Town of Solon v. Williamsburgh Savings Bank

42 N.Y. Sup. Ct. 1

• Court: New York Supreme Court
• Decided: January 15, 1885
• Status: Published

Opinion

Folleto,- J.:

' The respondent urges in support of the judgment all of the grounds above stated except the sixth, which was not argued and is not referred to in its brief.

The provisions of the general bonding act, so far as it relates to the power to bond, and the mode in which the power is to be executed, are divisible into two classes. The first class prescribes the conditions or facts which must exist before a town ca,n borrow money for investment in the stock or bonds of a railroad coloration, and the procedure by which those conditions or facts are to be ascertained and authenticated. The second class prescribes the mode by which, and the form in which the evidences of indebtedness for the money borrowed are to be issued.

One of the facts which must exist, is the consent of a majority of the tax-payers of the town representing a majority of the taxable property of the town, as shown by the last preceding tax list or assessment-roll; that the town issue its bonds to an amount named in the petition, not exceeding twenty per cent of the taxable property, as shown by said assessment-roll, and invest the proceeds in the stock or bonds (as said petition may direct) of the railroad company named in the petition. Whether this fa<?t exists, is to be determined by the county' judge by a procedure specified by the act, which determination has the same force and effect as other judgments and records in the courts of record in this State. This fact has been determined in respect to the town of Solon by the county judge of Cortland county; the determination has been entered of record, and the bonds issued.

The town seeks to have these bonds canceled upon the ground that the county judge did not acquire jurisdiction to make the determination, because:

1. The petition upon which he proceeded states, “the undersigned, representing a majority of the taxpayers, etc.,” instead of “the undersigned, a majority of the taxpayers, etc.,” desire the town to issue its bonds to the amount and for the purpose named in the petition.

2. The county judge did not make and enter in the clerk’s office a written order directing the publication of a notice that on a day named he would proceed to take proof of the facts set forth in the petition.

It is conceded that under the Constitution the legislature had power to pass this act, -and like all statutes constitutionally passed it should receive a reasonable construction; one, at least, which, though not promoting, will not inevitably defeat the attainment of the end which the legislature and the people at the time, thought it wise to authorize.

The statute confers jurisdiction upon the county judges to determine whether or not a town shall be authorized to create a debt for the purpose of aiding in the construction of a railroad, and prescribes the mode in which the determination is to be made, which is in the nature of a proceeding in rem. The proceedings must be initiated by a petition filed, which must assert that the petitioners are a majority of the tax-payers of the town, representing a majority of the taxable property thereof, which must be verified.

We think the petition asserts this fact in legal effect, though not in the precise words of the statute.

The term, “representing,” in the petition, in connection with such portions of the petition as are before us, fairly construed, means, that the undersigned stand for, or are, a majority of the tax-payers of the town. That the signatures hereunder written personally represent a majority of such tax-payers. It cannot be construed, as is contended, to mean that the undersigned represent as agent, or otherwise, a majority of the tax-payers. Nothing of the kind is said or is inferable from the language used. The affidavit of the verifying tax-payer stated “that the petitioners were a majority of the tax-payers of said town.” The petition and the verification together constituted the petition as presented to the county judge, and upon which he acted. The petition and .the accompanying affidavit must he read and construed together. ( Whiting v. The Town of Potter, 18 Blatchf., 165.) The whole of the petition is •not contained in the case, and we cannot, for the purpose of overthrowing the decision of the Special Term upon this question, or the jurisdiction of the county judge, assume that the signatures did not purport tó have been made, or were not, in fact, made by the petitioning tax-payers in person.

The Court of Appeals has held that the procedure prescribed by the statute must be strictly pursued to enable a town to create a debt for this purpose; but no court has yet held that the copnty judge does not acquire jurisdiction in case the petition is not in the precise words of the statute; that a word, or a punctuation mark added or omitted, though not affecting the sense, is fatal.

