People v. Westchester County National Bank

The only question before us is the validity of chapter 872 of the Laws of 1920. The defendant was the successful bidder for $25,000 of bonds issued under the authority of that act. It later refused to accept them. If the act is constitutional, under the

The act provides for the issue of $45,000,000 of bonds by the state. Their proceeds are to be paid into the state treasury and expended for a bonus to persons who served in the military or naval service of the United States at any time between April 6th, 1917, and November 11th, 1918. These moneys, therefore, must be applied for this object and for no other purpose whatever. (Constitution, art. 7, sec. 4.) “ Every person, male or female, who was enlisted, inducted, warranted or commissioned, arid who served honorably in active duty in the military or naval service of the United States at any time ” during the war “ for a period longer than two months, and who at the time of entering into such service was a resident of the state of New York, and is a resident at the time this act takes effect, and who was honorably separated or discharged from such service, or who is still in active service, or has been retired, or has been furloughed to a reserve,” is to receive ten .dollars for each month of active service, not exceeding, however, $250 in the aggregate. If dead the same amount shall be paid to the relatives of the deceased. As required by its terms this act was submitted to the people and was approved by a vote of 1,454,940 in its favor as against 673,292 in opposition.

The logic of this opinion is not that the legislature is unauthorized.to aid the wounded. We cannot too clearly emphasize at the outset of our discussion that this is not an act to care for and restore to health and usefulness those who became disabled in the performance of their duty. To do this is a sacred trust. Every human impulse prompts us to its full accomplishment. Neglect here spells disgrace. Yet by this act help for the wounded is at least postponed. For them as a class nothing is done. Whatever right the state may have to use its

If, however, the legislature has the power to create a debt for the purpose declared in this act, these considerations are not for us. They serve but to admonish us to scrutinize our Constitution with the greater care, - to use the greater caution in deciding how and when and why New York may incur indebtedness under its limitations. To that question we confine ourselves.

At the basis of our ideas as to the relation of the citizen to the state is one outstanding principle of taxation. Whether or not the legislature is curbed by any constitutional formula no tax may be imposed except it be for a public purpose. Otherwise, however, unless for some constitutional restriction the taxing power is plenary. Except for such restriction the legislature may appropriate public moneys for private corporations or for individuals if thereby the public welfare is promoted. (Town of Guilford v. Board of Supervisors, Chenango Co., 13 N. Y. 143 .)

It is said that this act serves no such purpose. We think, however, that it does. In deciding whether the object for which taxation is imposed is for a public object the courts “ must be governed mainly by the course and usage of the government, the objects for which taxes have been customarily and by long course of legislation levied, what objects or purposes have been considered necessary to the support and for the proper use of the government, whether state or municipal. Whatever lawfully pertains to this and is sanctioned by time and the acquiescence of the people may well be held to belong to a public use, and proper for the maintenance of good government, though this may not be the only criterion of rightful taxation.” (Loan Association v. Topeka, 20 Wall. 655 , 665.) In this state the granting of pensions and gratuities for military service is not a new experiment. By the act of May 11th, 1784, public land was granted

The payment of a pension or a bonus for past services showing the gratitude of the people, showing thsCt the state is mindful of those who have made sacrifices for it, is an incitement to patriotism and an encouragement to defend the country in future conflicts. Even if such a payment is not clearly one ma'de in the general interest, at least -there is such ground for the claim that where the legislature has accepted that view, the courts may not interfere. That they believe the action unwise or unnecessary is immaterial. As to that question the legislature is the final arbiter. (Jones v. City of Portland, 245 U. S. 217 ; State ex rel. Atwood v. Johnson, 175 N. W. Rep. 589 ; State ex rel. Atwood v. Johnson, 176 N. W. Rep. 224 ; Gustafson v. Rhinow, 144 Minn. 415 ; State ex rel. Hart v. Clausen, 194 Pac. Rep. 793 ; Opinions of the Justices, 211 Mass. 608 .) What long custom and usage has sanctioned, what the weight of judicial authority has approved, that we should be slow to declare wrongful. Nor may a distinction be made between such a bonus as our act provides and a pension. The .one is a reward for past military services payable at once; the other such a reward payable in installments.

