•-^ 
 
 t 
 
 COMMUNICATION 
 
 FROM THE 
 
 Comptroller of the City of; New York 
 
 ™ THE ViU^'*/^VAfei^5_ 
 
 Assembly Committee on Cities, "^Ov -^^-^t.- 
 
 RELATIVE TO 
 
 PROPOSED AMENDMENTS 
 
 TO THE 
 
 Greater New York Charter 
 
 to remedy certain evils, including the prac- 
 TICE OF THE confession OF JUDGMENTS 
 BY THE CORPORATION COUNSEL. 
 
 FEBRUARY 20, 1900.
 
 City of New York, 
 
 DEPARTMENT OF FINANCE. 
 
 Comptroller's Office. 
 
 February 20tli, 1900. 
 
 To the Committee on Cities of the Assembly : 
 
 Gen'I'lemen : — On February IH, ]900, I had the 
 honor of appearing before your Committee in sup- 
 port of two bills introduced by Mr. Fallows to 
 amend, respectively, sections 255 and 149 of the 
 Greater New York Charter. The first bill (Assem- 
 bly No. 742) affects the powers and duties of the 
 Law Department, and the second (Assembly No. 
 741) those of the Department of Finance. 
 
 It was necessarily impracticable within the brief 
 limits of that hearing to elucidate fully the rea- 
 sons which make this legislation of vital import- 
 ance, and I desire, therefore, In this communica- 
 tion to explain why it is of so urgent a character 
 as to render it inadvisable to postpone action by 
 referring the proposed Charter amendments to the 
 Charter Revision Commission which it is proposed 
 to create at this session of the Legislature. 
 
 I. 
 
 assembly bill no. 742. 
 
 This bill (See Appendix I) amends Section 255 
 of the Charter, relating to the Law Department in 
 two particulars : 
 
 (a.) By requiring the ai)proval of the Board of 
 Estimate and Apportionment before proceedings 
 shall be instituted by the Corporation Counsel to
 
 acquire title to real estate by condemnation pro- 
 ceedings, except for the openino; of streets. 
 
 (6.) By prohibiting the Corpoi-ation Counsel 
 from offering judgment in favor of or against the 
 City of Xe\v York without the previous written 
 approval of the Comptroller, and in case of a money 
 judgment exceeding $10,000, or relief other than 
 in the nature of a money judgment, by requiring 
 also the approval of the Mayor. 
 
 (rt.) As to the first mentioned amendment, relat- 
 ing to condemnation proceedings : 
 
 It has been the theory of our municipal govern- 
 ment for many years that the control of the City's 
 liabilities, expenditures and obligations should be 
 vested in one central and responsible body — the 
 Board of Estimate and Ajiportionment. The neces- 
 sity for some such control is so self-evident as to 
 require no argument. 
 
 The money of the taxpayers is almost wholly ex- 
 pended from two sources : (1) from taxation, and 
 (2) from the proceeds of sales of bonds. In the 
 making of the annual budget to be raised by taxa- 
 tion the Board of Estimate and Apportionment is, 
 subject to certain important legislative restrictions, 
 substantially free to determine the amounts of 
 departmental appropriations upon which tlie an- 
 nual burden of taxation dejjends (Charter, Section 
 226). In the determination of the extent to which 
 the City shall become indebted bj' the issue of 
 bonds for public improvements the Board of Es- 
 timate and Apportionment is also supposed to 
 possess similar powers {id.. Sections 48, 169, 174, 
 181, 184, &c.. &c.), although for a few pixrposes 
 the Commissioners of the Sinking Fund are vested 
 with these powers {id.. Sections 169, 180). 
 
 As a matter of fact, this theory of law is not 
 realized in practice for the following reasons : 
 
 (1.) By far the larger part of the annual budget
 
 is made up of the items of State taxes, Redemption 
 of and Interest on tlie City debt, and Sinldng Fund 
 Installments, which are regulated by statute and 
 necessarily beyond the control of the local author- 
 ities, and the salaries of such graded employees as 
 policemen, lirenien, school teachers and members 
 of the street cleaning force, whose salaries are fixed 
 by express legislative enactments. It is not my 
 intention to suggest any modification of existing 
 laws on this subject, if, indeed, such modification 
 be in any way practicable. 
 
 (2.) In regard to the issue of bonds the Board of 
 Estimate and Apportionment is deprived of its 
 legitimate authority owing to the manner in which 
 the City is obligated to pay for lands acquired by 
 the Corporation Counsel in behalf of the several 
 subordinate administrative branches of the city 
 government without the sanction or approval of 
 that Board. In order to aiipreciate the constant, 
 enormous, unliquidated liability of the city for 
 lands acquired in condemnation proceediugs, per- 
 mit me to refer to the fact that at the date of con- 
 solidation the City of New York had acquired title 
 to and taken possession of land valued at nearly 
 $88,000,000, which had not been paid for because 
 the awards had not been confirmed, and that pro- 
 ceedings were pending for the acquisition of addi- 
 tional land valued at over $5,000,000, the title to 
 which had not then vested in the city. 
 
