author: Learned, P. J.: Rumsey, J.

text:
    JAMES G. AVERELL and Others, Respondents, v. DAVID DAY, 2d, and Others, Commissioners, etc., Appellants.

      Action to vacate an assessment, as a cloud upon title — when the defendants cannot show that the defect appears upon the face of the records.

    The complaint alleged that the defendants, acting as commissioners under chapter 888 of 1869, had levied an assessment upon the plaintiffs’ lands, which was an apparent lien thereon and a cloud upon the plaintiffs’ title thereto ; that the assessment was in fact void, because of certain defects mentioned in the complaint, which defects did not appear in the statement and apportionment, and would not necessarily appear in any proceedings to enforce the collection of the assessment. The answer denied the existence of the irregularities specified in the complaint; set forth the proceedings taken by the defendants; alleged that they were regular and that the assessment was valid. It did not deny the allegations of the complaint, to the effect that the irregu-. larities and defects therein mentioned did not appear m the statement and apportionment, and would not necessarily appear in the proceedings to enforce' the assessment tjpon the trial it appeared that the assessment was invalid by reason of the irregularities mentioned in the complaint, and also by reason of an error appearing on the face of the records made by the defendants.

      Held, that the defendants having admitted that the irregularities, for which it was sought to set aside the assessment, did not appear on the face of the records, could not have the complaint dismissed, because there was another defect, which did so appear. (Kumsey, J., dissenting.)
    Appeal from a judgment in favor of the plaintiffs, entered upon the report of a referee.
    This action was brought to annul an assessment levied upon the plaintiffs’ lands by the defendants, as commissioners for the draining of Birch Creek Swamp, under chapter 888 of 1869, upon the ground that the proceedings of the commissioners and their subsequent assessment were void, by reason of non-compliance by the said defendants, as commissioners, with the statute under which they were appointed, in matters none of which were required to appear of record.
    The^ complaint after setting up certain alleged irregularities, proceeded: “ And plaintiffs aver that by reason of the said improper principle upon which the same was made, and of the omission of the defendants to give said notices, as aforesaid, and to - acquire title to the lands over which said ditch or channel was constructed by them, or to the said easement npon or across any of said lands, the said apportionment or assessment against the plaintiffs is invalid and void and ought not to be enforced, but that the same does not appear in said statement and apportionment, and will not necessarily appear in any proceedings to enforce the same; and that the same remain as apparent liens upon plaintiffs’ said lands and clouds upon their title thereto and the record thereof.”
    The answer denied the existence of the alleged irregularities, and alleged that the assessment was valid. It did not deny that the irregularities did not and would not appear on the face of the proceedings.
    At the close of the plaintiffs’ case, the defendants made a motion for a nonsuit and dismissal of the complaint, on the grounds that plaintiffs had not established a cause of action, for the reason that the very defects in the proceedings of the commissioners alleged by the plaintiffs appear upon the records of the proceedings of the commissioners, and would necessarily appear in proceedings to collect the tax or by a claimant under a tax title in an attempt to enforce his lien.
    At the close of the testimony in the case they renewed their motion for a nonsuit upon the ground already stated, and upon the further grounds, specifically, that the determination filed by the commissioners does not state that the ditching was required by the public health, and that therefore the assessment is not a cloud npon the plaintiffs’ title; and also upon the further ground that neither the petition to nor the order of the county judge states that the ditching was necessary for the public health, and. consequently all subsequent proceedings of the commissioners are invalid upon their face, and the assessment does not constitute a cloud upon the plaintiffs’ title.
    Both motions were denied by the referee.

      L. W. Russell, for the appellants.

      L. Hasbrouck, for the respondents.
   Learned, P. J.:

This is an action to annul and set aside an apportionment and assessment. The complaint alleges certain facts showing that the assessment is void; alleges that it is a clond on plaintiffs’ title, and, further, that the invalidity arising on these facts does not appear in said statement and apportionment and will not necessarily appear in any proceeding to enforce the same. The answer, at some detail, sets forth the action of the defendants in making the assessment and apportionment, and avers that the proceedings have been regular and valid. It does not aver that the facts on which the invalidity is based, as stated in the plaintiffs’ complaint, do appear in the statement and will necessarily appear in any proceeding to enforce the same.

The referee found with the plaintiffs that the assessment was invalid, and as it.was admitted in the pleadings that the invalidity would not appear, etc., he directed judgment in their favor. At the close of the evidence the defendants asked leave to amend their answer so as to set up that there was a defect, which was apparent on the face of the assessment, and therefore that the assessment was no cloud upon plaintiffs’ title. The referee ordered that they might so amend on certain terms.

The point now presented by the defendants is, that as the assessment shows on its face that it was invalid this action cannot be maintained. The plaintiffs say that the pleadings admit the contrary and that no such defense is set up in the answer.

It seems to me that the learned referee was right. Here is an action brought to set aside an assessment as invalid and as a cloud upon title. The plaintiffs, recognizing the familiar decisions^ aver that the invalidity does not appear in the assessment and will not necessarily appear in proceedings to enforce it. The defendants do not deny this, but they allege the validity of the assessment and rest on that defense. They give no indication that they will insist on the defence that there is a patent defect in the assessment, and that for this reason, though the assessment is void, this action is needless.

The courts refuse to sustain actions to set aside assessments because the party will usually have a sufficient remedy at law. Thus if the assessment is invalid on its face, there will be a sufficient remedy at law. But the defense that there is a sufficient remedy at law must be pleaded. [Le Roy v. Platt, 4 Paige, 77.) Or even if we say that in this present case the plaintiffs were required to show as a part of their cause of action that the invalidity did not appear on the face of the assessment, we have the admission of the defendants on that very point. The defense that such invalidity appeared was not set up and the defendants cannot avail themselves of it (Codd v. Rathbone,, 19 N. Y., 37), even though the fact should appear on the trial by evidence introduced for another purpose, I think it would be unjust to permit the defendants, who have litigated this action on the ground that the assessment was valid, to avail themselves now of the ground that it was so utterly invalid that the action was unnecessary.

The judgment should be affirmed, with costs.

Rumsey, J.

(dissenting);

The action is brought to set aside an assessment levied upon the lands of plaintiffs by defendants acting as commissioners undef chapter 888, Laws of 1869.

The complaint alleges that the assessment made by the defendants is an apparent lien and cloud upon plaintiff’s title to the lands mentioned in it, but that it is in fact void because of certain defects mentioned in the complaint, and which defects' it allegés will not appear in the statement and apportionment, nor in any proceedings which may be taken to enforce the assessment. The answer denies the existence of these irregularities, and alleges that the proceedings are regular and valid, but does not deny that the particular irregularities mentioned in the complaint will not appear on the face of the proceedings, or in any proceedings taken to enforce the assessment.

The referee found that the defects alleged in the complaint existed; that they invalidated the assessment, and that it was admitted by the pleadings that they did not appear on the face of the proceedings, and ordered judgment for the plaintiffs for the relief demanded in the complaint, which was • entered accordingly, and this appeal is taken.

The rule has been settled in this State for many years that to authorize the court to intervene to set aside an assessment as a cloud on the title of the plaintiff, he must make it appear that the claimant, under the assessment, would not, in his attempt to enforce it, develop, defects rendering it invalid by the proof which he would be obliged to produce. (Guest v. City of Brooklyn, 69 N. Y., 506, 513, 514; Marsh v. Same deft., 59 id., 280, 283, 284; Scott v. Onderdonk, 14 id., 9.) At the close of the plaintiffs’ case, defendants moved for a nonsuit upon the ground that the proceedings of the commissioners were invalid, and that the invalidity appeared on the face of the proceedings. This was denied, and defendants excepted. The correctness of this.ruling is the first question raised. The record of the defendants’ proceedings as commissioners then appeared in the case, and they were a necessary part of the plaintiff’s case, for without them there would have been no foundation for the assessment, and it could not have been pretended that it constituted a lien. (Sharp v. Speir, 4 Hill, 76.) It appeared by these papers that it was not determined either by the commissioners or by the county judge that it was necessary for the public health that such lands should be drained, as> required by section 6 of the statute. This determination was essential, not only to the validity of the proceedings, but to the constitutionality of the statute. (Matter of Ryers, 72 N. Y., 1—7; Burk v. Ayers, 19 Hun, 17-24.) "Without that the proceeding is utterly void, and except for that purpose the legislature has no authority to permit the land to be taken. The plaintiffs had, therefore, failed in their case. They had not shown an Assessment apparently valid on its face.

