George Crane Morehouse.

The supervisors' manual : a practical treatise on the law applicable to the duties of supervisors from the date of their election to the end of their official term; also, the law relative to town bonds, railroad aid bonds, defective roads and bridges, town meetings, assessment and collection of taxe online

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Online LibraryGeorge Crane MorehouseThe supervisors' manual : a practical treatise on the law applicable to the duties of supervisors from the date of their election to the end of their official term; also, the law relative to town bonds, railroad aid bonds, defective roads and bridges, town meetings, assessment and collection of taxe → online text (page 80 of 96)
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1879, the county treasurer of that county, to recover the amount of the taxes
levied and collected from the Lake Ontario Shore railroad, upon the assessed value
of so much of the said railroad as is located in the town of Hamlin, from and
including the year 1873 down to and including the year 1885, the trial court found
as a fact that the money raised in each of the said years in the town of Hamlin,
to pay the county and State taxes, was paid to the county treasurer of the county
of Monroe, who deposited the same in the treasury of said county, and that here-
after, and on or before the 15th day of February in each year, the said moneys
were wrongfully taken out and appropriated by the county of Monroe to its own
use and benefit in paying its county and State obligations, without the consent of
the said town of Hamlin or any of its officers; and that the county treasurer
never purchased any of the town bonds issued to aid the said railroad, or invested
any portion of the said moneys so received by him as a sinking fund, as required
by chapter 907 of 1869, as amended by chapter 288 of 1871. Upon an appeal from
a judgment recovered against the board of supervisors for the amount of the State
and county taxes paid to the county treasurer from the 9th day of September,

1880, to and including the year 1885.

Seld, that the constitutionality of all the provisions contained in the acts of

Municipal Indebtedness and Eailroad Aid Bonds. 725

1869 and 1871, and the interpretation which was to be given the same had been
determined by the court of appeals. {In re Clark v. Shddon, 106 N. Y. 104.)

The defendants contended that if plaintiff was entitled to the relief awarded by
the judgment appealed from, it could only be granted by the county judge of
Monroe county on a petition of the tax payers of the town of Hamlin, in the man-
ner prescribed by section 1, chapter 283, Laws of 1871.

jETeM, that this contention could not be sustained, as the right of plaintiff to
compel the county to account for moneys which it had wrongfully applied to its
own use, in which the town of Hamlin was interested, was not created by this
statute, but had its foundation in prior statutes of long standing as well as in the
precepts of the common law.

That the principle contended for would apply only in favor of the party against
whom the new right was created, and certainly could not be invoked by a wrong-
doer as against a party whose right under the statute had ripened into a vested

Wood T . Supervisors of Monroe County, 50 Hun, 1 .

That it was well settled that the supervisor of a town may maintain an action
of this character in his name as supervisor.


The recovery embraced that portion of the tax levied on the railroad property
which is commonly known as the State tax, the trial judge holding that the
amount of State tax which is levied upon the taxable property of the county is, by
statute, made a charge against and a debt due from the county, and that when the
county treasurer made a remittance to the State treasurer of the amount of the
State tax it was, in fact, in payment of a debt due from the county, made at the
request of the defendant, by its authorized agents, and it was, therefore, liable to
the plaintiff on the same principle that it was liable for the county tax misappro-
priated to its use. ffdd, that it was error to so hold, as the law makes it the duty
of the county treasurer to pay such taxes directly to the State treasurer, and, in
50 doing, he does not act as agent of the county, but performs that duty as a
public officer as directed by certain general statutes.


That the county was not responsible for the omission or defects of the county
treasurer in respect to the moneys that were due to the State, nor at all concerned
with them any further, nor in any other manner than is declared in section 25,
chapter 427, Laws of 1855, and that, under the provisions of that section, the
county was not called upon to act until a loss had occurred, nor until the State
had exhausted its remedy against the treasurer and his sureties.


That such portion of the tax as was levied on the railroad property during the
several years in question, as its portion of the town tax raised for the purpose of
paying the annual interest on the bonds, and to redeem such of them as matured,
was properly deducted and not included in the recovery.


