9 N.Y. 439 | NY | 1861
It is insisted that the act, under which the bonds' in question purport to have been issued, is unconstitutional and void, because it contained the provision that the supervisor and commissioners appointed therefor should have no power to do any of the acts authorized by it, unless the written assent of two-thirds of,the taxpayers referred to therein had been obtained. This ground is untenable. The act took effect immediately on its passage. It conferred certain powers and rights on the several towns in the county of Cayuga which they did not previously possess, and' which any such town could-avail itself of, at its own election. That election was to be determined by the will of a certain class and number of resident persons taxed in such town, to be expressed by their, written assent. Towns are sometimes called quasi corporations, and by the general law of the State prescribing the powers, duties and privileges of towns, chapter 11 of part 1 of the Revised Statutes (1 R. S., p. 337, § 1), “each town, as a,body corporate, has capacity ” to do certain acts and exercise certain prescribed powers;, and it is declared that “no town shall possess or exercise any corporate powers, except such as are enumerated in this chapter, or shall be specially given by law, or shall be necessary to the exercise of the powers so enumerated or given.” (§ 2.)
In the case under consideration, the act, as before stated, by its terms took effect immediately; but parties to be affected by it were at liberty to accept the privileges granted, and. incur' the burdens and obligations it would impose as their interest or will should dictate:. and any one or more of the towns, referred to therein, could take the benefit of it, and make it effective as to themselves, irrespective of the election or will of the others. It was therefore in all its material characteristics
A law, having the same general object in view as the act we are examining, was passed about a year after it (Laws of 1853, chap. 283), by which the village of Rome was authorized to subscribe for and take and hold stock in a railroad and provide for the payment of it by issuing corporation bonds; but it was declared therein that “ the board of trustees should have no power to make such subscription as is authorized in the first section of this apt, nor to issue bonds or create any liability under this act, until it has been previously approved by two-thirds of all electors who shall have paid a tax on personal or real estate in said village, whose names shall appear regularly on the last village assessment-roll for the year next preceding the one in which the vote was takenand provision was made for determining the fact of such approval at a special election to be held for the purpose.
The constitutionality of that law was called in question in the case of The Bank of Rome v. The Village of Rome (18 N. Y., 89). One of the grounds taken against its validity was, that it delegated the legislative power of this State to the voters of the village of Rome within the principles settled in Barto v. Himrod (supra). The provision above cited required the act itself to be approved by the electors before the power conferred by it could be exercised, and in that respect was distinguishable from the law under consideration, and more obnoxious to the objection suggested and urged against it; but this court held it to be constitutional and valid. Johnson, J., in giving the opinion of the court, concluded it by saying that the case was, in substance, only “ a submission, to a vote of the parties interested, of the question whether or not they chose that the municipal corporation should subscribe to the railroad. In other words, the legislature did not compel the village to subscribe, but, creating by law the necessary machinery, left it to the taxpayers to determine the matter.”
2d. The next, and an important, question presented is, whether it was incumbent on the, plaintiff to show affirmatively that the assent of the taxpayers, required to be obtained by the said act, had in fact been obtained.
The towns of this State, as before remarked, have not the general power to borrow money, nor are their officers, in the exercise of their ordinary duties, authorized to issue bonds or any other evidence of indebtedness, in the name of the towns represented by them, for loans or other debts contracted or incurred on their behalf. Such power must therefore be specially conferred by a grant from the legislature; and there is no doubt that the grant may be made, upon such terms and under such limitations, restrictions and conditions as may be deemed' necessary and proper for the protection of the taxpayers who are to pay the debt, on the one hand, and for the security of the lenders and creditors, on the other. The power may, therefore, be either general or qualified or special: That conferred in this case was of the latter character. The act expressly declares that the officers vested with the authority of borrowing the money on the faith and credit of their town, and performing the other acts therein specified, should “have no power to do any of 'the acts” authorized by the law until a railroad company had been organized for the purpose of constructing the railroad designated therein, and such written assent had been obtained, and, together with an affidavit of the character specified in the first section of the act, had been filed as is directed by that section. The legislature have thus seen fit to declare, in addition to other requirements and conditions imposed by the law, that taxpayers of the towns included within its operation should not be charged with the burden of the debt contemplated, except with the- written assent of two-thirds of the resident persons taxed in said towns appearing on the assessment-roll thereof made next previous to the time such money was borrowed. Such assent was to be obtained by