It has been argued that the county judge does not acquire jurisdiction to proceed with his inquiry unless a majority of the taxpayers, representing a majority of the taxable property, join in the petition before it is filed with the county judge; and that this fact must affirmatively appear. It is paradoxical to say that the jurisdiction of the county judge, to inquire and determine whether a majority of the tax-payers representing a majority of the taxable property have signed, depends upon the existence of the very fact which he is directed to determine the existence of. When a petition is filed asserting the jurisdictional fact, the county judge has jurisdiction to proceed, and must proceed with the inquiry.

His adjudication is based upon the signatures to the petition and upon the consents of the tax-payers, given during the pendency of the proceedings before him, and if, at the close of the proceedings, a majority of the tax-payers representing a majority of the taxable property have consented, he is to so adjudge and appoint commissioners. If a majority have not consented, he is to so adjudge. His adjudication is based upon the facts as they then exist, and the statute makes it final unless it is overthrown upon certiorari.

The court finds that the statutory notice published, was dated and signed by the county judge, July 2, 18J0, and recited that it was published pursuant to an order made that day, but that the order was an oral one, and that a written order was not made or entered, other than as one is inferable from the notice. The statute does not prescribe the form or contents of the order, that it shall be in writing, or that it shall be entered. “ It shall be the duty of said county judge to order that a notice shall be forthwith published in some newspaper in such county, etc.” (Sec. 1, chap. 907, Laws, 1869.) This was done, as is found by the court, and written evidence that the order was made is contained in the notice signed by the judge, and also in the judgment entered. The statute does not require the order -and notice to be separate instruments. ITad the document read : It is ordered that the following notice be published, and concluded with a notice signed by the judge, its sufficiency would hardly be questioned, but it would not have been more potent nor would it have afforded better record evidence of the existence of the order than is furnished by the present record. The county judge gave the notice required by the statute, and it is hypercritical to say that his act is void, because he did not by a formal written order ,entered, direct himself to do that which it wras his duty to do, and just what he actually did do.

The county judge acquired jurisdiction to adjudge that a majority of the tax-payers representing a majority of the taxable property had consented to the creation of this debt, and to appoint commissioners to caTry the judgment into effect.

In 1869, the assessed valuation of the property in the town of Solon was $225,300. The bonds authorized to be issued, and issued, were less than twenty per cent of this amount, but the value of the property assessed in the town for that year, as equalized by the board of supervisors, was $213,333, and the amount of bonds authorized, and issued, exceeded twenty per cent of the equalized valuation. The term “ assessment-roll,” has been several ti'meá defined to mean the list or roll of taxable property and persons, completed, verified and deposited by the assessors with the town clerk, as required by the statutes. (Mygatt v. Washburn, 15 N. Y., 316 ; Clark v. Norton, 49 id., 243 ; People ex rel. Gillies v. Suffern, 68 id., 321; People ex rel. Chamberlain v. Forrest, 96 id., 544.)

Words and terms having a precise and well settled meaning in the jurisprudence of a country are to be understood in the same sense when used in its statutes; unless a different meaning is unmistakably intended. (McCool v. Smith, 1 Black, 459; Stephenson v. Nigginson, 3 H. L. Cas., 638.) This point was not argued, and does not seem to be relied upon by the respondent upon this* appeal, and need not be further considered.

By these proceedings and the adjudication, the status of the town •was changed ; it had been incompetent, but was now' competent to create a debt for the purpose named, and it stands in the same position in respect to its debt and creditors, that any municipal corporation stands in respect to a debt which it may create. The town purchased stock in the railroad corporation to the amount authorized, and paid for it in bonds, or, in other words, it created a debt for a lawful purpose and issued its promises to pay, which for a time it faithfully kept, but now seeks to repudiate. The only remaining questions are whether the commissioners so far deviated from, or exceeded their statutory powers, in carrying the will of the town and the judgment of the court into effect, as to entitle the town to repudiate its debt and compel the innocent holders of its bonds to surrender them for cancellation.

