People v. Denison

The remittitur from the court of appeals is dated April 6, 1880, and it is therein declared, after a recital .of the appeal to that court., that the court of appeals, after hearing counsel for the parties, “and after due deliberation had thereon, did order and adjudge that the order of the general term of the supreme court appealed from in this action to this court, be and the same is hereby affirmed, and judgment rendered absolute for the defendants on stipulation, with costs.”

An order of this court, made on April 6, 1880 (the date of the caption of the order, February 6, 1880, is evidently erroneous, as .it is prior to that of the remittitur, and the date of the filing is April 6, 1880), after reciting the previous proceedings, says, “and the said plaintiffs having in their notice of appeal stipulated and consented, that if the order appealed from should be affirmed, that judgment absolute should be rendered against them; the said court of appeals having, on the 6th day of April, 1880, affirmed the order of the said general term, and directed judgment absolute in favor of the defendants on stipulation : How then, on reading and filing the remittitur from the said court of appeals, and on motion of Wm. C. Huger, of counsel for the respondents, it is ordered that the judgment pf the court of appeals be, and the same is hereby made the judgment of this court.”

Under the orders which have been given, the clerk of Albany county entered a judgment on April 28, 1880, against the plaintiffs and in favor of the defendants, “for the sum of ninety-five thousand three hundred and eighty-two dollars and forty-five cents, the amount Of their counter-claim, and six thousand five hundred and seven dollars and fourteen cents, as and for their costs in this action, amounting in the aggregate to one

The judgment for the counter-claim the attorney-general now moves to vacate, as being unauthorized by any order of the court, and as otherwise illegal and improper. So much of the notice of motion as objected to certain items of costs allowed by the clerk was abandoned, and the only question now in issue is the legality of the judgment for the counter-claim. For the purpose of presenting one point, which the motion involves, more sharply, the exact words of the stipulation given in behalf of the plaintiffs on their appeal to the court of appeals, with that of the remittitur, and also that of the order of the special term of this court, making the judgment of the former that of the latter, have been detailed. From that statement it distinctly appears, that neither the court of appeals nor the supreme court has expressly ordered judgment for the counter-claim, and the authority of the clerk of Albany county to enter it must depend upon statutory enactments. To the consideration of the legality of that judgment, the discussion will be at once directed, without any embarrassment founded upon any order or decision directly allowing it.

The first and perhaps the principal objection to the validity of the judgment is, that it is against a sovereign State, which has never authorized the bringing of suits against itself in its own courts for the recovery of any debt or obligation supposed to be owing by it, but which, on the contrary, only four years ago (by chapter 444 of the Laws of 1876), created “ A State Board of Audit,” to whom both the “duty” and “power” were confided “ to hear all private claims and accounts against the State (except such as are now heard by the canal appraisers according to law), to administer oaths and take testimony in relation thereto, to determine on the justice and amounts thereof, and to allow such

Apart, however, from the objection founded upon this statute, which makes the presentation of ‘ ‘ all private claims and accounts against the-State” to the board of audit a necessity, there is still another, and ; that is, that there can be found no warrant for the recovery of any such demands in this court, either by action against the State, or by interposing the samé as a set-off in one brought by the State. In either, as the aid of the courts is invoked to enforce, as there was in this case, an affirmative claim against the sovereign

In Commonwealth v. Matlack ( 4 Dall. 303 ), an action brought by the State to recover from the defendant, who had been clerk to the Senate during several sessions, certain moneys, which he had received to disburse for its contingent expenses, it was held that no set-off could be allowed. On the trial of that action, “ the defendant proved that he had expended considerable more money than he had received for the use of the house ; and he claimed a verdict for the amount of his advances as well as for the additional compensation allowed by the act of 1794. But, after argument, the court declared that the defendant could not indirectly recover from the State, a substantive, independent claim by way of set-off, any more than he could directly recover a debt due from the State, by bringing a suit against her. That the present action was brought to compel an account for money received for the use of the senate ; in which the defendant, if he proved that the money received was so applied, would be entitled to a verdict; but that even then, he could not be entitled to a verdict for the amount of his advances, which" the senate alone was competent to allow.”

