Case Name: PATRICK FALCONER and others, Appellants, v. THE BUFFALO AND JAMESTOWN RAILROAD COMPANY and others, Respondents; THE BUFFALO AND JAMESTOWN RAILROAD COMPANY v. WALTER JUDSON, W. BREED and EDWARD P. JONES, Commissioners to issue Bonds for the Town of Ellicott, and ROBERT NEWLAND
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1876-04
Citations: 14 N.Y. Sup. Ct. 499
Docket Number: 
Parties: PATRICK FALCONER and others, Appellants, v. THE BUFFALO AND JAMESTOWN RAILROAD COMPANY AND OTHERS, RESPONDENTS. THE BUFFALO AND JAMESTOWN RAILROAD COMPANY v. WALTER JUDSON, W. BREED and EDWARD P. JONES, Commissioners to issue Bonds for the Town of Ellicott, and ROBERT NEWLAND.
Judges: Mullin, J., concurred.
Reporter: Supreme Court Reports (Hun)
Volume: 14
Pages: 499–514

Head Matter:
PATRICK FALCONER and others, Appellants, v. THE BUFFALO AND JAMESTOWN RAILROAD COMPANY AND OTHERS, RESPONDENTS. THE BUFFALO AND JAMESTOWN RAILROAD COMPANY v. WALTER JUDSON, W. BREED and EDWARD P. JONES, Commissioners to issue Bonds for the Town of Ellicott, and ROBERT NEWLAND.
Town bonding act— Commissioners appointed under — Powers and duties of — Bffect of constitutional amendment, article 8, § 11.
Town bonds issued in aid of railroad — right of railroad company to compel delivery of— chapter 507 of 1870.
Commissioners appointed under the town bonding act, to issue bonds in aid of a railroad, are estopped from questioning the validity of the proceedings under which they were appointed. Commissioners so appointed can issue bonds only in accordance with the conditions of the petition asking for their appointment. Having executed such bonds at an earlier period and placed them in the hands of a third party, to be delivered when the proper time arrived, and having entered into an agreement with the railroad -company that said bonds should be delivered upon the performance of a certain condition, which condition was afterward complied with by the railroad company, and the constitutional amendment (§ 11, art. 8) having meanwhile gone into effect, held, that the bonds thereby became nuil and void and the commissioners could not deliver them to the railroad company.
The legislature has not, by chapter 507 of 1870, authorized the commissioners to agree with the railroad company to issue the bonds which the tax-payers have consented maybe issued to the railroad company; that duty is left to rest solelyupon the consent of the tax-payers. That act merely regulates the action of the commissioners and prescribes the purposes to which the railroad company shall apply the bonds or their proceeds.
The consent of a majority, in number and amount, of the tax-payers of a town that the bonds of the town may be issued, in aid of the construction of a railroad within this State, in the way provided for, by what is properly known as the bonding act, gives no right to the railroad company that a court of law or equity will enforce against the town because:
1st. The company is not bound to receive the bonds, or to apply them or their proceeds in the construction of the road.
2d. It cannot compel the persons appointed to issue the bonds, to, sign and deliver them for the same reason.
3d. Because they owe no duty, at that stage of the proceedings, to the railroad company.
The first case came before the General Term, upon appeals from two orders dissolving an injunction and sustaining a demurrer to the plaintiffs’ complaint.
The action was brought to prevent the issuing and delivery of $200,000 of the bonds of the town of Ellicott to the Buffalo and Jamestown Railroad Company. The plaintiffs were tax-payers of the town, and the defendants were the railroad company, the commissioners previously appointed to execute and deliver the bonds, and Robert Newland, who had the bonds in his possession, in escrow, or upon a trust, to deliver them to the railroad company upon the performance of certain conditions.
