All the questions in this case, except one, are covered by the opinion in Kilbourne v. Supervisors of Sullivan Co.,* and need not be further discussed. The question peculiar to this case, grows out of the refunding of the bonds of the town under the act of 1883. The facts are briefly these. The town of Thompson issued its bonds in aid of the Monticello Port Jervis R.R. Company, under the act of 1868 (chap. 553), as amended by the act of 1869 (chap. 96). The bonds were delivered to the railroad company in exchange for its stock, and passed by sale into the general market. The town undertook to resist its liability on the bonds, and in Horton v. Town of Thompson
(71 N.Y. 513) the whole issue was declared void by this court; but actions were afterwards brought in the Federal court upon the matured coupons, and the bonds held to be valid and binding obligations of the town. (Thompson v. Perrine, 103 U.S. 806, 106 id. 589.) Judgments followed as of course, and the town found itself liable upon its bonds, notwithstanding the favorable decision in this court. Our view of the law did not help or mitigate the actual condition, and the town was compelled to take steps to provide for the payment of the debt which a competent court had adjudged to exist. The original bonds
drew seven per cent interest. In 1883 an act was passed (chap. 226) which authorized the town to issue bonds at a lower rate of interest to refund its original debt. With that new issue the judgments for interest were discharged, and the old bonds paid off and retired, so that the new issue is alone outstanding. It is now claimed that the act of 1869 (chap. 907), as amended in 1871 (chap. 283), under which this action is brought, does not cover the new issue of bonds, but spent its entire force upon those originally executed. That is a distinction which we cannot approve. A doctrine of similar character was rejected by us inCity of Poughkeepsie v. Quintard, (136 N.Y. 275). We there maintained the substantial identity of the one existing debt, although, in the process of refunding, the old bonds had been paid off. We regarded it as the renewal or extension of an old debt instead of the creation of a new one. The reasons are quite as clear in the present case. The new bonds stand in the place and stead of the old securities; they represent in all respects the same debt and the same liability: they are practically and substantially bonds issued in aid of the railroad company, notwithstanding their new form and later issue; for they represent and secure that identical debt, and were created to fund and pay it. There is not a single reason which justifies the application of the act of 1869 to the old bonds which does not equally apply to the new. The theory of the act was that the town had borne the burden of creating a new taxable property within its limits, and should have the benefit of the taxes resulting, until its burden was lifted. Refunding has only reduced the annual interest pressure, but has not removed the burden, and to say that the technical payment of the old bonds as a necessary step in the process of renewal, has at all satisfied the purposes and objects of the act of 1869, is to put form in the place of substance, and make the mere security for the debt the object of protection, instead of the debt itself. Such a construction would destroy and render ineffectual the obvious purpose of the law in every case where the saving of interest by a permitted refunding can only be accomplished by retiring and paying off the old bonds with the proceeds of the new.
The question of costs included in the judgments will not arise until they are solely represented by outstanding bonds.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.
* Ante, page 170.