In White v. The Governor (18 Ala. [N. S] 767), it was held that a set-off was not allowable in an action brought by the State, and that the general statutes in regard to set-off were not applicable. The court (page 769) say: “By the established rules of interpreting

In State v. Baltimore & Ohio R. R. Co. ( 34 Md. 344 ), an action for money had and received, the defendant in its second plea pleaded a set-off and a claim against the State. To this plea there was a demurrer, and the court (page 374) said : “ Upon the questions raised by the demurrer to the- second plea, we concur in the ruling of the superior court. In actions instituted by the State, it is well settled that no right of set-off exists, unless in cases where such defense is expressly allowed by statute, for the reason that the State being sovereign, is not liable to be sued by an individual or corporation.”

It can scarcely be necessary to: multiply authorities in support of a principle which, apart from any decisions, would seem to be elementary. Commonwealth v. Rodes (5 T. B. Monr. 318), Chevallier v. State ( 10 Tex. 353 ), and Raymond v. State ( 54 Miss. 562 ; also reported in 28 Am. R. 382), are equally in point; and even though a set-off against the sovereignty is allowed by statute to be pleaded, the supreme court of the United States has expressly decided (United States v. Eckford, 6 Wall. 484 ), that “no. judgment for any ascertained excess can be rendered against the government, although it may be judicially ascertained that, on striking a balance of just demands, the government is indebted to the defendant in such amount.”

It will be assumed then as well-settled law, that unless the State has authorized a set-off of an independent claim against itself in an action which it has

In People v. Brandreth ( 36 N. Y. 191 ; also reported in 3 Abb. Pr. N. S. 224), at circuit and general term of this court, it was held, “ that in an action by the State to recover money, no counter-claim or set-off could be allowed.” The court of appeals, however, refused to pass upon that question, and affirmed the prior decisions upon other grounds. The opinion of Judge Hunt, though entitled to great respect, is a dissenting one, and even he does not undertake to decide that a recovery can be had against the State for any sum which it may be indebted in excess of its own demand.

The result of our examination is clear, that even prior to the act of 1876, which established a State board of audit, there was no authority either by a suit against the State, or in one instituted by it, to enforce a claim against it. The argument, however, founded

We are now brought to the consideration of another question, and that is, if this action ad been between private individuals, could the judgment for the counter-claim be upheld? This discussion will be premised by a statement of the case, and its situation when it went to and passed from the court of appeals.

The State, on September 9, 1879, entered into a contract with Henry D. Denison, to do certain work upon the Erie canal, and to furnish the materials therefor, in which the other defendants were the partners of Denison. The complaint averred that under that contract the defendant should have received only $74,183.40; that no legal or valid change or alteration of that contract was ever made. That at various times between November 23, 1869, and June 1, 1875, by false pretenses and false certificates from resident and assistant engineers, the defendants obtained several hundred thousand dollars from the State in excess of what they were legally entitled to receive under their contract. The complaint also contained a distinct

The answers deny all fraud, corruption and collusion of every kind. They admit the making of the original contract set out in the complaint, but aver the legal performance of work and furnishing of materials for and to the State to the amount of $494,584.05, in actual value, which have been duly accepted by it. The payments on account thereof are detailed, and all are averred to be under legislative appropriations made for that purpose. Such payments, however, the answers claim, do not liquidate the demands of defendants in full, but, on the contrary, $73,674.05 is charged to be justly due and owing by the State to the defendants on account of the work done and materials furnished by them, for which sum, “with interest thereon from the first day of June, 1875, with costs of this action,” judgment is demanded.

To the answer of the defendants there was a reply by the plaintiffs, which distinctly put in issue the right of the defendants to recover the moneys set up by way of counter-claim, and also the facts upon which such right of set-off was averred to exist.

The report of the referees, to whom the action was referred to hear and decide, did not find any fraud, nor that the State had paid one dollar, for work or materi

The judgment entered upon this report was, as has already been stated, reversed by this court at general term, and a new trial was ordered, upon two grounds: First, that the complaint being for fraud, the plaintiffs could not maintain their action without establishing it; and, second, that the voluntary payment of the money by the State precluded its recovery, without allowing at least the value of the work done and materials furnished, of which the State had the benefit. It then became a grave question for the attorney-general to decide, whether he would take a new trial and endeav- or to establish upon it what the State, according to the report of the referees, had failed to prove upon the first, or whether he would seek to maintain the judgment on the ground upon which three referees— learned and able lawyers—had placed it. Either course was perilous. If he had taken a new trial and failed to prove fraud, as his predecessors had failed, he would have been subject to the imputation of having needlessly subjected the State to the expense of a second trial, the necessary failure of which had been foreshadowed by the result of the first trial. If he went directly to the court of appeals and gave the stipulation required by the Code (section 191), and was there also unsuccessful, he was liable to be censured for throwing away the chance of success by establish

