Williams v. . Town of Duanesburgh

66 N.Y. 129, 1876 N.Y. LEXIS 204

Opinions

This action is brought to recover interest due on certain bonds, issued and delivered in May, 1862, by one Jenkins, railroad commissioner of the town of Duanesburgh, to the Albany and Susquehanna Railroad Company. The bonds are part of $30,000 of bonds issued by him as commissioner in payment of a subscription of that amount made by the commissioner in the name of the town to the capital stock of the company. They contain a recital that they are issued by virtue of an act of the legislature of the State of New York, entitled "An act to authorize any town in the counties of Schenectady, Schoharie, Otsego, Delaware, Chenango and Broome to subscribe to the capital stock of the Albany and Susquehanna Railroad Company, passed March 31, 1856, and of the acts amending the same," and the bonds, when delivered, created a valid obligation against the town of Duanesburgh, under the enabling acts referred to, provided those acts were a lawful exercise of legislative power, and the commissioner in issuing the bonds, acted within the authority conferred thereby.

The validity of enabling acts, authorizing town and other municipal corporations to subscribe for stock, and to issue bonds in aid of railroad enterprises in the locality, was first considered by this court in The Bank of Rome v. The Village ofRome (18 N.Y., 38), and the constitutionality of such legislation was distinctly affirmed. The question had before that been raised in the Supreme Court, and had been decided both adversely to, and in favor of, the validity of such legislation. In Town of Duanesburgh v. Jenkins (57 N.Y., 177), JOHNSON, commissioner, gave an instructive history of the course of judicial decision in the State upon the subject. The doctrine of the case of The Bank of Rome v. The Village ofRome has not only not been impaired by subsequent decisions, but it has been expressly reaffirmed. (Starin v. Genoa,23 N.Y., 439; Gould v. Sterling, 23 id., 456; see Clark v. The Cityof Rochester, 28 id., 605.) And in the late case of The People v. Smith (45 N.Y., 781), which was a certiorari to review the proceedings on the application to bond the town of Phelps, in aid of the construction of a railroad, ALLEN, J., who delivered a very able opinion, while in the Supreme Court, in Clark v. TheCity of Rochester (13 How., 204), against the validity of municipal bonding acts in aid of railroads, concedes that that view has not received the sanction of the courts.

Cases involving the regularity of proceedings under these enabling acts, have repeatedly been before this court, and while it has uniformly held to a strict construction, and has refused to uphold proceedings under them, unless an exact compliance with the requirements of the statute was shown, it has never assumed to rejudge the question of the constitutional validity of the legislation, upon which the proceedings were founded, although in every case the invalidity of the law would have been a complete and final answer to the claim of authority to issue the bonds. (People v. Smith, 45 N.Y., 772; Same v. Hurlbert, 46 id., 110; Same v. Knowles, 47 id., 415; Same v. Sawyer, 52 id., 296; Same v. Spencer., 55 id., 1; Same v. Smith, 55 id., 135; Same v. Morgan, 55 id., 587.)

The decision in The Bank of Rome v. The Village of Rome was made in 1858, under one of the earliest acts on the subject of municipal bonding in aid of railroad enterprises. After that decision, numerous projects for the construction of railroads in different parts of the State were conceived, which could only be carried out by means of corporate aid extended by the cities and towns through which they were to be constructed. Many of these projected lines of road were of doubtful utility, and many others were in localities where neither population or business warranted the expectation of a profitable traffic. But it was easy in the abnormal condition of the country during the civil war to induce individuals or communities to engage in hazardous enterprises, and to pledge their means or credit to support them. Legislation to enable cities and towns to pledge their credit in aid of railroads was readily procured and municipal bonding for railroads became a recognized part of the system of railroad construction. These bonds were put upon the market, and were purchased upon the faith of the decision in The Bank of Rome v. The Village of Rome. The legislature authorized savings banks to invest the savings of their depositors in them, and they were sought for investment, not by capitalists only, but by trustees and persons of limited means, who desired to invest in available securities promising a fixed and certain income. Under these circumstances, the court cannot at this time, without doing the greatest injustice, overrule The Bank of Rome v. The Village of Rome. The doctrine of stare decisis has here a most forcible application. The rule declared in that case has become in the nature of a rule of property. It is doubtless true, that in many cases severe taxation without compensating benefits will be entailed to pay the indebtedness created under the bonding acts. But the loss must fall either upon the community at large, or upon those who have purchased bonds, the issue of which the legislature sanctioned, and the validity of which this court deliberately affirmed. We adhere to the decision made in The Bank of Rome v.The Village of Rome. The question involved in that case is not now open to controversy in this court.

