Case Name: The People of the State of New York v. The New York Central Railroad Company
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1864-03
Citations: 29 N.Y. 418
Docket Number: 
Parties: The People of the State of New York v. The New York Central Railroad Company.
Judges: 
Reporter: New York Reports
Volume: 29
Pages: 418–435

Head Matter:
The People of the State of New York v. The New York Central Railroad Company.
An order for'an extra allowance, made by a single judge, before judgment, affects a substantial right, within the meaning of section 309 of the. Code, and is the subject of appeal to the general term,
The right to make an extra allowance being a matter of discretion on tho part of the judge who makes the order, the court of appeals has no power to review the exercise of that discretion, or to examine as to the merits or amount of the allowance.
This action was brought to recover a large amount of toll for property transported over the road of the defendant, and to obtain an adjudication declaring the act of the legislature, releasing railroads from the payment of tolls, unconstitutional and void. As appears by the affidavits used on the motion for extra allowance the amount involved in the action was more than ten millions of dollars, as near as could be ascertained of which five millions were claimed in the complaint for arrears of tolls. The action was tried at the Orange county circuit, and resulted in .the dismissal of the complaint; but the judge directed the exceptions to be heard in- the first instance at the general term, and ordered all proceedings to be stayed until such exceptions could be heard and decided. The cause was heard at general term, and resulted in an order denying a new trial, and directing judgment for the defendant upon the verdict. The attorney-general desiring to appeal, and both parties wishing to avoid the delay which would result from a motion for an extra allowance of costs, if made at this stage of the cause, a stipulation was entered into by which the attorney-general allowed $1,000 to be taxed as an extra allowance, and agreeing that after tie decision of the appeal in said action, the prevailing party might apply to the supreme court for such further allow anee as to the court should seem proper, with the same effect as if application for such further allowance were made immediately after the trial of such action in the supreme court. The attorney-general appealed to the court of appeals, where, after argument, the judgment was affirmed; whereupon a further stipulation was entered into between the attorney-general and the attorney for the defendant, agreeing that the motion for an extra allowance of costs should be made in either of the counties of Albany or Rensselaer, with the like force and effect as if made in the second judicial .district. Pursuant to such stipulation, a motion was made before a special term, held in the city of Albany, founded on all the papers, briefs, stipulations and proceedings in the cause, and on the affidavits of the attorney and counsel for the defendant, Messrs. Fairchild, Paige and Tremain, showing the extent and nature of the preparations required and made for the trial of the cause, and that an extra allowance of at least $20,000 was necessary to indemnify the defendant against the costs, charges and disbursements actually incurred by the defendant in the necessary defense of the action. The only paper read in opposition to the motion was an affidavit of Mr. Eeynolds, counsel for the plaintiff, stating that the company always insisted that the plaintiff’s action was without any * substantial foundation; and that, in his opinion, if any considerable time was spent in preparing' for the trial and argument, it was unnecessary. The court made an order granting $20,000. The plaintiff appealed from the order to the general term, in the second district; whereupon the défendant moved to dismiss the appeal, on the ground that the order was not appealable. The general term, after argument, made an order dismissing the appeal, with ten dollars costs. From the order dismissing the appeal, the plaintiff appealed to this court; and the defendant now moved to dismiss such appeal, on an affidavit, and on all the papers and proceedings in the cause.
John H. Reynolds, for the appellant.
L. Tremain for the respondent.

Opinion:
Denio, Ch. J.
The stipulation between the parties, by means of which the application for a further allowance for costs was postponed until after judgment, contained a reservation of the rights of the respective parties. The right to a review was fairly included in this reservation, and that was possibly the motive for entering into the stipulation. But by postponing the application until after judgment, it was impossible to include the order for the further allowance in the judgment. The case, on its general merits, was consequently renewed at the general term and in this court, upon a record which contained no allusion to any such further allowance. It would violate the spirit of the agreement if we should hold that the plaintiffs are precluded by this course of proceeding from presenting to the tribunals of review any questions which might have been made if the application had .been heard and determined before judgment, and the order had been incorporated in the judgment. It follows, I think, that in considering the appeal from the order, we should act upon the same principle which would have governed us if we were sitting in review of the judgment, after án affirmance by the general term, and had found tiffs order for an extra allowance among the papers returned upon the appeal. If it had been made before judgment, the record returned here would have contained the papers used on the application, .the order of the special term making an allowance of $20,000 in favor of the defendants, the appeal, if there had been one, to the general term from the order, and the dismissal of that appeal on the ground that the decision , of the single judge at the special term as to the amount' of the allowance was conclusive. As it was made after judgment, pursuant to a stipulation by which all rights are reserved, we must, on the appeal from the order, exer - cise the same jurisdiction which would have belonged to us if the order had been parcel of the judgment; we can not in any other way give effect to the terms and plain intention of the stipulation.
