Summary
In Brownell v. Town of Greenwich, (114 N.Y. 518), the bonds sued upon were issued in aid of a railroad, under the town bonding act; but, subsequently, they were repudiated and it was insisted that they were void, because they had been made payable in 20 years, in violation of the provision of the act that they should be payable in 30 years.
Summary of this case from Citizens' Sav. Bank v. Town of GreenburghOpinion
Argued March 6, 1889
Decided June 11, 1889
Esek Cowen for appellant. D.M. Westfall for respondent.
By the bonding act of 1869 the defendant was transformed from a mere political division of the state, with limited corporate powers, into a municipal corporation with power to borrow money on an extensive scale and to invest it in the stock or bonds of such railroad company as a majority of its taxpayers, representing a majority of its taxable property, should designate. (Laws of 1869, chap. 907, p. 2303; Horn v. Town of New Lots, 83 N.Y. 100, 107.) Those powers, however, remained dormant and wholly ineffectual for any purpose, unless they were called into action by the determination of the county judge, based upon such proceedings as the statute requires. The first question to be decided, therefore, is whether the adjudication of the county judge was valid and binding upon the town, so as to bring into operation these new and important powers conferred by the statute under consideration. The parties admit that the county judge "duly adjudged, determined and ordered," the jurisdictional facts being first recited, that the allegations of the petition are substantiated, and that the petitioners represent a majority of the taxpayers and a majority of the taxable property of the town according to the last assessment-roll. They further admit that the county judge duly appointed and commissioned the commissioners, who accepted, qualified and acted. The statute authorized the county judge to so "adjudge and determine" only in case it had been in all things complied with. (Laws of 1869, chap. 907, § 2.) How, then, could he "duly" adjudge unless every step required had been taken? "Duly," in legal parlance, means according to law. ( Gibson v. People, 5 Hun, 542, 543; People ex rel. Hawes v. Walker, 23 Barb. 304; Fryatt v. Lindo, 3 Ed. Ch. 239; Burns v. People, 59 Barb. 531, 543; Webb v. Bidwell, 15 Minn. 479, 484.) It does not relate to form merely, but includes form and substance both. The expression "duly adjudged," as used in the statement for the submission of this controversy, therefore, means adjudged according to law, that is, according to the statute governing the subject, and implies the existence of every fact essential to perfect regularity of procedure, and to confer jurisdiction both of the subject-matter and of the parties affected by the judgment, including the defendant. A judicial officer has jurisdiction, when he has power to inquire into the facts, to apply the law and to pronounce the judgment. Any step in the cause or proceeding before him is necessarily the exercise of jurisdiction, and that step cannot be "duly" taken unless jurisdiction exists. The final step, in particular, the making of the judgment, cannot be "duly" taken unless all of the preliminary steps upon which it is based have likewise been duly taken.
We also think that the rule of pleading facts prescribed by section 532 of the Code of Civil Procedure may with propriety be applied to the statement of facts required by section 1279; and that whatever is a sufficient statement of the facts, according to the former, to impliedly allege jurisdiction, is a sufficient statement of the fact, according to the latter, that jurisdiction existed. ( Rockwell v. Merwin, 45 N.Y. 166.) There is no reason for greater particularity in admitting facts for the submission of a controversy than in alleging them in a pleading.
The same reasoning applies with equal force to the admission that the commissioners were duly appointed and commissioned. This means that they were appointed by due authority or by the authority of law. According to the statute, the county judge had no authority to appoint them until he had adjudged and determined, in the manner and upon the proofs required, whether a majority of the taxpayers and taxable property were in favor of bonding. (Laws of 1869, p. 2305, § 3.)
The persons appointed, therefore, became commissioners of the town de jure, empowered to represent and to act for the town. (Id.) They were authorized to execute and issue "the bonds of such municipal corporation" and to affix "the seal of such corporation" thereto (§ 4); "to subscribe (for railroad bonds or stock) in the name of the municipal corporation which they represent;" "to represent either in person or by proxy such municipal corporation at all meetings of the railroad bondholders or stockholders;" to "vote for directors on the stock of such town" (§ 5); to provide a sinking fund to pay the bonds of the town, and under certain circumstances to sell the railroad stock or bonds belonging to the town. (§ 6.) The acts of the commissioners, as to all matters within the scope of the authority conferred upon them by the statute, were the acts of the town. ( Gould v. Town of Oneonta, 71 N.Y. 298.) Hence, irregularities in the manner in which the commissioners may have performed their duties cannot affect the validity of the bonds issued in the hands of an innocent holder for value. ( Town of Solon v. Williamsburgh Savings Bank, ante, p. 122.)
It was not necessary that merely executive acts, not involving the exercise of discretion, should be done by the commissioners personally, but such acts might be done by another under their direction. ( Mayor v. Sands, 105 N.Y. 210, 217.) "When a statute commands an act to be done, it authorizes all that is necessary for its performance." (Sedgwick's Const. and Stat. Laws, 245.) Hence the commissioners could lawfully employ Mr. Andrews as a broker to sell the bonds and invest the proceeds according to their instructions.