In the court of appeals all the judges except Earl, J., concurred in the opinion of Judge Folger, “ That the cause of action stated in the complaint was one in fraud alone, and that the referees did not find that , there was fraud in the transaction.” Two of the judges (Miller and Earl) further concurred with Judge Folger in his opinion that some of the payments to the defendants by the canal commissioners and auditor were without authority of law, but that the referees erred in holding that the State could recover all the money thus paid without any allowance for the value of the work done, but that there was not a ratification by the legislature of the unauthorized, payments. A majority of the court (Church, Ch. J., Rapallo, Andrews and Danforth, JJ.), however, held that there was a ratification by the legislature by their acts of the action of the canal commissioners and the auditor of the canal department in making payment to the defendants. Perhaps, in view of the conclusion reached by the court, it ought further to be said that in no event could a recovery have been had by the State for the moneys voluntarily paid. If the < legislature .has ratified payments made by officers of the State, no rule of law known to us would sustain an action to compel their payment back (People v. Stephens, 71 N. Y. 527 ).

From the foregoing statement, it appears that the grounds upon which a reversal was placed by a majority of the court were: 1st, That the complaint was in fraud, and the referees had failed to find that

Section 191 of the Code provides that, “ An appeal cannot be taken from an order granting a new trial on a case or exceptions, unless the notice of appeal contains an assent on the part of the appellant, that if the order is affirmed, judgment absolute shall be rendered against the appellant.” If that section is to be construed as the defendants argue it should be, then in any case where a set-off or counter-claim is set up in the answer, though not proved or thought of upon the trial (and how often that occurs in practice is well known to the profession), and upon such trial the plaintiff has a recovery, which the general term reverses on appeal, under a stipulation of the character given in this case on appeal, to the court of appeals, an affirmance of the order of reversal would necessitate a judgment for a counter-claim which never existed, was unproved on the trial, and only claimed pro forma in the answer. Can a construction which produces such a result be sound? Must a party who seeks to review a decision which overturns his right to recover, take the hazard in doing so, of paying a claim against himself, the only existence of which is to be found in ■the pleading? .It seems to me‘that no such result was intended by our law-makers, and that a succeeding section, as will now be endeavored to be shown, removes the difficulty.

Section 194 of the Code provides : “The judgment

It may be argued that the view which is taken in thi's opinion differs from that expressed by Judge Eabl in Hiscock v. Harris, an unreported case recently decided by the court of appeals, a manuscript copy of which has been furnished me. The plaintiff in that case sought to recover upon an item in an award made in his favor. The defendants in their answer alleged that the award was procured by the fraud of the plaintiff, and asked that the “award be adjudged to be void, and that the same be vacated and set aside, and that the submission be declared to be revoked, and that the complaint be dismissed, and that they have judgment accordingly.” To this answer there was a reply deny

Neither, then, in Hiscock v. Harris, nor in any adjudged case which I have been able to discover, has it been held that where an order granting a new trial to the defendant is affirmed in the court of appeals, that such affirmance and the direction for “judgment absolute upon the right of the appellant,” without any further or other direction,' authorizes the clerk of the county, in which judgment is to be entered, to include therein a demand made against the plaintiff for an independent claim, when the right thereto has never been adjudicated in his favor, and when no judgment which has been rendered necessarily involves its merits. So to hold would, it seems to me, often work gross injustice, and such holding is not required by any language of the Code, which can readily and easily be so interpreted as not to do any injustice, and also protect any

This opinion has already reached a length which was not intended, and the conclusions can be briefly stated.

There must be an order vacating the judgment against the State for the reasons : 1st, That the defendants cannot obtain a judgment for any debt or claim against it in this court. 2d, There is no judgment or order of any court warranting or directing it.

Various other points were made and discussed by the attorney-general upon this motion, which have not been considered, because the result of our deliberation, just stated, has made the examination thereof unnecessary.

Order accordingly, vacating the judgment.

From this order the defendants appealed to the court at general term, where, in September, 1880, the order was affirmed without further opinion.