If I am right in this view, the question before us is whether the discretion ,of the court, mentioned in the 309th section of the code, is an uncontrollable discretion of a single judge, not subject to be examined by the general term of the supreme court. If this is the case, ijfc is- obvipus that allowances in the nature of judgments for very large sums, may be passed by one judge, without a right to question their correctness before any higher tribunal, while many other orders and the verdicts of juries for any amount, however -small, are subject to be examined upon several successive appeals. The question, therefore, is, whether an order for an extra allowance made by a single judge before judgment, is the subject of an appeal to the general term. By the section of the code, providing for appeals from orders of a single judge to the general term (§ 349), one of the cases in which an appeal lies is where the order involves the merits of the action, or some parts thereof, or affects a substantial, right. It may, perhaps, be doubted whether a question respecting the costs can be said to involve the merits of the action; but. I think this order affects a substantial right, within the meaning of the section. In construing the section we see in the first place that it concedes that ttiere are some orders of a special term which are not the subjects of an appeal to the general term, and that such as affect a substantial right are not within that category. In a general way it may be said that every order which may be made in a cause affects, the rights of the parties in some appreciable manner. What, (lien, is meant by the term substantial right? In my opinion it is distinguished from a formal right. Suitors have :i certain right to require the observance of all the terms of legal procedure; but inasmuch as it would be productive of infinite delay and expense if every decision upon a matter of practice was subject to be examined on appeal, the legislature wisely determined that the litigation upon such points, which were generally of minor'importance, should be limited to the court or judge who first made the order. Parties frequently commit loches in the proceedings in an action, and are obliged to apply to the court for relief, or to be let in to answer or the like, and proceedings are frequently set aside for irregularity, upon or without terms; and the cause proceeds; and it may be eventually determined in favor of the party who was beaten on the motion. These orders, or some of them, are only important in respect to the manner in which the case is eventually to be tried on the merits. Without now undertaking further to classify them, it is sufficient to say that an order which peremptorily and finally charges a party with the payment of a sum of money, great or small, which he ought not to pay, or with a greater amount than he oughl to pay, affects his rights, not in a matter of form but in substance; and such was the nature of the order in this case. It was, therefore, examinable at the general term, and it was error in the general term to refuse to take cognizance of and to examine it on the merits, on the plaintiff's appeal.
The further question is, whether we have jurisdiction to correct this error on an appeal from the order of dismissal. It is no answer to say that it did not enter into the judgment, and thus become an intermediate order within the first-subdivision of the eleventh section of the code. The stipulation waives that objection, as has been already stated. We have, on a former occasion, sat in review of the judgment, and have affirmed it; but the order was not then in the judgment, and could not be reached, if we would otherwise have had jurisdiction of such a question. We have-no jurisdiction to review intermediate orders before judg ment in the action, except such as determine the action and prevent a judgment. But' on an appeal from the judgment we are to review any intermediate order involving the merits, and necessarily affecting the judgment. Supposing this order to have been made before judgment, and to have been brought up to the general term by the appeal from the judgment, as would have been the case but for the stipulation, could we say that it did not necessarily affect the judgment? To my mind, it affected it in this way: It rendered that absolute and final which was in law examinable at the general term, and this was affected by the order of dismissal which is appealed from. Hence I am in favor of reversing that order.
Whether we could examine the merits of the allowance is another question. We have, in several cases, disclaimed any right to interfere with an adjudication which was discretionary in the supreme court. The code, in terms, makes this matter of extra allowances discretionary. It is not implied from this, that it is the discretion alone of the single judge who makes the order; nor does that expression affect at all the jurisdiction of the several branches of the supreme court. When the case is removed to another court whose province it is to review determinations in matters of .law of. the "subordinate tribunals, the matter is presented in a different aspect, and it seems to me that we cannot review the .discretion of the supreme court.
