Town of Solon v. Willlamsburgh Savings Bank

The relief sought in this action was that certain bonds "of the plaintiff* purporting to have been issued pursuant to statute, and held by the defendant, be adjudged void, and that they be surrendered up and can-celled. They, with other bonds amounting in the aggregate

The first inquiry which is the subject of controversy arises upon the petition, presented to the county judge, and by which the proceeding before him was initiated. Is was essential to his jurisdiction and to the validity of the adjudi cation and its result, that the petition contain a statement of all the facts which the statute provided should be set forth in the application. And, as the proceeding rests wholly upon the statute, and is in derogation of the common law, and affects the rights of property of individuals, the statute must be strictly pursued in all respects pertaining to the question of jurisdiction, to render the proceeding effectual. People ex rel. Rogers v. Spencer, 55 N. Y., 1 ; People ex rel. Green v. Smith, id., 135 ; Town of Wellsboro v. N. Y. C. R. R. Co., 76 N. Y., 182 ; Craig v. Town of Andes, 93 id., 405.

The petition was addressed to the county judge, and proceeded to state that “the undersigned, representing a majority of the taxpayers of the town of Solon, in said county of Cortland, whose names appear upon the last preceding tax list or assessment roll of said town,” etc. Nothing in the further provisions of the petition is criticized. It was signed by persons purporting then to -be citizens of that town, and upon it was the verification by the affidavit of one of the petitioners, which, among other things, stated that “the persons signing said petition are a majority of

The contention on the part of the plaintiff is, that the petition failed to set forth that the petitioners were such a majority of the taxpayers, by reason of the insertion of the word “representing,” which, it is claimed, so qualified the phrase “a majority of the taxpayers” following it, as to import that such majority did not themselves subscribe the petition#, but did it only through the instrumentality of others who were such subscribers, and, in the relation of agency, represented such taxpayers in thus making the application. If the petition in that respect requires such construction, it was defective, and could not support the proceeding founded upon it. People ex rel. Haines v. Smith, 45 N. Y., 772 . The insertion of the word “representing ” was clearly of no advantage to the petition, and if it had been omitted, there would have been no opportutunity for criticism. But the word in its connection and apparent purpose, we think, is not entitled to the interpretation and effect contended for by the plaintiff’s counsel in giving construction to the instrument. It may be treated as having reference and relation to the term “ majority,” rather than to the persons constituting it. The inquiries, what represents a majority ? How is a majority represented ? In their application to it as a term might produce as the answer: more than one-half of the whole of any number of persons or things. In that sense it would be within common parlance to say that a majority is represented by a particular body of people, although they are the persons who constitute the majority.

That this was the meaning applicable and intended by the statute to be applied in the use there made of it, appears by the provision in .the second section of the same act, that “if it shall appear satisfactorily to him (the county judge) that the said petitioners, or the said petitioners and such other taxpayers * * * as may then and there appear before him and express a desire to join as petitioners in said petition, do represent a majority of the taxpayers,” etc., and in the third section, that “if the said judge shall adjudge and determine that such petitioners do represent a majority of such taxpayers,” etc. The same expression is carried into, and repeated in, the amendatory act. Laws 1871, chap. 925, § 2.

The use made of the word in that connection by the statute would seem to be a legislative interpretation of it for the purposes of the act, and thus give to the phrase in question, of the petition, the requisite import, and make it correspond, in that respect, with the affidavit of verification and to the adjudication as made by the county judge.

In respect to their duties, the statute provided that it should be the duty of the commissioners to cause to be made and executed the bonds of the municipal corporation, attested by the seal of such corporation affixed, if it have a common seal, and if not, then by their individual seals and signed and certified by them. The commissioners made and issued the bonds of the town to the amount before mentioned, and invested them in the stock of the railroad company for a like amount. The town had no common, seal.' The attestation clause of each bond was: “In witness whereof the within named commissioners * * * have caused this bond to be made and executed, and have set their hands and seals hereto the first day of September, in the year one thousand, eight hundred and seventy;” and they subscribed their names as commissioners, and opposite each was the scroll “(L. S.).” The requisite of a seal at common law was that it be impressed upon wax, wafer or other tenacious substance. It is contended by the defendant’s counsel that this doctrine has been relaxed, and that the scroll upon these bonds may be treated as adopted by the commissioners as their seal, and, therefore, rendered effectual as such. Whatever may have been the-

The statute on the subject has relation only to corporate and official seals. In the cited case of Curtis v. Leavitt ( 15 N. Y., 9 ) the question of the sufficiency of the seal to the bonds there in question, which were made prior to such statute, was considered in some of the several opinions delivered. They were the bonds of a corporation and the corporate seal was merely impressed upon the paper on which each bond was written or printed. The view of Judge Comstock was that the rule in England on that subject was applicable, as the contract was made there, and -cited The Queen v. Inhabitants of St. Paul, etc. (7 Adol. and Ellis N. S., 232) in support of the proposition that an impression on wax or wafer was unnecessary, but that it was sufficient that the seal be impressed upon the paper with intent to seal.

