
    Strough, Supervisor, v. Board of Supervisors.
    
      (Supreme Court, General Term, Fourth Department.
    
    November 24,1888.)
    1. Towns—Issue of Bonds in Aid of Railroad—Sinking Fund.
    Though an issue of bonds by a town, in aid of a railroad company has boen adjudged invalid by the court of appeals, yet, some of the bonds having been sold, and held valid in the hands of the purchasers by the supreme court of the United States, the town is entitled to the benefit of Laws N. Y. 1869, c. 907, § 4, as amended by Laws 1871, c. 283, which provides that “all taxes, except school and road taxes, collected ” by a town from a railroad, in aid of which it has issued bonds, shall be paid into a sinking fund, for the benefit of the town, by the county treasurer, and the town may recover, to be paid into the sinking fund, the amount of such taxes diverted to other uses.
    2. Same—Limitation of Actions.
    An action for the amount of taxes so diverted is, in effect, for money had and received, and comes within Code Civil Proc. N. Y. § 382, limiting actions upon contracts, express or implied, to six years.
    3. Same—When Limitation Begins to. Run—Constructive Trust.
    The payment of such taxes to the county treasurer created at most a constructive trust in favor of the town; and under Code Civil Proc. N. Y. § 410, providing that, when a demand is necessary in order to entitle a person to maintain an action, time shall be computed from the time when the right to make the demand was complete, the statute begins to run from the time the moneys were misappropriated.
    Case submitted on agreed statement.
    Action by Byron J. ¡¿trough, supervisor of the town of Orleans, -against the board of supervisors of the county of Jefferson, to compel the payment into a sinking fund, for the benefit of the town, of taxes collected from the Clayton & Theresa Railroad Company. Code Civil Proc. N. Y. § 410, provides: “Where a right exists, but a demand is necessary to entitle a person to maintain an action, the time within which the action must be commenced must be computed from the time when the right to make the demand is complete, ” except in specified instances.
    Argued before Hardin, P- J., and Follett and Martin, JJ.
    
      WaylandF. Ford, for plaintiff. J ohn G. McCartin and Watson M. Rogers, for defendant.
   Follett, J.

The questions in difference between these parties are brought before the court by a submission entered into pursuant to sections 1279 and 1280 of the Code of Civil Procedure. In 1871 the county judge of Jefferson county adjudged (pursuant to chapter 907 of the Laws of 1869) that a majority of the tax-payers, representing a majority of the taxable property of the town of Orleans, had duly consented that bonds of said tow-n be issued to the amount of $80,000, and invested in the stock of the Clayton & Theresa Railroad Company, and appointed three commissioners to carry the adjudication into effect. This adjudication was reviewed upon certiorari, by the general term, which affirmed the judgment on the 20th of June, 1872. While the matter was pending in the general term, the commissioners issued 160 bonds, for $500 each, dated February 15,1872, payable February 15,1894, with semiannual interest at 7 per cent, per annum, and exchanged them for an equal amount of the stock of said railroad company. The railroad company sold $10,-000 and hypothecated $70,000 of the bonds before February 25,1873, when the court of appeals reversed the judgments of the general term and county judge. People v. Sawyer, 52 N. Y. 296. Shortly afterwards the hypothecated bonds were sold, and afterwards an action was brought in the circuit court of the United States to recover the interest due on the bonds, and a judgment therefor recovered, which was affirmed in October, 1878, by the supreme court of the United States, which held that the bonds were valid in the hands of the purchasers. Orleans v. Platt, 99 U. S. 677. Since this decision there has been raised by taxation an amount sufficient to pay the interest which has become due on the bonds, and $13,000 of the principal, and in 1885 the town realized $30,000 by disposing of its stock in said railroad company, with which 60 bonds were then paid, leaving $37,000 of the bonds outstanding, the interest upon which has been paid by money raised by taxation. Column No. 1 shows the amount of the state tax; No. 2, the amount of the county tax; No. 3, the total amount of the state and county taxes collected from said railroad company in the town during the years 1873 to 1886, both inclusive; and No. 4, the amount raised by taxation during said years in said town for the purpose of paying interest and principal upon said bonds.

No. 1. No. 2. No. 3. No. 4. 1873, - - $ 9 20 $ 12 23 $ 21 43 Nothing. 1874, 213 17 335 93 549 10 do. 1875, - - 160 60 348 70 509 30 do. 1876, 120 09 320 61 440 70 do. 1877, - 132 35 276 02 408 37 do. 1878, 41 08 99 34 140 42 do. 1879, - - 119 27 244 14 363 41 $10,[ XXX XX XXXX ], . 152 27 257 12 409 39 26,[ XXX XX XXXX ], - - 103 08 273 36 376 44 23,[ XXX XX XXXX ], 114 05 221 21 335 26 7,[ XXX XX XXXX ], - - 159 20 212 38 371 58 5,[ XXX XX XXXX ], 123 70 159 88 283 58 10,[ XXX XX XXXX ], - - 160 25 188 65 348 90 1,[ XXX XX XXXX ], 141 50 145 93 287 43 1,705 00

The moneys paid by the railroad company in these years were paid by the town collectors into the treasury of the county, and expended under the direction of the defendant for county purposes. For the purpose of fixing a date as of which the moneys were expended, it was agreed in the submission that the taxes of each year were expended on the succeeding 1st day of June. In November, 1887, the plaintiff demanded that the defendant and its treasurer should pay into a sinking fund the taxes (except school and road) collected during the years 1873 to 1886, inclusive, and also the taxes to be collected in 1887 from the railroad company, as provided by section 4, c. 907, Laws 1869, as amended by chapter 283, Laws 1871. The defendant, through its treasurer, paid the sum collected in 1887 into a sinking fund for the benefit of the town, but refused to pay into said sinking fund the moneys collected in the previous years, and thereupon the parties entered into this submission.