 As to nearly all of these liabilities the Board of 
 Estimate and Apportionment of the City of New 
 York.as formerly constituted, had never had the op- 
 portunity of granting or withholding its approval. 
 The liabilities had been incurred through the action 
 of city departments and other boards of the city 
 government acting independently, and it was only 
 when the awards, having been confirmed by the 
 Supreme Court, became payable, that the Board of 
 Estimate and Apportionment was called upon to 
 exercise the purely ministerial and perfunctory
 
 fluty of autliorizing- the issue of bonds, for the 
 failure to perform which that board could have 
 been niandamused. The Department of Finance 
 had no official knowledge of these liabilities, and 
 when it became necessary to obtain knowledge of 
 the extent thereof that knowledge had to be sought 
 laboriously and with difficulty in the records of 
 other departments. 
 
 The Greater Xew York Charter is equally de- 
 ficient in this I'espect. 
 
 In order to understand this more readily it may 
 be well to give concrete illustrations. 
 
 (1.) The Commissioner of Water Supply desires 
 (as he has recently) to acquire a large and expen- 
 sive tract of land to increase the supply of water. 
 He prepares maps which receive the approval of 
 the Board of Public Improvements (Section 486). 
 These maps are filed by the Corporation Counsel 
 (Section 489), who shall thereupon apply for the ap- 
 pointment of Commissioners of Appraisal (Section 
 490), who, upon appointment, duly file their oaths 
 of office (Section 493), whereupon the "City of 
 New York shall be and become seized in fee of 
 all those parcels of real estate which are shown 
 on the said map hereinbefore referred to " (Section 
 494). It is at this time that the city becomes 
 liable or "indebted" for the land taken, yet 
 neither the Board of Estimate and Apportionment 
 nor the Comptroller is officially advised of this 
 fact until, perhaps, years afterwards, when, the 
 awards having been made and confirmed by the 
 Supreme Court these officials are required (Sections 
 509, 510, 169) to authorize {sic) the issue of the 
 necessary bonds. 
 
 (2.) The Board of Public Improvements deter- 
 mines to lay out a new i^ark (Section 436), the 
 whole cost of which is to be borne by the city of 
 New York, and directs the Corporation Counsel to 
 begin condemnation proceedings for that purjiose 
 (Section 970). Said Board also by resolution vests
 
 5 
 
 the title to the lancls in the city prior to confirma- 
 tion of the report of the Commissioners (Section 
 990) at whicli time tlie city becomes liable or " in- 
 debted.'" When the awards are payable and the 
 necessary bonds must be issued the Board of Esti- 
 mate and Apportionment is apprised for the first 
 time of the liabilities thus incurred. 
 
 (3.) The Board of Docks directs the Corporation 
 Counsel to acquire title to water-front property 
 by condemnation proceedings (Section 822) and it 
 becomes the duty of that official to proceed in ac- 
 cordance with his instructions. The value of the 
 land may be ten or twenty millions, but if he asks 
 any questions as to the financial ability 
 of the city to pay for it, there is nowhere in the 
 law any provision requiring this perfectly proper 
 curiosity to be satisfied. There is a certain 
 responsibility on the Board of Docks that 
 the bonds issued in behalf of the Depart- 
 ment shall not exceed $3,000,000 per annum 
 (Section 180), but as it would be uncertain when 
 the awards would become payable it would be a 
 difl[iciilt matter to show that the Board were in- 
 directly evading this provision of law. If, on the 
 other hand, after the property had been taken by 
 the city, it should require an issue of bonds in ex- 
 cess of $3,000,000 per annum to pay the awards to 
 the proj)erty owners, it is doubtful whether that 
 limitation would be respected by the Courts at the 
 cost of allowing a person's property to be taken 
 withoi^t prompt compensation. 
 
 The Board of Estimate and Apportionment has 
 no voice and no official knowledge of the enormous 
 liabilities which can thus be incurred. 
 
 These examples might be multiplied almost in- 
 definitely, for the truth is that there is pi'actically 
 no check by the responsible financial officers of the 
 city on the liabilities for land damage which the 
 several departments incur. Even the Corporation 
 Counsel cannot check them except by an abuse of
 
 6 
 
 power ; for he is vested with no discretion in re- 
 gard to nndertakinii' the proceedings. When it is 
 borne in mind that it is for awards for lands that 
 the proceeds of bonds are chiefly needed (by far 
 the larger part of liond sales being applied for this 
 purpose) it will be seen how loose and fatally de- 
 fective the city's financial system is in this respect. 
 An exception has been made in the amendment 
 relating to the opening of streets, because in nearly 
 all cases the awards for this purpose are offset by 
 assessments on the property benefited by the open- 
 ings and the city's obligations are therefore merely 
 temporary.
 