It is unnecessary to refer to the view of other members of the court, as no question as to the seal was determined by the court in that case, other than that no seal was necessary to the validity of the bonds. In Ross v. Bedell ( 5 Duer, 462 ), the question arose upon a notarial seal, and it was held that a seal stamped upon paper of sufficient tenacity to retain the impression, is a seal within the rule of the common law. And see Van Bokkelen v. Taylor, 62 N. Y., 105 . The doctrine established in this state upon the subject does not permit the conclusion that the scroll upon the bonds in question was the seal of the commissioners.

But it does not follow that the bonds are for that reason invalid. There are no negative words in the statute declaring or necessarily implying such effect of the omission of the seal, and whether or not this requirement was merely directory, as held in Draper v. Springport ( 104 U. S., 501 ), inasmuch as they were issued and delivered by the commissioners in the performance of their duty, and upon a consideration, the mistake or failure to affix their seals does not defeat the enforceable validity of the bonds. People ex rel. Fiedler v. Mead, 24 N. Y., 114 ; Kelly v. McCormick, 28 id., 318; Board of Education v. Fonda, 77 id., 350; San Antonio v. Mehaffy, 96 U. S., 312 ; United States v. Linn, 15 Peters, 290.

At all events, as the commissioners intended to properly and effectually execute the bonds, and the omission of the seals was caused by their misunderstanding, mistake or inadver

In September, 1875, the defendant, by purchase, for a valuable consideration, became the owner and holder of thirty-two of the bonds, of $500 each. At that time seals had been affixed and were upon them over the places where the scroll before mentioned was placed, so that the bonds-then appeared to have been properly sealed. The defendant purchased them in good faith, and then supposed that the seals were those of the commissioners.

The evidence tends to prove that the seals were not affixed by any officer of the railroad company who received them from the commissioners, and that they were nob upon them when transferred by the company. Who were all the intermediate holders between the transfer by the railroad company and the purchase of them by the defend • ant, does' not appear. The trial court found that those seals were affixed by a stranger. If placed there by some one having no interest in the bonds, and without any authority, consent or complicity of any person having any interest, the seals would not be treated as affecting any alteration of the bonds. United States v. Linn, 1 How U. S.. 104; Bees v. Overbaugh, 6 Cow., 746 ; Casom v. Jerome, 58 N. Y., 315 ; Fidlerton v. Sturges, 4 Ohio St., 530 .

If, therefore, this was done by a stranger, in the sense of the term applicable in such case, the alteration produced by it would not be effectual to impair the right, before existing, to enforce the bonds. But, inasmuch as they passed through the hands of other owners before they reached the defendant, it is contended that the finding that it was done-by a stranger is not supported, and that the presumption arises that the seals were affixed by some party having an interest in having them put on, and, therefore, explanation is necessary to relieve them from the legal effect of the-alteration. As a general rule, when a material alteration appears to have been made in a written instrument after its-execution, evidence is necessary to explain it, and the burden of proof rests upon the party seeking to enforce it, to-do so to support a recovery upon it. Herrick v. Malin, 22 Wend., 388 ; Smith v. McGowan, 3 Barb., 404 ; Simpson v. Davis, 119 Mass., 269 ; Willett v. Shepard, 34 Mich., 106 ;. Waring v. Smyth, 2 Barb., 119 .

The plaintiff’s counsel seeks to apply that rule in respect to the burden of proof to this case, and insists that the defendant must bear it. While the burden is with a party

It does not appear that the bonds were necessarily invalidated by the addition of the seals, treating it as a material alteration And as against the defendant, who is a holder in good faith and free from imputation in the matter the presumption which might arise in an action where the securities were asserted for the purpose of a recovery founded upon them, is not properly available in this action, brought for the purpose of their cancellation. Equity will not grant, such relief upon a doubtful case. For the purpose of the relief in view in the action, it cannot be assumed upon the case, as presented, that the alteration was fraudulently made. And if the defendant eventually fail to recover upon the bonds, it may be that a recovery can be supported upon the original consideration. Clute v. Small, 17 Wend., 238 ; Meyer v. Huneke. 55 N. Y., 412 , 417. It is not now necessary to inquire into the extent or value of such a remedy.

The alleged alteration upon the facts appearing in the record does not, in this action, entitle the plaintiff to the relief in view, against the defendant.

