Lowber vs. The Mayor &c. of the City of New York

Lowber vs. The Mayor &c. of the City of New York. The supreme court has the power to exercise such an efficient control over every proceeding in an action pending in it, as effectually to protect every person interested in the result, from injustice and fraud; and it will not allow itself to be made the instrument of wrong. As a general rule, none but the parties to an action will be allowed to meddle with M'mimagement, or will be recognized as having any standing in court in relation to it. But the comptroller of the city of New York, being a tax-payer and an officer of the corporation, having charge of its financial concerns, may move to have a judgment alleged to have been recovered against the city through collusion with, and by consent of, the city officials, set aside and vacated. Peabody, J., dissented. THIS was an appeal, by the plaintiff, from an order made at á special term, vacating a judgment for about $200,000, entered against the Mayor &c. of the city of New York, in favor of the plaintiff. Upon an affidavit stating fraud and collusion in the entering up of the judgment, upon a quasi ■confession, signed by the defendant’s attorney, A. 0. Flagg, the comptroller of the city, applied to one of the judges of the court and obtained an order to stay all further proceedings, and to compel the parties to show cause why the judgment so entered should not he set aside and the defendants he allowed to make a defense to the action. On the day appointed, cause was shown before Justice Eoosevelt, at a special term ; who, after hearing arguments of counsel, granted the order appealed from. John M. Barbour, D. Dudley Field, and Wm. Curtis Noyes, for the appellant James B. Whiting, for the respondents. [MAJORITY — Clerks, J.] Clerks, J. I presume that it will not he disputed, even hy the counsel for the plaintiff, that it belongs to the essential, inherent powers of this court to exercise such an efficient control over every proceeding in an action pending in it, as effectually to protect every person actually interested in the result, from injustice and fraud; and that it will not allow itself to he made the instrument of wrong, no less on account of its detestation of every thing conducive to wrong, than on account of that regard which it is proper it should entertain for it own character and dignity. And it will not only rectify proceedings of this nature, when brought to its notice by the intervention of any person having an interest in the result, whether formally a party to the action or not, hut it is the solemn duty of every judge upon the bench to employ a vigilant eye, without waiting for the suggestions of others, for the purpose of avoiding and detecting the perpetration of wrong which may be attempted by the instrumentality of legal forms. And this vigilance should be exercised through every stage of the action, from the issuing of the summons to the levying of the execution. This superintendence and this exercise of power should indeed he regulated hy a sound discretion and with the utmost caution. Bules, and orders, and decisions of the court, deliberately made, should not lightly be disturbed. As a general rule, none hut the parties to an action will be allowed to meddle with its management, or will be recognized as having any standing in court in relation to it. When the litigants consist of adults not under restraint, and not insane, acting in their own right, the presumption that every man is the proper director of his own interests, and the serious inconvenience that would ensue from allowing the unsolicited interference of persons not interested, render it expedient that the court shall lend no attention to any but the parties on the record. But even this rule must yield to the circumstances of the case. Even adult parties, apparently acting in their own right, and presenting themselves apparently in the adverse position of plaintiffs and defendants, may, by seeming to adjust only their mutual rights, compromise very seriously, and perhaps irrecoverably, the rights of others. The familiar instance in the argument will at once present itself. Where one party confesses a judgment without consideration, or for too large an amount, or where it is not made in strict compliance with the directions of the code, the judgment will be set aside on the application of a party not named on the record, but who is a creditor of the defendant. Now, on what principle is this interference allowed ? Is it merely because the moving party has also obtained a judgment against the defendant? Even if this were the precise reason, it would be a very palpable instance of recognizing the right of a person not a party to the record, to claim the interposition of the court in regard to it; but the reason of allowing this has no such restrioted limits. In the particular instance referred to, indeed, the court will only hearken to a judgment creditor; because it is expedient to have his claim judicially established, before it will be judicially recognized. But the broad reason for the interference of the court is, that the plaintiff and defendant, in the fraudulent confession of judgment, have by their combined action employed its forms to accomplish an act which affects the interests of persons having an interest in the disposition of the property affected by the judgment, and whenever this is done, the court has the essential, inherent power to interfere; although, as a general rule, as I have said, in order to avoid confusion and contention, it will not do so where the parties to the record are adults; acting in their own rights, and are free from restraint. On the general principle which I have stated, the court would never allow a trustee to concede away any portion of the trust estate without ample consideration; and if he were a defendant in an action, and was about compromising the rights of his cestui que trust by a confession, by letting a judgment go by default, or by carelessness, or even by a palpably mistaken view of his duty, the court; at the instance of the person having the beneficial interest in the controversy, would interpose. The power of a trustee over the estate vested in him exists only for the benefit of the cestui que trust; and in equity, trusts are so regarded that no act of a trustee will be recognized as valid, which is calculated to prejudice the cestui que trust, although a purchaser without notice will be protected. Courts are equally jealous in watching all the acts of a trustee by which the interests of the trust may be compromised. The instances quoted by the plaintiff’s counsel, . in which the court refused to recognize the acts of unauthorized persons to bind parties to a suit, have no application to this case. If the comptroller attempted, during the progress of the suit, to consent, of his own accord, to a reference or an arbitration without any authority from the defendants, of course the consent would not be binding on them, and would be entirely void; but by this application he does no such thing. As a tax-payer, and as an officer of the corporation, particularly identified with the administration of its financial concerns, he presents himself before this court, and informs us that the defendants, who are, in fact, the mere trustees of the property and the other interests of the people of this municipality, the corporators of whom it is composed are, by their conduct in relation to the plaintiff’s demand, wasting thg property of their cestui que trust. It is not necessary to suppose that this is a case of bribery or corruption on the part of the individual members