It is claimed that, conceding the power of the legislature to pass enabling statutes authorizing towns to subscribe for stock or to issue bonds in aid of the construction of railroads the act under which the bonds in question were issued was invalid, for the reason that it did not simply authorize, but required the commissioner, when the consent of the tax-payers had been obtained and the proofs filed, to subscribe for the stock of the railroad corporation, and to issue the bonds of the town in payment therefor. The acts relating to town subscriptions in aid of the Albany and Susquehanna Railroad Company, passed prior to May, 1862 (when the bonds in question were issued) were chapter 64 of the Laws of 1856, chapter 401 of the Laws of 1857, and chapter 384 of the Laws of 1859. Under all the acts, the obtaining of the consent of a proportion of the tax-payers, and the filing of proofs of consent in the town clerk's office, were made conditions precedent to the right of town commissioners to issue the bonds of the town. The act of 1856, as amended in 1857, provided, in substance, that the commissioner, on the consent being obtained and the proof filed, may borrow, on the faith and credit of the town, the sum mentioned in the consents, not exceeding $100,000, and execute bonds therefor. (§ 2.) The third section authorizes the commissioner to dispose of the bonds at not less than par, and invest the proceeds in the stock of the road, and directs that the money shall be used in the construction of the road; and authorizes the commissioner to subscribe for and purchase the stock of the company to the amount for which the tax-payers have consented, not exceeding the sum limited. The act of 1859 provided for a different disposition of the bonds from that contemplated in the act of 1857, and makes such disposition imperative upon the commissioner. The second section is as follows: "Any town now authorized to subscribe to the capital stock of said company, whenever the proofs shall have been filed in the clerk's office, of the consent, etc., in pursuance of an act passed March 31, 1856, as amended April 14, 1857, authorizing a subscription, by the commissioner, in the corporate name of the town, to the capital stock of the company, such subscriptionshall be made by the commissioner, or commissioners, for the amount the tax-payers shall consent to, not exceeding $100,000, in the same manner as individual subscribers; and the said commissioners are hereby authorized and required to issue the bonds authorized by said act in payment, at par, of the stock so subscribed, in installments, as required in case of individual subscribers."

In People v. Bachellor (53 N.Y., 128) this court held that a mandamus would not lie to compel a town to issue its bonds and subscribe for stock in a railroad corporation under a mandatory act of the legislature. In that case the town had not acted; the bonds had not been issued, and no subscription had been made. GROVER, J., in his opinion, considered that an act requiring a town to subscribe for stock in the corporation was equivalent to compelling the town to engage in the business of a common carrier, and thereby subjecting itself to the duties and responsibilities of that relation. He said: "A municipal corporation cannot be compelled to embark in a business of a private character, because its prosecution by it will probably, or certainly, lead to taxation for the capital to be invested, or expenses incurred therein." But I do not understand that case as deciding that the construction of railroads is not a public purpose for which taxation may be justified.

