PULLMAN against THE MAYOR, &c., OF NEW YORK

PULLMAN against THE MAYOR, &c., OF NEW YORK. Supreme Court, First District; Special Term, November, 1866. Muhioipal Corpobatioh.—Aot op 1866, as to Contracts by the City op New Yobk.—Injoitotions aqaihst Oppioebs. Under the provisions of the act of 1866, the corporation of the city of New York are not authorized to make a contract for lighting the city with gas, for a period beyond one year, or an amount larger than the sum appropriated by the act. An injunction may bo issued to restrain a municipal corporation from entering into a contract which is beyond their legal powers. Motion for an injunction. This action was brought in July, 1866, by Christopher Pullman, a member of the Common Council of the city of New York, against the Mayor and the Common Council of said city, and Charles G. Cornell, Street Commissioner, to restrain the de«fendants from proceeding under a resolution of the common council of the city of New York, passed on or about July 10, 1866, in the words following : “ MesoT/ved, That the Street Commissioner be and he is hereby authorized and directed to make a contract for lighting all the sheets, avenues, roads, squares, parks, public buildings, and places of the city of New York, with coal gas, such contract to be founded on sealed bids or proposals, and to be made with the company giving adequate security, to be approved by the comptroller in the manner provided by law, which shall agree to do the same for the lowest price for each lamp or light per annum, or quantity, when it can be measured according to existing regulations, and affording to such company sufficient time to lay their mains and introduce gas as required by the contract. The provisions of the contract last made and executed with the Manhattan Gas Company, as far as practicable, shall be embodied in the contract made in pursuance of this resolution, and the term during which the same is to continue shall be for the same number of years as that contract. Any resolution or ordinance inconsistent with this resolution is hereby repealed.” The injunction was sought on the ground that the term for which such contract would be made would be twenty years (that being the term of the Manhattan Gas Co. contract): that by the act, Laws of 1866, oh. 876, the legislature appropriated the sum of $763,715 to pay for lighting the public lamps of New York city for the year 1866 ; that no other sum was ever appropriated for such lighting for a greater period : that by the 9th and 10th sections of the same act, the common council were prohibited from making a contract for such lighting, for a longer period than one year; that such passing of said resolution, was a violation of law and of their duties by s aid common council, and the making of such contract so directed to be made, would be illegal, and any such contract so made would be void: that the making of a contract for twenty years at a price to be fixed now, would deprive the city of any benefit flowing from competition in the gas business and from a fall of price; that it was designed to make such contract for the price of fifty dollars or more for each public lamp, which would amount to about $1,200,000 per year, which is wasteful and extravagant: that the corporation of New York is a limited corporation, restricted by several charters and acts of the legislature, among them the. act aforesaid : that the common council of said city is, and the members thereof are trustees of the property of such corpora tion, and that the plaintiff is a member of said common council, and is a eo-lrustce with the other members of said common council, and he and they are “ bound in law and equity, to protect and preserve the said property to the people of the said city, who are the beneficiaries of said trust:” that plaintiff protested and voted against said resolution, before it was adopted by the common council, for the above reasons. That the said coutract was not yet made, but the street commissioner was about to advertise for proposals; that the payments under such contract would be made from the taxes levied, and other of such trust property: and plaintiff prayed the equitable intervention of the court for the protection of the trust property from the contemplated waste by the trustees, the common council. A preliminary injunction was granted by Mr. Justice Geobge G. Babnabd, on an affidavit reciting substantially the above matters, and served on a majority of the members of the common council, on the mayor, and on the street commissioner. The motion for a perpetual injunction, made by plaintiff, was submitted upon written points to Justice Geobge G. Babbabd, on August 31, 1866, and the defendants put in an affidavit of Wm. M. Tweed, deputy and acting street commissioner, stating that there are no contracts existing for the lighting of the city with gas, and said corporation is liable for such charges as the gas companies see fit to impose ; and they have to pay a much larger sum, than if a contract were made therefor. Charles Tracy, and Joseph F. Daly, for plaintiff. I. The common council of the city of Hew York and the members thereof are trustees of the property, funds, and effects of said city, so far as the same are, or may be, committed to their care or control (Laws 1864, ch. 406, § 3). 1. This act passed by the legislature of 1864, was simply declaratory of the then existing law. At common law the officers of a municipality were always trustees, and their office was always a public trust. 