of the common council, or of any other officers of the city government, or that the council of the corporation has intentionally betrayed the city. It requires much stronger proof than I have discovered in the papers before me, to induce me to believe that he for a moment contemplated any injury to his constituents. That officer, and even the members of the common council, may be sincerely of opinion that to litigate this claim would involve the city in considerable expense, without any reasonable hope of ultimate success; and, indeed, that seems to be the conviction of many others who cannot be suspected of any other Unworthy motive to influence their opinion. But it is enough for us, on this appeal, to be convinced that the court below had the power to interfere, and that the evidence of the facts on which it might rightfully interfere is such, that if they had been presented to a jury, and the jury had found the same way, their verdict would be sustained. The title of the plaintiff had been condemned by one court as to part of the property to be sold, and is now subject to doubts which can be removed only by a judicial investigation. On the evidence a jury might have found, as the court below has, that the value of the property was excessively overrated. The objections that by the terms of the resolution of the corporation, the contract was not then completed, but was to be made in form by the comptroller, also deserves consideration. These matters seem to have been overlooked at the trial. As they should be re-examined, we express no formal opinion upon them. The form of the judgment is also incorrect. The payment by the defendants should have been required on the plaintiffs executing and delivering to the defendants, (or filing in court for them, if they refuse to receive it,) a warranty deed of the premises, free from all incumbrances, except as excepted in the contract, and with a good title in all other respects. Justice to all parties would be best promoted by modifying the order below, and allowing the answer and subsequent proceedings to be set aside, provided the comptroller, or any other tax-payer who may be substituted in his place, shall, within thirty days after receiving a written notice of the entry of this modified order, file an original complaint as a tax-payer, corporator or otherwise, on behalf of himself and others, setting forth such matters, and making such parties, and praying such relief in the premises, as he may be advised. In the meantime let the plaintiff’s proceedings in this action be stayed; and if another suit shall be commenced, as above provided for, let the plaintiff’s proceedings be further stayed until the final decree in the other suit. Let the plaintiff in the new suit give security in the amount of |5000. Mitchell, P. J., concurred. [DISSENT — Peabody, J., (dissenting.)] Peabody, J., (dissenting.) If there is any evidence of fraud or collusion in this case, there certainly is none connecting the plaintiff with it. The circumstances of suspicion attach only to the acts of others, to which he was not necessarily, and is not shown to have been, a party. I think, however, that there is no satisfactory evidence of fraud or collusion on the part of any one, not even of those with whom he dealt; and in this, as I understand the opinion of my brethren, I concur with them. I am unable, however, to proceed with them to the conclusion at which they have arrived. The question of fraud and collusion being disposed of, the only one remaining is that of error in the judgment; and whether there be or be not error, is a question which cannot be tried in this manner. It can properly be tried on an appeal from the judgment, and only in that manner. But if the relief asked could properly be had on motion, it could be had only on the application of a party to the record, against whom the erroneous judgment was rendered. If in a suit by A. against B., injustice be done the latter by judgment therein, he alone can have relief against it. Whether the remedy he hy appeal or hy motion, the party injured alone is entitled to it; and an application on hehalf of a third person, not a party to the proceedings, cannot properly be entertained. Mr. Flagg, in contemplation of law, is a stranger to this suit. His official relation to the city gives him no right here, and he has no standing in court to make this motion. The city might make it if it desired to, and would he entitled to be respectfully heard on the merits ; and if it produced only the same evidence which is now before us on the motion of Mr. Flagg, it would be entitled only to have it respectfully denied. It has been said that a corporator and tax-payer can maintain an action in such a case on behalf of himself and others, corporators and tax-payers, similarly related to the subject of the litigation; and the doctrine has the sanction of several cases in this court: all of them, however, in this district, and all of them relating to the corporation of the city of Hew York. Whether this doctrine will ever receive the sanction of a court beyond the boundaries of this judicial district, and whether in this district it will ever be sustained as to any corporation except that of the city of Hew York, (most worthy and most wronged,) may very well be doubted. The weight of judicial authority, even here, is not decidedly in its favor, as is shown by the very masterly review of the cases by Mr. O'Conor, in the case of Wetmore v. Story, (22 Barb. 447.) The most that can be said in favor of it, in the light that he has thrown on the subject, is that the proposition finds some support, but is left in doubt on authority, even here. But that doctrine, if sustained, is far from affording sanction to a proceeding like this. That a person not a party to a judgment, but only remotely, and to a very trifling extent, interested in its consequences, may, in the absence of fraud or collusion, without the assent of either party to it, and in spite of their combined opposition, in a suit even in his own name, set it aside, not only as to himself, but as to thousands of others similarly situated, without the co-operation, or even consent, of any one of them, is a doctrine which, if it he law, is certainly not to he extended on any slight provocation. But when such a person asks, without the formality or responsibility of a suit in his own name even, to thrust himself between the plaintiff and defendant in the original suit, and on a motion against both, and in spite of their strenuous resistance, to have a judgment set aside for his own convenience or pleasure, a new position is taken; a novel attitude surely is assumed, and one hitherto unknown to the course and practice of the law. There is no claim of any precedent for this proceeding. But it may be said that the novelty of the case is but a feeble argument against it; and such a remark, I fear, is not inconsistent with the spirit of the times. My own opinion, however, will not affect the result in this case; and with a consciousness of this, and in the absence of any urgent reason to wander therefrom, I must be excused the indulgence of a desire, (eccentric though it may be,) to keep within a path hitherto not entirely untrodden, but which has at least been explored; and within sight of some of the recognized landmarks of the law. [New York General Term, December 7, 1857. I think that the order of the court below should be reversed and the motion denied, and that the judgment originally entered should be allowed to stand—at least until some party to it shall arise to question it. Order modified. Mitchell, OlerJce and Pear-body, Justices.]