
    The Town of Walton, Appellant, v. Hugh Adair, Respondent.
    
      Tax on a railroad in aid of which town bonds have been issued—a payment by the county treasurer to the supervisor of the town of the amount, raised for county purposes is legal, and of the amounts raised for State and town purposes is illegal—the town may recover the latter amounts in the absence of proof that they have been expended for its benefit.
    
    The payment by the county treasurer of Delaware county, to the supervisor of the town of Walton, out of the taxes levied in said town upon a railroad com-' pany, in aid of which the town had issued bonds, of the amounts raised for town and State purposes, is unauthorized, and the town is entitled to recover the amount of the unauthorized payment from the treasurer, unless the latter is able to show that the town received the benefit of such money.
    What evidence is insufficient to warrant a-finding that the town has had the benefit Of such moneys, considered.
    Where it appears that'the funds wrongfully paid by the county treasurer to the supervisor were mixed with other funds which were rightfully in the hands of the supervisor, it will be presumed that in the payment of the town indebtedness the supervisor first used the moneys rightfully in his hands.
    That part of section 13 of the General Municipal Law, as amended by chapter 515 of the Laws Of 1903, which provides, “any payment heretofore made'in good faith by the treasurer of any county to. any town, or. to the supervisor ■■ thereof, of the taxes received in any year by such treasurer from railroad corporations in that town is hereby validated,” is unconstitutional so far as it attempts to take from a town an existing cause of action.
    Under chapter 396 of the Laws of 1874 and chapter 334 of the Laws of 1879, the payment by the county treasurer to the supervisor, out of the taxes levied against the railroad company, of the amount raised for county taxes is ..proper..
    Appeal by the plaintiff, The Town of Walton, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the : clerk of the county of Delaware on the 29th day of October, 1903, upon the dismissal of the complaint by direction of the court after a trial at the Delaware Trial Term, and also from an order entered, in said clerk’s office on the 29th day of October, 1.903, directing the dismissal of the complaint.
    
      E. H. Hanford, for the appellant;
    
      C. L. Andrus, for the respondent.
   Smith, J.:

In 1900 this defendant was treasurer of Delaware county. 'As such treasurer, upon the 12th day of January, 1900, he received from the New York, Ontario and Western Railroad Company the sum of $2,640.66, its taxes for all purposes in the town of Walton. By section 12 of the General Municipal Law (Laws of 1892, chap. 685, as amd. by Laws of 1893, chap. 466). it was his duty¿ with the part of such taxes not assessed for school district and highway purposes, to purchase the outstanding unpaid bonds of said toW-n, issued or- substituted for bonds issued to aid in the construction of said railroad where they could be purchased at or below par, and to cancel them; and if such bonds could not be purchased at or below par it was the duty of the treasurer to invest such money in bonds of the United States or of the State of New York or of any town or village or city of such State, and hold such bonds as a, sinking fund for the redemption and payment of the outstanding railroad aid bonds. This statute was a general statute providing for all towns which had issued bonds in aid of the construction of a railroad where said bonds had not been paid. Of such $2,640.66 so received by the defendant, after having deducted the highway taxes and the school district taxes, the sum of $2,062.14 remained for investment. Of this amount the sum of $1,403.68 was the amount assessed as for town purposes; the sum of $415.26 the amount assessed as for county purposes, and the sum of $243.20 the amount assessed as for State purposes. These moneys were all turned over to the supervisor of the town of Walton. Of these taxes which, under the statute, should have been invested, no question is made that that part of it raised for town purposes was wrongfully paid to' the supervisor, and the town clearly has the right to recover the same unless it be shown that the town has already had the benefit of these moneys. The respondent insists that the part of these moneys raised for county purposes was properly paid to the supervisor under another statute, which will be considered hereafter, and that inasmuch as the county has paid in full its State tax, the county will be deemed to have received the benefit of that part of this fund which was Collected for State taxes.

As to the last proposition the argument of the defendant is not convincing. The county treasurer pays from the moneys first received the amount which the State demands of the county as its proportion of tax. These "moneys, although assessed as for State taxes, he would be required to hold for investment, and he did hold them until he paid them over to the supervisor of the town. It cannot be held, therefore, that the county has had the benefit of this payment unless it be shown that these moneys have been applied to some other indebtedness of the county.

The statute requiring these moneys to be held as a sinking fund for the bonds issued in behalf of the railroad was sections 4 and 12 of chapter 907 of the Laws of 1869 (as amd. by Laws of 1870, chap. 789; Laws of 1871, chap. 283, and Laws of 1879, chap.- 62). Section 12 of the General Municipal Law is a re-enactment in substance of that act. At the time of the passage of the act of 1869 the Few York and Oswego Midland Railroad Company, the predecessor of the Few York, Ontario and Western Railroad Company, from the assessment of which these taxes were collected, was exempt from taxation. (See Laws of 1866, chap. 398, § 16.) By chapter 296 of the Laws of 1874-it was provided that all the moneys collected from the said railroad for county taxes- in any of the towns by which bonds had been issued in aid of the construction of said railroad should be paid to the railroad commissioners of such towns, and it was made the duty of the railroad commissioners of the towns to apply said moneys to the payment of the interest of the bonds issued in behalf of said railroad company, or of the principal thereof. It was also provided by said statute that the property of said railroad should be subject to taxation. By chapter 234 of the Laws of-1879 (as amd. by Laws of 1881, chap. 495) it was provided that, the duties of railroad commissioners in the towns of Delaware county should devolve upon the supervisors of the towns respectively, who should act as railroad commissioners. Under that act, which remains unrepealed as far as I have been able, to discover, it was the duty of the collector of taxes to pay the amount collected for county taxes against said railroad to the supervisor of the town rather than to the treasurer of the county, and the payment by the treasurer of the county who had received them without warrant of law to the supervisor will, therefore, be deemed to be in execution of the statute and not a violation of his duty. Of the $2,062.14, therefore, which were properly for the payment of the bonds or for investment-either by the county treasurer or by the railroad commissioner, i. <?., the supervisor of the town, the sum of $415.26. was properly paid, to the supervisor, leaving $1,647.88 as the amount of moneys wrongfully' transferred by.the treasurer of the county to the supervisor of the town of Walton.

