Lowber v. Mayor of New York

Roosevelt, J.

—A motion is made on behalf of the comptroller, as the chief financial officer of the city, and as a citizen and tax-payer, and one of the members of the corporate body denominated the Mayor, Aldermen, and Commonalty, the ultimate effect of which is to obtain a perpetual stay of proceedings on a judgment for about $200,000, entered up, as he in substance alleges, by a quasi confession, without any just or real cause of action against the city.

Two preliminary objections are raised: first, that the presiding judge is not holding a court; and secondly, that the applicant has no standing in court.

The answer to the first objection is, that by section 401 of the Code, it is declared that every application for an order is a motion, and that motions in the first judicial district, with one exception (which this is not), may be made “ to a judge or a justice out of court.”

As to the second objection, it is contended that the comptroller, whether officially or individually, cannot be heard on mere affidavits; that he must file a regular, formal bill of complaint, and that such bill must be filed on behalf of all other tax-payers as well as himself.

Whether a person not a direct party to a confessed judgment, but complaining of its injurious operation' on his interests, shall be heard summarily on informal affidavits, or be put to the more tedious remedy of a bill in equity, depends, according to the settled practice of the court, upon the special circumstances of each particular case, to be judged of after the affidavits on both sides have been read.

The more usual course in modern times, especially in this State, has been to grant the same relief on motion as might be obtained on formal suit. (4 Johns., 191; 2 Kern., 215.)

If the facts can be sufficiently ascertained from the affidavits, a duplicate suit is unnecessary. But if on the papers presented the facts are involved in doubt and contradiction, the court may either order a reference, where a cross-examination of the witnesses can be had, or leave the parties to a formal bill of complaint, with its consequent pleadings, issues, and trial by jury or otherwise, as the law may require.

To determine, therefore, the course -to be taken, it is obvious that all the papers must first be read.^*

The cause was then heard upon the merits, being argued by the counsel already named. The facts involved appear in the opinion.

Roosevelt, J.—A judgment has been entered up (by collusion, it is alleged, on the part of the public authorities, or some of them), in the records of the court, on the report of a referee, for about $200,000, to be levied of course out of the property of the city, including whatever funds may come into the treasury from taxation, to the great prejudice of the citizens generally, and especially of those whose earnings are to be assessed to satisfy this unjust demand.

On an affidavit of the facts, as he understood them, the comptroller of the city applied to one of the judges of the court and obtained an order to stay all further proceedings, and to compel the parties to show cause why the judgment so entered should not be set aside, and a proper defence be made to the action.^*

At the day appointed, cause was accordingly shown, and a large portion of a week was consumed in its discussion. Among other papers presented by Mr. Lowber’s counsel, and relied on by him, was a written document, prepared in open court, signed “ Richard Busteed, attorney for defendants, and John M. Barbour, attorney for plaintiff,” dated after the order to show cause, whereby it was stipulated “ that the motion made herein to let the defendants in to a further defence in said cause, and to amend their answer therein, be denied.” This paper, as it appeared to the court, was of itself wholly insufficient for the purpose intended; and while furnishing no adequate ground for denying the motion for relief, it suggested the most conclusive reason for permitting it to be made by the comptroller, whether in his official capacity, as head of the “ finance department” of the city, or in his individual capacity of a corporator and contributor to its revenues. It showed, especially in connection with Mr. Busteed’s affidavit, that the aldermen and councilmen were opposed to any defence being made, and that the “ law department” under their direction entertained the same views. If, therefore, the case, as alleged, was one of gross injustice to the tax-payers, they had no alternative but a resort to direct intervention, or to that of another department of the city government, or to both. And what officer for this purpose could be more appropriate than the chief of the “ department of finance,” having by the terms of the' charter (§ 22) “ control of all the fiscal concerns of the corporation ?” It is an erroneous impression, although a very prevalent one, that the members of the Common Council constitute the corporation. The city of Hew York, in the language of the Dongan charter, “ is an ancient city, and the citizens of the said city have anciently been a body politic and corporateand in the language of the Montgomerie charter, it was “ the inhabitants and citizens of said city,” whom the crown “ thought fit” to constitute “ a body politic and corporate, by the name and style of the Mayor, Aldermen, and Commonalty of the city of New York.” It is the “ citizens,” and not the aldermen merely and their associates, who form the corporators, and, in their aggregate character, the corporation. Aldermen, like other officers, are elected, not to supersede, but to aid the citizens, in the “ better government of the city;” and, so far as questions of property and revenue are concerned, they may be likened to directors of banking and railroad companies. They are' trustees of the common fund, of which the citizens are the stockholders, or, as the law expresses it, the cestui que trusts.