2. The common law rights and liabilities of trustees belong to, and are inseparable from every act of the common council and the members thereof, when acting in their official capacity. 3. The right of a co-trustee to seek the equitable interference of the courts to prevent a waste of the trust property contemplated by the other trustees, is well established. 4. The plaintiff Pullman, as he alleges in his affidavit, understood and appreciated his duties as such trustee, and protested against the contemplated gas contract in the councils of the trustees before it Was finally resolved on by the majority. 5. So far from there being any question as to the right of Mr. Pullman to bring this suit, it is his duty to seek the aid and instruction of the courts upon the point. 6. The time is come to carry out the principles which govern trusts, in the administrations of the vast municipal trust, in which the city property is held. II. The powers of the common council (trustees) are expressly limited. The first and greatest limit is in the matter of raising money, for they are absolutely powerless to levy taxes, the right being reserved to the State. If it be contended that they can make any contract they please, how can such a proposition be made to agree with the fact that the money to pay liabilities created by contract, may be granted or withheld at pleasure by the State? 1. The act of 1866 expressly declares that no contract shall be made for any purpose not contemplated by the act, nor which should render the city liable for an amount greater than the sum devoted by said act for such purposes. The sum devoted for gas by such act, is seven hundred and sixty-three thousand seven hundred and forty-five dollars. The liability fastened on the city by the contemplated gas contract for twenty years, would be over twenty-five millions of dollars. 3. The powers of the corporation are limited expressly every year, by each successive tax levy, which is but a new annual charter, enlarging or restricting such powers. III. A contract for twenty years for gas would be most injudicious and wasteful. Coal from which gas is made, is, and has been, unprecedently high for many reasons, particularly the scarcity of freighting accommodation, caused by the absorption of vessels during the war, for government purposes. When things become settled, and the freights are reduced by reason of the return of such vessels, coal will fall. Hew charters for gas companies are granted every year, and a lively competition, resulting inevitably in a fall of price, must be expected. Under this twenty year contract, the city can reap no advantage from either of these contingencies. 1. The rules governing the administration of trust property, are in no wise unlike those governing the proper- administration of any man’s private affairs, so far as economy is concerned. What is prudent in one case, is prudent in both. And trustees are required to use the same prudence and forethought as they would use about their individual affairs. IV. The plaintiff makes a prima facie case for the relief sought,by the action: and if the preliminary injunction were now dissolved, the defendants would be at liberty to make such a contract as would wholly defeat the power of the court to render judgment for such relief. In such a case, no mere denial of the equity on a motion to dissolve the injunction is enough: and although the proofs at this motion might be such as to cause the court to doubt the plaintiff’s right to recover, yet according to the established practice the injunction should be retained till the trial of the cause, in order that equity be not defeated. Voorhies’ Code of 1864, p. 411; Minor v. Terry, 6 How. Pr., 211; Crocker v. Baker, 3 Abb. Pr., 182. Richard O’Gorman, for defendants. This action is brought by plaintiff as a member of the common council and co-trustee with the defendants in order to obtain a judgment declaring a resolution of the common council (set forth in the complaint) to be illegal and void, and restraining the defendants from making the contracts, and advertising the proposals, specified in the resolution, &c. The plaintiff avers that the resolution which he seeks to avoid, is in form a valid ordinance. His reasons for asking the court to declare it void are : First. That it is in law void and invalid, and that its invalidity might involve the corporation in expensive legislation. Second. That according to the information and belief of plaintiff, the contract therein referred to would be injudicious, wasteful and most extravagant, and that if said contract were made it would be made at an extravagant price for twenty years, and would absorb a vast annual sum of money, and enrich monopolists. To deal with the second class of reasons. First. It will be seen that there is no allegation of fraud, improper motive, undue influence. There is no fact alleged. The plaintiff sets forth the grounds of his opinion, and defends, his vote as one of the minority who opposed the passage of the resolution. But beyond that opinion, which is no doubt satisfactory to himself, the plaintiff affords to the court no light to enable it to judge why he supposes the contract would be injudicious, or wasteful, or most extravagant, or tending to enrich monopolists. He gives no ground whatever for his opinion that the contract would be made at the rate of fifty dollars or