Town of Duanesburgh v. Jenkins

By the Court, James, J. The Albany and Susquehanna Railroad Company was organized under the general railroad act, for the purpose of constructing a road from Albany to Binghamton. Its stock not attracting capitalists or local subscriptions sufficient for the construction of the road, its promoters sought aid from towns along its route, and for that purpose, in 1856, procured the passage of the statute above set forth, From its numerous amendments it is inferred that the local tax payers saw fit to withhold their consents; at all events, it is certain that the requisite number of tax payers in the town of Duanesburgh did not respond, and that the requisite proofs to bind the town could not be made. It seems, however, that affidavits were made and filed; not such as the law required, or such as would bind the town, but under color of which a commissioner assumed to act and subscribe for stock in the name of the town, and to issue its bonds therefor. To subscribe for railroad stock, or to purchase stock, and become a member of a corporation, and issue its bonds therefor, is not one of the general .powers possessed by towns. Before a town can become bound by persons assuming to act as its officers for such purpose, the authority for such action must have been conferred by the legislature and accepted by the town. That such power may be conferred has been adjudged. (Bank of Rome v. Village of Rome, 18 N. Y. Rep. 38. Starin v. Town of Genoa, 23 id. 439.) And when conferred, and accepted by the town, it may be exercised by officers or commissioners, as shall he specified by the act. But acceptance by the town can not be forced. A town — 306 — can not, by mere legislative enactment, be compelled,to subscribe for the stock of a private corporation, or to issue its bonds in payment for such subscription, any more than can an individual. (Clark v. City of Rochester, 24 Barb. 474. Willcocks on Mu. Corp. 30. Bailey v. The Mayor of New York, 3 Hill, 543. The King v. Pasmore, 3 Durn, and East, 240. Angell and Ames on Corp. 7th ed. § 84.) The authority to grant the power, and declare the mode of acceptance, is with the legislature; but the option of acceptance is with the town. In the case under consideration, the power to subscribe for the stock of said railroad company and issue bonds in payment, was offered to the town; but until accepted in the mode specified by the act, it had no vitality. The mode of acceptance was by the written consent of a majority of the tax payers, and a consent in that form was a condition precedent to vitality in the power. It was proper to appoint a commissioner at any time, if applied for by twelve freeholders, to operate the act if accepted; but such appointment was not an acceptance of the power. One of the findings in this case reads as follows : “In May, 1862, the commissioner filed in the town and county clerks’ offices, affidavits of the consent of the tax payers of the town of Duanesburgh, to a subscription on behalf of said town to the stock of the Albany and Susquehanna Railroad Company to the amount of $30,000.” I do not understand exactly what was meant by this finding. If, by it was meant that the consent of all, or a majority, of the tax payers of the town had been filed, it is not sustained by the proofs. The act of 1856 required the assent of two thirds of the tax payers according to the tax roll of the preceding year. Ho such assents were ever obtained; but, in the effort to obtain them, the assent of a majority on the roll of 1855 was obtained. In 1857 the law was so modified as to allow acceptance by a majority, according to the last assessment roll; but no such assents were ever obtained; and we infer they — 307 — could not be, from the fact that after five years delay, acceptance was sought to be forced by legislative enactment. The law was first invoked in that behalf. It was claimed that the consents under the act of 1856, being a majority according to the assessment roll of 1855, were, by the amendment of 1857, made an acceptance, and. might be acted upon in 1862. The court did not approve such construction, nor do we understand the act of 1857 as intending any such effects. When this case was before us on appeal from an order of the special term dissolving an injunction, (see 40 Barb. 574,) we took occasion to say: “if the phrase Hast assessment roll,’ in the original act, had reference to the roll next preceding the passage of the act, then the roll of 1855 was meant, because the act was passed on the 31st of .March, 1856, If that phrase in the original act had reference to the roll next preceding its passage, it must be held to have the same reference when used in the amended act, which would .then mean the roll of 1856, as the amendment was passed in April, 1857. It is true the act of 1857 declares that ‘ the second section of said act is hereby amended and shall read as follows still, such amendment not being made to correct an error in the former act, does not relate back and take effect from the passage of the original act, but only changes the original act, from the passage of the amendment. (Ely v. Holton, 15 N. Y. Rep. 595, 598.) And the legislature-having by special words provided that the doings under the original act might be made available under the amended act,, have