[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 191
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 192 Although this is the first action brought to this court by a county against the state under the enabling act of 1899 (Chap. 336), the principle here involved has been decided in actions brought by towns against counties under the acts of 1869 and 1871 (Chaps. 907 and 283). (Matter of Clark v. Sheldon, 106 N.Y. 104;134 N.Y. 335; Bridges v. Bd. Supervisors Sullivan Co.,92 N.Y. 575; Crowninshield v. Bd. Supervisors Cayuga Co.,124 N.Y. 585; Kilbourne v. Bd. Supervisors Sullivan Co., 137 N.Y. 173;Barnum v. Bd. Supervisors Sullivan Co., Id. 179.)
The only question that remains open for discussion is whether the principle applied in the cases above cited, as between the towns and counties, is controlling in the similar situation now occupied by certain counties toward the state. The incidental questions, which are suggested rather than argued, may be brushed aside with a bare mention. 1. The Statutes of Limitations, which were urged in bar of the action of the towns against the counties, have no application here, because this court has held, in Bd. Suprs. Cayuga Co. v. State *Page 194 (153 N.Y. 281), that a claim against the state cannot be barred by lapse of time so long as there is no tribunal in existence with authority and jurisdiction to adjudicate upon it; and this equitable rule has also found expression in the enabling act (1899) which provides that lapse of time shall not be a barrier to valid claims filed within one year of the passage of the act. 2. The form in which relief shall be sought in such cases has been settled in Strough v. Board of Supervisors JeffersonCounty (119 N.Y. 212), upon the theory that an action as for moneys had and received is the appropriate remedy where there has been a diversion of taxes from the purposes for which they were assessed and levied, and a payment thereof to an officer or department of government not entitled thereto. 3. The school and road taxes excepted from the operation of the statutes of 1869 and 1871 are those collected in the various tax districts for local purposes; and the exception referred to does not relate to that portion of the state tax which may be devoted to highways and schools at large. (Kilbourne v. Bd. Supervisors, supra.) 4. The taxes collected from such bonded railroads and paid to the county treasurer constituted a trust fund in his hands upon which the law had impressed a distinct purpose, and any diversion of it from that purpose was illegal. (Matter of Clark v. Sheldon,supra.)
Upon the main question we take up the discussion with the observation that certain moneys derived from taxes levied upon railroads in towns which aided in their construction through the issue of bonds, were directed by law to be devoted to a certain purpose, namely, to the establishment of a sinking fund to be used in the redemption and cancellation of such bonds. The depositary selected by the legislature for this purpose was the county treasurer. The duty imposed upon him by statute was not performed. A part of the moneys that should have gone into the sinking fund have been paid into the state treasury. Under a precisely identical condition as between the towns and the county, the latter has been held liable to refund the moneys which it wrongfully, that is, illegally, obtained. *Page 195
How is the case different as between county and state than it was between town and county? One difference that did exist has been obviated. The state could not be sued unless and until it created a tribunal to hear and determine such claims as the one at bar, while the county could be sued in the regular courts at any time within six years after the cause of action accrued. Is there any other difference? It is argued by the learned attorney-general that under the general tax laws of the state the county of Ulster has paid into the state treasury no more than it was required to pay; that its state tax, like that of every other county, is based upon its aggregate assessable property, which can neither be diminished nor increased by the taxing officers, and, therefore, the state has received no more than it was entitled and bound to collect. This is the same argument that was presented in the cases cited; and it is a perfectly accurate statement of the law as far as it goes, but it stops just short of the point to which we are brought by the statutes of 1869 and 1871. These latter statutes have provided that a certain portion of the moneys derived from taxes levied in the towns of the county of Ulster shall not go into the treasuries of the county or state, but into the custody of a trustee for a specified purpose. The moneys have gone into the respective treasuries of county and state. The same power that commanded the taxation of all property not exempt by law has devoted to a specific purpose the moneys derived from certain taxes. This has been held to be within the constitutional prerogatives of the legislature (Matter of Clark v. Sheldon, supra) and to the extent that this supplementary and special legislative fiat is inconsistent with the general tax laws of the state, the latter must be held to have been pro tanto repealed or modified. The power to make laws includes the power to repeal and amend. The right to tax is co-ordinate with, not superior to, the right not to tax. Taxation for general purposes is hedged about by no sanctity that cannot be invoked in behalf of taxation for special purposes within constitutional limitations.