We are to determine, therefore, whether there are any limitations in our Constitution upon the powers of the legislature which affect the matter before us. Originally there were none. In the constitutional convention of 1846, however, it was found that the state had contracted

This article as reported was confined solely to limiting the power of the legislature as to debts. It did not touch the power to appropriate the property of the state or the money it ‘might raise by taxation for payments or gifts to individuals or corporations so long as such pay

Out off from the right to loan or give the credit of the state, however, by 1867 the legislature had begun to resort freely to grants of public funds to railroads and to charitable associations. Therefore, in the constitutional convention of that year the attempt was renewed to deprive it of that power. Sanford E. Church, later the distinguished chief judge of this court, reported from the committee of finance a proposed article of the Constitution. It contained a section numbered eleven. “ Neither the credit,. money or property of the state shall in any manner be given or loaned to or in aid of any individual, association or corporation.” (Proceedings of Debates, p. 791.) This proposal was debated at length but it was not adopted.

This Constitution having been rejected by the people a commission was appointed in 1872 to consider amendments. It was again proposed to limit the right of the state with regard to gifts and loans of its property. The committee on sectarian appropriations reported a clause: “ Neither the credit nor the money or property of the state or of any county, city, village or town shall in any manner be given or loaned to or in aid of any association, corporation Or other private institution whatever.”

We find, therefore, among others, two limitations imposed on the legislature in addition to the one that was always implied. They both relate to gifts or loans either of the credit or the moneys of the state. “ The credit of the state shall not in any manner be given or loaned to or in aid of any individual.” (Art. 7, sec. 1.) “ Neither the credit nor the money of the state shall be given or loaned to or in aid of * * * any private undertaking.” (Art. 8, sec. 9.) They both also represent the triumph of efforts to prevent improvidence, to make useless any pressure from special interests, to safeguard the credit of the state, and the interests of the people as a whole. They are not to be brushed aside. They are to be fairly construed to obtain the object for which they were intended. As in 1846 so to-day economy, public and private, is one of our pressing needs. Upon it depends the prosperity of the state and its inhabitants. The crushing load of taxation — national, state and municipal — now as then threatens our future — the future of him who pays no direct taxes as well as the future of him who does. Now as then great expenditures may be lightly authorized if payment is postponed. To place the burden upon our children is easy. Nor do we scrutinize so closely the expenditures to be made if that be

Whether the purpose is a public one, therefore, is no longer the sole test as to the proper use of the state’s credit. - Such a purpose may -not be served in one particular way. However important, .however useful the objects designed by-the legislature, they may not be accomplished by a gift or a loan of credit to an individual or to a corporation. It will not do to say that the character of the act is to be judged by its main object — that because the purpose is public, the means adopted cannot be called a gift or a loan. To do so would be to make meaningless the provision adopted by the convention of 1846. Gifts of credit to railroads served an important public purpose. That purpose was distinctly before the legislatures that made them. Yet they' were still gifts and so were prohibited.

As we have seen, this act provides that $45,000,000 shall be raised by the state upon its bonds and the proceeds applied as a bonus to those who have been in the military service of the United States. We have seen also that the proceeds can be used only for this one object. Is this a

If not a loan then does this act contemplate a gift of the state’s credit? In answering this question the mere form of the transaction is immaterial. If the gift of the bonds of the state to a railroad corporation would be such a gift — and it undoubtedly would be — then so v¡ouId be an issue of bonds by the state with the express 'condition that their proceeds should be given to the same corporation. The evasion of the constitutional prohibition would be palpable and it could not and should not be permitted.

The important question is, therefore, whether under this act the provisions made for the soldiers and sailors is a gift to them or a gift in their aid. We have held that a payment to an individual is not a gift if it be made in recognition of a claim, moral or equitable, which he may have against the state. “ The legislature, however, is not prevented from recognizing claims founded on equity and justice though they are not such as could have been enforced in a court of law if the state had not been immune from suit.” (Munro v. State of N. Y., 223 N. Y. 208 , 215.) What meaning then have the -courts given to these terms ? What is an equitable or moral obligation against the state ? Instances where such payments have been .authorized are many. In some, claims have been allowed where beneficial .services have been performed for "the state (Cole v. State of N. Y., 102 N. Y. 48 ); in others where property was furnished it (O’Hara v. State of N. Y., 112 N. Y. 146 ); or the state received money for .land the title to which proved defective (Wheeler v. State of N. Y., 190 N. Y. 406 ); or work was done, the expense of which in equity the state should bear (Lehigh Valley R. R. Co. v. Canal Board, 204 N. Y. 471 ). In

These cases give some indication of what we mean when we speak of a moral obligation. In all some direct benefit was received by the state as a state or some direct injury suffered by the claimant under circumstances where in fairness the state might be asked to respond — where something more than a mere gratuity was involved.

