Williamsburgh Sav. Bank v. Town of Solon

• Citation: 136 N.Y. 465,32 N.E. 1058
• Parties: WILLIAMSBURGH SAV. BANK v. TOWN OF SOLON.
• Decision Date: 17 January 1893
• Court: New York Court of Appeals

136 N.Y. 465

32 N.E. 1058

WILLIAMSBURGH SAV. BANK

v.TOWN OF SOLON.

Court of Appeals of New York.

Jan. 17, 1893.

Appeal from supreme court, general term, second department.

Action by the Williamsburgh Savings Bank against the town of Solon. Plaintiff had judgment, which was affirmed at general term, (20 N. Y. Supp. 27,) and defendant appeals. Modified and affirmed.

Louis Marshall and B. A. Benedict, for appellant.

Edward B. Thomas and Howard D. Newton, for respondent.

FINCH, J.

The plaintiff brought this action to recover upon unpaid interest coupons attached to the bonds of the town of Solon, issued about 20 years earlier, in aid of the Utica, Chenango & Cortland Railroad Company. The complaint sets out in full the judgment of the county judge authorizing such issue upon the consent of the taxpayers, and the further proceedings which followed, and avers the plaintiff's ownership of the specified bonds, and the refusal of the town to pay the matured interest thereon. It further avers that in a prior action between the same parties the validity of the same bonds was put in issue, and that the judgment then rendered conclusively determined that such bonds were the valid obligations of the town.¹ The answer admitted the rendition of such judgment, but referred to the record on file as to its terms, and alleged that the issues raised by the pleadings in that action were other and different from those contained in the answer, and that such prior judgment was not an estoppel upon the town. On the trial it was stipulated that either party might read from the printed case prepared on appeal in the former action, and the whole of that record was put in evidence. The defense in the present action was that the bonds sued on were invalid and void, and not the obligations of the town, and the specific defects relied on were the following: First, that the judgment of the county judge was void on its face, because the petition was not sufficient to confer jurisdiction, and that it did not set forth that the persons signing the same were a majority of the taxpayers of the town of Solon, whose names appeared on the last preceding tax list or assessment roll of said town as owning or representing a majority of the taxable property therein; second, that the Utica, Chenango & Cortland Railroad Company was not a railroad corporation, and was never legally organized, because $1,000 per mile had not been subscribed to its stock, nor had 10 per cent. thereon been paid in cash; third, that the bonds issued had upon them neither the seal of the town nor of the individual commissioners; fourth, that after their issue they were altered by affixing thereto individual seals, which was done by some person or persons unknown, but by the act or procurement of the then holders of the bonds so altered; fifth, that the bonds did not run for 30 years, because delivered to the company after their date; sixth, that after the delivery of the entire issue a portion were returned to the commissioners, and exchanged for an equal amount, but of different denominations and different place of payment, the returned bonds having been burned or destroyed, and that the coupons sued on belonged to such bonds issued in exchange; seventh, that when the petition was presentedto the county judge no order was made or filed by him for the publication of the requisite notice; and, eighth, that the principal of the bonds exceeded 20 per cent. of the taxable property of the town, as shown by the last preceding tax list or assessment roll. I shall refer to these detailed objections by the numbers herein affixed to them, and without reference to their enumeration elsewhere. It is apparent that a single issue is raised by the complaint and answer, which is the validity or invalidity of the bonds in suit. The defects pointed out or asserted are the grounds or reasons upon which the defenant maintained its side of the issue involved, but that issue is essentially one and single, and is whether the bonds are or are not the real obligations of the town.

