
    Peter Wilkins v. The Mayor, etc., of New York et al.
    (New York Common Pleas—Special Term,
    September, 1894.)
    A municipal corporation cannot be made a party to a taxpayer’s action brought under chapter 301, Laws of 1892.
    Such an action is maintainable only upon proof that the officers of the municipal corporation have done, or are about to do, some act the commission of which involves a waste of or injury to the corporate property, funds or estate, or the performance of some illegal official act.
    A plea of ultra rieres is not available against an agreement entered into by a municipal corporation where the other party to such agreement has ' made valuable improvements to the property in question, relying upon such agreement.'
    An agreement with the lessee of a ferry franchise that if it becomes its own successor on a resale of the franchise improvements made by it shall become the property of the city without payment therefor, and that the terms of sale on such resale shall contain a provisionthat if the purchaser and lessee should be a person or persons other than^the first lessee such person or persons should pay to such lessee the value of the improvements, is one within the discretion of the commissioners of the sinking fund, and a sale in pursuance of such terms will not—produce waste of the municipal property.
    Motion to have a preliminary injunction continued pendente lite.
    
    . Action by a resident taxpayer in the city of Eew York, ■pursuant to the provisions of section 1, chapter 301 of the Laws of 1892, for injunctive relief against the contemplated .sale of a,ferry franchise and lease of the wharf property connected with the operation thereof, upon the ground that such sale, if permitted, will involve the performance of an illegal official act on the part of the defendants, and result in a waste of or injury to the property of the municipality.
    
      James A. Dennison, for plaintiff.
    
      William H. Clark, Corporation Counsel (Charles Blandy and E. J. Freedman, of counsel), for defendants.
   Bischoff, J.

On the argument of this motion the plaintiff asked for leave to amend his complaint by adding thereto an allegation to the effect that within the year immediately preceding the commencement of the action he paid a tax upon an assessment exceeding $1,000. Such an amendment is allowed, and thus the objection that the moving papers fail to show that the plaintiff is qualified under the provisions of section 1 of chapter 301 of the Laws of 1892 to maintain this action is removed.

The action is brought to restrain the defendants from doing an act alleged to be in excess of authority and threatening a waste of, or injury to, the property of the defendant municipal corporation, the Mayor, etc. It is instituted pursuant to the provisions of the section of the act above referred to which empower a taxpayer to prosecute and maintain an action against “ all officers, agents, commissioners and other persons acting, or who have acted for and on behalf of any county, town, village or municipal corporation in this state, and each and every one of them, * * * to prevent any illegal act on the part of any such officers, agents, commissioners or other persons, or to prevent waste or injury to, or to restore and make good, any property, funds or estate of such county, town, village or municipal corporation.” The action is not authorized specifically against the county, town, village or municipal corporation, and the other persons ” against whom it may be brought are defined to be those “ acting or who have acted for and on behalf of any county, town, village or municipal corporation.” The language of the statute referred to, therefore, ex proprio vigore, excludes the county, town, village or municipal corporation as among the contemplated defendants. It does not appear that the plaintiff, either as a taxpayer or otherwise, will be specially damnified or affected by the acts sought to have restrained. Independently of statute authority, therefore, he is without a locus stcmdi in this action, so far as it concerns the defendant municipal corporation, the Mayor, etc., and aims to restrain or avoid the latter’s corporate act. Roosevelt v. Draper, 23 N. Y. 318; Starin v. Edson, 112 id. 206. As against the defendant, the Mayor, etc., then, the plaintiff can in no event succeed in this action. Hence, for that reason injunctive relief against the same defendant should be denied.

As against the remaining defendants, a majority of the hoard of commissioners of the sinking fund of the defendant municipal corporation, the action is maintainable only upon proof that they have done, or are about to do some act the commission of which involves a waste of. or injury to the corporate property, funds or estate, or the performance of some illegal official act. Evidence of like circumstances is, therefore, requisite to authorize the restraint of their official acts by interlocutory injunction. No act which is free from fraud or collusion, and which involves only the exercise of administrative discretion on the part of a municipal officer, will or can be restrained. Talcott v. Buffalo, 125 N. Y. 280; Ziegler v. Chapin, 126 id. 342. The defendants are not arraigned upon any accusation which impugns their personal or official integrity. What, then, are the facts on which the plaintiff predicates his claim to injunctive relief against the defendant sinking fund commissioners ?

In August, 1888, the Staten Island Rapid Transit Company was the lessee from the mayor, etc., of the ferry plying between the city of New York, at the foot of Whitehall street, and Staten Island, under a lease of which there then remained about five years unexpired. On the 4th day of August, 1888, the mayor, etc., and the Staten Island Rapid Transit Company entered into an agreement, in writing and under seal, whereby the latter corporation undertook to make extensive and valuable improvements, which were to he of a permanent character, and had been previously authorized by the board of commissioners of the sinking fund, upon the wharf property of the former which was used in connection with the operation of the ferry franchise, and which improvements were designed to promote the convenience of the traveling public. By the same agreement it was, among other things, mutually covenanted that upon the expiration of the then existing lease of the ferry franchise and accompanying wharf property the mayor, etc., would pay, or cause to be paid, to the Staten Island Rapid Transit Company the value of the improvements, which was to be ascertained by arbitration in case of a disagreement respecting it, unless the Staten Island Rapid Transit Company should upon the next sale of the franchise and lease of the wharf property succeed itself as purchaser and lessee, in which event, upon the expiration of the lease pursuant to such sale, as well as in case of the forfeiture of such lease by breach of its conditions, the improvements were to be and become the property of the mayor, etc., without any payment whatever therefor. A further provision of the agreement was to the effect that upon the next sale of the ferry franchise and lease of the accompanying wharf property the mayor, etc., would cause to be inserted among the terms of the sale a provision to the effect that if the purchaser and lessee should be a person or persons other than the Staten Island Rapid Transit Company it would pay, or cause to be paid, to said transit company the value of the improvements to the wharf property which were made by the latter pursuant to the said agreement of August 4, 1888.