But their learned counsel insists that the answer admits that the invalidity does not appear on the face of the proceedings. That is not quite correct. Giving to the constructive admission all that can be claimed for it, it goes no further than the allegations of the complaint. Those allegations do not mention this irregularity, and consequently nothing is admitted concerning it. I do not think the defendants were called upon to set up the fact that this flaw appeared in the record. As we have seen, it was for plaintiffs to prove an assessment, which but for extrinsic evidence would be valid. If they fail there, they do not make out their case. (Marsh v. Brooklyn, 59 N. Y., 280.) And the defendants can take advantage of this defect, as soon as it Appears, as they may of any failure of the plaintiffs’ proof.

The plaintiffs claim further that the certificate of sale provided for in section 13 is presumptive evidence of the regularity of all previous steps in the matter and entitles the purchaser without more, to take possession of the land, and therefore the action may be maintained on the authority of Scott v. Onderdonk (14 N. Y., 9). We need not discuss the effect to be given to this certificate, for there is none. The plaintiffs have put themselves on the void assessment.

Conceding that the certificate if given would be a cloud on the plaintiffs’ title, it cannot be a lien until it exists. Thus far the plaintiffs’ case shows only an attempt to make an assessment which is utterly void. Not only is no title asserted, but the case shows that there is nothing on which to base an assertion of title. It is just the case in which Scott v. Onderdonk holds that the action will not lie.

I am not insensible to the apparent hardship of the situation in which the plaintiffs are placed. But the well settled rules applicable to this class of cases cannot be changed to meet special emergencies. If the defendants are in fact defending this case- in bad faith, and with knowledge of the invalidity of the assessment, the court upon a new trial can take that fact into consideration in the award of costs, which are in its discretion.

The judgment must be reversed, the referee discharged, and a new trial ordered, costs to abide the event.

Present — Learned, P. J., Rumsey and Osborn, JJ.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Rtjmsey, J.:

license: Public Domain

text:
    ELIZABETH SNYDER, Appellant, v. SYLVESTER SNYDER and Others, as Executors, etc., Respondents.

      Costs in an action against an executor — when the plaintiff is entitled to them, as a matter of right — 3 B. 8., 90, sec. 41.
    The refusal of an executor to refer a disputed claim presented against the estate entitles the claimant under section 41 (3 R. S., 90) to costs, as a matter of right, in case he recovers a judgment in an action brought thereon in the Supreme Court.
    Appeal from so much of an order made at Special Term as denies costs to the plaintiff.

      S. D. Ifalliday, for the appellant.

      Merritt King, for the respondents.
   Rtjmsey, J.:

The plaintiff having a claim against the defendants’ testator, presented it to the executors, who refused to allow it and refused to refer it under the statute. The plaintiff then brought suit in this court. The action was referred and the referee reported in favor of the plaintiff. ' She then moved at Special Term to confirm the report and for costs. The report was confirmed and judgment ordered on it, but without costs. From so much of the order as refuses costs plaintiff takes this appeal. The action having been commenced before the 1st day of September, 1880, the right to costs is controlled by the Revised Statutes. (Code Civil Pro., § 3347, sub. 11.) The section which bears on that subject provides that no costs shall be recovered in any suit at law against executors, unless it appear that the demand on which the suit was founded was presented, and “ that its payment was unreasonably resisted or neglected, or that the defendant refused to refer the same.” If either of these things appear, costs are a matter of right. In this case it is undisputed that the defendants refused to refer. Plaintiff should therefore have had costs awarded to her. (Fort v. Gooding, 9 Barb., 388; Stephenson v. Clark, 12 How. Pr., 282.)

So much of the order as is appealed from should .be reversed, with ten dollars costs and printing disbursements, and costs of the action to be taxed should be awarded to plaintiff.

Learned, P. J., and Osborn, J., concurred.

Order denying costs reversed, with ten dollars costs and printing disbursements, and costs granted.


author:
Rumset, J.:
      Osborn, J.: Learned, P. J.

text:
    LEWIS POTTER, Respondent, v. TOWN OF GREENWICH, Appellant.

      Town bonds — a bond running a shorter time than that specified in the statute is void on its face — the court has no power to reform, the bond — action against a town — what facts do not give a right of action.

    In 1871, the railroad commissioners of the town of Greenwich, appointed and acting under chapter 907 of 1869, signed and issued bonds of the town to the amount of $40,000, which were by their terms due and payable twenty years, instead of thirty years after their date as required by the statute. The bonds were delivered to one Andrews, the treasurer of the railroad, as an agent to sell them and purchase railroad bonds with the proceeds . Andrews delivered in exchange for suchbonds, bonds of the railroad company for $50,000. The town bonds were sold by Andrews, and one of them was purchased by the plaintiff. Interest on the town- bonds was paid by the railroad company until 1877, and thereafter until January, 1879, by the town, which, since the last-mentioned date, has refused to pay the interest; but no interest was paid by the railroad company on the $50,000 of bonds given by it to the town.
    In this action brought by the plaintiff upon the bond purchased by him:

      Held, that the bond was void upon its face, and that no recovery could be had thereon against the town.
    That the court had no power to reform the bond by so altering it as to mate it payable thirty instead of twenty years from its date. (Learned, P. J., dissenting.)
    The complaint, as a second and separate cause of action, alleged that the defendant purchased from the railroad company $50,000 of its bonds, and in payment thereof delivered to the company its own bonds for $40,000, the company and the defendant each believing the bonds so delivered to be good and valid ; that the plaintiff thereafter purchased from the company one of the defendant’s bonds; that interest was paid until January 1, 1879; that thereafter the plaintiff presented the coupons then due to the supervisor of the defendant, who refused to pay the same, alleging that the said bond was illegal and void ; that the plaintiff thereupon tendered to the supervisor the said bond, and demanded the return of the money he had paid thereon, but that the supervisor refused to repay the same or any part thereof.

      Held, that the facts stated did not constitute a cause of action. (Learned, P. J., dissenting.)
    Appeal from a judgment in favor of tbe plaintiff, entered upon the trial ’ of tliis action by the court without a jury, and from a judgment entered upon an order overruling a demurrer to the second and third causes of action set forth in the complaint.
    The action was brought upon certain bonds issued by the defendant to aid in the construction of a railroad. In the nrst cause of action set forth in the complaint the facts attending the issue of the bonds and the plaintiffs acquisition thereof were fully stated. The second and third causes of action were as follows:
    “ For a further and separate cause of action the plaintiff alleges upon his information and belief that heretofore, and on or about the first day of June, 1871, the defendant purchased and received from the Greenwich and Johnsonville Railroad Company aforesaid, $50,000 (nominal value) of the said company’s second mortgage bonds, agreeing to pay' therefor the sum of $40,000, and as evidence of said indebtedness caused to be executed and delivered to the said railroad company eighty of its bonds of $500 each, in form alike, except numbered from one to eighty consecutively; a copy of said bonds are hereinbefore set forth; that said defendant and said railroad company each understood, believed and intended that said bonds so delivered were good and valid obligations of said defendant; that thereafter and about the day of , 1871, the plaintiff, at the request of defendant, purchased from said railroad company a bond numbered eight, a copy of which is hereto .annexed, marked ‘ A,’ and paid the company therefor the full face value thereof in cash, who then became, and ever since has been, the lawful owner and holder thereof, and of the claim which the same represents against defendant, and said railroad company duly expended the said money in the construction and equipment of their said road.
    “That thereafter, and until the 1st day of January, 1879, the said defendant paid the interest that became due thereon, and took up the interest coupons as the same fell due; that since the last mentioned date the defendant has neglected and refused to pay the interest that became due, or any part thereof; that on or about the 25th day of March, 1880, plaintiff duly presented the said coupons, then due for interest as aforesaid, to the supervisor of said defendant, and demanded payment thereof; payment was refused, and he, alleging that said bond was illegal and void, refused to pay the same, thereupon plaintiff tendered to said supervisor the said bond and demanded to be repaid the money advanced by him for said hond, and said supervisor refused to repay the same or any part thereof.

      “ That said coupons now due were, after the same became due, and before the commencement of this action, duly presented at the place where the same were made payable, and payment demanded and refused.
    “ That the said bond or interest has not been paid or any part thereof. ■

      “ For a further and separate cause of action the plaintiff alleges that on or about the 1st day of June, 1871, the plaintiff, at the request of the defendant, and for its legitimate and lawful use and benefit, advanced, laid out and expended the sum of $500, which sum the said defendant promised to repay, with interest; that the same became due and payable on or about the 1st day of January, 1879; that no part thereof has been paid, except the interest thereon up to the 1st day of January, 1879.
    “ That there is now due and payable to plaintiff, by reason of the foregoing, the sum of $500, with interest thereon from January 1, 1879.
    “ Wherefore the plaintiff prays a decree and judgment of this court, that said bonds or instruments may be corrected and made to conform to the statute under which the same were issued, in accordance with and as the said parties thereto intended the same should be and were when issued and sold, and the same as corrected be declared a charge upon the real and personal estate within the limits of defendant, and to pay the interest due thereon from January 1, 1879, and in case said bonds cannot be so corrected, then the said defendant be decreed to pay the plaintiff the sum of $500, the amount advanced to defendant and for its benefit, with interest thereon from January 1, 1879, with costs of this action.”