The fact that it was held by the court of appeals that the proceedings taken were insufficient to authorize the commissioners to issue bonds is no justification for the refusal of the defendant to set apart these taxes for the purpose of creating a sinking fund. The object of creating this fund was to provide for the payment of the interest accruing upon the bonds, and the principal, and to afford some relief to the tax-payers who had created this new taxable property. The court of last resort held that the town was liable to pay its bonds, and the burden was as effectually imposed as though the court of appeals had declared the proceedings to bond the town regular and effectual. The benefits conferred by this section are not, in terms or by implication, restricted to towns, the bonds of which have not been declared invalid by the court of appeals, but are conferred upon all towns having bonds issued under this act, which must be paid by taxation. We think this town is as clearly entitled to the benefits of this act as though its proceedings to acquire authority to issue bonds had never been questioned. Section 4, c. 907, Laws 1869, as amended by chapter 283, Laws 1871, is constitutional, and “all taxes except school and road taxes collected” from the Clayton & Theresa Railroad Company in the town of Orleans belong to that town, and it was defendant’s duty, by its-warrants issued to the town collector, to direct him to pay the money received for such taxes to the treasurer of the county of Jefferson, to be applied by him as provided by the section. Bridges v. Supervisors, 92 N. Y. 570; Clark v. Sheldon, 106 N. Y. 104,12 N. E. Rep. 341. This duty was not only omitted, but the defendant directed the county treasurer to pay and apply all of the moneys received by him from The collectors of the town to other purposes, and thereby putting it out of the power of the treasurer to obey the statute. Eor this illegal, though innocent in intent, misappropriation of these moneys, the defendant, in its corporate capacity, is liable, and the only remaining question is, what is the extent of its liability? Is the time within which this action must be begun fixed by section 382, (the six-years section,) or section 388, (the ten-years section,) of the Code of Civil Procedure? This action is for the recovery of money received by defendant from a third person, which should have been, but was not, applied by the defendant to the plaintiff’s use,—an action for money had and received. Newman v. Supervisors, 45 N. Y. 676; Bank v. Supervisors, 106 N. Y. 488, 13 N. E. Rep. 439; Bridges v. Supervisors, supra; 4 Wait, Act. & Def. 506. An action for the recovery of money had and received is founded upon an express or implied promise, (Dumond v. Carpenter, 3 Johns. 183; Fagnan v. Knox, 66 N. Y. 525-532; Price v. Mulford, 107 N. Y. 303-309, 14 N. E. Rep. 298; 4 Wait, Act. & Def. 469,) and falls within section 382 of the Code of Civil Procedure. When did the cause of action accrue ? Plaintiff insists that the defendant became a trustee of these moneys for the plaintiff, and that the cause of action did not accrue until November, 1887, when defendant refused to pay the moneys collected into the sinking fund pursuant to the demand of the plaintiff. This is not the case of an express trust. Confidence was not reposed in the defendant by the plaintiff, or by a third person for the plaintiff’s benefit, in respect to these moneys. No trust in respect to them has been established by the voluntary act of two or more parties, and the relation of trustee and cestui que trust of an express trust by the voluntary act of the parties never existed; but, so far as there can be said to have been a semblance of a trust, it is a constructive one, which is not within the rule that the statute of limitations does not begin to run against a beneficiary until the trustee has openly renounced the trust, or done something hostile to the rights of the cestui que trust. Kane v. Bloodgood, 7 Johns. Ch. 90, Affirmed, 8 Cow. 360; Lammer v. Stoddard, 103 N. Y. 672, 9 N. E. Rep. 328; Price v. Mulford, supra; York's Appeal, 110 Pa. St. 69, 1 Atl. Rep. 162, and 2 Atl. Rep. 65. The right of action for the recovery of these misappropriated moneys arose when they were misappropriated, (section 410, Code Civil Proc.; Price v. Mulford, supra,) and the plaintiff’s-recovery must be limited to the sums misappropriated within six years prior to August 6, 1888, the date of this submission. The plaintiff is entitled to a judgment for the recovery of $1,291.49, with interest on $371.58 from June 1, 1883; with interest on $348.90 from June 1,1885; and with interest on $287.43 from June 1,1886,—payable to the treasurer of the county of Jefferson, to be by him applied as provided by section 4, c. 283, Laws 1871, together with the costs and disbursements of this action, payable to the plaintiff.

Hardin, P. J., and Martin, J., concur.  