Hathaway v. County of Delaware

Parker, P. J.: The plaintiffs seek to recover against Delaware county the $10,000 advanced by them to the Albany County Bank, and which was subsequently applied by that bank upon a note held by it against such county, upon the theory that such application amounted to a payment of a debt due from the county, and, therefore, was money paid by them to the use of the county. ■ Upon this claim the trial judge has found that if it be assumed that the note upon which the plaintiffs’ money was so applied was a valid and existing obligation against the county, yet the plaintiffs did not make themselves creditors of the county by voluntarily discharging that debt or any portion thereof. It is conceded that the note delivered by Woodruff to the plaintiffs was a forgery and that all his statements concerning it and the alleged loan to the county were false, and that the county has never, either expressly or impliedly, promised the plaintiffs to pay them such sum or any part thereof. Neither is there any claim — 183 — on the part of the plaintiffs that Delaware county ever directly requested them to advance this money to the Albany County Bank to be applied upon this alleged note against the county, nor has there been any action whatever on the part of that county from which a request to make such advancement can be implied for the clear reason that Delaware county lias never taken any action whatever in the matter. It was utterly ignorant of the transaction until after the plaintiffs had advanced the money and asked from the county that it be returned. It is tojoe noticed that this is not an action to recover money had and received by the defendant, but one to recover money paid to another for its use. A request to make such alleged payment, either express or implied, is, therefore, indispensable before a right of action is established. It is a familiar principle that a voluntary payment of the liabilities of another without his request will not give an action in favor of him who makes the payment. (Taylor v. Baldwin, 10 Barb. 626; Ingraham v. Gilbert, 20 id. 151; Gould v. Village of Phœnix, 3 T. & C. 797; Thomson v. Thomson, 76 App. Div. 178; Flynn v. Hurd, 118 N. Y. 19; National Bank of Bullston Spa v. Board of Supervisors, 106 id. 494; City of Albany v. McNamara, 117 id. 169.) The plaintiffs, however, claim that a request will be implied whenever the equities in the case warrant it, and that in this case the equities are so strong in favor of the plaintiffs, and it is so clear that they should not be deemed as having volunteered to pay the debt in question, that a request should be implied upon the part of the county. From an examination of the evidence in this case it so clearly appears to me that none of the plaintiffs’ $10,000 has in fact been applied to pay a liability due from the county of Delaware that I prefer to sustain this decision of the trial court upon that ground, rather than to examine the claim and argument of the plaintiffs above stated. At the time when the plaintiffs’ draft for $10,000 was sent to the Albany County Bank, or just prior thereto, that bank held four several notes purporting to be the obligations of Delaware county, executed to it for money borrowed thereon. One was for $15,896.83, given to renew two notes which were about $7,000 each and issued in April and May, 1898; the three other notes, aggregating $18,691.65, were discounted in February, April and May, 1899. All of such notes were issued for the avowed purpose of procuring — 184 — funds with which to pay the State taxes, and the proceeds thereof were paid directly by the bank, at the time each was issued, to the Comptroller of the State for such purpose. Each of such three notes was subsequently on its maturity, viz., October 2, 1899, renewed to the bank, and it was upon these notes that the plaintiffs’ $10,000 in question was subsequently applied. Each of such three notes, when it was originally discounted by the bank, purported to be the obligation of Delaware county, was signed by its treasurer, Woodruff, and on its face recited that it was issued pursuant to the provisions of section 91 .of chapter 908 of the Laws of the State of New York of the year 1896, as amended by chapter 361 of the Laws of 1898, and for the purpose of procuring sufficient money to pay the Comptroller of the State the State tax due from said county of Delaware, and that it was also issued by virtue and in pursuance of a certain resolution adopted by the board of supervisors of said county at a regular meeting of said board, held on the 19tli day of November, 1898. As a matter of fact, however, all the towns in Delaware county had, at the time such notes were discounted, levied and collected and paid over to the said Woodruff, as treasurer, the full amount of the taxes assessed against said county and necessary to be paid to the State for the year 1899, and if it were necessary for said treasurer to borrow money to meet the call of the State Comptroller for such taxes by the first of June for that year, it was because he had either converted the amount so paid him to his own use, or else had diverted the same to some other .unauthorized purpose. Very clearly the said county of Delaware had at that time performed all the duty that it then owed to the State regarding such taxes, viz.: It had levied and collected the same and paid them over to its treasurer, and any default in the payment of the same, as required by the statute, would have been the default of. such treasurer in the performance of his official duties. Under such circumstances, it is clear that the county treasurer was utterly unauthorized to borrow any money upon the credit of the county for the purpose of paying such taxes, and the notes which he assumed to then issue for that purpose were each of them void on its face. An inspection of such section 91 would have informed the said bank that the treasurer could issue a note to borrow funds for such purpose only to the extent of the deficiency appearing in the county — 185 — treasury against the several towns of the county, and an inspection of the records of such treasury would, have informed it that no such deficiency whatever existed. Also an examination of the resolution which is referred to in said notes, with the record annexed, shows that no authority was given, or intended, by the board of supervisors to the treasurer, to borrow money for the purpose of paying such State taxes. ' Nor, indeed, could any officer of the county, or resolution of such board, confer any authority to borrow on the credit of the county for such purpose. As stated above, the county had performed its full duty when sufficient money had been paid over to its treasurer by its several towns to pay the tax in question. From that time the claim of the State was against the treasurer and his sureties, and no obligation from the county to the State arose or existed, save for the deficiency that might arise after judgment and execution in favor of the State had been exhausted against them. This is clear from the provisions of sections 91,92 and 93 of the Tax Law, above cited. Thus it is apparent that the money borrowed by Woodruff from