 (b.) As to the second amendment, relating to con- 
 fessions of judgment by the corporation counsel. 
 
 The provision of law in tlie Greater New York 
 Charter (§ 149) regulating the settlement and ad- 
 justment of claims against or in favor of the city is 
 identical in language with that contained in the 
 New York City Consolidation Act of 1882 (§ 123). 
 
 It reads as follows : 
 
 " He (the Comptroller) shall settle and adjust all 
 " claims in favor of or against the corporation, and 
 " all accounts in which the corporation is con- 
 " cerned as debtor or creditor." 
 
 This is the only specific grant of power on the 
 subject contained in either the present Charter or 
 the former Consolidation Act. 
 
 Nevertheless every Corporation Counsel has, 
 since 1876, maintained that as soon as a claim was 
 put in suit he possessed the power to settle, ad- 
 just and compromise the same as an implied power 
 incidental to the conduct of the city's law busi- 
 ness. 
 
 In 1876, when this controversy first arose be- 
 tween Hon. Andrew H. Green, then Comptroller, 
 and Hon. W. C. Whitney, then Corporation Coun- 
 sel, opinions were obtained from Hon. W. M. 
 Evarts and Hon. George T. Curtis, that such an 
 implied power existed. Mr. Whitney's position, 
 however, was quite moderate as compared with 
 that of the present Corporation Counsel. 
 
 Mr. Whitney apparently was satisfied with the 
 contention that when the adjiastment of a claim in- 
 volved only a question of law he should be free to 
 offer judgment, as, for example, if the facts, if ad- 
 mitted or proved, would not constitute a legal de- 
 fense. 
 
 This is apparent from the following extract from 
 Mr. Whitney's letter to Comptroller Green : 
 
 "All cases in which we have failed to act har- 
 " moniously with each other, and in which between
 
 8 
 
 " us both the City suffered, are cases involting 
 " qtiestions of law only ; for, since my accession 
 " to office, I have never failed to assume as correct 
 " all stalemeiits of fact made by any administra- 
 " tite department icith reyard to ichicli I deem 
 " myself to Jiace no discretion, whatever my opin- 
 " ion may be in regard to the probability of sus- 
 " taining the allegation of fact made by such 
 " department." 
 
 Each successive Comptroller and Corporation 
 Counsel has maintained stoutly his own view of 
 the law, but, prior to consolidation, the contro- 
 versy was never submitted to the courts for adjudi- 
 cation, and never became a practical matter because 
 these officers have always approached each other in 
 a spirit of compromise and harmony designed to 
 prevent unseemly contention and promote the 
 proper protection of the city's interests. On the 
 one hand, no Comptroller has objected to the set- 
 tlement by the Corporation Coun.sel of claims which 
 involved only questions of law, while, on the other 
 hand, the settlement of claims involving questions 
 of fact and the exercise of business jude:ment and 
 discretion, have, with substantial uniformity, been 
 submitted to the Comptroller. 
 
 In the early part of 1898 thejiresent Comptroller 
 endeavored to continue and perpetuate this amicable 
 and efficacious modus vivendi (see letter, Appendix 
 III). The reply of the Corporation Counsel (see 
 Appendix IV) shows the spirit in which this ad- 
 vance was met. It exhibited a change of attitude 
 which was apparently irreconcilable. 
 
 The issue thus raised seemed of paramount im- 
 poi'tance. 
 
 It is apparent that if a claimant, after failing to 
 secure what he legards as a satisfactory settlement 
 from the Comptroller, can, by the simple process of 
 serving a summons, take his claim over to the office 
 of the Corporation Counsel and obtain a settlement 
 more advantageous to his interests, the Law De- 
 partment takes the place of the Department of
 
 9 
 
 Finance as the Auditing lirancii of the city govern- 
 ment. 
 
 Such a result was seen to be inevitable, and the 
 result foreseen has actually come to pass. 
 
 Consider for a moment tlie revolutionary nature 
 of this change as ajjplied to the scheme of govern- 
 ment provided by the Charter. 
 
 1. The Comptroller is the only official to whom 
 the law nuvkes a specilic grant of power to settle 
 and adjust claims. The alleged power of the Cor- 
 poration Counsel has to be elaborately implied 
 from the duty of having "charge and conduct of 
 all the law business of the corporation and its de- 
 partments and boards." 
 
 2. An attorney possesses no power to make an 
 offer of judgment in behalf of a private client with- 
 out the latter's consent. In the case of a munici- 
 pal corporation, like the City of NeAv York, which 
 can act only through its duly authorized repre- 
 sentatives — in this case the Comptroller — such 
 consent should also be obtained. 
 
 3. The Charter provides tliat "the finance de- 
 partment shall have control of the fiscal concerns 
 of the corx)oration." Yet it is claimed that the 
 mere service of a summons will transfer that con- 
 trol to the Law Department. 
 