The complaint alleges, among other things, that the plaintiffs are each freeholders, residents and tax-payers of the town of Ellicott. That a petition was presented to the county judge of Chautauqua county, asking for the bonding of the town upon the conditions that the line of the railroad of said company, to be constructed from the city of Buffalo to the line of the State of Pennsylvania, in said county, should be located and constructed through the village of Jamestown, in said town of Ellicott, before said bonds should be delivered to said company, and such proceedings were thereupon had upon such petition, before the county judge of said county of Chautauqua, on or about the 20th day of May, 1872, that he adjudged and determined that said petitioners, signing said petition, represented a majority of the tax-payers, etc. That in the month of June, 1872, an agreement or contract was made between said railroad company and said commissioners of the town of Ellicott, providing, among other things, that “such commissioners aforesaid, for themselves, as such commissioners, and their successors in office and assigns, do agree to and with the said party of the second part, that when the said party of the second part shall have located and constructed through the village of Jamestown, in the said town of Ellicott, the proposed railroad of the said company, running from the city of Buffalo to the Pennsylvania State line, in the said county of Chautauqua, the said party of the first part, as such commissioners, or their successors in office, will thereupon immediately subscribe in the name of the said town of Ellicott to the capital stock of the said “ The Buffalo and Jamestown Railroad Company,” to the amount of $200,000, and will pay for the said stock by delivering to the said company the bonds of the said town of Ellieott in the amount of $200,000, which bonds shall be made and executed by the said party of the first part, or their successors in office, in due form of law, and by them duly signed, sealed and certified.” * * * “And in consideration of the premises, the said party of the second part, for itself, its successors and assigns, does hereby agree to and with the party of the first part, and their successors in office, that the party of the second part will, in manner and form hereinbefore specified, receive the subscriptions aforesaid, of the said party of the first part, to the said capital stock in the sum of $200,000, and will receive in payment therefor the said bonds of the town of Ellieott to the amount of $200,000, created and issued by the said commissioners, in manner and form aforesaid, in due form of law, and will thereupon issue and deliver to the party of the first part, in due form, the certificates representing the amount of the capital stock so subscribed and paid for as aforesaid.
“ The parties of the first part refer to the petition and proceedings under which they were appointed such commissioners, as aforesaid, and do not undertake or agree to perform the conditions of this contract, except as they are empowered and authorized so to do by said petition, and proceedings and the statute in such case made and provided.”
That at some time prior to the 28th day of August, 1874, said commissioners did sign bonds of said town of Ellieott for the aggregate amount of $200,000; and did, on the 28th day of August, 1S74, put said bonds into the hands of Augustus E. Allen and Robert Newland, the said Allen and Newland, at the same time, signing a paper containing the following, among other provisions, stating that said Allen and Newland held the bonds for the following uses and purposes : “If the said Buffalo and Jamestown Railroad Company shall, on or before the 1st day of January, 1876, have constructed its railroad to and through the village of Jamestown, in said town of Ellieott, upon a right of way and road-bed in which they have the title in fee simple, * * * and upon such commissioners having subscribed $200,000 to the capital stock of said company and received the certificate of said company therefor, to deliver to said company the said $200,000 in bonds of said town in payment of such subscription ; and in ease said company shall not construct its said railroad, in manner and form and to the extent aforesaid, on or before January 1st, 1876, then we are to return said bonds to said commissioners.”
That said bonds are now in the hands of said Newland.
The plaintiffs asked that any bonds that may have been signed by such commissioners shall not be sold or delivered to any person or corporation but shall be canceled or destroyed ; and that they shall not execute or deliver any other bonds of said town of Ellicott, as such commissioners aforesaid, and shall not subscribe to the stock of the Buffalo and Jamestown Railroad Company or purchase the same.
The plaintiffs obtained a preliminary injunction prohibiting the issuing and delivery of the bonds. The defendants demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action The court at Special Term sustained the demurrer and dissolved the preliminary injunction, and from such orders the plaintiffs appealed.
The second case came before the General Term upon a case agreed upon by the parties, without action, for submission to the court. The plaintiff seeks to compel the defendants to deliver certain bonds of the town of Ellicott, in the county of Chautauqua, to or for the benefit of the plaintiff corporation, for an equal amount of stock in the same corporation.
A petition of tax-payers of the town was presented to the county judge, in March, 1872, with a condition that the company should build its road through the village of Jamestown, in the town, before the bonds should be delivered. Subsequent proceedings were thereupon had, in accordance with the statutes, and the defendants Weeks, Breed and Jones were appointed commissioners in May, 1872. The commissioners executed the bonds, and in August, 1874, delivered them to the defendant Newland and one Allen, deceased, in escrow, to be delivered to the railroad company if it should finish its road through the village of Jamestown before the 1st of January, 1876. The road was so built and finished in October, 1875, but the commissioners and Newland refused to deliver the bonds, upon the ground that they were prohibited from so doing by section 11, article 8 of the amended Constitution of the State of New York, which took effect 1st January, 1875.
