People of the State of N.Y. v. . Ingersoll

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The history of this action, a fragment only of which is presented by the record before us, has been peculiar, and if the practice adopted is to ripen into a precedent may be regarded as unfortunate. Ordinarily, a judgment deliberately given upon a question directly in issue has been, and should be, regarded as the law of the particular case by other judges in subsequent stages of the litigation, until reversed upon appeal. In no other way can justice be duly administered, or the decisions of the courts command the respect of suitors and the public. Conflicting decisions by different judges, resulting in final judgments in the same action, each carried out to its legitimate results, necessarily leads to confusion; and indulged in to any great extent, will bring reproach upon the judicial system.

The principal question, and indeed the only question of importance that has, as yet, been presented to the courts, is as to the status of the plaintiffs and their right to maintain the action. That was first presented by the demurrer of the defendant first served with process, and the decision was for the plaintiffs, overruling the demurrer at Special Term, this was affirmed at General Term, the three justices sustaining their respective views in well considered and elaborate written opinions. This result was acquiesced in by that defendant who answered over, and the action stands for trial upon the issues of fact joined therein. Thereafter, upon the motion of the present defendant, about one-third of the complaint was, by order of another judge, stricken out as "irrelevant and redundant," the allegations being claimed by the defendant, and held by the court, not essential either to the right of the plaintiffs, or the liability of the defendants, in respect to the cause of action stated. To the complaint, thus expurgated and pruned of what was regarded by the court below as superfluous and redundant statements, the present defendant demurred, and had judgment both at Special and General Terms, upon the ground that the plaintiffs had no standing in court, or right to maintain the action in respect to the matters and causes alleged. Thus two conflicting decisions have been given and are now operative, under one of which the plaintiffs, having a judgment affirming their right to maintain the action, the parties have put themselves upon the country; from the other, the present appeal has been taken. The precise question presented by this appeal may — if the matter stricken out by the court upon the application of the present defendant was, in fact, "irrelevant and redundant," in no way affecting the cause of action or the status of the plaintiffs, in case of a recovery by the plaintiffs — be presented upon an appeal from the judgment upon the issues of fact now ready for trial; and thus, if the practice is tolerated, several successive appeals from judgments and decisions, in different forms, may be brought in the same action by different parties, each presenting but the one and the same question. It is true, that the complaint has only been expurgated of the supposed redundant matter as to the present respondent, and as to the other defendants it stands as originally served; and the cause must proceed against them upon the facts alleged, so far as material to the right of the plaintiffs to sue, and upon the theory upon which the action was brought and the complaint framed by the learned counsel for the plaintiffs, and this constitutes another of the anomalies of this case. Whether the allegations and statements stricken out, as to this respondent, were or were not material, and might or might not be available to give the plaintiffs a right of action, is not before us upon this appeal; and no opinion is, therefore, expressed upon the question. It may be that if these allegations should be sustained by proof, the case would be regarded as so essentially different from that presented by the demurrer before us, that the judgment in the one case would not control in the other. All possibility of conflict or successive appeals on the same question would have been obviated had the part stricken out been regarded by the court as redundant, as it had been adjudged, and the decision of the court first made adopted as the law of the case, irrespective of the individual opinions of the judges. In its present form, a very doubtful question is involved as to the right of the plaintiffs to appeal, there being no final judgment as to all the parties defendant. But in view of the magnitude of the amount, and the novelty and importance of the questions involved, and the serious embarrassments and possible loss that might arise from a dismissal of the appeal, I incline to forego the consideration of the question of practice, and consider the appeal upon its merits, as if no question existed as to its regularity. The action having been severed, as to this defendant, in the manner and by the proceedings before referred to, the demurrer of the defendant and the present appeal must be considered as if the present respondent were the sole defendant, and the action stood against him alone.