      Eselp Cowan, for the appellant.

      J. W. Rill, for the respondent.
   Rumset, J.:

The case shows that in March, 1871, an adjudication was made, under the authority of chapter 907, Laws of 1869, by the county judge of Washington county, in which it was recited that a petition had been presented to him under the act, setting forth certain facts required by it and asking that tbe bonds of the town may be created and issued in the manner specified in it to the amount of $40,000, and invested in the second mortgage bonds of the Greenwich and Johnsonville Railroad Company, at eighty cents on the dollar, and adjudging that the allegations in the petition are proved, and that the petitioners represent a majority of the taxpayers, and of the taxable property on the last assessment roll, and directing that the order be entered and recorded in the Washington county clerk’s office. No petition, or notice, or proof of publication was offered in evidence or proved unless by the recitals in the order, nor was there any evidence of the appointment or commissioning of. commissioners, except the parol testimony of the county judge, and no proof of the loss of any of the papers not produced, or that they ever existed, except as they were recited in the adjudication.

It appears further that certain persons claiming to be commissioners under this record, signed the bonds of the town for $40,000, making them due and payable by their terms in twenty years, instead of thirty years, as required by the statute. The learned justice at Special Term finds that the commissioners intended to issue the bonds to conform to the statute, but committed the drafting of them to a scrivener, who by mistake made them read that they are payable in twenty years instead of thirty, and that the commissioners being inexperienced in such matters assumed the bonds to be correct, and inadvertmily issued them and sold them. He also found that they intended to do right, and intended to do what they did do supposing it was right.

The evidence on this subject shows that the bonds were prepared for signature without-any direction or supervision of the commissioners ; that the only commissioner who was sworn on the subject, had never examined the law, nor taken any advice on it, and paid no attention to it; that he read the bonds before he signed them, and intended to execute them in the precise form in which they were executed. It was further found that the commissioners, after they had signed the bonds, left them with one Andrews, who was treasurer of the railroad company, who sold them, and with the proceeds purchased railroad bonds. The plaintiff testified that he paid cash for his bond; but there was no evidence except the hearsay declarations of Andrews, given under objection, to show how the other bonds were sold, or that they were in fact sold, and not exchanged. No officer or taxpayer of the town, except the commissioners and Andrews, ever saw the bonds, or knew of the defect in them until after the last payment of interest by the town, which was in July, 1878.

The bonds amounting to $40,000 bore interest at seven per cent. The railroad bonds amounting to $50,000 also bore interest at seven per cent. Up to 1877, the interest on the town bonds was paid by the railroad company, which paid seven per cent interest on the town bonds of $40,000 directly to the holders of them; but did not pay to the town any of the interest on its $50,000 bonds held by the town. No interest was ever paid on the difference of $10,000.

The plaintiff had no communication with any of the commissioners when he bought his bond, but dealt with Mr. Andrews exclusively. The bonds, were by their terms due and payable July 1, 1891, and interest coupons were attached for each year to 1891, payable alternately on the first days of January and July in each year. Upon the trial of the issue of fact raised on the first cause of action set out in the complaint, the court held that the town never ratified the bonds; that the commissioners had no power to make the bonds payable in less than twenty years, but that the statute providing that the bonds shall be due and payable in thirty years overrides and controls the words of the bonds fixing an earlier date for their payment, and that so much of the bonds as prescribes an earlier date of payment than that fixed by statute should be corrected and conformed to the statute, and ordered judgment for that relief and for the interest unpaid.

. Judgment was accordingly entered correcting plaintiff’s bond by erasing the words “ to pay on the first day of July, 1891 ” and inserting instead the words “ to pay at the expiration of thirty years from the date hereof,” and otherwise as directed in the decision, and defendant appeals.

It must be taken as established in this State that everyone who deals in bonds of a town must see to it that the statute which authorizes their issue has been complied with at his peril; that the commissioners to issue the bonds not being appointed by the town are not town officers, and represent the town no farther than they act within the statute, and that there can be no such thing as a bona fide holder of these bonds. (Cagwin v. Hancock, 84 N. Y., 532; Horton v. Town of Thompson, 71 id., 513; Angel v. Town of Hume, 17 Hun, 374.) If the courts of the United States have adjudged the law differently, their rulings are not yet controlling against the decisions of the highest court of our own State, and we ought not, as we do not desire, to follow them. Justice to all parties in these matters can best be secured by a' strict adherence to what the law has required to be done.

The acts of the commissioners are binding on the town only so far as they follow the authority given to them. (Horton v. Town of Thompson, supra.) The statute here required that the bonds should become due and payable in thirty years with semi-annual interest. Unless they were so payable they are void. The commissioners cannot impose upon the town any other bonds than such as the law authorized. They are, the agents of the town only to do the acts prescribed by the statute, and in the way prescribed by it. The taxpayers .never consented to the issue of twenty-year bonds. The petition, as recited in the judgment, asked that the. bonds might be issued as specified in- the law. That required a thirty-year bond. No taxpayer consented to anything else, and as the consent of the taxpayer is the basis of the right (Horton v. Thompson, supra; People ex rel. D. W. and P. R. R. Co. v. Batchellor, 53 N. Y, 128) no other bond is valid or .binding on the town. The case of Rock Creek v. Strong (96 U. S., 271-277) was decided upon the ground that the bonds there in question were practically thirty-year bonds and within the statute. The learned justice at Special Term held that these bonds, if regarded as payable in twenty years, were not within the power of the commissioners. It was therefore necessary to correct them before they could be made a charge on the town. This having been done, it is sought to sustain it on two grounds: First. That they were made payable in twenty years by mistake. The facts in regard to the mistake I have stated in a former part of this opinion. The commissioners were not mistaken as to the law, for they paid not the slightest' attention to it. They were not mistaken as to the facts, for it appears and is undisputed that they made the bonds just as they meant to do, and signed them after reading them’ over without any misapprehension as to what they contained. They made no mistake whatever; they simply issued the bonds in this manner without taking the trouble to inquire whether they were valid or not. Such a mistake cannot be corrected in equity. (Lanning v. Carpenter, 48 N. Y., 408; Mowatt v. Wright, 1 Wend., 355; Hunt v. Rousmaniere, 1 Pet., 13.)

The second ground on which these bonds were reformed, and the ground mainly relied on to sustain this judgment, is that by the force of the statute the bonds are payable in thirty years, and therefore the statute overrides the contract of the parties in whatever form it is put and makes these bonds payable in thirty years by its own force. In discussing this point it is necessary to keep the idea of a mistake out. of our minds, for there was no mistake, and to remember that the bonds are just what the contract of the parties intended them to be, twenty-year bonds. It is also to be remembered that the town has never ratified the act of these commissioners.

Conceding that the transaction was between the plaintiff and Andrews acting as the agent of the commissioners, it was not a loan of money upon the security of a bond to be issued as provided by the statute.' The bonds were made and signed and the plaintiff bought this twenty-year bond knowing just what it was. The statute was not in the mind of either. No previous agreement had been had. The bond was there, made as they intended, and the plaintiff bought it precisely as it was. The contract was in the bond, and there was no mistake about it as long as the interest was paid. The contract they made was, not to be sure, the one they were empowered to make. The town authorized them to issue thirty-year bonds. The commissioners did not do it. They issued twenty-year bonds which were worth less than the bonds they were authorized to issue. They sold them and used the money. In doing this they were not acting as public officers. The town was acting as an individual when this contract was made for it. (People ex rel. D. W. and P. R. R. Co. v. Batchellor, 53 N. Y., 128-141, and cases cited.) The commissioners acted for the town as all other special agents do for their principals. If they go beyond the authority granted the act is not binding on the principal, in the absence of an estoppel. (Munn v. Commission Co., 15 Johns., 44; Corn Exch. Bank v. Cumberland Coal Co., 1 Bosw., 436; Horton v. Town of Thompson, supra, 521, 522, 524; Cagwin v. Hancock, 84 N. Y., 542; Martin v. Farnsworth, 49 id., 555-558.)

As we have seen, these bonds in their physical shape are void and of no force. But it is said that the statute is part of the bond and fixes its terms. If that be so no bond can be invalid for want of form, if it purports on its face to be a bond issued under the act and contains-an amount to be paid, signatures and seal, for the statute provides everything else. Nor was there any need of this suit, for the bonds are not due, and their time of payment being fixed by the statute there is no uncertainty about the rights of the parties to them.

