McDermott v. Sinking Fund Com'rs of Jersey City

• Decision Date: 09 June 1903
• Citation: 69 N.J.L. 675,55 A. 37
• Parties: McDERMOTT v. SINKING FUND COM'RS OF JERSEY CITY.
• Court: New Jersey Supreme Court

55 A. 37

69 N.J.L. 675

McDERMOTT

v. SINKING FUND COM'RS OF JERSEY CITY.

Supreme Court of New Jersey.

June 9, 1903.

(Syllabus by the Court.)

Certiorari by the state, on the prosecution of Walter L. McDermott, against the sinking fund commissioners of Jersey City, to review a resolution. Resolution affirmed.

Argued February term, 1903, before DIXON, GARRISON, and SWAYZE. JJ.

Allan L. McDermott, for prosecutor.

George L. Record, for defendants.

SWAYZE, J. The object of this proceeding is to set aside a resolution of the sinking fund commissioners of Jersey City canceling bonds of the city held by the commissioners. The bonds canceled amount to $68,064.42. The resolution was passed November 18, 1902. Prior to that date all of the bonds, except one for $2,500, had been held by the commissioners for certain sinking funds, which were especially appropriated to the ultimate redemption of specific issues of bonds, and known by several different names Upon that date the commissioners had in a fund known as the "Sinking Fund of 1873" securities of the par value of $2,500, and cash to the amount of $68,332.64. Sixty thousand dollars of the cash came from fees for liquor licenses received by the city after July 1, 1902, and appropriated to the sinking fund of 1873 by a resolution of the board of finance adopted July 25, 1902. On November 18, 1902, the sinking fund commissioners first passed a series of resolutions for the purchase for the sinking fund of 1873 of the bonds in question from the sinking funds for which the bonds were then held. The effect was to transfer the cash to the other sinking funds, and to transfer the bonds to the sinking fund of 1873. At the same time they bought the $2,500 bond of a private corporation. Thereupon the commissioners passed the resolution removed by the writ of certiorari, canceling these bonds. In substance, the action complained of was the payment of these bonds, to the extent of $60,000, out of the money derived from license fees, and, to the extent of $8,000, out of other assets of the sinking fund of 1873. Some of the canceled bonds had been issued to procure money for the ordinary expenses of the city. Some had been authorized by statutes which provided for the payment of the bonds by money raised in the next tax levy. All had been issued under different statutes, which, in different language, required the bonds authorized thereby to be paid by taxation.

It is contended on the part of the prosecutor that the action of the sinking fund commissioners is, in effect, a payment of current expenses out of bonds, instead of the annual tax levy, and is an evasion of the statutes requiring bonds to be met by taxation. The action of the sinking fund commissioners now questioned is the cancellation only. Their right to transfer these bonds from the other sinking funds in return for the cash is not questioned.

As to the contention that the bonds should have been met by...