Lowber v. Mayor of New York — 5 Abb. Pr. 484

Majority

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LOWBER a. THE MAYOR, &c., OF THE CITY OF NEW YORK.

Supreme Court, First District;

General Term, December, 1857.

Headnote

Judgment against Municipal Coepoeation.— Motion to Vacate.

The comptroller of the city of New York, being also a tax-payer and corporator, may move to have a judgment recovered against the city through collusion with the city officials, set aside, and to be allowed to come in and defend the action.

Appeal from an order at the special term vacating a judgment against the defendant, &c.

The proceedings before the special term are reported Ante 325, where the facts involved are given.

John M. Barbour, David Dudley Field, and William Curtis Noyes, for the appellants.

—I. This motion is against the wishes of the Common Council and corporation counsel, and against a written stipulation by both parties filed in the cause; and is made not because any new defence has been discovered since the trial, but because the one made was unsuccessful. There are three questions on this motion. 1. Was the judgment right % 2. Was it collusive ? 3. If it were both, has the comptroller a right to vacate it against the wishes of the parties ?

II. As to the last question—a judgment, though wrong, is binding between the parties until reversed on appeal. It cannot be vacated on the motion of a stranger. The Code (§174) allows a judgment to be interfered with by motion to relieve a “ party” in case of mistake, inadvertence, surprise, or excusable neglect. The relief cannot be given to any but a party, nor for error in the judgment, nor for collusion. A corporation is to be treated like any other party—it is bound by the acts of its agents and counsel. To allow tax-payers to interfere in this way would make the greatest confusion and trouble. The greatest extent to which such intervention can be allowed is, when he commences

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an independent suit on behalf of himself and other tax-payers against the city, or other parties, to prevent or punish a breach of trust. The corporation counsel and the Common Council are the governing bodies in respect to the defence of suits. Even the corporation counsel could not be heard now on a motion to open the judgment—much less the comptroller. The latter has no right to interfere in the affairs of the former officer. Both cannot defend the suit, for they disagree as to the defence, and there would be divided counsels. If they could, why cannot the mayor come in also ? He may disagree with both, and infinite confusion be the result in the conduct of the suit.

III. The judgment is not collusive. There is no evidence to show that the bargain and suit were not real, or that the defendants have been betrayed by their counsel. Hr. Flagg himself put in the defence, and dictated and swore to the answer. The answer was deliberately made, and the case deliberately tried. It was not Hr. Busteed’s fault that no appeal was taken. He, in his allowed discretion, did not believe there was any ground for such a step. Horeover, it was not his province to give security. The evidence, if it proves any thing, proves not collu sion,, but negligence in conducting the defence, which is not ground for setting aside the judgment.

IV. The judgment was right upon the merits as disclosed by the facts presented. There were four objections to the judgment. First, That though there had been proposals on both sides, yet, no contract was actually entered into between the plaintiff and the city. Second, That if one had been entered into, the proper remedy was specific performance, and not damages for non-performance. Third, That the value of the property was enormously exaggerated. Fourth, That the plaintiff had no title to part of the property. Hone of these objections were well taken. The contract was consummated by the Common Council accepting the bid; and the city thus being bound to take the property, the plaintiff could sue for the price. The evidence of value greatly preponderates in favor of the price at which the plaintiff agreed to sell. The title of the plaintiff was good from the first; if not, it was made so by the act of April 17,1857, ch. 763.

Jas. R. Whiting, for the respondents.

—I. This application is

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to open a judgment, and addresses itself to the equity powers of the court. It may be made by the defendants, or by any party who may be affected by the judgment. It will always be granted on motion, in furtherance of justice, and under the Code of Procedure, in cases of mistake, inadvertence, surprise, or excusable neglect (Code, §174), and it is unnecessary to proceed by bill or complaint.

II. If there be collusion between the parties, and third persons may be affected by the judgment, it cannot stand. A collusive judgment is a fraud upon the court.- By supporting such a judgment to the injury of innocent third persons, the court becomes a party to the fraud intended to be effected by such a judgment.

