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Bush v. O'Brien, et al.
Frederic R. Kellogg for appellant.
L. Laflin Kellogg for respondents.
HAIGHT, J,—The defendants O'Brien, Clark and Brown interposed a demurrer to the plaintiff's complaint upon the ground that it does not state facts sufficient to constitute a cause of action, and the question certified is does the complaint state sufficient facts, &c.
The action was brought by the plaintiff as a taxpayer of the City of New York to restrain the demurring defendants from collecting, and the comptroller of the city from paying, certain judgments which the demurring defendants had obtained against the City of New York, amounting in the aggregate to $700,000. The complaint alleges that these judgments were obtained and entered upon an offer executed and verified by the corporation counsel and accepted by the demurring defendants. The complaint further alleges that the offers of the judgments made by the corporation counsel were not authorized by the comptroller, the mayor or by the alder men and commonalty of the city; that the corporation counsel had no authority or power to make the offers, and that the judgments entered thereupon were illegal and void.
The first and, to our minds, the important question raised for review relates to the power of the corporation counsel. He appears to have made the offers to allow judgments to be entered in the actions then pending against the city, pursuant to the provisions of section 738 of the Code of Civil Procedure, which authorizes the defendant, before trial, to serve upon the plaintiff's attor ney a written offer to allow judgment to be taken against him for a sum specified. Section 740 of the Code provides that "unless an offer or an acceptance made as prescribed in either of the last four sections is subscribed by
Bush v. O'Brien, et al.
the party making it, his attorney must subscribe it, and annex thereto his affidavit to the effect that he is duly authorized to make it in behalf of the party." This provision of the Code appears to have been complied with, the corporation counsel verifying the offer made by him. The papers, therefore, upon which the judgments were entered all appear to be regular, and upon their face show valid judgments. It is charged, however, in the complaint that the corporation counsel, in fact, had no authority to make the offers, and, consequently, his affidavit to the effect that he was authorized was false. If the verification by the corporation counsel was false, it was an illegal act on his part, and the case is brought within the clear wording of the statute which authorizes a taxpayer to bring an action "to prevent any illegal official act" on the part of any officer of any county, town, village or municipal corporation in the State (Laws 1892, chap. 301). The question presented does not call for a review of a board of audit, or of a board of assessors, or other judicial body who have passed upon the merits of a claim, such as was considered in the case of Osterhoudt v. Rigney (98 N. Y., 222) and other kindred cases, but is limited to the question of power. If the corporation counsel had no authority to make the offers, he had no authority to do so. If he had no power to make them, it, of necessity, follows that the judgments were not only irregular, but were unauthorized.
In the first place, as bearing upon the power of an attorney to make an offer of judgment, we have the very significant provisions of section 740 of the Code above quoted. By its provisions, if the offer is not signed by the party it must be by his attorney, and he must annex thereto his affidavit to the effect that he is authorized by the party to make the offer, thus indicating that the authority to make the offer must be other than that of the ordinary retainer by a party to prosecute or defend
Bush v. O'Brien, et al.
an action. If the attorney has the power to make or accept an offer of judgment by virtue of his retainer then the provision of the Code requiring him to annex his affidavit is useless and unnecessary. But we think this question has been settled in this State and that the Code but recognized the existing rule. In the case of Gaillard v. Smart (6 Cowen, 385), Savage, Ch.J., delivered the opinion of the court, holding that while an attorney, by virtue of his retainer, had the power to discontinue an action, he had no power to release the cause of action. In Barrett v. 3d Ave. RR. (45 N. Y., 628, 635), Allen, J., says: "The authority of the attorney does not extend to a compromise or release. He may discontinue an action, because that relates to the conduct of the suit, and is within his retainer, and not to the cause of action. An attorney cannot settle a suit and conclude the client in relation to the subject in litigation without his consent" (citing Shaw v. Kidder, 2 How. Pr., 244; Lewis v. Gamage, 1 Pick., 347). In the case of Beers v. Hendrickson (45 N. Y., 665, 669), Grover, J., says: "An attorney is not authorized by his retainer to satisfy a judgment without payment, and if he does so the court will set such satisfaction aside." In Mandeville v. Reynolds 68 N. Y., 528, 540), Folger, J., in delivering the opinion of the court, after referring to the ruling of the court below to the effect that the attorneys in the action. had no power to compromise the judgment and release the defendant unless authority was expressly given to them by the plaintiff, says: "In holding thus, I think that the court was right. An attorney is not authorized by his retainer to satisfy a judgment without payment,
and if he does so the satisfaction will be set aside. The authority of an attorney does not extend to a compromise or a release. He cannot settle a suit and conclude his client in relation to the subject in litigation without consent of the latter." In Arthur 2. Homestead Fire Insur
Bush v. O'Brien, et al.
ance Co. (78 N. Y., 462) it was held not to be within the scope of the authority of an attorney in an action to change the rights of his client except so far as it may be done in the action. He cannot justify the commencement of another action or create a cause of action against his client which did not before exist. In Lewis v. Duane (141 N. Y., 302) it was held an attorney employed to foreclose a mortgage has no implied authority in the matter to compromise the rights of his client and make nugatory the duty he was employed to perform.
There are numerous other cases which might be cited of the same import, but we think those referred to justify our previous assertion that the question has long been settled. It is claimed, however, that the powers of a city attorney, or corporation council, differ from those of an attorney employed by an individual. They undoubtedly do if the charters under which they are elected or appointed give to them greater or different powers, otherwise not. This question has also been considered by the courts. In the case of Taylor v. Mayor, &c. (11 Abbott's Pr., 66), it was held that the Corporation Council of the City of New York had no larger powers, as such, to bind his client than those connected with the ordinary relations of attorney and client. And very recently, in the Supreme Court of the United States, in the case of Stone v. Bank of Commerce (174 U. S., 412, 423), Peckham, J., in delivering the opinion of the court, says: "We are also of the opinion that, as city attorney, he had no greater power to bind the city by that agreement than would an attorney have in the case of an individual."
We are thus brought to a consideration of the charter of the City of New York. Section 255 creates a law department, the head of which shall be called the corporation council, "who shall be the attorney and council for the City of New York, the mayor, the municipal
Bush v. O'Brien, et al.
assembly and each and every officer, board and department of said city." It further provides that he shall "have charge and conduct all of the law business of the corporation and its departments and boards, and all law business in which the City of New York is interested." There are other other special powers given to him with reference to the opening of the streets, &c., which have no bearing upon the question under consideration. If he has any power to settle and audit claims against the city, it must be found in the provisions of the charter quoted. A careful examination of these provisions fails to satisfy us that the Legislature intended to invest the corporation counsel with any other or greater powers than that of an attorney employed by an individual to take charge of his legal business. The charter also has created a finance department, of which the comptroller is the head, to whom has been given the express power "to settle and adjust all claims in favor of or against the corporation, and all accounts in which the corporation is concerned as debtor or creditor" (sec. 149). The power to settle and adjust, therefore, appears to have been vested in the comptroller, and not in the corporation. counsel. This construction leaves each officer supreme in his own department. The comptroller determines whether a claim shall be compromised or not; if it is not compromised, the corporation counsel has the supreme power of determining the nature of the defense that shall be interposed to any action that shall be brought thereon, but not to compromise. If it had been intended to give the corporation counsel power to compromise claims rejected by the comptroller, without his knowledge or consent, then the corporation counsel would, in effect, become the superior of the comptroller, for all of the comptroller's determinations with reference to the audit of claims would be subject to review by the corporation counsel. Clearly this was not intended.