Evidence of such assent was therefore necessary as the basis and foundation of the right to contract the debt and execute the bonds in quéstion. Such evidence was not given. It is expressly stated in the Case, aS before remarked, that al though some of the signatures to the assents produced were genuine, the plaintiff “failed to prove that said signatures constituted or were the signatures of two-thirds of the resident persons taxed as appeared on any assessment-roll of said town whatever,” but he appears to have relied on the affidavit, to which they were annexed, as sufficient evidence of that fact. The court below apparently have assented to that proposition, and its ruling and decision were evidently based on that view of the case. This, in our opinion, was an erroneous construction of the act. It requires, as one of the conditions of the grant of the power conferred, that an affidavit “to the effect that the persons, whose written assents are thereto attached and filed as' aforesaid, comprise two-thirds of all the resident taxpayers of said town on its assessment-roll next previous thereto,” should be filed with such assent; but it does not state or declare—certainly not in terms—that such affidavit shall be the evidence of the requisite assent, nor' that it shall operate as a protection to the lender; nor is there anything in the act from which it can be fairly inferred that such was its object. The material and controlling requirement was the assent in fact of the taxpayers, expressed in writing, signed
These views lead us to the conclusion that it was incumbent on the plaintiff to prove that the written assents given in evidence had actually been signed by the requisite number of taxpayers designated in the act, and that the omission to provide such proof is fatal to the recovery. In coming to this conclusion, I have not overlooked, nor failed to give full effect to, the decision of this Court in the case of The Bank of Rome v. The Village of Rome (19 N. Y., 20). The provision of the statute under which that case was decided, and which has already been referred to in considering the constitutional question above discussed, is materially different from the law under consideration. That act, after conferring the power on the village to subscribe for railroad stock and to issue bonds for the payment thereof, on obtaining an approval of the said act itself by two-thirds of the electors required by the eighth section above cited, which was to be ascertained at a special election to be held and conducted at the time and in the manner directed in the ninth section, provides in that and the tenth section, that the trustees of the village, after the canvass directed to be made at such election, “ shall immediately thereafter return to the clerk of the board of trustees the
3d. As the requisite assent to borrow money and do the other ' acts authorized by the law in question may be shown on a new trial, it may be proper to consider and determine now, whether (conceding such assent to have been given) the power has in fact been executed so as to create a liability on the part of the defendant. The power conferred was limited to the perform anee of certain acts, and was to be executed by the supervisor and the assessors of the town. The object was to extend aid-towards the construction of a railroad or railroads running
It was evidently the intention of the act that money should be raised and paid over to aid in the construction of a railroad, and no color is given to the idea or the position that the credit merely of any town should be given, through and by which money might be raised. A town might be willing to incur a debt to a limited sum, with the knowledge that the whole amount for which it was incurred was actually to be appropriated to the construction of a railroad that might be deemed conducive to its interests, but would absolutely refuse tó issue
These considerations lead us to the conclusion that the defendants are not liable to the plaintiff on these bonds, and that the judgment of the court below is consequently erroneous and must be reversed and a new trial ordered.
The first objection made to the recovery in this case is, that the act of 1851 authorizing the town of Sterling to borrow money is in conflict with the Constitution, upon the principles established in Barto v. Himrod (4 Seld., 483). This objection is sufficiently answered by the case of The Bank of Rome v. The Village of Rome (18 N. Y., 38). Previous to the act of 1851, the town of Sterling had no power to borrow money or subscribe for stock, even if every inhabitant of the town were desirous of doing so. It was under a disability which it required legislation to remove. The effect of the statute was simply to remove this disability. Whether it was expedient for the town to exercise the power when obtained, was another question. It belonged to the legislature to confer the power, and this it did, without requiring the consent of the town. It belonged to the town to act under the power, and this was left to the town, without any interference on the part of the legislature, except to prescribe by what majority and in what mode it should act. There was here no submission of any legislative question to the town. All that it was essential for the legislature to do was done finally and absolutely. It was not submitted to the people of the town in any form, whether the act, or any portion of it, should take effect. All that was submitted to them was the prudential question, whether it was expedient to avail themselves of the power which the statute conferred. It was upon this distinction solely, that I based my assent to the judgment in the case of The Bank of Rome v. The Village of Rome (18 N. Y., 38), and not at all upon the idea that the question was submitted to the people of a village, merely instead of the whole state.
Our next inquiry .isj whether the authority conferred by the statute has been properly exercised. The first section of the act of 1851 authorizes the then supervisor of the town, together with Robert Hume and William Wyman, who are appointed commissioners for the purpose of carrying- the act
Section four made it the duty of the board of supervisors of the county, in each of the years, 1851 and three following years, to levy and collect from the taxable inhabitants and property of the town, a sum equal to the interest upon the bonds; and in each of the years succeeding the said three years, to levy and collect in like manner, a sum over and above the interest, equal to the principal which would fall due, on or before the 1st of March thereafter. The bonds or obligations in question were not in fact issued until August, 1853, and were signed not by John M. McFadden, the supervisor of the town of Sterling for the year 1851, and by Robert Hume and William Wyman the commissioners named in the act, but by William Wasson,'supervisor for the year 1853, and by Robert Hume and Isaac Turner, the commissioners elected for that year under section 10 of the act.