 4. The Comptroller is an officer elected by the 
 people ; the Corporation Counsel is appointed by 
 the Mayor. 
 
 5. The Comptroller gives an official bond of 
 $200,000 ; the Corporation Counsel one of $5,000. 
 
 6. Nothing is clearer than that the Comptroller, 
 at least before suit brought, is vested with abso- 
 lute discretion, sul)ject to his responsibility as an 
 official in the settlement and adjustment of claims 
 for and against the City. 
 
 He certainly was not intended to be a mere au- 
 tomaton or machine.
 
 10 
 
 But in what matters is dist-retiou of the greatest 
 importance ? 
 
 Certainly not in iincontested chdms— in matters 
 where the rights of tlie City are perfectly clear and 
 defined. 
 
 In such matters no discretion is necessary. Tlie 
 payment of a just debt involves nothing but the 
 drawing of a warrant— a purely ministerial act — 
 wliere the facts are certain and well known. 
 
 On the other hand, it is precisely in questions 
 where the City's rights are contested and are 
 doubtful that discretion is essential. 
 
 It is in complicated and not in clear financial 
 matters that the highest intelligence is needed for 
 the protection of the vast interests belonging to 
 the municipality. 
 
 And yet the contention of the Corporation Coun- 
 sel, if correct, would result in entirely taking that 
 discretion from the officer in whom it is expressly 
 vested at the very time and iinder the very circum- 
 stances when its exercise becomes of the greatest 
 importance, and in placing it solely upon the 
 shoulders of another officer, concerning whose 
 powers in this regard the statute is wholly silent. 
 
 And, moreover, it must be kept in mind that the 
 result would not be merely a transfer of that dis 
 cretiou, but would be to vest the Corporation Coun- 
 sel with the ijowers of a Court of Appeal to re- 
 verse, annul or modify the discretion which the 
 Comptroller had theretofore exercised. 
 
 In other words, the use by the Comptroller in 
 the rejection of a claim against the city of the dis- 
 cretion with whicli lie is expressly vested by the 
 Charter would result, instead of rendering his dis- 
 cretion effectual, in vesting another official with 
 full and unrestricted power to undo that which the 
 Comptroller had purported to accomplish. 
 
 7. The action of the Comptroller in paying 
 claims against the city is carefully hedged about 
 by an elaborate system of checks ; no such pro-
 
 11 
 
 vision is made for the Corporation Counsel. For 
 example, it is jirovided (§ 195) that no warrant for 
 the payment of the city's moneys " shall be signed 
 by the Comptroller or countersigned by the Mayor, 
 except upon vouchers for the expenditure of the 
 amount named therein, examined and allotced by 
 an. axdifor of accoitnts, approved by the Comp- 
 troller, and filed in the Department of Finance, 
 except ill tin- case of judgments.'''' 
 
 This last exception ought to be conclusive as to 
 the intent and spirit of the law. Judgments need 
 not he audited hg an auditor of accowds hefore 
 being paid by the Comptroller. 
 
 Why ? Because it was assumed that judgments 
 would come to the Comptroller for payment after an 
 audit of the most thorough efficiency — the trial of 
 an action. The city in paying a judgment might be 
 supposed to have the protection of a Court, and its 
 solemn decision based upon both law and facts. 
 Yet in the last two years not one judgment 
 IN ten that has been paid out of the city 
 
 TREASURY HAS REPRESENTED ANYTHING BUT THE 
 SOLE, UNCONTROLLED AND UNCHECKED ACTION OF 
 
 AN APPOINTIVE OFFICER. Where judgment is en- 
 tered by consent or by default or upon offer of 
 judgment, the judicial decree represents nothing 
 but the acquiescence of the defendant. The 
 Charter names the Comptroller as the officer to ac- 
 quiesce in behalf of the city and under these cir- 
 cumstances to use the empty "judgments" of 
 Courts as a cover for the audits of the Corporation 
 Counsel is a prostitution of the judiciary system 
 of the State. 
 
 The only machinery- for audit in the city govern- 
 ment provided by tlie Charter is in the Depart- 
 ment of Finance— in the "Auditing Bureau" of 
 that department. Section 151 larovides that this 
 bureau shall have such "clerks and assistants, 
 examiners, engineers, inspectors and employees as 
 the Comx^troller may deem necessary and proper."
 
 12 
 
 The Comptroller lias them ; the Corporation 
 Counsel has not. 
 
 In view of these considerations reconrse was had 
 to the Conrts. 
 
 A taxpayer's action was brought by Mr. Irving 
 T. Bush with the view of obtaining an adjudica- 
 tion. Mr. Justice Prior at Special Term rendered 
 a decisi(m upholding the views cf the Corporation 
 Counsel. It lias been impossible as yet to secure 
 a review of this decision on appeal. 
 
