Bush v. . O'Brien

Haight, J. The defendants O’Brien, Clark and Brown interposed a demurrer to the .plaintiff’s complaint upon the *209 ground that it does not state facts sufficient to constitute a cause of action, and the question certified is, does the complaint state sufficient facts, etc. The action was brought by the plaintiff as a taxpayer of the city of New York to restrain the demurring defendants from collecting, and the comptroller of the city from paying, certain judgments which the demurring defendants had obtained against -the city of New York, amounting in the aggregate to $700,000.00. The complaint alleges that these judgments were obtained and entei'ed upon offers executed and verified by the corporation counsel and accepted by the demurring defendants. The complaint further alleges that the offers of'the judgments made by the corporation counsel were not authorized by the comptroller, the mayor or by the aldermen and commonalty of the city; that the corporation counsel had no authority or power to make the offers, and that the judgments entered thereupon were illegal and void. The first and, to our minds, the important question raised for review relates to the power of the corporation counsel. He appears to have made the offers to allow judgments to be entered in the actions then pending against the city, pursuant to the provisions of section 738 of the Code of Civil Procedure, which authorizes -the defendant, before trial, to serve upon the plaintiff’s attorney a written offer to allow judgment to, be taken against him for a sum specified. Section 740 of the Code provides that “ Unless an offer or an acceptance made as prescribed in either of the last four sections is subscribed by the party making it, his attorney must subscribe it, and annex thereto his affidavit, to the effect, that he is duly authorized to make it, in behalf of the party.” This provision of the Code appears to have been complied with, the corporation counsel verifying the offer made by him. The papers, therefore, upon which the judgments were entered all appear to be regular . and upon their face show valid judgments. It is charged^ however, in the complaint that the corporation counsel, in fact, had' no authority to make the offers, and, consequently, his affidavit to the effect that he was authorized was false. *210 If tlie verification by tlie corporation counsel was false, it was an illegal act on his part, and the case is brought within the clear wording of the statute which authorizes a taxpayer to-bring an action “ to prevent any illegal official act ” on the part of any officer of any county, town, village or municipal corporation in the state. (Laws 1892, chapter 301.) The question presented does not call for a review of a board of audit, or of a board of assessors, or other judicial body who have passed upon the merits of a claim, such as was considered in the case of Osterhoudt v. Rigney (98 N. Y. 222) and other kindred cases, but is limited to the question of ¡lower. If the corporation counsel had no authority to make the offers, he had no power do so. If he had no power to make them, it, of necessity, follows that the judgments were not only irregui lar, but were unauthorized. In the first place, as bearing upon the power of an attorney to make an offer of judgment, we have the very significant provisions of section 740 of the Code above quoted. By its provisions, if the offer is not signed by the party it must, be by his attorney, and he must annex thereto his affidavit to the effect that he is authorized by the party to make the offer, thus indicating that the authority to make the offer must be other than that of the ordinary retainer 'by a party to prosecute or defend an action. If the attorney has the power to make or accept an' offer of judgment by virtue of his retainer, then the provision of the Code requiring him to annex his affidavit is useless and unnecessary. But we think this question has been settled in this state and that the Code but recognized the existing rule. In the case of Gaillard v. Smart (6 Cowen, 385), Savage, Ch. J., delivered the opinion of the court, holding that while an attorney, by virtue of his retainer, had the power to discontinue an action, he had no power to release the cause of action. In Barrett v. Third Avenue R. R. Co. (45 N. Y. 628, 635), Allen, J., says: “ The authority of the attorney does not extend to a compromise or release. He may discontinue an action, because that relates to the conduct of the suit, and is-within his retainer, and not *211 to the cause of action. An attorney cannot settle a suit and conclude the client in relation to the subject in litigation,without his consent.” (Citing Shaw v. Kidder, 2 How. Pr. 244; Lewis v. Gamage, 1 Pick. 347.) In the case of Beers v. Hendrickson (45 N. Y. 665, 669), Grover, J., says “An attorney is not authorized by his retainer to satisfy a judgment without payment, and if he does so, the court will set such satisfaction aside.” In Mandeville v. Reynolds (68 N. Y. 528, 540), Folger, J., in delivering the opinion of the court, after referring to the ruling of the court below to the effect that the attorneys in the action had no power to compromise the judgment and release the defendant unless authority was expressly given to them by the plaintiff, says: “ In holding thus, I think that the court was right. An attorney is not authorized by his retainer' to satisfy a judgment without payment, and if he does so, the satisfaction will be set aside. . The authority of an attorney does not extend to a compromise or a release. He cannot settle a suit, and conclude his client in relation to the subject in litigation without consent of the latter.” In Arthur v. Homestead Fire Insurance Co. (78 N. Y. 462) it was held not to be within the scope of the authority of an attorney in an action to change the rights of his client except so far as it may be done in the action. He cannot justify the commencement of another action or create a cause of action against his client which did not before exist. In Lewis v. Duane (141 N. Y. 302) it was held that an attorney employed to foreclose a mortgage has no implied authority in the matter to compromise the rights of his client and make nugatory the duty he was employed to perform. There are numerous other cases which might be cited of the same import, but we think those referred to justify our previous assertion, that the question has long been settled. It is claimed, however, that the powers of a city attorney, or corporation counsel, differ from those of an attorney employed by an individual. They undoubtedly do if the.charters under which they are elected or appointed gives to them greater or *212 different powers, otherwise not. This question has also been considered by the courts. In the case of Taylor v. Mayor, etc. (11 Abbott’s Pr. 66), it was held that the corporation counsel of -the city of New York had no larger powers, as such, to bind his client than those connected with the ordinary relations of attorney and client. And very recently, in the Supreme Court of the United States, in the case of Stone v. Bank of Commerce (174 U. S. 412, 423), Peokham, J., in delivering the opinion of the court, says: “ We are also of the opinion' that, as city attorney, he had no greater