
    Byron J. Strough, Supervisor, App’lt and Resp’t, v. The Board of Supervisors of Jefferson County, Resp’t and App’lt.
    
    
      (Court of Appeals,
    
    
      Filed January 28, 1890.)
    
    1. Town bonds—Laws 1871, chap. 283—Action fob. failube to invest TAXES IN SINKING FUND—PASTIES.
    A failure of the county treasurer to invest railroad taxes in a sinking fund for the payment of bonds issued by a town in aid of such railroad, is an injury to a property right of such town, and an action therefor is maintainable by its supervisor.
    3. Same—Estoppel.
    The town is not estopped by the neglect of its supervisor for several years to assert the claim, the gounds of which were equally known to all. the members of the board.
    
      3. ' Same.
    In such action the amount of railroad taxes applied in payment of state ] taxes, as well as that used for county taxes, should he charged against the' county.  ■
    
      4. Same—Limitation—Code Crv, Pito., § 382.
    A cause of action for such misappropriation of moneys arose on the 1st day of June in each year, and a recovery is limited to the taxes so appro- ■ printed within six years. The action is governed by § 382 of the Code.
    Cross appeals from judgment of the supreme court, general • term, fourth department, in favor of. plaintiff, on controversy sub-' mitted without action under § 1279 of the Code.
    , Watson M. Rogers, for deft; Wayland F. Ford, for pl’ff.
    
      
       Affirming 23 N. Y. State Rep., 940.
    
   Andrews, J.

The county treasurer of Jefferson county, from 1873 to 1887, omitted to perform the duty imposed upon him by the fourth section of chap. 907 of the Laws'of 1869, as amended by chap, 283 of the Laws of 1871, to apply the taxes assessed, during those years on the property of the Clayton & Theresa: Railroad, within the town of Orleans in said county, and collected ■. and paid over to him, either to the purchase of the bonds of said. town, issued in aid of the construction of said railroad, or in the. purchase of other bonds, to be held as a sinking fund for their redemption. The aggregate taxes collected from the railroad in said town during those years for state and county purposes was $4,845.31, and was paid out by the treasurer for general county purposes, including state taxes. It is stated as one of the agreed • facts that at the time the moneys were so applied, neither the. county treasurer nor any officer of the county was cognizant of ■ the duty imposed by the act of 1871, and that there was no intentional misapplication of the taxes in question.

The warrants issued by the board of supervisors, under which. they were collected, were in the usual form, and required the collector to pay over certain specified sums to various town officers, and a certain sum to the county treasurer on account of the state tax levied on the town of Orleans, and also to pay to the treasurer the remainder of the moneys collected, not otherwise particularly appropriated. There was no specific direction in the warrants in respect to the disposition to be made of the taxes collected from the railroad, and when paid to the treasurer they were included in the aggregate sum paid to him, and there was no separate application of those moneys by the county treasurer to state or county purposes, but the same were applied by him with, and as a part of the other moneys raised in the town for state and .county taxes. • ■ :

In the year 1872, bonds of the town of Orleans, to the amount of $80,000, were issued in aid of the construction of the Clayton & Theresa Railroad. Litigation arose as to the validity of the proceedings to bond the town, and no taxes were raised in the town to pay the interest or principal of the bonds until the year 1879,. which was after the decision of the United States supreme court, affirming the.validityof the bonds, in the case of Orleans v. Platt, 99 U. S., 676, made in 1878. ,.The attention of the board of supervisors and of the county treasurer was first called to the provisions of § 4 of the act of 1871 in the fall of 1887, when a demand was made upon the board in behalf of the town for repayment into the treasury of the county of the taxes collected in said town from the railroad, and used in payment of state and county taxes. Thereafter, the plaintiff, as supervisor of the town of Orleans, and the defendant, The Board of Supervisors of Jefferson County, made an agreed case, for the submission of the controversy between the town and the county to the determination of the court, under § 1279 of the Code. The general term sustained the claim of the town to have the moneys collected from the railroad and used for the payment of state and county taxes refunded by the defendant, but the court limited the recovery to moneys so misapplied within the period of six years prior to May 1, 1883, the date of the submission, and awarded judgment against the defendant for the amount of the taxes, diverted during these years, with interest, and directed that the sum recovered should be paid to the county treasurer, to' be applied as required by the act of 1871. Both parties have appealed,' the plaintiff from the part of the judgment limiting the recovery to six years, and the defendant from the whole judgment.