III. Any person as amicus curia has the right (and it is his duty) to inform the court of any fraudulent or collusive judgment, through which innocent third parties may be injured, and when the court is so informed, it will not permit the power of the court to be used to aid in the consummation (2 Coke’s Inst., 178; 2 Keble, 544; Comb., 13; 2 Shower). In such case the court will ex mero mot/u, interfere even against the will of the parties, for it cannot permit its records to he stained by a judgment founded in fraud and obtained by collusion. The act of the law injures no person.

IV. The corporation are but the formal parties; the tax-payers are the real parties in interest; the injury is done to them, they are the cestuis qwi trust; the defendants in respect to the property of the city are but trustees. In this regard they are to be treated as a private corporation or a private individual, who may do an act in contravention of a trust (Attorney-General v. Landsfield, 9 Mod., 286; Green v. Rutherforth, 1 Ves., 468; Attorney-General v. Whorewood, 1 Ib., 536; Dummer v. Corp. of Chittenham, 14 Ib., 252; Lewin on Trusts, 597). The court will compel a trustee to assert his legal right (Foley v. Brunel, 1 Bro., C. C., 277, per Ld. Thurlow; Hoffman’s Treatise, 44; Bailey v. The Mayor, &c., 3 Hill, 576 ; 4 Gill & J., 388).

V. The comptroller, the head of the principal executive department of the city government, department of finance, although not a member of the corporative body, is one of the most important officers of the city government, whose duty it is to guard that department against illegal encroachment, and

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who, as a tax-payer also, interested in this judgment, has a right to be heard on this motion, and for this purpose has a locus in curia.

—I presume that it will not be disputed, even by the counsel for the plaintiff, that it belongs to the essential, inherent powers of this court, to exercise such an efficient control over every proceeding in an action pending in it, as effectually to protect every person actually interested in the result from injustice and fraud, and that it will not allow itself to be made the instrument of wrong, no less on account of its detestation of every thing conducive to wrong, than on account of that regard which it is proper it should entertain for its own character and dignity. And it will not only rectify proceedings of this nature, when brought to its notice by the intervention of any person having an interest in the result, whether formally a party to the action or not, but it is the solemn duty of every judge upon the bench to employ a vigilant eye without waiting for the suggestion of others, for the purpose of avoiding and detecting the perpetration of wrong which may be attempted by the instrumentality of legal forms. And this vigilance should be exercised through every stage of the action, from the issuing of the summons to the levying of the execution.

This superintendence, and this exercise of power, should indeed be regulated by a sound discretion, and with the utmost caution. Eules, orders, and decisions of the court, deliberately made, should not be lightly disturbed. As a general rule, none but parties to an action will be allowed to meddle with its management, or will be recognized as having any standing in court in relation to it. When the litigants consist of adults, not under restraint, and not insane, acting in their own right, the presumption that every man is the proper director of his own interests, and the serious inconvenience that would ensue from allowing the unsolicited interference of persons not interested, render it expedient that the court shall lend no attention to any but the parties on the record.

But even this rule must yield to the circumstances of the case. Even adult parties, apparently acting in their own right, and presenting themselves apparently in the adverse position of plaintiffs and defendants, may, by seeming to adjust only their

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mutual rights, compromise very seriously, and perhaps irrecoverably, the rights of others.

The familiar instance referred to on the argument will at once present itself. Where one party confesses a judgment without consideration, or for too large an amount, or where it is not made in strict compliance with the directions of the Code, the judgment will be set aside on the application of a party not named on the record, but who is a creditor of the defendant. jNow, on what principle is this interference allowed? Is it merely because the moving party has also obtained a judgment against the defendant? Even if this were the precise reason, it would be a very palpable instance of recognizing the right of a person not a party to the record to claim the interposition of the court in regard to it. But the reason of allowing this has no such restricted limits. In the particular instance referred to, indeed, the court will only hearken to a judgment creditor, because it is expedient to have his claim judicially established before it will be judicially recognized. But the broad reason for the interference of the court is, that the plaintiff and defendant, in the fraudulent confession of judgment, have, by their combined action, employed its forms to accomplish an act which affects the interests of persons having an interest in the disposition of the property affected by the judgment; and whenever this is done, the court has the essential inherent power to interfere, although as a general rule, as I have said, in order to avoid confusion and contention, it will not do so where the parties to the record are adults, acting in their own right, and are free from restraint.