 In the meantime, however, the Corporation 
 Counsel himself began a proceeding to set aside 
 judgments confessed by his predecessor in the sum 
 of 8700,000 in favor of certain aquediict contractors 
 whose claims had previously been rejected by the 
 Court of Appeals. Neither the Comptroller nor 
 Mr. BtisIi wei-e permitted to be heard in tliis pro- 
 ceeding. The Corporation Counsel in liis argument 
 carefully avoided the question of inherent power, 
 and, as a result, the Appellate Division of the Su- 
 preme Court sustained the judgments in question 
 on the assumption of fact, that Comptroller Fitch 
 had acquiesced in the settlement. The Court di- 
 vided three to two, the minority (^Judges McLaugli- 
 lin and Patterson) holding as a matter of fact that 
 "the Comptroller did not consent to the settle- 
 ment," and then decided squarely that under the 
 circumstances the Corporation Counsel possessed 
 no power to make such an offer of judgment. 
 
 This dissenting opinion being the only opinion of 
 any Appellate Court on this subject is printed in 
 full hereafter, and particular attention is called to 
 the strong expressions contained therein. (See Ap- 
 pendix V.) The decision of the Court of Appeals 
 in this case having been based uiion a certificate 
 from the Appellate Division containing a state- 
 ment of fact (^believed by a majority of the Judges) 
 that the Comptroller acquiesced in the settlement 
 does not, of course, touch upon tlie controversy in 
 question. 
 
 It would seem, therefore, so far as judicial opiu-
 
 13 
 
 ions are concerned, that ultimately the contention 
 of the Comptroller will be sustained by the Apjjel- 
 late Courts. But such a result can be hoped for 
 only after long delays. The evil complained of 
 should be relieved at once by appropriate legisla- 
 tion. If, by any possibility the Court of Appeals 
 should decide that the Corporation Counsel pos- 
 sesses the power under the cover of legal proceed- 
 ings to dispose of the city's property without let 
 or hindrance the law should be amended. ' If, on 
 the other hand, the decision should be the reverse 
 that decision should be forestalled. 
 
 In the arguments made l)y the Corporation 
 Counsel in the Bnsh litigation undue stress was 
 placed upon the contention that to require the ap- 
 proval of any other official for offers of judgment 
 would interfere with and delay the conduct of the 
 city's business. This argument ignores the fact 
 that some check of this kind is met with in the 
 charters of nearly all large cities, and that in the 
 ordinary routine of the business of the Department 
 of Finance thousands of vouchers are submitted by 
 the Comptroller to the Corporation Counsel for 
 advice, on account of which the latter has never 
 been heard to complain that the city's business has 
 been delayed. 
 
 In private litigation the fact that the approval 
 of the client is necessary to a compromise of the 
 case has never been found to interfere in the slight- 
 est degree with the efficiency of the services per- 
 formed by the attorneys. The client is absolutely 
 unable, even should he be desirious, of directing 
 the attorney in matters of. law. He is, how- 
 ever, perfectly able to understand the con- 
 clusion which will follow from the settling of or 
 omission to settle his rights, and when this ques- 
 tion arises there is no reason whatever why it 
 should not be ijresented to the client by the attor- 
 ney, together with the advice of the latter as to 
 those matters wherein he is particularly qualified
 
 14 
 
 to advise, thus subjecting the question to the in 
 spection of two minds instead of one. 
 
 The same is true as to a municiiKil rorpora- 
 tion. 
 
 I venture to say that if the power of the Comp- 
 troller, as herein claimed, is fixed and limited be- 
 yond controversy, there will be no greater danger 
 of any detriment to the city's interests than there 
 Avoiild be in the case of a private client, and. on 
 the contrary^ that the necessity tchich wilt thus 
 arise f 07- a coiisultafio/i between two of the chief 
 officers of the municipality in matters of such im- 
 portance as the city's rights is muc7i better calcu- 
 lated to protect the city's rights than would be the 
 case if a power of such vast and far-reaching im- 
 portance be left solely to the control of the legal 
 adoiser.
 
 15 
 II. 
 
 Assembly Bill No. 741. 
 
 This bill (see Appendix II) amends Section 149 
 of the Charter, relating to the Department of 
 Finance in the following iiarticulars : 
 
 {a.) By enabling the Auditing branch of the city 
 government to j)ass upon the reasonableness of 
 liabilities incurred by heads of departments upon 
 " dei)artmental orders" — i. e., contracts of less 
 than $1,000 each made without competition among 
 bidders. 
 
 (6.) By providing a fund out of which claims 
 settled and adjusted by the Comptroller under the 
 powers which he now possesses by law may be 
 paid. 
 
 (c.) By placing in the hands of the Board of 
 Estimate and Apportionment control over the 
 liabilities to be incurred for local improvements 
 each year payable from the Street Improvement 
 Fund. 
 