power to bind the city by that agreement than would an attorney have in the case of an individual.” We are thus brought to a consideration of the charter of the city of New York. Section 255 creates a law department, the head of which shall be called the corporation counsel, “ who shall be the attorney and counsel for the city of New York, the mayor, the municipal assembly and each and every officer, board and department of said city.” . It further provides that he shall “ have charge and conduct of all the law business of the corporation and its departments and boards, and all law business in which the city of New York is interested.” There are other special powers given to him with reference to the opening of the streets, etc., which have no bearing upon the question under consideration. If he has any power to settle and audit claims against the city, it must be found in the provisions of the charter quoted. A careful examination of these provisions fails to satisfy us that the legislature intended to invest the corporation counsel with any other or greater power than that of an attorney employed by an individual to take charge of his legal business. The charter also has created a finance department, of which the comptroller is the head, to whom has been given the express power “ to settle and adjust all claims in favor of or against the corporation, and all accounts in which the corporation is concerned, as debtor or creditor.” (Section 149.) The power to settle and adjust, therefore, appears to have been vested in the comptroller, and not in the corporation counsel. This con *213 struction leaves each officer supreme in his own department. The comptroller determines whether a claim shall be compromised or not; if it is not compromised, the corporation counsel has the supreme power of determining the nature of the defense that shall be interposed to any action that. shall be brought thereon, but not to compromise. If it had been intended to give the corporation counsel power to compromise claims rejected by the comptroller, without his knowledge or consent, then the corporation counsel would, in effect, become the superior of the comptroller, for all of the comptroller’s determinations with reference to the audit of claims would be subject to review by the corporation counsel. Clearly this was not intended. It is claimed that we held otherwise in the case of O'Brien v. Mayor, etc. (160 N. Y. 691). We do not so understand that decision. That case is reported below in 40 App. Div. 331. The facts, as stated in the opinion, are to the effect that the settlement was made by the corporation counsel “ with the assent, approval or acquiescence first obtained of every municipal officer and department having to do with the subject, or having knowledge of the question involved, or who were competent to aid the city in reaching a conclusion as to whether it was wise to make a compromise, and for what amount.” The question certified to this court in that case is as follows: “ Had the counsel to the corporation, with the concurrence and upon the recommendation of the mayor, the comptroller and the aqueduct commissioners, the chief engineer of the aqueduct commission and the special counsel retained by the city in the particular case, power to offer to confess judgment against the defendants in an action brought to recover an amount claimed to be due to plaintiffs upon a contract, made under chapter 490, Laws of 1883, and where there was an actual controversy between the contractors (the plaintiffs in the action) and the defendants as to the amount due the plaintiffs under the said contract for a sum of money very much less than that claimed by the plaintiffs in the action, and where the counsel to the corporation and the other public *214 officials named, being all of the public officials who had any . authority or power under the statute creating the aqueduct .commissions or under the other statutes in force at the time .the offer was made in relation to the subject-matter of the contract, approve of the offer of judgment as a settlement of the controversy advantageous to the city of New York, and where, as a fact, such a settlement was advantageous to the city, the offer of judgment having been made and accepted by the plaintiffs and judgment entered thereon upon the 27th day of ■December, 1897 % ” The question was answered by us in the .affirmative, and properly so, for in the question it distinctly appears that the compromise was made with the concurrence of the comptroller, etc. The Appellate Division appears to have entertained- an impression that a taxpayer had the right to interpose and appeal in an action in which a person has obtained a judgment against the city on a claim for damages. We know of no such .authority. This is not an action in which the plaintiff is seeking to set aside an assessment against his own' property and ■thus remove a cloud therefrom, but is brought under the statute to restrain an official illegal act. It is contended that the question discussed as to the power of the corporation counsel to confess or make offer of judgment against the city is purely academic, so far as this court is concerned, for the reason that the legislature has enacted that he shall not have it. It appears, however, that the ■judgment in this case was entered, and, if report be true, numerous other transactions of a similar character took place, before the legislature took action in the matter. The act was local, having reference to the city of New York, and certainly the question cannot be academic in so far as it is involved in tin's case, or in other cases arising before the passage of the .act, or in other cities of the state. It is also contended that a taxpayer cannot maintain an action to restrain the payment of a judgment against ’the city without showing that the city was not justly indebted in the amount stated in the judgment. If this be so, then a treas *215 urer who is authorized by statute to pay out the money in his custody only upon a warrant of the comptroller, should he see fit to disregard the statute and pay over the public moneys upon the order of any other officer, thus completely ignoring the comptroller, the taxpayers could not interfere to restrain his unlawful acts. The statute under which this action was brought authorizes a taxpayer to bring an action to prevent waste, and also to prevent an official illegal act. If the action was based upon the provision of the statute “ to prevent waste,” then it would be necessary to show that the city was not justly indebted in the amount stated in the judgment, for if it was, there could be no waste. This action, however, was brought under the other provision of the statute, to prevent an official illegal act. The act complained of, as we have seen, was a false affidavit made by the corporation counsel. He may have supposed that he had authority to make it and intended no wrong. Still, if the allegations of the complaint are true, it was, in fact, false, and as such was a constructive fraud upon the public. The question certified should be answered in the affirmative, the interlocutory judgment reversed and the demurrer overruled, with costs in all the courts, with leave to the defendants to answer in twenty days upon payment of the costs.