It is insisted by the defendant’s counsel that the authority to act was given specifically to the supervisor for the year 1851, and to the commissioners named in the act, and that no' other persons could exercise it: also that the persons whose assent was to be obtained, were those appearing upon the last assessment roll previous to the passing of the act; and that the power to levy and collect the sums necessary to pay the principal and interest of the bonds was confined to specific years, and could not be exercised at any other time.
There is no doubt that a statutory power of this kind must be strictly pursued; and were there no other authority for the issuing of the bonds in question, than the act of 1851, they would, in my opinion, be clearly void. An additional act, however, was passed in 1853 (Sess. Laws of 1853, ch. 605), by which it was provided; that it should be “lawful for the supervisor and railroad commissioners of the town of Sterling,
This last act was very imperfectly framed. It substitutes, with sufficient clearness, the supervisor and commissioners for the year 1853, for those of 1851; but it leaves all the other specific provisions of sections 1 and 4 of the act of 1851 without modification in terms. Still, by a liberal construction, in view of the obvious design of the act, it may with propriety be held, that the effect of the act of 1853, was to modify the entire act of 1851, so that its'provisions should have the same application to the bonds authorized by the act of 1853, as to those authorized by the previous act; in other worus that the year 1853, was to be substituted in all respects for the year 1851, in the original act, and the other provisions to be modified in accordance with this change. This construction removes the principal if not all the difficulties' growing out of the departures from the strict letter of the act of 1851. It is said that the bonds purport upon their face to be issued by virtue of the act of 1851 alone; and hence that they cannot be sustained by a resort to the provisions of the subsequent act. ■ This, however, is an erroneous conclusion. There was no necessity that the bonds should, in terms, refer to either act. The irm portant question is, whether the authority existed; not whether it is properly stated in the bonds.
But there are other objections to the validity of these bonds of a more serious nature. The statute authorized the officers of the town to borrow the sum of $25,000, and pay it over to the president and directors of the railroad company to be expended by them “ in grading and constructing ” a railroad, &c. Instead of borrowing the money, the supervisor and commissioners delivered over the bonds to the company in payment for stock, for which they were authorized by the act to subscribe, and the company sold them at a discount. The question is, whether this was within the authority conferred by the
If they could sell at a discount at all, they could of course sell at any sacrifice however great. The bonds of the town of Sterling for $25,000, might have been sold for $10,000. Can it be supposed, that if such a power had been specifically asked of the legislature, the request would have been granted ? Would the town have been permitted to raise by taxation upon its inhabitants $25,000, for the sake of furnishing the railroad company with $10,000, to be expended upon its works? I think not; and yet this is, in effect, the power which it is claimed was conferred by the act authorizing the town to borrow. The rate of discount, whether more or less, can make no difference with the principle.
Had the town itself made the sale, and paid over the avails to the railroad company, it seems to me entirely clear, that the transaction would have been illegal. It is usual for the legislature when conferring upon a municipal or other corporate body the power to raise money upon the faith and credit of the corporation, to guard against such a, sacrifice. An example of this may be seen by referring to the act amending the charter of the city of Rochester, passed July 3, 1851. By section 12 of that act the common council were authorized to create a public stock not exceeding $30,000, to be applied to the erection of a city hall; and for that purpose to issue bonds or certificates in the usual form. They were also authorized to sell and dispose of such bonds or certificates “ upon such terms as they should (shall) deem most advantageous to
The reason why such a prohibition was not inserted in the act under consideration can be readily seen. By each of the sections of the act amending the charter of the city of Rochester, to which I have referred, the common council were expressly authorized to sell the bonds; and hence the necessity of the restriction. In the present case, the only authority given. by the act is to borrow upon the bonds of the town. Ho express power to sell the bonds is given, and no such power can, I think, be implied. To borrow money and give a bond or obligation for it, and to sell a bond or obligation for money, are by no means identical transactions. In the one case the money and the bond would, of course, be equal in amount: in the other, they might or might not be equal. Hence, a mere authority to a corporation to borrow money upon its bonds is equivalent, ex vi termini, to an authority to dispose of the bonds at par; and no further restriction is necessary.
But, it is true, the town did not itself sell the bonds, nor ■ make any sacrifice upon. them. It transferred them to the railroad company at par, in payment for stock for which it was authorized to subscribe. This, however, does not strengthen the plaintiff’s case. It was as much a departure from the terms of the statute as if the town had itself sold the bonds at a discount, and was equally inconsistent with the object and intent of the act, which was, that the railroad company should receive a sum equal to the amount of the debt incurred by the town, to expend upon the road, in the completion of which the town was supposed to have an interest. There is, therefore, in
There is another objection, which is equally fatal to the validity of the bonds. Section 1 of the act of 1851, after conferring upon the supervisor and railroad commissioners power to issue the bonds, concludes with a proviso to the effect that these officers should have no power to do any of the acts authorized by the statute until “the written assent of two-thirds of the resident persons taxed” in the town, as appearing upon the last assessment-roll, should have been obtained and filed in the clerk’s office of Cayuga county..
