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in being. It is exactly in that case that the sovereign, through
the attorney-general, comes into court to protect these unde-
fined, and perhaps ^indefinable, rights which nobody else can
protect.

I speak not of cases where there is a public authority which
is legally competent to represent the injured persons, but which



1872] THE RING ABUSES: A STATE GRIEVANCE. 529

fails of its duty, which is in default. I speak not of cases where
there exists concurrently a right in some public authority to
represent the injured persons, and also a right in the sovereign
to represent those persons. What I now speak of is cases where
the injured persons cannot be made parties, and nobody has
been commissioned by the sovereign to represent them. Then,
of necessity, I say, by the elementary principles of English and
American jurisprudence, the sovereign must and will represent
the injured persons in every case which is of the nature of a
public wrong. The Crown in England, the People in this State,
will come into court by their attorney-general to represent and
assert the rights of those injured persons. All the cases in
England are cases in which the injured persons are rate-
payers, as they are called ; they are what we call taxpayers.
All the English cases are taxpayers' cases.

In the Dublin case the wrong-doers were the corporation
of that city. The wrong was a breach of trust in the mis-
application of public money. The injured persons were the
existing tax or rate payers, and, in a far greater degree, the
future rate or tax payers. The Crown, by its attorney-general,
came into court to represent the existing and future tax-
payers. The words of Lord Rcdesdale almost seem to imply
that the existing taxpayers might of themselves have a
remedy. I presume his exact meaning is that the} might
become relators. The persons on whom the taxes were in
future to be levied could be protected only by information by
the Crown.

I call your special attention to the words of Lord Redesdale :

" Supposing the debt not to be extinct by the collection, have
not the persons upon whom the rates are levied, and has not the
Crown on behalf of those persons from whom they may be in
future levied, a right to see that the funds are properly applied
according to the directions of the Act ? It has been said that such
a right vests in the attorney-general by virtue of his office, and
that the Court of Exchequer, upon such information, has jurisdic-
tion to order such person to account and pay the money. A simi-
lar remedy is applicable, as I conceive, to any other person having
VOL. i. 34



530 THE WORKS OF SAMUEL J. TILDEX. [1872-

the trust and management of public money any public accountant
of any description."

There is an answer to the criticism of the learned counsel.
How can the persons on whom these rates are in the future
to be levied be made parties to this action ? My learned friend
is answered in this case, and answered by Lord Eedesdale.
Again said that great jurist,

" If persons are entitled to the benefit of a trust of any descrip-
tion, for instance, persons who are interested in a fund which for
a certain period is to be applied to the extinction of a debt, are
they not to have a right to call, from time to time, for an account,
for the purpose of seeing that every sum as it has been received
should be applied according to the exigency of the particular case,
as in the extinction of so much of the principal of the debt, to
which it could be applied, and consequently in extinction of so
much of the interest, reducing the amount of the interest by
degrees, and thus effecting the earlier reduction of the principal
of the debt ? "

I wish to call your Honors' attention to two other passages.
In reply to the attempt to ascribe the origin of the jurisdiction
over breaches of trust to the statute of Elizabeth, he said :



((



We are referred to the statute of Elizabeth with respect to
charitable uses as creating a new law upon the subject of charita-
ble uses. That statute only created a new jurisdiction, it created
no new law ; it created a new and ancillary jurisdiction, a juris-
diction borrowed from the statutes which I have mentioned.' 7

His conclusions were summed up as follows :

" I therefore think your Lordships ought now to proceed to
reverse the judgment [dismissing the information and ordering
the relators to pay the costs] which has been given by the Court
of Chancery in Ireland, and to direct, on the contrary, an account
to be taken of the receipt and application of the duties in ques-
tion, according to the exigencies of the particular case, following
nearly the terms of the prayer of the information."