But the law and the contract are by no means the same thing. The law is the grant of power to the town and that which gives foi’ce to the contract when it is made, and at the same time it is-the limit of the authority of the special agents to bind the town. (Horton v. Town of Thompson, supra, 522, 524.) The contract,, on the contrary, is the result of the assent of the minds of the commissioners with the purchasers of the bonds. It is contained in and evidenced by the paper which they have made.

The essence of the contract is the agreement of the minds of the parties. This the legislature cannot create. (People v. Batchellor, supra.) It may fix the manner in which the act shall be done, but it could not say that the act done in an entirely different manner shall operate in a way the parties have not expressed.

If the parties have made the statutory contract, it is good because the law permits it and the contract has been made. If they have made a different contract, with their eyes open, the law simply says, “ that is not the thing I authorized.” It does not say, “ you have chosen to agree on some other thing, and- I will, against your protest, make your minds meet in a bargain you never made.”

It is an old rule that every statute which limits a thing to be done-in a particular form, although it be in the affirmative, includes in itself a negative, viz.: that it shall not be done otherwise. (Plowd. Comm., 206.)

If the statute is a part of the act, this rule is of no use, for the-act cannot be done in any other way. Indeed, if the rule contended for by the respondent be the true one, no act done under statutory-authority, with good intentions, can ever be void, for the statute-being portion of the aet, overrides the void part and makes all good. That makes the validity of such an act depend on the intention with which it-was done. But in the absence of fraud or mistake the intention of the contract must be sought in the paper. (Pollock on Cont., 438.) Any other rule would give rise to most distressing uncertainty. Suppose we adopt the rule of the Special Term. The plantiff paid no attention to the law, but thought the bonds were good. As to him they are good because he meant right. Another purchaser knew what the law was; knew the bonds were wrong, but deliberately violated the law, and took his chances. Is the bond to be held good as to him ? If it is, what becomes of the maxim that he who comes into equity must come with clean hands ?

These commissioners acted in disregard of the requirements of the law, because they did not know what it was. Suppose that after they had issued half of the bonds they had accidentally learned what the law was, but deliberately resolved to violate it? Would any part of the bonds last issued be valid? Would the validity depend upon the proof or failure to prove the guilty knowledge ? In these very bonds, suppose that in a suit by another plaintiff another commissioner should swear that he knew what the law was, but for his own reasons proposed to violate it — and Mowry was not sworn Would those bonds be held good or bad?

When does the statute of limitations run against this bond? If the plaintiff should sell it, without changing its form, and should guaranty its payment, when will his liability begin? Suppose these bonds, by their terms, bore interest at four per cent, payable annually. Could any one insist that the town must pay seven per cent semi-annually ? Certainly not. And yet that is the rate the statute prescribes. JVIany other difficulties might be suggested as the result of leaving the terms of the paper and settling its validity by the varying evidence of the intention of the parties. I think the only safe rule must be to hold the party in this, as in all other cases, to his rights as fixed by the contract he has made, and to hold that where the agents of a corporation fail to pursue the strict requirements of a statutory enactment under which they are acting, the corporation is not bound, and the contract is not effective. (Smith v. Newburgh, 11 N. Y., 130, 136; Delafield v. State of Illonois, 26 Wend., 192, 221.) It cannot be claimed that the town is estopped to urge that these bonds are void. (Town of Springport v. Teutonia Savings Bank, 84 N. Y., 403, 406; Weismer v. Village of Douglas, 64 id., 91, 105.) Neither has it ratified them. (Smith v. Newburgh, supra; Horton v. Town of Thompson, supra)

The legislature has from time to time passed curative statutes by which technical defects in the exercise of statutory powers have been remedied. In 1877, it provided by chapter 320, for the cure of certain defects of the nature of that urged here, and enacted that where the time fixed for the maturity of such bonds was for a longer period than that fixed by the law, a variance of sixty days should not be regarded as ■ affecting the validity of them. If the statute is part of the bond, and overrides all provisions which contradict it, these statutes are of no force, and all the decisions as to the power of the legislature to pass them, are useless learning, because there can be no such thing as a statutory bond which contains provisions contradictory to the statute.

I do not see any principle on which the judgment on the issue of fact can be sustained. No precedent is cited for it and it cannot stand. I do not mean to say that under a complaint containing proper allegations the money paid for this bond may not be recovered if it was bought of the town. That question is not here.

The demurrer to the second cause of action is, I think, well taken. Towns as such have no power to contract, other than the statutes give them. (Lorillard v. Town of Monroe, 11 N. Y., 392; People ex rel. Van Keuren v. Town Auditors, 74 N. Y., 310-316.) If the right is given by a private statute it must be stated in the pleading. (Code Civ. Pro., § 530.) None such is stated.

If it is given by. a public statute we must take notice of it. We know that there is no public statute which of its own force, without some action on the part of the town, authorizes it to buy railroad bonds and issue its own to pay for them. No facts are stated which show that the town had such authority. It is not even alleged that such authority existed. If proceedings were had or authority given to enable the town to issue its bonds, they must be set out in the count in question. No other count can be referred to for them. (Bliss, Code Pleadings, § 121.) 'The case of Horn v. Town of New Lots (83 N. Y., 100) does not aid the plaintiff. It was alleged in that case that by mandate and authority of acts of the legislature which were cited, the bonds of the defendant town had been issued, and that the money of plaintiff, raised by a void tax, had been applied in payment of them. The court overruled the demurrer to the complaint there, because it appeared that the money ■ went to pay bonds legally issued by the town, and was therefore paid to its use.

But in the case at bar there are no facts alleged which show the power of the town to make this contract. The demurrer does not admit the power. That is a legal conclusion from the facts. The demurrer admits the facts and takes issue on the legal conclusion. (Bliss, Code Pleadings, §§ 136, 137.) The case of Town of Wayne v. Sherwood (14 Hun, 423; S. C., 76 N. Y., 599) is in point. In that case the plaintiff alleged that the defendant’s intestate made a certain contract with it. The defendant demurred. The demurrer was sustained on the ground that, although the act was done as alleged, the town had no power to make the contract and no cause of action was stated.

But if the bond is part of the second count, as is claimed, the plaintiff is no better off. If the statement in the bond must be taken as true, it is that the bond is lawfully issued and that it is valid. If the demurrer admits anything in the bond it admits that. If the bond is valid it is not due, and there can be no cause of action on it until it is due. There is no allegation that the bond is void. The complaint alleges that the supervisor refused to pay, saying that the bond was void, but that does not amount to an allegation that the bond was in fact void, or that the defendant claimed it was void, for the law does not give the supervisor the right to speak to that effect for the town. He has no more right than any other taxpayer to repudiate its lawful debts.

The same considerations apply to the third cause of action. (See City of Rochester v. Town of Rush, 80 N. Y., 310, 311, 312.)

For these reasons the judgment on the issue of fact must be reversed and a new trial ordered, costs to abide event; and the defendant should have judgment on the demurrers, with costs, with leave to plaintiff to amend on usual terms.

Osborn, J.:

I have spent much time in the examination of this case on account of the disagreement of my associates. I am inclined to think with my Brother Learned, that if the power of the legislature to authorize towns to issue bonds to aid in the construction of railroads was before the court now as an original question, with the knowledge which they now possess of the practical workings of such' power, they would hesitate long before giving their sanction to the validity of such legislation. But it is too late now, particularly for an inferior appellate tribunal, to raise any such question, but it is well at all times to keep this fact in mind so that there shall be no extension of mischief already done, by undertaking to extend or stretch the law as already settled to meet a particular case.

The bonds issued by the town of Greenwich could only be so issued by an act of the legislature. This, it is claimed, was obtained. Except for this legislative enactment no one would claim that the bonds that were in fact issued had any validity. All the officers in the town might unite in issuing bonds purporting to create an indebtedness of the town, but these would not be worth the paper they were written or printed on. Innocent purchasers might procure them, but this would create no liability on the part of the town. Even if under any circumstances such authority could be exercised by officers, this would be most clearly true, unless it could be shown ’ that the money was actually received and used by the town, and for which the town received (its taxpayers equally) full benefit by way of paying the ordinary and legitimate expenses of the town, and so-have relieved the town from the burden of taxation pro tanto. In. this case the bonds issued were void on their face. The town, its-officers or the commissioners appointed, had no authority to issue’ any such bonds. The act should be strictly construed. Upon the face of the bonds the act was referred to, and even'to an innocent purchaser the maxim “ ignorantia legis neminem exousat ” might well apply.

There is nothing to show any mutual mistake of facts or even ignorance of the law in the issuance of these bonds. On the contrary, the opposite appears.

