Opinion
February Term, 1898.
J.H. Metcalf, for the appellant.
Ansley Wilcox and Frank C. Ferguson, for the respondent.
Plaintiff as a taxpayer seeks to maintain the action and by means thereof to prevent waste of the property of the city of Buffalo.
In Adamson v. Nassau Electric R.R. Co. (89 Hun, 261) it was held "A city has no power to alienate or appropriate the city streets and has no property rights therein, and the provision of the statute authorizing an action to prevent a waste of the estate and other property of a municipality refers to property owned by the city and within its power of disposition." In that case it was held that the legislation which authorizes a taxpayer to maintain an action to prevent waste was not intended to enable a taxpayer to maintain an action "against the members of the common council in a city, and the administrative officers thereof, for the purpose of restraining officials acting within the limits and scope of their powers and discretion;" and reference was made in the opinion to Ziegler v. Chapin ( 126 N.Y. 342) where it was said: "We have quite recently declined to become arbitrators between taxpayers and their municipal officers in every instance of disagreeing opinions or conflicting judgments, and have decided that, jurisdiction in the officials existing, the courts can interfere in actions like that before us only where some fraud or collusion or bad faith is alleged and proved."
In Potter v. Collis ( 19 App. Div. 392) it was held, viz.: "The power of the Legislature, unless restricted by the Constitution, is absolute over the property held by a municipal corporation for public use, and it may grant to a railroad company the use of its streets." And it was further held that, in an action authorized to be brought by a taxpayer, "it must appear that the act complained of, or which the taxpayer seeks to restrain, is an illegal official act, or the action must be one to prevent waste or injury to, or to make good, property, funds or estate of the municipal corporation." And it was further held in that case, viz.: "The fact that an applicant to a city commissioner of public works for a permit to excavate streets and avenues in order to change the motive power of a railroad, also needs a permit from the board of electrical control, does not make illegal the act of the city commissioner of public works in granting the permit." In that case the taxpayer's application for an injunction was denied, and the right of a taxpayer to maintain the action upon the facts of that case was denied.
In Kellinger v. Forty-second Street, etc., R.R. Co. ( 50 N.Y. 209), CHURCH, Ch. J., in referring to the decision of People v. Kerr (27 id. 188), says that it was held "that legislative authority to construct a railroad on the surface of the streets without a change of grade was a legitimate exercise of the power of regulating public rights for public uses, and that the city was not entitled to compensation, because it had as a corporation no property which was appropriated."
We are of the opinion that the complaint fails to state facts sufficient to warrant a taxpayer to maintain the action for the relief sought in the complaint in this action. We must, therefore, reverse the interlocutory judgment and sustain the demurrer to the complaint.
All concurred, except WARD, J., dissenting.
The complaint alleges that the plaintiff is a citizen of the city of Buffalo, N.Y., and a resident of said city; that he owns real estate in said city, and that his assessment for taxes upon said real estate amounts to more than $1,000, and that he has been assessed and paid taxes upon said assessment within one year previous to the commencement of this action; that the defendant the city of Buffalo is a municipal corporation, duly organized, and existing and exercising the functions of such municipal corporation under and pursuant to the laws of the State of New York, and that it is a city of the first class; that the legislative power of the city of Buffalo is vested in a common council which consists of the board of councilmen and the board of aldermen; that the defendant Edgar B. Jewett is the mayor of the city of Buffalo; that the defendant the Buffalo Traction Company is a domestic street surface railroad corporation organized and existing by virtue of the laws of the State of New York; that it was incorporated on the 28th of October, 1895, and was organized for the purpose of building street surface railroads exceeding sixty-four miles in length through various streets and avenues in the city; that such streets and avenues embrace nearly all the streets and avenues in the city of Buffalo not already occupied by street railroad tracks, and which are in the thickly-settled parts of the city, together with all the important streets of the city not already occupied with railroad tracks; that if the said defendant should be allowed to build in said streets, it would result in incumbering the same with railroad tracks, trolley poles and wires, and obstructing and hindering the ordinary course of travel and the use of such streets for the public and would be a nuisance; that the traction company, which will hereafter be called the defendant, had applied to the Board of Railroad Commissioners of the State of New York for its certificate that public convenience and a necessity required the construction of its railroad in the city of Buffalo; that the Railroad Commissioners had refused such certificate; that the defendant had applied to the common council of the city of Buffalo for its consent to lay the tracks and operate the railroad of the defendant upon the streets of the city; that such consent to the defendant to construct, maintain and operate said street surface railway in the said streets and avenues and public places of the said city was voted by the said common council "wrongfully, willfully and corruptly in violation of their official duties to the said city and its taxpayers, and in waste of the property, funds, effects and estate of the said city, solely in order to favor the said defendant railway company, the persons who are incorporators and stockholders thereof and interested therein, and for their own personal benefit, and that in making the said grant they colluded with such persons with intent to cheat and defraud the said city out of a large part of the value of said franchise to the city, and to confer the benefits thereof upon the said defendant railway company and said other persons instead of upon said city and its taxpayers; and that they acted with undue haste and improvidence, and in reckless disregard of all proper safeguards and of the city's interests;" that the defendant procured the passage, by the Legislature of this State, of chapter 649 of the Laws of 1896, which was a curative act intended to relieve the defendant from obtaining the consent or certificate of the Railroad Commissioners and for other purposes; that said act was not properly passed and was void; that while it assumed to be a general act it was, in fact, intended to be and was a local act which had never received the sanction of the mayor of Buffalo, as required by the Constitution of this State.
The complaint is very voluminous, contains many allegations of fraud and misconduct and illegality on the part of the city authorities of Buffalo and of the defendant, whereby the valuable rights and privileges of the city in its streets were illegally and corruptly lost and wasted, to the loss, injury and damage of the taxpayers of the city and the plaintiff.