The appeal in the action, as it comes before us, does not involve the right of the State to maintain an action against the auditors or any of them for malfeasance in office, or any person occupying an official position and who has been faithless to his trust. The action is for the recovery of a certain sum alleged to have been obtained by the respondent and the other persons named in the complaint, his associates and confederates, by false and fraudulent means and devices, and by a corrupt and fraudulent combination and conspiracy. The gist of the action is, the obtaining by the defendant and others and appropriating to their own use a large sum of money, to which they were not entitled, by the false and fraudulent practices detailed, and the demand is for judgment for the amount alleged to have been thus obtained, with interest. It is not in terms averred that the money, in any legal sense or in equity and good conscience, belonged to the plaintiffs, so that the defendants can be charged with the same as received to their use, or that the wrong was perpetrated directly against the State or the people of the State, that is, the whole State as a legal entity, and the whole body of the people; but the want of such averment it is claimed is supplied, and the necessity of such averment obviated, by allegations as to the source from which the money came, and the authority and agency by and purposes for which it was procured. The title to and ownership of the money sought to be recovered must determine the right of action, and if the money did not belong to the State, but did belong to some other body having capacity to sue, this action cannot be maintained. (People v.Booth, 32 N.Y., 397.) The eminent senior counsel for the plaintiffs, in his argument in the Supreme Court of the demurrer of another defendant, with copies of which we have been furnished, in answer to a question put as to "who did own the money," asserted that the State owned it, and, in substance, conceded that none but the true owner could have an action for its recovery. He says: "I believe I have answered the question, Who owns the money? It is but another way of putting the question, Who can maintain the action? Of course, the action ought to be maintained by the party who is regarded as the technical owner of the money, and the party so regarded in the law is the party to maintain the action." I have quoted this paragraph as expressing accurately and tersely the precise point upon which the right of the plaintiffs to sustain the action hinges, and it is in strict conformity with People v. Booth (supra). It may not be material whether the property in the money was absolute or qualified, general or special; but there must be an ownership of some kind to give an action. The party to maintain an action for a tort or wrong to property must be one whose property rights have been tortiously interfered with or invaded — one who, as trustee, special property man, bailee or general owner, has been pecuniarily damaged. The State cannot, any more than an individual, have a civil action for the recovery of money, whether by way of damages for fraud or other wrong, the wrongful conversion of chattels, or for money received by and in the possession of others, except upon proof of title and ownership. A distinction is to be observed between actions by the people or the State, in right of the prerogative incident to sovereignty, and those founded on some pecuniary interest or proprietary right. The latter are governed by the ordinary rules of law by which rights are determined between individuals. A class of cases referred to and examined at great length by counsel do not call for an extended consideration if the title to the money fraudulently taken was in the county of New York, and an action lies at the suit of the board of supervisors in behalf of that county for its recovery. It is well settled in England that, in right of the prerogative of the crown, the attorney-general, in his name of office, may proceed, either by information or by bill in equity, to establish and enforce the execution of trusts of property by public corporations, to prevent the misappropriation or misapplication of funds or property raised or held for public use; and the abuse of power by the governors of corporations or public officers, or the exercise of powers not conferred by law, and, generally, to call upon the courts to see that right is done to the subjects of the crown who are incompetent to act for themselves. Ordinarily, the remedies sought have been preventive, but in some cases, as incident to the preventive and prospective relief, a claim has been made for retrospective relief, especially when the misappropriated funds could be traced and reclaimed in specie. The jurisdiction has been sustained upon the general principles of the right and duty of the court to grant preventive relief, and the relief actually granted, if any, in addition and as incident to that, has depended upon circumstances. The right of the attorney-general to intervene and the jurisdiction of the court was at first referred to the statute of Elizabeth concerning charitable uses and the trusts enforced as charities; later a public use, although not strictly charitable, was held within the equity of the statute; but a distinction was made as to the source from which the funds proceeded, and moneys, the avails of rates and taxes levied by act of parliament, were held not within the statute; but this distinction was soon ignored, and respect was had to the purpose for which property and funds were held, rather than their source and origin, in determining whether they were held for a public and charitable use within the jurisdiction of the Court of Chancery. Still more recently, courts have held that the statute of Elizabeth was not the source of the jurisdiction of the Court of Chancery, but that trustees of property for public use were always subject to the action of account, and that the Court of Chancery had concurrent jurisdiction with the courts of common law in compelling an accounting, and that by reason of the technicalities of the action of account proper in courts of law a court of equity afforded the better remedy of the two. The municipal corporation act of 6 William IV, chapter 76 has been referred to, but I do not understand that it affects the question as to the general jurisdiction of the Court of Chancery over public trusts at the instance of the attorney-general. It did make large classes of property held by boroughs and other municipal corporations trust property, and the corporation trustees of the same, which before had been held as the property of the corporations, unaffected by any trust, and as private property, but in no other respect affected the jurisdiction of courts of equity. The same principle has been held applicable to commissioners and other public officers clothed by parliament with power over property for a public use. In all the cases the action of the court was invoked against faithless trustees, and to compel a proper execution of the trust, and a right use of trust funds by those charged with their administration. A breach of duty or a violation of trust by the trustees, either actual or threatened, and impending, is at the foundation of every action by the attorney-general or the crown, or the people as sovereign, and essential to the right of either to maintain, as well as to the right of a court of equity to entertain jurisdiction of a suit, by either touching property and funds held by public or municipal corporations for public use. If the property of a corporation be illegally interfered with by corporation officers and agents or others, the remedy is by action at the suit of the corporation, and not of the attorney-general. (Attorney-General v. Brown, 1 Swans., 265; Same v. Heelis, 2 S. S., 67; Same v.Eastlake, 11 Hare, 205; Same v. Mayor of Dublin, 1 Bligh [N.P.R.], 312; Same v. Mayor of Liverpool, 1 M. C., 171;Same v. Wilson, 1 Cr. Ph., 1; Same v. Corporation ofPoole, 2 Keene, 190; S.C., sub nom. Attorney-General v.Aspinall, id., 513, and 2 M. C., 613; S.C., 4 M. C., 417, and 8 Cl. Fin., 409.) Decisions are cited from the reports of this country and of this State entitled to consideration and respect, affirming to some extent the doctrine of the English courts, and applying it to like cases, as they have arisen here. But in none has the doctrine been extended beyond the principles of the English cases, and aside from the jurisdiction of courts of equity over trusts of property for public uses, and over the trustees, either corporate or official, the courts have only interfered, at the instance of the attorney-general, to prevent and prohibit some official wrong by municipal corporations or public officers, and the exercise of usurped, or the abuse of actual powers. A case is not made by the complaint, within the doctrine contended for, or the cases relied upon, or within the reasons which lie at the foundation of the doctrine, and it is not necessary, therefore, to consider whether the doctrine to its full extent, or within what limits, if at all, is a part of the common law of this State, or whether it has been superseded or modified by statute. Doubtless, the prerogatives of the crown, except as affected by constitutional limitations, exist in the people as sovereign, but to what extent the exercise of this prerogative is committed to the public officials, either by the legislature or by the common law, is a question worthy of grave consideration, and not to be lightly decided, and should only be determined when necessary to a judgment and decision. Whenever the legislature, by statutory enactment, has conferred upon State officers or public bodies authority to represent the body of the people in the exercise of any prerogative right no question can arise, for in those matters, except as restrained by the Constitution, the legislature is supreme. If there were no other remedy for a great wrong, and public justice and individual rights were likely to suffer for want of a prosecutor capable of pursuing the wrong-doer and redressing the wrong, the courts would struggle hard to find authority for the attorney-general to intervene in the name of the people. But, in the absence of such a necessity, the exercise of high prerogative powers ought not, by a species of judicial legislation, to be committed to the discretion of any individual or body of men. Such a committal of power should be the act of the legislature, who can hedge it about with all necessary safeguards. This action is not to establish or enforce a trust. The parties defendant are not, nor is either of them a trustee charged with any duty, or intrusted with the possession of funds or property to be administered by them for any public use. They are sought to be charged as tort feasors, for a consummated and completed tortious act.

