Mayor of New York v. Sands

The complaint did not allege any want of power in Connolly to make such contract, or to transfer the check, or any illegality in its delivery to defendant, except such as might be inferred from the charge that it was corruptly and fraudulently * done.

After the passage of chapter 904 of the Laws of 1874, consolidating the government of the city and county of New York, the mayor and commonalty of the city , were substituted as plaintiff in place of the board of supervisors.

On the trial" a verdict was directed by the trial court for the plaintiff, but the grounds of the decision do not appear in the record. The defendant duly excepted to the ruling of the court. The general term affirmed the judgment, upon the ground that the act of the comptroller, in paying out the check, was contrary to the provisions of chapter 590 of the Laws of 1857, and chapter 190 of the Laws of 1870, which required that all moneys drawn from the treasury by authority of the board of supervisors should be upon vouchers, examined and allowed by the auditor and approved by the comptroller, and no money should be drawn therefrom except on a warrant drawn by the comptroller, countersigned by the mayor and clerk of the board.

The court, assuming that the contract with Connolly was ■ a lawful one, and that upon the performance of the services-he was entitled to compensation, held that his claim was-then nothing more or less than a claim against the county which should be ascertained, adjusted and paid in the mode required by law, and that the receipt and use of the check, by defendant, with knowledge of its illegal use by Connolly, was a fraudulent misappropriation of the moneys represented by it which subjected him to an action to recover the-same as for a fraudulent conversion thereof.

There was no attempt upon the trial to show any actual fraud intended, either by Connolly or the defendant; but the case was rested altogether upon a fraud inferable from the alleged illegality of the transaction. The undisputed evidence showed that the draft was paid to the defendant by Connolly in good faith, in satisfaction of a claim held by him against Connolly, as comptroller, for services rendered in effecting a loan of money for the county upon its bonds, to the amount of $15,000,000. The proof was undisputed

It was further shown that the services were rendered in pursuance of a. contract previously made with the comptroller, to the effect that he should have one-half of one per cent for effecting such loan, provided it was made upon favorable terms and without other expense to the county. The transaction between Connolly and the defendant sprang out of the effort of the former to execute the power conferred and duty imposed upon him by chapter 323, of the Laws of 1871, which authorized and empowered the comptroller of New York to create a public fund or stock, to be denominated 11 consolidated stock of the county of New York,” and by which any holder of the present stock of the county of New York, or bonds of the said county of New York, was authorized to exchange the same for said consolidated stock, upon such terms and conditions as should be determined and offered by said comptroller. Such stock was also authorized to be issued to pay off and cancel any bonds or stock of said county falling due in the year 1871, and also to meet the requisitions on the county of New York by the state for the payment of the bounty debt in that year. Such stock was to be in the fprm designated by the comptroller, and signed by the comptroller and mayor of the city and sealed with the seal of the board of supervisors of the county, and attested by the clerk of said board. All stock of the county of New York thereafter issued was to be known as “consolidated stock of the county of New York ” and issued under the authority of that act. In pursuance of the authority thus conferred, the comptroller issued the bonds in question and procured them, through the assistance of the defendant, to be negotiated with A. Belmont & Co._, at a premium of 4¿- per cent.

No question is made as to the legality of this issue, or but that the whole proceeds of the bonds, including premiums, excepting the check in question, were applied to the purposes of the county or paid over to its treasurer by the comptroller.

It would be difficult to conceive of a grant of power conferred in broader or more comprehensive language, and which could be less restricted by conditions and limitations upon an agent’s authority. No limit is imposed upon the amount of bonds to be issued, except that implied from the use to which they were to be devoted in the retirement and payment of existing obligations of the county; and no

It is obvious, from the language of the act as well as the evidence in the case, that heavy liabilities of the county were becoming payable in the immediate future, and that large amounts would be required to meet its obligations, and that it was considered desirable not only to raise the money required without delay, but also that all the county’s outstanding indebtedness should be funded at the same time and put upon a uniform basis as to the time of its redemption and its rate of interest.