Your Honors will see that Lord Redesdale, with the concur-
rence of Lord Lvndhurst. then Chancellor, and Lord Eldon.

it

who was Chancellor when the case was heard, sustained the



1872.] THE RING ABUSES: A STATE GRIEVANCE. 531

prayer which I have read. The case, with all the weight of
these illustrious jurists and of the highest Court of Equity in
England, applies the doctrine it asserts to all cases of breaches
of any public trust as well as of strictly charitable trusts ; it
affirms the jurisdiction to afford a complete remedy by decree-
ing a recovery, restoration and just application of the money
or property misapplied, and it declares the right of the
sovereign (the Crown in England, the People in the State of
Xew York) to claim and enforce the remedy.

Some time after the decision in this case there happened in
England a change in regard to municipal bodies which excited
great attention at the time, and of which everybody acquainted
with the literature, the politics, or the jurisprudence of that
country must have heard. It was the Municipal Reform Act.
I think it was passed in the time of Lord Melbourne. It was
considered equally as great a reform as the Parliamentary Re-
form Act which had been carried through Parliament by the
Administration of Earl Grey. It passed in the year 1835. It
did two things made two great changes. In the first place,
whereas municipal bodies had been generally close corpora-
tions, self-elected bodies, they were made representative
municipalities. In the next place, whereas certain portions of
the funds of these bodies indeed all of their funds which
were not specially excepted had been held to be the private
property of the corporation, and as such, of course, involved
no trust, and were free from the cognizance of the Court of
Chancery, a general provision was enacted by which these cor-
porate funds became public funds. They were placed, as my
friend [Mr. 0' Conor] suggests to me now, upon the American
basis ; that is to say, all corporate funds, from whatever source
derived, by taxation in any form, or in any other mode of rev-
enue, were public funds held for municipal purposes, more or
less restricted.

Here is a very gross perversion by this learned opinion of
which we have heard so much. It is gravely asserted in that
opinion that the origin of the jurisdiction in these cases is in



532 THE WORKS OF SAMUEL J. TILDEN. [1872.

the Act of 1835 ; whereas, in truth, that jurisdiction arose
simply because the character of the holding of the funds was
changed, and instead of remaining private funds they became
trust funds, and were thus brought within a general established
jurisdiction of the courts of equity which had existed from
time immemorial. There was no change in the nature of the
jurisdiction or of the principles on which it was founded, or of
the rules by which it was governed, as your Honors will see
when you refer to the cases which arose after the Municipal
Reform Act. There is no intimation in them of anv change

/ O

of that kind. But the Dublin case is cited precisely as though
the law ran along in a smooth, unbroken current, unchanged
in anything except the different subjects that were brought
within the operation of the law by a change in the character
of the subject, without any change in the character of the
jurisdiction.

This, if your Honors please, was the case of the Attorney-
General vs. the Mayor of Liverpool, reported in 1 Mylne
& Craig, p. 171. We have dealt with Dublin, the capital of
Ireland, a city of two hundred and fifty thousand population.
We come now r to the city of Liverpool, the great mart of
commerce in England, with its population of half a million.
This case first arose on an application for an injunction. That
was heard by the Master of the Rolls, Sir C. C. Pepys,
who perhaps the year after became High Chancellor as
Lord Cottenham. The case arose in this way : The corpora-
tion of Liverpool had been in the habit, out of its corporate
funds, which were held as private property within the sole
and absolute control of the corporation, and not as trust
property, of paying certain stipends to the clergymen of Liv-
erpool. This Act, changing the character of the municipal
funds, and to some extent the organization of municipal bodies,
having been passed, and there being a desire that the appro-
priation of money to these clergymen should not cease, the cor-
poration of Liverpool proposed to transfer of their corporate
funds and property, I think, something like half a million to



1872.] THE RING ABUSES: A STATE GRIEVANCE. 538

trustees, to be held by these trustees for the benefit of these
clergymen.

