City of Rochester v. Quintard

• Decision Date: 13 December 1892
• Citation: 136 N.Y. 221,32 N.E. 760
• Parties: CITY OF ROCHESTER v. QUINTARD.
• Court: New York Court of Appeals Court of Appeals

136 N.Y. 221

32 N.E. 760

CITY OF ROCHESTER

v.QUINTARD.

Court of Appeals of New York.

Dec. 13, 1892.

Appeal from supreme court, general term, fifth department.

Submission without action of a controversy under section 1279, Code Civil Proc., between the city of Rochester, plaintiff, and William J. Quintard, defendant, to determine the liability of the latter to complete the purchase of certain bonds of said city negotiated for by him. Defendant appeals from a judgment of the general term directing a judgment for plaintiff. 20 N. Y. Supp. 396. Affirmed.

MUNICIPAL BONDS-POWER TO ISSUE.

Const. art. 8, s 11, restraining a city of over 100,000 inhabitants from becoming indebted for any purpose to an amount, including existing indebtedness, of more than 10 per cent. of the assessed value of its real estate, ‘except as herein otherwise provided,’ which exception includes the issue of water supply bonds, but for a term not to exceed 20 years, does not render void Laws 1892, c. 358, authorizing the city of Rochester to issue such bonds for a term of 50 years, since the city, though by reason of its population subject to the restraint imposed, is not required to avail itself of the exception where its total indebtedness, with addition of the proposed bonds, does not reach the prescribed limit, and therefore the proviso in respect to the term of said bonds has no application. 20 N. Y. Supp. 396, affirmed.

Clark & Sedgwick, for appellant.

C. D. Kiehel, for respondent.

FINCH, J.

The question involved in this appeal is the proper construction of section 11, art. 8, of the constitution, and arises upon the following state of facts: The city of Rochester is shown to have had over 100,000 inhabitants at the date of the issue of the bonds the validity of which is questioned, and at the same date had an existing indebtedness which, together with the newly-authorized bonded debt, did not exceed, or even reach, 10 per centum of the assessed valuation of the real estate of the city subject to taxation, as it appeared by the rolls of the last preceding assessment for state or county taxes. The legislature passed an act (chapter 358, Laws 1892) authorizing the city to issue its bonds to an amount not exceeding $1,700,000 at a rate of interest not greater than 4 per cent., and payable in not more than 50 years, in order with the proceeds to improve and extend its water supply. The city issued a part of the authorized bonds and put them upon the market at public sale to the highest bidder. The defendant bought $300,000 of them at a small premium, but refused to accept and pay for them, upon the ground that the city could not, under the constitutional restrictions, issue the bonds redeemable in 50 years, which was the term of credit stipulated, but was confined to an issue running but 20 years, and accompanied by a sinking fund sufficient to extinguish the debt at its maturity; and that the act permitting the longer credit was unconstitutional and void. Formal tender of the bonds and demand of payment was waived, and the purchaser's refusal stands upon the constitutional objection alone. An agreed case was made, upon which the general term held the act to be constitutional, and the bonds valid. The defendant thereupon brought this appeal.

The first paragraph of section 11, the construction of which is disputed, has no immediate and direct bearing upon the inquiry. It forbids any gift or loan of the municipal money or credit, any ownership of corporate or associate bonds, and the creation of any indebtedness, except for county, city, town, or village purposes, and except that lawful provision is permitted to be made for the support of the poor. An improvement of the water supply is a recognized city purpose, and a debt to accomplish that object is within the exception of the first paragraph, and, so far as that is concerned, might be lawfully contracted to any needed amount, and upon any term of credit deemed advisable. The section then proceeds to put a...