Can this action be maintained on the ground that the commissioners did not affix the “ common seal ” of the town, or “ their individual seals ” to the bonds as directed by the fourth section of the act ? The end to be attained by the proceedings before the county judge, was to enable the town to borrow money on its credit, and invest it in the stock of the railroad company, and thus aid in the construction of the road. The money was borrowed, the stock subscribed and paid for, and the end attained.

It is contended, in behalf of the town, that it can repudiate its obligations to pay the money borrowed, and compel, through the aid of a court of equity, the holders of its obligations to surrender them for cancellation because its commissioners failed to execute its obligations in the precise mode directed by the statute. In other words, the town seeks this relief, mot because of any wrong perpetrated, or attempted by the defendant, but because of a mistake made by the commissioners of the town. This question has no ■connection with the proceedings instituted and carried on, to authorize the town to raise money for this purpose, and must be considered entirely apart from all questions arising out of the initiatory proceedings carried on before the county judge, and upon the theory that the commissioners were authorized to borrow money upon the •credit of the town, and invest it in the stock of the railroad. ■Chapter 311, Laws 1869,_ authorized the town of Springport to borrow money on its bonds,' and take stock in the Cayuga Lake Railroad Company. The town commissioners were authorized “ to execute bonds therefor under their hands and seals.” The town had no seal. The money was borrowed and bonds were issued therefor without seals. It was held, in an action brought on the coupons, that this provision was merely directory, and that the bonds were valid notwithstanding the omission of the seals. (Draper v. Springport, 104 U. S., 501.)

Town of Springport v. Teutonia Savings Bank (75 N. Y., 397) was an action in equity by tiie town to set aside the bonds, issued under the statute referred to, upon the ground, among others, that the bonds were not sealed, as required by the statute.

In discussing this question the court, by Rapallo, J., said at page 408: “ I have not discussed the point made by the appellant’s eounsel in regard to the defect in the execution of the bonds, which consists in the omission of the commissioners to affix a seal to the signatures, as directed in the act. -The omission cannot have produced any injury to.the rights of the town, and the direction to affix seals was not intended for its benefit, but for the benefit of the lender of the money. I do not regard the point made in respect to it as one which addresses itself with much force to a court of equity, as a ground for exercising its discretionary power to decree the cancellation of a security upon which an innocent party has advanced money. I should be inclined if there wei-e no more equitable defense than this, at least to leave the town to its legal defense on this ground. But we have considered it unnecessary to pass upon that point, as a substantial defense to the bonds' appears, which is quite sufficient to sustain that branch of plaintiff’s case.”

Avery v. Springport (14 Blatchf., 272) arose over the same issue of bonds, in which it was held that the omission of the seals invalidated the bonds. This case, though not cited in Draper v. Springport (supra), is in effect overruled by it.

The commissioners of the town of Yates issued bonds, without seals, under chapter 811, Laws of 1868, as amended by chapter 241, Laws 1869, which authorized the commissioners to borrow money il and to execute bonds therefor under their hands and seals respectively.” The money was borrowed and invested in the stock of a railroad corporation. The bonds given for the money recited, as in the case at bar, that they were issued under the hands and seals of the comuTissioners. In an action on the coupons, it was held that the bonds were valid, notwithstanding the omission of the seals. (Phelps v. Town of Yates, 16 Blatchf., 192.)

We are unable to discover an}' difference in principle between the statutes cited in the foregoing cases and the one under consideration, or between the cases cited and the one at bar.

By a statute of the State of Texas, the city of San Antonio was authorized to borrow money on bonds and subscribe and pay for stock in a railroad corporation. The twelfth section of the act provided that the officers, whose duty it was to carry out the law. “ may issue bonds bearing interest, or otherwise pledge the faith of the city.” Obligations were issued in the form of bonds, but not under seal, and for this reason it was held that the obligations were not bonds. (San Antonio v. Mehaffy, 96 U. S., 315.)

