#### Town of Stinnett, Appellant, vs. Noggle, Respondent.

*February 20*

March *12, 1912.*

*Towns: Treasurer: Default in turning over funds to successor: Bight of action: Demand: Pleading: Sufficiency: Counterclaim: When must exist at commencement of action.*

1. Under subd. 6, sec. 836, Stats. (1898), and sec. 819, Stats. (Laws of 1907, ch. 55), a town treasurer is not in default, and the town board has no right to bring an action against him, by reason of his not turning over funds of the town to his successor, until after a demand has been made therefor.

2. In an action by a town against its former treasurer a complaint alleging that defendant had unlawfully retained and converted to his own use moneys belonging to the town and had refused to turn over the same to plaintiff, is *held*sufficient to show that there had been a demand.

3. An allegation in such complaint that defendant had acted as treasurer until a certain date, “when his successor was appointed and qualified, and one T. was the said person so appointed,” is *held*sufficiently to allege that a successor to defendant as treasurer had been appointed and had qualified.

4. In an action by a town against its former treasurer for moneys alleged to be withheld by him, a counterclaim to the effect that defendant had paid out on behalf of the town a sum in excess of the total amount received by him,, states a cause of action arising out of the transaction set forth in the complaint as the foundation of plaintiff’s claim and is connected with the subject of the action, within subd. 1, sec. 2656, Stats. (1898).

5. Whether the cause of action pleaded as a counterclaim under subd. 1, sec. 2656, Stats. (1898), must have existed at the time of the commencement of the action, not determined. *Orton v. Noonan,*29 Wis. 541, questioned.

6. Where at the time of the commencement of an action by a town against a former town treasurer the plaintiff was in fact indebted to the defendant, such indebtedness, if in other respects pleadable as a counterclaim under subd. 1, sec. 2656, Stats. (1898), may be so pleaded notwithstanding the provision of sec. 824 that no action can be maintained upon such a claim until after it has been laid before the town board of audit, etc'., if in fact that condition precedent be fulfilled before the expiration of the time within which defendant is required to plead.

*604Appeal from an order of tbe circuit court for Wasbburn county: FeaNx A. Ross, Circuit Judge.

*Reversed.*

This action is brought by the plaintiff to recover $593.81 from the defendant. The complaint, among other things, alleged that at the municipal election held in said town in April, 1907, the defendant was duly elected and thereafter duly qualified as town treasurer of the plaintiff town and en-tei*ed upon the duties of his office; that at the municipal election held in said town in April, 1908, said defendant was elected for the period of one year, but that he failed to qualify by giving the required bond, although he continued to act as treasurer until about the 12th day of December, 1908, when his successor was appointed and qualified, and that one Robert Trulson was the person so appointed to act as treasurer 'from and after the said 12th day of December; that the defendant while acting as treasurer received into his hands moneys belonging to the different school districts, for county taxes, school taxes, current expenses, highway taxes, saloon licenses, and other moneys, all belonging to said town, in the sum of $9,687.69; that defendant while acting as treasurer disbursed in behalf of said town the sum of $9,093.88, and no more; that defendant “did then and there wrongfully and unlawfully retain in his possession and convert .to his own use, and without any right or authority so to do, keep and maintain of the moneys belonging to the said plaintiff, which he has ever since refused to turn over to said plaintiff, the sum of $593.81, and the said *George W. Noggle*has ever since the 12th day of December, A. D. 1908, so unlawfully retained and converted to his own use and withheld of the moneys belonging to said town, the said sum of $593.81.”