Davies, Mullin and Weight, JJ., concurred with the chief judge.
Johnson, J.
The order at special term was made upon a summary application in the action# after judgment. It was a final order, and most clearly affected a substantial right. It cannot be doubted that a final order Which gives a party, to an action the legal right to demand, and to enforce the. collection of, the sum of $20,000, or any other snm of money, which he would not have, otherwise, is a substantial right.
Whether this court has jurisdiction to review'the. order appealed from, depends entirely,- in my judgment, upon the question whether the supreme court at general term should have reviewed the order of the special term on the appeal taken, instead of dismissing such appeal. If it should, a substantial legal right has been affected; and the fact that-the original order was made in a summary application after judgment, places the jurisdiction of this court to review the order in question beyond all doubt. This question is not in the least affected by the circumstance that the right to make the summary application for the order after judgment was seemed to, or conferred upon, the defendant by the written stipulation of the plaintiff's attorney; nor by the terms of the stipulation, that after the decision of the action by the court of appeals the prevailing party on such appeal might apply to the supreme court for a further allowance, "with the same effect as if the application for such further allowance were made immediately after the trial of said action, in the supreme court." It is quite immaterial how, or by what means, the defendant acquired the legal right to make his application in the action after-judgment, .instead of making it before judgment. It is enough that he had the legal right, and exercised it. The law then conferred upon this court* jurisdiction to réview the order upon appeal, and the parties could not, by the terms of their stipulation, deprive it of such jurisdiction. Parties cannot, by stipulation, limit or take away jurisdiction from a court, any more than they can confer it. The terms " with the same effect," contained in the stipulation, were doubtless intended by the parties to apply only to the validity of the order, which might be made upon the application provided for, and not at all to the jurisdiction of any court to review it on appeal. At any rate, they can have no other,legal operation. The stipulation did not, however, and could not, "nothwithstanding these terms, secure to the defendant the same rights in respect to the further allowance when made, that it would have had, had the application been made before judgment. Had it been made before judgment, the further allowance would have entered into the judgment and formed part of it. How it is no part of the judgment, but stands as a legal claim against the plaintiff, and depends upon the .validity of the order alone.
We come, then, to the question whether the supreme court at general term should have entertained the question apon the appeal, and determined the matter involved in the appeal upon its merits. I am clearly of the opinion that 4 should. That the right involved in the allowance, if it be a legal right, is a substantial one, Jias been already sufficiently shown.
The only question whiéh remains to be considered, therefore, is, whether the amount of a further allowance within the statutory limit, where it has been determined "that a further allowance is proper, rests in the mere arbitrary discretion of the judge, or whether such amount depends upon and is to be governed by some rule or principle of law. I have no doubt that it is strictly a matter of law when the judge making the allowance undertakes to give to the prevailing party any sum beyond what is necessary to indemnify such party for his expenses in the action, upon the facts appearing on the application. The code, §303, abrogated all the former rules and provisions of law on the subject of costs in actidhs, and provided that the prevailing party should have certain sums which are specified and fixed, "by way of indemnity for his expenses in the action," and which are termed costs, in the act. It is then provided by § 309 of the code, that in difficult and extraordinary cases, with certain specified exceptions, where a trial has been had, " the court may in its discretion make a further allowance to any party not exceeding five per cent upon the recovery or claim or subject matter involved."
