p. 427Application, under chapter 489 of the Laws of 1859, made by Robert T. Haws, comptroller of the city of New York, to open a judgment recovered against the city.
The facts of the case are fully stated in a report of a preliminary proceeding, Ante, 243. In pursuance of the decision there stated, the comptroller procured the affidavit of M. G-. Harrington, Esq., the referee, as to the proceedings before him, and on this paper, in addition to those stated in the report referred to, the motion to set aside the judgment now came on to be heard. The contents of the affidavit are not necessary to be stated, as they are not involved in the points on which the decision turns.
Wm. Curtis Noyes, for the motion.
I. The order of reference was without jurisdiction, and should be set aside. It is admitted that the affidavit was insufficient, but it is said that the pleadings are sufficient for the granting of the order. The action is for damages for a misrepresentation. It was grounded mainly on the decision in the case of Whitney a. Allaire (1 Comst., 303; S. C., 1 Hill, 484 ), which held that “ Where one conveys or leases to another his right in real estate, an action will lie for a fraudulent representation as to the territorial extent of such right.” There is no pretence in this case, that there was any fraudulent representation made by the city. “ And in such a case, the proper measure of damages in favor of the lessee, is the sum which in good faith he is obliged to pay to a third person to obtain what the lease would have given him, if the representation had been true.” If the question here was one of the expenses incurred by Sharp, in making preparations for the ferry, in Hew York and Brooklyn, then that case had nothing to do with the question. It was one of equity, whether the lease should be set aside, and special findings of fact were to be sought, and there was and could be no examination of an account. It was clearly a case where there existed no right to a reference at all, except by consent; but the corporation coimsel says he opposed the motion. It was the duty of the corporation counsel to appeal and have the order reversed. The city has the right to a trial in open court before the proper tribunal, and the corporation counsel had no right to consent to a reference as
p. 428he did; for the omission, on his part, to appeal was virtually a consent that the order of reference should stand. But the statute expressly requires a written consent. {Code,% 270.) The corporation counsel had no power to consent to the arbitration as he did. It would not be proper in the case of a private individual—and he cannot do it where the interest of the city of Hew York is concerned, and where the order is appealable and reversable. (Bodington a. Harris, 1 Bing., 187; Haner a. Bliss, 7 How. Pr. R., 246; Grade a. Sheldon, 3 Barb., 232 .)II. The proceedings in the Common Council, showing that the rent of the ferry was reduced from $20,000 to $5000 upon the petition of the plaintiff and others, and the new and substituted contract made under it, should have been set up in the answer and given in evidence, and the omission to do so should be relieved against.III. Upon the lease and the resolution upon which it was founded, the plaintiff had no cause of action. By their plain terms, he took only such title as the city had, and knew that there was a question as to the extent of the right.IV. The representations alleged to have been made by the aldermen and deputy street-commissioner as to the extent of the right, were made without authority, and were not binding upon the city. They were inadmissible as evidence, and the error in admitting those of the aldermen was not cured by afterwards attempting to disregard them. 1. Where evidence bearing with directness and force upon the question at issue, has been erroneously admitted by a referee, a new trial must be granted, although there may be unobjectionable evidence sufficient to sustain his conclusion. (Williams a. Fitch, 18 N. Y. R., 546.) 2. The city cannot be bound by any such representations as those claimed to have been made in the present case. (Bell’s Case, 22 Beav., 35; Holt’s Case, 2 Ib., 53; The Deposit and General Life Insurance Company, 4 Jurist, N. S., 595; S. C., 25 Beav., 513; The Bank of the United States a. Davis, 2 Hill, 451 ; Angelí and Ames on Corporations, 5th ed., 309.) That the leasing of ferries is exclusively under the control of the corporation of the city, see Benson a. The Mayor, &c., of New York, 10 Barb., 223 ; Hoffman's Treatise on Corp., 122, 130.V. The plaintiff and others, by their proposition to change the terms of the lease and to reduce the rent, after they knew