 (a. ) In regard to ike first amendment relating 
 to ^'departmental orders^ 
 
 The Auditing Bureau and the Comptroller are 
 popularly supposed to possess powers under the 
 Charter whicli would enable them in the audit of 
 bills, to check extravagance or improvidence on 
 the part of heads of departments and others 
 authorized to incur liability in behalf of the city. 
 This popular impression is erroneous. Contracts 
 exceeding $1,000 in amount must be made at 
 public letting after due advertisement and 
 competition as provided by law. Contracts 
 of less than this amount, however, can 
 be made without competition. There has always 
 been a tendency on the part of some city officials to 
 evade the provisions of law requiring public letting 
 of contracts by dividing the orders on works into
 
 16 
 
 amounts of less than $1,000 each, and it has fre- 
 quently happened that the prices agreed to by de- 
 partments have been excessive. Sometimes after 
 investigation by the Auditing Bureau this luis been 
 admitted by the heads of dej)artments making the 
 contracts. Nevertheless, under the law as it now 
 stands, it has been held that the agreement made 
 by the head of the department with the contractor, 
 is linal and conclusive, and that the Auditing Bur- 
 eau and the Comptroller possess no power to reduce 
 the prices charged. Such a decision was rendered 
 by the Supreme Court even in such a flagrant in- 
 stance as the Eagle Safe case (see Appendix VII), 
 wliere it was held that the action of the Commis- 
 sioner in issuing the departmental order was bind- 
 ing upon the city no matter how excessive tlie 
 prices charged might liave been. Under these cir- 
 cumstances the work of auditing claims becomes 
 merely perfunctory and might as well be performed 
 by an automaton. The amendment in question 
 enables the Comptroller to reduce excessive claims 
 while offering all necessary and proper protection 
 to the legal rights of the contractor. 
 
 (b. ) In regard to the second amendment creat- 
 ing a fund out of lohicJi claims settled and ad- 
 justed 1)1/ the Comjjt roller mag be paid. 
 
 There are always a certain number of claims pre- 
 sented to the Comptroller for settlement each year, 
 the justice of which is not disputed, but which 
 cannot be paid by the Comptroller because no 
 proper fund exists out of which payment can be 
 made. The Comptroller is therefore obliged to re- 
 fuse payment of these claims, and after suit is 
 begun it is the practice of the Corporation Counsel 
 to offer judgment, whereupon the claims in ques- 
 tion are paid out of the judgment fund, whicli can 
 be by law constantly replenished by the issue of 
 revenue bonds. The existence of this (^lass of 
 claims offers a constant excuse for the practice of
 
 17 
 
 confessions of judguient by the Corporation Coun- 
 sel, althougli this course mulcts the city in con- 
 siderable amounts of legal costs which could other- 
 wise be avoided. The amendment in question es- 
 tablishes a "claim fund" on the same basis as 
 the judgment fund is now established by law, and 
 will enal)le the Comptroller to pay those claims 
 promptly, thereby rendering prompt justice to the 
 city's just creditors and saving a considerable 
 amount annually in the costs of legal proceedings. 
 It is not believed that this amendment will ex- 
 cite opposition from any quarter, since the Corpor- 
 ation counsel has caused a bill to be introduced in 
 the Legislature intended to accomplish the same 
 result. 
 
 (c.) In regard to the third amendment limiting 
 the liaJ>ilities to be annually incurred in behalf of 
 the street improvement fund. 
 
 The liabilities of the Street Improvement 
 Fund arise out of contracts for local im- 
 provements, the costs of which are ulti- 
 mately to be borne by assessments upon 
 the ijroperty benefitted. The assessment lists, 
 however, are not transmitted to the Board of 
 Assessors until after each work is completed, and 
 it is many years after the city has advanced the 
 money to contractors in payment of work per- 
 formed, before the assessments are collected from 
 the iDroperty owners. The result is that assess- 
 ment bonds have to be issued to replenish this 
 fund in very large amounts, and these bonds 
 technically form a part of the city's funded debt. 
 Owing no doubt to the fact that the law con- 
 templates the ultimate reimbursement of the city 
 for amounts thus advanced in Ijehalf of property 
 owners, an exception is made in the Charter (§ 149), 
 in favor of this class of contracts by allowing them 
 to be made in unlimited amounts without the 
 necessity of certificates by the Comptroller that
 
 18 
 
 funds have been provided to meet the expense 
 thereof. 
 
 While it may be desirable not to place these con- 
 tracts on the same footing as ordinary contracts, 
 the whole expense of which is borne by the city, it 
 is, nevertheless, necessary that some check should 
 be established wherebj^ the city might not be com- 
 pelled to issue assessment bonds in excessive 
 amounts at times when it would be financially im- 
 possible or undesirable to do so. The amendment 
 in question, therefore, authorizes the Board of 
 Estimate and Apportionment to determine how 
 many of these contracts in the aggregate may be 
 entered into in any fiscal year and the Comptroller's 
 certificate is then required only in regard to the 
 fact that each such contract as presented to him 
 for registration does not together with the amount 
 of all similar contracts previously entered into 
 during the current year exceed the aggregate 
 amount thereof so authorized by the Board of 
 Estimate and Apportionment. 
 