more per year for each lamp, or that such a price is exorbitant, or that the price of gas is now at its height. All these things may be so, but the moving papers set forth no fact from which the court can be legitimately led to such a conclusion. As to the fact that by the resolution the operation of the contract to be executed was to continue for twenty years, no suspicion of delin quency on the part of the majority voting for the resolution can be deduced therefrom. The terms of the former contracts were twenty or fifty years. That a term should be agreed on sufficiently long to warrant capitalists in investing the amount necessary for the construction of mains, pipes, &c., is clear, and the mayor in his veto message recognizes the fact. Whether the term should be twenty or only ten years, is a question which was properly before the common council, who were the proper authorities to decide the question. They are the legislative organ of the city. The mayor is the executive organ. Surely it is not a question for this court, whether the majority of the common council were right or wrong in the decision they arrived at on that point. In the absence of all allegation or suspicion of fraud, it must be assumed that the common council acted deliberately or for good cause, and without some reason it cannot be assumed that the minority who voted against the resolution were right, and the majority who voted for it were wrong. That such a contract as the resolution directs should be made, is manifest. It is absurd that this city should continue to depend for its light by night on the good will of certain gas companies, who are not bound to light a single lamp, and may if they please leave this city in darkness when they will. This resolution then, is, for all that appears on the moving papers, not only, as is admitted, valid in form, but is clearly necessary and proper, in all respects but in this, that it may indicate for the contract a term unnecessarily long: but this is a matter of opinion, in which the common council may be in the right. The question of fraud does not arise. On what ground then is the aid of this court of equity invoked ? Merely this, that the resolution is by reason of certain legislation of the last session, invalid,' void, and conveying no right. It does not seem necessary to call on a court to adjudge that to be void which is void ; and to meet this apparent absurdity, the plaintiff avers that the resolution, although void, may yet lead to litigation if acted on. The course adopted by the plaintiff to prevent litigation is peculiar. In order to prevent a possible litigation in the future, he himself inaugurates a certain litigation in the present. This complaint is in the shape of a bill quid timet, and never was a move delicate prescience of remote possibility made the basis of an action. How can the plaintiff know, or surmise, or suspect, that any gas company in this city will be less skilled in the effect of this law of 1866 than himself. If the resolution is void, a contract made in obedience to it is void too. Are not gas companies bound to know this, and likely to know it, as well as he ? And if they are ignorant on the subject, and stumble into a contract in which there is no legal validity, is it not likely that they may find it out when they come to demand payment from the city for the gas furnished in accordance with it ? There is no cause of action in this case, even if the plaintiff’s view of the law is correct If the resolution is void in law, no rights can be conveyed by virtue of it, and it will be time enough to seek the aid of the courts for the protection of the city when it is wrongfully assailed. The plaintiff has no right to the judgment he asks. If all that he alleges or insinuates, or suspects, be true, yet he has no standing in court, and no right to ask the interposition of a court of equity. But the plaintiff’s position as to the effect of the law of 1866 is incorrect. His views of that law amount to this : that inasmuch as the city tax bill provides seven hundred sixty-three thousand seven hundred and forty-five dollars, for lighting the lamps of the city for the year 1866, the corporation can make no contract for the lighting the city for 1867, or any subsequent year, because such contract would involve the expenditure of a greater sum of money. This proposition, if correct, would reduce the corporation to a condition of utter helplessness. The city cannot live thus, from hand to mouth. There are many transactions necessary for its existence, which cannot be accomplished unless by contracts extending over years, and involving the expenditure of larger sums of money than the appropriation for any one year. If the corporation could not incur a responsibility continuing beyond one year, no contractor would run the risk of dealing with them. But the proposition is absurd. The tax bill of 1866 provides for the expenditure of that year. The “ objects and purposes ” for which the sums therein mentioned were appropriated, were the obtaining supplies for that year. During that year no more than seven hundred sixty-three thousand seven hundred and forty-five dollars can be spent on gas ; but surely no reference was meant to 1867, or any subsequent year. As far as these years are concerned, the corporation will state to the legislature the amount they need, as they have heretofore done, and the legislature will direct the imposition of a tax, as they