A defense set up in the joint answer of the defendants, that the statute of
limitations was a bar to the recovery for all taxes paid over to the county treas-
urer more than six years previous to the commencement of this action, was sus-
tained as to both defendants. Seld, that it was error to do so as to the county
treasurer, as he received the tax as a trustee, within the legal sense of that term,
and was precluded from setting up the statute and thus defeating the relief to
which the plaintiff was otherwise entitled as against him.


That as the moneys were unlawfully and wrongfully paid to the county with
the full knowledge of its lawful agent that the trustee had no title thereto which
he could transfer to the county, and as the county had no. rightful claim to the
same, it should also be held liable as trustee to the plaintiff and be required to

736 Supervisors' Manual.

account for the funds which had been applied to its use and that it was properly
made a party defendant to this suit.


That as the county had made no investment of the trust funds which were re-
ceived from the trustee but paid them out on its own indebtedness, and the only re-
lief which the plaintiff could have by way of indemnity was a money judgment, the
county could plead the statute of limitations as a bar.


That this action is of the class and character mentioned in subdvision 3 of sec-
tion 383 of the Code of Civil Procedure, which provides that an action to recover
damages for an injury to property or a personal injury, except in a case where a
different period is expressly prescribed, must be brought within six years from
the time when the act was done which creates the liability.


The question whether the plaintiff, to bring the case within subdivision 5 of
section 382 of the Code of Civil Procedure, must make out a case of actual and
intentional fraud on the part of defendant, the board of supervisors, or whether
a case of legal or constructive fraud, not involving any moral delinquency on its
part, was suificient to prevent the running of the statute until the injured party
had notice of the act which constituted the fraud, not considered.


The city of Lockport, in pursuance of chapter 907, Laws of 1869, issued its bonds
for $100,000 to aid in constructing a railroad. Taxes were levied and collected and
paid over to the predecessors of defendant (the county treasurer) between and in-
cluding the years 1878 and 1886, to the amount of $1,351.87, as taxes levied upon
the property of the said railroad, located in the city of Lockport, none of which
were for school or road taxes. From the time of the first payment of such taxes to
the county treasurer, 1878, up to the time of hearing of this matter before the
county judge, there has been constantly in the hands of the county treasurer
moneys in amount in excess of the amount of the taxes collected from said rail-
road company, and when defendant was inducted into office, there was paid over
to him, by his predecessor, the sum of $10,180.97, and when these proceedings
were instituted, there remained unexpended of said sum over $9,000, and as the
referee reports, the same " is held for, and subject to, the payment of miscella-
neous demands and expenditures of said county, not specifically provided for by
the board of supervisors." The referee also found and reported " that said county
treasurers, respectively, in each of said years, with the knowledge and approval
of the board of supervisors of Niagara county, mingled the moneys so received
for taxes from said county with other moneys of said county, and treated the
same as ordinary county moneys." Held, that the moneys thus levied and col-
lected and paid over to the county treasurer, never came into his hands for any
other purpose than that mentioned in the statute, and they are devoted by law to
the benefit of the municipality, and must be held and invested in the mode and
manner directed. The statute appropriates the taxes, and makes it the duty of
the county treasurer to separate and set them apart as a sinking fund.

Spaulding v. Arnold, 6 N. Y. Supp. 836.

When the money was paid into the hands of the respective county treasurers
during the period of years mentioned, it was their duty to separate the taxes
paid by the railroad assessed in the city of Lockport, from the other moneys
which came into his hands, which he could have readily done, and invested the
same as required by said statute.


These moneys have never been paid out and are now in the hands of the present
incumbent, mingled with other moneys.
The fact that the former treasurer mingled the money with that of the county.

Municipal Indebtedness and Kailkoad Aid Bonds. 737

did not constitute a misappropriation by him, so that there is no fund from which
the present treasurer can draw the money to make such investment.


The county treasurer acts as trustee for the town, and there having been no
repudiation of the trust by any of the present treasurer's predecessors, the statute
of limitations does not apply, though more than six years have elapsed since
some of the taxes collected were paid to the treasurer.