As the tax laws stood prior to 1869, it was the duty of the *Page 196 counties to pay and the right of the state to receive the annual state tax upon all assessable property. As the laws were amended in 1869 and 1871 a certain class of newly-created property was in effect and for a time exempted from taxation for state purposes. The moneys which, under the general laws, would have properly gone into the state treasury, were directed by the legislature to be used in lightening the burdens of the tax districts which had assumed unusual burdens in creating this new property. No subsequent statute has changed this situation.
As a part of the learned attorney-general's argument, to the effect that the state has received no more than it was entitled to receive from the county of Ulster, it is urged that there is no inconsistency between the general tax laws and the statutes of 1869 and 1871; that it was no less the duty of the county treasurer to create the sinking fund referred to than it was the obligation of the county to pay a state tax upon all of its assessable property, but that all this could have been easily accomplished by adding enough to the general tax to create the sinking fund. We agree that there is no such inconsistency between the general tax laws and the special statutes as to render them absolutely hostile to each other, but that is as far as we can follow the argument. To us it seems plain to a demonstration that the railroads in question were to be taxed only once, and that for a specified purpose. If the sinking fund was not to be created and augmented by the proceeds of that tax, it is apparent that there would either have to be an additional tax upon the railroads, or an increased tax upon the county at large; or, if not that, at least a double tax upon the bonded towns. One of three results would be inevitable. If the railroads were taxed for general purposes and also to create a sinking fund, they would be subjected to double taxation. If the bonded towns were to be taxed for general purposes upon all their assessable property, and enough more to create a sinking fund, they would not only be paying a two-fold tax, but they would be subjected to the very burden from which the statutes of 1869 and 1871 were designed to relieve *Page 197 them. If the county at large were to be taxed for general purposes upon all assessable property, and for the purposes of the sinking fund as well, those towns and municipalities not bonded would be compelled to share the burdens belonging wholly to others. Surely, all these hypothetical possibilities suggested by counsel for the state would be much more inequitable than the claim of the plaintiff that the intention of the legislature was to relieve the primary tax districts from the burdens assumed in the creation of new taxable property, by devoting a portion of the moneys derived from its taxation to the payment of the debt created with the property.
Two other reasons are advanced for the dismissal of the plaintiff's claim. One is that the allowance of this and similar claims will create a deficiency in the revenues of the state; the other is that in the imposition of an additional general tax to supply this deficiency other counties will be compelled to share the burden which should be borne by the county of Ulster alone. This is in reality another statement of the argument already noticed.
Assuming, although not admitting, that there can be such a thing as a deficiency in the revenues of the state, it cannot affect the merits of the case at bar, because this court has held (Matter of Clark v. Sheldon, supra), in the case of a town against a county, under conditions where an actual legal deficiency was created, that it could have no effect upon the liability of a county whose treasurer had used the moneys derived from taxes upon railroads in bonded towns for purposes not authorized or permitted by law. There is, however, no such thing as a legal deficiency in the revenues of the state. Unlike a county or town, the state is not limited to the imposition of a tax exactly equal to its expenditures or obligations; on the contrary, it may, and in fact sometimes does, levy a tax that amounts to more or less than the actual needs for the current year. As a matter of business policy, economy and convenience, the annual aggregate income from taxation is doubtless based upon the anticipated outgo, but the power to tax for *Page 198 more or less is not thereby affected. So, also, the contention that other portions of the state will be compelled to bear part of the burdens that really belong to a single county is answered by the suggestion that if the moneys which should have been applied to the purposes directed by the statute had not been paid into the state treasury, the other portions of the state would have borne no new or additional burden. They would simply have been deprived, for the time being, of the contribution which newly-created property would have added to the general fund.
The final question to be decided is, whether the county stands in such legal relation to the situation that it has a right of action on its own behalf and as trustee for the towns. Why not? Concededly, it has refunded to the towns some of the moneys which have been diverted from their proper destination, and its liability to refund the rest has been legally established. This liability is based upon the fact that it had no right to such moneys. A part of these moneys have found their way into the state treasury. The state has no more right thereto than the county. The county having paid to the state moneys that should have been deposited with a trustee for the benefit of the towns, the state should, ex aequo et bono, return it to the county. Apart from all this, however, the enabling act of 1899 has designated the county as the proper party to present the claim. The county is the only tax district that is brought into direct relations with the tax department of the state. Through the county these moneys reached the state, and there is manifest propriety and justice in providing that through the same agency they shall be returned to the proper custodian, the trustee designated by the state.
The order of the Appellate Division should be affirmed, with costs, and judgment absolute ordered for the plaintiff upon defendant's stipulation.
PARKER, Ch. J., GRAY, BARTLETT and CULLEN, JJ., concur; O'BRIEN and MARTIN, JJ., dissent.
Order affirmed, etc. *Page 199