City of Poughkeepsie v. . Quintard

The question raised in this case is over an apparent collision between the terms of the charter of the city of Poughkeepsie and the Refunding Act of 1878. The former provides (§ 125, chap. 523, title V, Laws of 1883) that "the common council shall not have power to borrow, and is hereby expressly prohibited from borrowing, any money on account of the city except as herein provided. The said council shall not create any pecuniary obligations whatever on the part of the city which shall not be payable in the current year, and which cannot be discharged from the income of the same year." This provision, appearing first in the charter of 1854, was repeated in 1874, and has constantly remained as a restraint upon the city. Nevertheless a bonded debt was lawfully created to supply the city with water. That was done, not by an amendment of the charter, but by express legislative permission outside of it granting authority to borrow money for such purpose (Laws of 1867, chap. 333), and that permission was given without notice of or reference to the section of the charter prohibiting a loan. It operated as a permitted specific exception to an established general rule, and so construed the two acts could be read together without collision or contradiction. In 1878 (Chap. 75) and in 1889 (Chap. 526) what is known as the Refunding Act was passed, which authorizes in two forms the extension of a bonded debt for a period of not exceeding thirty years, but at a lower rate of interest. This act applies to every village, city or county owing such debt and desiring to extend it through an added period of credit It applies to all of them without reference to their charters or the acts under which the indebtedness was created, and is an enabling act of which any city may avail itself. The two forms of extension authorized are, first, an exchange of old for new bonds securing the new credit at the lower rate of interest, and, second, to meet the emergency of a refusal by holders to make the exchange bond for bond, the issue and sale of new bonds, applying the proceeds to the cancellation of the old ones. The city of Poughkeepsie chose the latter course, but is met by a refusal of the purchaser to take the new bonds upon the ground that it is a borrowing of money prohibited by the charter. It must be conceded that the transaction in form may be a borrowing of money, but in substance it is the very different case of refunding an existing debt. There is a new creditor and a reduced rate of interest, but the same old debt. The municipal liability is not increased, but merely suffered to remain, and not a dollar of new or added debt results. The transaction is no different from what it would have been if there had been an exchange of bonds. There it is conceded there would have been no borrowing of money and merely an extension of credit. But the actual result and the contemplated purpose are exactly the same under the second form of refunding as under the first, and I do not think the permission of the Enabling Act comes into collision with the prohibition of the charter. That prohibition had an obvious purpose and meaning. It was to restrain the creation of a debt, not the extension of one already existing; to prevent a new liability, not to postpone payment of an old one; to shield the taxpayers from the waste and danger of extravagant and needless appropriations, and not to obstruct the convenient and beneficial extension of a proper debt lawfully incurred. Full force and effect can be given to each statute by reading them together and construing them as if they were contained in one and the same act of legislation. It is our duty to harmonize them if possible, and I can see no more reason for deeming them inconsistent and repugnant than the provision of the charter and the original act authorizing the water debt. It is true that the Refunding Act is a general act applying to all the municipalities, and that circumstance is urged to show that it worked no repeal of the debt provision of the charter, but no repeal was necessary or intended. Here was in the Refunding Act a specific permission to do one particular thing granted to all cities and so given to Poughkeepsie, and that particular intention to allow the refunding of its maturing debt is met by the general intention manifested in the charter not to permit any debt to be contracted at all, and in such a case, if there be inconsistency, the particular intention takes effect as an exception. (Hoey v.Gilroy, 129 N.Y. 132.) But I do not think that the refunding provision is within the spirit or intent of the charter prohibition. The object and purpose of the latter was to prevent something entirely different in substance and effect from that which the Refunding Act permitted, and the two statutes may be read together and each perform its proper office and accomplish its appropriate duty without necessary collision or inconsistency.

Nor do we encounter difficulty in the provisions of the charter which point out the mode of payment and provide for the payment itself of a matured debt. They operate only when ultimate payment is required, and have no application when, by the extension of the debt, its payment is postponed in fact. What may seem payment in form is not so in truth, but a mode of substituting extended bonds for those matured, taking the form of payment solely to compel the substitution intended. I think substance would be sacrificed to form, the intention of one statute be defeated and of the other perverted, if we should construe them as hostile and inconsistent.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.