It was objected that, inasmuch as the Act had already passed,
although it had not gone into operation, the trust related back
and operated upon these funds, and that such an assignment
would not be valid. As I before said, it came before the Master
of the Rolls on an application for an injunction ; and (p. 201)
the Master of the Rolls said :

" Cases were cited to show (what cases were not required to
prove) that the Court has no jurisdiction over a corporation which
has control over its own property ; but although a body having
a corporate existence is capable of acquiring and possessing prop-
erty, and therefore also of disposing of it, if property is held by
a corporation as a trustee, if the corporation holds it clothed with
public duties, the Court has always asserted its right to interfere.
In the case referred to, which was argued in the House of Lords,
this proposition was assumed throughout. In that case the corpo-
ration of Dublin were trustees of certain funds for the purpose of
supplying the city of Dublin with water ; and nobody ever ques-
tioned the right of a Court of Equity to interpose in order to see
that the public duties were discharged and that the trusts upon
which the corporation held the property were duly performed.
Now, under this Act, the right of property in the corporation is
entirely altered. That which may have heretofore constituted their
own property, and which they may have held as owners, they now
hold, by virtue of the Act, subject to certain duties ; and it would
indeed be a singularly strong case in which the Court should refuse
to exercise its jurisdiction to prevent a breach of trust, supposing
a case of breach of trust to be made out against them."

If your Honors please, there is one other thing I desire to
call your attention to in this case ; and that is, that trust funds
which have been raised and expended by the corporation of the
city of New York have been raised in pursuance of an annual
tax levy. These funds have been parcelled out by the statute
giving power to raise them, for the specific purposes to which
they were to be applied. The Act has generally been a long
Act, enumerating with much particularity the purposes for
which the taxes were to be raised and applied. In this case



534 THE WORKS OF SAMUEL J. TILDEN. [1872.

the power to use for municipal purposes was broader than that
which has been customary with the taxes levied in the city of
New York. I wish to take the time of the Court only for a
sinirlc moment on this topic. I read from 1 Mylnc & Graiir
the abstract of the provision of the Municipal Reform Act
creating the trust :

"The income and annual produce of all the property of any
body corporate named in conjunction with such borough in Sched-
ule A should be paid to the treasurer of such borough ; and that
all the moneys which he should so receive should be carried by
him to the account of a fund, to be called ' The Borough Fund.'
and that such fund, subject to the payment of any lawful debt
due from such body corporate, and saving the claims of all persons
upon the real and personal estate of such body corporate, should
be applied to the payment of the salaries of the mayor of the
borough and other officers in such Act mentioned, and also
toward the payment of divers expenses therein mentioned, con-
nected with the municipal regulations to be made by virtue of
the Act, and with the police and the administration of justice
in such borough, and of all other expenses not therein otherwise
provided for, which should be necessarily incurred in carrying
into effect the provisions of the Act ; and that in case the said
borough fund should be more than sufficient for the purposes
to which the same was by the Act made applicable, the surplus
thereof should be applied, under the direction of the council, to
the public benefit of the inhabitants and the improvement of
the borough ; and in case the borough fund should not be suffi-
cient for these purposes, the council of such borough was thereby
authorized and required to order a borough rate, in the nature
of a county rate, to be made within the borough for the purpose
of raising so much money as, in addition to such fund, would be
sufficient for the payment of the expenses to be incurred in
carrying into effect the provisions of the Act."

There is a broader power of application of a trust fund,
and a larger discretion than ever existed under any annual
tax-levy of the corporation of the city of New York. The
Vice-Chancellor denied the injunction on this ground, that
if the corporation should have conveyed this fund which they
proposed to alienate, or rather, that portion of the fund,



1872.] THE RING ABUSES: A STATE GRIEVANCE. 535

to trustees, it would still be within the control of the Court,
and an injunction was unnecessary.

The information was amended, and the case came on again ;
the trustees to whom the fund had been conveyed, the clergy-
men who were the beneficiaries of that fund, and the mayor,
aldermen, and burgesses of Liverpool being parties defendant,
and the relief asked being to set aside the conveyance and
reclaim the fund. That is reported in 1 Keene, p. 513,
Attorney-General vs. Aspinall. The Vice-Chancellor allowed
the demurrer, and the case went on appeal to the Chancellor,
and is reported in 2 Mylne & Craig, p. 613. At p. 618 the
opinion of the Court below was overruled.

Justice MILLER. How was it decided below ?