To the foregoing complaint the defendant answered and thereafter served an amended answer. In each of these pleadings the defendant attempted to set up a counterclaim. The counterclaim set forth in the amended answer alleged that various sums of money had come into his hands as town *605treasurer; tbat said sums were deposited in tbe First National Bank of Hayward, as directed by tbe town board of supervisors of said town, together witb bis collection fees; tbat during bis incumbency tbe plaintiff town borrowed a large sum of money from tbe First National Bank of Hayward for tbe use of said town, to be deposited to tbe .credit of defendant as town treasurer, but as to tbe amount of sucb loan or tbe amount placed to bis credit defendant bas no knowledge; tbat defendant paid out during tbe time be was so acting as town treasurer, upon orders of tbe chairman countersigned by tbe town clerk, and to school treasurers legally entitled thereto, a sum of money in excess of tbe amount so received and so •deposited, including bis fees for tbe collection ■ of said moneys upon tbe tax roll, as treasurer, in tbe sum of $476.56, which sum defendant pleads as a counterclaim to plaintiff’s •complaint herein. Tbe counterclaim further alleged tbat on tbe 4th day of April, 1911, defendant duly filed bis claim for said sum witb tbe town clerk, to be audited and allowed, and tbat tbe town board neglected and refused to audit tbe ■same and tbe same was presented to tbe electors of said town at tbe annual meeting on. tbe 4th day of April, 1911, for allowance, and the electors of said town disallowed said claim, and tbat more than ten days have elapsed since tbe last annual town meeting and tbat said claim bas not been paid or allowed ■or any part thereof, and tbat there is now due to defendant from said town tbe sum of $476.56. Tbe action was commenced on February 23, 1911, and tbe original answer was •served on March 16, 1911, and tbe amended answer was served on April 20, 1911. A demurrer was sustained to tbe •counterclaim contained in tbe first answer. Tbe plaintiff again demurred to tbe counterclaim set forth in tbe amended answer. Tbe circuit court held tbat tbe complaint did not •state facts sufficient to constitute a cause of action and sustained tbe demurrer as a demurrer to tbe complaint. From .an order entered accordingly tbe plaintiff appeals.

*606Eor the appellant there was a brief by *J. G. Davis,*attorney, and *Sanborn, Lamoreux & Pray,*of counsel, and oral argument by *Mr. Davis.*

*L. H. Mead,*for the respondent.

Barnes, J.

By subd. 6, sec. 836, Stats. (1898), it is provided that “It shall be the duty *of*the town treasurer . . . to deliver, on demand, to his successor in office, . . . all moneys in his hands as such treasurer.”

By sec. 819, Stats. (1898), as amended by ch. 55, Laws of 1901, town boards “are . . . authorized to make demand for payment to the town treasurer for any damages, penalties, forfeitures or moneys due hereunder to the town; for breaches of official bonds to the damage of the town, . . . and in case of failure to comply with said demand they may bring suit to recover said . . . moneys due the town hereunder without further notice or demand whatsoever.”

It is admitted that if the complaint failed to state a cause of action the demurrer to the counterclaim was properly sustained as a demurrer to the complaint. It has been held that as to actions which town boards are authorized to bring under sec. 819, Stats., no vote of the electors is necessary to-authorize the commencement thereof under subd. 2, sec. 716,. Stats. *Fox Lake v. Fox Lake,*62 Wis. 486, 22 N. W. 584. And it is not claimed by the respondent that any vote of the electors was necessary. Bespondent does claim, however,, that the complaint is defective in that it fails to allege that a demand was made upon the defendant before suit was brought, and further, because it fails to allege that defendant’s successor was duly qualified and therefore entitled to-recover the money.

The action is for conversion, and there is nothing alleged to show that defendant was wrongfully in possession of the-town funds until his successor was appointed and had qualified. Under the statutes referred to there was no default on. *607defendant’s part until Ms successor demanded tbat tbe moneys be paid over, and no right on tbe part of tbe town board to institute an action until a demand bad been made.

Tbe complaint does not allege in specific terms tbat a demand was made, but we think it does so in substance and effect. Pleadings must be liberally construed. Tbe complaint alleges tbat defendant unlawfully converted tbe money. Tbe demurrer admits tbis allegation to be true, but it can only be true because a demand was in-fact made, as tbat was one of tbe essential things to make a conversion. Again, the complaint alleges that the defendant refused to pay over tbe money sued for. Tbis plainly implies tbat he had been requested to do so, because ordinarily a refusal follows a request or demand. So, while we cannot commend tbe pleading as a model one, we think it was broad enough to advise defendant tbat a demand bad been made upon him and broad enough to permit evidence to be offered to tbat effect.

There is much less merit in tbe claim tbat tbe complaint does not allege tbat a successor to tbe defendant as treasurer bad been appointed and bad qualified. The allegation is that defendant continued to act as treasurer until December 12, 1908, “when his successor was appointed and qualified, and one Robert Trulson was tbe said person so appointed.” It would be hypercritical to say tbat tbis averment did not advise the defendant that Trulson bad been appointed to tbe office and had qualified himself to discharge bis duties.

Tbe sufficiency of tbe defendant’s counterclaim has not been passed upon by tbe trial court, but we deem it proper to decide it inasmuch as tbe question has been argued. Both sides expressed great confidence in their ability to win on tbe facts as soon as tbe law of the case was settled, and are apparently anxious to go to trial on tbe merits. In any event, it would not be good administration of justice to invite another appeal to determine tbe sufficiency of tbe counterclaim.