Turning now to the prior judgment, for purposes of comparison, we observe that it was between the same parties, their positions as plaintiff and defendant being reversed, and that the subject-matter of the controversy is identical in both litigations. The same bonds, the same liability, the same general question, furnish the vital ground of controversy in each. We see, further, that the same material issue dominates both. The first action was in equity. The town sued the bondholders, and sought to cancel in their hands the same identical bonds on which, here and now, the bondholders have sued the town. In the first case the plaintiff could not recover, nor the defendant defeat the action, except by an adjudication, one way or the other, of the validity or invalidity of the bonds. It is easy to see that the plaintiff could not succeed without proving them to be void, and securing a judgment of that tenor. But the same thing was true of the defendant in that action. It might have defended upon other grounds,-those peculiar to equity, and independent of the main and central issue,-but it did not. One such ground might have been that there was an adequate remedy at law, but that was waived, because not raised by demurrer on the one hand, or by pleading the defense on the other. There was no such issue in the case, for, if not pleaded, it cannot be made available. Watts v. Adler, 130 N. Y. 646, 29 N. E. Rep. 131; Ostrander v. Weber, 114 N. Y. 102, 21 N. E. Rep. 112; Town of Mentz v. Cook, 108 N. Y. 508, 15 N. E. Rep. 541. The defendant submitted itself to the jurisdiction of equity by abandoning its claim, to meet its enemy only in a court of law. Another such defense might possibly have been laches, but that was not interposed, and was explicitly shut out from the decision. Instead of it, the defendant chose to use the facts by way of estoppel,-a defense euqally good at law as well as in equity. On the trial, no merely equitable question was raised, save and except that if the bonds were invalid on their face the remedy was at law, which the court correctly overruled. The defendant's final motion, at the close of the case, for a dismissal of the complaint, rested upon no such ground, but wholly and entirely on the contention that the bonds were valid, and the lawful obligations of the town. That, therefore, was the sole issue involved, and the sole issue ultimately decided. The plaintiff municipality deliberately chose the forum of equity, saying that it was afraid of the courts of law, and of the multitude of suits which might follow, and especially of some in the federal courts, and, before the tribunal which it voluntarily selected, was bound to show, and could only succeed by showing, that the identical bonds here in controversy were void. The defendant, which might, perhaps, have shielded itself behind two equitable defenses not touching the issue tendered, did not do so, but threw them away, incapacitated itself from having their benefit, and met its adversary squarely upon its own ground, and became bound to prove the bonds valid, or submit to have them canceled. Both parties consented to try that question in equity, and neither resisted its jurisdiction. It is plain, therefore, that the parties were the same, the subject-matter of the controversy the same, and the one single and material issue the same.

But let us follow that first trial into its details, even though we may not strictly be bound to do so. The first defect relied on here is that the petition was not sufficient to give the county judge jurisdiction, and precisely that objection was No. 1 in the equity case. It was there stated in the exact and identical words contained in the present answer. Under that pleading the town was bound to present all its objections to the jurisdiction which it challenged. It could not pick out one for that trial, and save five more for as many separate trials over the jurisdiction; for the estoppel of the resultant judgment covers not only what was, but what might have been, decided under the issue raised. Tuska v. O'Brien, 68 N. Y. 449. The jurisdiction, then, was assailed for the use of the word ‘represented,’ and there was no other criticism. Nobody had then discovered that in the petition, as printed, the word ‘and’ is used instead of ‘as,’ before the word ‘owning;’ still less that the use of either word made any difference in the plain and obvious meaning of the sentence. That is the criticism now made, and accompanied with the scintilla of an apology by saying that in Town of Mentz v. Cook we went upon a point quite as narrow. That is a mistake. I thought the point settled upon authority in that case was small, but at least it was visible to the naked eye, and did not require a microscope to disclose it, and was not, as here, after two trials, raised for the first time in the general term. Post v. Railroad Co., 125 N. Y. 697, 26 N. E. Rep. 14. But, whether small or not, it might have been raised in the equity case, under the objection made, and is defeated by the judgment then rendered; for the trial court found, as its 4th, 5th, 7th, and 11th conclusions of law, that the petition was sufficient to give the court jurisdiction, and the general term and this court each affirmed that conclusion. It is too late, in this case, to seek to alter that judgment.

The second defense here is that the railroad company was not a corporation, by reason of the nonpayment of 10 per cent. on its subscription. The complaint in the equity suit raised the same objection, and the language of the two pleadings is again identical, word for word,-a fact which the appellant's brief mistakenly disregards. Proof was given in the prior case tending to prove the facts alleged, but the court found that the railroad company did become a corporation duly organized, and, as a conclusion of law, that such company was, at the time of...