The learned trial justice has found that these moneys all went to the benefit of the town, and Upon this ground has dismissed this complaint. I am linable to find any sufficient evidence upon which this conclusion can rest. It must be based, if at all, upon the evidence first that, in the making tip of the tax levy no provision was made for the setting aside of this fund which has been called the railroad tax rebate; that the full amount was necessary for the payment of'the audits against the said town, and the further evidence of one Patterson that all those audits had been paid. . If all these moneys were needed for the payment of the debts of the town and those debts were paid from these moneys the conclusion of course would follow that the town had had the benefit of these moneys, although wrongfully paid by the county treasurer to the supervisor. While there is evidence, however, that they were all needed for. the debts of the town and that all the debts of the town had been paid, the evidence that those debts had been paid is not satisfactory. - It is given by an attorney who has examined the records simply, who cannot in any way be presumed to have personal knowledge of the matters of which he swears, and moreover there is no evidence that those debts were paid from these moneys. For aught that appears in this record those debts may have been paid from moneys subsequently collected, or, from other funds belonging to the town. On the contrary, the bank account of the supervisor is presented. These funds were given to the supervisor in two checks, one of $1,800 and another of $262.14. The check for the $262.14 was never deposited in the supervisor’s bank account as far as can be ascertained. The check of $1,800 was deposited in that account upon February 5, 1900. Upon January 30, 1900, the supervisor had on hand in his account $19.82. Aside from those moneys received from this, county treasurer the next moneys deposited by the supervisor were upon March twenty-fourth, when he received the collector’s check for $3,867.36. Meantime the bank had paid out for town accounts the sum ,of $285.55, so that at least $265.73 of this $1,800 was applied in payment of town accounts. From the twenty-fourth of March the moneys received by the supervisor applicable to the payment of the debts of the town were more than sufficient to pay the checks drawn upon that account for town indebtedness. It was a full year from the time this $1,800 was deposited in the account of the supervisor before he absconded, and meanwhile he paid out from $8,000 to $9,000 by check from his account as supervisor. The plaintiff contends that inasmuch as after March twenty-fourth he had in that account moneys properly applicable to the payment of town indebtedness, in addition to this $1,800, the payment for town indebtedness must be presumed to have been made from those moneys deposited properly applicable thereto, and that the $1,800 deposited, or such part thereof as was left upon March twenty-fourth, not being properly in his hands as town moneys, should be deemed to be a personal deposit against which his checks for private indebtedness which he Brew should be charged. This principle is claimed to be warranted by the decision in the case of Importers & Traders' Nat. Bank v. Peters (123 N. Y. 272). For the moneys which were rightfully received by the supervisor his bondsmen are liable for their proper application. For this $1,800, or so much thereof as was wrongfully received by the supervisor, his bondsmen are not responsible for its proper application. The funds wrongfully paid the supervisor by the county treasurer having been mixed with other funds which were rightfully in the hands of the supervisor, he having absconded and being in default, it does not lie with the county treasurer to say that the moneys which he wrongfully paid to the supervisor have been applied upon the town indebtedness while the supervisor had in his hands moneys properly applicable thereto. The bondsmen of the supervisor would seem to have the clear right to insist that the payments for town indebtedness should be charged against the funds properly in the hands of the supervisor and for individual indebtedness against the funds which, he held as without right. If the contention of the defendant be true that this $1,800 is deemed to have been paid out upon the checks for town indebtedness while there were other funds in the account applicable to the payment of those debts, then the town is without remedy against the county treasurer or his bondsmen, or against the bondsmen of the supervisor. If these moneys be all traced to the payment of the indebtedness of the town this defendant would not.be held liable therefor. Having diverted the fund,' however, from the channel in which he was by law commanded to place it, before he can be relieved from responsibility for his wrongful act he must show clearly that the town has not lost thereby. This, we think, he has failed to do.

Finally, the respondent insists that by chapter 515 of the Laws of 1903 this, payment by the county treasurer to the supervisor was legalized. That act constituted an amendment to section 12 of the General Municipal Law, and the act recites that “any payment heretofore made in good faith by the treasurer of .any county to any town, or to the supervisor thereof, of the taxes received in any year by such treasurer from railroad corporations in that town is hereby validated.” This would be an answer to this action if the Legislature has power to take from the town a cause of action existing.; A cause of action is property which can only be taken from an individual or a town by due process of law (Const, art. 1, § 6), and as far as this act assumes to validate this proceeding and destroy the right of action which the town had against the county treasurer for the moneys so wrongfully appropriated, the act must be deemed inoperative. The judgment must be reversed and a new trial granted.

All concurred:

Judgment and order reversed and new trial granted, with costs to appellant to abide event.  