The constitutionality of the act of 1871 was considered by the court In re Clarke v. Sheldon, 106 N. Y., 104; 8 N. Y. State Rep., 537. That was a proceeding by petition under the act of 1869, against a county treasurer, to compel him to appropriate taxes collected in the town of Sodus, Wayne county, from railroads in that town, as required by the act, and it was decided that the relief should have been granted.

It is insisted, however, that the plaintiff, as supervisor, cannot' maintain the action. There can now be no controversy that the legal rights of the town of Orleans were disregarded by the application of the sums collected in that town for taxes, from the Clayton & Theresa Railroad, to the payment of state and county taxes. This was an injury to a property right of the town, and' may, we think, be redressed, if actionable at all, at the suit of the' supervisor of the town, as the representative of its interests. The-bonds issued were the obligations of the town. They are a charge' upon the taxable property within the town, and there is no other1 resource for their payment. The act of 1869, as amended in 1871, relieved towns which should issue bonds in aid of the construction of railroads therein to some extent from the burden of the obligation, by appropriating the taxes on the railroad property, therein as a special fund, for the payment pro tanto of the bonds issued. It is true that the taxes are collected from individual and private property, and not out of the corporate property of the town, but the statute, in substance, gives the town, in its corporate capacity, the beneficial ownership of the fund when it directs.' its application to discharge a corporate obligation. The case of Bridges v. The Board of Supervisors of Sullivan County, 92 N. Y., 570, sustained an action brought by the plaintiff as supervisor of one of the towns of that county, to recover from the county money raised in the town by taxation on the property of the Hew York & Oswego Midland Railroad, and applied by the board of supervisors to county purposes, contrary to the provisions of chap. 296 of the Laws of 1874.

By that act, all moneys to be collected (by taxation) upon the real or upon the real or personal property of the said corporation in any towns or municipalities by which bonds have been issued in aid of the construction of (said railroad), are hereby appropriated to said towns or municipalities respectively.” The act required the collector to pay over the railroad tax when collected to the railroad commissioners, who were directed to apply the same to the payment of the interest and principal of the bonds. This is a decisive authority in favor of the right 'of the present plaintiff to maintain this action, as one brought to vindicate and enforce a property right of the town he represents. Other authorities support the same conclusion. Hathaway v. Town of Cincinnatus, 62 N. Y., 434, and cases cited.

The further contention is made that assuming the misapplication of the money by the defendant, the town of Orleans has lost its remedy by acquiescence and loches. It appears that for a period of fourteen years the town of Orleans was represented by its supervisor in the board of supervisors, who was apprised from year to year of the disposition made by the county treasurer of the railroad taxes in the town, that is, that they formed a part of the aggregate fund out of which the state and county charges were paid, and that the supervisor of Orleans made no objection until the year 1887. It is insisted that the town of Orleans, having during this period had the benefit of the taxes collected from the railroad, by their application to county purposes, thus diminishing its taxation pro tanto for those purposes, it is estopped from now insisting that the county should repay the money, although the application was unauthorized.

The answer is obvious and complete. If the county is compelled to restore the money wrongfully diverted, it will simply reinstate the county and the several towns to their prior position. The county has had the benefit of the money belonging to the town of Orleans. If restoration is made, each town, including the town of Orleans, will contribute by taxation its ratable proportion of the fund required for the repayment. In other words, each town will pay back its proportion of the taxes illegally diverted, and the tax to create the fund for reimbursement will be equivalent to what should have been originally imposed to meet the obligations, but which were discharged in part by the misapplication of the money of the town of Orleans.

The town of Orleans, moreover, cannot be estopped by the neglect of its supervisor to assert a claim, the grounds of which were equally known to all the members of the board. The point that the proportion of the railroad taxes paid by the county treasurer to the comptroller for the state tax, should not be charged against the county, assumes tfiat the county treasurer, in the payment of state taxes, does not act as the agent of the county. The quota of state taxes of each county is a county charge in the sense that the scheme of taxation makes each county a debtor therefor. When the county treasurer paid the state tax, he paid in its behalf an obligation of the county. The county had the' benefit of the misapplication of the money of the town of Orleans, so far as it went to pay the state tax. We perceive no ground upon which a liability for this part of the fund can be distinguished from the liability for the part applied to other county purposes. If the county is liable for one part, it is, we think, for the other also. See Mayor, etc., v. Davenport, 92 N. Y., 604.

