People ex rel. National Exchange Bank v. Stupp ( 1888 )

Bradley, J.,

(after stating the facts as above.) The question presented is whether the official"duty of the treasurer of the city of Auburn required him to pay the amount of the order or draft to the relator. If it clearly appeared that such was his legal duty as such officer, the relator was entitled to a peremptory writ of mandamus; otherwise not. The statute pursuant to which the amount, of money in question was levied upon the taxable property of the city of Auburn directed that when collected it be paid to the railroad commissioners, and by them applied to the payment of the interest upon the bonds issued pursuant to the sam.e statute. Laws .1866, c. 433, § 4. By this provision of the act it evidently was designed that .the moneys collected for such purpose should be paid to those commissioners by the collector or officer who executed the warrants of the board of supervisors in the city; and to that extent, and for such purpose, the form prescribed by the Revised Statutes for such warrants was qualified. People v. Brown, 55 N.Y. 180. This was not observed in preparing the warrants, but those issued to the city treasurer in 1887 in terms directed payment to the supervisors of the city of the sums mentioned in them, “for town charges assessed” on the Avards respectively. These sums in the aggregate amounted to $38,799.83, in which was included- the amount levied for the payment of the interest upon the bonds before mentioned. These facts have no substantial importance as relates to the fund in question. While they may account somewhat for the method employed for the payment of the money to the railroad commissioners, the direction in the warrants covering it did not have the legal effect to divert the money from its legitimate destination. Those commissioners were the proper depositary of it; but inasmuch as the direction of the warrants to the city treasurer was to pay it to the supervisors of the city, he may have required that it be paid to those commissioners through the order of such supervisors. The result would in practical effect be the same as if the payment were made without their intervention to the commissioners. The drawers of this order were not entitled to this money, nor would their order to any person other than the commissioners entitle ttie payee to it. The right to the fund depended upon and was given by the statute. The commissioners were the constituted authority to receive and disburse it as directed by the statute. They were officers charged with a defined duty. Horton v. Town of Thompson, 71 N. Y. 513. While the bonds so issued and outstanding represented a debt of the city, the railroad commissioners had no power to borrow money to pay any portion of the principal or interest of them, and charge the city with liability upon their notes for it. The question arises as to the effect of the order or draft made by the city supervisors, and indorsed as it was by the commissioners. It had the nature of authority, so far as those supervisors could give it to the treasurer, to pay that amount of money to the commissioners. It could create no indebtedness of the city to them. Their right as such to receive the money was dependent upon its collection through the means provided for the levy and collection of taxes. This was a duty imposed upon the board of supervisors of the county. And while, as an incident to the power, such as they may have, to disburse money, the supervisors of the city might draw orders, upon the treasurer to parties entitled to the money coming within that which they havh the power, if any they have, to so disburse, they are powerless to create any debt against the city. They are members of the board of supervisors of the county, and have the powers of supervisors of towns. Laws 1879, c. 53, § 43. Their powers are only those conferred by the statute, and such as are incident to their exercise. It is contended by the learned counsel for the relator that the indorsement of this draft and the delivery of it by the commissioners to the First Xational Bank vested title to it in the bank, and by its indorsement and transfer by the cashier of that bank to the relator the latter took title to it. This proposition is dependent upon the fact that the draft was negotiable paper, and as a consequence transferable by indorsement and delivery, like commercial paper. This has the form of a negotiable bill of exchange. The question is therefore one of power in the city members of the supervisors of the county to make, and of the commissioners to transfer by indorsement, such paper, and thus create liability of the city to any holder in good faith who may have taken it in regular course of business. The power of those supervisors and commissioners, as such, to make and transfer such paper by indorsement is not supported by presumption, as the fact is recognized that all their powers are given by statute; and they have no such authority. Bank v. Supervisors, 5 Denio, 517; Barker v. Loomis, 6 Hill, 463; Parker v. Board, 106 N. Y. 392, 13 N. E. Rep. 308.