The present respondent is not alleged to have occupied any official position, or to have owed any allegiance to the State or any of its civil or political divisions, except such as every citizen owes, and is not charged with having occupied any fiduciary relation to the city, county or State of New York, or to the funds of either. Unless the people of the State, or the State as a body politic or corporate, owned and were entitled to the money wrongfully abstracted, the defendant cannot be made a trustee for the State by reason of his tortious act; that is, he can only be charged as an involuntary trustee of the true owner of the fund. Only one of the other defendants had any official relation to the transaction detailed, and such relation was not that of trustee in any sense of any funds or property, or of the credit of the public. He, with others, was charged with certain specific duties, which did not include the possession, care or disposal of the public funds or credit. These duties were concluded long before the commencement of this action, and the complaint against him, so far as it touches his official action, is for malversation in the administration of his office or agency, by means of which large sums of money have been lost to the true owner, and appropriated by himself and others. Whatever other remedies the people may have to redress or punish this wrong, no precedent has been referred to for the maintenance of a civil action by the people to recover either the money lost or for compensatory damages, without proof of a right in the State as a political and corporate entity to the money as owner, and which would give it a place in the treasury of the State when recovered, or for some pecuniary damages sustained by the State, the compensation for which would of right belong to its treasury. The people, by the complaint, claim as owners, and do not seek to reclaim the money and compel its appropriation to any particular use or purpose. The claim of counsel, in their printed brief and upon argument, was, that it must be assumed that upon the recovery of the money by the State, and its reaching the State treasury the legislature would make such disposition of it as should be equitable and just, not claiming that there was any valid trust which could be established and enforced in equity. Such a shadowy and unsubstantial equity, depending upon the will and future action of the legislature for its recognition and establishment, is not the equivalent of, or substitute for, a trust of which the courts can take cognizance. In all the cases of public or charitable use, established at the suit of the attorney-general or the State, the particular use has been averred, and without such averments the bill or information would have shown no equity, and the court would have been without jurisdiction.Attorney-General v. Huber, Same v. Eastlake, Same v.Brown (supra), are illustrations of the principles controlling the jurisdiction of courts of equity over individuals and public bodies acting officially in respect to property interests of the public. In all the cases the parties proceeded against, and whose action was sought to be controlled or restrained, had the active administration of property or the power to raise and control funds dedicated or granted for public use, and their offices and duties were continuing, and respect was had in the relief sought to their future action. So the other cases referred to supra, of Attorney-General v. Dublin and Same v.Liverpool, are instances of the application of the principle, and the exercise of the jurisdiction against municipalities having control and direction of funds and property for the public use. The Attorney-General v. Wilson (Craig Phil.), differs from the others in this: that the borough of Leeds appeared on the record as relator and as a co-plaintiff with the attorney-general. The right of the corporation of Leeds to maintain the action was recognized and affirmed by the court; and it was said that the right of action, prior to the passage of the municipal corporation act of 6 William IV, was solely in that corporation, for the reason that the fund was the property of the corporation, and was only subjected to a trust and the jurisdiction of the court of equity as a trust fund by that act; and it was held that the corporation was a proper party to the action, its right of action not being destroyed, because, by the act, the attorney-general had a right to complain of a violation of the trust. In that case, as in the others, the foundation of the jurisdiction was an existing and continuing trust, and the object and purpose of the action was to compel the due execution of the trust, and for relief against a fraudulent misappropriation of the trust fund by former governors of the corporation and managers of the trust. But without further pursuing, in this connection, the consideration of the rights of the people of the State, and the powers of the attorney-general as their representative, to call the parties to an account for their malfeasances, and to reclaim the money tortiously and fraudulently appropriated, the right of the county of New York to sue for and recover the money as owner and proprietor should be considered as the question primarily to be determined, for in the absence of any fraud or collusion on the part of the governing body of the county in the perpetration of the wrong and commission of the fraud, or any inability or disinclination of the proper officers of the county to prosecute, if the money was the property of the county, property belonging to its treasury, and the robbery and wrong was against the county, whether the money was held upon any particular trust, or was applicable to the general purposes of the county, or was incapable of use for county purposes, except by legislative permission, there would be no necessity or occasion for the intervention of the people or their attorney-general, as there might be if the authorities of the county — the trustees in fact — had been participants in the fraudulent abstraction of the moneys, or accessories to the frauds by refusing to prosecute. It is material to recall the fact that all the allegations of collusion, on the part of the county officers, in the perpetration of the fraud and wrong, and in the illusory prosecution of the offenders, as well as of any unwillingness on the part of the county or its corporate authorities to prosecute for the recovery, have been expunged from the complaint, as to this defendant. It would not be claimed that if the county has a cause of action and can recover the money (and there are no obstacles to an action by the county, and no omission of the officers of the county to bring an action) that the State can maintain an action for the same money. True, in some cases, as in the case of general owner and bailee, or principal and agent, either can, under certain circumstances, maintain an action for money or property or upon contracts; but these are exceptional cases, and this case is not within the exception or the reasons for it. There is no such or analogous relation between the State government and the counties of the State, and the general rule must apply, that a right of action for the same thing cannot, in the absence of legislation or some peculiar reason giving duplicate actions, exist at the same time in two independent corporations or individuals. For the wrongful conversion of money or property belonging to a municipal corporation, or for which it may have an action, there cannot be concurrent remedies by the State and the municipality prosecuted pari passu. If the State has a right of action it results from and as an incident of its sovereignty, and must, necessarily, be paramount to that of the subordinate body, and upon the exercise of the right by the State the right of the corporation must be suspended, and upon a recovery by the State the corporation be barred of its remedy. Otherwise, a party may be vexed with two litigations, and possibly have two recoveries against him for the same cause of action. I find no authority or precedent for thus depriving a municipal corporation of a civil and corporate right of action, and of property, in the discretion of the law officer of the State. A county is not independent of the State, an imperium inimperio, but is in all things subject to the State and the legislature of the State, as sovereign, and its boundaries, its rights, privileges and powers may be enlarged or curtailed, and its property and property rights controlled from time to time, in the discretion of the legislature; but when grants, whether of rights or of power, are conferred by the legislature they are held absolutely, and to be enjoyed and exercised independently, subject only to the general laws of the State, the terms and conditions annexed to the grant, until withdrawn or modified by the legislature. This is consistent with The Town of Guilford v. Supervisors of Chenango (3 Kern., 143), and Darlington v.Mayor of New York (31 N.Y., 164). Chancellor KENT, in speaking of municipal corporations, says: "They may be empowered to take or hold private property for municipal uses, and such property is invested with the security of other private rights." (2 Kent's Com., 275.) As remarked by Judge DENIO, in Darlington v.Mayor, etc. (supra): "This does not exempt such property from legislative control, and, in that respect, property rights stand upon the same footing as other corporate rights, whether political or civil. Property owned by a city, county or other municipal or local government, is held by it as a public corporation and subject to the law-making power, and the governing body, by whatever name called and known, are merely trustees for the public, who are the cestui que trust of the corporation. A municipal corporation is the trustee of the inhabitants of the territory embraced within its limits."

