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175 Wis. 428

Pauly v. Keebler

Wisconsin Supreme Court

Decided December 13, 1921

Wisconsin Supreme Court · decided 1921-12-13

<p> Mechanics’ liens: Principal contractor as trustee for lien claimants: Validity of statute: Constitutionality: Due process of law: Equal protection of the laws: Imprisonment for debt: Embezzlement: Criminal intent: Who are beneficiaries of trust. </p> <p>1. The first article of the declaration of rights in the state constitution is a substantially equivalent limitation of legislative power to that imposed by the Fourteenth amendment to the federal constitution, and the legislature is bound to accord to all persons the equal protection of the laws and refrain from legislation depriving any one of life, liberty, or the pursuit of happiness.</p> <p>2. Within the constitutional provision requiring due process of law or its equivalent, the law of the land, a statute duly enacted by the legislature is not necessarily the law of the land if it is so arbitrary and capricious as to deprive the citizen of fundamental rights guaranteed by the constitution.</p> <p>3. Statutes do not in all cases deprive citizens of due process of law merely because they are limited to particular classes, since the legislature can make classifications to promote the general welfare if there exists such reasonable ground for the classifications as to show that they are not arbitrary and personal or do not unjustly discriminate between different classes of individuals.</p> <p>4. A statute which applies to all individuals similarly situated does not deny equal protection of the laws, though it is invalid if individuals or corporations are singled out for the imposition of burdens or as beneficiaries.</p> <p>5. Sub. 3, sec. 3315, Stats., which makes it embezzlement for a principal contractor receiving money from a landowner to appropriate it for his own use without paying those persons entitled to a lien on the land, is constitutional, as it benefits every property owner irrespective of the value of his holdings, and under certain circumstances might be a protection to all laborers, subcontractors, and materialmen. The legislature may therefore constitute the moneys so received by the principal creditor a trust fund anc¡ punish its misappropriation as an embezzlement.</p> <p>6. Said sub. 3, sec. 3315, though it does not expressly prescribe that the prohibited act must be with fraudulent intent, implies a wrongful intent by the use of the term “embezzlement,” and a conviction cannot be had thereunder without proof of an intent to defraud, the same as such proof must be made in a prosecution under sec. 4418. (Jones, J., is of the opinion that it is competent for the legislature to create the offense of embezzlement without mention in the act of criminal intent.)</p> <p>7. Said sub. 3, sec. 3315, does not violate sec. 16, art. I, Const., providing that no person shall be imprisoned for debt arising out of or founded on a contract, expressed or implied.</p> <p>8. Statutes are to be upheld by the courts'unless they are unconstitutional beyond any reasonable doubt.</p> <p>9. All legislative powers not withheld or limited by the constitution of the state or the exercise of which is not prohibited by the federal constitution are vested in the legislature, and courts cannot set aside statutes merely because they may be deemed unwise or may work inconvenience or hardship.</p> <p>10.Sub. 3, sec. 3315, is not limited to cases where a claim of lien has been filed, but it does not apply where the right to a lien has been lost.</p> <p>Eschweiler, J., dissents in part.</p>

Relies on Alonzo Bailey v. State of Alabama · Tweeddale v. Tweeddale · Bailey v. State

Good law ✅— No negative treatment on recordhow we know

Reversed · Decided 1921-12-13

How this case has been cited

Cited by 50 later decisions (1 by the Supreme Court) — most recently June 2008 · most notably Wisconsin v. Constantineau (1971), 90 Wis. 2d 823 - Stanhope v. Brown County (1979)

2 federal appellate · 46 state decisions — followed in 13 states

100192119301940195019601970198019902000decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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Eschweiler, J.

¶1I concur in the result reached in this case, namely, the reversal of the order and the discharge of the plaintiff in error. I cannot, however, agree with the *441conclusion expressed in the majority opinion as to the constitutionality of sub. 3, sec. 3315, Stats. First, I think no conviction should in any event be allowed to stand under the statute as now worded, because.it fails to require proof that such alleged misapplication of the funds received by the contractor from the owner is done with an unlawful intent, and the reference in that statute to the embezzlement statute is not sufficient to make this statute complete by such reference or by implication. Second, I think the statute in question attempts to do, indirectly at least if not directly, that which is prohibited by sec. 16, art. I, Const., which provides: “No person shall be imprisoned for debt arising out of or founded on a contract, expressed or implied.”

¶2The obligation of the principal contractor towards the subcontractors and materialmen for services rendered or materials delivered is .a contract obligation of the simplest and plainest kind. A statute, therefore, attempting to provide that the failure of a person for whom services had been rendered or materials delivered to pay for the same should be denominated a felony and punished by imprisonment would be a clear violation of the provision above quoted, or else the constitution in that regard is an idle waste of words.

¶3By express agreement the principal contractor himself or his surety may lawfully undertake with an owner that such contractor and his surety will, for a valuable consideration, pay to said subcontractors or materialmen money to become due them on account of their employment by the contractors, and such subcontractors and materialmen may maintain an action upon such contract although it may have been' entered into without any consideration moving from them, and even without -their knowledge or consent at the time of the making thereof. New York C. J. F. Co. v. Kenosha, 167 Wis. 371, 376, 167 N. W. 451, and cases there cited; Builders L. & S. Co. v. Chicago B. & S. Co. 167 Wis. 167, 169, 166 N. W. 320, being an application to this particular kind of contracts of the general rule so often repeated in this court *442since Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440. Many of the subsequent cases on that rule are cited in Sedgwick v. Blanchard, 164 Wis. 421, 424, 160 N. W. 267. These all recognize the relationship that is here presented between the principal contractor as promisor, the owner as promisee, and the subcontractors or materialmen as beneficiaries as being a contract obligation, nowhere designating it as a trust relationship. The statute now being upheld by the majority punishes a breach of such contract obligation by imprisonment in what seems to me to be á disregard of the letter and the spirit of the constitutional provision.

¶4In Bailey v. Alabama, 219 U. S. 219, 31 Sup. Ct. 45, the United States supreme court declared unconstitutional the so-called peonage law of Alabama, which by the supreme court of that state had been declared constitutional as reported in 161 Ala. 75, 78, 49 South. 886. The federal court said (p. 238) as follows:

“We cannot escape the conclusion that, although the statute in terms is to punish fraud, still its natural and inevitable effect is to expose to conviction for crime those who simply fail or refuse to perform contracts for personal service in liquidation of a debt, and judging its purpose by its effect that it seeks in this way to provide the means of compulsion through which performance of such service may be secured.”

¶5Here as there the real purpose of the statute is to' provide means of forcing payment of a debt by threatened confinement in the penitentiary of those who fail to perform that which is a simple and plain contract obligation.

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