In 1893 the lease of the ferry franchise and wharf property existing at the time of the agreement of August 4,1888, expired, and the value of the improvements made by the Staten Island Rapid Transit Company was thereupon fixed by agreement, and without resort to arbitration, at $175,000, which sum was considerably less than cost. A notice of the sale on May 16, 1894, of the ferry franchise to the highest bidder above the upset annual sum of $22,500, with the lease of the accompanying wharf property at the annual rental of $21,500, was thereupon published by the defendants, acting as a majority of the board of commissioners of the sinking fund, and among the terms of sale specified in the notice was one pursuant to which a purchaser and lessee, if other than the Staten Island Rapid Transit Company, was required to pay to the latter corporation the sum of $175,000 for its improvements as a condition of his being let into possession. By the preliminary injunction granted herein the contemplated sale was suspended and the plaintiff now asks to have it permanently enjoined. The particular objections to the sale as proposed by the sinking fund commissioners which the plaintiff urges in support of his claim to injunctive relief are that because the covenant of the mayor, etc., in the agreement of August 4, 1888, to pay for the-improvements to be made by the Staten Island Rapid Transit Company is ultra vires and unenforcible, the imposition of such payments as a condition of the sale is wholly arbitrary and unauthorized; that the threatened exaction of such promise of payment from a purchaser and lessee other than the Staten Island Rapid Transit Company operates as an unjust discrimination in favor of the last-mentioned corporation; and, hence, that the threatened exaction of the promise is destructive of that fair competition among intending purchasers and lessees which would redound to the benefit of the mayor, etc., in securing the greatest obtainable sum above the upset price.

I am unable, after careful consideration of all the facts, and of the brief submitted by the learned counsel for the plaintiff, to accede to the validity of the plaintiff’s contentions. That the board of commissioners of the sinking fund of the defendant municipal corporation is authorized and lawfully charged with the duty to' dispose of its ferry franchises to the highest bidder, and to let to the purchaser the wharf property con-' nected with and necessary to its operation, is 'unquestionable (Starin v. Edson, 112 N. Y. 206), and, assuming that the agreement of August 4, 1888, was at its inception, and while it remained wholly executory, ultra vires, and, therefore, unenforcible against the municipality because in excess of its-lawful authority to incur an indebtedness, it remains that the agreement was fully performed on the part of the Staten Island Rapid Transit Company, such performance in reliance' upon the promise to indemnify the latter corporation having resulted in the defendant municipal corporation’s gam of valuable improvements to its wharf property. Under such circumstances a plea of ultra vires must be regarded as inequitable, and would be unavailable to the defendant municipal corporation as a defense to the Staten Island Rapid Transit Company’s demand for payment of the value of its improvements. Whitney Arms Co. v. Barlow, 63 N. Y. 62 ; Rider Life Raft Co. v. Roach, 97 id. 378; Starin v. Edson, 112 id. 206 ; Mayor, etc., v. Sonneborn, 113 id. 423 ; Mayor, etc., v. Huntington, 114 id. 631; Buffalo v. Balcom, 134 id. 532.

Regarding the defendant municipal corporation’s obligation to indemnify the Staten Island Rapid Transit Company to the extent of the value of its improvements to the former’s wharf property as indisputable if the latter corporation should not succeed itself as purchaser of the franchise and lessee of the wharf property, it seems but the exercise of administrative discretion on the part of the officers of the municipality, upon the sale of the franchise and lease of the property, to secure the municipality against the consequences of its obligation by requiring the purchaser to relieve it therefrom, so long as such a requirement does not operate to destroy fair competition upon the sale and so prevent the obtaining of the highest possible purchase price for the franchise. That such cannot be the result from the requirement that a purchaser and lessee, other than the Staten Island Rapid Transit Company shall pay to the last-mentioned corporation the value of its improvements is manifest from the further provision of the agreement of August 4, 1888, that if the Staten Island Rapid Transit Company shall succeed itself as purchaser of the franchise and lessee of the property, the improvements, upon the expiration of its further lease, shall be and become the property of the mayor, etc., without payment therefor of any sum whatsoever. Instead of being a discrimination in favor of the Staten Island Eapid Transit Company, the requirements tend rather to the creation of an eqpality among all who are likely to bid upon the sale. If the Staten Island Eapid Transit' Company succeeds as purchaser and lessee, it forfeits its claim against the municipality for $175,000, the value of the improvements made. If another than the Staten Island Eapid Transit Company is the purchaser and lessee, he must pay the same amount while he has the like advantage of the use of the improvements during the term of Ms lease. In either event, however, the municipality acquires the improvements, without expense to it.

Motion for continuance of the injunction denied, and preliminary injunction dissolved, with ten dollars costs.  