Vill. of Ft. Edward v. Fish

• Citation: 50 N.E. 973,156 N.Y. 363
• Parties: VILLAGE OF FT. EDWARD v. FISH.
• Decision Date: 07 June 1898
• Court: New York Court of Appeals

156 N.Y. 363

50 N.E. 973

VILLAGE OF FT. EDWARD

v.FISH.

Court of Appeals of New York.

June 7, 1898.

Appeal from supreme court, general term, Third department.

Action by the village of Ft. Edward against Wilbur W. Fish. From a judgment of the general term (33 N. Y. Supp. 784) reversing a judgment in favor of defendant, he appeals. Affirmed.

John F. Parkhurst, for appellant.

Edgar T. Brackett, for respondent.

VANN, J.

By this action the plaintiff sought to recover the sum of $1,750, alleged to have been paid by its board of water commissioners to the defendant without authority, under the following circumstances: The plaintiff is a municipal corporation with a board of trustees, who in 1893, pursuant to the provisions of certain statutes, organized themselves into a board of water commissioners, and prepared an issue of coupon bonds amounting to $97,000, all dated May 1, 1893, and drawing interest at the rate of 4 per cent. per annum from that date. Laws 1875, c. 181; Laws 1881, c. 175; Laws 1893, c. 30. On the 20th of July, 1893, the water commissioners agreed in writing with the defendant to sell him 50 bonds of said issue, each being for $1,000, together with all interest accrued thereon, then amounting to the sum of $444.44, for $50,000; but it was stipulated that said agreement was not to be binding upon him unless his attorneys should ‘approve of the regularity and validity of said bonds, in writing.’ The attorneys, on examining the bonds and the proceedings upon which they were based, found some features which they considered defects, but which they thought might be cured. On the 27th of July they wrote to the water board that they were unable at that time, upon the papers before them, to advise that the proceedings were regular. Among other things, they said: ‘As, in our opinion, it is very questionable whether in the present instance such requirements have been met, we feel compelled to advise against the validity of the bond issue.’ In the meantime the water commissioners had received a more favorable offer from the comptroller of the state, and on the same day that they received said letter they arranged with him to take all of the bonds then unsold, including those mentioned in the contract with the defendant, at a profit of $6,000 over the face value of the bonds. They telegraphed to the defendant their election to withdraw from the contract, and he answered, demanding ‘delivery of bonds as contracted.’ On the 4th of August he met a representative of the commissioners at the comptroller's office, and told him that he waived all defects, and that he wanted the bonds, or a share of the profits on them if they were sold to the comptroller. The water commissioners, through their representative, insisted that the contract was conditional, and that under the circumstancesthey were released from it. The comptroller virtually refused to take the bonds unless a satisfactory arrangement was made with the defendant, so that he would get out of the way. After some negotiation a compromise was arranged, which was expressed in a contract signed by the defendant and by the president of the board. Said contract, dated August 4, 1893, recited that a dispute had ‘arisen concerning the fulfillment of a certain agreement relative of the sale by said board and the delivery of certain water bonds to said Fish,’ and ‘for the purpose of settling said dispute the said board’ agreed ‘to pay, and the said Fish to accept, the sum of $1,750, in full settlement, payment, and satisfaction and discharge of all claims and liabilities of the said water commissioners to the said W. W. Fish for and on account of the failure of said board to deliver said bounds to said Fish under the terms stated in said agreement; said sum to be paid within five days.’ The comptroller thereupon accepted the bonds, and paid a premium on them at the rate previously agreed upon. On the same day the president, in behalf of the committee in charge, reported to the full board the facts concerning the compromise and settlement with the defendant. The report was accepted, but no other action was taken, except that the thanks of the board were extended to the committee. On August 10th the water commissioners paid the defendant the sum of $1,750, as required by the compromise agreement. In June, 1894, the plaintiff commenced this action to recover from the defendant said sum, with interest from the date of payment, upon the theory that it was made without lawful authority. Upon the trial before the court without a jury, the foregoing facts appeared, with others, without dispute; and, no evidence having been given by the defendant, the presiding justice dismissed the complaint on the ground that the plaintiff had failed to establish a cause of action. Upon appeal to the general term the judgment was reversed, and the defendant now comes here, having given the usual stipulation for judgment absolute.

The legislature enacted that the bonds should not be ‘disposed of by such commissioners at less than the par value thereof.’ Laws 1875, c. 181, § 8. The first question presented for decision is, what is the meaning of the words ‘par value,’ as thus used in the statute? ‘Par’ means equal, and ‘par value’ means a value equal to the face of the bonds. A sale of bonds at par is a sale at the rate of a dollar in money for a dollar in bonds. This is the accepted meaning of the term in the mercantile world, which the legislature is presumed to have adopted in enacting the statute. The question is not open to discussion in this state, for it was settled more than 50 years ago by the noted case of State v. Delafield, 8 Paige, 527, 26 Wend. 192, 2 Hill, 159. In that case it was held that where the legislature of a state authorized its officers to borrow moneys for the use of the state, and to sell its bonds for that purpose, but not for less than their par value, a sale of bonds which were to draw interest from the time of sale, but which were to be paid for in future installments only, and without interest, was a sale of such bonds for less than their par value, and that they were not binding upon the state, because its agents had exceeded their authority. When the matter was before the chancellor, he said: ‘If the officers could issue bonds which would draw interest immediately, and still be allowed to give the purchaser of such bonds the use of the money loaned for ten months, without interest, they could with the same propriety, so far as the statutory prohibition was concerned, have sold the bonds upon a contract that they should be delivered and draw interest immediately, and that the purchaser might advance the nominal amount of the bonds in installments of from one to five years, as the same might be wanted by the complainant to carry on her public works. * * * The very idea of a sale of a bond or draft, or other security for the payment of money, at par, is that it is to be sold dollar for dollar of the amount due and payable thereon. * * * Such is the popular or generally received meaning of the terms ‘par’ or ‘par value,’ and this was unquestionably the sense in which these terms were used by the legislature of Illinois, in the statute under which the officers of the state were authorized to issue these bonds.' When the case reached the court of errors, Judge Bronson said that ‘if ‘par value’ does not mean, in this case, a dollar in money for every dollar of security, the wit of man cannot tell us what it does mean.' Senator Verplanck, referring to the same subject, said: ‘If the payment be now made to the state in New York funds, the par value would, in the common language of the stock market, as well as the natural interpretation of the phrase, independent of usage, be the amount due on the face of the certificate. But the actual sale is made on terms which, on the $300,000 sale, gave the appellant an advantage of one hundred and three days' interest; and on the $283,000 sale, of above ten months. I cannot, upon any understanding of the words, consider this a sale at par value, any more than if there had been an undisguised discount at the same rate.’ In the case now before us the face value of the bonds contracted to be sold by the water board to the defendant included accrued interest, and amounted to $50,444.44, whereas the contract price was but $50,000. The executory contract, therefore, provided for a sale of the bonds ‘at less than the par value thereof,’ in violation of the statute, and was absolutely void, because it was expressly prohibited by law. Neither party was bound thereby,...