An effort has been made to distinguish the county of New York from the other counties of the State, in respect to its powers and corporate capacity, as one of the civil and political divisions of the State. But a brief consideration will serve to show, as was impliedly, if not expressly, conceded by counsel for the plaintiffs, that there is no substantial distinction: that is, no difference, between the organization and power of the county of New York and those of the other counties of the State which in the least affects the question under consideration. From the first, the State has been divided, for governmental and political purposes, into counties, and every part of the State has been incorporated into and embraced within the territorial limits of some county, and subjected to county government. Every Constitution of this State has recognized this fact, and made provisions consistent with it and based upon it. New York was one of the twelve original counties into which the State was divided by a law of the first legislature, held in the then colony of New York, on the 1st day of November, 1683. (2 R.L., 44, 45, 46.) The first charter of the city of New York granted after the treaty of peace of 1674, by which the English were reinstated in the possession of the colony, was by Governor Dongan, in 1683, although the charter of Governor Nicolls, of 1664, had been recognized, and corporate proceedings had under it from 1674 to the granting of the Dongan charter. (Hoffman's Treatise, 20.) From an early period, if not from the first, the boundaries of the city and county of New York have been the same. Perhaps at one period this was not so, but the fact is not material, and only of interest as a matter of local history. (See Hoffman's Treatises on the Corporation, appendix, xix, xx, xxi, notes 17, 18.)

From 1683 to the present time the county of New York has existed with substantially the same territorial limits as at present, at all times having and exercising more or less of the political and corporate rights that were held and exercised by the other counties of the State. By reason of the coincidence of the boundaries and the constituencies of the two distinct organizations, the city and county of New York, and their common interests and sources of revenues, the county organization has been of less political importance than in other sections of the State, and the governing body has been differently constituted and has exercised less power. At times, many of the powers exercised elsewhere by the boards of supervisors have been devolved upon the common council of the city; and, duties ordinarily performed by county officers have been performed by city officials. It is not important to trace the changes that have been made from time to time, by some of which the distinction between the city and county government has been, to some extent, ignored. At no time has the county ceased to exist, and at all times a body has existed known as the board of supervisors of the county, who were the governing body of the county, exercising such legislative, administrative and corporate powers as the legislature has seen fit to intrust to it. To the extent that other special provision has been made by law for the performance of the functions in other counties performed by the boards of supervisors, the county of New York has been excepted from and not subject to the general laws affecting counties and prescribing the powers and duties of boards of supervisors. But in all other respects, the county has been subject to such general laws, and possessed all the powers corporate, as well as governmental, conferred by law upon the counties of the State. In 1857 a most material change was effected in the constitution of the county government, and from that time the functions of the governing body and the corporate powers of the county have been greatly enlarged, and the county government has more nearly assimilated to that of other counties. In that year, the controlling power in both branches of the legislature and the executive department of the State was in antagonism with the party dominant in the city and county of New York, and either with a view to the better administration of the government of the county, or for the purpose of dividing the political power and the emoluments of office in the city and county of New York, provision was made for the government of the county by a hybrid body: that is, by a board of supervisors so chosen as to secure an equal number from each of the two political parties. As a reform in government the project was doubtless a failure; but as a means by which individual members of the two parties were enabled to combine and enjoy the luxuries of power, patronage and plunder, it has proved a perfect success.