The occasion was exceptional and extraordinary, and large and apparently almost unlimited power was therefore given to the comptroller to accomplish this object. Whenever money was required to satisfy the indebtedness of the county he was not only authorized but was charged with the duty of providing it by a sale of the bonds of the county; and whenever an exchange of the consolidated stock could be effected for the outstanding stock or bonds of the county, he was authorized to do it upon such terms and conditions as should be determined by himself. It was contemplated that enormous sums of money should pass into his hands; and its application and security were entrusted wholly to the judgment, discretion and integrity of the comptroller. In the performance of the duties cast upon him he was made independent of all other county authority or supervision, and was broadly charged with the responsibility of providing funds not only to meet the current and maturing debt of the county, but to fund all of its outstanding obligations. The moneys to be raised on the bonds, whether in premiums or principal, were undoubtedly the property of the county; and the comptroller’s

It is a matter of public history, of which courts will take judicial notice, that in the sale of bonds and negotiation for loans in behalf of states, municipalities and governments, the services of their own fiscal agents are usually, if not invariably, supplemented by the employment of bankers, brokers and other financial agencies, to aid in raising moneys for such public purposes. During the late war the federal government raised large sums by the issue and sale of treasury notes and bonds, which it would have been practically difficult if not impossible to do upon favorable terms but for the assistance rendered by extraneous financial agencies employed and paid by the secretary of the treasury. Most if not all of the acts authorizing such loans, contemplated such services and authorized the secretary to pay for them, sometimes at a fixed rate, sometimes at rates not exceeding a certain limit, and often according to his judgment and discretion. Appropriations were sometimes but not always made in the acts for the payment of these expenses. See 12 U. S. Stat. at L. p. 129, chap. 5, Laws 1861, p. 345, chap. 33, Laws 1362; p. 709, chap. 73, Laws 1863; voL 15, p. 13, chap. 13, Laws 1874, p. 465, chap. 177, Laws 1865.

It is a matter of common knowledge that such loans in all countries of the world are usually negotiated through agencies outside of the regular financial authorities of the government making the loans. Whether their employment in the case in hand was wise and prudent, or perhaps even indispensable to the accomplishment of the object intended by the statute, cannot be determined as a question of law, for the statute gave the comptroller power to determine that question in his own discretion, subject only to the obligation to do so honestly and in good faith.

Under these circumstances - the question is presented as to what were the duties of the comptroller and the extent of his power in carrying out the law.

It is a well established principle that statutes containing grants _ of power shall be construed so as to include the authority to do all things necessary to make the object of the grant effectual, and to enable the donee of the power to accomplish the expressed purpose of the act.

Domat expresses the idea as follows: “All laws necessarily bear with them all the powers or incidents necessary to carry out their intention.” Sedg. Stat. Law, p. 245.

Sedgwick says: “ When a statute commands an act to be done it authorizes all that is necessary for its performance.” Sedgwick, 228. Potter’s Dwarris states the rule to be “In

The rule stated has been frequently referred to and applied in the reports of this state. It was stated by Judge Ruggles, in Stief v. Hart ( 1 N. Y., 23 ,) as follows: “Whenever the law requires an act to be done it authorizes the agent to do what is necessary to accomplish it in the mode pointed out for its performance.” In this case power in the sheriff to take goods out of the hands of a pledgee, for the purpose of a sale on execution, was implied from the authority given him to levy upon and sell the interest of the pledgor in such goods.

In People v. Hicks ( 15 Barb., 160 ,) it was held that a statute giving power to a magistrate to examine such witnesses as might be produced before him authorized him to issue subpoenas for such witnesses and to compel their attendance by the usual process of the court. Judge Edwards, giving the opinion of the court, says: “In an anonymous case, which is reported by Lord Coke (12 Coke, Rep. 130), he says that on a motion made by him before the justices of the king’s bench, it was unanimously resolved ‘ that when the statute gave power to justices of the peace to require any person or persons to take the oath the law impliedly gave them power to make a warrant to have the body before them.’ ” Judge Roosevelt also says “that the grant of an express power carries with it, by necessary implication, every other power necessary and proper to the execution of the power expressly granted.” 1 Kent, Com., 404.