On the general principle which I have stated, the court would never allow a trustee to concede away any portion of the trust estate without ample consideration; and if he were a defendant in an action, and were about compromising the rights of his cestui que trust, by a confession, by letting a judgment go by default or by carelessness, or even by a palpably mistaken view of his duty, the court, at the instance of the person having the beneficial interest in the controversy, would interpose. The power of a trustee over the estate vested in him, exists only for the benefit of the cestui que trust; and in equity, trusts are so regarded that no act of a trustee will be recognized as valid which is calculated to prejudice the cestui que trust, although a

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purchaser without notice will be protected. Courts are equally jealous in watching all the acts of a trustee by which the interests of the trust may be compromised. The instances quoted by the plaintiff’s counsel, in which the court refused to recognize the acts of unauthorized persons to bind parties to a suit, have no application to this case.

If the comptroller attempted, during the progress of the suit, to consent, of his own accord, to a reference or an arbitration without any authority from the defendants, of course the consent would not be binding on them, and would be entirely void; but by this application he does no such thing. As a taxpayer, and as an officei of the corporation, particularly identified with the administration of its financial concerns, he presents himself before this court, and informs us that the defendants, who are, in fact, the mere trustees of the property, and the other interests of the people of this municipality, the corporators of whom it is composed, are, by their conduct in relation to the plaintiff’s demand, wasting the property of their cestwis que trust.

It is not necessary to suppose that this is a case of bribery or corruption, on the part of the individual members of the Common Council, or of any other officers of the city government, or that the counsel of the corporation has intentionally betrayed the city. It requires much stronger proof than I have discovered, in the papers before me, to induce me to believe that he, for a moment, contemplated any injury to his constituents. That officer, and even the members of the Common Council, may be sincerely of opinion that to litigate this claim would involve the city in considerable expense, without any reasonable hope of ultimate success; and, indeed, that seems to be the conviction of many others who cannot be suspected of any unworthy motives to influence their opinion. But it is enough for us, on this appeal, to be convinced that the court below had the power to interfere, and that the evidence of the facts on which it might rightfully interfere is such that if they had been presented to a jury, and the jury had found the same way, their verdict would be sustained. The title of the plaintiff had been condemned by one court, as to part of the property to be sold, and is now subject to doubts, which can be removed only by a judicial investigation. On the evidence, a jury might have

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found, as the court below has, that the value of the property was excessively overrated. The objection that, by the terms of the resolution of the corporation, the contract was not then complete, but was to be made in form by the comptroller, also deserves consideration. These matters seem to have been overlooked at the trial. As they should be re-examined, we express no formal opinion upon them.

The form of the judgment is also incorrect. The payment by the defendants should have been required on the plaintiff’s executing and delivering to the defendants (or filing in court for' them, if they refused to receive it,) a warranty deed of the premises, free from all incumbrances (except as excepted in the contract), and with a good title in all other respects.

Justice to all parties would be best promoted by modifying the order below, and allowing the answer and subsequent proceedings to be set aside, provided the comptroller, or any other tax-payer, who may be substituted in his place, shall, within thirty days from written notice of the entry of this modified order, file an original complaint as a tax payer, corporator, or otherwise, on behalf of himself and others, setting forth such matters and making such parties, and praying such relief in the premises as he may be advised. In the mean time, let the plaintiff’s proceedings in this action be stayed, and if another suit shall be commenced, as above provided for, let the plaintiff’s proceedings be further stayed until the final decision of the other suit. Let the plaintiff in the new suit give security in the sum of $5,000.