Mr. Elagg, then, in both his capacities, certainly in one or other of them, having from necessity a right to be heard, the question is, taking all the evidence together, on both sides,— "What is the case presented, and is it of sufficient magnitude and public importance to warrant a departure from the ordinary course of judicial action ?

The expediency of establishing a great market at the foot of Seventeenth street, on the East Eiver, was a matter purely of legislative discretion. In the exercise of this discretion—at the instance of certain petitioners whose names do not appear in the papers before me—the Common Council, on August 15,1856, hy resolution, “ authorized and directed the comptroller to advertise for proposals” for a block of ground, and to report the same in thirty days to the Common Council “ for its further action.” Among the proposals sent in was the one dated November 6, 1856, from Mr. Lowber, for two blocks between Sixteenth and Seventeenth streets, east of Avenues C and D, including the bulkhead on the river, for 196,000 dollars, “free of all encumbrances except taxes.” And subsequently, in February of the present year, a resolution was passed by the two boards, but neither approved nor disapproved by the mayor, “ directing the comptroller to purchase, without delay,” the Lowber lots, for $196,000; “ the property to be conveyed by a good and sufficient warrantee deed, free and clear of all liens and encumbrances except taxes and assessments, upon the title to the said premises being approved by the counsel to the corporation.” The resolution also “appropriated” $196,000 for the purpose, provided that the taxes and assessments to be assumed should not exceed $2,500.

On the passage of this resolution, as soon as the ten days had elapsed to render it operative without the express approval of the mayor, Mr. Lowber immediately prepared and executed a deed, dated and acknowledged the 10th of March, and submitted it to the corporation counsel for his approval. It is suggested that Mr. Busteed at the time- was lying on a bed of sickness. In six days, nevertheless, a remarkable instance, certainly, of expedition in such matters, his endorsement was procured, certifying that “ he had examined the title and approved of the same.”

By the terms of the resolution, the comptroller, it will be recollected, was to malee the purchase. It was not made by the mere passage of the resolution. The Common Council were no doubt aware that a “purchase” was a contract, and that all contracts in such cases were required by law (sec. 23, act of 1840), to be made “ by the appropriate heads of departments.” The-Common Council, as they did, might direct the comptroller to make a contract, and if without good cause he refused, they might (through the court) compel him by mandamus. But until he made or was compelled to make the contract, no contract existed, and neither Lowber nor the city was bound. Lowber, notwithstanding, without consulting the comptroller, and seemingly considering his intervention, and any financial difficulties which he might suggest,—such, for instance, as an empty treasury, without money to “appropriate,” or a recent judicial decision against the title,—as matters of no consequence, immediately, “ on the same day,” as he says himself, tendered his deed and demanded the consideration money. And although, as he admits in his complaint, both the mayor and comptroller “wholly refused to accept such deed, or in any way to recognize or complete said purchase,” he insists that the purchase was made, and demands judgment that the corporation be compelled “ to accept and receive the said deed or such other suitable and proper assurance of the said premises as the court may approve, and to pay the said $196,000, with interest from the 16th of March, 1857, and in all things specifically to execute the aforesaid contract of sale.”

On the statements in Lowber’s complaint, the title, it is obvious, whatever it may be, still remains in him. Deeds take effect by delivery. Without acceptance there can be no delivery. A tender merely, passes no title. The complaint admits there was no acceptance of the deed. Had there been, the action, instead of assuming the shape of an equity suit for a specific performance, would have been a common suit for money due. It assumes therefore that the contract, if any, was unexecuted; and it shows as clearly, in my opinion, that none was ever finally made. Details, as every one knows, are incident to such contracts. They must first he settled by the contracting officer and the party. A disagreement as to these may, and often does, take place. Until adjusted, there may be general proposals, but no binding engagement.

The complaint, as it seems to me, for these and other reasons, might have been demurred to, and had it been brought before the court in that form would, I think, have been dismissed without requiring any further answer. A demurrer, however, was not interposed.

But the objections, being not formal but substantial, going to the foundation of the action, were not waived by the omission. They might still be taken by answer; and even after answer, and without answer or demurrer. The Code (§ 148) provides that “the objection that the complaint does not state facts sufficient to constitute a cause of action,” shall not be deemed to have been waived, even by its omission in both demurrer and answer.