We are referred, however, to three cases where it is said a far wider interpretation was given to this doctrine. This we believe to be a mistake. In Munro v. State of N. Y. ( 223 N. Y. 208 ) Munro was employed by the state in what has been defined as a hazardous employment in connection with a state hospital for the insane. (Workmen’s Compensation® Law [Cons. Laws, ch. 67], sec. 2, group 7.) While engaged in his work he was struck by one of a gang of eighteen insane patients, who, under the care of two keepers, were repairing a road. The state conceded on the trial that Sabilski, who assaulted him, was known to be dangerous, and also conceded that there was negligence in permitting him to be working in a gang with but two attendants. Under these circumstances there was a clear moral obligation. Munro was injured by the negligence of the state’s employees. He was engaged in the kind of work which had the employer been an individual would have, our legislature has said, required compensation for an accident irrespective of fault. In Matter of Borup ( 182 N. Y. 222 ) we held that by retroactive statute the legislature might assume liability or require a town to assume it where the owner’s property was injured by a change of the grade of a street although at the time of the change no recovery was -possible. The law in this respect was, to the common idea, unjust. For the benefit of the public a private injury must be borne

In every case that we have found, therefore, there was the foundation of a claim against the state itself, however imperfect. In all there was some obligation, not enforcible against it, perhaps because it might not be sued, perhaps because the maxim of respondeat superior may not be invoked against it, perhaps because of the absence of some small element, the presence of which would give a legal cause of action and where without that element payment might still be morally required. They are cases where the state is allowed to make compensation for benefits which- it has received or for injuries which

Under these decisions is the bonus to our soldiers and sailors the payment of an obligation due them from the state? This is the ultimate question. Upon its answer depends the validity of the act of 1920. It is so conceded in one of the dissenting opinions. And in discussing it we do not ignore the splendid services and the great patriotism not only of the American expeditionary forces but of those who remained on this side of the sea. We do not forget the love and admiration that they have won and the gratitude that is theirs. We know that when the United States declared war it declared it for the whole country; that the government of the state, the government of the United States were equally interested in victory; that while serving the United States our soldiers and sailors were also protecting New York. We were all vitally interested in the war. Defeat spelled unspeakable calamity. Yet the men who gained the victory were not in any respect servants of the state. It did not call them from their homes or lead them to battle. It did nothing. It exercised no authority. It is said that our soldiers were taken from homes and occupations and compelled to risk their lives for inadequate pay while others earned large wages in safety — that the statute attempts in a small way to distribute more fairly the public burden. It is all true, but again the state was not

Should we give the words “ moral obligation ” the broad meaning urged upon us we may go far. More than once men of whom we are proud, through sheer patriotism, have gone to Washington and served us in serving the United States at great cost to themselves in money and health and comfort. Have they a moral claim against the state? It is said they were voluntary agents, that they were not compelled to do what they did.

On its face the act itself shows an attempt, not to pay a claim but to give a reward. No distinction is made between one and another. All, whatever their merits, whether their duties led them to danger or to safety, are treated alike. No attempt is made to adjust economic conditions. And as a reward not a payment the public rightly regards it. Did the majority favor the act because they believed they were discharging an obligation? Or was their vote a testimony of their gratitude? We are told that similar statutes have been passed elsewhere. So we have already said. It is one thing, however, to quote such practices as illustrating those fundamental principles common to free governments as we have «quoted them. It is another to use them as defining the distinction between a gift and the payment of an obligation necessitated by the language of our Constitution. Such decisions as have been made show the danger of such a course. In Massachusetts the justices were of the opinion that money might lawfully be raised by taxation to pay veterans of the Civil War but they speak of such a payment as a gratuity. (Opinion of the Justices, 211 Mass. 608 .) In Wisconsin money was to be raised by taxation to pay a bonus to veterans. In considering the constitutionality of this act the court held that notwithstanding the soldiers served the United States they also served Wisconsin and that as the object was to promote loyalty the act served a public purpose.» But the question we must decide, whether any moral obligation rested on the state to make compensation, did not arise. The inference is that the court did not so believe for it treats the bonus as a mere gratuity. Further, an article in its Constitution similar to ours (Wisconsin Constitution, sec. 3, art. 8), was not violated, not because the bonus was in payment of an obligation but because

As striking an illustration as can be found of the general understanding of this subject may be found in a recent message of the President of the United States to Congress. He says: “ I have commended the policy of generous treatment of the nation’s defenders, not as a part of any contract, not as a payment of a debt that is owing, but as a mark of the nation’s gratitude.”

