cluded in the tax levy for this year (1919) and thus paid. This would be done automatically. The charter (Laws 1901, c. 466) provides that all special revenue bonds must be included in the tax levy of the year succeeding that in which they are issued (section 187).

Can the board of estimate now substitute corporate stock for these bonds? The defendants do not claim that corporate stock can be issued to replace revenue bonds-not as a general thing. To do so would be in violation of the charter provisions (section 169). But the defendants do claim that it can be done in this instance, because the issue of these special revenue bonds originally was illegal, and that they were issued only "pending the issue of corporate stock therefor." But, as has been shown, the issue of the special revenue bonds was not illegal. It was one of the two authorized methods of paying these expenses. And there is no provision of law for issuing special revenue bonds "pending" the issue of corporate stock. The charter expressly provides for the issuance of "corporate stock notes" in anticipation or pending the issuance of corporate stock; special revenue bonds may not be issued for such a purpose (section 189 as amended by Laws 1916, c. 616).

Not only does the charter require all special revenue bonds to be paid from the succeeding year's tax levy (section 187) but section 10 of the Rapid Transit Act expressly so provides as to these very payments, if the city shall determine in the first instance to pay them in this manner rather than by the sale of corporate stock.

[3] The proposed issue of corporate stock cannot be deemed a "refunding" under section 235 of the charter. The provisions of that section must be read in connection with the other sections of the charter expressly requiring that special revenue bonds shall be met in only one way, namely, by their inclusion in the succeeding year's tax levy. [4] The situation is slightly different as to the provision relating to the $3,500,000 of the proposed corporate stock. That amount is not to be paid to discharge special revenue bonds or bonds or obligations of any kind of the city. That amount the resolution provides shall "be paid into the general fund for the reduction of taxation." It would pay no specific debt or obligation. It would merely furnish so much. additional funds applicable by the city for its general needs. The sum to the credit of the general fund has to be deducted from the sums necessary to be raised by taxation. Charter, § 900. So the payment of this sum into the general fund would result in reducing the tax rate, and would merely dispense with the necessity for raising an equal amount by taxation to cover the needs of the city for the current year.

[5] It cannot be claimed there is any "refunding" as to this amount, for section 235 says that such bonds may be issued for the purpose only of paying "any stocks or bonds outstanding." The charter (section 169) prohibits the use of the proceeds of the sale of corporate stock to pay the city's "operating expenses," and specifically provides that corporate stock cannot be issued for "other than revenue producing improvements," with a few exceptions which do not affect this matter. This is the so-called "pay as you go" provision of the charter added by chapter 615, Laws 1916. Paying the proceeds of the

proposed sale of corporate stock into the general fund would mean the use of the money for the very purposes prohibited by the charter.

[6] It is unquestioned that a city can issue bonds only as expressly authorized by statute, and unless so authorized they are void. Merrill v. Monticello, 138 U. S. 673, 11 Sup. Ct. 441, 34 L. Ed. 1069; Wells v. Town of Salina, 119 N. Y. 280, 23 N. E. 870, 7 L. R. A. 759. The city has no general power, in the absence of express statute, to issue corporate stock or bonds to reimburse its treasury for payments made from it. Coffin v. City of Indianapolis (C. C.) 59 Fed. 221. See, also, City of Oneida v. King, 116 App. Div. 35, 101 N. Y. Supp. 239. Each year since the 1912 amendment the city has had the option of determining which of the two methods of payment should be followed, and each year it has made its determination and has carried it out. Now a new administration seeks to upset and undo all that has been done in the years past by prior administrations. To permit such a course to be followed would work havoc. It would make conditions chaotic. There would be no finality to any action, for each succeeding administration could undo what any of its predecessors had done, or could even reverse itself; and if it were permissible to substitute corporate stock for revenue bonds, or pay the proceeds of a corporate stock sale into the general fund after the expenses to cover which the stock was issued had been met by being included in the tax levy, it would be equally proper to pay off corporate stock before maturity (if its provisions permitted or its holders were willing), and include the whole amount of it in the tax levy. And so this process could be followed by each succeeding administration; one administration changing it one way and the next reversing that action. Fortunately this cannot be done under the law. Such action has been condemned by the courts.

[7] When a municipality, or one of its boards or departments, has lawfully adopted a policy, or has resolved to proceed in a certain way, and that policy or action has been carried out, it cannot be rescinded or changed, though a different policy or action might originally have been equally valid. The policy having been determined, and the action taken and carried out under authority of law, the power to change or rescind does not exist. Bigler v. Mayor, etc., of New York, 5 Abb. N. C. 51, 64, and notes at pages 51 and 65; Staples v. City of Bridgeport, 75 Conn. 509, 54 Atl. 194; Mitchell v. Brown, 18 N. H. 315; Pond v. Negus, 3 Mass. 230, 3 Am. Dec. 131; Brady v. Mayor, etc., of Brooklyn, 1 Barb. 584, 591; 2 Dillon on Municipal Corporations. (5th Ed.) § 539; 1 Beach on Public Corporations, § 368.