It is probably true, that up to that time the county, as such, had but little, if any property, even that which was necessary for public use, but that circumstance did not affect its political existence or corporate capacity. A county may be absolutely destitute of all property and pecuniary means, and yet the political and corporate existence be as perfect and the corporate rights as complete as under any other circumstances. Very few of the counties possess any property, save the necessary lands and buildings for public use, and some, at an early day, may not have been the possessors of these, but their records may have been kept in the dwelling, store or office of the clerk charged with their custody, their courts held in a school-house, occupied by the sufferance and permission of the school trustees. But the county organization was none the less perfect by reason of the poverty of the county, or its imperfect preparation to perform all its functions. It suffices, for all the purposes of the present argument, that from 1857 to the passage of the law of 1870 the county, under the administration of a board of supervisors, did exercise many and large political, legislative and administrative powers, acquire property, incur pecuniary liabilities and perform other corporate acts under the sanction of law. The board of supervisors of the county of New York were not, certainly, during all that time distinguished from the boards of supervisors of other counties by the want of power or the opportunities for its exercise, although the powers were not in all respects identical. The legislation which is the occasion of the present litigation recognizes and affirms the corporate existence and capacity of the county of New York as distinct from and independent of the city government, and as possessing all the essential powers conferred upon other counties; and if there were no other foundation for the claim, that legislation would be sufficient to invest the county with all the attributes which pertain to a county organization and a municipal corporation, and bring New York within the provisions of the general statutes upon the subject of counties and their corporate rights and powers, except as otherwise specially provided by law.

The act (chap. 382 of the Laws of 1870), "to make further provisions for the government of the county of New York," distinctly recognizes the existence of a county, with every element of power and circumstance that can be claimed as necessarily incident to any other like organization. It directs the board of supervisors to cause to be raised by tax the sums of money necessary for the payment of the claims specified in certain sections thereof, after deducting from the aggregate amount of the claims the estimated revenues of the county; thus recognizing the existence of liabilities against the county, and the possession by it of property and sources of revenue other than the power of levying taxes. It also regulates the bringing of actions against the county, and section 4 is based upon the acknowledged fact that the county had incurred obligations and contracted debts, which were a county charge, to an amount so large that it was inexpedient to levy a tax for the payment of them at that time, and, hence, provision was made for borrowing money for that purpose. By the special provisions made for the audit and payment of the claims referred to, the legal right and obligations of the county were not essentially varied, or the relation between the State and county affected, or any new relation created between the State and the creditors of the county. A special process was devised and put in execution to meet a present necessity, somewhat different in detail from that provided by general laws for the adjustment and payment of county charges, but the whole process was by and in behalf of the county as a corporate body, having the power to act for itself, and there was no special or general agency to act in behalf of the State. It was merely a grant of corporate power, modified and varied from that ordinarily conferred upon this and other counties, as made necessary by the peculiar circumstances; and to the limit of the power thus conferred the county was an independent individual agent, and the State, as such, was neither entitled to the fruits nor responsible for the consequences of the exercise of such power. The county was permitted to change the form of its indebtedness, but the indebtedness remained, as before, a county charge. The authority to borrow was conferred upon the county, and to be executed by county officers.

The special duty of auditing the claims was imposed upon the individuals designated by the act, but their duty ended with certifying the amounts of the several claims, and the county officials had no control of their action. The legislature might have fixed the sums and adjusted the claims in the statute, or authorized the amount to be determined in any other way, or by any other tribunal. To this extent, the county, in respect to this class of claims, was taken out of the general statutory provisions authorizing claims and charges against counties to be audited by the board of supervisors. (1 R.S., 366, § 4; id., 368, § 17.) Those individuals were not strictly county officers, neither were they State officers, but constituted a special commission for performing a service for and binding upon the county which is ordinarily performed by a county board, and which would seem to have been before then performed by the comptroller of the city, pursuant to the provisions of chapter 854 of the Laws of 1868. Precedent was found for a special board of audit for the adjustment of claims against the county of New York in chapter 806 of the Laws of 1867, constituting Chauncey M. Depew, Benjamin W. Bonney, Lewis B. Woodruff and John H. Martindale such board. Every other act, save the audit of the claims, was to be performed, and was performed, by the county officials and in behalf of the county. The money was to be and was borrowed upon the bonds of the county, executed and attested by the proper officers, and paid by the comptroller to the proper claimants. The chamberlain of the city is by law made county treasurer, and all moneys belonging to the county, from whatever source derived, of right are received by him and disbursed upon proper warrants. (1 R.S., 370, § 29.)

By the act substituting the non-partisan board of supervisors for the former organization (Laws of 1857, chap. 590, § 6), the finance department of the city and its officers (of whom the comptroller is chief), are to have the like powers and perform the like duties in regard to the fiscal concerns of the board of supervisors, as in regard to the local concerns of the city; and it is directed that no money shall be drawn from the treasury of the county except on the warrant of the comptroller, countersigned by the mayor and clerk of the board, thus making the comptroller and mayor ex officio county officers. The complaint, therefore, is strictly accurate in the averment that the moneys obtained from bona fide purchasers of the bonds, issued by the comptroller as prescribed by the act, were "in formal compliance with the statutes and usual modes of official proceeding in said city, deposited in the National Broadway Bank of the city of New York, to the credit of an account therein kept by the chamberlain of the city of New York, as county treasurer of the said county, by virtue of his said official character as such chamberlain." The comptroller was not a depositary or disburser of the public funds, and the act did not contemplate that he should receive and disburse the money. The brief direction in the act, that he should pay the claims audited, must be read in connection with the general laws defining his powers and prescribing his duties in respect to county matters, and as a county officer, or an officer charged with duties affecting the county. It was merely an authority, and a direction to draw a warrant upon the county treasurer in the usual form, as was done in this case. It was not intended to take these funds without the protection of the safeguards provided by law for all public funds. Thus the funds were, as averred in the complaint, legally and properly paid into the county treasury as county moneys, to be drawn out only in the manner and upon the warrants authorized by law. In the withdrawal of these funds all the forms of law were complied with. The relation of the county of New York to these moneys, and its right as a municipal corporation to and over them, was precisely the same as would have been that of any and every other county in the State to moneys raised upon its credit, or in virtue of power conferred upon it for county purposes. The question then is as to the rights of a county, as a public corporation, in respect to funds raised by authority of law upon its credit, and in the hands of its treasurer, and whether an action could be maintained by the county in any form for the recovery of the money, if tortiously or fraudulently taken from the county depositary or embezzled by him.

