Benedict v. City of New York

• Decision Date: 02 June 1919
• Docket Number: No. 315,315
• Parties: BENEDICT v. CITY OF NEW YORK
• Court: U.S. Supreme Court

250 U.S. 321

39 S.Ct. 476

63 L.Ed. 1005

BENEDICT

v CITY OF NEW YORK.

No. 315.

Argued April 22, 1919.

Decided June 2, 1919.

Messrs. Leon Abbett, of Hoboken, N. J., and Charles K. Allen, of New York City, for appellant.

Mr. Terence Farley, of New York City, for appellee.

Mr. Justice BRANDEIS delivered the opinion of the Court.

In 1874 commissioners theretofore appointed by special act (Laws N. Y. 1871, c. 765) to improve the streets of Long Island City were directed to improve a particular district. Laws N. Y. 1874, c. 326. The act provided that the cost of the improvement should be assessed upon the land benefited and created a lien upon the land for the assessment and interest; but it declared that no sale for failure to pay the assessment could be made before the expiration of ten years after filing of the assessment roll. The improvement was to be paid for by delivering to the contractors interest-bearing certificates of indebtedness equal, at par, to the expense of the work and materials furnished. These certificates did not provide for a personal obligation on the part of the city or the district. They were receivable in payment of assessments at par and interest and were payable in cash only out of moneys to be derived from the assessments, which the city treasurer was directed to keep as an improvement fund separate from all other funds. The statute further provided that upon the completion of the sales for nonpayment of assessments 'all the certificates issued by the said commissioners shall be paid off, and if there be any excess to the credit of said improvement fund * * * it shall be paid into the city treasury.' By an amendment passed June 11, 1879 (Laws N. Y. 1879, c. 501), it was provided that, under certain circumstances, it was the duty of the officer making sale of land for nonpayment of assessment to receive in payment of the purchase price, certificates at par and interest.

Certificates were issued to the amount of $1,847,500. A large portion of the assessments levied were left unpaid by the landowners; and it became necessary to sell the properties. Sales for nonpayment of assessments were made in 1888. The purchase price was paid in certificates at par and interest up to the amount of the assessments, the interest and the excess, if any, being paid in cash. In 1892 and 1893 sales of land were made at much less than the amounts of the assessment. Here also bidders were permitted to pay the purchase price in certificates at par and interest. Likewise the owners of lots sold were permitted to redeem lots upon paying the amount of the bid and accrued charges by certificates at par and interest. After all the land had been disposed of and the improvement fund exhausted there remained and are now outstanding unpaid certificates aggregating about $300,000.

Prior to June 11, 1879, Benedict acquired certificates to the amount of $8,000 which he has held ever since, and on which the principal and interest are unpaid. In July 1910, suing on behalf of himself and others similarly situated, he brought this suit in the Circuit (now District) Court of the United States for the Southern District of New York to enforce, as upon an express trust, an accounting of the improvement fund and liability for alleged breaches of trust. The contention is that Long Island City became trustee of the lien on the several lots for the benefit of the certificate holders; and the alleged breaches of trust relied upon are in substance that, through its treasurer and in spite of the protest, the city permitted and authorized sales of land for e §§ than the assessment in violation of the act of 1874; that instead of canceling certificates received in payment of assessments and of the purchase price at sales, it reissued the same; and that even where sales had been made for less than the amount of the assessments it allowed redemption from sales in certificates at par and interest. The City of New York is made defendant on the ground that in 1898 Long Island City was merged into it by the Greater New York Act and that the consolidated corporation assumed the obligations and liabilities of the constituent municipalities. Laws N. Y. 1897, c. 378.

Protest was made by plaintiff at time of sales against the course pursued by the treasurer, but he justified the action complained of, relying upon act of 1874 and chapter 501 of the Laws of 1879 and chapter 656 of the Laws of 1886. Writs of mandamus had previously been issued compelling him to receive certificates at par and interest even in payment for the redemption of land sold for nonpayment of assessments. People ex rel. Ryan v. Bleckween, 8 N. Y. Supp. 638¹; People ex rel. Oakley v. Bleckwenn, 13 N. Y. Supp. 487²; People ex rel. Oakley v. Bleckwenn, 126 N. Y. 310, 27 N. E. 376. But plaintiff contended that, in view of section 23 of title VI of chapter 461 of the Laws of 1871, if the acts of 1879 and 1886 were construed as authorizing the action of which he complains, they impair, in violation of the federal Constitution, the obligation of contracts previously entered into with certificate holders. The case was fully heard in the District Court on evidence, and several distinct defenses were relied upon. The city insisted, among other things, that the statutory lien did not impose a statutory trust upon it; that the persons who acted were not its agents, but independent officers, agents of the state; that the specific provision of the statute relied upon by plaintiff did not constitute terms of the contract but related merely to the remedy; and that the later legislation introduced at most permissible changes of remedy. The court without passing upon these questions, entered a decree dismissing the bill on the ground that the statute of limitations and laches constituted a complete defense. 235 Fed. 258. This decree was affirmed by the Circuit Court of Appeals on the same grounds. 247 Fed. 758, 159 C. C. A. 616. Benedict is a citizen of Connecticut; but as he invoked the jurisdiction of the Circuit Court not only on the ground of diversity of citizenship, but also because of rights asserted under the federal Constitution, his further appeal to this court was permissible. Vicksburg v. Henson, 231 U. S. 259, 267, 268, 34 Sup. Ct. 95, 58 L. Ed. 209.

The whole case is here for review; but we find it unnecessary to decide most of the...