Counsel for appellant contend tbat tbe defendant’s alleged *608cause of action, did not exist until after tbe claim had been presented to the town board for audit and allowance and the same was laid before the electors at the annual town meeting and was disallowed, as provided by sec. 824, Stats. (1898). The claim was not disallowed by the electors until April 4, 1911. Counsel further claim that the alleged counterclaim falls within the provisions of subd. 2 of sec. 2656, Stats. (1898), and that under that subdivision only a cause of action which existed at the time of the commencement of the action, to wit, February 23, 1911, could be pleaded as a counterclaim. It is obvious that the counterclaim falls under subd. 1 of sec. 2656 instead of subd. 2. The cause of action arises out of the transaction set forth in the complaint as the foundation of plaintiffs claim and is connected with the subject of the action. As to subd. 2, the statute expressly provides that the cause of action pleaded as a counterclaim must exist at the commencement of the action. There is no such statutory requirement as to counterclaims arising under subd. 1. This court, however, held in *Orton v.*Noonan, 29 Wis. 541, that only a cause of action which existed when suit was begun could be pleaded as a counterclaim under subd. 1, because it did not clearly appear that the legislature intended to change the common-law rule in this regard. Perhaps the court in deciding this case paid too little heed to the spirit of the Code and .showed too much attachment to common-law rules of procedure, and that the rule in *Orton v. Noonan*might well be abrogated. It would seem that, where the legislature has said that as to one class of causes of action they must exist when suit is commenced to be pleadable as counterclaims, and makes no such requirement as to another class, there was a reasonably plain intention to differentiate between the two. However this may be, the decision in *Orton v. Noonan*should not be extended to cases that do not fall within its limitations. There, the counterclaim interposed *609was for rents wbicb fell due after tbe action was begun and no part of tbe indebtedness bad accrued at tbat time. Here, tbe alleged indebtedness existed at tbe time tbe action was begun, and tbe right of action was complete, except tbat tbe statute required, as a condition precedent to tbe commencement of a suit to enforce tbe existing right, tbat tbe claim must be laid before tbe town board for audit and allowance. Inasmuch as tbe indebtedness did exist when plaintiff began its action, and tbe condition precedent bad been fulfilled within tbe time tbat defendant was required to plead, we bold tbat tbe objection raised is not tenable. While it is not tbe function of tbe courts' to sweep away statutory barriers, it is their function to so construe statutes, when reasonably possible, as to require parties to try their cases on tbe merits and to restrict them to a minimum amount of tactical maneuvering wbicb usually results in unnecessary delay and expense. Tbe issues arising on tbe complaint in tbe present case necessitate an accounting to determine bow much money belonging to tbe plaintiff came into tbe bands of tbe defendant and bow much money tbe defendant disbursed in paying tbe lawful obligations of tbe town: When tbe, balance is struck it will tell whether defendant owes the town or *vice versa.*If defendant has mistakenly paid out some of bis own money to take care of orders drawn upon him as treasurer, common honesty and fair dealing would require tbat be be reimbursed, and it would be an expensive and nonsensical ceremony to require him to resort to another action to get what is found to be bis due.

It follows tbat tbe order appealed from must be reversed, and tbe cause remanded with directions to overrule tbe demurrer interposed to tbe counterclaim. Neither party is allowed costs, except tbat tbe appellant is required to pay tbe clerk’s fees in this court.

*By the Court.*— It is so ordered.

*610The following opinion was filed March 16, 1912:

Marshall, J.

(concurring). There is little, if any, doubt here, I apprehend but that- *Orton v. Noonan,*29 Wis. 541, was wrongly decided in respect to the matter now referred to in the opinion of the court. If the result reached in this instance required it, entire re-establishment of subd. 1, sec. 2656, of the Code according to the legislative intent I apprehend would occur. The court has gone in that direction as far as actual necessities required. In harmony with manifest desire to restore the Code so far and as rapidly, as practicable, where it was impaired by judicial hostility or Want of appreciation of its purpose, and to welcome legislative assistance to that end wherever needed, this occasion for progress in that line should not go unimproved to any extent. No rule of property is involved, — nothing but one of practice formulated in misconception of written law. That is error such as this and all'courts customarily exercise much liberty to correct.