Mayor v. Sands

• Decision Date: 19 April 1887
• Citation: 11 N.E. 820,105 N.Y. 210
• Parties: MAYOR, ETC., OF THE CITY OF NEW YORK v. SANDS.
• Court: New York Court of Appeals Court of Appeals

105 N.Y. 210

11 N.E. 820

MAYOR, ETC., OF THE CITY OF NEW YORK

v.SANDS.¹

Court of Appeals of New York.

April 19, 1887.

Appeal from general term supreme court, First department.

Luther R. Marsh and A. J. Vanderpoel, for appellant.

Charles P. Miller, for respondent.

RUGER, C. J.

This action was commenced about the year 1873, in the name of the board of supervisors of the county of New York, to recover from the defendant the value of a certain check alleged to have been misappropriated by the comptroller of New York, and delivered to the defendant. It was further alleged in the complaint that one Connolly was comptroller, and the defendant commissioner of taxes for said city, and that Connolly, having received the check in question for the use and benefit of the county, willfully and corruptly, and with intent to cheat and defraud the county, indorsed and transferred it to the defendant, who wrongfully converted it to his own use, with like intent and purpose; and that, after demand duly made upon said defendant for the same, he neglected and refused to repay the moneys received thereon to the plaintiff. The defendant, answering, denied all of the allegations of the complaint except those specifically admitted, and, after admitting the official character of himself and Connolly, and the receipt of the check, alleged that the same was duly indorsed and delivered to him by Connolly in payment for services rendered to Connolly as comptroller in effecting a loan of money for the city and county of New York under a contract previously made between them. The complaint did not allege any want of power in Connolly to make such contract, or to transfer the check, or any illegality in its delivery to defendant, except such as might be inferred from the charge that it was corruptly and fraudulently done. After the passage of chapter 304 of the Laws of 1874, consolidating the government of the city and county of New York, the mayor and commonalty of the city were substituted as plaintiff in the place of the board of supervisors. On the trial a verdict was directed by the trial court for the plaintiff, but the grounds of the decision do not appear in the record. The defendant duly excepted to the ruling of the court. The general term affirmed the judgment, upon the ground that the act of the comptroller in paying out the check was contrary to the provisions of chapter 590 of the Laws of 1857, and chapter 190 of the Laws of 1870, which required that all moneys drawn from the treasury by authority of the board of supervisors should be upon vouchers examined and allowed by the auditor and approved by the comptroller, and no money should be drawn therefrom except on a warrant drawn by the comptroller, countersigned by the mayor and clerk of the board.

The court, assuming that the contract with Connolly was a lawful one, and that upon the performance of the services he was entitled to compensation, held that his claim was then nothing more or less than a claim against the county which should be ascertained, adjusted, and paid in the mode required by law, and that the receipt and use of the check by defendant, with knowledge of its illegal use by Connolly, was a fraudulent misappropriation of the moneys represented by it, which subjected him to an action to recover the same as for a fraudulent conversion thereof. There was no attempt upon the trial to show any actual fraud intended either by Connolly or the defendant, but the case was rested altogether upon a fraud inferable from the alleged illegality of the transaction. The undisputed evidence showed that the draft was paid to the defendant by Connolly in good faith, in satisfaction of a claim held by him against Connolly, as comptroller, for services rendered in effecting a loan of money for the county upon its bonds to the amount of fifteen millions of dollars. The proof was undisputed that the defendant negotiated the loan, and that it was a favorable one; that the commission charged was fair and reasonable; and that the defendant was possessed of sufficient financial ability and influence to make his assistance valuable, and enable him to obtain the loan upon terms advantageous to the county. It was further shown that the services were rendered in pursuance of a contract previously made with the comptroller, to the effect that he should have one-half of 1 per cent. for effecting such loan, provided it was made upon favorable terms, and without other expense to the county. The transaction between Connolly and the defendant sprang out of the effort of the former to execute the power conferred and duty imposed upon him by chapter 323 of the Laws of 1871, which authorized and empowered the comptroller of New York to create a public fund or stock, to be denominated ‘Consolidated Stock of the County of New York,’ and by which any holder of the present stock of the county of New York, or bonds of the said county of New York, was authorized to exchange the same for said consolidated stock, upon such terms and conditions as should be determined and offered by said comptroller. Such stock was also authorized to be issued to pay off and cancel any bonds or stock of said county falling due in the year 1871, and also to meet the requisitions on the county of New York by the state for the payment of the county debt in that year. Such stock was to be in the form designated by the comptroller, and signed by the comptroller and mayor of the city, and sealed with the seal of the board of supervisors of the county, and attested by the clerk of said board. All stock of the county of New York thereafter issued was to be known as ‘Consolidated Stock of the County of New York,’ and issued under the authority of that act. In pursuance of the authority thus conferred, the comptroller issued the bonds in question, and procured them, through the assistance of the defendant, to be negotiated with A. Belmont & Co. at a premium of 4 1/2 per cent.

No question is made as to the legality of this issue, or but that the whole proceeds of the bonds, including premiums, excepting the check in question, were applied to the purposes of the county, or paid over to its treasurer by the comptroller. It would be difficult to conceive of a grant of power conferred in broader or more comprehensive language, and which could be less restricted by conditions and limitations upon an agent's authority. No limit is imposed upon the amount of bonds to be issued, except that implied from the use to which they were to be devoted in the retirement and payment of existing obligations of the county; and no restriction as to the terms upon which they were to be disposed of, or the amount of the expenses to be incurred in their preparation, negotiation, and transfer, is found in the act. The comptroller was broadly charged with the duty of creating a public fund or stock, to be denominated ‘Consolidated Stock of the County of New York,’ and whatever power was necessary to enable him to perform this duty was necessarily conferred upon him by the act. Whether this was a wise or prudent grant of power, or whether, in the careful exercise of it, the comptroller was enabled to commit abuses or frauds upon the people of the county with impunity, is not a subject for our consideration. We find the law upon the statute book, and it is subject to the same rules of construction as other statutes thus appearing. Citizens of the state, having occasion to deal with the comptroller in reference to the subject-matter of the act, had the right to rely upon its provisions, and the authority apparently conferred upon him to bind the fund or principals represented by him.

It is obvious from the language of the act, as well as the evidence in the case, that heavy liabilities of the county were becoming payable in the immediate future, and that large amounts would be required to meet its obligations, and that it was considered desirable, not only to raise the money required without delay, but also that all the county's outstanding indebtedness should be funded at the same time, and put upon a uniform basis as to the time of its redemption and its rate of interest. The occasion was exceptional and extraordinary, and large and apparently almost unlimited power was therefore given to the comptroller to accomplish this object. Whenever money was required to satisfy the indebtedness of the county, he was not only authorized but was charged with the duty of providing it by a sale of the bonds of the county; and, whenever an exchange of the consolidated stock could be effected for the outstanding stock or bonds of the county, he was authorized to do it, upon such terms and conditions as should be determined by himself. It was contemplated that enormous sums of money should pass into his hands, and its application and security were intrusted wholly to the judgment, discretion, and integrity of the comptroller. In the performance of the duties cast upon him, he was made independent of all other county authority or supervision, and was broadly charged with the responsibility of providing funds, not only to meet the current and maturing debt...