in substance declared that they did not intend the-amendment should have effect anterior to its passage.” And. this court on that occasion further held, that “the term ‘the-last assessment roll,’ as used in both statutes, had reference;, not to the passage of said acts, or either of them, but to the roll preceding acceptance.” These views are still entertained. It therefore follows, that as the several acts of legislattion tendering to towns the right to issue bonds and subscribe308 for the stock of this road, had not been accepted by this plaintiff, all action in that matter, in its name, was without authority "and void. But the defendant Jenkins, notwithstanding, had assumed to act in the name of the town; he had subscribed for stock and issued its bonds in payment therefor. . Some of the bonds had passed to third persons for value, and some remained with the defendants, when this action was commenced. It is clearly apparent that subsequent legislation was intended by the managers, to legalize these acts of the commissioner. But the legislature could not do indirectly what it had not the power to do directly. The legislature, we repeat, could not compel a municipal corporation to become a stockholder in a private corporation, nor compel it to use its property to pay for such stock; 'or, what is the same thing, isstie its bonds in payment. It would be monstrous to establish such a doctrine., and a gross outrage upon a town and its citizens to enforce it. It would be depriving the town of its property without its assent, and without due process of law. A municipal corporation is absolutely as much entitled to have its liabilities determined by due process of law as an individual. It is so guarantied by the constitution. (Art. 1, §§ 6, 7,) and any legislation in disregard of that right is usurpation. (Baldwin v. The Mayor of New York, 42 Barb. 549.) The power of the legislature, to pass a law, to raise money by tax, from towns, counties or state to pay for services rendered, injuries sustained, or wrongs inflicted, and diiect the application, is not disputed. (Town of Guilford v. Sup. of Chenango, 3 Kern. 143.) But there are some things a state legislature can not do, even though not restrained by a constitution. As Judge Chase said, in Calder v. Bull, (3 Dallas, 386, “The nature and end of legislative power will limit its exercise. This fundamental principle flows from the very nature of our free republican institutions. There are acts which the federal and state legislatures can not do without exceeding their authority. — 309 — There are certain vital principles which will determine and overrule an apparent and flagrant abuse of legislative power; such as to authorize manifest injustice by positive law, or to take away that security for personal liberty, or private property, for the protection whereof government was established.” But it is, perhaps, unnecessary to discuss this question, because we think it does not arise in the case; nor have we to do with the motive which procured such legislation. Our duty is with the statute, and if found within legislative power, and constitutional, to give it construction. After a careful examination of each of the several statutes above cited, we think the subscription for stock and issue of bonds of and for the town, by Jenkins as commissioner, were without authority at the time made, and that they have not been legalized or validated by subsequent legislation; that whatever the intention of the promoters of the scheme' of town subscriptions, the legislature has not assumed to deprive the towns of the option of accepting or rejecting the power to take stock and issue its bonds therefor. That body only assumed to cast its broad mantle over acts authorized to be done. The language of each statute is this : “in any case where the commissioner of any town authorized to subscribe to the stock of the Albany and Susquehanna Railroad Company, shall have filed in the clerks’ offices affidavits,” &c. “such proof by affidavits shall be valid and conclusive to authorize the subscription to stock and the issue of bonds, notwithstanding any clerical or other defect in such proof by affidavit.” It is only in cases where the commissioners appointed for a town had authority to act for such town, that those statutes have application. In such cases their propriety is not questioned. Iri cases where the power had been accepted, the consents in fact given, and under actual authority stock had been subscribed for, and bonds issued, it would be unjust to allow the town to escape liability because of any clerical or other defects in the affidavits or proof of authority filed. The power to cure such defects by legisla — 310 — tion is undoubted. This, in all probability, was what the legislature intended to do, and it did nothing more. It did not enact, or assume or intend tb enact, that any affidavits which a commissioner might have filed should be valid and conclusive proof to uphold subscriptions and legalize' bonds, without regard to their contents, and whether the consents of the tax payers had been given or not. When this case was formerly before us, we laid down certain principles applicable to the facts then appearing, to which we still adhere, which we think should have controlled the case at circuit 5 one of which was that