The demurrer was sustained, not from any defect of juris-
diction, but on the ground of a want of equity in the bill.
The Chancellor was Lord Cottenham ; and on the appeal the
doctrine, that this municipal or borough fund was a trust
property within the jurisdiction of the Court by which relief
might be given on the application of the attorney-general,
was sustained. Then this circumstance happened, in the
mean time there had been a new election of the town council ;
and it was alleged that the newly chosen officers of the council
of Liverpool were disposed to affirm the act of their prede-
cessors, and not to sue, not to resist that action going into
effect. As to that, Lord Cottenham said, on p. 633 :

"It has been said that the fair inference from the language

o o

of this charge is that the town council approve of the appro-
priation. [That is, the new town council.] I cannot so under-
stand it, nor do I feel at liberty, upon a demurrer, to assume that
such is the case, against the plain language of the charge. Sup-
posing, however, that the fact were so, and were so charged, I can-
not think that such opinion or such conduct of the town council
would deprive the attorney-general of the right to file this infor-
mation according to the facts stated in it."

That great jurist had already declared (p. 627) that the
" facts stated upon the information constitute a case which



536 THE WORKS OF SAMUEL J. TILDEN. [1872.

entitles the attorney-general, on behalf of the inhabitants,
to demand the interference of the Court, unless its jurisdiction
had been taken away by the Act of Parliament." He held that
Parliament had not deprived it of jurisdiction.

Mr. FIELD. What year was that in ?

In the. year 1837. The next case to which I refer is the
Attorney-General vs. Wilson, reported in 1 Craig & Phillips,
p. 1. That was a similar case, except that the appropriation
complained of was made to compensate certain officers who
were supposed not to have been sufficiently paid by the old
authorities of the corporation. The opinion was delivered by
the Lord Chancellor, who, I suppose, was Lord Cottenham.
In this case there was this peculiarity, the election of the
corporation had taken place as in the other case ; but instead
of affirming the acts of their predecessors, as in the other
case, the new officers came into the suit as rclators and as
co-plaintiffs with the attorney-general, and complained of the
acts of their predecessors. The objection was made that the
corporation under these successive councils was to be con-
sidered as a continuous and the same body, and could not
complain of its own acts; but on that point the Lord Chancellor
said, on p. 23 :

"What the present plaintiffs, the corporation, complain of, is
that certain persons, members of the corporation at a former
time, fraudulently and illegally used the power and authority of
the corporation for the purpose of depriving it of property to
which it was by law entitled. Is it to be said that the corpora-
tion is therefore without remedy ? It is true that, in future, all
such property being in trust for the benefit of the public, the
attorney-general may assert the right of the public in an infor-
mation ; but if, before the Act passed, a corporation might, in a
proper case, institute a suit for the purpose of setting aside
transactions fraudulent against it, though carried into effect in
the name of the corporation, that right cannot be affected by
the attorney-general having also a power to complain of the
transaction."



1872.] THE' RING ABUSES: A STATE GRIEVANCE. 537

Mr. O'CoxoR. The two rights of action were not inconsistent?

They were not inconsistent. By the change whereby the
fund became a trust for the public instead of being private
property, the attorney-general acquired, but the corporation
did not lose, the right of action.

Mr. O'CoxoR. He says expressly that the success of the
attorney-general's suit would put an end to the other.

The w rong-doers were officers of the borough of Leeds, a
borough, I suppose, of about two hundred and fifty thousand
inhabitants.

The next case is that of the Attorney-General vs. The Corpo-
ration of Poole, reported in 2 Keene, p. 190. This differs
from the other case in this respect, the Municipal Corporation
Act conferred authority upon the officers of the corporation
(the incoming officers of the corporation, the newly elected
officers) to make compensation for the loss of emoluments to
certain officers whom they might remove from office. It gave
them a certain discretion over the disposition of the corporate
funds for this purpose. But there was held to be an abuse of
discretion and breach of trust in this case ; it was alleged that
compensation had been given to an officer for the loss of an
office which he continued to hold, and that other wrongs had
been committed. The statute provided that a review of any
allowance made should be had if one third of the town council
objected to the allowance. The person attempting to secure
the benefit of this compensation got eighty persons upon the
list of burgesses by having their rates paid for them, and thus
outnumbered the objectors by more than two thirds. No pro-
test consequently could be effectually interposed, and the re-
view provided by the statute was defeated.