p. 429of the adverse claim of Murray, offered to enter into a new contract, which was accepted by the Common Council, and the rent reduced in part on account of that claim; this constitutes a new contract and bars all right to any recovery in any possible view of the case.VI. The referee admitted a mass of irrelevant and improper evidence, for which alone his report should be set aside.VII. The neglect of the corporation counsel to appeal from the order of reference, to set up in the answer and to put in evidence the" proceedings of the Common Council reducing the rent of the ferry and making a new and substituted contract, to attend upon the reference in person, and to take an appeal in order to review the decision of the referee, when requested by the comptroller and mayor, are more than sufficient to bring the case within the act of 1859 (§ 5), and to authorize the opening of the judgment, the setting aside of the order of reference, and the amendment of the answer, so that the action may be fairly and openly tried by the tribunal legally constituted for that purpose. What is fraud ? What is collusion ? As used in this statute, in reference to a client, the term signifies any act or omission which enables a judgment to be improperly obtained, and which would authorize a court to set it aside. Why it is gross inattention on the part of the corporation counsel to his duties—an obstinate refusal to present the proper evidence before the referee—an obstinate refusal to present the case to the appellate tribunal. It is acquiescing in a claim which he knows to be unfounded. Any of these amount to fraud, to collusion, under this statute. The conduct of the corporation counsel, in acquiescing in it, is a “ collusion” which would justify the comptroller in making this application, and the city hias just as much right to be relieved from this judgment as a private person. I do not mean, by “ collusion,” sharing in the spoils, or acquiescing in a suit brought for vmproper gains, or bribery and the like, for this section is sufficiently complied with by showing gross inability, or unwillingness, or neglect on the part of the corporation counsel to present the case as it should have been presented to the court, and to the referee. Moreover, this section is mandatory, and made so by an express legislative enactment, that the evil which it was intended to remedy should be remedied. If you put this case on the same footing as that of an
p. 430ordinary judgment, then you do not enforce the statute; for it authorizes a review after judgment, and expressly excepts from the general rules of law, cases against the city which have already passed to judgment, or which may hereafter pass to judgment. And it authorizes the court to lay its hand on such judgment and set it aside, in order to prevent and put down the evil which exists; and if we show, as I think we have done, that this case has not been industriously, and diligently, and properly defended, then, I say, we are entitled to relief under this statute.David, Dudley Field, opposed.
I. If the motion could be entertained at all upon these papers, this motion is too late. Hotice of the judgment was served on the defendant’s attorney, on the 4th day of June, 1859, and was known to the comptroller as early as the first of September, yet no steps were taken by him to interfere with it till the 6th of October, three months after the judgment, and more than a month after the execution had been issued.II. If the motion was in time, the first question which would arise would be, whether there is proof of collusion or fraud. Without the establishment of one of these two facts, the courts are not authorized to interfere. Section 5 of the act of 1859, ch. 489, does not give to the comptroller the right of opening or reversing judgments, at his pleasure. It gives him leave to apply to the courts, and if they are satisfied with his proof of fraud or collusion, they may allow him to supersede the counsel to the corporation in the management of the defence, and the new counsel may seek relief on the ground, either of collusion by his predecessor in suffering the judgment, or of fraud in the plaintiff in obtaining it. This statute gives no new methods of opening and reversing a judgment; it leaves the old method to be pursued in certain circumstances. The “proper and necessary means,” mean the old, recognized, and legal means, and none others.The new charter of the city (Laws of 1857, 446, § 26), provided that the law department, of which the counsel to the corporation was the head, should “ have the charge of and conduct all the law business of the corporation and of the departments thereof.” The change wrought in this provision, by section 5 of
p. 431the act of 1859, was to enable the comptroller, with the sanction of the courts, to substitute another counsel for the corporation, whenever there appeared fraud or collusion.In this case, no reason whatever is shown why the comptroller should be permitted to substitute other counsel, in the place of the counsel to the city.III. If, however, cause for such substitution had been shown, and the new counsel were admitted to represent the city hereafter in this cause, the defendants show no reason for setting aside the judgment. The city is to be treated as all other defendants are treated. Municipal corporations have no other rights before the courts than such as belong to all parties litigant. The constitution itself has declared, that “ all corporations shall be subject to be sued in all courts for like cases as natural persons” {Art. 8, § 3). This language certainly implies, if it does not require, that one measure of justice shall be dealt out to corporations and natural persons.IV. Suppose, then, this were the case of a private person, or a private corporation—an insurance company, for instance—defending an action, would the reasons put forth here enable the defendant to set aside the judgment and try his case anew ? It is most confidently contended that such an idea would not be seriously entertained.