R. P. Marvin, for the appellants in first action.
George F. Comstock, for the respondents in first action.
George F. Comstock, for the plaintiff in second case.
Porter Sheldon, for the defendants in second case.

Opinion:
Mullin, P. J.:
The consent of a majority, in number and amount, of the taxpayers of a town, that the bonds of the town may be issued in aid of the construction of a railroad within this State, in the way provided for by what is popularly known as the bonding act, gives no right to the railroad company that a court of law or equity will enforce against the town, because: 1st. The company is not bound to receive the bonds, or to apply them or their proceeds in the construction of the road. 2d. It cannot compel the persons appointed to issue the bonds, to sign and deliver them for that same reason. 3d. Because they owe no duty at that stage of the proceedings to the railroad company.
Whether the tax-payers could compel the persons appointed to execute and deliver the bonds is a question not before ns, and need not be considered.
It was, doubtless, a defect in the bonding act, that it did not provide some way to secure the application of the bonds, or their proceeds, to the construction of the railroad; and to enable it, before the subscription for the stock in the name of the town, to compel the officers of the town to issue the bonds, and that defect led to the adoption of chapter 907 of the Laws of 1869.
That act provided that a majority, in number and amount, of the tax-payers, whose names appeared on the last assessment roll of the town, might apply to the county judge, by petition, setting forth that they desired that the town might issue bonds to the amount named, and invest the same, or their proceeds, in the stock or bonds of a railroad company in this State, named in the petition.
The duties of the county judge upon receipt of the petition are prescribed, and he is required to take proof of the matters alleged in the petition, and, if they are proved to his satisfaction, he is then to adjudge that the facts so alleged are true, and cause such finding to be entered of record.
After this adjudication is made, the county judge is then to appoint commissioners who are to execute bonds in the name of the town ; and they are to subscribe in the name of the town for stock of such railroad company to the amount named in the petition of the tax-payers, and to pay for the same with the bonds or their proceeds.
By these provisions of the statute, a duty is doubtless, imposed upon the commissioners to subscribe for stock of the railroad company, to issue bonds with which, or their proceeds, to pay for the stock, which the courts may compel them to perform. But there is no contract between the town or its commissioners and the railroad company that the latter can in any way enforce.
While the proceedings remained in this way, the legislature might repeal the bonding act, without violating the provision of the Constitution of the United States which forbids the States to pass any law impairing the obligation of contracts.
In 1870 the legislature passed an act (chapter 507 of the laws of that year), which declared that it should be competent for any corporation, to aid whose construction bonds shall have been authorized to be issued by any municipal corporation, to enter into an agreement with the commissioners appointed to issue bonds, limiting and defining the times when, and the proportions in which said bonds or their proceeds shall be delivered to said corporations, and the place or places where, and the purposes for which such bonds or their proceeds shall be applied or used, and such agreement shall be valid in all courts and places. And the commissioners shall not be compelled by any court to deliver such bonds or their proceeds to such railroad company, until such agreement shall be executed if required by them.
It will be seen that the legislature has not, by the act referred to, authorized the commissioners to agree with the railroad company, to issue the bonds which the tax-payers have consented may be issued to the railroad company; that duty is left to rest solely upon the consent of the tax-payers, so that there has been at no time any contract by which the railroad company became entitled to the bonds.
The contract provided for by the section of the chapter (507) above cited, merely regulates the action of the commissioners and prescribes the purposes to which the railroad company shall apply the bonds or their proceeds.
The duty of the commissioners to issue bonds rests on the statute of 1869, and not upon the agreement authorized to be made by chapter 507.
When the section of the State Constitution took effect that prohibits towns from issuing bonds in aid of railroad companies, the right of the railroad company to enforce the delivery of the bonds was taken away. It rested purely on the act of 1869, and not upon the contract between it and the town or its agent.
The commissioners, therefore, had no power to agree, in and by the contract between them and the railroad company, dated the 14th of June, 1872, that, when the company had located and constructed its road through the village of Jamestown, they would subscribe for stock and issue bonds to pay for the same. The right of the railroad company to these bonds did not, and could not rest on the agreement of the commissioners, but upon the statute of 1869 and the consent of the tax-payers.
