Falconer v. Buffalo & Jamestown Railroad

Mullin, P. J.:

The consent of a majority, in number and amount, of the taxpayers of a town, that the bonds of the town may be issued in aid of the construction of a railroad within this State, in the way provided for by what is popularly known as the bonding act, gives no right to the railroad company that a court of law or equity will enforce against the town, because: 1st. The company is not bound to receive the bonds, or to apply them or their proceeds in the construction of the road. 2d. It cannot compel the persons appointed to issue the bonds, to sign and deliver them for that same reason. 3d. Because they owe no duty at that stage of the proceedings to the railroad company.

Whether the tax-payers could compel the persons appointed to execute and deliver the bonds is a question not before ns, and need not be considered.

It was, doubtless, a defect in the bonding act, that it did not provide some way to secure the application of the bonds, or their proceeds, to the construction of the railroad; and to enable it, before the subscription for the stock in the name of the town, to compel the officers of the town to issue the bonds, and that defect led to the adoption of chapter 907 of the Laws of 1869.

That act provided that a majority, in number and amount, of the tax-payers, whose names appeared on the last assessment roll of the town, might apply to the county judge, by petition, setting forth that they desired that the town might issue bonds to the amount named, and invest the same, or their proceeds, in the stock or bonds of a railroad company in this State, named in the petition.

The duties of the county judge upon receipt of the petition are prescribed, and he is required to take proof of the matters alleged in the petition, and, if they are proved to his satisfaction, he is then to adjudge that the facts so alleged are true, and cause such finding to be entered of record.

After this adjudication is made, the county judge is then to appoint commissioners who are to execute bonds in the name of the town ; and they are to subscribe in the name of the town for stock of such railroad company to the amount named in the petition of the tax-payers, and to pay for the same with the bonds or their proceeds.

By these provisions of the statute, a duty is doubtless, imposed upon the commissioners to subscribe for stock of the railroad company, to issue bonds with which, or their proceeds, to pay for the stock, which the courts may compel them to perform. But there is no contract between the town or its commissioners and the railroad company that the latter can in any way enforce.

While the proceedings remained in this way, the legislature might repeal the bonding act, without violating the provision of the Constitution of the United States which forbids the States to pass any law impairing the obligation of contracts.

In 1870 the legislature passed an act (chapter 507 of the laws of that year), which declared that it should be competent for any corporation, to aid whose construction bonds shall have been authorized to be issued by any municipal corporation, to enter into an agreement with the commissioners appointed to issue bonds, limiting and defining the times when, and the proportions in which said bonds or their proceeds shall be delivered to said corporations, and the place or places where, and the purposes for which such bonds or their proceeds shall be applied or used, and such agreement shall be valid in all courts and places. And the commissioners shall not be compelled by any court to deliver such bonds or their proceeds to such railroad company, until such agreement shall be executed if required by them.

It will be seen that the legislature has not, by the act referred to, authorized the commissioners to agree with the railroad company, to issue the bonds which the tax-payers have consented may be issued to the railroad company; that duty is left to rest solely upon the consent of the tax-payers, so that there has been at no time any contract by which the railroad company became entitled to the bonds.

The contract provided for by the section of the chapter (507) above cited, merely regulates the action of the commissioners and prescribes the purposes to which the railroad company shall apply the bonds or their proceeds.

The duty of the commissioners to issue bonds rests on the statute of 1869, and not upon the agreement authorized to be made by chapter 507.

When the section of the State Constitution took effect that prohibits towns from issuing bonds in aid of railroad companies, the right of the railroad company to enforce the delivery of the bonds was taken away. It rested purely on the act of 1869, and not upon the contract between it and the town or its agent.

The commissioners, therefore, had no power to agree, in and by the contract between them and the railroad company, dated the 14th of June, 1872, that, when the company had located and constructed its road through the village of Jamestown, they would subscribe for stock and issue bonds to pay for the same. The right of the railroad company to these bonds did not, and could not rest on the agreement of the commissioners, but upon the statute of 1869 and the consent of the tax-payers.