The object of this provision plainly was not to give exemplary damages or smart money Tby way of punishment to a party for bringing a difficult or extraordinary action which he should be unable to maintain, nor to enable the prevailing party to make anything in the way of gain or profit over and above the expenses for maintaining or defending such an action. This cannot be claimed with any show7 of reason. . The object and intention, manifestly, were to enable the prevailing party to obtain indemnity for his expenses in actions of this kind, which would not be covered by the ordinary allowance prescribed for all actions. And any allowance beyond what was necessary to indemnify for the actual expenses of the action would be . as unauthorized and illegal as the allowance of an improper item in a bill of costs upon taxation; and the right to redress would be just as clear and certain in the one case as in the other. Such being the nature and character of this further allowance, it is plain that the party against -whom the allowance is made has the right of appeal from the order, whenever the question is fairly raised whether the limit of indemnity for expenses of the action has not been transcended, in view of the facts before the court upon which the allowance is made. And I am clearly of the opinion that no such allowance can be rightfully made in any case without proof, showing the necessity of further indemnity, for the expenses of the action, and the amount of the expense incurred for which indemnity is thus sought. Most certainly this should be required where the application is made before a judge who did not try the action. The. order cannot properly be made and the amount fixed upon mere speculation or conjecture, but must be based upon due proof showing the action to be a proper one for such an allowance, and the necessity of further allowance for the pmrpose of indemnity for ex2>enses actually incurred, and which are the 23roper subject of conrpensation by the rules of law. It is conceded by the plaintiff's counsel, that the action was sufficiently difficult and extraordinary in its character to justify the further allowance of some amount by way of indemnity, but it is insisted that the evidence before the court did not justify the allowance of this extraordinary and unprecedented sum.
On the other hand, it is claimed, in behalf of the defendant, that the amount within the statute limit of five per cent on the amount claimed, or subject matter involved is matter of pure and unmixed discretion in the judge by whom the amount is fixed, without reference to any fact or circumstance 'other than that of the difficult or extraordinary character of the action; and that had the judge in this case granted an allowance of $250^000, or even $500,000, no appellate court could have interfered in any way, and the allowance would have stood a perfectly legal and valid Claim capable of being enforced against the plaintiffs. This would, certainly follow, if the amount within the limit of the. statute is a matter qf discretion simply on the part of the judge, and does not depend upon any legal principle or rule; which I have endeavored to show is not the case.
It is true that the language of the section is, that "the court may also, in its discretion, make a further allowance." But this manifestly does not mean a mere arbitrary unregulated discretion, but a judicial discretion to be exercised upon certain conditions, and in reference only to certain definite ends. It can be exercised only in a certain class of cases; it cannot exceed a certain percentage, whether full indemnity for the expenses of the action is thereby secured or not; and must, as we have seen, be confined to indemnity—for the expenses, contemplated by the section, alone. If it is attempted to be exercised in an ordinary action in no respect difficult; or if the prescribed percentage is exceeded, or the allowance exceeds a just measure of indemnity according to the proofs, it is exercised in violation of a legal right, and an appeal lies the same as for any other error of law.
It is not necessary for this court to determine that the general term should, have reversed the order of the special term, hut only that the order was appealable, and the appeal, should have been entertained, and the matter involved in it there passed upon. But as the whole case is before us, we may and ought, I think, to determine what items of expense may be properly included in such an allowance. The amount allowed is altogether unprecedented, equal to the salary of the learned judge who granted the order, for his official services for over five years and a half, and leads almost irresistibly to ;'the inference that some item of expense must have been included, which the law does not authorize and will justify. It was held by this court in Wolfe v. Van Nostrand (2 Comst. 570), that this further allowance under §309 was, by way of indemnity, for the expense of the trial in the court of original jurisdiction, and not in the appellate court. That decision was, I think, clearly correct, and in strict accordance with the design of the statute, and the uniform practice of the courts. The allowance can only be made where a trial has been had, even in difficult and extraordinary actions, and the practice is to make the motion for -it immediately after the trial, without reference to future proceedings by the other party, and to have the sum inserted in the judgment, with the other costs.
It is obvious in the present case, looking at the notice of the motion, the several affidavits used, and the opinion of the learned judge who made the order, that the allowance was made in reference to the entire proceedings in the action throughout, from its commencement to its final determination in the court of appeals. And besides, the papers fail to show that this extraordinary amount of expense has been either paid or incurred by the defendant. The allowance is by way of indemnity for actual expenses in the action necessarily, or at least reasonably, incurred, over and above the amount covered by the. allowances fixed in the statute, and not for speculative or extravagant charges because they are made, even if submitted to by the party prevailing. It should be shown not only what the expenses are for which the further allowance is claimed, but also that they have been necessarily, reasonably, and fairly incurred in reference to the trial.
In this view it is quite clear that the appeal to the general term was properly taken, and should have been there entertained, and the merits passed upon. The order of dismissal should, therefore, be reversed.