The word “ bond ” ex vi terrrii/ni, imports a sealed instrument. (Cantey v. Duren. Harp. [S. Car.], 434 ; Taylor v. Glaser, 2 Serg. & R. [Pa.], 502 ; Denton v. Adams, 6 Vt., 40; Deming v. Bullitt, 1 Blackf., 241; Skinner v. McCarty, 2 Port. [Ala.], 19 ; Harman v. Harman, 1 Baldw., 129; U. S. v. Stephenson, 1 McLean, 462; Board of Education v. Fonda, 77 N. Y., 355.) The Supreme Court of the United States (San Antonio v. Mehaffy, 96 U. S., 315), in considering the validity of the San Antonio obligations, said: “ The securities issued were within the latter category. If that clause were wanting, we should have no difficulty in holding-that the city was, under the circumstances, estopped from denying-their validity. The doctrine of ultra vires, whether invoked for or against a corporation, 'is not favored in the law. It should never be applied where it will defeat the ends of justice if such a result can be avoided.” (Whitney Arms Co. v. Barlow, 63 N. Y., 62.)

In Wadsworth v. Wendell, a soldier was entitled to lot 7 in Solon. Before he received his patent from the State, he conveyed to the plaintiff his title and interest in the lot by an instrument, in form, a deed, with a covenant for further assurance. The deed was -not sealed, but eoncluddd : “ In witness whereof, I have hereunto set my hand and seal.” After the patent was issued, the soldier conveyed the lot to the defendant’s grantor by an instrument under seal. The plaintiff brought ejectment and was defeated. (12 .) The plaintiff then brought an action in equity to •compel the defendant to convey the land to the plaintiff. The plaintiff’s unsealed deed was held todbe a good conveyance in equity, and the defendant was compelled to convey the lot to the plaintiff. (S. C., 5 Johns. Ch., 224.) If equity will aid a party to acquire his rights under an instrument so executed and void at law, a court of equity will not order an instrument so executed to be surrendered for cancellation.

The cases are very numerous in which obligations in the form of bonds, without seals, have been held valid when executed by or to public officers or municipal corporations, under statutes requiring the bonds to be under seal, and but two or three eases need be cited: Kelly v. McCormick (28 N. Y., 318); Board of Education v. Fonda (77 id., 350); United States v. Linn (15 Peters, 290); Whitney v. Coleman (9 Daly, 238).

When bonds are authorized by .statutes which prescribe their conditions and mode of execution, instruments departing from the prescribed conditions, but effecting substantially the end sought to be attained, have uniformly been held good when freely and fairly entered into. The commissioners of .the towns of Yenice and Genoa were authorized to issue “ bonds ” in aid of a railroad corporation, but the act did not prescribe whether with or without seals. They were issued without seals. The Supreme Court and Court of Appeals, recognizing the rule that the term “ bond ” implied an instrument under seal, held the unsealed bonds valid. (Gould v. Venice, 29 Barb., 442; People ex rel. Fiedler v. Mead, 24 N. Y., 114.) The bonds in controversy are not invalid because not sealed.

The court finds that the seals were affixed before the bonds were purchased by the defendant, by some previous owner, without the consent or authority of the commissioners. It is urged that the bonds being negotiable and purporting on their face to have been issued under seal, that any owner was authorized to affix the seals. Without' stopping to consider this question, we think this action cannot be maintained because the seals were affixed in the manner found by the court. The court does not find that the seals were affixed with a fraudrdent intent, and there is no evidence in the case to warrant such a finding.