Upon the hearing of a controversy submitted upon an agreed statement of facts,
it appeared that an adjudication had been made, by the county judge of Jefiferson
county, that a majority of the taxable property owners of the town of Orleans had
duly consented that the bonds of that town be issued to the amount of $80,000,
and invested in the stock of a railroad company, and such adjudication had been
reviewed upon certiorari, and affirmed by the general term.

While the matter was pending in the general term, the commissioners issued
bonds to the amount of $80,000, and exchanged them for the stock of the railroad
company, which sold $10,000, and hypothecated $70,000 of the bonds before Feb-
ruary 25, 1873, when the court of appeals reversed the judgment of the general
term and the county judge; thereafter it was decided by the supreme court of the
United States, in an action originally brought in the United States circuit court,
that the hypothecated bonds (which were sold after the decision of the court of
appeals), were valid in the hands of the purchasers thereof. After this decision
money sufficient to pay the interest and a part of the principal of the said bonds
was raised by taxation, the portion thereof paid by the railroad company being
paid by the town collector into the treasury of the county and expended under
the direction of the defendant, the board of supervisors of that county, for county

Strough T. Supervisors of Jefferson County, 50 Hun, Si.

Meld, that as the court of last resort had held that the town was liable to pay
Its bonds, the fact that the court of appeals held that the proceedings taken were
insufficient to authorize the commissioners to issue the bonds was no justification
for the refusal of the defendant to set apart these taxes for the purpose of creat-
ing a sinking fund, as required by section 4, chapter 907, Laws of 1869, as amended
by chapter 383, Laws of 1871.

That the town was as clearly entitled to the benefits of the act, as though its
proceedings to acquire authority to issue bonds had never been questioned.

That the defendant was liable, in its corporate capacity, for the moneys so re-
ceived by the county treasurer, and paid out by him, pursuant to its directions,
as for money had and received for the town's benefit, and that the action fell
within section 383 of the Code of Civil Procedure, which limited the plaintifi's
recovery to the sums misappropriated within six years prior to August 6, 1888,
the date of the submission.

That the relation of the trustee and cestui que trust of an express trust by the
Voluntary act of the parties did not exist in this case.


In December, 1887, the ten supervisors elected from the city of Auburn drew
upon the city treasurer an order, of which the following is a copy:

" $31,550. AuBXiKN, N. y., Decerriber 37, 1887.

"City treasurer of the city of Auburn, on or before February 8, 1888, pay to
railroad commissioners of city of Auburn, or order, twenty-one thousand five hun-
dred and fifty dollars."

The order was delivered to the commissioners, two of whom, as such, sub-
scribed their names to an indorsement, making it payable to the First National
Bank of Auburn for deposit, and delivered it so indorsed to the cashier of that
bank, who afterward, on January 13, 1888, indorsed and transferred the order to
the National Exchange Bank of Auburn. The First National Bank suspended
payment January 38, 1888. The city treasurer having refused, after its maturity.

728 SuPEEVisoEs' Mast UAL.

to pay the amount of the order to the National Exchange Bank, a motion was
made by it for a writ of mandamus requiring such payment to be made.

The sum of money mentioned in the order was levied by the board of supervi-
sors of Cayuga county in December, 1887, to pay the interest, which became due
in 1888, upon certain bonds of the city which had been issued in aid of the con-
struction of a railroad, and was embraced in the moneys which, by the warrants
then issued by the board to the city treasurer, he was authorized and directed to
collect .

The statute, pursuant to which the amount of money in question was issued,
directed that when collected it was to b" paid to the railroad commissioners, while
the warrants issued to the city treasurer directed payment to the supervisors of
the city of Auburn, of the sums mentioned in them.

Held, that the commissioners were the proper depositary of the money, and that
the direction contained in the warrant did not have the legal effect of diverting
the fund from its legitimate destination.

That, as the drawers of the order were not entitled to the money, and as their
order to any person other than the commissioners would not entitle the payee to
it, the order did not create an indebtedness on the part of the city to the commis-

That the city members of the board of supervisors had no authority to make,
nor had the commissioners authority to transfer, by indorsement, a negotiable
bill of exchange, nor was their power to make and transfer it supported by pre-
sumption, as all their powers were given by statute.