this action could be maintained by the town of Duanesburgh. We have been unahle to perceive that on this point the facts were changed on the trial. In addition to the opinion of Justice Potter, heretofore adopted, it is proper to say, a town may sue and be sued in all controversies between it and others ; (18 N. Y. Rep. 155, 157; 1 R. S. 5th ed. 813, 836;) and in all litigation must sue and be sued by its name, except where officers are specially authorized by law to sue in their name of office, for its benefit. (1 R. S. 5th ed. 836.) By the acts of these defendants this town stands on the books of said railroad corporation as a stockholder, ¡prima facie personally liable to all the responsibilities as such, (act of 1857,) such as its debts to laborers and servants. (Gen. Bailroad Act, § 10.) Bonds issued in the name of the town have been sold to third persons for value;- the act of 1859, in its sixth section, says, qualified by the condition of the. second section, that “all bonds issued by the commissioners of the several towns shall be binding upon the town, &c. in the hands of bona fide holders and owners,” &c. and hence here was a color of liability against this town. Under this color of liability the town is subject to suit; in its corporate capacity it might be put to the trouble and costs of defense; if it, did not defend its corporate property would be made liable to satisfy any judgment recovered.' So if the town acquiesced, it might be — 311 — held estopped from interposing a want of authority in Jenkins as a defense to any action brought against it, either by an employee of the railroad or by a bona fide holder of said bonds. Of the effect of the statute of 1859, respecting bona fide holders of bonds, it is not necessary to speak, because the defendants are not in a position to raise that question. Probably enough has been said to indicate the views entertained. The second conclusion of law was “that by virtue of the act, (chapter 18 of the Laws of 1863, and chapter 402 of the Laws of 1864,) amending the first mentioned act, the said company having constructed its road through said town of Duanesburgh, the said bonds are valid and binding upon said town, without reference to the form or sufficiency of such affidavits/’ &c. The judgment below seems to have been placed mainly upon this ground, and if authority in fact existed to issue bonds, the conclusion would be right; but as no such authority existed, the statutes of 1863 and 1864 have no application, and for that reason the judgment is erroneous. Again; it was not only not shown that Jenkinshad author-' ity to subscribe for stock and issue bonds, under the statutes of 1856 and 1867, but it affirmatively appeared that he did not have sitch authority; that the consents of tax payers had never been given.- It was only claimed that his usurpation had been legalized and made binding on the town by legislative enactment. The acts of 1856 and 1857 have never been repealed, either directly' or by implication; the acts of 1863 and 1864 did not assume to repeal the conditions precedent imposed -by the act of 1856, modified by that of 1857, or to invest the town with power, or its commissioner with authority, to act without the assent therein required. We repeat; both the statutes Of 1863 and 1864 were predicated on the condition that the power and authority had been accepted and given by the town and its tax payers, and on that theory they were enacted, to meet any objections that might be made — 312 — to the affidavits on file by reason of formal, clerical and other defects of like character; it was not assumed to change the fact, or supply a want of authority; or to declare the bonds valid, whether the commissioner had authority to issue them or not. [Saratoga Generar Term, July 10, 1866. For the reason that a town can not legally take stock in a. railroad corporation, nor issue its bonds therefor, without authority from the law making power, duly accepted by the town; and for the reason that the act of authorization had never been, accepted by this town, nor the conditions precedent which authorized the commissioner to subscribe for stock and issue bonds complied with; we hold that the defendant Jenkins was not the agent of the town, nor authorized to act for it, or on its behalf in the premises ; that his subscription for stock and issue of bonds in the name of the town were unauthorized acts, and wholly void; and that no subsequent statute has legalized either, or made the bonds valid or obligatory on the town; or could legalize or make them binding. That the plaintiff was entitled to judgment upon the facts of the case, declaring such subscription and issue of bonds void; that Jenkins forthwith return the certificates of stock to such railroad company, and that said railroad company strike the name of said town from its stock book; that Jenkins be restrained from subscribing for other stock or issuing other bonds in the name of said town; that both defendants be restrained from selling, assigning or transferring any of the said bonds heretofore issued, and that the plaintiff recover such damages as shall have been sustained by reason of the unauthorized acts of the defendants. Judgment reversed, new trial granted, costs to abide the event. Bockes, James, Bosekrms, and Totter, Justices.]