Case Name: THE CITY OF POUGHKEEPSIE, Plaintiff, v. WILLIAM I. QUINTARD, Defendant
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1892-07
Citations: 72 N.Y. Sup. Ct. 141
Docket Number: 
Parties: THE CITY OF POUGHKEEPSIE, Plaintiff, v. WILLIAM I. QUINTARD, Defendant.
Judges: Dykman, J., concurred.
Reporter: Supreme Court Reports (Hun)
Volume: 72
Pages: 141–144

Head Matter:
THE CITY OF POUGHKEEPSIE, Plaintiff, v. WILLIAM I. QUINTARD, Defendant.
Municipal corporations — prohibition against incurring debt — right to issue new bonds to retire old ones maturing — it does 'not create a new debt.
Tlie charter of the city of Poughkeepsie prohibited it from borrowing money, except that it might incur an obligation which was to be paid in the current year from income, but by a special act it was empowered to issue bonds for the purpose of procuring a water supply. By a subsequent amendment to the charter the water bonds were made a part of the city debt, and the subject of the water supply was brought under the restrictions of the charter, which, in addition to the above restrictions, provided that money should be raised by tax to pay the installments of the debt as it matured.
Chapter 75 of the Laws of 1878, as amended, authorized a city, whenever any of its bonds matured, or in anticipation thereof, to issue and sell new bonds at a rate of interest not exceeding six per cent, and also at less than the rate of the bonds becoming due, in order to retire such bonds.
Under this latter act the city, for the purpose of retiring certain water bonds, issued new bonds, some of which were bid for by William J. Quintard, who refused to complete liis purchase because the charter, as he alleged, forbade the city to incur the debt:
I-Ielcl, that, under chapter 75 of the Laws of 1878, and particularly under its amendment by chapter 526 of the Laws of 1889, the city had a right to exchange a new bond for an old one maturing.
That such an exchange could not be said to create a new debt or obligation, because the money derived from the new bond was to be applied to the payment of the old one. (Cullen, J., dissenting.)
Submission of a controversy between tbe City of Poughkeepsie, as plaintiff, and. William I. Quintará, as defendant, without action, upon an agreed statement of facts.
The question presented was as to the authority of the city of Poughkeepsie to issue new bonds to retire old bonds of the city water debt which were maturing. The plaintiff bid for $19,000 of the new bonds, but being advised that the bonds were illegally issued, refused to pay for them.
G. B. Herrick, for the plaintiff.
Ciarle d¿¡ /Sedgwick, for the defendant.

Opinion:
Barnard, P. J.:
The right to exchange a new bond of the city for an old one maturing is given plainly by chapter 526, Laws of 1889, and the laws amended thereby. The act of 1889 went farther than the preceding acts; in that legislature permission was given to sell new bonds under very guarded conditions, and to pay the old ones with the proceeds of the new. Neither the direct exchange or the issue of the new bonds constitutes a creation of a liability under the city charter. Neither creates a new debt or obligation. As to the exchange it is very plain that a substitution of one bond for another created no new liability. The application of money derived from a new bond to the payment of the old is the same thing in the spirit of the act permitting cities to meet maturing loans by an exchange or sale of new bonds.
Judgment for plaintiff upon submitted case, with costs
Dykman, J., concurred.