That the order, as indorsed and delivered to the First National Bank, gave to
the bank no title to the draft, or to the fund to be covered by it, but, at most, was
a mere authority to receive the money from the treasurer, when it should be re-
ceived or collected by him, for deposit in behalf of the commissioners and for their
use. That an order denying the motion for a writ of mandamus should be

People, exrel. Nat. Exch. Bk., t. Stupp, 49 Hun, 554.

Proceedings taken to bond the plaintiff in aid of a railroad resulted in a decision
that bonds of the town should be issued to an amount specified, and commission-
ers on behalf of the town were appointed to subscribe for the stock and to issue
the bonds. Said commissioners, the railroad corporation, and one P., entered
into an agreement, by the terms of which the former were to issue the bonds and
place them in the hands of P., as trustee, to be exchanged for an equal amount
of stock as the work of construction progressed. This action was brought against
the parties to that agreement, to have said proceedings declared null and void,
to enjoin the negotiation or disposition of the bonds and to require their cancella-
tion. The referee found the bonded proceedings to be void for want of jurisdic-
tion, but that P. had sold a portion of the bonds. Defendants were required to
account for the proceeds; they are to be allowed for all sums paid out of the same
in good faith in constructing the road, or for any legal purpose mentioned in the
agreement. An accounting was had under these findings, and a judgment was ren-
dered against P. foiCthe balance of the proceeds in his hands. Plaintiff objected
to the allowance for moneys expended. Held, untenable; that to entitle it to
recover any of the proceeds of the bonds, plaintiff must recognize the validity of
the bonds, as, if it claimed them invalid, none of the proceeds thereof belonged
to it, and it could only recover upon the theory that the bonds had been made
and negotiated wrongfully and without authority, and had gone into the hands
of a bona fide holder, who could enforce the same; that, therefore, as plaintifE
was in court claiming the proceeds of the bonds, it could take no benefit from the
finding as to their invalidity, and P., as trustee, was entitled to credit for all
Bums paid out by him within the scope of his duty and authority.

Also held, that P. was properly allowed his commissions. The agreement, as
made, limited the application of the bonds or their proceeds to the construction
of the road in the county of W. ; subsequently the commissioners gave to P. a
written authority to pay out the bonds for the construction of the road in an ad-
joining county. Held, that P. was entitled to be allowed for payments so made.

It seems, that had the action been maintained upon the finding as to the inva-
lidity of the bonds, no injury was sustained, and no recovery could have been
had beyond the costs and expenses incurred by the town ia defending itself
against an attempted enforcement of the bonds, as, if the proceedings were with-

Municipal Indebtedness and Railkoad Aid Bonds. 729

out jurisdiction and the bonds issued absolutely without authority, not by the
town but by strangers falsely simulating authority, plaintiff was not estopped by
the recitals in the bonds, and they could not be enforced against it even under
the decision of the United States courts by a "bona fide " holder.

Town of Lyons v. Chamberlain, 89 N. T. 578.

The provisions of the railroad act of 1869 (sec. 4, chap. 907, Laws of 1869), di-
recting and providing for the application of taxes assessed upon any railroad in a
town, city or village, toward the redemption of bonds issued by the municipality
to aid in the construction of such railroad, are not in conflict with any constitu-
tional provision.

They do not impose a tax upon property in other portions of the county for the
benefit of the town, city or village; they simply deprive such other portions of the
benefit derived from taxation of railroad property in the municipality.

They are not violative of the provision of the cJtate Constitution (sec. 8, art. 7)
prohibiting the paymeTit out of the treasury of the State of any moneys, except
in pursuance of an appropriation, etc. ; as the fund realized from such taxation
does not belong to the State or go into its treasury.

They are not repugnant to the constitutional provision (sec. 20, art. 3) declaring
that every law which imposes a tax shall distinctly state the tax and the object
to which it is to be applied; the said provision simply specifies what may be done
with a tax which has been legally imposed.