[8] Defendants' papers show that corporate stock was issued in different years prior to 1916 to cover unpaid taxes. This would be no precedent for the present action, for the charter provisions, since those issues were authorized, have been amended. Laws 1916, c. 615. But action entirely similar to the present action was taken by a prior city administration in 1914. As it is determined that the present action is illegal, it follows that that prior action was equally so. The personnel of an administration has no bearing upon the legality of its acts. If an act is illegal, it cannot be justified because some other administra

tion has also disregarded the law. Nor can the relief demanded be denied because the plaintiff did not take action to prevent such prior illegality from being consummated. Even if his conduct subjected him to criticism, it would be no reason for refusing to enjoin the consummation of this illegal action.

[9] A taxpayer's action is proper. The proposed action of the board of estimate would result in diminishing the city's debt limit and in increasing its interest charges.

It is to be regretted that the need of a prompt decision has made it impossible to give more time to the preparation of this opinion, but the illegality of the proposed action seems so clear that it is the duty of the court to grant the injunction sought.

(106 Misc. Rep. 342)

BADOLATO v. MOLINARI.

(Supreme Court, Trial Term, Kings County. February 17, 1919.)

1. PRINCIPAL AND SURETY 175-LIABILITY OF PRINCIPAL-IMPLIED AGREEMENT TO INDEMNIFY.

The general rule is that a surety may hold his principal on an implied agreement to indemnify, even where there is no express promise. 2. PRINCIPAL AND SURETY 175 LIABILITY OF PRINCIPAL-INDEMNITY.

The theory underlying the principle of cases deciding that there can be no indemnity in favor of a surety on a bail bond, because he virtually becomes accused's jailer, and that government seeks presence of accused, rather than money represented by bond, does not obtain in New York in view of Cr. Code, §§ 586-588, authorizing acceptance of cash bail. 3. BAIL 73-CASH IN LIEU OF BAIL COMMON LAW.

Under the common law, cash could not be accepted as or in lieu of bail, and it is acceptable only when authorized by statute, as by Cr. Code, §§ 586-588.

4. PRINCIPAL AND SURETY 175-LIABILITY OF PRINCIPAL-INDEMNITY— STATUTE.

In view of Cr. Code, § 577a, and sections 586-588, an individual bondsman for an accused in a criminal action may recover from accused upon an implied agreement of indemnity the amount he has been obliged to pay because of accused's failure to appear.

Action by Antonio Badolato against Domenico Molinari. Judgment for plaintiff.

Mark Rudich, of Brooklyn, for plaintiff.

Creamer & Adams, of Long Island, for defendant.

CROPSEY, J. The question is whether the surety on a bail bond for a defendant in a criminal action, who has not been promised indemnity, can recover from the defendant the amount he has been obliged to pay on his bond because of defendant's failure to appear. The bond in question was one to answer, and was executed only by the surety. The defendant did not need to join in it. Cr. Code, § 568.

[1] The general rule is conceded, that a surety may hold his principal on an implied agreement to indemnify, even where there is no express promise. But the claim is that this rule does not apply in the

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

case of sureties on bail bonds given in criminal cases. There are two contentions made as to this: One, that there can be no indemnity upon either an implied or an express contract, as such an agreement is void, being against public policy; and the other, that, even though there may be indemnity provided by an express agreement, no such agreement will ever be implied. It is the latter contention that the defendant here makes. He concedes, apparently, that an express agreement may be enforced.