I do not think the court had the power to reform the bond in suit. Such a contract, creating an indebtedness on the part of the town, could only be valid as it was in strict conformity with the statute. Suppose the bonds through the grossest negligence had been issued by the supervisor and town clerk instead of the commissioners Appointed for that purpose, would the court reform, by allowing the parties to sign, or regarding the parties as signing, whose duty it was to sign ? As well have made these bonds payable in a thousand years or on demand, and then ask the court to reform, as to do so in this case. It is quite unlike the reformation of contracts, which parties have the legal right to make, either as they appear or as they are asked to be reformed. Nor has there been, if such a thing were possible, any ratification to preclude the defense set up on the part of the town.

I think the holders of the bonds have mistaken their remedy, if any. As the only power to issue came from a legislative- enactment, and the terms of such enactment have not been followed so that the bonds are invalid, I think the remedy would be to apply to the source of power and by some act legalize the bonds already issued or authorize new bonds to be issued with which to pay these illegal bonds, and which innocent purchasers through very careless parties have obtained and for which they have parted with their money.

For the reasons thus stated I concur with Mr. Justice Rumsey in a reversal and the granting of a new trial. I also agree with him as to the disposition made of the demurrer.

Learned, P. J.

(dissenting):

As to the demurrer to the third count, we might think the defendant’s argument had much weight, if it were not for the decision in Horn v. Town of New Lots (83 N. Y., 100). That decision (and especially the concluding part of it), goes so far, that we cannot say that a complaint for money paid, laid out and expended at the request of a town, states no cause of action. In that case the action was described by the court as one for money had and received, of the same class of cases, therefore, as the present. Perhaps the plaintiff here might be required to make the complaint more definite. But that is not the question before us.

As to the demurrer to the second count, the language of the same case is applicable. The legislature has commanded a town in the State to issue bonds * * * So far, then, tbe township has been, by legislative power, made an entity, with capacity as a town to incur a debt and make an obligation and become liable to pay.” This count avers a purchase by the town of certain railroad bonds, and an issue therefor of its own bonds, payable in blank, and the purchase by the plaintiff of one of such bonds. It might be that, on. a trial of the issue of fact, no recovery could be had. But since the legislation referred to in the opinion just cited, we ought not to hold such account demurrable. (Perkins v. Church, 31 Barb., 84; Phoenix Bank v. Donnell, 40 N. Y., 410.) The defendant cites the case of Ferrin v. Myrick (41 N. Y., 315). That presented the question whether a certain contract therein described alleged to have been made by an administrator, bound the estate, and therefore bound his successor, the defendant. The demurrer therefore admitted only that the person who was the former administrator, made the contract. Its legal effect was the question of law presented by the demurrer. Here the demurrer admits that the defendant made certain purchases and gave certain bonds. And, as said above, townships have now capacity to incur a debt and to make an obligation. If there Were still (as perhaps there was once) a complete inability in a town ever to make an obligation; or if the town were never, in the language above cited, “ an entity,” the demurrer might have been well taken.

The real merits of this case arise on the tria' of the issues of fact in the first count. The learned justice foum- that three persons were duly appointed commissioners of the defendant under chapter 907 of the Laws of 1869, on the 18th day of March, 1871. That, on the 25th day of March, 1871, these commissioners, intending to comply with the terms of the act, issued certain bonds, described in the complaint, and sold them for cash at par. That the plaintiff purchased the bond set forth in the complaint, and paid the commissioners in cash therefor, without suspicion of defect or irregularity, and that he is still the owner. That the defendant had paid the interest thereon up to January 1, 1879, but not since. The bond (like the others) is dated March 25, 1871; is payable July 1, 1891; and has coupons attached for semi-annual interest. The principal point is that the statute (sec. 4) provides that the bonds shall be due and payable at the expiration of thirty years from date, while the bonds actually issued ran a little over twenty. The learned justice finds that this occurred by the mistake' of a scrivener. And he decided that so much of the language of the bond as prescribed an earlier date than thirty years, should be construed as corrected and conformed to the statute. Judgment was rendered accordingly, and also for the recovery of the interest already accrued.

There seems to be no proof in respect to the person who prepared the bonds. The learned justice, in finding that they were thus drawn by a scrivener by mistake, probably meant that they must have been drawn by some person, and that there was no evidence that the commissioners intended that they should be drawn differently from the requirement of the statute. The facts appear to be that the bonds were prepared by some one; that the commissioners executed them, without any notice or knowledge, that they did not conform to the statute in respect to time; and that the commissioners, or one of them at least, read the bonds, or some of them before execution.

It seems, too, that there is sufficient evidence that the commissioners, through Andrews, sold the bonds thus prepared, and that through him they also invested the avails in the second mortgage bonds of the Greenwich and Johnsonville Railroad Company. Up to 1877 the railroad company seem to have paid the interest on the town bonds, in substitution for paying the interest on their own. Afterwards, in 1877, on the failure of the company, the money needed to pay the interest on the town bonds was raised by tax on the town and was paid.

We have, then, this state of facts in brief: The commissioners are said in the act (sec. 5) to represent the municipal corporation ‘f and are said (sec. 4) to issue bonds of the corporation. They issued bonds of the defendant, and they received the plaintiff’s money therefor. They invested the proceeds, as they, lawfully might (sec. 5), in bonds of the railroad. These railroad bonds belonged to the defendant (sec. 5), and were to be in the custody of their treasurer, or other proper officer. (See. 6.) For several years the defendant had the benefit of such ownership of the railroad bonds, inasmuch as the railroad company paid the interest thereon indirectly; that is to say, the railroad company, who were not liable on tbe town bonds, paid the interest on them in tbe place of paying the interest on their own bonds, held by the town. So that for several years the town practically received the interest on the railroad bonds. Thus the defendant had the plaintiff’s money, and invested it in railroad bonds, and now refuses to pay the obligation which it gave for this money.

It may be that the commissioners were not town officers. But yet they acted for the town, and the statute says that they represent the municipal corporation. It is of little consequence whether the persons who are to act for the town are chosen by a majority of electors who are present at a town meeting, or are appointed by the country judge at the request of the majority of the taxpayers. If ■ the law authorizes such persons to act for the town, that is enough. The town is bound by their lawful action. (Marsh v. Little Valley, 64 N. Y., 112; Horn v. Town of New Lots, ut supra; Thompson v. Perrine, 108 U. S., 806, overruling Horton v. Thompson, 71 N. Y., 513.) The defendant cites the remarks in Wellsboro v. New York and Connecticut Railroad Company (76 N. Y., 185), that the bonding acts are subversive of the just rights of the minority. That is so; for the reason that lending money to railroads or investing in railroad stock is not the proper business of towns, and therefore it is unjust that the legislature should have authorized the majority to bind the minority for such business. It would be equally unjust if done through the town officers and by the consent of an overwhelming majority. And it is unfortunate that courts ever held such laws to be constitutional, but it is now too late to change. And since such transactions have been held to be valid, towns must be held to have capacity in these respects “ to incur a debt and make an obligation and become liable to pay.” And it may be remarked in passing that the case last cited did not involve the rights of bona fide holders. The decision in Sheboygan County v. Parker (3 Wall., 93) that similar commissioners were not county officers ” was a decision, under the Constitution of Wisconsin, which requires county officers to be elected by the electors. It did not touch on the extent to which such commissioners could bind the body which they represented. And that such commissioners are agents of the town is repeatedly stated in Gould v. Oneonta (71 N. Y., 308). ' The defendant being authorized to borrow money with which to make a certain purchase did through its commissioners, as it lawfully might, borrow part of that money from the plaintiff and used the same for the purpose for ' which it was borrowed. Both the plaintiff and the commissioners intended that, as the evidence of such loan and as the obligation for its repayment, a bond of the defendant should be given in the manner prescribed by the act of 1869. Through some mistake the bond ran only for twenty instead of thirty years. The defendant with the plaintiff’s money and other money similarly obtained made the purchase contemplated. The question is, should the plaintiff lose his money. Several views may be urged in his behalf: 1st. That the bond in its present form is a valid obligation of the town. 2d. That the bond should be reformed to correspond with that authorized by the statute. 3d. That if not originally valid it has been ratified. 4th. That the plaintiff should recover his money on the original consideration.

First. We are unable to say that the bond in its present form is a valid obligation of the town. In the case of Rock Creek v. Strong (96 IT. S., 271), cited to support this view, the bonds according to the act were to be payable not more than thirty years from date. They were dated September tenth and were made payable thirty years from October fifteenth, but they were not registered by the auditor until October seventeenth. The court held that they were, practically, thirty-year bonds. That is very different from this case. In Singer Manufacturing Company v. City of Elizabeth (42 N. J. Law, 257) the city was authorized to issue bonds payable in not less than twenty years. The obligations issued were payable on demand. The court said: “ The plaintiff in good faith loaned to it the requisite sum, and such money in common honesty must be repaid.” The decision may stand as giving a recovery on the original consideration. In Johnson v. County of Stark (24 Ill., 92) the county had issued bonds with coupons payable in New York. Previous decisions had held that county obligations must be paid at the treasurer’s office. The court held that the part which mentioned the place of payment might be rejected. If that were sound doctrine, yet it could not be applied to this case. It is not a mere rejection but an entire change which is needed. We do not see how an authority to issue thirty-year bonds can justify the issue of bonds running only twenty years.