“ Sometimes 'an alteration in a note, seemingly material, and such as ma g prima facie render it void, is innocent and does not vitiate the instrument. So it is when it is done to correct a mistake in penning the note, or to make it express the real bargain of the parties, or to give the proper legal form to their contract. In such case the payee has a right to enforce it. Again, if the alteration was made without fraudulent intention, the payee may resort to the original indebtedness, if that was independent of the note and has not been discharged by the execution of it, and pursue the maker upon that. (Clute v. Small, 17 Wend., 238; Meyer v. Huncke, 55 N. Y., 412.) But to have such resort he must be able to produce and surrender the note. Hence its real value is not destroyed by the alteration. Its worth is as much as the original independent indebtedness was worth at the time of the conversion.” (Booth v. Powers, 56 N. Y., 31.)

It is difficult to see how the addition of the seals altered, in any material respect, the obligation of the town, and unless the legal effect of tiie obligations'were changed, the alteration (if it be such) was an immaterial one. (Casoni v. Jerome, 58 N. Y., 318 ; Waugh v. Bussell, 5 Taunt., 707; People v. Muzzy, 1 Denio, 239 ; Kinney v. Schmitt, 12 Hun, 521.) Again, when the maker of a negotiable instrument puts it forth in a condition so that an alteration can be made without defacing it or exciting the suspicions of a prudent' man, the maker is estopped from urging the alteration as a defense as against a bona fide holder. (Redlich v. Doll, 54 N. Y., 234; 2 Daniels on Neg. Inst., 377.) These obligations were put forth in a condition which permitted the seals to be affixed without affording the slightest ground for suspicion on the part of the most prudent purchaser that they were not in the same condition as when issued. The fact that the bonds become due within less than thirty years from the date of their delivery is not a sufficient reason for their cancellation. The bonds are dated September 1, 1870, and are payable thirty years from their date, with semi-annual interest, as prescribed by the statute. The road at this time was in process of construction. By chapter 507, Laws 1870, the commissioners were authorized to deliver the bonds from time to time as might be agreed upon between them and the railroad company. It was not intended that the bonds should he dated at the time of their delivery. Such a construction would, require the bonds to be payable at different dates. Potter v. Greenwich (26 Hun, 326; affirmed, 92 N. Y., 662), is not in point. In that case the bonds were payable on their face twenty years from date. The action was by the holder to compel a reformation of the bonds, upon the ground that there was a mutual mistake, and it was held that there was no mistake. The fact that the bonds in suit are substitutes for prior bonds to a like amount, and were substituted for the reason and in the manner described in the statement of facts, is not a ground for their cancellation. Even though the bonds could not for this reason be enforced in an action at law the town would have no right to compel their surrender. The town had created a debt which it is bound to pay, and it cannot, without tendering payment, compel the holders of 1¿he evidences of its indebtedness to surrender them for cancellation though irregularly issued.

The four questions last discussed relate merely to defects, if they are such, in the mode in which the commissioners issued the evidences of the indebtedness of the town, not to the power of the town to create the debt or of the liability of the town for its payment. Eor seven successive years, from 1871 to 1877 inclusive, the commissioners reported the amount of the bonds issued, the purpose for which issued, and asked the board of supervisors to levy and collect an amount sufficient to pay the interest on the indebtedness. Eor five successive years, from 1873 to 1877 inclusive, the supervisor of the town made a like report to and request of the board of supervisors. The supervisor is certainly an officer of the town. During these seven years every tax-payer and every officer of this town knew that the bonds were outstanding and that taxes were collected for the payment of the interest, but they, took no steps to review the determination of the county judge and permitted innocent purchasers to become the owners of the bonds. By this action and inaction the town is estopped from requiring the bonds to be surrendered for the alleged defects in the mode in which they were issued by the commissioners.

The judgment of the Special Term is reversed and a new trial ordered, with costs to abide the event.

Boakdman, J., concurred.

Hardin, J.:

I am not prepared to concur in the opinion of brother Follett so far as it discusses the application of the doctrine of estoppel, but in other respects I assent to the opinion and concur in a reversal of the judgment.

Judgment reversed and new trial ordered, costs to abide the event.