The plaintiff, therefore, when he paid his money for the bonds in question, paid it to the town, and the town received it and invested it in railroad bonds, which it is presumed to still hold, and which, in the absence of proof to the contrary, are presumed to be of value. The defendant received all that it contracted for, but what did the plaintiff receive? The defendant contends that he received nothing of any value, because, as it claims, the bonds delivered to him by the commissioners or by their direction are void, inasmuch as they were made payable in twenty years, while the bonding act of 1869 (§ 4), only authorized the issue of bonds "payable at the expiration of thirty years from their date." On the 12th of May, 1871, an act was passed by the legislature amending section 4 of the bonding act "by adding at the end thereof," the following provision: "The said commissioners may issue the said bonds payable at any time they may elect less than thirty years, * * * but they shall not so issue the bonds that more than ten per cent of the principal of the whole amount of bonds issued shall become due or payable in any one year." (Laws of 1871, chap. 925, § 6, p. 2119.) The question now arises whether the bonds of the plaintiff were actually issued before or after May 12, 1871, the date when said amendment took effect. They bear the date of March 25, 1871, and are presumed to have been executed at that time; but executing is not issuing, for they might be fully executed but never issued. It is clear that the purchaser of a bond from the obligor named therein simply lends the latter money. ( Coddington v. Gilbert, 17 N.Y. 489; Ahern v. Goodspeed, 72 id. 108.) The essence of the original transaction between the parties, therefore, was a loan of money secured by the bonds of the borrower. The bonds had no legal inception and could not become valid obligations, aside from any other question, until actually delivered for a valuable consideration. Under the circumstances, we think that the delivery of the bonds to the plaintiff determines the date when his bonds were issued. In this vital respect the case differs from Potter v. Town of Greenwich ( 92 N.Y. 662; 26 Hun, 326), where the bonds were issued prior to the passage of the act of May 12, 1871. The plaintiff in that case bought his bonds in April of that year. The five bonds in question, therefore, were issued on the first of July, 1871, when they were first delivered as evidence of an existing debt. The plaintiff had the right to assume that they were issued under the statute as it stood at the date of the delivery, for he was dealing with actual commissioners, clothed with all the authority that the statute conferred. The mere inspection of his bonds would show that they were made payable as the statute then required. It does not appear that he had seen any of the bonds except those which he purchased, or that he knew that all of the bonds were payable at the same time, or even that any other bonds had been issued at the date of his purchase. He was not bound to examine the entire series to see that no more became due in a single year than the statute permitted. He was bound to examine his own bonds and was, doubtless, charged with knowledge of the bonding act and the bonding roll, as the one was a public statute and the other a public record, and both were accessible to all. How could he examine the remaining bonds? If they were not then issued, but still in the hands of the commissioners, an examination would be useless, for a purchaser of bonds issued according to law cannot be affected by the subsequent acts of the commissioners in issuing other bonds in a manner not in accordance with law. If they were issued, how could he find them, scattered in the hands of unknown owners? It would be unreasonable to charge him with knowledge of the contents of the rest of the bonds, or to declare his bonds void, because the others, of which he knew nothing and had no means of knowing, were, in fact, made payable at a time not authorized by the statute. A purchaser, under the circumstances disclosed, might assume that the defendant, through its lawfully appointed commissioners, would not do an act utterly void, and thereby commit a fraud upon one of its citizens by taking his money without any consideration.
The only other claim of the appellant that we deem it important to notice is, that the act of 1871 does not apply to bonds issued in pursuance of a consent of taxpayers given and adjudicated upon before that statute was passed, and that if the act can be construed as applying to such bonds, it is, to that extent, unconstitutional and void. In Syracuse Savings Bank v. Town of Seneca Falls ( 86 N.Y. 317), it was held that the act of 1871 applied to proceedings regularly taken prior to its passage. In that case the proceedings were terminated in August, 1870, when the county judge made the adjudication and record and appointed the commissioners, who delayed action until after May 12, 1871, when they subscribed for stock and issued the bonds. No further consent of the taxpayers was obtained. In Angel v. Town of Hume (17 Hun, 374), the adjudication was made April 22, 1871, and the bonds were issued in February and July, 1872. In both of these cases it was held that the judgment of the county judge, based solely upon the consent of the taxpayers to bond pursuant to the act of 1869, was not nullified nor avoided by the amendment of 1871. In neither of those cases had any taxpayer consented to such an issue of bonds as the amended act gave the commissioners the discretion to issue.
In Gould v. Town of Sterling ( 23 N.Y. 456), the consents were obtained prior to September 29, 1852 (pp. 443, 445), while the bonds were issued in August, 1853 (p. 457). In the meantime an act had been passed authorizing the interest upon the bonds to be made payable on the first days of January and July of each year, instead of March first as was provided by the original bonding act.