Said statutory provisions include all taxes of every description save those ex-
cepted therein; i. e., school and road taxes, and so include town, village, city,
county and State taxes. The scheme of the act is practicable and not difficult of

It seems, the officers imposing the taxes may ascertain the amount required to
be paid under said provisions to the county treasurer, and held by him as a sink-
ing fund, and specify the same in the warrant issued to the collector. If not so
specified, the collector may make the proper deduction of school and road taxes
and pay the balance to the county treasurer. If the duty of making the separa-
tion has not been discharged before the payment of the county treasurer, it de-
volves upon him to make the separation and invest the proper amount, as directed
by the statute.

It is not requisite that the taxes so to be appropriated should be specially
levied; they are to be levied the same way as other taxes.

The said provisions are applicable to any municipality having bonds outstand-
ing, issued in aid of ths construction of any railroad, and they are not limited to
railroads constructed under said act of 1869.
Matter of Clark v. Sheldon, 106 N. T. 104.

Where, upon application under said act of a tax payer of a town, to compel the
county treasurer to execute the provisions of the act, it appeared that the taxes
imposed upon railroads in the town for the year specified, after deducting school
and road taxes, were much more than the sum specified in the petition as the
amount of such taxes paid to the county treasurer. Held, that it was no defense
that the petitioner had not prayed for a sufficient amount; that the county treas-
urer could not complain of this, or of an order requiring him to set aside a less
sum than the act required.

It seems, that in such a case, notwithstanding the prayer of the petition, the
county judge has power to ascertain the amount and compel the county treasurer
to set aside for a sinking fund all the taxes which may appear to have been paid
to him, and which, by the act, are devoted to that purpose. It is no answer on
the part of the county treasurer in such proceedings, that if he sets aside the
taxes as required by the act, there will be a deficiency in other funds; the law
having appropriated them for a specific purpose, it is his duty to so apply them,
and he may not use them for other purposes. All prior laws in conflict with said
provisions or requiring different disposition of taxes so collected, were thereby so
far modified or repealed.

The court says- " We do not perceive that these provisions of section 4 are in
conflict with any constitutional provisions. They do not impose a tax on property
in other towns of the county * * * for the benefit of the town of S. They


730 SUPEBVISOES' Mabtttal.

simply deprive other portions of the county of the benefit to be derived from the
taxation of the railroad property within the town of S. As to other portions of
the county, it is practically the same as if the railroad property was exempt from


The words last quoted seem to solve the questions which boards
of supervisors are likely to meet in these cases, to-wit : to treat such
property as if it were exempt from taxation and in raising the sums
to be levied and collected in the county, not to consider it as one of
the tax payers liable to contribute a share thereof.

In Oneida county, the practice is to extend the tax against the
railroad on the roll, in the same manner that any other tax is ex-
tended, and then to levy a tax on the county for the estimated
amount to become due from the railroad, and when the ratio is de-
termined, to issue a draft for the amount of the tax on the railroad
payable to the railroad commissioners of the town in which such
railroad is situated. The railroad in Oneida county is the New York
and Oswego Midland railroad, which has a special law on the subject
requiring the sinking fund moneys, which consist of the county
taxes, to go to the railroad commissioners of the town, and not, as
in the act of 1869, to the county treasurer.

This is not an exact compliance with the statute, but the variance
is so small (comparing the valuation of the railroad with that of the
whole county) that it would be hard to compute in figures the amount
of the variance.

The law relating to this railroad is as follows :

Taxation of the New Toek and Oswego Midland Raileoad.

§ 884. Taxation. — All laws and parts of laws in so far as
they exempt the property, real or personal, of the New York and
Oswego Midland railroad corporation from taxation are hereby re-
pealed, and the real and personal property of the said corporation is
hereby made subject to State, county, town and municipal taxation.

Chap. 296, Laws of 18V4, % 1 .

Proceeds of Tax to be Paid to Commission-

evs of TO'Wns. — All moneys to be collected upon the real and
personal property of the said corporation and xipon said real prop-
erty now or hereafter used or held, or which may hereafter be used
or held by any receiver or successor of said corporation for county
taxes in any of the towns or municipalities by which bonds have

Online LibraryGeorge Crane MorehouseThe supervisors' manual : a practical treatise on the law applicable to the duties of supervisors from the date of their election to the end of their official term; also, the law relative to town bonds, railroad aid bonds, defective roads and bridges, town meetings, assessment and collection of taxe → online text (page 80 of 96)