It is urged on the part of the defendant, that in view of the reference in the attestation clause to seals as affixed, with the fact that the scroll before mentioned was added, afforded an invitation of implied authority to any holder, to. affix the requisite seals. And cases are cited bearing upon that subject, in relation to uncompleted instruments. But the cases generally in which that has been recognized and supported, .have been those where the possession of the uncompleted paper has been entrusted to persons under circumstances which permitted the inference of authority to do it, and when in view of such apparent authority, ft would be a fraud upon innocent parties taking in good faith, to permit the assertion to the contrary Ledwich v. McKim, 53 N. Y., 307 ; Chemung Canal Bank v. Bradner. 44 id., 680, Redlich v. Doll, 54 id., 234; Van Duzer v, Howe, 21 id., 531, Day v. Saunders, 3 Keyes, 347; Mitchell v. Culver, 7 Cow,, 336 ; Boyd v. Brotherson, 10 Wend., 93 , Michigan Bank v. Eldred, 9 Wall., 544 ; Angle v. N. W. Mut, Life Ins, Co., 92 U. S., 330 .

It is contended that the bonds held by the defendant were issued without authority, and were for that reason void. This contention is founded upon the fact that about three months after the last of the bonds were delivered by the commissioners to the president of the railroad company he surrendered up to them a number of those bonds, amounting to $24,000, and they issued and delivered to him in their place a like amount, of which those held by the defendant are a part. The substituted bonds were of larger denomination than those so surrendered, and were made payable at a different place. And this change was made with a view to their availability for sale and transfer in the city of New York. It may be assumed that the power of the commissioners to issue bonds of the town ceased when they had issued the amount mentioned in the petition of the taxpayers. The returned bonds had not been used by the railroad company. They were destroyed by the commissioners, so the substituted bonds did not increase the entire amount outstanding beyond the authorized limit.

The bonds issued pursuant to the statute were the obligations of the town, and, in performance of their defined duty in that respect, the commissioners represented the plaintiff, and, in some sense, their relation was that of agency. When the proceeding for the purpose has been (as is treated to have been in this case) legally conducted to the appointment of such officers, irregularities in the manner in which they perform their duties do not affect the validity of the bonds issued, in the hands of an innocent holder for value. Town of Lyons v. Chamberlain, 89 N. Y., 586 .

The liability of the municipal corporation is dependent upon the statute, and its observance in the proceedings had with a view to the creation of such obligations. And when there is a failure to comply with the statute in the steps taken to vest the power in those officers to create the bonds, there can, in this state, be taken no rights by a person as a bona fide holder. Cagwin v. Town of Hancock, 84 N. Y., 532 ; Craig v. Town of Andes, 93 id., 405.

So far as we have observed, the doctrine of the cases does not necessarily go any further in that respect. The examination of the proceedings before the county judge disclosed their regularity and showed that the persons whose names were subscribed to the bonds were duly appointed, and, by the statute, vested with the power to issue bonds like those in question. While the commissioners were not appointed by the town, or clothed with power by it, the power to exercise their statutory, defined duties was ¿yen pursuant to the requisite consent of the taxpayers. The question, therefore, arises whether, by this issue of the substituted bonds, the plaintiff was charged with liability. The issue of bonds outstanding in excess of the amount authorized would have been void. That was not the case here, and the plaintiff was practically unaffected by those put in place of the ones surrendered. The plaintiff, through the commissioners, paid the interest coupons upon them for several years, and the defendant was the holder of them for six years before this action was commenced.

These facts might be entitled to some consideration upon the question of loches. Alvord v. Syracuse Savings Bank, 98 N. Y., 599 -610.

But we do not place our conclusion upon that ground. The defendant was a bona fide holder of these bonds, and as such relied upon the authority with which the commissioners were lawfully clothed. To charge the plaintiff upon them would not increase its apparent liability beyond that which it undertook, by the proceeding had, pursuant to the statute, to assume. So there is no equity in its behalf as against the defendant, to support this action for tiieir cancellation arising out of the substitution. The defendant was, not only by the apparent situation at the time of the purchase, but by the continued recognition of the

This proposition may not, to the full extent which it is applied to the relation of an agent clothed by his principal with authority, be applicable to the commissioners in their relation to the town for which they are appointed to perform the duties devolved upon them, but in the reason of it is illustrated a principle which may be applied to the circumstances of the present case in reference. to the execution of the bonds in question.

In the cited case of Horton v. Town of Thompson ( 71 N. Y., 513 ) the bonds appeared to have been, in terms, issued in violation of the statute, pursuant to which the consent of the taxpayers was given, upon which the proceeding taken was had. And the remarks of the learned judge who delivered the opinion maybe treated as applicable only to the case as there presented. They represent the town in the exercise of the powers with which they are vested. Cagwin v.Town of Hancock, 84 N. Y., 542 ; Alvord v. Syracuse Savings Bank, 98 id., 599 .

The practical effect of this substitution of the bonds was not an excessive issue, but the continuance of those issued, modified in form, not in substance, and these were the only ones, with others outstanding, which covered the amount of the stock of the railroad company, to which the commissioners had subscribed for the town, and for which they had undertaken to issue its bonds for a like amount. “ He that seeks equity must do equity,” is a fundamental maxim of equity jurisprudence.

The conclusion is that the plaintiff was not entitled to the relief sought in this action, upon the facts as proved and found in the court below.

The judgment should be affirmed.

All concur, except Follett, Ch, J., not sitting.