City of Poughkeepsie v. Quintard

• Decision Date: 20 December 1892
• Citation: 32 N.E. 764,136 N.Y. 275
• Parties: CITY OF POUGHKEEPSIE v. QUINTARD.
• Court: New York Court of Appeals Court of Appeals

136 N.Y. 275

32 N.E. 764

CITY OF POUGHKEEPSIE

v.QUINTARD.

Court of Appeals of New York.

Dec. 20, 1892.

Appeal from supreme court, general term, second department.

Controversy between the city of Poughkeepsie and William J. Quintard, submitted on an agreed case without action. From a judgment of the general term (19 N. Y. Supp. 944) entered for plaintiff, defendant appeals. Affirmed.

Clark & Sedgwick, for appellant.

C. B. Herrick, for respondent.

FINCH, J.

The question raised in this case is over an apparent collision between the terms of the charter of the city of Poughkeepsie and the refunding act of 1878. The former provides (section 125, c. 523, tit. 5, Laws 1883) that ‘the common council shall not have power to borrow, and is hereby expressly prohibited from borrowing, any money on account of the city, except as herein provided. The said council shall not create any pecuniary obligations whatever on the part of the city which shall not be payable in the current year, and which cannot be discharged from the income of the same year.’ This provision, appearing first in the charter of 1854, was repeated in 1874, and has constantly remained as a restraint upon the city. Nevertheless, a bonded debt was lawfully created to supply the city with water. That was done, not by an amendment of the charter, but by express legislative permission outside of it granting authority to borrow money for such purpose, (Laws 1867, c. 333,) and that permission was given without notice of or reference to the section of the charter prohibiting a loan. It operated as a permitted specific exception to an established general rule, and, so construed, the two acts could be read together without collision or contradiction. In 1878 (chapter 75) and in 1889 (chapter 526) what is known as the ‘Refunding Act’ was passed, which authorizes in two forms the extension of a bonded debt for a period of not exceeding 30 years, but at a lower rate of interest. This act applies to every village, city, or county owing such debt, and desiring to extend it through an added period of credit. It applies to all of them without reference to their charters or the acts under which the indebtedness was created, and is an enabling act of which any city may avail itself. The two forms of extension authorized are- First, an exchange of old for new bonds securing the new credit at the lower rate of interest; and, second, to meet the emergency of a refusal by holders to make the exchange bond for bond, the issue and sale of new bonds, applying the proceeds to the cancellation of the old ones. The city of Poughkeepsie chose the latter course, but is met by a refusal of the purchaser to take the new bonds upon the ground that it is a borrowing of money prohibited by the charter. It must be conceded that the transaction in form may be a borrowing of money, but, in substance, it is the very different case of refunding an existing debt. There is a new creditor, and a reduced rate of interest, but the same old debt. The...