the Albany County Bank, upon the notes above mentioned, was not used for the benefit of the county at all. The State then had no claim against the county for it, nor any part of it. Its claim tlien was against Woodruff and his sureties, and the amount advanced on the notes and paid to the Comptroller by the bank was in fact paid to the use and benefit of Woodruff. Neither upon the notes as such, nor for money paid to its use, had the bank any valid demand against Delaware county. No person, officer or otherwise, could create an obligation against such county except pursuant to the provisions of some law authorizing him to do so. I am of the opinion, therefore, that the plaintiffs’ $10,000 has not in-fact paid any indebtedness for which Delaware county was liable. Such county has not been advantaged by its application upon the notes in question, and, therefore, it is clear that no cause of action has arisen to the plaintiffs on account thereof. As to the right of the plaintiffs tc recover for the $5,000 received by the county treasurer upon the plaintiffs’ draft made payable to his order, and which was intended as a loan to said county, I have a great deal more doubt. Undoubtedly the plaintiffs supposed, from the fraudulent state — 186 — ments of Woodruff, that they were dealing with him as the agent of the county, and that they were discounting the county’s note by sending their draft to the treasurer, Adair ; and from the fact that such draft was made payable to Adair’s order they doubtless assumed that they were safe in trusting it to the possession of Woodruff, as a messenger to Adair. It being conceded that Adair indorsed the draft, presented it to the National Bank of Commerce, on which it was drawn, received the plaintiffs’ money thereon and still holds it, as the treasurer of Delaware county, they make a strong claim that, if Delaware county would retain the proceeds of such draft, it must adopt and become responsible for the representations and consideration upon the faith of which it was issued to Adair. They argue that, from the fact that it was payable to the order of Adair, he had notice and was bound to assume that so long as it was in Woodruff’s possession. it had not yet acquired any valid inception; that neither he, nor any one, could acquire any title to it, or ownership in it, except through Adair himself, and that so upon" the face of the draft there was notice sufficient to put him upon inquiry as to the truthfulness of Woodruff’s claim that lie had purchased the draft from the plaintiffs and that it was his property. It seems to me that there is a good deal of force in this claim. True, if Woodruff had fraudulently acquired from the plaintiffs so much money and paid his debt to Adair with it, it would hot be claimed that the plaintiffs could call upon Adair to restore it; but the reason of such a rule is very familiar, and the difference between the draft and the money is very apparent. Before the plaintiffs permitted the draft to pass into the possession of Woodruff, they, in effect, stamped upon it the fact that, although in his custody, it was their property and that he held it as their messenger or agent. I recognize the fact that a very large amount of the business of the country is done through drafts purchased from banks, and which are.made payable directly to the creditor of the one who makes the purchase, and yet I would be inclined to hold that, upon its face, such a draft discredits the claim that the alleged purchaser has any ownership in it, were it not for the decision and the argument therein found in the case of Goshen National Bank v. State (141 N. Y. 379). In that case Murray, who was the treasurer of Orange — 187 — county, owed the State money for taxes assessed against the county in 1892. He was also the cashier of the Goshen National Bank, and under his authority as such caslfier he drew a draft of such bank on the Importers and Traders’ National Bank of New York for $2,567.37, payable to the order of the Comptroller, and sent it to him in payment of the taxes so due from him to the State. The Comptroller took the draft, obtained the amount thereof from the said drawee and credited it to Murray in discharge of such taxes. It was paid by said drawee from moneys belonging to the Goshen bank. Murray drew such draft without paying anything for the same, or without any charge against himself in favor of the bank. He took advantage of his position as cashier to defraud the hank out of the amount of the draft and to pay his own debt with the same. He soon after absconded, and the bank then discovering the fraud, made this claim against .the State to recover back the amount. The Court of Appeals held that the State was not liable to refund the amount of the draft to the Goshen bank. In reaching that conclusion, it held that the form of the draft did not convey any notice to the State or its officer that the funds of the hank were being used by the cashier to pay his private debt. In that case, as in this, the draft was procured from the hank by the fraud of one who, claiming to be the owner of it, turned it over to the payee therein in payment of his own debt. In that case, as in this, the draft was payable to the order of the defendant, and in the hands of the one from whom the defendant received it, was apparently undelivered and without any inception. In that case, as in this, the one from whom the defendant received the draft assumed to have paid for it to the bank that issued it, and in that case, as in this, it was argued that upon the face of the draft itself there was notice sufficient to put the payee therein named on inquiry as to the truthfulness of such a claim; and in this case, as in that, the draft was issued by bankers who were engaged in the business of dealing in commercial paper. In that case the court rejected such argument in the following language: “ We think there is nothing unusual or suspicious in this form of making the draft payable direct to the creditor of the cashier, nor any notice that' in so doing the bank’s funds have been improperly used. Bank or cashier’s drafts are used so enormously at the present time in the — 188 — payment or settlement of debts and in other commercial transactions that they have almost acquired the characteristics of money. So long as they are drawn on behalf of a solvent bank and upon a solvent drawee, and signed by one of the officers usually signing such instruments, they are regarded by the commercial community very much the same as so much cash, and the fact that the draft was drawn by a cashier directly in favor of his own creditor and sent to that creditor by him, would not naturally give rise even to the suspicion that there was anything irregular, fraudulent or wrong in the conduct of the cashier.” I am unable to distinguish the principle therein decided from the one presented by the similar facts of this case. (See, also, Campbell v. Upton, 66 App. Div. 434; affd., 171 N. Y. 644.) That case seems to be controlling of the one before us and to call for a reversal of so much of the judgment as holds the defending county liable for the $5,000 so received. All concurred, except Houghton, J., dissenting in opinion.