Take, for instance, the Manhattan Bank. Could it come into court and say, Here is a judgment against us; we knew it long ago, but we believe there was some collusion or fraud, and w'e now ask that it be opened, and that we be let in to defend ?V. The plaintiff has proceeded regularly in his suit; he has made a bona-fide claim; he has litigated it bona fide, and obtained a judgment; there is not the slightest pretence of any fraudulent conduct in the conduct of the action; the plaintiff has deceived nobody; he has taken no undue advantage. He is entitled to this judgment. He has acquired rights under the law of which he cannot be deprived without subverting principles of great importance to society. Interest revpublim sit finis litiv/m.VI. The defendants’ counsel have not colluded with the plaintiff, or any one on his behalf, to suffer judgment. On the contrary, the statement of the referee shows a persistent and almost vexatious course of objection and resistance on his part, from
p. 432beginning to end. The defendants’ counsel were always in attendance, and sometimes two or three of them.VII. There being, therefore, no collusion and no fraud, on what ground can the defendants claim to have the judgment set aside ? Every step has been regular; and the remedy of the defendants, if they have any, is by appeal.VIII. If the order of reference was not properly granted, it should have been appealed from. It was made by a judge of this court on argument, and cannot be attacked in this collateral way. Indeed, an appeal from the judgment would bring up the power to make that order.IX. But the order of reference was properly made. It was moved for on the pleadings- and an affidavit. It is of no importance whether the affidavit showed that the case was referable; or, indeed, whether there was any affidavit at all. It was enough if it appeared to the judge, upon the pleadings, or even upon the oral statements of the counsel, thatf the examination of a long account would be involved. That was a jurisdictional fact, which the judge was to pass upon, and upon which his determination was conclusive. The fact need not have been recited in the order.X. It did, however, appear from the pleadings, and the result showed, that the trial would involve the examination of a long account. An account with five items has been held to be a long account. ( 10 Wend., 577 .) The case of Shelden a. Wood, in the Superior Court (1 Code R. N. S., 118), holds that “ an issue which involves a long account may be referred, notwithstanding the action is founded on fraud.” And in chancery, such a case would have been referred'to a master. (Willard's Eq. Juris., 309).XI. Upon the merits of the trial before the referee, and the correctness of his conclusions, it would not be proper to attempt a discussion here. His decision cannot be thus reviewed. But it may, perhaps, not be inappropriate to observe, that the findings of fact and conclusions of law stated in his report, approve themselves to the judgment. (See Whitney a. Allaire.)How, sir, I should do an injustice to myself, and to the referee who tried this case, not to ask you to look at his report, and say whether it does not show a careful examination, and an earnest desire to obtain the facts and apply the law. And it shows, too, I submit, correct conclusions of law. It clearly appears that my
p. 433client, by a mistake of fact, caused by misrepresentations made by the agents of the city, has been led into an expenditure of $165,000. Has he no remedy ? Shall it be said that a corporation is exempt from the rules of law applicable to individuals? If a bank had represented to my client that it owned property in Wall-street, of which my client took a lease, and it afterwards turned out that the bank did not own the property thus leased, and my client lost a hundred thousand dollars by the misrepresentation, is it supposed that he could have no claim against the bank ? I submit to you, sir, that if the facts of this case as found to be true, if Jacob Sharp took this lease on an imtrue allegation of the city’s title, made on a resolution of its Common Council, and approved by its mayor, and on this lease thus taken, expended a large sum of money, is it not equitable that this large and opulent corporation should repay him the amount thus expended ? But whether the judgment be well or ill founded, the objections to it appear on the record, and can only be investigated when this record is brought before the proper tribunal upon a regular appeal.I concede that a reference may be ordered by the court in an equity case, but I deny that the court may order a reference in all sorts of cases. The case of Sheldon a. Wood was an action for money had and received, and holds that, “ where an action is brought to recover back money alleged to have been fraudulently charged in an account between the parties, a reference will be ordered, though the ground of the action is the fraud of the defendant.” How, before the passage of the Code, the plaintiff could have declared for money had and received in a general form, and then, if a bill had been demanded, would have been bound to furnish the details of his claim. How, in this case of Sheldon a. Wood ( 2 Bosw., 267 ), in which I appeared as counsel for the plaintiff, we averred that an excess of money had been paid to Wood, as a partner of Marvine, our assignor, which was not legally due to him, and our allegations of misrepresentation and fraud were made for the purpose of avoiding what would otherwise have been the effect of a written contract, and of the settlement made between the parties upon the basis of that contract. And Judge Mitchell’s opinion was, that any action upon a contract may be re
p. 434ferred
which directly involves the examination of an account between the parties. I admit this proposition, but I deny it when the examination is incidental merely. But in the present case it is not even incidental, upon the rule of damages as laid down in Whitney
a. Allaire; for the simple question is, how much did Sharp pay for the lease from Murray ?
It is said that this application is made too late. This statute was passed for the purpose of extending the time to apply in certain cases, and is the law of the land. If your honor will permit any such narrow construction as that now claimed, it is a virtual nullifying of the statute.
By section 5 of an act entitled “An act to enable the supervisors of the city and county of Mew York to raise money by tax” (Laws of 1859, 1121), the comptroller of the city, when he has reason to believe that any judgments of record against the mayor, &c., or which may thereafter be recovered against them, have been obtained by collusion, or founded in fraud, not only is authorized, but required, to take all proper and necessary means to open and reverse the same, and to use the name of the Mayor, Alderman, and Commonalty, and to employ counsel for that purpose.
The first question which arose in my mind when this motion was commenced before me was, whether a judgment could be opened on an application made by the comptroller, pursuant to this statute, when no collusion or fraud has been directly and affirmatively shown, but, nevertheless, palpable error in the proceedings, and palpable inadvertence and misconception of duty on the part of the defendants’ counsel.