Corporate capacity is conferred upon each county in the State, and New York is not excepted, to sue and be sued, to purchase and hold lands within its limits, for the use of its inhabitants; to make contracts and possess personal property, and to dispose of and regulate the use of its corporate property; and all suits and proceedings by and against a county in its corporate capacity are directed to be in the name of the board of supervisors of such county, that serving pro hac vice, as the corporate name. (1 R.S., 364, §§ 1-3; id., 384, §§ 1, 2; 2 id., 473, §§ 92, 95;Supervisors of Onondaga v. Morgan, 2 Keyes, 277.) Counties are public, as distinguished from private corporations, and they are political as auxiliaries to the government of the State, and they are trustees of the people, the inhabitants within their county. (North Hempstead v. Hempstead, 2 Wend., 109.) They are sometimes called quasi corporations, because not in terms declared by statute to be corporations, and have a corporate capacity only for particular specified ends. But so long as they are invested with corporate attributes, even if it be sub modo, the distinction is without a substantial difference within the limits of the corporate powers conferred. (2 Kent's Com., 278, 279; A. A. on Corporations, § 23.) They are trustees only of the property held for public use. They are not the guardians and protectors of private and individual interest or property of the citizen. They may not intervene by action to protect or redress the individual citizen in respect to wrongs or injury to his person or property. Their power as well as duty is restricted to the protection and preservation of property possessed by them in their corporate capacity. (Town of Guilford v. Supervisors of Chenango; Mayorof Georgetown v. Alexandria Canal Company, 12 Peters, 91.) This trusteeship and corporate power, as a pecuniary and fiduciary relation, extends to and embraces not only the tangible property of the corporation, but the franchises and powers conferred for raising moneys and other means for the support of the local government and the use of the inhabitants of the county, and to the means realized from the franchises and powers conferred. It is immaterial whether the grant be of fees and emoluments from licenses, excise duties, rents or the like, or of a power to levy taxes or borrow money. The grant is a money grant by the State to the extent of the power conferred and the money realized under and by means of it. The pecuniary ability of a county may consist entirely, as it does ordinarily, in the power delegated to it to levy taxes or create a debt. The credit of the county, with granted power to use it, supported by the power of taxation delegated by the State, is a corporate right, and the fruits and avails of that credit, when exercised by the borrowing of money, are as much the property and rightfully belong to the treasury of the county as if the specific sum had been granted in terms and paid from any other source. In political and governmental matters the municipalities are the representatives of the sovereignty of the State, and auxiliary to it; in other matters, relating to property rights and pecuniary obligations, they have the attributes and the distinctive legal rights of private corporations, and may acquire property, create debts, and sue and be sued as other corporations; and in the borrowing of money and incurring pecuniary obligations in any form, as well as in the buying and selling of property within the limits of the corporate powers conferred, they neither represent nor bind the State.

The relation of principal and agent does not and cannot exist, for obvious reasons, between the State and the various municipal corporations, created with power to contract debts in respect to the exercise of the corporate functions. Debts contracted by municipalities, by authority of the legislature, are contracted by them as principals and not as agents of the State. If this were not so, they would be clearly within the prohibition of section 12 of article 7 of the Constitution, but that they are not was decided in People v. Flagg (46 N.Y., 401). This agency must be established to entitle the State, without the direct sanction of the legislature, to claim or control the fruits and proceeds of the legal pledge of municipal credit, and from such agency, once established, necessarily and logically results the liability of the State for the debts incurred, and this in face of the explicit prohibition in the State Constitution against the direct and indirect creation of a State debt. The State cannot claim the benefits and repudiate the obligations resulting from the relation of principal and agent. The claim of the State to funds and moneys thus acquired cannot be rested upon the general sovereignty of the State and its rights and duties as parens patriæ. The State may, and must in some cases, care for and protect those who are incapable of caring for themselves, as infants, idiots and the like; but a corporation with full power to acquire and hold property, create debts, levy taxes and sue and be sued, with a competent board of governors, is not within this class of incompetents in need of the exercise of this nursing quality of the State government. Neither can I discern any just foundation for the claim of the State to these funds — that its action is necessary to the protection of the tax-payers of the municipality. The cestuisque trust of the corporate property consist of all the inhabitants within the territorial limits of the corporation, including tax-payers and non-tax-payers; they are the corporators and their interests, as well the present as future inhabitants and corporators, are cared for and represented by the governing body for the time being as in other corporations. I incline to the opinion that money borrowed or raised by taxation for county purposes, and not wanted or used for the particular purposes for which it was raised, is applicable, by the action of the board of supervisors, to the payment of any county charge; but if this be not so, the want of power to appropriate it to public use, without legislative authority, does not work a forfeiture of the money to the State. It is not intended to deny the existence of plenary power in the legislature to direct the appropriation of any money in the county treasury to any use or purpose for the benefit of the inhabitants of the municipality. (Darlington v. The Mayor,supra.) The same objection might be taken to the right of the State, for if the moneys were once in the State treasury, it would require legislation to authorize their application or payment to any particular use. But whatever the legislature might do in the way of revoking a grant of power or of using or controlling the property of a county, no power in that direction has been conferred upon the attorney-general.