have heretofore done, to meet the demand. To claim that by this section of the tax levy of 1866, the contracting power of this corporation is taken away, is a bold proposition. The contracting power of the corporation is as large as it possessed under the Dongan and Montgomery charters, subject to the restrictions, as to the mode of its exercise, set forth in the city charter of 1857. It is not to be supposed that the legislature ever intended to deprive the corporation of its j>ower, thus clearly and solemnly guaranteed to it, by an act less clear and solemn. It is incredible that it intended to effect this purpose of permanent destruction of an ancient franchise, by a clause slipped into an act professing merely to empower the raising money, to meet the exigencies of one year. The ordinary rules of construction meet such a case: “ general words of a statute are to be restrained in their application to the subject matter in reference to which they are employed (People v. Flagg, 17 N. Y., 587; Farmers’ Loan Company v. Mayor, 4 Bosw., 89; Breasted v. Farmers’ Loan Company, 8 N. Y. [4 Seld.], 299). The cause of such a rule is manifest. It is possible that the legislature, in dealing with some special subject, and being attentive only to that, may in haste, or carelessness, or inadvertence, use language which may admit of a more general application, and thus lead to consequences they never intended. If, on the other hand, they mean to express their will on some general subject, they can easily do so clearly and plainly, so that no doubt can exist. In the construction of statutes, the object is to ascertain the intent of the legislature, and although the latter may lead to certain consequences, if the intent seems • the other way, the strietletter of the law is made to yield to the "intent (James v. Patton, 6 N. Y. [2 Seld.], 9). The position of this case then is this : I. The plaintiff makes no allegation of any fraud or intent to commit fraud,on the part of any of the defendants, or any one. else. The fear he expresses that some damage may occur to the city from the course he deprecates is a groundless fear, depending only on the opinion of the plaintiff, and having not a single fact alleged to support it. For all that he states, the act he desires to prevent is an act highly advisable, and necessary to the city, and his interference a positive injury to the city. II. If, as plaintiff claims, the resolution be void, illegal, invalid, no valid contract can be made thereunder—no legal rights can accrue—no damage can arise ; no litigation need be feared—and if it comes, it cannot be more difficult or expensive than that which plaintiff now forces on the city. III. The act which the courtis called on to prevent is a legal act—a proper legitimate exercise of the contracting power of this city, secured to it by ancient charters, necessary for its existence and utility. The judgment claimed in the complaint would be a grievous wrong. The temporary injunction obtained does injury to the city, and offends its dignity. It may be well to deny to' no man the opportunity of proving against public officials any charge of delinquency, and to stay for a time any official act, about which any suspicion of wrong may lurk; but the interposition of a court of equity should never be asked, unless on facts clearly and distinctly sworn to, from which the conscience of the court may be satisfied that good grounds exist for the application. In this case no such facts have been alleged. The position assumed by the plaintiff as co-trustee with the defendants does not strengthen his case. Against the other trustees, whose, motives he does not seek to impugn, he stands one of a small minority. Against them he alleges neither fraud nor incompetency, and merely claims that his opinion as to the fitness of the act he impeaches differs from theirs. IY. In no capacity has the plaintiff shown any right to the injunction. 1. The step which it prevents is legal. 2. If not legal, no injury can happen from it, which cannot be prevented by the ordinary course of law. By granting the injunction serious damage may be inflicted on the city. By withholding it no damage may be inflicted, because if the resolution is void, the contract founded on it is void, and a suit on the part of the gas company who has acted under such contract must fail. Charles Tracy, and Joseph F. Daly, in reply. The argument for the defendants is an attempt to nullify the laws by which the people of this city are protected against the wastefulness of the common council. It claims that that body has perfect contracting power, notwithstanding the limit placed by law on its expenditures; and, therefore, that when this common .council is limited to a certain amount for gas for 1866, it may incur a debt of double that sum for any subsequent year. There would have been no clearer fallacy if the argument had claimed that this common council could legally incur a debt for this year’s gas beyond the sum it is authorized to pay for that purpose. The convenience, or inconvenience, of being under limit of expenditure for gas, and not being free to make a long time contract, was a subject for the legislature; and that body determined that the public convenience and economy would best be .served by giving the common council a fixed sum to spend on gas. and depriving them of all power beyond that sum. This legislation must be obeyed; and it both means and says, that this