Hoag v. Town of Greenwich

• Decision Date: 19 April 1892
• Citation: 30 N.E. 842,133 N.Y. 152
• Parties: HOAG v. TOWN OF GREENWICH.
• Court: New York Court of Appeals Court of Appeals

133 N.Y. 152

30 N.E. 842

HOAG

v.TOWN OF GREENWICH.

Court of Appeals of New York.

April 19, 1892.

Cross appeals from supreme court, general term, third department.

Action by Isaac Hoag against the town of Greenwich on certain bonds. Plaintiff obtained judgment as to part of the bonds, which was affirmed by the general term. Both parties appeal. Modified.

Westfall & Whitcomb,(D. M. Westfall, of counsel,) for plaintiff.

Esek Cowen, for defendant.

FINCH, J.

The objection urged on behalf of the parties defending this action, that the judgment of the county judge authorizing the bonding of the town was not shown to have been founded upon the necessary jurisdictional facts, is answered by the provision of the statute which explicitly enacts that ‘such judgment, and the record thereof, shall have the same force and effect as other judgments and records in courts of record in this state.’ Laws 1869, c. 907, § 2; Laws 1871, c. 925, § 2. The evident purpose and legitimate effect of this provision is to clothe the judgment with the usual legal presumptions which attend the adjudications of courts of record having general jurisdiction, and to throw the burden of proving a lack of jurisdiction upon those asserting it. Craig v. Town of Andes, 93 N. Y. 410;Brownell v. Town of Greenwich, 114 N. Y. 518, 22 N. E. Rep. 24. No such want of jurisdiction was shown in the present case, and the contrary must be presumed; so that we enter upon our consideration of the case at bar under very different circumstances from those which have dictated the drift of our earlier decisions. In most of them the difficulties encountered were vital, because they struck at the original and primary authority to borrow the money or incur the municipal obligation, while here that authority is fully established, and narrows the inquiry to an alleged mistake or error in its execution.

A further objection, affecting many, though not all, of the bonds, grows out of a prior adjudication, in which the error referred to was sought to be cured by a reformation of the sécurities. Potter v. Town of Greenwich, 92 N. Y. 663. There appear to have been three counts in the complaint in that case, two of which were eliminated by demurrers affecting the form and sufficiency of the pleading, and leaving only the equitable cause of action for a reformation of the bonds to be finally determined in this court. A reference to the decision made shows very clearly that the final judgments entered upon the stipulations were conclusive only upon the equitable cause of action, and the claim of the parties to have the bonds reformed. The right to recover at law without such reformation was not before the court, was not determined, and appears to have been expressly reserved. Outside of the questions respecting the form of the last two counts in the complaint, which arose upon the demurrers, and which the action of the court shows were not upon the merits, the only issues which went to trial and were involved in the judgment were those which were pertinent to the equitable relief sought; and the final adjudication denying that equitable relief left open to the bondholders their remedies at law upon the unreformed instruments or the transactions out of which they sprang. Both the trial court and this court so declared. We said in the opinion given: ‘It is contended by the learned counsel for the appellant that the bonds are valid as they now read. That seems also to have been the opinion of the trial judge. * * * If that is so, (and whether it is so or not is not in question here, for the plaintiff presents the case in no such aspect,) no aid from a court of equity is needed, and the plaintiff has vexed the court without cause. He should be left to his remedy when the bond matures.’ The judgment absolute, at first described as ‘upon the merits,’ was corrected by striking out that clause, and now stands as sustaining the demurrers to the last two counts upon the ground that they did not state a cause of action, and dismissing the complaint so far as it sought equitable relief. That judgment, therefore, and those in the other cases which depended upon it, settle only a question of pleading, and the right to a reformation of the bonds. They furnish no bar to the present cause of action.

The bonds which form the subject of this controversy divide themselves into two groups, according as they were issued before or after May 12, 1871. Four bonds issued before that date, have been adjudged void, and the remaining 26, issued after that date, have been declared valid. Each party appeals from so much of the judgment as is adverse. The act of 1869, which authorized the issue, directed the bonds to be made payable in 30 years. The act of May 12, 1871, authorized their issue payable in not to exceed 30 years, (chapter 925, § 6;) but further directed that not more than 10 per cent. of the total authorized debt should be made payable in any one year. All the bonds issued were drawn so as to become due in 20 years, and that fact is relied upon to defeat both groups of the bonds in controversy.

There are several facts essential to a just appreciation of the nature and character of the difficulty in addition to those which have been already mentioned. The transaction authorized was a borrowing of money by the town to be used for certain specific purposes. Describing it as a sale of the bonds does not alter the real nature of the contract. The town could not sell its own promise to pay, and the bonds in its hands were that, and nothing more. They acquired no vitality as securities capable of a sale until they had obtained a valid inception in the hands of the first holder. The consideration described as paid by him is in truth a loan of so much money to the town, for which he takes the town's promise to pay in the form of a bond. The result is in no respect different from what it would have been if the town borrowing the money and given as a voucher its promissory note. The bond and the note alike are but evidences of the debt, which itself is the obligation to repay the loan. I think the authorities fully justify this view of the nature of the transaction. Coddington v. Gilbert, 17 N. Y. 489;Eastman v. Shaw, 65 N. Y. 527;Ahern v. Goodsspeed, 72 N. Y. 108.

It is important, next, to consider and define the position and attitude of the commissioners appointed under the act of 1869. By force of the judgment of the county judge, they became the authorized agents of the town, empowered to borrow upon its credit the sum of $40,000, but restricted as to the term of credit to be given. That agency is denied by the appellant, who insists that no such relation was established, citing two decisions of this court as authority,-Gould v. Town of Sterling, 23 N. Y. 456;Horton v. Town of Thompson, 71 N. Y. 513. But these cases (and there...