The existence of the power in question is so indisputable that it is unnecessary to pursue the discussion of the question further; and it is material only upon this point to add a few observations in relation to the necessity of paying the necessary expenses of the loan to enable the comptroller to carry out the provisions of the law. ( Certainly the necessity of raising the money provided for by the act to accomplish its purposes cannot be denied. The members of the legislature were the sole judges of this necessity; and having themselves determined that question, it was the duty of the comptroller to execute the mandate of the law. Whatever he judged' it necessary in good faith to do in carrying out its purpose it was lawful for him to do, provided he did not transgress any positive provision of law or violate the purpose or spirit of the act. The statute conferred upon him large discretionary powers in carrying out its provisions; and he could not be made hable for any

The necessity of incurring some expenses in the negotiation of the loan and placing the bonds authorized to be issued is, in view of the universal practice in such cases, too plain to admit of dispute; and it is obvious that unless the comptroller was vested with power to pay them the whole purpose of the act might be defeated at its outset.

The comptroller had no general authority to contract a debt for such purpose on behalf of the county, and no special authority except such as is inferable from the act in question. It is also plain that if he could not obtain the assistance required or the services necessary by a pledge of the credit of the county, subjecting the financial agent to the risk of an unfavorable consideration of his claims by the board of supervisors or other auditing officers of the county, he would be obliged to adopt other means to ■ accomplish the object intended. Can it be reasonably said that the power to pay expenses from the fund raised was any more detrimental to the interests of the county than the power to pledge its credit? If the possession of one power is to be inferred from the act, is there not equal reason to say that if its exercise is required for the purposes of the law, the other power was equally inferable ? They both rest upon the same principle, and are governed by the same rule; and one power is as equally .open to abuse as the other.

The comptroller was directed to create a public fund, and his power was commensurate with the requirements of the task imposed upon him. It is unreasonable to say that in imposing the duty of raising the money in question upon him the' legislature intended to hamper and restrict his performance of it by denying to him the means necessary to perform it, or that its scheme was subject to be defeated by the neglect or refusal of the county officers to provide means to execute its provisions. The act contains no reference to the intervention or co-operation of any county officers in its execution; and it is repugnant to establish principles of construction to import into its provisions requirements of prior enactments not pertinent thereto, and which would be plainly destructive of its purposes.

Such was the view taken of the act by the board of apportionment organized under chapter, 583, Laws of 1871, as expressed in resolutions adopted May 9, 1871. Such board, in authorizing an issue of about $9,000,000 of the consolidated stock of the county under said act to meet a portion of its indebtedness, provided that “ the expenses incurred in providing for the issue of said stock should be paid out of the premiums.received for the same.”

The statutes referred to in the opinion of the general term seem to us to have no application to the subject. They provide among other things that no moneys shall be drawn from the treasury except upon previous applications for that purpose, and in terms apply only to moneys already placed in the treasury of the county and disbursable in the regular and customary administration of its affairs upon the authority of the board of supervisors. The check in question never reached the treasury of the county; and, although it may have been the property of the county, it was still in the hands of Connolly, subject to the purposes of the act by which he acquired its possession. He was by such act made the agent of the county, with power to disburse so much of its funds in his hands as was necessary to carry out the purpose of the law by which he was appointed.

We are, therefore, of the opinion that the courts below erred in holding that the comptroller had no authority to pay out the check; and we are further of the opinion that no cause of action was proved against the defendant. We think that no right of action exists against the defendant in respect to this transaction, except upon proof of collusion between him and Connolly to defraud the county of the money represented by the check.

We deem it unnecessary to refer at length to a comtemporaneous act, similar in form to the one under discussion, authorizing the comptroller to create a public fund or stock, to be denominated ‘ ‘ consolidated stock of the city of New York,” as its introduction would tend only to complicate the questions discussed. The complaint alleges that the check was the property of the county; and the proof tends to establish that it was received in payment of a part of the premium due upon a loan to the county. The city could not, therefore, have had any legal interest in its disposition or recovery.

It is claimed by the respondent that, inasmuch as the contract between Connolly and Sands provided for the pay ment of the same commission for negotiating city as well as county bonds, the defendant came under the provision

We think it was competent for a city officer to render services to the county or any other employer outside of the city, and charge and receive a compensation for such services.

We have examined other objections made to the right of Sands to retain the compensation in question, arising out of the fact that he was a city officer, but think the authorities upon which they are based too obviously inapplicable to call for special discussion.

There is no evidence in the case upon which the plaintiff showed any right to recover; and it was, therefore, error for the trial court to direct a verdict in its favor.

The judgments of the courts below should, therefore, be reversed and a new trial ordered, with costs to abide the result.

All concur except Andrews and Finch, JJ., dissenting.