Adams v. East River Savings Institution

O'Brien, J. It appears from the record that on the 14th of April, 1892, the plaintiff, as county treasurer of the county of Kings, acting under the authority of a resolution of the hoard of supervisors of that county and certain statutes then *55 in force, offered for sale and invited bids for bonds of the county amounting in the aggregate to the sum of $620,000. Various persons and corporations thereupon made bids for the purchase of the bonds. The defendant bid the sum of $91,104 for $90,000 par value of the same and its bid was duly accepted by the plaintiff. The defendant gave its check for the amount of the bid, but afterwards stopped the payment thereof and refused to complete its purchase upon the ground that the bonds were void having been issued without power and in violation of the prohibition contained in art. 8, § 11 of the State Constitution. It is conceded that if the bonds are valid that the defendant is bound to receive them and pay the sum bid therefor otherwise not. Upon an agreed case submitted to the General Term it was held that the plaintiff had power to issue and sell the bonds, and that the portion of the issue purchased by the defendant were valid obligations and that the plaintiff was entitled to judgment. We think that the judgment is correct and, as the reasons in support of the conclusion reached, have been very fully and clearly stated by the learned judge who gave the opinion at the General Term, in which we fully concur, it is quite unnecessary for us to enter upon any lengthy discussion of the question. The provision of the Constitution which it is claimed forbids the issue of the bonds in question went into effect on the first of January, 1885, and is as follows: “Bo county containing a city of over one hundred thousand inhabitants, or any such city, shall be allowed to become indebted for any purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city subject to taxation, as it appeared by the assessment-rolls of said county or city on the last assessment for state or county taxes prior to the incurring of such indebtedness; and all indebtedness in excess of such limitation, except such as may now exist, shall be absolutely void, exept as herein otherwise provided. Bo such county or city whose present indebtedness exceeds ten per centum of the assessed- valuation of its real *56 estate subject to taxation shall be allowed to become indebted in any further amount until such indebtedness shall be reduced within such limit. This section shall not be construed to prevent the issuing of certificates of indebtedness or revenue bonds issued ini anticipation of the collection of taxes for amounts actually contained, or to be contained, in the taxes for the year when such certificates or revenue bonds are issued and payable out of taxes. Bor shall this section be construed to prevent the issue of bonds to provide for the supply of water, but the term of the bonds issued to provide for the supply of water shall not exceed twenty years, and a sinking fund shall be created on the issuing of the said bonds for their redemption, by raising annually a sum which will produce an amount equal to the sum of the principal and interest of said bonds at their maturity.” The territory embraced within the county of Kings is the city of Brooklyn and four regularly organized towns. Binetysix per cent of the total real estate of the county, according to the valuation next preceding the issue of the bonds in-question, was within the corporate limits of the city of Brooklyn and the other four per cent in the towns. The city has a large municipal debt of its own. The county, as such, has also a debt of several millions, and the towns, in their corporate capacity, have also created debts. The objection to the validity of the bonds in question is that they create a debt against the county, which, when added to the debt existing at the time of -the issue, makes an aggregate indebtedness of the county exceeding ten per centum of the assessed valuation of the real estate of the county subject to taxation, as appears by the assessment rolls of the county, made at the last preceding assessment for state and county taxes. The defendant, however, reaches and passes the ten per cent limit only by computing the municipal debt of the city of Brooklyn as part of the indebtedness of the county of Kings, and unless this proposition can be maintained, the defendant’s contention must fail, and the bonds purchased by the defendant are unquestionably valid. This provision of the Constitution declares void all *57 indebtedness created in violation of the limitations therein prescribed; but these limitations must be taken and understood distributive!}^ and not collectively. As thus understood, the limitation applies to two distinct cases: (1) A city containing ■over one hundred thousand inhabitants. (2) A county within which is a city containing that population. The prohibition is aimed at each of these organizations, or political divisions, of the state separately. When it is proposed to issue additional city bonds in a city of the class mentioned in the Constitution, there' are two facts to be considered; first, the existing indebtedness of such city, and secondly, the valuation of the real estate therein. The indebtedness of the county of which the ■city forms a part does not play any part in the process of determining when the limitation is applicable, as it is wholly immaterial. So, also, when a county, containing as the county of Kings does a city of more than one hundred thousand inhabitants, desires to create an additional debt, the ten per cent limitation is not reached until the county debt equals ten per centum of the valuation of all the real estate in the county, including, of course, the real estate in the city which forms a part of the county; but in ascertaining when the limitation is reached in such a case, the debt of the city cannot be charged against the county any more than its proportionate share of the state debt or the debt of the several towns within its limits. The power of the county or the city, as the case may be, is restricted only by the amount of its own debt, and for the purpose of creating a disability against the one or the other, the debts of both cannot be aggregated. The contention of the learned counsel for the defendant pushes the prohibition to a point not warranted by a fair consideration of the language used, or the general purpose which the framers of the amendment intended to accomplish. The judgment should be affirmed, with costs. All concur. Judgment affirmed.