The only authorities cited to sustain the position that the act of 1871 is unconstitutional are People v. Batchellor ( 53 N.Y. 128), and Horton v. Town of Thompson (71 id. 513). We do not consider either of them applicable to this case. The only constitutional questions involved in these cases were, in the former, whether the legislature could compel a town to become a stockholder in a railroad corporation by exchanging its bonds for stock without its consent in any way given; and, in the latter, whether the legislature could make a void bond valid after it had been actually issued to a person who could not claim as a bona fide holder.
In the case under consideration the consents had been duly given and an adjudication duly made to that effect when the amendatory act was passed. There was no want of power, therefore, to issue bonds, as the conditions precedent had all been complied with. The amendment did not extend to matters of jurisdiction, "but to that which the legislature might have dispensed with the necessity of by the prior statute." The bonding act would not have conflicted with the Constitution if it had contained no provision as to when the bonds should be made payable, but had left that to the discretion of the commissioners. That provision, therefore, so far as the Constitution is concerned, was immaterial and could be modified, even retrospectively, at the discretion of the law-making power.
In Williams v. Town of Duanesburg ( 66 N.Y. 137), the court said: "In this case the legislature could originally have authorized the bonds of the town * * * to be issued under the precise circumstances existing when they were issued; and if the acts of the commissioners have, by subsequent legislation, been ratified, it is equivalent to an original authority to do what has been done. The authorities as to the legislative power to validate, by subsequent legislation, acts done in assumed execution of a statute authority which has not been strictly followed, are numerous and decisive." ( People v. Mitchell, 35 N.Y. 551; Town of Duanesburg v. Jenkins, 57 id. 177; People ex rel Kilmer v. McDonald, 69 id. 362; Tifft v. City of Buffalo, 82 id. 204; Rogers v. Stephens, 86 id. 623.) If the legislature has power, after bonds have been issued, to correct irregularities of official action without affecting the consents of the taxpayers previously given, its power to authorize a change in the form of the bond before it is actually issued, without impairing such consents, cannot well be denie
Without examining any of the other grounds upon which we are urged to affirm the judgment appealed from, we think that it should be affirmed for the reasons already stated.
By the act of May 12, 1871, the commissioners were authorized to issue bonds, payable in twenty years, aggregating in amount $4,000. So much of the issue as was in excess of $4,000 was without authority of law and void. But the subsequent unauthorized action of the commissioners in issuing bonds of the town could not, and did not, invalidate or affect the bonds aggregating $4,000, for which act authorizations had been duly given.
The commissioners sold to this plaintiff bonds of the face value of $2,500, $1,500 less in amount than the authorized issue. It does not appear that after the passage of the act mentioned, and prior to the sale made to the plaintiff, the commissioners sold any other bonds. We are unable to say from the evidence before us that plaintiff's bonds were not issued to him before the limit of $4,000 was exceeded.
The plaintiff then seeks to recover upon bonds regular upon their face, and in an amount less than the issue permitted by statute. The defendant attacks their validity upon the ground, among others, that the commissioners exceeded their authority by issuing more bonds payable in twenty years than the statute permitted. The burden, therefore, rested upon the defendant to establish such defense. It was incumbent upon it to show that plaintiff's bonds did not constitute a portion of the authorized issue of $4,000. This it omitted to do, and, as a necessary consequence, failed to establish the defense interposed.
These views lead me to concur in the result arrived at by Judge VANN.
BRADLEY, J., concurs in the result on the ground that the bonds in question were issued after the act of May 12, 1871 (chap. 925), took effect, and that it may be presumed, nothing appearing to the contrary, that those bonds, at the time of their issue, did not make the amount issued, after such act took effect, exceed $4,000.
I dissent upon the ground that the taxpayers of the defendant never gave their consent to the issuing of bonds payable in twenty years. Such consent was essential to the validity of the instruments. The proceedings before the county judge, which terminated in the appointment of commissioners, were taken by authority of the act of the legislature of May 18, 1869, and authorized the issuing of bonds running for thirty years. The bonds in suit recite that they were issued by authority of that act. They bear date and were executed before the passage of the act of May 12, 1871. They are void upon their face. ( Potter v. Town of Greenwich, 26 Hun, 326; affirmed, 92 N.Y. 662.) And were not, in my judgment, made valid by the act of the legislature last cited. The shortening of the period of payment deprived the taxpayers of the town of substantial benefits under the statute intended to provide for the payment of the bonds, and is more than a mere irregularity.
The legislature had no power to authorize a loan by the town to the railroad company without its consent ( People v. Batchellor, 53 N.Y. 128; Horton v. Town of Thompson, 71 id. 513); and the act of May 12, 1871, cannot be construed as applicable to bonds executed pursuant to consents given before its passage, and which related to entirely different obligations.
For these reasons, I think, the judgment should be reversed.
All concur for affirmance, except BROWN, J., dissenting; POTTER, J., not sitting; BRADLEY and PARKER, JJ., concurring in result.
Judgment affirmed.