Ulster Cnty. v. State

• Decision Date: 12 January 1904
• Citation: 177 N.Y. 189,69 N.E. 370
• Parties: ULSTER COUNTY v. STATE.
• Court: New York Court of Appeals Court of Appeals

177 N.Y. 189

69 N.E. 370

ULSTER COUNTY

v.STATE.

Court of Appeals of New York.

Jan. 12, 1904.

Appeal from Supreme Court, Appellate Division, Third Department.

Action by the county of Ulster against the state of New York. From an order of the Appellate Division (80 N. Y. Supp. 128) reversing a judgment dismissing plaintiff's claim and granting a new trial, the state appeals. Affirmed.

Under various statutes a number of the towns in Ulster county issued bonds to aid in the construction of certain railroads running through them. In 1869 the Legislature passed an act (chapter 907, p. 2306, § 4) providing that: ‘All taxes except school and road taxes, collected for the next thirty years, or so much thereof as may be necessary, in any town, village, or city, on the assessed valuation of any railroad in said town, village or city, for which said town, village or city has issued or shall issue bonds to aid in the construction of said railroad, shall be paid over to the treasurer of the county in which said town, village or city lies, and said money so paid over, including interest collected on bonds held by said treasurer as a sinking fund, shall be invested by said treasurer in state, city, town, county or village bonds, issued pursuant to law of this state on United States bonds, within sixty days after receiving the same, and shall be held by said county treasurer as a sinking fund for the redemption and payment of the bonds issued or to be issued by said town, village or city, to aid in the construction of said railroad.’ This act was amended in 1871 (page 558, c. 283) so as to permit the purchase of such railroad bonds with moneys arising from the taxes levied upon such railroads. The amended act further provided for the cancellation of the bonds so purchased, and for other things not material to the present inquiry. For many years after the passage of these acts no attempt was made to carry out their provisions in Ulster county or the bonded towns thereof. In 1888 the bonded towns commenced proceedings to compel the treasurer of Ulster county to set aside the state and county taxes levied upon such railroads for the purposes specified in the statutes of 1869 and 1871. Considerable litigation ensued between the bonded towns and the county, which resulted in the establishment of the right of the former to recover of the latter all state and county taxes not devoted to the purposes of the sinking fund provided for in said acts. Some of the claims thus created have been paid, while others are yet to be paid. In various years, and from the moneys arising from taxes levied upon and collected from railroads which had been assisted by the issuance of bonds by the towns of Ulster county, the treasurer of that county paid into the state treasury in the form of state taxes the sum of $42,451.87. In 1899 the Legislature passed an act (chapter 336, p. 725, Laws 1899) to confer jurisdiction upon the state court of claims to hear, audit, and determine the alleged claims of the several counties containing towns, villages, and cities bonded to aid in the construction of railroads, etc., on account of the payment to the state of the state taxes collected from such railroads, etc. By the first section of this act jurisdiction to hear, audit, and determine such claims is conferred upon the court of claims, with power to award judgments without interest. The second section directs the disposition of the moneys paid under any such judgment. The third section provides that awards shall be made and judgments rendered only when the facts proved shall make out a case against the state which would create a liability were the same established in a court of law or equity against an individual, corporation, or municipality. It further provides that the lapse of time shall not affect such claims, if filed within one year after the passage of the act. Under this act the present action was brought, with the result above stated.

O'Brien and Martin, JJ., dissenting.John Cunneen, Atty. Gen., for the State.

John J. Linson, for respondent.

WERNER, J. (after stating the facts).

Although this is the first action brought to this court by a county against the state under the enabling act of 1899 (chapter 336, p. 725, Laws 1899), the principle here involved has been decided in actions brought by towns against counties under the acts of 1869 and 1871 (chapter 907, p. 2306, Laws 1869, and chapter 283, p. 558, Laws 1871). Matter of Clark v. Sheldon, 106 N. Y. 104, 12 N. E. 341;Id., 134 N. Y. 335, 32 N. E. 23, 19 L. R. A. 138;Bridges v. Bd. Supervisors Sullivan Co., 92 N. Y. 575;Crowninshield v. Bd. Supervisors Cayuga Co., 124 N. Y. 585, 27 N. E. 242;Kilbourne v. Bd. Supervisors Sullivan Co., 137 N. Y. 173, 33 N. E. 159;Barnum v. Bd. Supervisors Sullivan Co., 137 N. Y. 179, 33 N. E. 162.

The only question that remains open for discussion is whether the principle applied in the cases above cited, as between the towns and counties, is controlling in the similar situation now occupied by certain counties toward the state. The incidental questions, which are suggested rather than argued, may be brushed aside with a bare mention. First. The statutes of limitations, which were urged in bar of the action of the towns against the counties, have no application here, because this court has held in Bd. Sup'rs Cayuga Co. v. State, 153 N. Y. 281, 47 N. E. 288, that a claim against the state cannot be barred by lapse of time so long as there is no tribunal in existence with authority and jurisdiction to adjudicate upon it; and this equitable rule has also found expression in the enabling act (1899), which provides that lapse of time shall not be a barrier to valid claims filed within one year of the passage of the act. Second. The form in which relief shall be sought in such cases has been settled in Strough v. Board of Supervisors Jefferson County, 119 N. Y. 212, 23 N. E. 552, upon the theory that an action as for moneys had and received is the appropriate remedy where there has been a diversion of taxes from the purposes for which they were assessed and levied, and a payment thereof to an officer or department of government not entitled thereto. Third. The school and road taxes excepted from the operation of the statutes of 1869 and 1871 are those collected in the various tax districts for local purposes, and the exception referred to does not relate to that portion of the state tax which may be devoted to highways and schools at large. Kilbourne v. Bd. Supervisors, supra. Fourth. The taxes collected from such bonded railroads and paid to the county treasurer constituted a trust fund in his hands, upon which the law had impressed a distinct purpose, and any diversion of it from that purpose was illegal. Matter of Clark v. Sheldon, supra.

Upon the main question we take up the discussion with the observation that certain moneys derived from taxes levied upon railroad in towns which aided in their construction through the issue of bonds were directed by law to be devoted to a certain purpose, namely, to the establishment of a sinking fund to be used in the redemption and cancellation of such bonds. The depositary selected by the Legislature for this purpose was the county treasurer. The duty imposed upon him by statute was not performed. A part of the moneys that should have gone into the sinking fund have been paid into the state treasury. Under a precisely identical condition as between the towns and the county, the latter has been held liable to refund the moneys which it wrongfully-that is, illegally-obtained.

How is the case different as between...