We need, however, go no further than our own decisions. We have used the same language under like circumstances. In 1892 an act was passed directing supervisors to raise by tax and pay each man drafted in the Civil War the sum of $300. Such men never received a bounty. They were compelled to serve, as the majority of the soldiers and sailors of this war served, under an act of the national government granting them no compensation except their military pay. We said our national government had the right to call upon these men and that they had no claim, legal or equitable, against the town or county where the money was to be raised. Those who served under conscription only discharged their obligation to the general government. They did nothing more than fulfill their

We are not forgetful of the fact that if there is any reasonable ground for the legislative decision that a moral obligation exists, the courts may not intervene. If there is such a ground the legislature must determine whether the claim shall be recognized. But the prohibitions of the Constitution may not be evaded by the assertion that such an obligation exists, when in fact it does not. Arbitary action may not convert a wrong hito a right.

Such we believe, is the situation here. The state proposes to give its credit to the soldiers and sailors, not to satisfy any obligation that it owes them, but as a gratuity. The act is, therefore, prohibited by section 1 of article 7 of the Constitution.

The judgment appealed from should be reversed and judgment should be rendered in favor of the defendant against the plaintiff, with costs in this court.

“The credit of the-state shall not in any manner be given or loaned to or in aid of any individual, association or corporation ” (Constitution of New York, art. VII, sec. 1). The purpose of the prohibition is revealed in its history (2 Lincoln, Constitutional History of New York, p. 87). The purpose was to put an end to .the use of the credit of the state in fostering the growth of private enterprise and business. That is the mischief which gives understanding of the ermedy. I do not mean that the prohibition is to be limited to the particular evil that inspired it. It is

We are told that requital, if due at all, is due, not from the state, but from the nation, which summoned the host to service. I find- myself unable to - define by bounds so artificial the claims of equity and honor. The service that preserved- the life and safety of the nation preserved at the same time the fife and safety of the states (Opinion of the Justices, 190 Mass. 611 , 615; Gilbert v. Minnesota, 254 U. S. 325 , 328; Gustafson v. Rhinow, 144 Minn. 415 ; 175 N. W. Rep. 903 ; State ex rel. Atwood v. Johnson, 170 Wis. 251 ; 175 N. W. Rep. 589 ). If something is still due beyond the letter of the bond (Opinion of the Justices, 175 Mass. 599 ), state, as well as nation, will not rest till justice has been done. Neither can silence conscience by referring the claimant to the other. I am not convinced by the argument that reparation, if due from our legislature to-residents of New York, is due in equal measure to residents of Maine and California. Each state may fairly be left to take care of its own. Most have already done so. One finds it hard to believe that they have, all of them, been meddling in matters not of their concern. It is the state rather than the nation — possessing as the state does the residuary powers of government —which in our federal system is to be viewed as parens patrios. The

I pass, then, to the question whether the legislature might reasonably hold that men who in greatly serving had also greatly suffered, gained thereby a claim to .reparation for their suffering. I mean, of course, a claim in justice or equity or morals or honor. Great achievement and great sacrifice have been meagrely rewarded. ' The perils of battle, the hardships of camp and trench, may be poorly paid at any price; few will assert that they are recompensed at the rate of a dollar a day. Even for those who did not reach the firing line, there were the pangs of separation from home and kindred, the anxieties and the strain of a new and hazardous adventure. Legislature and people, beneficiaries of this devotion, have heard the call of a moral duty to mitigate the disparity between suffering and requital. But the catalogue of suffering does not end with pain of mind and body. There was money loss as well, or so at least a legislature, looking at average conditions, might not unreasonably believe. Its judgment in such' matters must prevail unless wholly arbitrary and baseless (Matter of Stubbe v. Adamson, 220 N. Y. 459 , 469). Labor in the market was paid with no such modest stipend as these men received for labor in submarine and trench. Even with food and housing added to the stipend, we cannot say that there is mere caprice in a finding of the lawmakers that compensation was inadequate. Often the stipend was sent home for the benefit of relatives who, if not wholly dependent on the absent one, had need of something more if they were to be maintained in his absence according to .the standards of the past. Lost also were indefinite opportunities for profit and advancement. While soldiers and sailors risked their lives abroad, wages abnormally high were the reward of those who stayed behind. The losses did not end with peace. Men who had left their callings

