Court Opinion

ID: 5482171
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:58:24.382114+00
Date Added: 2024-06-11T08:33:37.924793
License: Public Domain

Dye, J.
(dissenting). We all agree, including the parties, that this is a proper case for a judgment on the pleadings and that the registered 4% water bonds sought to be called for payment were validly issued under date of October 10, 1908, the principal payable fifty years from date, viz., October 10, 1958, subject to the condition that “ The City reserves the right to recall or repay this bond at the expiration of twenty years from its date of issue.” (L. 1906, ch. 203, as amd. by L. 1907, ohs. 84, 724; resolution duly adopted by Common Council of the City of Buffalo, March 25, 1908, and approved by the Mayor April 6, 1908.)
The city by this action seeks a judgment declaring that the language of such reservation gives it the right to repay or recall the bonds or any of them, at any time during the period October 10, 1928, and October 10, 1958, which right the bondholders, the respondents herein, assert the city lost when it failed to call or repay said bonds or any of them, on October 10, 1928, or at the very least within a reasonable time thereafter.
The problem thus sharply presented turns on the meaning of the phrase ‘ ‘ at the expiration of twenty years from its date of issue ” — or to state it quite simply, what is the call date of the bonds?
A majority in the prevailing opinion have dealt with the problem as one of statutory construction rather than one of contract law in order to arrive at the conclusion that the controverted words “ at the expiration of ” as used in the bond, are equivalent in meaning as if the phrase “ at any time after ” had been used.
We are unable to agree with either the premise or the conclusion. While it is true that an enabling act was a necessary prerequisite to the issuance of the bonds as a valid municipal *140obligation, it is equally true that when the bonds were issued in pursuance thereof, and sold for value, the bond itself became the document which fixed the rights of the city vis-á-vis the party who chances to own it. The bond is an evidence of debt — the language of which must be given effect in accordance with ordinary usage. It is only when- the wording is ambiguous and uncertain that extrinsic evidence may be employed to clarify the meaning. The words “ at the expiration of ” when considered in context are neither meaningless nor ambiguous. The use of the phrase “ at the expiration of ” to designate a fixed point of time is nothing new in legal terminology. It is a common expression often used in the market place and has come to have such a generally accepted meaning that it may be regarded as a phrase of art. As far back as Lester v. Jewett (11 N. Y. 453, 459 [1854]), a leading case and followed since, a contract containing an option to purchase stock “ at the expiration of one year from [this] date ” was held to designate a fixed date in point of time and we refused to give effect to an attempt to exercise the option one day too late. This meaning has been consistently followed in the lower courts (Fine Realty Co. v. City of New York, 53 Misc. 246; Railway Adv. Co. v. Posner, 35 Misc. 285; Ferree v. Moquin-Offerman-Hessenbuttel Coal Co., 29 Misc. 624; Maier v. Rebstock, 92 App. Div. 587; de Pass v. Stoddard, 83 Misc. 12). The same meaning has been adopted in many of our leading foreign jurisdictions (Bour v. Kimball, 46 Ill. App. 327; Magoffin v. Holt, 62 Ky. [1 Duv.] 95; Abell v. Bishop, 86 Mont. 478; Markley v. Godfrey, 254 Pa. 99), and other jurisdictions allow a reasonable time after the expiration of the stated period (Weber Showcase & Fixture Co. v. Kaufman, 45 Ariz. 397; Howard v. Galbraith, 13 Cal. App. 373; Rogers v. Burr, 97 Ga. 10; Davis v. Godart, 131 Minn. 221; McDougall v. O’Connell, 72 Wash. 349). No reported case has been called to our attention and my own research has disclosed none and none is pointed to in the prevailing opinion, holding that in point of time the phrase “at the expiration of ” may be exercised ‘ ‘ at any time after ’ ’ the expiration of the fixed period. In Thompson v. Fairleigh (300 Ky. 144 [1945]), authorities interpreting the phrase “ at the end of ” and “ at the expiration of ” are carefully reviewed leading to the conclusion that authorized action taken within a reasonable time will satisfy the contract.
