Opinion
Argued October 5, 1914
Decided November 10, 1914
James A. Parsons, Attorney-General ( William A. McQuaid and Claude T. Dawes of counsel), for appellants.
J.S. Frost and Andrew J. Nellis for respondents.
The Appellate Division held that the expenses of the defense of the action brought by the corporation against John Franey as county clerk of Albany county was one of the "necessary expenses for the purposes of this article" as provided in section 262 of the Tax Law (Cons. Laws, ch. 60), and that the county clerk was authorized to employ an attorney in the defense of the action and properly charge the fund in his possession with the expenses attendant thereon; that the county clerk in the collection of the tax does not act for the county, but as the agent of the state.
The correctness of the conclusion of the Appellate Division involves an examination of the provisions of the Tax Law relative to the imposition of taxes upon the recording of mortgages, as well as the duty to be performed by the county clerk.
By article 11 of the Tax Law a tax was imposed upon the principal debt or obligation secured by mortgage upon real property situate within this state, payable to the recording officer of the county in which the property mortgaged was situate. The recording officer is required to indorse upon each mortgage a receipt for the amount of tax paid, and is inhibited from recording any mortgage unless the tax imposed thereon shall be paid.
It is made the duty of recording officers in counties outside of Greater New York to pay over to the county treasurer on the first day of each month the moneys received by him during the preceding month on account of taxes paid to him, after deducting the necessary expenses of his office as prescribed in section 262 of the law, except taxes paid upon a mortgage which under the provision of section 260 was to be apportioned by the state board of tax commissioners between several counties. When such determination has been made it is made the duty of the recording officer to file in the office of the recording officers of such other counties a brief description of the mortgage on which such tax is paid sufficient to identify the same, together with a statement of the payment of such tax and the amount thereof.
The state board of tax commissioners are empowered to adopt rules to govern their procedure, and may require certified statements to be furnished by recording officers of the respective counties in relation thereto, and upon making determination file a certificate with the recording officer of each county within which a portion of the mortgaged property is situate, and thereupon a minute of such determination shall be entered in the margin of the record of the mortgage, and likewise a certificate shall be made when the state board of tax commissioners apportion between respective counties the amount on which the tax is to be computed.
It is further a duty of the recording officer prior to the first day of November in each year to cause to be prepared a list containing a description of all mortgages upon which taxes have been paid by reference to the date of each mortgage, the name of the mortgagor and mortgagee, the amount of the principal due upon which the tax was paid, together with the book and page where said mortgage is recorded, together with the town, city or village in which the mortgaged property is assessed, and if assessed in two or more tax districts the amount apportioned to each tax district by the state board of tax commissioners, and the amount deducted for his necessary expenses as approved by the state board of tax commissioners. Such statement shall be filed in his office and he is required to furnish a copy thereof to the clerk of the board of supervisors and another copy thereof to the state board of tax commissioners; thereafter the board of supervisors from the statement filed with them by the county clerk apportions one-half of the tax paid to the county treasurer under the act, one-half to the payment of school taxes, and one-half thereof to the payment of state, county, city and town expenses.
The recording officer, as well as the county treasurer, is required to furnish a bond conditioned for the faithful and diligent discharge of the duties required of them respectively to the people of the state in a penal sum not exceeding twenty-five thousand dollars as the state comptroller may prescribe.
Another duty imposed upon the recording officer arises in case a mortgage is given to secure the payment of a series of bonds, notes or other evidence of indebtedness. The mortgagor when he pays a tax on said mortgage may present to the recording officer bonds, notes or other evidence of indebtedness, secured by said mortgage, and it thereupon becomes the duty of the recording officer to indorse upon each of said bonds, notes or other evidence of indebtedness presented to him a statement signed by him to the effect that the tax imposed by this article on that portion of the principal indebtedness secured by the mortgage represented by bonds, notes or other evidence of indebtedness has been paid and such statement is made conclusive proof of such payment.
Attention has been called to the various duties imposed by the Tax Law upon the recording officer in addition to the ordinary duties performed by him as county clerk. It is apparent that the labor imposed upon the recording officer by the Tax Law involves a keeping of books of account covering the various transactions referred to, the employment of accountants, copyists and assistants in his office, expenses for postage, books, blanks, wages of employees and other items incidental to the services required. Section 262 of the Tax Law provides:
"Recording officers and county treasurers and the chamberlain of the city of New York, shall severally be entitled to receive all their necessary expenses for the purposes of this article, including printing, hire of clerks and assistants, being first approved and allowed by the state board of tax commissioners, which shall be retained by them out of the moneys coming into their hands."
By the language of the statute quoted, the expenses incident to the duty imposed upon recording officers were limited in their scope to the "necessary expenses for the purposes of this article."
The word "necessary" has no meaning peculiar to itself; it may express something indispensable, or it may be construed as reasonable, useful and proper, dependable upon the character of its application. When used with reference to the public, as in the statute under consideration, it should be construed strictly for the benefit of the public. The words "for the purposes of this article," as used in the statute, were intended as words of limitation to restrict the allowance for necessary expenses incurred by the recording officers in the performance of duties imposed upon them by the article of the Tax Law, which we have enumerated.