We have held that the legislature is still free, with all the restrictions «imposed by the Constitution upon gifts of money or of credit, to assume liability in law when liability may be found in equity or honor (Lehigh Valley R. R. Co. v. Canal Board, 204 N. Y. 471 ). Equity and honor are the same as in olden days. The Constitution does not define them, nor seek to circumscribe their content. An employee in a state hospital was injured by the assault of a patient confided to his care (Munro v. State of N. Y.,

If the account may be recast by adjusting recompense to suffering when the disparity disturbs the conscience, it

I am led, therefore, to the conclusion that the payment of this bonus, as money earned, but not received, is not wholly without support in something which the legislature might estimate as a moral or honorary obligation. If there is any reasonable basis for such an estimate, for such a conception of equity and justice, the courts must yield to the judgment of the legislature that it is worthy of recognition. The question is then one that the legislature must determine for itself (U. S. v. Realty Co., 163 U. S. 427 , 444; Oswego & Syracuse R. R. Co. v. State of N. Y. supra, at p. 357). “ Its decision * * * can rarely, if ever, be the subject of review by the judicial branch of the government ” (U. S. v. Realty Co., supra; cf. Opinion of the Justices, 175 Mass. 599 , at p. 602). Some may think the service so far beyond requital that the attempt should be surrendered for mere futility.' -Others may think that high and unselfish sacrifice is cheapened when repaid in money. Others again may think that for the sake of the economic or financial stability of the commonwealth, losses already

We are warned that the recognition of this equity may be followed by the recognition of others still weaker and more rarefied. All sorts of hypothetical situations are suggested in the briefs of- counsel, and held before us in terrorem. I am not swerved by these forebodings. I do not know the equity that is incapable of being reduced to an absurdity when extended by some process of analogy to varying conditions. Here, as often in the law, the difference between right and wrong is a difference of degree. Most of these imaginary problems will never in fact arise. They assume a legislature and an electorate without responsibility or conscience. The public credit is not pledged in these cases by the legislature alone. The pledge is invalid unless ratified by the vote of the

None of the previous cases in this state controls the case before us. Bush v. Board of Supervisors Orange Co. ( 159 N. Y. 212 ) is not decisive. The claim of drafted men or of those who had hired a substitute that they should receive, many years after the civil war, a bounty equal to that paid as a reward for volunteering, had small support in morals (cf. Opinion of the Justices, 190 Mass. 611 ; Opinion of the Justices, 211 id. 608). That decision, moreover, could stand on the single ground that the debt, contracted by a county, was not one for county purposes, and that there was surely no morahobligation resting on the county, even though upon some sprained theory we might ascribe one to the state. The Mahon case (Matter of Mahon v. Bd. of Education N. Y. City, 171 N. Y. 263 ) does not control, for the teachers were servants of the municipality, who had made a voluntary contract, and the Constitution prohibits the grant of extra compensation to public officers, servants, agents or contractors of the state, or of its civil subdivisions (Art, III, sec. 28), That provision is inappli

The judgment should be affirmed with costs.

The New York Constitution, article VII, section 1, provides: “ The credit of the State shall not in any manner be given or loaned to or in aid of any individual, association.1 .or corporation.” I am unable to agree with my associates that this limitation prohibits the creation of a debt upon _ submission to the people, pursuant to article VII, section 4, for the purpose of raising money to pay soldiers’ bonuses or for any other public purpose which is to be carried out by the state itself without the intervening agency of an individual, association or corporation.

The payment of soldiers’ bonuses is or may be recognized as being for a public purpose and a public undertaking. The purpose and the undertaking are to supplement the pay of the soldiers and thereby to promote military zeal in the future. Whether the sense of gratitude or the sense of obligation prevailed with the legislature and the people as the impulse of the legislation; whether the bonus is to be regarded as alms or honorarium, thus becomes a matter of indifference to the court. What to one seems an act of gratitude becomes to another the recognition of an equity. But the state may borrow money for its public purposes whether moved thereto by benevolence or by moral constraint, so long as no association, corporation or private undertaking acting as a quasi state agency receives the money or is thereby aided.

I vote to affirm.

His cock, Ch. J., Hogan, McLaughlin and Crane, JJ., concur with Andrews, J.; Cardozo and Pound, JJ., each read a dissenting opinion.

Judgment reversed, etc._