I shall not detain your Honors to read this case, except a
little on the last hearing. It appears in the different stages of
the controversy in three reports, the first of which I have cited.
Again, in 4 Mylne & Craig, p. 417. There the demurrer was
allowed by the Chancellor, with leave to amend. The case



538 THE WORKS OF SAMUEL J. TILDES. [1872.

finally came to be heard on appeal in the House of Lords, and
is reported in 8 Clarke & Finnclly, p. 409. At that time
Lyndhurst was Lord Ilii>'h Chancellor, and he said :

*/

" I believe, Mr. Solicitor-General, we are all of opinion that this
is a public trust ; that these funds are held by the corporation
subject to a trust, so as to give a court of equity jurisdiction over
the subject-matter ; and that these funds have been applied, at
least in one instance, for a purpose to which they could not prop-
erly be applied, namely, for the purpose of giving compensation
for offices which the party still holds. It seems to me that that is
a sufficient ground for maintaining the judgment of the Court of
Chancery."

Lord Campbell said :

"I see no ground for any difficulty upon the subject. Before
the Municipal Corporations Regulation Act was passed, certainly
the corporation property was not subject to any trust ; the corpo-
rations might do with it whatever they chose; and, generally
speaking, no relief could be obtained, either at law or in equity, for
any misapplication of that property. The Municipal Corporations
Act creates a trust for corporation purposes, iirst, for certain
specified purposes, and then, when these are answered, for other
general purposes ; for the benefit of the town. Then, this being
trust property, there is nothing in the Act of Parliament to take
away the jurisdiction which the Court of Chancery would other-
wise have over it, or to take away the right which the subject
would otherwise have to relief in a court of equity in case of any
misapplication of the trust property. Now, looking at this infor-
mation, the allegations in it state a case of fraud."

Lord Cottenham concurred ; he said :

" It having been established in the case of the Attorney-General
vs. Aspinall which I believe has not been brought here by appeal,
and which has been followed by other cases in the Court of
Chancery that a borough fund is constituted a trust fund by
this Act of Parliament, the question then is, whether the informa-
tion states a case of breach of trust or improper dealing with that
which is held by the corporation for public purposes, and therefore
in that sense to be considered a trust fund and subject to the
jurisdiction of the Court of Chancery, for the purpose of prevent-
ing breaches of trust and abuses of that sort of confidence, whether
reposed in individuals or corporations. Looking at the informa-
tion, we find that it states that which, beyond all doubt, would



IS72.J THE' RING ABUSES: A STATE GRIEVANCE. 539

constitute a great abuse of this property, and therefore a breach of
trust. Nothing more is required to bring the case within the
jurisdiction of the Court of Chancery ; and therefore it becomes
impossible that a general demurrer for want of jurisdiction can be
supported."

That, if your Honors please, is a decision by the court of
last resort. That opinion was held by three Lord High Chan-
cellors, Lord Lvndhurst, the then Lord Chancellor, Lord

tf

Cottenham, who had been and again became Chancellor, and
Sir John Campbell, who afterward became Chancellor.

The next case I call vour Honors' attention to is that of the

V

Attorney-General vs. Eastlake, reported in 11 Hare, p. 205.
The opinion in this case was delivered by Sir William Page
Wood, one of the most eminent chancery jurists in England,
and to-day, under the name of Lord Hatherley, Lord High
Chancellor of England. The action was against the officers of
the borough of Plymouth.

Your Honors will see that several of these cases are against
statutory commissioners appointed as these three commis-
sioners were in the case now before us. Some of them are
against corporations having a specific trust under special pro-
visions of law. The three I cited previous to the present are
against three corporations having only that general trust which
arises in all municipal corporations with respect to the funds
of these corporations raised by taxes. This is a very interest-
ing and instructive opinion. It goes over the cases erroneously



Online LibrarySamuel J. (Samuel Jones) TildenThe writings and speeches (Volume 2) → online text (page 46 of 52)