Second. It is claimed that the bond should be reformed, and this was the opinion of the learned justice. The defendant’s counsel urges, and we think correctly, that this is not the ordinary case of mistake in the execution of an instrument,, inasmuch as there is no reason to think that 'the plaintiff and the commissioners did not understand its contents. But there is another view. The commissioners were public officers appointed for a certain purpose. If they neglected or refused to perform their duties they might be compelled to perform. It was their duty to execute bonds running thirty years. The plaintiff, whose money they had received, had a right to compel them to discharge the duty they owed to him, As it was said in the ease of Gould v. Oneonta (ut supra), where certain coupons had been taken off, “ there was nothing which prevented the commissioners from reannexing the coupons to the bonds and then pay: ing them. Or if they had destroyed them they could execute new ones. * * * They could then home done what they should in the first i/nsta/nce ha/oe done. They could home righted a wrong which they committed.” It ought not to deprive the plaintiff of his right to such a bond as the commissioners should have given; that he trusted that they would do their duty. He was not to blame, and they were. It is not an answer to this view to say that the commissioners sold him a twenty year bond, and that is the end of the bargain. It was not, accurately speaking, the sale of the bond of some third party. It was the executing of the defendant’s obligation for money lent to the defendant. And when the public officers, authorized to execute a proper obligation, did negligently execute one which was improper, the plaintiff should have, in some way, the obligation which the law declared he should have. The-learned justice suggests that the constitutional provision stands in the way of the execution of the proper bond. We doubt whether that provision impairs obligations existing at its adoption. At any rate, the form of the judgment in this case obviates any objection on that point. We do not think it necessary to discuss the question of ratification.

But we may say that, if the plaintiff is not to receive the bond to which he was entitled running for thirty years, we see no reason why he should not recover back his money from the defendants. The case of Horn v. Town of New Lots (ut supra), is strongly in his favor. There by an illegal assessment the plaintiffs money had been taken, and it had been used for the benefit of the town in paying some obligations. It was held that the plaintiff might recover as'for money had and received. Here the plaintiff’s money has been used for the benefit of defendant in buying railroad bonds. But his money, instead of being taken from him by an illegal assessment, has been filched from him by an illegal bond. And the defendants are the persons who set up its illegality. If the defendants refuse, as it is proved that they did in this case, to execute a bond in accordance with the act, it is simply unjust that they should keep the plaintiff’s money. They have had the railroad bonds which they bought with it, and whether the purchase was profitable or not, cannot matter to him. Even if their “treasurer or other proper officer ” has not taken proper care of those bonds, that is no reason why they should not pay the money they have liad.

The judgment should be affirmed, with costs.

Judgment reversed, new trial granted, costs to abide event.


author: Learned, P. J.:

text:
    BALTUS T. VAN SLYKE, Respondent, v. JOHN C. VAN LOAN and Others, Appellants, Impleaded with JEDEDIAH R. BALDWIN and Others, Respondents.

      Sale of parcels of land covered by a mortgage — order in which they must be sold upon a foreclosure thereof — rights of joint obligors to contribution.

    After the execution of the mortgage, to foreclose which this action was brought, a portion of the premises covered thereby, called A, was sold to one Gage; thereafter another portion thereof, called B, was sold to Eliza Baldwin ; thereafter the residue of the premises, called C, was sold to Eliza Baldwin and Cornelia Baldwin. Eliza and Cornelia subsequently gave a mortgage to Yan Loan upon 0.

      Held, that according to the equitable principles applicable to the case, the undivided half of Cornelia in part C should be first sold ; then piece B ; then the undivided half of Eliza in piece C, and finally piece A.
    That as it would be a sacrifice of the property to sell undivided interests in it, the whole of pieces B and-C should be first sold, and one-half of the avails of C first applied upon the plaintifl’s mortgage ; then the avails of part B, and lastly the avails of the other half of piece C.
    That any surplus should be paid into court, and that upon the distribution thereof the rights of Eliza and Cornelia as to contribution between each other might be determined.
    Appeal from portions of a judgment, entered in an action for the foreclosure of a mortgage owned by the plaintiff.
    The questions brought up for review are, first, the order of sale of the several parcels of the mortgaged premises, and, secondly, the amount of additional allowance that can be awarded to the plaintiff in this action under section 3253 of the Code of Civil Procedure.
    The plaintiff’s mortgage was made and executed on the 22d day of July, 1858, by Jedediah R. Baldwin, and Henry S. Baldwin, and their wives, who at that time were the owners of the mortgaged premises, to secure the payment of $4,465. Subsequent to the execution of plaintiff’s mortgage, and on the 6th day of October, 1863, the defendants Baldwins conveyed one parcel of said mortgaged premises to Mary Gage, who thereafter conveyed it to the defendant Mary Weeks. On the 25th day of July, 1876, the defendants Jedediah R. Baldwin and Henry S. Baldwin and their wives conveyed by deed a second piece of the mortgaged premises to Joel Nelson, and on the same day said Nelson reconveyed the said premises to the defendant Eliza A. Baldwin, wife of the defendant Henry S. Baldwin. On the 10th day of April, 1877, the said defendants Jedediah R. Baldwin and Henry S, Baldwin conveyed the remaining parcel of the mortgaged premises to Joel Nelson, and on the same day Joel Nelson conveyed the same to the defendants Cornelia .A. Baldwin and Eliza A. Baldwin, wives of tlie defendants Jedediah R. Baldwin and Henry S. Baldwin.
    January 14, 1878, the defendants Eliza A. Baldwin and Cornelia A. Baldwin executed a mortgage on the last mentioned piece of property to Jedediah R. Baldwin, as general guardian of John C. Yan Loan and Louis Yan Loan, infants and defendants, to secure the payment of $6,000; and they also executed their bond to accompany said mortgage, conditioned for the payment of $6,000 with interest. The court at Special Term ordered that the premises which had been mortgaged by Eliza A. Baldwin and Cornelia A. Baldwin to Jedediah R. Baldwin, as general guardian, on the 14th day of January, 1878, should be sold prior to the sale of the premises which had been conveyed by J. E. and H. S. Baldwin to Joel Nelson on the 25th day of July, 1876, and on the same day conveyed by Joel Nelson to Eliza A. Baldwin. The court ordered that the plaintiff have an extra allowance of five per cent on the amount reported due by the referee.

      John Sanderson, for the appellants.

      Andrew Yanderzee, for the respondent Van Slyke.

      John M. Harris and N. G. MoaTc, for the respondents Jedediah B., Cornelia A. and Eliza A. Baldwin.
   Learned, P. J.:

After the execution of the mortgage a piece of the premises, which for convenience we will designate as A, was conveyed to Mary. Subsequently to that conveyance another piece, which we will designate as B, was conveyed to Eliza Baldwin. And after that second conveyance a third piece (supposed to be the residue), and which we will designate as C, was conveyed to Eliza Baldwin and Cornelia Baldwin. It is not disputed that on this foreclosure sale the piece A is in any case to be sold last.

If nothing more had taken place than is above stated it is plain that C would be sold first and B second. But after the last named conveyance Eliza and Cornelia gave their bond charging their separate property to Van Loan, and secured it by a mortgage executed by both of them upon piece 0. The bond and mortgage are now held by-,.

If the conveyance of piece-0 had been to Eliza alone, and if she had given her bond and mortgage thereon to Van Loan, then the case would be plainly one where the plaintiff held security on two pieces of property, B and C, and Van Loan only on one, C, and both the pieces of property belonged to the same person, Eliza, therefore on the familiar principle the plaintiff would have to enforce his debt first out of B, leaving C, if possible, for Van Loan.

If, on the contrary, the conveyance of C had been to Cornelia alone, and she alone had given a bond and mortgage thereon, then that principle would not apply; because the two pieces of property would not belong to the same person, but one would belong to Eliza and tbe other to Cornelia. Unless some other equity appeared, therefore, the principle would not apply. And in this case the equity would be (on the facts as they appeared) that which arises from the rule of the inverse order of alienation.