When these were swept away by the constitutional provision the rest of the provisions of the agreement of the seventeenth of June became inoperative. There being no bonds that could be issued, they were released from the obligation to issue them.
E. Darwin Smith, J.:
The questions presented in these cases depend primarily, upon the construction of the petition of the persons claiming to be a majority of the tax-payers of the town of Ellicott.
In that petition is the following clause: " Your petitioners desire that the said town of Ellicott shall create and issue its bonds to the amount of $200,000, and invest the same, or the proceeds thereof, in the stock of the Buffalo and Jamestown Railroad Company, upon the condition that the line of the said railroad of said company, to be constructed from the city of Buffalo to the line of the State of Pennsylvania, in said county, shall be located and constructed through the village of Jamestown, in said town of Ellicott, before said bonds shall be delivered to said company or sold."
The object which the petitioners intended to secure by this condition, I think, was two-fold: first, to secure the location of said railroad through the village of Jamestown ; and, secondly, to secure its construction and completion upon such line to and through the said village, before the said bonds were to be issued or sold.
The objection, that it does not appear from the said petition that the Buffalo and Jamestown Railroad Company is a railroad company in this State, I think, is-waived by the provisions of the contract hereinafter mentioned, wherein the Buffalo and Jamestown Railroad Company, the party of the second part to said contract, is described as " a railroad corporation created and existing under and by virtue of the laws of this State."
The question upon the form of the petition in The People ex rel. Rogers v. Spencer (55 N. Y., 1), was presented upon certiorari, and in the opinion of Judge Andrews, who delivered the opinion of the court, it is stated " that the rights of third persons are not in question, and the court could, without injustice to any one, affirm the conclusions they had reached."
Any person acting under and in affirmance of such proceeding as valid, would be estopped, I think, from questioning their validity afterward.
The town of Ellicott, through its commissioners, have, in the contract referred to, clearly recognized the proceedings before and adjudication of the county judge as valid, and are estopped from questioning them for defects in the said petition.
The railroad company was authorized, under the act of the legislature of 1870 (chap. 507), to contract with the railroad commissioners of the town of Ellicott, to fix and define the time and terms upon which they would subscribe to the stock of said company, and issue the bonds of said town in payment therefor ; and the said act declares that contracts so made shall be valid. This provision makes valid the contract so made against the commissioners, or the town they represent, so far as such contracts are not in violation of law, or exceed the powers of the commissioners. The commissioners could not contract to subscribe for the stock of said railroad, in violation of the condition of the petition subscribed by the tax-payers and addressed to the county judge, nor could such commissioners, by contract, enlarge their own powers. They could contract provisionally, to issue such bonds and subscribe for such stock, when said railroad should have been located through, and completed to the village of Jamestown.
This would simply define the time and terms for the issue of such bonds. They could not provide for the issue of such bonds at any earlier period, by executing them and delivering them conditionally, in trust or otherwise. The subscription of said stock and the issue of said bonds could not lawfully take place until said railroad was completed to the village of Jamestown. Before said railroad was so completed, the power of the said commissioners, and the power of the said town to subscribe for said stock and to issue said bonds, was entirely taken away by the amendment of the Constitution, which went into effect on the 1st day of January, 1875. These commissioners were public officers, acting under the authority of law, which was thus repealed before any vested right had accrued under it binding upon said town of Ellieott. The execution and delivery of said bonds to Augustus Allen and Robert Newland in trust for said parties, as stated in complaint and case, could not in any degree affect the question nor change the rights of the town. These bonds in the hands of the said trustees cannot lawfully be delivered to the said railroad company, and are absolutely null and void in the hands of the said trustees.
It follows, therefore, from these views, that the order dissolving the injunction in the suit of Ealconer against said commissioners and other defendants, was improperly dissolved, and the demurrer in said action erroneously sustained, and should be reversed and said injunction restored. The cause of action in said suit was clearly maintainable, upon the merits, within the case of Ayers v. Lawrence (59 N. Y., 192), and in the case of The Buffalo and Jamestown Railroad Company v. Walter J. Weeks and others. Judgment should be given for defendants, according to the prayer of said defendants in the said submitted case, with costs.
Mullin, J., concurred.