The comptroller swears, that the action is unfounded and fraudulent, and this belief, whether afterwards substantiated by direct proof or not, is a sufficient justification to him for instituting the proceeding. For this, he is responsible to no one ; if he, sincerely entertaining the belief, brings the case before the court, and, on the motion, circumstances are disclosed, not amounting to collusion or fraud, except such fraud as may be inferred from the manner in which the reference was obtained— not amounting even to intentional breach of duty in any respect on the part of defendants’ counsel, but to gross error and mistake, by which a judgment for a large amount has been ren
p. 435dered against the defendants, and the time for remedying the error by appeal has been allowed to elapse, is it not the duty of the court, now that the case has been properly and legally brought before it, to give the defendants an opportunity of being again heard and effectively defended ? Undoubtedly, judgments, as I said on a former occasion, not dissimilar to this, should not hastily, or for slight causes, be set aside; but where the mistake is manifest, and where, through the inadvertence of counsel, or any other cause, which the defendant himself does not directly sanction, the administration of justice can never be hindered or embarrassed by opening the judgment, and giving the defendant ah opportunity of being heard before the suitable tribunal. There are many reasons which satisfy me that the judgment in this action should be opened; at this time and place it is not necessary that I should enumerate, or even indicate, all of them. It is sufficient to mention one.
This is an action for representations by the defendants’ agents, in relation to the extent of a right, which afterwards proved to be false, to the great alleged damage of the plaintiff.
A motion was made by the plaintiff’s counsel for a reference, upon an affidavit stating that the trial of the action would occupy a long time, and that a number of separate and distinct facts would have to be proved by a large number of witnesses. The notice contained the name of the person whom the plaintiff wished to be appointed referee, requiring that the whole of the issues in the cause should be heard and determined by him. This motion, it appeared from the order, was opposed by the counsel of the corporation ; whether he actually attended to contest it, so that the judge was made aware of an earnest and real opposition, I am not informed ; but it is quite certain, that he did not consent in writing, so that the order, to all intents and purposes, was a compulsory reference. Now, although by section 270 of the Code, all or any issues in an action, whether of fact or law, or both, may be referred upon the written consent of the parties, section 271 provides that no reference can be comrpulsoriVy ordered—that is, without the consent of both parties—except the trial shall require the examination of a long account; in which case the referee may be directed to hear and decide the whole issue, and except where the taking of an account shall be necessary for the information of the court be
p. 436fore judgment, or for carrying the judgment into effect. The order of reference in this action could have been granted only under the first subdivision of the latter section (271)—that is, on the ground that the trial required the examination of a long account.
But no such pretence is set forth in the affidavit on which the application is founded; it only states, that a number of separate and distinct facts will have to be proved by a large number of different witnesses. Ror does it appear from the pleadings, that the examination of a long account, in the legitimate sense of an account, could be invoked. The plaintiff, indeed, states by way of aggravation of damages, that he was obliged* to expend large sums of money, and to contract to pay large sums of money; but this could not constitute an account against the defendants, so as to bring it within the policy of the law, which compels, in actions growing out of certain dealings based upon an express or implied contract between the parties to an action, or their representatives, a departure from the ordinary method of trial in common-law actions. Ro account of this description can be necessary in an action of tort, or sounding in tort; indeed, if this were permitted, that provision of the constitution, declaring “ the trial by jury, in all cases in which it has been heretofore used, shall be inviolate forever,” could be always evaded. That is a constitutional right which cannot be too faithfully preserved; and any legislative provision tampering with it should, at the least, be very strictly construed. Compulsory references should be rigorously confined to cases invoking the examination of a hona-fide account in an action of contract, and should, also, be literally and truly, a long account. I, therefore, think that the court which granted the order of reference, most manifestly exceeded its power, and, as I believe from some misapprehension, committed a grave error. It would not, perhaps, be proper for me, sitting at special term, to review the action of another judge also at the special term, even in cases of this description, where the order is voidable. But here is a statute calling upon the courts to interpose, as if in any emergency, and requiring a certain officer different from the head of the law department of the corporation, to make the application in questions of vital importance, in which the interests of nearly a million of persons are concerned; we find undoubted and
p. 437flagrant error, forcing the trial of a difficult and complicated cause before a tribunal, in contravention of the constitution, and no effort made to rectify the wrong by appeal. Shall I, under such circumstances, hesitate to afford to the defendants such a trial as they are constitutionally entitled to
% I am confident, if the judge who granted the order of reference, heard the motion which I am about to decide, and recalled the circumstances under which it was granted, that he would be the first to revoke his own order, and set aside the judgment founded upon it.
As I have already intimated, it is unnecessary to consider the other objections to the manner in which this judgment was obtained. The order of reference alone would be fatal to it.
The judgment must be set aside, and the order of reference revoked, with costs.