Now, in the present case Eliza and Cornelia have separate estates, though undivided, in the land. Their rights and equities are just the same as to these undivided estates as they would be in respect to divided estates. Let us suppose, then, that instead of -a conveyance of piece C to Eliza and Cornelia, there had been made simultaneously a conveyance of a piece D to Eliza and a piece E to Cornelia, the two pieces D and E together making the residue C, and then that Eliza and Cornelia had mortgaged D and E to Van Loan as in the present case'. Then, as above stated,- the equity would be that piece E belonging to Cornelia should be sold before piece B, and that piece B should be sold before piece D. That is to say, the principle of marshalling assets for the benefit of Van Loan would require that B should be sold before D, while Cornelia’s liability under the rule of the inverse order would require her piece E to be sold before B.

That same principle applies in the piesent case, where the rights of Eliza and Cornelia are undivided interests in piece C, just as it would apply if the rights of Eliza and Cornelia were in divided pieces of land. So that according to equity the undivided half of Cornelia in piece 0 should be sold first; then piece B; then the undivided half of Eliza in piece 0, and lastly piece A.

But it would be a sacrifice of property to sell undivided parts of it where the whole can be sold. And therefore the equity above declared must be worked out by the application of the proceeds of the sale. Both pieces of property, B and C, must be sold, and the order of sale is therefore immaterial, and the application of the avails must be as follows: One-half of the avails of C must be first applied to plaintiff’s mortgage and costs, as representing Cornelia’s share. Next, the avails of B must be so applied, and lastly the other half of the avails of piece C, representing Eliza’s share. Any surplus after the plaintiff’s mortgage and' costs have been paid must be brought into court for the parties entitled thereto, according to the rights above declared.

As Eliza and Cornelia are jointly liable on the bond to Yan Loan, some question may arise between them as to their respective rights by the way of contribution. It may result that the property of one will have paid more than her share of the Yan Loan mortgage. Those rights we cannot settle at this time. Possibly they may be adjusted on the distribution of the surplus, but even that we cannot now say. On the question of the allowance of five per •pent, a majority of the court are in favor of affirmance.

The judgment will be modified in accordance with this opinion, .and as modified affirmed, without costs to either party.

Present — Learned, P. L, Rumsey and Osborn, J J.

Judgment modified in accordance with opinion, and as modified •affirmed, without costs to either party.


author: Rtjmsey, J.: Learned, P. J.:

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. JOHN SWINBURNE, Respondent, v. THE TRUSTEES OF THE ALBANY MEDICAL COLLEGE, Appellants.

      Medical colleges — what provisions of the Revised Statutes are not applicable to them— R. S., part 1, chap. 15, tit. 1, a/rt. 2 — Notice of meetings of trustees > — it need not be personalty served, unless that be required by statute or a by-lam.

    The provisions of article 2, title 1, chapter 15, part 1 of the Revised Statutes (1 R. S., 460), apply only to literary institutions and are intended to control the colleges, academies and schools for literary instruction, to the exclusion of the schools for teaching special sciences.
    The Albany Medical College, created by chapter 26 of 1839, is not subject to or controlled by the said provisions.
    There was no provision in the charter or by-laws of the Albany Medical College prescribing what notice of meetings should be given to the members of the board of trustees. It had been the custom for many years to notify the members of the meeting through the mail. The relator was removed from his office or position of professor in the college at a meeting at which a majority of the trustees were present, and of which meeting notice had been served upon all the trustees by depositing in the post-office at Albany, addressed to each trustee, a postal card containing a notice of the time and place of such meeting.

      Meld, that in the absence of proof showing that all the members did not in fact receive the notices so sent it would be presumed that they were received; that such notice was sufficient and that the meeting was regularly held.

      Appeal by tbe defendants from an order of a Special Term directing that a peremptory mandamus issue, addressed to the defendants, commanding them to reinstate the relator in the position of professor in the Albany Medical College.

      A. J. Parker, for the appellants.

      F. O. Moak and F. J. Sioinburne, for the respondent.
   Rtjmsey, J.:

The board of trustees of the Albany Medical College consists of twenty-five members. By its charter (chap. 26, Laws of 1839, § 4), it has power by a vote of two.-thirds of the members constituting the board to remove professors. The relator had been for some years professor of clinical surgery, fractures and dislocations. On the 2d day of January, 1880, at a meeting of the board, at which twenty-one members were present, a resolution was passed by which the chair of fractures, dislocations and clinical surgery was abolished ; seventeen trustees voting for the resolution, and four voting-against It. The relator was thereby, as he claims, removed from his professorship. He moved at Special Term for a writ of mandamus to the defendants commanding them to reinstate him.

The ground of the application is that no legal notice of the meeting was given to the trustees. It appears by the affidavits used to oppose the motion that the members of the board were notified of it by sending to each one a postal card, and that it has been the practice to notify the members by mail for many years. The relator claimed that a legal notice of this meeting could only be given by publication in a newspaper printed in Albany county for at least six days. This was not done. The Special Term held that this was the statutory notice; that none other was valid; and that for want of it, the proceedings at the meeting of January second were void, and granted the writ.

The relator insists that the Albany Medical College was subject to the provisions of article 2, title 1, chapter 15, part 1, Revised Statutes (1 R. S., 460), entitled “ Of the Powers and Duties of the Trustees of Colleges.” Section thirty-three of that article provides that notice of the time and place of a meeting of the trustees shall be given, in a newspaper printed in the county where such college is situate, at least six days before the meeting.

The first question before us is whether this institution is subject to the provisions of that article.

Chapter 15 is entitled Of Public Instruction,” and contains regulations for the Regents of the University, colleges, academies and schools for general literary instruction. Article 2 of the chapter is entitled “ Of Colleges.” It fixes the number of trustees at not more than twenty-four, nor less than ten, of which a majority shall be a quorum. It permits each corporation, subject to its provisions, to hold property of the annual value of $25,000; to remove professors in a particular manner, and to grant literary honors. Some of these provisions are unlike those granted to the Albany Medical College, and one at least, the-right to grant literary honors, is entirely inconsistent with, and outside of the power of this college. The charter of the defendant college expressly makes it subject to the provisions of chapter 18, part 1, Revised Statutes. Like chapter 15, title 3 of chapter 18 contains a specification of the powers of the incorporations subject to it, and it contains a provision that no corporation shall possess any powers, except such as are expressly given by its charter or by section 1 of that title. An examination of the two chapters will show that considerable inconvenience might be produced, by holding that the Albany Medical College was subject to the provisions of both.

The intent of the legislature will be best carried out, we think, by holding that chapter 15 applies only to literary institutions and is intended to control the colleges, academies and schools for literary instruction to the exclusion of the schools for teaching special sciences. This intent strongly appeal’s from subsequent legislation. In 1853 the legislature established a complete system for the organization of medical colleges, different from that contained in chapter 15, prescribing their general powers, and in terms making them subject to the provisions of chapter 18. (Laws of 1853, chap. 184.) It is noticeable that the same act provides for the incorporation of colleges by the regents. If it had been supposed that chapter 15 applied to medical colleges this new act need not have been passed, and we must accept this act as an authoritative declaration of the legislature that chapter 15 did not apply to medical colleges.

It follows that notice of meetings of trustees of the Albany Medical College was not required to be published as directed in chapter 15, and that no special mode of giving notice is prescribed.

The learned counsel for the respondent insists that if that is so the common law rule applies, and that rule requires notice to be served personally on each trustee.

It is undoubtedly the rule of the common law that, unless the statute or the by-laws of a corporation prescribe the notice to be given of a meeting, each member must have actual notice, and in default of such notice proceedings had at it are invalid except all are present and concur in the act (Rex v. Liverpool, 2 Burr., 723; Rex v. Chetwynd, 7 B. & C., 695; Potter on Oorp., § 336, and cases cited; Wiggin v. Elders, etc., 8 Metc., 301.) There is no reported case in this State which we can find prescribing the manner of service of such notice. Nor can we find any decided case in the books in which it is held that the notice must be personal as distinguished from actual. It is true that, in a note to section 337 of his work on corporations, Judge Potter says that the notice must be personal, but he does not so state in the text, and neither the cases he cites, nor. any other cases, so hold. In Rex v. Liverpool (2 Burr., 723-731) the objection to the validity of the meeting was that no notice had been given, and Lord Mansfield held that each member must be actually summoned. In Stow v. Wyse (7 Conn., 211) the vote in question had been taken at a meeting of which no notice had been given. The point decided was that the vote was not valid. No question was made as to the kind of notice required. So in Wiggin v. Freewill Baptist Church (8 Metc., 301, 310) the notice had been given by posting in three places. The court do not pretend to say what kind of notice was required, but holds only that the members must all have notice, and that ,the notice there given was not sufficient. In Taylor v. Griswold (2 Green. [14 N. J. L.], 222) and in Savings Bank v. Davis (8 Conn., 191), cited by Judge Potter, the question was not involved. The result of the decisions is that an actual notice must be given to each member, and we are not required to hold that such notice must be personal. Such notice as is required in legal proceedings need not be given, for the notice of the meeting is sufficient if verbal (Wilcoek on Mun. Corp., 46), or if given by letter to non-residents (Stebbins v. Merritt, 10 Cush., 27), or if left at the house of a member in his absence (Angelí and Ames on Corp., § 492). It is clear that the important thing is to bring to the knowledge of each member the fact that a meeting is to be held. If each member has that knowledge the cases agree that the meeting is valid.