When these were swept away by the constitutional provision the rest of the provisions of the agreement of the seventeenth of June became inoperative. There being no bonds that could be issued, they were released from the obligation to issue them.

E. Darwin Smith, J.:

The questions presented in these cases depend primarily, upon the construction of the petition of the persons claiming to be a majority of the tax-payers of the town of Ellicott.

In that petition is the following clause: “ Your petitioners desire that the said town of Ellicott shall create and issue its bonds to the amount of $200,000, and invest the same, or the proceeds thereof, in the stock of the Buffalo and Jamestown Railroad Company, upon the condition that the line of the said railroad of said company, to be constructed from the city of Buffalo to the line of the State of Pennsylvania, in said county, shall be located and constructed through the village of Jamestown, in said town of Ellicott, before said bonds shall be delivered to said company or sold.”

The object which the petitioners intended to secure by this condition, I think, was two-fold: first, to secure the location of said railroad through the village of Jamestown ; and, secondly, to secure its construction and completion upon such line to and through the said village, before the said bonds were to be issued or sold.

The objection, that it does not appear from the said petition that the Buffalo and Jamestown Railroad Company is a railroad company in this State, I think, is-waived by the provisions of the contract hereinafter mentioned, wherein the Buffalo and Jamestown Railroad Company, the party of the second part to said contract, is described as “ a railroad corporation created and existing under and by virtue of the laws of this State.”

The question upon the form of the petition in The People ex rel. Rogers v. Spencer (55 N. Y., 1), was presented upon certiorari, and in the opinion of Judge Andrews, who delivered the opinion of the court, it is stated “ that the rights of third persons are not in question, and the court could, without injustice to any one, affirm the conclusions they had reached.”

Any person acting under and in affirmance of such proceeding as valid, would be estopped, I think, from questioning their validity afterward.

The town of Ellicott, through its commissioners, have, in the contract referred to, clearly recognized the proceedings before and adjudication of the county judge as valid, and are estopped from questioning them for defects in the said petition.

The railroad company was authorized, under the act of the legislature of 1870 (chap. 507), to contract with the railroad commissioners of the town of Ellicott, to fix and define the time and terms upon which they would subscribe to the stock of said company, and issue the bonds of said town in payment therefor ; and the said act declares that contracts so made shall be valid. This provision makes valid the contract so made against the commissioners, or the town they represent, so far as such contracts are not in violation of law, or exceed the powers of the commissioners. The commissioners could not contract to subscribe for the stock of said railroad, in violation of the condition of the petition subscribed by the tax-payers and addressed to the county judge, nor could such commissioners, by contract, enlarge their own powers. They could contract provisionally, to issue such bonds and subscribe for such stock, when said railroad should have been located through, and completed to the village of Jamestown.

This would simply define the time and terms for the issue of such bonds. They could not provide for the issue of such bonds at any earlier period, by executing them and delivering them conditionally, in trust or otherwise. The subscription of said stock and the issue of said bonds could not lawfully take place until said railroad was completed to the village of Jamestown. Before said railroad was so completed, the power of the said commissioners, and the power of the said town to subscribe for said stock and to issue said bonds, was entirely taken away by the amendment of the Constitution, which went into effect on the 1st day of January, 1875. These commissioners were public officers, acting under the authority of law, which was thus repealed before any vested right had accrued under it binding upon said town of Ellieott. The execution and delivery of said bonds to Augustus Allen and Robert Newland in trust for said parties, as stated in complaint and case, could not in any degree affect the question nor change the rights of the town. These bonds in the hands of the said trustees cannot lawfully be delivered to the said railroad company, and are absolutely null and void in the hands of the said trustees.

It follows, therefore, from these views, that the order dissolving the injunction in the suit of Ealconer against said commissioners and other defendants, was improperly dissolved, and the demurrer in said action erroneously sustained, and should be reversed and said injunction restored. The cause of action in said suit was clearly maintainable, upon the merits, within the case of Ayers v. Lawrence (59 N. Y., 192), and in the case of The Buffalo and Jamestown Railroad Company v. Walter J. Weeks and others. Judgment should be given for defendants, according to the prayer of said defendants in the said submitted case, with costs.

Mullin, J., concurred.