While it may be assumed that the First Xational Bank took, by the indorsement made upon the order by the commissioners, authority to receive from the treasurer the amount mentioned in it for deposit to their credit, the bank took no title to the draft, as such, by the indorsement. The.deposit for safety and convenience of funds for current uses in banks has the support of the customary methods employed in the transaction of business. This had been done by the commissioners in previous years. The draft and the indorsement of it could have no force except as on a particular fund, the omission to specify which in it, in view of the restricted power of those officers, added nothing in effect to the character of the paper, which it would have had if the fund had been mentioned in it. In that event it would have lacked the form of negotiable paper. Xor did it operate as a transfer of the fund. This the commissioners had no power to make, as it was by statute devoted to a speciiic purpose, from which they had no authority to divert it. It would therefore seem that the order as indorsed and delivered to the First Xational Bank gave to it no title to the draft or to the fund intended to be covered by it, but at most was mere authority to receive from the treasurer, when it should be received or collected by him, the money for deposit in behalf of the commissioners, and for their use. And it is unnecessary here to determine whether, as between the bank and the commissioners, the relation of creditor and debtor would be produced on the receipt and deposit by it of the amount to their credit, as would ordinarily arise by placing funds to the credit of depositors. It was, we think, not within the power, apparent or real, of the commissioners to lend the money. Their duty was to disburse it for the specific purpose for which it was raised^and in the mean time to preserve it within their control. This official duty of the commissioners in respect to such fund was a trust which they as such officers were required to execute, of which the bank was advised, and the bank was not, any more than were they, permitted to treat the money or deal with it in such manner as to deny its application to the purposes of the trust; and so far as necessary for the protection of it against diversion, and for the purpose of such protection, the bank would be chargeable as trustee of the fund until drawn from it by and in the name of the commissioners.' Van Alen v. Bank, 52 N. Y. 1; Baker v. Bank, 100 N. Y. 31, 2 N. E. Rep. 452.

The cases cited to support the contention that this draft was negotiable in its character and legal effect, have relation to those in which the power exists in the officers of corporations, municipal and otherwise, and persons, to in that manner represent or create liability. In Kelley v. Mayor, 4 Hill, 263, the draft was issued to the party entitled to payment of a debt contracted by the city of Brooklyn in the course of its business, and was drawn upon the treasurer pursuant to authority furnished by the city charter. The power of a corporation to incur liability for property purchased or for services performed takes with it the duty to pay, and the right through the constituted authorities to represent, such liability by draft upon its treasurer, which may be effectual to support a claim for the amount in behalf of its holder, to whom it has been duly transferred. Such was the doctrine of the case of Ketchum v. City of Buffalo, 14 N. Y. 356, although there the debt was represented by a bond of the city. But when a draft is not by its terms drawn upon a particular fund, liability upon it as such of the drawee depends upon his acceptance. Brill v. Tuttle, 81 N. Y. 454; Attorney General v. Insurance Co., 71 N. Y. 325. The draft in question did not, therefore, in terms import the transfer of the fund, and, as it was not duly accepted by the treasurer, lie is not apparently charged upon it as a hill of exchange or draft, but the claim made by the relator must depend upon the question whether that' officer is •charged with the duty to pay to it the amount of the draft. For the purposes of the question presented here we are unable to hold that the claim of the relator has the support of such duty of the city treasurer. It may be observed that the right to a peremptory writ of mandamus depends upon a clear legal right to the relief sought by it. People v. Board, 64 N. Y. 600; People v. Wendell, 71 N. Y. 171. And when it rests in any substantial doubt, or the facts upon which it depends are in any essential respect controverted by affidavit, such writ will not be allowed to issue. People v. Cromwell, 102 N. Y. 477, 7 N. E. Rep. 413. Whether any equities in behalf of the relator may arise from payment by it of the amount of the draft to the First Yational Bank, and the placing such amount to the credit of the commissioners by the latter bank, if such are the facts, is a question not here for consideration, and would not be if the fact of the credit of the amount by that bank was not controverted by the affidavits on the part of the defendant. These views lead to the conclusion that the relator was not entitled to a peremptory writ; and that an alternative writ of mandamus, ■which its counsel suggests should in that event issue, we think, upon the facts appearing, is not available for the purposes of any relief to the relator. The order should be affirmed.

Barker, P. J., and Haight and Dwight, JJ., concur.