The answer which was put in—so far as relates to matters of fact—confined the defence to a few simple objections: First, that at the time of the passage of the resolution directing the comptroller to make the purchase, and professing to appropriate the requisite amount, and ever since, there were no moneys in the treasury to meet such an appropriation, or out of which it could be paid, and no power under existing laws to borrow the same; and, second, that although the Common Council, after passing their resolution, had applied to the Legislature for authority to raise by loan the requisite funds, that body had adjourned without granting the request.^*

From the pleadings it will be seen, in connection with affidavits, to which I shall presently advert, that there was at that time no question of fact really in dispute. The Code (§ 270), unless by consent of both parties, impliedly prohibits “ a reference” in cases “ where the investigation will require the decision of difficult questions of law.” It assumes that the judges, specially chosen and commissioned for that purpose, are the proper persons to determine such matters; and that there is neither necessity nor fitness in subjecting the parties, or either of them, to the heavy expense of appointing a judicial substitute for the occasion. In the present instance, however, a different course was taken; and, on the application of the attorneys on both sides, a reference was directed to Mr. Sickles “ to hear and determine” the whole matter; who, on the 12th of June, among other things reported :—“ I find generally that each and all the several facts set forth in the complaint (it will be observed the facts were not disputed) are true as therein stated, and upon the facts so found by me my conclusions of law are” as follows : First, that the plaintiff Lowber, by all that had occurred, had become “ legally and equitably bound” to convey; Second, that the defendants, in like manner, had become legally and equitably bound “ to receive and accept the said deed from him, and to pay to the plaintiff the sum of $196,000, with interest from March 16, 1857; and, third, that the plaintiff is entitled to a judgment in this action for the said sum of, &c., amounting in all to $199,353.77, together with his costs, &c.”

On this report, and on the same day of its date, without the intervention of any judge of the court,—none being required by law in such cases,—a judgment was entered up in favor of Mr. Lowber against the city for $199,910.71; leaving the title to the lots (as I understand the facts, and as I believe to be their legal effect) still in him, as well as the possession of the rejected deed, which had been tendered by him to the mayor and comptroller for acceptance; an omission the more remarkable when it is recollected that the proceeding was not a common-law suit, but a bill in equity for the specific performance of an alleged executory contract.

It now appears further—for such is the clear preponderance of the affidavits—that the value of the property—its market value, I mean, and not as some of the plaintiff’s affidavits express it, “ its value for market purposes”—was enormously exaggerated. But the more decisive objection—unanswerable, as it seems to me, in every view of the case—is the fact that long before the law department gave its certificate, the Superior Court at special term, as respects more than two-thirds of the property, had in effect pronounced the title bad.^* Mr. Lowber’s counsel, it is true, while admitting that Mr. Justice Hoffman, in the decision given by him, “was of a different opinion,” says, “ I have never been able to concur in the views taken ;” hut he adds, in the document signed by him and his associates, “ the case referred to is now before the general term of the Superior Court for review; and its decision (when rendered) may throw further light upon the subject, if the court find it necessary to determine the question.” Strange as it may seem, —a strangeness only to be accounted for by the then recent illness of the head of the law department, the pressure of business upon him, and the consequent necessity of relying upon professional clerks and assistants,—this document, with the notification I have cited from it, was submitted, and bears date a few days before the certificate was given. , The appeal, too, from Judge Hoffman was not only pending, but had been elaborately argued, and, it was supposed, would shortly be (as it was in July following) decided; a decision which, as the counsel thought it might, did “ throw further light on the subject.” It affirmed the decision of Mr. Justice Hoffman, and showed that although Mr. Lowber’s counsel did “ not concur in the views taken by the learned judge,” his colleagues did.

The decision of the general term of the Superior Court, it may be said, was not pronounced, and of course was not known, till some months after the title in this case was passed, and even some weeks after the judgment in the present action was entered. But that fact, while it affords matter of vindication to the corporation counsel, is, at the same time, of itself, a sufficient reason, under the circumstances, for opening the judgment, —a reason, as it seems to me, not only sufficient, but controlling—leaving, in any just view of the subject, no alternative. To say that the citizens, in such a case, are to hazard more than half a million of dollars, the probable cost of land and market, and that there is no relief, would be monstrous. The proposition shocks all our notions of law and of judicial proceedings, and especially when broached in a court having, by the constitution, “ general jurisdiction in law and equity”

“ As matter of law” (says the counsel of the city in his second point^*), “ I deny that the corporation can be ordered by this, or any court, to defend a suit.” The counsel seems to forget that if the corporation (by which he means the aldermen and other officers of the corporation) cannot be ordered to defend a suit, the corporators may be permitted to do it for them; and that if the court cannot compel the corporation to resist an unjust claim, it can refuse to permit its records to be used as the machinery for enforcing it.