 It will be seen therefore that Assembly Bills 
 Nos. 741 and 742 while independent measures, each 
 desirable in regard to the subject matter respec- 
 tively contained therein, sujtplement each other, 
 and taken together constitute a scheme of amenda- 
 tory legislation for the financial sj'stem of the city 
 which will correct serious evils, the existence of 
 which has been recognized for many years by 
 students and critics of the municipal government 
 of the city of New York. 
 
 I have the honor to be with great respect, 
 Your obedient servant, 
 
 Bird S. Coler, 
 
 Comptroller.
 
 19 
 
 APPENDIX NO. I. 
 
 STATE OF NEW YORK. 
 
 No. 742. Int. 653. 
 
 In Assembly, 
 
 February 5, 1900. 
 
 Introduced by Mr. Fallows — read once and re- 
 ferred to the committee on affairs of cities. 
 
 AN ACT 
 
 To amend chapter three hundred and seventy-eight 
 of the laws of eighteen hundred and ninety- 
 seven, entitled "An act to unite into one munici- 
 pality under the corporate name of the city of 
 New York the various communities lying in and 
 about New York harbor, including the city and 
 county of New York, the city of Brooklyn and 
 the county of Kings, the county of Richmond, 
 and part of the county of Queens, and to provide 
 for the government thereof," relative to the law 
 department. 
 
 The People of the State of New York^ represented 
 in Senate and Assembly, do enact asfoUotos : 
 
 Section 1. Section two hundred and fifty-five of 
 chapter three hundred and seventy-eight of the 
 laws of eighteen hundred and ninety-seven is 
 hereby amended so as to read as follows : 
 
 § 255. There shall be a law dejiartment of the 
 city of New York, the head wliereof shall be called 
 the corporation counsel, who shall be the attorney 
 and counsel for the city of New York, the mayor, 
 the municipal assembly, and each and every officer, 
 board and department of said city, except as other- 
 wise herein provided. The salary of the corpora- 
 tion counsel shall be fifteen thousand dollars a 
 year. The corjjoration counsel shall liave charge and-
 
 20 
 
 rondiict of all the law business of the corporation 
 and its departments and boards, and of all law busi- 
 ness in which the city of Xew York is interested, 
 except as otherwise herein ijrovided. He shall 
 have charge and conduct of the legal proceedings 
 necessary in opening, widening, altering and clos- 
 ing streets, and in acquiring real estate or interests 
 therein for the city by condemnation proceedings, 
 and the preparation of all leases, deeds, contracts, 
 bonds and other legal papers of the city or of, or 
 connected with, any department, board or officer 
 thereof, and he shall approve as to form all such 
 contracts, leases, deeds, bonds and other legal 
 papers ; provided, hoiceve?; tliat he shall not insti- 
 tute any proceedinrj for acquiring title to real es- 
 tate by condemnation proceedings, except for open- 
 ing streets, unless the same s7iall have been ap- 
 proved by the concurrent note of all the viembers of 
 the hoard of estimate and apportionment upon a 
 statement to be furnished said board, of the valua- 
 tion of sncJi veal estate as assessed for purposes of 
 taxation ; and provided, further, that the board of 
 estimate and apportionmei^t, shallhave iwxoer by a 
 majority vote to direct such changes to be made in 
 the forms of contracts and specifications as may 
 seem to promote the interests of the city. He shall 
 be the legal adviser of the mayor, the 
 municipal assembly and the various depart- 
 ments, boards and officers except as other- 
 wise herein provided, and it shall be his duty to 
 furnish to the mayor, the municipal assembly and 
 to every department, board and officer of the 
 city all such advice and legal assistance as counsel 
 and attorney in or out of court as may be required 
 by them, or either of them, and for that j)urpose, 
 the corporation counsel may assign an assistant or 
 assistants to any department that he shall deem to 
 need the same. No officer, board or department 
 of the city, unless it be herein otherwise specially 
 provided, shall have or employ any attorney or 
 counsel. The corporation counsel, except as other-
 
 21 
 
 wise herein provided, shall have the right to in- 
 stitute actions in law or equity, and any proceed- 
 ings provided by the code of civil procedure or by 
 law in any court, local, state or national, to main- 
 tain, defend and establish the rights, interests, 
 revenues, property, privileges, franchises, or de- 
 mands of the city,or of any partor portion thereof, 
 or of the people thereof, or to collect any money, 
 debts, fines, or penalties or to enforce the laws and 
 ordinances. He shall be a member of the board 
 of estimate and apportionment, and of the board 
 of public improvements. He shall not he em- 
 powered to compromise, settle or arljtisi any rights, 
 claims, demands or causes of action infatior of 
 or against the city of New York, or to permit, 
 offer or confess judgment against the city, or to 
 accept any offer of judgment in favor of the city 
 witlioui tlte previous loritten approval of the comp- 
 troller ; and in case of any claim for a money 
 judgment exci^eding ten iliousand dollars, or for 
 relief other than in the nature of a mo)iey judg- 
 ment, the previoiis written approval of the mayor 
 shall be also necessary. 
 