common council can go into gas contracting to the sum limited and no farther, whether the gas is for this year or any other and longer period. There is not placed at disposal, an annual sum for a series of years, but a single gross sum of money for gas this year. Another statute may take care of future years: this confines the corporation to a single year. At present the city has gas without a long contract. The statute assumes that it can have gas in the same way throngh the current year. If the gas producers will not supply it, this year, the inconvenience will be one which must be borne, and the common council have no veto power to annul the statute. But no such necessity exists. The city can get its gas this year according to the statutory plan. No company will fail to supply on the terms of the act. The legislature were capable of seeing this fact, and did see it; and there is no kind of necessity for a usurpation of power by the common council, nor would any emergency justify such an usurpation. The argument dwells on the alleged absence of charge of fraud. There would be something specious in that point, if the whole complaint was not, as it is, a continuous exhibition of a gigantic fraud, which is corruptly attempted. The word fraud does not make a case; nor does the lack of it hurt a case. The transaction, as detailed, and not controverted, is one grand fraud. Every feature of a fraud is present; namely, the causing of great loss and prejudice to the city, and the perpetration of the act under color and pretence of authority, but in breach of the' spirit, intent, and letter of the law. If such a transaction as this could slip through the court, there would be nothing to hinder this common council from making a gas contract for a century, and binding the estates and earnings of several generations to its fulfilment. The other point of the defendants’ argument, namely, that if the contract would be illegal and void there would be no harm in having it made, is novel. Here are trustees about to make a wasteful and ruinous contract binding the trust fund, and when the beneficiary claims to interpose the objection of illegality, they answer—well, if it is a void contract, you can set it aside afterwards. Here are public agents, about making a contract in the name of their principal, which is in excess of their powers, and the principal is not to be heard when asking for preventive justice because he can set aside the contract after it is made. The courts of equity never listen to such answers. Trustees and public agents are not allowed to go beyond their fixed powers, and are not allowed to impose colorable burdens on the fund. These representative persons are never allowed to go beyond their charter. Equity does not stop to inquire how badly the fund may be hurt, nor how easily the hurt may be cured, but it interposes promptly, and prevents the wrongful act. Equity does not recognize any pretensions of agents in favor of a breach of duty as harmless; but hinders every such breach without stopping to weigh or measure the precise amount of mischief which may follow from the lawlessness of the agents. The argument of the defendants furnishes a conclusive reason why we should have an injunction, by showing that a color of legality would tinge the wrongful contract, and it could not be set aside without litigation and effort. That a trustee should be allowed to involve the fund in an alternative of submitting to a wasteful and illegal contract, or of seeking redress and protection by defences to suits for payment, and by actions to avoid a formal contract, is not to be endured. The common council exists for the benefit of the city, not the city for the benefit of the common council. These public servants are to be kept to their place. They are not unlimited in authority. They are to be restrained by the courts, whenever they attempt to transgress. The statute has opened the door of the courts to citizens, and to courageous members of the common council, in order that just such wrongs as the present, should be dealt with, not only by redress after the wrong is perpetrated, but also by that preventive justice, which is peculiar to equity courts, as the guardians and conservators of all trusts, public and private. The wastefulness and extravagance of contracting, in the present state of prices, for a twenty years’ supply of gas, is so obvious that no argument to demonstrate it can be required. The chances' that the city may require gas at all, for a whole twenty years, depend on the progress of the arts. A period half as long, has given the world coal oil, and petroleum, and ocean telegraphs; and another ten years may give new methods of lighting the streets so much better than the gas posts, as to displace them altogether, and leave the contract a useless burden on the treasury. The last ha, year has brought to light, im-' mense beds of bituminous coal on the shores of the lower bay, within twenty-five miles of the city; which beds, when put in working order, should perceptibly reduce the cost of gas. The common council cannot be blind to these considerations; and their deliberate attempt to subject the city to a grievous burden, in the face of the Mayor’s veto message, is dishonest, and has its motive in corruption. The protection of the tax payers cannot be had, by trying to reason with such men, but only by invoking the power of the court by injunction, to prevent the consummation of