If this were not so, of what avail would be the legislative restrictions on the power of contracting debts and on the power of exercising executive functions ? All the property of the city, and all its revenues, past, present, and prospective, from taxation or otherwise, might be disposed of without appeal, by a single act of mortgage or conveyance, clothed in the form of a concerted judgment—a judgment, at the most, nominally defended, but really confessed—and of which, as in this case, the court itself, without its knowledge, might be made to figure as the innocent author.

As matter of law, I deny that the court can be made, and thus in effect “ ordered,” by the boards of direction, by whatever name called, of this or of any corporation, thus to lend its aid to violate the law, and ruin the corporators. Kor is it true either, that the corporation counsel, in the defence of suits in this court, brought against the city, is subject to the absolute orders of the two boards, and “ only responsible” to them. Although in the loose language of ordinary discourse, the aldermen and assistant aldermen are commonly called “ the corporation,” they are, in fact, only its legislative, as distinguished from its executive organs. The corporation of the city, as we have seen, consists of the whole body of the citizens. The citizens are the quasi stockholders. The “ charter officers,” whether legislative or executive, including the “ head of the law department,” are merely the agents and trustees of the citizens, and all ultimately responsible to them. It is an error on the part of the corporation counsel to assume, as he does in his third point, that he is “ responsible only to his client,” and that that client is the Common Council, as distinguished from the “ commonalty.” His office is the direct gift of the people, made elective for the express purpose of putting an end to the subserviency previously supposed to exist, and of creating a check or counterpoise in its stead. Nor is this all: the corporation counsel, when conducting the prosecution or defence of a suit in court, is an officer of the court, and as such, and like any other attorney in like case, responsible to the court. Although subject, within certain limits, to the legally authorized resolutions of the Common Council, when acting in his general character of “ counsel to the corporationwhen acting as an attorney of the court he is subject to the rules and regulations of the court, and with this intimation will, I have no doubt, be “ perfectly prepared (see his communication) to perform any duty which such a result, or the office he holds, may devolve upon him.”

An order will therefore be entered (first submitting a draft to the court for settlement), directing that the judgment and execution be set aside, as also the answer, reference, and report ; and that a new answer, to be prepared by the counsel to the corporation, and approved by the comptroller, be filed and served in twenty days from the date of this order, unless the comptroller, within the said twenty days should elect, as he may, officially and as a tax-payer and corporator, on behalf of himself and others, to file an original bill of complaint, setting forth such matters and making such parties, and praying such relief in the premises as he may be advised.

* His Honor remarked, after the delivery of this opinion, that the general practice of the general term in this district, and particularly during the presiding judgeship of Mr. Justice Mitchell, had been to entertain preliminary objections, and not to dispose of them until the whole case is heard; in other words, to hear the case at large, and without prejudice to the preliminary objection, to dispose of the whole together, without hearing two arguments.

* The order to show cause was as follows :—

Title or the Cause.

On the annexed affidavits, let all further proceedings be stayed under the execution issued in the above cause, until the further order of this court; and on motion of Whiting & Clark, attorneys of this court, on behalf of Azariah C. Flagg, comptroller of said city, who is a citizen and tax-payer of said city (the counsel to the corporation having declined further to interfere in the case on behalf of the defendants), it is further ordered that they have leave to prepare such further papers in this case as they may deem necessary ; and upon the annexed affidavits, and such as they may serve upon the plaintiff or his attorney within five days after the making this order, let the plaintiff show cause before this court, at a special term thereof to be held in the said city of Mew York on the 7th day of September next, at the opening of the court on that day, why the judgment in this cause, and execution issued thereon, should not be set aside, and the defendants let in to a further defence in said cause, and to amend their answer therein as they shall be advised, upon such terms or conditions as the court may deem proper to impose. And let a copy of these papers, and such others as may be served upon the plaintiff, be also served upon Eichard Busteed, Esq., the attorney and counsel to the defendants ; and let the said attorney and counsel show cause, before this court, at the same time and place above mentioned, why leave should not be given by this court to said Whiting & Clark to appear for the future in said cause, and act therein as attorneys and counsellors for the defendants, either in their own name or in the name of the said Eichard Busteed. C. A. Peabody.

