Germania Sav. Bank, Kings Cnty. v. Vill. of Suspension Bridge

• Decision Date: 06 June 1899
• Citation: 159 N.Y. 362,54 N.E. 33
• Parties: GERMANIA SAV. BANK, KINGS COUNTY, v. VILLAGE OF SUSPENSION BRIDGE.
• Court: New York Court of Appeals Court of Appeals

159 N.Y. 362

54 N.E. 33

GERMANIA SAV. BANK, KINGS COUNTY,

v.VILLAGE OF SUSPENSION BRIDGE.

Court of Appeals of New York.

June 6, 1899.

Appeal from supreme court, general term, Second department.

Action by the Germania Savings Bank, Kings County, against the village of Suspension Bridge, in the state of New York. From a judgment of the general term affirming a judgment for defendant (26 N. Y. Supp. 98), Charles E. Clark, privy to plaintiff, appeals. Dismissed.

Tracy C. Becker, for appellant.

W. E. Willey, for respondent.

VANN, J.

This action was brought to recover the interest alleged to have become due on the 1st days of January and July, 1888, on four coupon bonds for $500 each, known as ‘Suspension Bridge Water Bonds,’ bearing the numbers 234 to 237, inclusive. The defense alleged in the answer is that bond No. 237 had never been issued at all, that the other bonds had never been legally issued, and that all of them, after they had been engraved and signed, were feloniously abstracted from the possession of the board of water commissioners, and sold without authority, before they had a legal inception. Upon the trial it appeared that the defendant's board of water commissioners, acting under the authority conferred by chapter 181 of the Laws of 1875 and chapter 80 of the Laws of 1882, after duly adopting the proper resolutions to borrow money, and issue bonds therefor, in order to construct waterworks for the defendant, had caused the bonds, with interest coupons annexed, to be duly engraved, and had signed the same for the purpose of issuing them. The first series included the numbers in question, but No. 237 was never issued in any way, while the other numbers were not sold, but were at one time delivered as collateral security to a debt of the board, with the understanding that they were to be redeemed at an early day. Subsequently they were redeemed by, and restored to the possession of, the board, which ordered them destroyed, and supposed their order had been complied with. The board had no authority, under the statute, to dispose of the bonds by using them as collateral. About the 1st of July, 1885, and after the three bonds had come back into the possession of the board,-the fourth having always been in its possession,-one Homan, the treasurer of the board, sold the four bonds, at a discount of 2 per cent., to Charles E. Clark, of Buffalo. No part of the proceeds of the sale was received by, or came into the possession of, the board of the defendants. In thus selling the bonds, Homan neither acted nor claimed to act as treasurer of the board, but represented that he was acting for a third party, who owned them. Subsequently Mr. Clark sold them to a broker in New York, who in turn sold them to the plaintiff. The interest was paid upon them until July 1, 1887, when default was made, and none has since been paid. No interest was paid by authority of the board, and it does not appear by whom any payment was made, although it is supposed to have been through Homan in order to prevent discovery. The trial judge, after finding that said bonds were never delivered or intended to be delivered by the board for sale, and that the plaintiff was a bona fide purchaser, directed judgment for the defendant, dismissing the complaint upon the merits, with costs.

Upon appeal to the general term, judgment was affirmed, and formal judgment of affirmance was duly entered on the 17th of January, 1894. 26 N. Y. Supp. 98. As the amount demanded in the complaint was less than $500, no appeal could be taken to the court of appeals, as the law then stood, without permission of the general term. Code Civ. Proc. § 191; Laws 1871, c. [159 N.Y. 366]282, § 8; Laws 1874, c. 322, § 1. Accordingly a motion was made at the term at which the appeal was decided for leave to appeal to the court of appeals, but the same was opposed by the defendant, and on the 16th of February, 1894, was denied. More than a year passed before any attempt to appeal to this court was made. On the 27th of May, 1895, an act was passed by the legislature entitled ‘for the protection of bona fide purchasers and holders of coupon bonds and of municipal corporations against misfeasance, malfeasance or negligence of public officers.’ Laws 1895, c. 792. It authorizes any bona fide holder of negotiable bonds, put in circulation by means of the misfeasance, malfeasance, or negligence of any public officer, whose right of recovery thereupon ‘has been or shall be determined by the judgment of a court of competent jurisdiction,’ to begin an action against such officer for the recovery of all damages which the holder ‘shall have suffered because of the misfeasance, malfeasance or negligence of such public officer.’ A similar right of action is given to any municipal corporation ‘which has been or shall be compelled to pay any negotiable bond, or any coupon originally attached to such bond, by the judgment of a court of competent jurisdiction, because of’ such misfeasance, etc. After these provisions, section 4 declares that ‘in any suit or action upon any coupon or coupons hereinbefore mentioned, or upon any bonds hereinbefore mentioned, or to recover any damages hereinbefore mentioned, any party to such action shall have and is hereby granted a right of appeal, to the general term or appellate division of the supreme court from the judgment of any trial court, or to the court of appeals from any judgment of the general term or of the appellate division of the supreme court, although the amount in controversy in such action has been or may be, less than $500. Appeals from any inferior court to any appellate court, including an appeal to the court of appeals although the amount in controversy may be less than $500, from any judgment in any suit or action to recover against any municipal corporation or civil division of this state upon any negotiable bonds or upon any coupon originally attached thereto, issued or put in circulation by the agents or officers of such municipal corporations or civil division of this state, may be taken by any person who has been or shall be bound as a privy by such judgment within sixty days after such privy shall have been served by any of the parties to such civil action, with a copy of the said judgment and with a written notice of the entry thereof, and said appeal may be taken in the name of such party without entering an order of substitution as such party by said person so bound as a privy,’ upon his giving certain security prescribed by the act. The section also provides that the ‘appeal when so taken by said privy shall be conducted and...