Much was said in the course of the argument of the position and rights of the tax-payers, and the impossibility of justice being done them, unless the State could by action recover and control the money in controversy. But the tax-payers, as distinguished from other inhabitants of the county, have no peculiar interests to subserve, or right to or interest in the money. The cestuisque trust of a municipal corporation are all the inhabitants within the territorial limits, whether taxable or not; and although the tax-payer may be more immediately affected pecuniarily by a maladministration of the corporate and trust funds, he has no rights except such as are common to all the inhabitants. One tax-payer for himself, or himself and all others, or all the tax-payers combined, cannot have an action for the correction or prevention of a misappropriation or misuser of the corporate property. (Doolittle v.Supervisors of Broome County, 18 N.Y., 155; Roosevelt v.Draper, 23 id., 318.) When the State, in the exercise of the taxing power, or any of the political corporations in the exercise of a delegation of the same power, has collected taxes pursuant to law, the amount levied has ceased to be the property of the tax-payers, and becomes corporate funds and money in trust for public purposes. The result is the same if the money is borrowed in anticipation of taxation and to be levied of those who shall hereafter become tax-payers. Neither the present nor prospective tax-payers have any special and peculiar interest in the fund, as distinguished from that of other citizens and subjects of the government, imposing the tax or incurring the debt. The borrowing of money to be repaid by taxation in the future is but one form of exercising the taxing power, and the character of the fund is the same, whether it has been collected of the tax-payer or borrowed upon the credit of the government, State or local. (People v. Flagg, 46 N.Y., 401.) For all governmental and public purposes, including that of levying taxes and borrowing money for public use, the corporation is regarded as perpetual, and no respect is had to the changing character of the constituency, and those liable to contribute to the support of the government or the payment of its debts. If, by mistake or error of any kind, taxes in excess of the amount required for present purposes have been, pursuant to law, collected they cannot be recovered back, unless there has been some irregularity or defect of jurisdiction, which vitiates the assessment and levy.

Neither is the money a waif belonging to the State, or any one who may chance to obtain possession of it, but it belongs to the municipal treasury, and is a trust fund for public use by the corporate authority. The result is the same if the money has been borrowed in excess of actual wants, and it is enough that a binding obligation has been incurred by the municipality to repay the money. Whether the obligation was incurred strictly pursuant to law is not important. If the public corporation, having power to act in a corporate capacity, has, by its officers, so acted under the laws as to become bound by its obligation, the debt has become a corporate and a county charge, and the moneys, the fruits and proceeds of the obligation, are trust funds subject to the control of the governing body of the corporation under the general laws of the State. The validity of the bonds, which are represented by the moneys sought to be recovered in this action, is conceded by the counsel for the appellants, and if not valid the purchasers of the bonds are entitled to reclaim the money paid for them. If valid, they are the obligations of the county of New York, and the debt a county charge. The State is under no obligation to pay the bonds or to provide for their payment, except so far as a sovereign State is bound to act in good faith toward those who have acted and parted with their money on the faith of its laws and policy. The State cannot, in good morals, do anything to impair or diminish the ability of the county to pay the bonds at maturity. The only security the debtor has is the credit of the county, and the grant of power to the county with direction in the act to levy taxes for the payment of the debt. To this extent, the State may, perhaps, be regarded as contracting with those who have taken the bonds, and to have agreed that this grant of power shall not be revoked; but this does not create an obligation to pay the bonds. It only brings the transaction within the provision of the Constitution of the United States prohibiting States from passing any bill "impairing the obligations of contracts" (Constitution of the United States, art. 1, § 10), and makes the grant of power irrevocable. (Hoffman v. Quincy, 4 Wallace, 535.) It is claimed that the county cannot be sued upon these bonds and a recovery had. That the federal courts would sustain an action upon these bonds against the county can hardly be doubted, in view of the past action of those courts in similar actions. It has been held by the courts of this State, that for claims which by statute are made a county charge, and for the auditing of which provision is made by statute, counties cannot be sued. (Brady v. Supervisors of New York, 10 N.Y., 260;Martin v. Supervisors of Greene County, 29 id., 645.) Conceding that the rule holds, as to an absolute undertaking to pay a specified sum at a given day, it proves nothing, If an action will not lie upon the bonds against the county, the holders have a perfect legal remedy by the writ of mandamus to compel the levy of the tax and the payment of the bonds, and whether the debt may be recovered by one form of civil procedure or another is not material. It necessarily follows, that this money being the fruits and avails of a burden, imposed pursuant to law upon the taxable inhabitants and property of the county of New York, for county purposes, of right belonged to the county of New York and its treasury, and the county has an action against any one who has by fraud or force become possessed of it.