The validity of enabling acts authorizing towns to issue bonds and subscribe for stock in aid of railroads was not questioned. The case of The Bank of Rome v. The Village of Rome was referred to in the opinion, and distinguished. It was not overruled, and no suggestion was made that it was not well decided. The learned judge in his opinion, after stating the question in the case then under consideration, adds: "This is a different question from that decided by this court in The Bankof Rome v. The Village of Rome, and in subsequent cases." If, in this case, the bonds of the town of Duanesburgh had not been issued, and no subscription had been made to the stock of the Albany and Susquehanna railroad, and the proceeding was to compel the town to issue its bonds and subscribe for stock, the case ofThe People v. Bachellor might have some application. But here the town, by its agent, has issued its bonds and subscribed for and taken the stock of the road. This was done after the passage of the act of 1859, but the town commissioner did not act under the compulsion of judicial process, but voluntarily, under the authority of the act. If the performance by the town, or its agent, of the acts directed to be done, could not be enforced, the statute, nevertheless, operated as an authority and permission to do the acts contemplated, and, having been done, they must be considered as having been done voluntarily under this permission and authority. The taking of stock in exchange for the bonds of municipal corporations is a mere incident to the primary purpose of enabling acts of this character, and authority to subscribe for stock to the amount of the bonds issued, or to invest the proceeds of the bonds in the stock of the railroad company which the municipality is authorized to aid, may be lawfully conferred. In The Bank ofRome v. The Village of Rome authority was given to the village by the act in question in that case to subscribe for the stock of the railroad mentioned in the act, and to provide for paying therefor by the issue of corporation bonds. This decision covers the question as to the power of the legislature, in both aspects. For these reasons, I am of opinion that the objection to a recovery, founded upon the mandatory character of the act of 1859, cannot be sustained.

It is claimed that the affidavits filed prior to the issuing of the bonds were defective, and did not show that the requisite number of tax-payers had consented. Proofs were filed in the proper clerk's office, in attempted compliance with the law, which show that consents were obtained, in some form, of a large number of tax-payers to the issue of the bonds; but the affidavits are confused and uncertain, and, while it does not appear that the requisite consents were not obtained, it must, we think, be conceded that the affidavits fail to show affirmatively this fact. It is the doctrine of this court, established in the cases arising under statutes for bonding towns in aid of railroads, that when the right to issue the bonds of the town is made by the statute to depend upon the consent of tax-payers, or other conditions precedent, and the bonds are issued without the conditions having been performed, they are void in whosesoever hands they may be. But the legislature may overlook a defective execution of the power conferred, and, by retroactive legislation, cure defects in the action of municipalities under these statutes. The legislature may, in the first instance, prescribe the conditions upon which the bonds may be issued. It may designate the agencies through which the municipality shall act, and determine what measure of consent of tax-payers shall be required, and in what form it shall be expressed. It may by subsequent legislation, when there has been a failure to perform conditions precedent, and the bonds have been issued, dispense with such conditions, and ratify and confirm, and make valid and obligatory upon the municipality, bonds issued without such performance — at least, it may do so in cases where the municipality has, through the construction of the road, or by the receipt of the stock of the company in exchange for the bonds, received the benefit which the statute contemplated as the equivalent for the liability it was authorized to incur. The officers authorized under these statutes to issue the bonds, are public agents and the legislature, looking over the whole matter, may, when in its judgment justice requires it, ratify and confirm their acts, which otherwise would be valid. In this case the legislature could originally have authorized the bonds of the town of Duanesburgh to be issued under the precise circumstances existing when they were issued, and if the acts of the commissioner 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 Duanesburgh v. Jenkins,supra; Gelpcke v. Dubuque, 1 Wal., 203; Thompson v. LeeCounty, 3 id., 377; Beloit v. Morgan, 7 id., 619; St.Joseph Township v. Rogers, 16 id., 663; Shaw v. NorfolkCounty Railroad Co., 5 Gray, 180; Cooley Const. Lim., pp. 371-379, and cases cited.)

By chapter 402 of the Laws of 1864, it was provided as follows: "And when bonds have been issued by the commissioner or commissioners of any town, and the said [Albany and Susquehanna] railroad shall have been constructed through such towns, the bonds shall be valid and binding on said town, without reference to the form or sufficiency of such affidavits, and the principal and interest on the bonds shall be levied, raised and paid in the manner provided in the original act."

This statute applies to the bonds issued by the defendant and operates as full and complete legislative declaration and recognition of their validity. (People v. Mitchell, supra;Town of Duanesburgh v. Jenkins, supra.)

The judgment should be affirmed.