* The answer was as follows :—

Tithe of the Cause.

The defendants, for answer to the complaint herein, respectfully show to the court: That by an act of the Legislature of the State of New York, passed April 7, 1830, it is provided as follows :

“ Seo. 19. The Common Council of the city of New York shall not have authority to borrow any sums of money whatever on the credit of the corporation, except in anticipation of the revenue of the year in which such loan shall be made, unless authorized by a special act of the Legislature.”

That by an act of the Legislature, passed April 2,1849, it is provided as follows :

“ Sec. 19. It shall be lawful for the Common Council of said city to establish such other departments and bureaus as they may deem the public interest may require, and to assign to them, and to those herein created, such duties as they may direct, not inconsistent with this act; but no expense shall be incurred by any of the departments, or officers thereof, whether the object of expenditure shall have been ordered by the Common Council or not, unless an appropriation shall have been previously made concerning such expense.” ® * ® ®

That under the laws of the State of New York and the charters of the city of New York, the Common Council of said city have no legal right to incur any expense, or to contract any debt, unless they have funds in their treasury not otherwise appropriated, or the means of procuring such funds by borrowing, and unless prior to incurring such expense, or contracting such debt, they appropriate the specific amount necessary to meet and satisfy such expense or debt out of such an appropriated balance and residue of funds in their treasury.

That the resolution set forth in the complaint as having been passed by the Board of Oouncilmen on the 21st day of January, 1857, and which purports to appropriate $196,000 for the purposes therein stated, is illegal and void.

That at the time of the passage of said resolution, and at all times thereafter, the said defendants have not had any moneys at all in their treasury to meet such an appropriation, or out of which the same could be paid.

That all the moneys in their treasury are devoted, under special acts of the Legislature, to other specific purposes, which acts forbid the appropriation of said moneys to any other uses than the uses authorized and allowed by said acts.

1 That said defendants have no private revenues of their own that could be used to meet said appropriation. Their entire revenue being pledged under an ordinance of the defendants, sanctioned and ratified by an act of the Legislature, to the sinking fund of the city of New York.

That shortly after the passage of said resolution, the defendants applied to the Legislature of the State for authority to borrow a sum sufficient to meet the appropriation made in and by said resolution, and to pay for the land therein referred to. That the Legislature has adjourned without passing any act to give the defendants such authority.

That the appropriation attempted to be made in and by said resolution is wholly ineffectual and void, because at the time it was made, and ever since, there were no funds in the treasury of the defendants to meet the same, and no power to the defendants or otherwise to raise such funds, and no revenue accruing to the defendants out of which the same could be taken ; and that until an act of the Legislature is passed, authorizing them to borrow the funds referred to in the said resolution, they have absolutely no means of obtaining the same.

They therefore submit that until such appropriation is rendered effectual by an act of the Legislature authorizing the defendants to borrow the amount thereof, or to procure the same through the Board of Supervisors of the city and county, by levying a tax on the people of the city of New York therefor, said resolution is ineffectual and inoperative, and the plaintiff has no right to enforce the contract therein alleged to be contained and set forth in the complaint against these defendants, or to have a decree for a specific performance of said contract.

Richaiu) Busteed, Def’U’ Att'y.

The answer was verified by Comptroller Flagg.

* Reference is here made to the decision of Mr. Justice Hoffman in Nott v. Thayer, decided April, 1854. The case appears not to have been yet reported.

* On the hearing of the motion, Mr. Richard Busteed submitted a communication to the court in reference to so much of the motion as sought relief against himself, which was, in part, as follows :—

“ 1. If the court can find authority to compel the corporation to take any legal steps in this matter, I am perfectly prepared in that event to perform any duty which such a result, or the office I hold, may devolve upon me.

“2. As matter of law, I deny that the corporation can be ordered by this or any court to defend a suit. If the corporation neglect its corporate duties, it is to be proceeded against in another form—quo warranto.

“ 3. As counsel to the corporation, I have the right and am bound to exercise discretion and judgment as to whether it be or be not defended; and for the exercise of this discretion and judgment, I am only responsible to my client.

“ 4. I have made an official communication to my clients in this matter, and they have approved my course. # # s o $

“ Richabd Busteed.”