To give to the words "necessary expenses" as used in the law construction which would admit of the employment of counsel by a recording officer, whenever in his fancy he might deem it desirable to consult counsel, and thus empower him to create a liability for payment of the same against the state, county, and the funds owned by them respectively was not contemplated by the legislature, and if such construction were to prevail would result in a departure from the safeguards erected about the disposition of public funds and the authority of officers to create an indebtedness against a county or the state, whether such officer be an agent of the state or of the county, or act in a public capacity for the benefit of the state and the county.
The policy of the law is to the contrary. (Constitution, article 3, section 21; article 7, section 4; Matter of Tinsley, 90 N.Y. 231; Matter of Chapman v. City of N.Y., 168 N.Y. 80 -86; Hughes v. County of Monroe, 147 N.Y. 49; People ex rel. Everett v. Board of Supervisors, Ulster Co., 93 N.Y. 397; Miller v. Mayor, etc., of N.Y. 76 N.Y. 151; People v. Brandreth, 36 N.Y. 191; Bratt v. Gibbs, 185 N.Y. 614.)
In Bratt v. Gibbs ( 185 N.Y. 614) the action was brought by plaintiff against the commissioners of highways of a town for legal services in opposing the laying out of a highway, in which opposition the town was successful, largely to the benefit of the taxpayers of the town. The position on the part of the commissioners and their conduct in employing counsel were indisputably all in good faith. The facts relating to the case are collated in a subsequent proceeding ( McCoy v. McClarty, 53 Misc. Rep. 69) in an opinion by Mr. Justice VAN KIRK, and it is unnecessary to reiterate them in this opinion. An examination of that case discloses the policy of the courts established in the Bratt Case ( 185 N.Y. 614, supra), the liability of the commissioners personally to the attorney employed by them indisputably for the rendering of services for the benefit of the taxpayers of the town.
In the case at bar the tax collected by the recording officer was not to be devoted solely to the benefit of the state. The county of Albany, in which the officer resided, was a beneficiary equally with the state of the avails of the mortgage tax. The fund, until distributed, was under the management and control of the state; when paid over one-half of the same became a part of the general fund of the state, and the remainder funds of the county of Albany. In the absence of specific authority such funds cannot be ordered by the court to be paid for any purpose, except by express authority of the legislature. ( Matter of Tinsley, 90 N.Y. 231.) We do not find such authority in the statute under consideration, or in any general statute. On the contrary, we think the statute inhibits the payment or disposition of such funds by the court. The Tax Law gives to the state board of tax commissioners supervisory power over the recording officer. Section 266 of the Tax Law also imposes upon the attorney-general the duty of enforcing payment of taxes thereunder in the name of the people of the state, and by section 62 of the Executive Law it is made the duty of the attorney-general to prosecute and defend all actions and proceedings in which the state is interested. Had Mr. Franey, the county clerk, refused to record the mortgage in question, the mortgagor might then have proceeded by mandamus to compel the recording of the same and the question of the validity of the tax claimed by Mr. Franey would be determined in such proceeding, and, in that proceeding, the attorney-general would, if called upon, be required to defend the county clerk, and such has been the practice. ( People ex rel. Title Guarantee Trust Co. v. Grifenhagen, 209 N.Y. 569.) Likewise, the action commenced against Franey, as county clerk, after the payment of the tax, was one in which the state was interested as it affected his action in the collection of funds belonging to the state and the county of Albany. The corporation having paid the tax under protest, and then sought the remedy provided by the statute, namely, a review by the state board of tax commissioners, could if dissatisfied with the determination made by that board resort to the remedy of certiorari to review such determination, and the attorney-general being the legal adviser of the state board, he would be required under section 62, above referred to, to defend such certiorari proceedings.
While the attorney-general under section 65 of the Executive Law may employ additional counsel to assist in the transaction of any legal business in which the state is interested, such law requires that counsel shall be designated by the attorney-general, and payment for his services rendered under such designation is to be made from the appropriation available for such purposes upon audit by the attorney-general and from the treasury of the state.
It is not claimed in this case that the relators were designated by the attorney-general, but it is alleged that the attorney-general had knowledge of the employment of the relators and acquiesced therein.
The attorney-general cannot bind the state save in the manner prescribed by law. ( Matter of Attorney-General v. Continental Life Insurance Co., 88 N.Y. 571.) If we assume for the purposes of this case to the contrary, that the attorney-general was bound by knowledge of the proceeding, and non-action by him was equivalent to a designation of relators as attorneys to represent Franey, this proceeding would not lie against the state board of tax commissioners and attorney-general to recover for such services, as the statute in such event provides that the compensation for services thus rendered should be audited by the attorney-general and paid out of the moneys appropriated for such purpose by the state.
The services rendered by the relators were not "necessary expenses for the purposes of this article" mentioned in section 262 of the Tax Law. Any liability for the services of the relators was the individual liability of the party employing them, and it cannot be assumed that the legislature will not recognize the equity of their claim and provide for the payment of the same in view of the mistaken belief of the county clerk that one of the relators being the county attorney was required to defend such action by reason of such office. The attorney-general was not a proper party to these proceedings, and the effect of this proceeding was indirectly an action against the state in the absence of statutory authority.
The order of the Appellate Division should be reversed and the determination of state board of tax commissioners confirmed, with costs in both courts.
WERNER, HISCOCK, COLLIN, MILLER and CARDOZO, JJ., concur; CHASE, J., dissents.
Order reversed, etc.