*141The use of the words “ at the expiration of ” in a municipal bond presents no different problem and requires no different solution than when used in any other chose in action or contract whether of a public or private nature. In fact because a bond is an obligation under seal and is fully negotiable, there is all the more reason that its phraseology should be interpreted in harmony with recognized authorities, for it is axiomatic that in dealing with a problem of construction like phrases should be accorded a like meaning.
The parties themselves have' had no difficulty with the controverted phrase since the issuance of this bond until the commencement of the within litigation. The city had by express reservation a right to call all or any part of the bonds “ at the expiration of twenty years from [the] date of issue ”. When that date arrived on October 10,1928, the city failed to exercise its unquestioned call privilege as it had the right to do, and by such omission must now be deemed to have abandoned and forfeited such right. After nearly forty-five years of practical construction in harmony with the authorities that have spoken on the subject, they now seek to attribute a contrary meaning by asking us to import into the terms of these seasoned bonds words they did not use, because not authorized by the enabling act at the time, in order to arrive at a meaning not expressed. Reformation of the terms of a written instrument may be had only when the proof is clear and unequivocal that a change is necessary to correct a mutual mistake or set same aside on the ground of fraud. Here no such grounds exist, for concededly the bonds were issued and sold pursuant to State statute and duly adopted resolution of the Buffalo Common Council. We may not attribute to the purchasers the acceptance of any condition relating to call before maturity not expressed in the bond. For purposes of our problem it matters not that the city can now refund at a lower rate of interest or that the call privilege reserved is not in accordance “ with present day call practice,” or that the text of these bonds differs from “ any other bond ” or that the call privilege is limited “ to a single moment of time twenty years hence ” and thus make it “ the thinnest of sporting chances ”. Not one of such factors — even if proof thereof existed — and it does not, are controlling here. We may look only to the condition as expressed in the language of the bond itself. '
*142However, since the prevailing opinion has found the solution it sought by resorting to a construction of the enabling act, it would be amiss if we did not point out that we read the same statute with a different result. Originally, chapter 203 of the Laws of 1906, insofar as pertinent, provided for a call privilege “ at any time after the expiration of twenty years ” which language, we submit, was a clear expression of legislative intent authorizing the city to pay the bonds in whole or in part at their option “ at any time after twenty years ”. However, and before any bonds were issued containing a call privilege expressed in such language, the act was amended by chapters 84 and 724 of the Laws of 1907, the effect of which was to increase the interest rate from 3% to 4% per annum, and to strike out words originally used “ at anytime after ” and substitute in place thereof “ at the expiration of ”. This was a most significant and important change, for it was not until the wording of the enabling act was so revised that the bonds issued in conformity thereto found a market. It was a deliberate and calculated change designed to limit the call privilege in the manner and to the extent stated. It was not a careless and inadvertent piece of draftsmanship but, on the contrary, a clear, concise and meaningful expression of legislative intent. But this was not all. Following the issue of the bonds containing the call privilege in the statutory language “ at the expiration of ” the Legislature again dealt with the subject by enacting another amendment giving the city the right to call its bonds “ at any time after the expiration of twenty years ” (L. 1909, ch. 349) thus demonstrating beyond doubt that it knew and understood that the phrases “ at the expiration of ” and “ at any time after ” have a different meaning in designating a point of time. These enactments made prior and subsequent to the enabling act, pursuant to which the bonds were issued, when read together indicate a serious and clear expression of legislative intent. The Legislature under accepted canons of construction must be deemed to have used the phrase “ at the expiration of ” in the sense in which it had been judicially construed up to that time (Lester v. Jewett, supra; Adler v. Deegan, 251 N. Y. 467; People ex rel. Sheldon v. Board of Appeals of City of N. Y., 234 N. Y. 484; Mabie v. Fuller, 255 N. Y. 194).
*143For these reasons we dissent from the views expressed in the prevailing opinion and vote to affirm the judgment appealed from, with costs.
Loughban, Ch. J., Lewis and Desmond, JJ., concur with Fuld, J.; Dye, J., dissents in opinion in which Conway and Froessel, JJ., concur.
Judgment reversed, etc.