it was really worth.
In Equity. ,