The question is interesting. A study of it shows considerable conflict in the cases and among the writers. An express agreement for indemnity has been held void, as against public policy. Herman v. Jeuchner, 15 Q. B. Div. 561; U. S. v. Greene (C. C.) 163 Fed. 442; U. S. v. Simmons (C. C.) 47 Fed. 575; Pingrey on Suretyship & Guaranty, §§ 415, 416. But some cases hold that, though the principal may not indemnify his bail, a third party may do so. U. S. v. Greene (C. C.) 163 Fed. 442; People v. Ingersoll, 14 Abb. Prac. (N. S.) 23. Other cases uphold the right to indemnity where there is an express contract, though most of them deny the right on an implied agreement. Stearns' Suretyship, p. 540; Cripps v. Hartnoll, 4 B. & S. 414; U. S. v. Ryder, 110 U. S. 729, 4 Sup. Ct. 196, 28 L. Ed. 303; Ewing v. U. S., 240 Fed. 241-252, 153 C. C. A. 167; Simpson v. Robert, 35 Ga. 180; Carr v. Davis, 64 W. Va. 522, 63 S. E. 326, 20 L. R. A. (N. S.) 58, 16 Ann. Cas. 1031; Ellis v. Norman, 19 Ky. Law Rep. 1798, 44 S. W. 429; Maloney v. Nelson, 12 App. Div. 545, 42 N. Y. Supp. 418, affirmed 158 N. Y. 351-355, 53 N. E. 31. Still other cases hold that a recovery may be had, though there be no express agreement-the implied agreement being held to exist as in the usual case of principal and surety. Petersdorff on Bail, pp. 516, 517; Reynolds v. Harral, 2 Strob. (S. C.) 87; Fagin v. Goggin, 12 R. I. 398; Harp v. Osgood, 2 Hill, 216-219; Brandt on Suretyship & Guaranty (3d Ed.) § 610. Though one case at least holds that an implied agreement will be enforced if the surety furnished cash bail, but not if he executed a bond. Hutchinson & Co. v. Morris, 86 Mo. App. 40.

The principle underlying the cases which hold there can be no indemnity is that under the theory of bail in those jurisdictions the bondsman becomes virtually the accused's jailer, and so the government has a double security for his appearance; that the government seeks the presence of the accused, rather than the amount of money represented by the bail bond, and to permit the surety to be indemnified would destroy his incentive to produce the defendant. And so it is not surprising to find that express agreements of indemnity have been held to be void, where they were made on the understanding that the principal would escape and would not stand trial. Dunkin v. Hodge, 46 Ala. 523; Ratcliffe v. Smith, 13 Bush (Ky.) 172.

But these reasons, if sufficient to justify the holding that no implied agreement of indemnity could be enforced, should likewise require the holding that an express agreement was void. There seems to be no reason for treating the one situation differently from the other. If the right to indemnify the bail is recognized as unobjectionable, 174 N.Y.S.-33

and not in contravention of public policy, there should be no reason for holding such an agreement to be valid if based upon an express contract, but void if based upon an implied contract. The manner in which the contract was created must be immaterial. If it is not against public policy to agree to indemnify bail, it cannot be against public policy to imply that such an agreement was made. If the law honors itself in enforcing an express contract, it should not stultify itself by refusing to enforce an implied contract which would accomplish exactly the same result.

[2, 3] The theory of bail in the jurisdictions in which decisions have been rendered declaring either express or implied contracts of indemnity, or both, to be void, does not exist in this state. Under the common law cash could not be accepted as or in lieu of bail. It is acceptable only when authorized by statute. Bishop's New Criminal Procedure (2d Ed.) vol. 1, § 264; 6 C. J. 1023; Eagan v. Stevens, 39 Hun, 311; McNamara v. Wallace, 97 App. Div. 76, 89 N. Y. Supp. 591. In the jurisdictions referred to cash bail could not be accepted. Nor was it authorized in this state before the adoption of the Criminal Code in 1881. Such a provision was contained in the proposed Code of Criminal Procedure prepared in 1850 by Mr. David Dudley Field (see sections 648-650), but it was not enacted until more than 30 years thereafter. See sections 586, 587, 588, Cr. Code. Under these provisions the theory of bail that existed in jurisdictions which did not permit of the deposit of cash as bail does not apply.

The accused himself may deposit cash and secure his release, and so the state does not look to the obligation of some third party as bail to produce the accused. As the court said in Moloney v. Nelson, 158 N. Y. 351, at page 355, 53 N. E. 31, at page 32:

"It is the loss of the money deposited, or the assurance that the sureties will be obliged to pay the amount of the bail, that is relied upon to secure the presence of the accused. It therefore cannot be said to be a part of the public policy of this state to insist upon personal liability of sureties, for there need not be such personal liability in any case if the accused make a deposit of money in lieu of bail, as provided by the statute."

And the United States Supreme Court seems to have accepted this view of the matter. In Leary v. United States, 224 U. S. 567, at page 575, 32 Sup. Ct. 599, at page 600 (56 L. Ed. 889, Ann. Cas. 1913D, 1029) that court said:

"Bail no longer is the mundium, although a trace of the old relation remains in the right to arrest. Rev. St. § 1018. The distinction between bail and suretyship is pretty nearly forgotten. The interest to produce the body of the principal in court is impersonal and wholly pecuniary."

[4] That bail might be indemnified, and even be paid, for executing the bond, was expressly recognized in this state by the addition in 1912 of section 577a to the Criminal Code, allowing surety companies to give bail.

It follows that in this state a bondsman for an accused in a criminal action may recover from the accused upon an implied agreement of indemnity the amount he has been obliged to pay because of the latter's failure to appear. The plaintiff is entitled to judgment for the amount stipulated, with costs.