It would hardly be claimed that if, after the avails of the bonds had been deposited with the county treasurer, the alleged frauds in the audit had been discovered and the warrants withheld, or payment had been refused by the treasurer, the State, by its attorney-general, without legislation, could have compelled the payment of the moneys into the State treasury, or recovered the money of the county treasurer. Neither would it be claimed that had the county treasurer embezzled the funds his sureties would not have been liable as for county moneys received by him. Had the bonds been delivered to a purchaser without actual payment of the money, any proceedings for a recovery of the bonds or the purchase-price would, necessarily, have been by the county. The fact that a larger sum was borrowed than was required to pay the just claims against the county, by reason of a fraud in the audit, does not, in my judgment, affect the question. The money has been raised, properly or improperly, upon the credit and at the expense of the county and for its use, to be repaid by it. The wrongful act of the public agents does not give to the State the rights and impose upon it the obligations of a principal in the transaction. Had only just claims been audited and allowed, and the precise amount required for their payment been raised, and that had been taken by force or fraud from the possession of the county treasury, the legal rights of the county and the relation of the State to the transaction would have been precisely the same as now, and yet the right of the county to maintain an action for the money would not, in the case supposed, have been doubted. The county would have been the rightful possessor of the money and the proper party to an action for its recovery. (Van Keuren v. Johnston, 3 Denio, 183; Supervisorsof Albany County v. Durant, 9 Paige, 182.) The reversal of the decree in this case by the Court for the Correction of Errors (26 Wend., 66) was upon a ground not affecting the right of a board of supervisors to maintain the action, if a cause of action had existed.

If any county of the State should, by authority of law, levy by tax or borrow upon the credit of the county and a pledge of taxes to be levied in the future, a sum of money for the building of a court-house or other special purpose, no one would doubt the title of the county to the money so long as it remained unexpended in the hands of the county officials, or its right of action for the recovery of it, if it should be tortiously taken or embezzled. If there should be a surplus remaining of the same money after the accomplishment of the special purpose for which it was raised, and it should be fraudulently or tortiously appropriated, the property of the county in such surplus, and its right of action to reclaim it, to the exclusion of the State and every other corporate body, would not be questioned. This case does not differ in principle and cannot be distinguished from that supposed. But for the importance given to it by eminent counsel, I should not regard the source from which the money came as a controlling, or even an important element in determining by whom the action should be brought. It was in the county treasury, and was paid from the treasury as alleged, and received by the defendant as the money of the county, upon a claim against the county; and if such claim was fraudulent and the pretence, under which the money was obtained false, the defendant is necessarily liable to the county, either in an action for the fraud or for money had and received, and is estopped from denying the title of the county to the money, or its right to reclaim it, if in fact it was falsely and fraudulently obtained. These considerations lead to an affirmance of the judgment of the Supreme Court.

While in view of some of the circumstances connected with the origin and history of this suit we might wish, for the purposes of this action, the law was different, we can but declare it as we find it. There is nothing in the transaction itself, or facts alleged in the complaint, to distinguish this case, in principle, from any other in which the funds and property of a county have been embezzled, stolen or tortiously appropriated, or tending to show that the right of action and remedy which would exist in such case in any county of the State, are not vested in or do not belong to the county of New York, in respect to the wrong complained of here. Neither is it averred in the complaint that obstacles, in any form, exist to the prosecution of such remedy by the county, or that the corporate authorities have not prosecuted, or will not and cannot effectually prosecute for the alleged wrong.

Were it believed that the remedy by and in behalf of the county was not plain, palpable and free from all doubt, we might hesitate in giving the judgment to which our examination has led us, lest a flagrant wrong might go unpunished. It was conceded by counsel for the plaintiffs, upon the first argument of this appeal, that the same reasons do not now exist for maintaining an action by the State, rather than the county, that were supposed to exist at the time of the commencement of this action. Reference was, doubtless, had in such suggestion, to the statements of the complaint stricken out by order of the court below, acquiesced in by the plaintiffs, tending to show collusion between the county officials and the wrong-doers, and the difficulties by reason of such collusion and complicity, in the way of an effective prosecution of an action by the county. Those statements are not now in the record, and the position and relation of the present government of the county to the defendants is supposed to have been changed. Whether this be so or not is not material upon this appeal, as the record discloses no fact which will take this action or cause of action out of the general principle governing all like cases. It will not answer to ignore well established rules of law and invent new principles and modes of procedure solely by reason of the magnitude of a claim or the enormity of a wrong, so long as there is a party in whom the cause of action is vested, able and willing to prosecute, and established rules of law and familiar modes of procedure give an ample remedy to enforce the right and redress the wrong.

To sustain this action upon the ground that the individuals acting in the transaction, under the statute, were State agents and not the agents of the county, would lead to serious results, and greatly embarrass the State in respect to the many millions of municipal obligations which have been incurred under legislative authority, only differing in the form and method of execution from that exercised in this case. The State cannot make the actors State agents without assuming the position and responsibility of principal, especially, if the agency is, as is claimed here, of a character entitling the State to the fruits and benefits of the agency. To sustain the action upon the ground of State sovereignty, and a general State guardianship over municipal corporations and their rights and property interests, without legislation upon this subject, and hold that for an invasion of the property rights of a public corporation an action will lie in the discretion and at the instance of the attorney-general, in the name of the people, to the exclusion of or concurrent with a like right of action in the corporation damnified, would introduce a new and strange doctrine, subverting those by which the rights and obligations of that class of corporations have been governed, and lead to confusion and embarrassment in the future, in the administration of the affairs and redressing of wrongs to the property rights of municipal corporations. The right to bring actions for injuries to their property is expressly conferred and given to counties by statute, and this necessarily excludes the right of the State to bring an action for the same cause. It is not intended to deny that a case may be made in which the attorney-general may, in the name of the people, institute and maintain an action against a wrong-doer, and the public corporation whose rights have been invaded or threatened, and the governing body of such corporation, to enforce a right, or redress a wrong, or prevent a breach of trust, where the governing body is faithless to its trust or a party to the wrong. Such a case is not made here, and the question is not before us.

The judgment should be affirmed.