Each of the bonds upon which the action was brought stated upon its face that the requisite assent had been obtained and filed, and to each was attached a certificate in the following words: “ Cayuga County Clerk’s Office, ss: I, Edwin B. Morgan, clerk of the County of Cayuga, hereby certify that a paper, purporting to be the written assent of two-thirds of the resident taxpayers of the town of Sterling, with the affidavit required by section 1 of the act referred to by its title in the foregoing bond, has been filed in this office.”
The statute did not authorize the giving of any such certificate, nor did it provide for the filing of any affidavit, or prescribe in any manner the evidence by which the requisite assent should be established. The paper referred to in the certificate was also produced from the files of the clerk’s office, with a number of names attached. This paper, together with the certificate, was read in evidence, under objection by the defendant’s" counsel. No evidence was given, or offered, of the genuineness of the signatures; nor that the subscribers were resident taxpayers of the town of Sterling; nor that the persons whose
It was not contended upon the argument, if the obtaining, of the written assent of two-thirds of the taxpayers, pursuant to the statute, is to be regarded as an indispensable prerequisite to the exercise of the power to issue the bonds, that the evidence was sufficient, under the ordinary rules of evidence, to establish the fact. But it was claimed, on the part of the plaintiff:
1. That the provision in regard to the consent of the taxpayers was not intended as a condition precedent, but merely as directory to the supervisor and commissioners; and that, whenever those officers were satisfied that such consent had been given, they had power 'to act.
2. That the town was estopped by the acts of its agents in executing bonds asserting upon their face that the requisite assent had been obtained and filed, and negotiating these bonds with the certificate of the county clerk annexed; especially after having acquiesced for a considerable time in such acts.
3. That the bonds are negotiable instruments, and that the plaintiff is a bona fide holder without notice of the defect.
The first of these positions is obviously untenable. It is quite impossible to. construe the proviso in the statute as embracing a mere direction to the officers upon whom the authority is conferred. It was plainly intended to make the obtaining of the assent of the taxpayers a condition precedent to the exercise of the power. Its words are, “ Provided always that the said supervisor and commissioners shall have no power to do any of the acts authorized by this act until,” &c. This admits of but one interpretation. It would be impossible to create a condition by language more explicit. The want of proof, therefore, that' this condition had been complied with, must be fatal to the recovery, unless the plaintiff is protected as a bona fide purchaser or can maintain his position that the town is estopped.
The reason upon which this rule is founded is that given by Lord Holt, in Hern v. Nichols (1 Salk., 289), viz., that, where one of two innocent parties must suffer through the misconduct of another, it is reasonable that he who has employed the delinquent party, and thus held him out to the world as worthy of confidence, should be the loser. This reason can, of course only apply to a case where the principal has himself employed the agent, and voluntarily conferred upon him power to do thfe act. This clearly is not such a case. The agents here were designated, not by the town, but by the legislature; and no power whatever was conferred by the town,- unless the assent of the taxpayers was obtained. Any representation, therefore, by the supervisor and commissioners in respect to such assent would be a representation as to the very existence of their power. Such representations, as we have seen, are never binding upon the principal. It is obvious, therefore, that the doctrine of the case of The Farmers' and Mechanics' Bank v. The Butchers' and Drovers' Bank has no application to the present case.
The negotiability of the bonds in no manner aids the plaintiff. It is true they are negotiable, and have in this respect, most if not all the attributes of commercial paper. But one who takes a negotiable promissory note or bill of exchange purporting 'to be made by an agent, is bound to inquire as to the power of the agent. Where the agent is appointed and the power conferred but the right to exercise the -power has been made to depend upon the existence of facts, of which the agent may naturally be supposed to be in an especial manner cognizant, the bona fide holder is protected; because he presumed to have taken the paper, upon the faith of the representation of the agent as to those facts. The mere act of executing the note or bill, amounts of itself in such a case, to a representation by the agent to every person who may take the paper, that the requisite facts exist. But the holder has no such protection, in regard to the existence of the power itself. In that respect the subsequent bona fide holder is in no better situation than the payee, except in so far as the latter would appear of necessity to have had cognizance of facts, which the other cannot be presumed to have known.
It follows from these principles, that until it was shown, that the written assent of the required number of taxpayers had been obtained pursuant to the act, there could be no recovery upon the bonds. The judgment of the Supreme Court must be reversed, and there must be a new trial, with costs to abide the event.,
did not hear the argument in either case; all the other judges concurring,
Judgments reversed, and new trials ordered.