the wrong. [MAJORITY — George G. Barnard, J.] George G. Barnard, J. The act of 1866 (2 Laws of 1866, p. 2056) authorizes the supervisors of the county of Sew York to raise by taxation certain sums, for certain specified objects, and among others the sum of seven hundred sixty-three thou- ; sand, seven hundred and forty-five dollars, for lamps and gas. It then provides as follows:—“ The said several sums shall be applied only to the objects, and purposes, for which the same are hereby appropriated, and neither said corporation, nor any member or officer thereof, nor any department or head of department, or other official, shall incur any liability for any of the objects and purposes specified to an amount beyond the sums so appropriated and again:—“ The mayor, alderman, and commonalty of the city of New York, shall not be liable upon any contract made, or expenditure authorized, or liability incurred by any board, department, or officer, of said corporation, for any object or purpose which is not expressly authorized by this act, nor for any contract made, or expenditure authorized, or liability incurred by any board, department, or officer of said corporation, for any object or purpose named in this act, beyond the amount appropriated to such specific object or purpose.” I do not understand it to be claimed that these provisions of the act are unconstitutional. There are then but two questions, viz.: 1. Does a proper construction of the act prohibit defendants from making the contract in question. 2. If it does, are the consequences of making such contract sufficient to call for a preventive remedy. That the first question requires an affirmative answer, seems to me almost too clear to admit of argument. If the appropriation is made for the sole object mñ. purpose ofprocuring the lighting of streets for one year only, then as the proposed contract in question extends beyond one year, and contemplates binding the corporation to take gas for more than one year, and imposing on it a liability to pay for the use of such gas for those other years, it is prohibited under the clause declaring that the corporation shall not be liable upon any contract made, or expenditure “ authorized, or liability incurred * * * * for any object “ or purpose not expressly authorized by this actP If the appropriation is to be regarded as not limited to procuring gas for one year only, but is intended to authorize the procuring of so much gas as can be procured for that amount, without any limit as to the term within which it shall be supplied, then, as this proposed contract contemplates rendering the corporation liable for a much larger sum than that appropriated, it is prohibited under the clause declaring that the corporation “ shall not be liable for any contract made, or expenditure authorized, or liability incurred * * * .* for any object or purpose named in this act, beyond the amount appropriated to such specific object or purpose.” It may be that the attention of the legislature was not called to .the consideration of the question, whether it might not be necessary to make a contract for the supply of gas extending over a term of years, and that if their attention had been called to the consideration of such question, provision would have been made to meet the case. But if no provision was made to meet the case because attention Was not called to the subject, it becomes simply a casus omissus, which the court is not authorized to supply. On the other hand, it may be that the attention of the legislature was called to the subject, and that they determined there was no necessity for a contract for longer than a year. Whatever consequences ensue from this want of power to make a contract for a term of years, must be ascribed to the legislature: the possibility of such consequences does not authorize either the common council to transcend their powers, or this court to sanction them in so doing. With reference to the second question, viz.:—are the consequences to flow from the making of this unlawful contract sufficient to call for a preventive remedy,—it is urged that if the contracts when executed will be void, no damage can arise from their execution, and consequently an injunction should not issue. ' This contract, if made, confers rights of property, and is to last for twenty years, and the fact of its having been granted might present embarrassment in the way of its being subsequently set aside. In the People y. Mayor (32 Barb., 102) it was held that under such circumstances the preventive remedy by way of injunction was not only lawful, but was the best and safest remedy which could be adopted. Here the parties defendants are trustees; their co-trustee seeks to enjoin them against committing a breach of their trust and they come in and say, although the court shall decide that the act which we are about to do would be a breach of our trust, yet the court should permit us to go on and do lt. Under such circumstances even the possibility of inconvenience arising from such breach will be sufficient to call on the court to prevent its commission. I have not considered the question whether it is more expedient to have gas furnished from year to year, than upon a contract for a term of years, nor whether the terms of the proposed contract are for the best interests of the city; as in the view which I have taken of this case these matters are not material to its decision. The iniunction must be continued.