In this case it appeal’s that for many years the custom has been to call meetings by notices sent through the mail. Each member must be presumed to be cognizant of it. We can take judicial notice that in a large city like Albany there is a delivery of mail at the house of each person several times during the day; and the presumption of law is, that communications so sent were delivered. (Bell v. Lycoming F. Ins. Co., 19 Hun, 238; Briggs v. Hervey, 130 Mass., 186; Whar. Ev., § 1323.) In this case it appears that every trustee was notified. Many years ago this court held that in business matters where notice was required, sending notice by mail was sufficient. (Utica Bank v. Van Cieson, 18 John., 485.) We see no reason for not applying that rule to notices of a meeting of this kind, and holding those notices sufficient, unless it appears affirmatively that they were not delivered to some one of the trustees. No objection is made to the form of the notice. We think, therefore, that the meeting of January 2, 1880, at which the relator was removed, was valid.

It follows that the order of the Special Term must be reversed, and the motion for a mandamus denied, with ten dollars costs of this appeal and printing disbursements.

Osborn, J., concurred.

Learned, P. J.:

I concur in the result. But I am not willing to say that where the majority (or the requisite number to do a certain act) of the trustees or directors of a private corporation have met and have acted, their action would be absolutely void if one trustee or director (or even several) had not been notified. I do not think that the authorities cited to this point establish it.

Furthermore, if this were so, it would be necessary for the relator to sustain this writ, to show affirmatively that some trustees had not actually been notified. This he has not done.

Order awarding peremptory mandamus reversed, and motion for peremptory mandamus denied, with costs against relator.


author: Rumsey, J. •. Learned, P. J.:

text:
    JAY BALL, Plaintiff, v. EDWIN P. SLAFTER, Defendant.

      Chattel mortgage — when a general assignee of the mortgagor may treat it as void — 1858, chap. 314 — pa/rol evidence is inadmissible to contradict its terms — if the mortgagor is allowed to sell goods and pay the debt from the proceeds, the mortgage must require all sales to be made for cash.

    A chattel mortgage containing a provision allowing the mortgagor to sell the property covered by it at retail for his own benefit, is fraudulent as to his creditors, and one to whom he has made a general assignment may, under chapter 314 of 1858, treat the mortgage as void, and take and retain the property covered thereby.

      Semble, That the right given by that statute to the assignee to have a transfer of property by the debtor declared void, extends only to defects based upon fraud or fraudulent intent.
    A chattel mortgage, given to secure the plaintiff for indorsing notes of the mortgagor, provided that the mortgagor should have the privilege of selling any of the mortgaged property which he then had on hand and in stock, or which he might thereafter purchase to replenish his stock, provided that the stock ' should not be reduced below $6,000. Upon the trial of this action, brought to recover the property from a general assignee of the mortgagor, the plaintiff offered to show that prior to and at the time of the giving of the mortgage, it was agreed that the goods were to be sold and the notes paid with the proceeds thereof.

      Held, that the parol evidence was inadmissible as contradicting the terms of the mortgage.
    That even if the agreement was proved it would not render the mortgage valid, as it did not require the sales to be made for cash.

      Vord v. Williams (24 N. Y. 359) distinguished and criticised.
    Motion by the plaintiff for a new trial on exceptions, ordered to be heard in first instance at the General Term, after a nonsuit at the circuit.

      M. M. Waters, for the plaintiff.

      D. II. Duett, for the defendant.
   Rumsey, J. •.

The court having ordered a nonsuit, it was not regular to direct the exceptions to be heard in the first instance at General Term. (Seely v. N. Y. C. and H. R. R. R. Co., 25 Hun, 280.) Rut as no objection is made to it we will consider the case.

The action is for the conversion of personal property. The plaintiff claims under a chattel mortgage dated November 7, 1878, but executed November 29, 1878. The mortgage was retained by the mortgagee and was not filed until March 19, 1879, at eleven o’clock in the morning.

The mortgage contains this clause, this mortgage is given with the express understanding and condition that the said Eardley N. Johnson shall have the privilege of selling any of said stock of goods during the term of this mortgage, which he now has on hand and in stock, or any goods that he shall purchase to replenish said stock, from time to time, the said Eardley N. Johnson hereby agreeing that the said stock shall not be reduced to any sum less than $6,000, while said Jay Ball indorses for said Johnson.” The mortgage was given to secure plaintiff for indorsing two notes for Johnson, and for renewals of the notes. On the trial the plaintiff testified that at the time the mortgage was made, it was arranged that Johnson was to sell the goods and pay the notes as fast as possible.

The defendant is assignee for the benefit of creditors of Johnson, under an assignment dated March 18,1879, and recorded Marcli 19, 1879, at 9:30 in the morning.

At the close of the evidence the defendant moved for a nonsuit on several grounds stated, among which were the following: that the mortgage was fraudulent as to him, because by the terms of it the mortgagor was permitted to sell the property for his own benefit, and because the mortgage was not filed before the delivery of the assignment.

By the law of 1858, chapter 314, an assignee for the benefit of creditors may, for their benefit, treat as void any transfer made in fraud of the rights of creditors. (4 Edm. Stat., 483.) Hnder this statute an assignee for the benefit of creditors has the same right to defend against a transfer which is fraudulent as to creditors, as has a creditor who has acquired a specific lien. (Southard v. Benner, 72 N. Y., 424.) The right given by that statute to invalidate a trans-f er of property extends only to defects based upon fraud or fraudulent intent. (Matter of Collins, 12 Blatch., 548; Southard v. Benner, 72 N. Y., 424, 428.) Hence the defendant cannot take advantage of the failure to file the mortgage, for the statute does not say that such failure makes the mortgage fraudulent as to creditors, but simply that as to them it shall be void.

But the ruling was put upon the ground that by the express terms of the mortgage, the mortgagor was allowed to sell the mortgaged property-at retail for his own benefit. If that fact is not disputed this case is directly within the case of Southard v. Benner (supra), and the decision was right.

That the mortgage does provide for a renewal of the notes, and that the mortgagor may sell the goods at retail, and that the notes were renewed, and goods sold for credit, was not disputed. It also appeared that. the proceeds were not paid to the mortgagee. There is no doubt that this made the mortgage fraudulent and void as to defendant. (Edgell v. Hart, 5 Seld., 213 ; City Bank v. Westbury, 16 Hun, 458.) The plaintiff however insists that the agreement was that goods were to be sold, and the notes paid, and that the case is within Ford v. Williams (24 N. Y., 359). He swears that when the mortgage was made this arrangement was also made, but not in writing. It is clear that the parol arrangement was inconsistent with the terms of the mortgage, and as no mistake is alleged, the mortgage as between the parties expresses the true contract. (Kelly v. Roberts, 40 N. Y., 432.) Whatever may have been the talk between them, the mortgage expresses the completed contract and the one by which the parties were bound, and it is clear that by the terms of the mortgage it was contemplated, not that the notes were to be paid, but that they were to be renewed, and that new stock was to be bought which was to be subject to the mortgage, and that Johnson could not be required to pay the avails of the goods sold to the plaintiff. We think that the plaintiff is bound by the terms of the mortgage.

But if the parol arrangement was part of the contract, we do not think the plaintiff is any better off. He says that the parol arrangement was that Johnson would sell the goods and pay these notes as fast as possible. In Ford v. Williams the agreement was that the mortgagor was to sell only for cash, and apply the proceeds on the secured debt. The agreement in this case did not require that the sales should be for cash, and as matter of fact they were on credit, and it did not necessarily require the proceeds to be paid on the notes when the sales were made. Indeed, the proceeds of the credit sales could not be so applied. While the case of Ford v. Williams is undoubtedly the law as far as it goes, we do not think it ought to be extended or applied to any case which does not come within it on the facts. The case at bar is not within it, and the mortgage is void. (City Bank v. Westbury, 16 Hun, 458; Wagner v. Jones, 7 Daly, 375.)

It is not necessary to consider the other points raised.

The defendant should have judgment on the nonsuit, with costs.

Osborn, J., concurred.

Learned, P. J.:

The question whether a general assignee for the benefit of creditors can, under the act of 1858, resist as void a chattel mortgage, on the ground that it was not filed, is not involved in this case. I think it was not involved in the case of Southard v. Benner. It is not necessary to express any opinion thereon. Otherwise I concur.

Motion for new trial denied and judgment ordered for defendant on nonsuit.