To avoid misapprehension, it should be observed that the act under consideration in Bridges v. Board of Supervisors, etc., supra, only appropriated to the use of towns, or municipalities, respectively, whose bonds were issued for the construction of the New York and Oswego Midland Railroad, the part of the taxes raised therein known technically as the county taxes, while the act now in question appropriates all taxes on railroads, except those raised for school and road taxes, to the use of the town issuing bonds under the act of 1869, including, therefore, as well what is known as the state tax, as the county tax proper.

The misappropriation of the taxes in question being conceded, there can, we think, be no doubt that an action would lie against the county in behalf of the town of Orleans to recover back the money misappropriated, on the principle upon which the equitable action for money had and received is founded. The money was collected in the town under the warrant of the board of supervisors. It was paid by the collector into the treasury of the county.

In contemplation of law it was received by him for the purposes specified in the act of 1871, viz.: the purchase or final redemption of the outstanding bonds of the town of Orleans. The county applied it, in contravention of the act, towards the discharge of county obligations. It ought in justice to restore it and make good to the town what it has lost by its unauthorized acts. To compel the performance of this duty, an action for money had and received is an appropriate remedy.

It was held in Newman v. Supervisors of Livingston County, 45 N. Y., 676, that this form of action cpuld be maintained against a county to recover back money collected on an illegal tax and paid into its treasury, and the fact that in this case the tax was legal, and that the wrong consisted in the improper diversion by the county of a fund belonging to the town, can make no difference. In Bridges v. Supervisors of Sullivan County, supra, an action for money had and received was held to be the proper remedy, under a state of facts quite similar to those in the case before us. The promise upon which the action for money had and received is founded is implied by law from the duty resting upon one who wrongfully withholds from another money which he cannot conscientiously retain, to account for and restore it to the person or party equitably entitled to it.

The final question arises upon the appeal of the town to the part of the judgment limiting the recovery to the taxes collected and appropriated within six years prior to the submission. Section 882, of the Code of Civil Procedure, prescribes a limitation ■of six years after the cause of action has accrued to certain actions, and among others, to “An action upon a contract - obligáy' tian, or liability, express or implied, except a judgment or sealed instrument.” It is stated in the submission in this case, that the several sums collected and paid to the treasurer of Jefferson county on account of railroad taxes in the town of Orleans, were" “ paid out and expended in payment of the debts and liabilities of the county of Jefferson, on the first day of June of each year, after the year for which the tax was collected.” A cause of action, therefore, for money had and received, arose on the 1st day of June of each year from 1873, against the county in favol*' of the town, for the sum so misappropriated on that day, and this cause of action would be barred in six years from that date.

The plaintiff insists that the action is for a breach of trust and the misuse of trust funds, and that the-statute does not commence' to run against such a cause of action until there is a denial of the-right of the beneficiary. The duty imposed on the treasurer was, in a general sense, a trust duty. This is true of every duly imposed on a public officer, but persons injured by a violation of-the duty, for which they may maintain an action at law, must pursue their remedy within' the period of limitation of legal' actions. See Roberts v. Ely, 113 N. Y., 128; 22 N. Y. State Rep., 185; Butler v. Johnson, 111 N. Y., 204; 19 N. Y. State Rep., 85; Matter of Neilley, 95 N. Y., 386. The legal remedy here was adequate and the causé of action was definite and distinct as to each misappropriation at its date, and we see no escapé from the conclusion that the limitation is governed by § 382, and consequently that no recovery can be had back of six years. The limitation of ten years prescribed in § .388 has no application, because another limitation is prescribed by § 382.

There seems to be an error in computation in the judgment below. The plaintiff is entitled to judgment for all taxes misappropriated by the county within six years prior to May 1, 1888. Tt should include the taxes levied in 1881, but which were not applied to county purposes until June 1, 1882, and also all subquent taxes received by the treasurer on or prior to June 1, 1887.

The judgment should be amended in this particular, and, as so-amended, should be affirmed.

All concur.  