The defendant (the traction company) interposed a demurrer to this complaint. First, that there was a defect of parties defendant, naming them. Second, that the complaint did not state facts sufficient to constitute a cause of action.
The learned counsel for the appellant presents but the single point upon this review, viz., that the complaint does not state facts sufficient to constitute a cause of action, and that it is defective in this respect, i.e., that it is brought, under section 1925 of the Code of Civil Procedure, to obtain a judgment preventing waste of or injury to the estate, funds or other property of the city of Buffalo, and that the only waste or injury alleged is the wrongful, willful and illegal giving of the consent by the municipal authorities of the city of Buffalo to the defendant, and he claims that, although the title to the streets sought to be appropriated by the defendant's railroad is in the city, it holds such title simply as trustee for the People of this State, and that the appropriation of such streets by the defendant is not such a waste or injury to the property of the city as will permit a taxpayer in the city to maintain the action, under the section of the Code cited, and he relies upon Adamson v. Nassau Electric Railroad Company (89 Hun, 261); Case v. The County of Cayuga (88 id. 59); Talcott v. The City of Buffalo ( 125 N.Y. 280); Ziegler v. Chapin (126 id. 342), and kindred cases, which hold in effect that where the municipality, through its officers, acted without fraud or corruption or illegally in granting the consents or privileges sought, such action was in the nature of legislative action and could not be attacked in a taxpayer's action.
An examination of the complaint discloses that the plaintiff can avail himself in this action, not only of the provisions of section 1925, but also of chapter 531 of the Laws of 1881, as amended by chapter 673 of the Laws of 1887 and chapter 301 of the Laws of 1892.
This statute provides that the action may be maintained to prevent any illegal "official act, * * * or to prevent waste or injury to, or to restore and make good any property, funds or estate of such * * * municipal corporation."
Talcott v. The City of Buffalo ( supra) was a taxpayer's action to restrain the city from substituting electric street lighting for that of gas in a street of that city.
The court in that case speaks of chapter 531 of the Laws of 1881, as amended, as supplementing section 1925 of the Code.
The complaint in that case assailed the proceedings as unwise, informal and not in the best interests of the people of the city.
O'BRIEN, J., speaking for the court, says at page 286: "The terms `waste' and `injury' used in this statute comprehended only illegal, wrongful or dishonest official acts, and were not intended to subject the official action of boards, officers or municipal bodies acting within the limits of their jurisdiction and discretion, but which some taxpayer might conceive to be unwise, improvident or based on errors of judgment, to the supervision of the judicial tribunals."
But that case seems distinctly to hold that where the acts complained of are ultra vires, or where corruption, fraud or bad faith amounting to fraud are charged, the action may be maintained.
In Adamson v. Nassau Electric Railroad Co. ( supra) the question did not arise upon demurrer, but there was a trial and upon the facts there disclosed it was held, Judge BROWN pronouncing the opinion of the court, that the taxpayer's action could not be maintained as the acts complained of were legislative acts of the municipality within its discretion, and which could not be supervised by the courts.
And in Parfitt v. Ferguson ( 3 App. Div. 176), which was a taxpayer's action where fraud and illegality were charged, Judge BROWN, pronouncing the opinion of the court, sustains the view that a taxpayer may maintain the action on the ground of illegal official acts, although those acts may not cause an immediate waste of the funds of the municipality.
To the same effect is Ziegler v. Chapin ( supra).
In Case v. The County of Cayuga ( supra) the action was to restrain the board of supervisors of that county from granting the consent of the county to the building of a street railroad in a street which passed along in front of the county buildings, the county being an abutting owner, but having no interest in the fee of the street. The discussion of principles by the court there governing such consents does not aid us in the determination of the question before us. The appellant's counsel contends that the plaintiff cannot stand upon chapter 531 of the Laws of 1881, as amended, because the complaint does not disclose that the plaintiff had complied with the provision of the statute which provides that, upon the commencement of the action, the plaintiff shall furnish a bond to the defendant therein, to be approved by a justice of the Supreme Court, etc., in such penalty as the justice shall require for the payment of the costs of the action.
We do not think the failure to furnish such a bond divests the court of jurisdiction to proceed with the action, as it does not go to the essence of the controversy. It is simply a provision protecting the defendant from costs, and may be waived by the defendant, but, if required by it, the court will stay the plaintiff's proceedings in the action until the security is furnished in analogy to the proceedings requiring security for costs by non-resident plaintiffs under sections 3268 and 3269 of the Code of Civil Procedure.
As we have seen, the complaint in the case at bar distinctly charges corrupt, wrongful and illegal action as the gravemen of the cause of action, and that being so the action is maintainable because the corrupt, illegal and fraudulent action of municipalities where injury results to the plaintiff is always a subject of cognizance and determination by the courts.
The appropriation of the streets of the city of Buffalo not already occupied by street railways for the purposes of the defendant, interfering, as it necessarily must to a considerable extent with the free use of the streets by the public and occasioning inconvenience to the abutting owners and the loss to the city of a valuable franchise, should be legally and honestly done, and the rights of the public carefully guarded, and taxpayers of the city have the right to know whether every step taken to secure that appropriation was in accordance with law.
The allegations in this voluminous complaint must be regarded as true in the disposition of the questions raised by the demurrer, and they disclose such a state of things surrounding the obtaining of this consent, as connected with the municipal authorities and with the defendant, that it demands the careful scrutiny and determination of a court and a jury.
The interlocutory judgment appealed from should be affirmed, with costs, with leave to the defendant to answer upon the payment of such costs within twenty days.
Interlocutory judgment reversed and the demurrer to the complaint sustained, with leave to the plaintiff to amend upon payment of the costs of the demurrer and of this appeal.