 § 2. This act shall take eilect immediately.
 
 22 
 
 APPENDIX NO. II. 
 
 STATE OF NEW YORK. 
 
 ISIo. 741. Int. 652. 
 
 In Assembly, 
 
 February 5, 1900. 
 
 Introduced by Mr. Fallows — read once and re- 
 ferred to the committee on affairs of cities. 
 
 AN ACT 
 
 To amend chapter three liundred and seventy-eight 
 of tlie hnvs of eighteen hundred and idnety-seven, 
 entitled "An act to unite into one municipality 
 under the corporate name of the city of New 
 York the various communities lying- in and about 
 New York harbor, including the city and county 
 of New York, the city of Brooklyn and the 
 county of Kings, the county of Richmond, and 
 part of the county of Queens, and to provide for 
 the government thereof," in regard to the de- 
 partment of finance. 
 
 The people of tlie State of New Yoric, represented 
 in Senate and Assembl?/, do enact asfolloros : 
 
 Section 1. Section one liundred and forty-nine of 
 chapter three hundred and seventy-eight of the 
 laws of eighteen hundred and ninety-seven, is 
 hereby amended so as to read as follows : 
 
 § 149. The finance department shall have control 
 of the fiscal concerns of the corporation. All 
 accounts rendered to or kept in the other depart- 
 ments shall be subject to the insj^ection and re- 
 vision of the officers of this department. It shall 
 prescribe the forms of keeping and rendering all 
 city accoimts, and except as herein otherwise pro-
 
 23 
 
 vided. the manner in which all salaries shall be 
 drawn, and the mode by which nil creditors, officers 
 and employes of the corporation shall be paid. All 
 payments by or on behalf of the corporation, ex- 
 cept as othei-wise specially provided, shall be made 
 through the proper disbursing officer of the depart- 
 ment of finance, on vouchers to be filed in said de- 
 partment, by means of warrants drawn on the 
 chamberlain by the comptroller, and countersigned 
 by the mayor. All contracts inriolvivg an obliga- 
 tion payable from, the city treasury for toorJc to be 
 done or supi^fUes lo he furnished, not made at 
 public letting in the manner provided in section 
 four hundred and nineteen of this act, shall be 
 evidenced by orders or requisitions in writing 
 upon forms to be approved by the comptroller, 
 signed by the proper head of the department, 
 board, officer or commission. Such orders shall 
 either state the specific amount agreed upon for 
 the said work or supplies, or shall state that pay - 
 ment therefor shall be at the current market rates, 
 but in either event it shall be lawful for and the 
 duty of the department of finance in auditing and. 
 paying claims against the city treasury arising 
 thereunder, to deduct therefrom any charge in ex- 
 cess of such current market rates ; provided how- 
 ever, that such action by the department of finance 
 shall not be conclusice to the extent of presenting 
 creditors of the city of New York from disputing 
 the justice of such determination by a proper 
 action at law. No claim shall be enforceable at 
 law against the city of Ne70 York for work done 
 or supplies furnished, not arising out of a con- 
 tract made at public letting, and excepting pur- 
 chases for contingencies of less than ten dollars 
 unless the same sJiall have been duly ordered by 
 the proper head of department, board, officer or 
 commission in the manner herein, promded, and a 
 reference to this section, shallhe printed on all such 
 requisitions or orders. The comptroller may re- 
 quire any person presenting for settlement an ac-
 
 24 
 
 count or claim for any cause whatever, against the 
 corporation, to be sworn before him touching such 
 account or claim, and when so sworn, to answer 
 orally as to any facts relative to the justness of 
 such account or claim. Willful false swearing be- 
 fore him is perjury, and punishable as such. He 
 sliall 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 * 
 but in adjusting and settling such claims, he shall, 
 as far as practicable, be governed by the rules of 
 law and principles of equity which prevail in 
 courts of justice. The power hereby given to settle 
 and adjust such claims shall not be construed to 
 give such settlement and adjustment the binding 
 effect of a judgment or decree, nor to authorize the 
 comptroller to dispute the amount of any salary 
 established by or under the authority of any officer 
 of department authorized to establish the same, 
 nor to question the due performance of his duties 
 by such officer, except when necessary to prevent 
 fraud. Claims settled and adjusted, by the comp- 
 troller under the author it)/ of this section, shall, if 
 no appropriation in the hud get he ijroperly appli- 
 cahle thereto, be paid from the proceeds of revenue 
 bonds issued as pronided. by section one hund,red. 
 and eighty-eight of this act ; provided, hoicever, 
 that where such, claim shall amount to ten thous- 
 and, dollars or more the approval in writing of 
 the mayor shall be obtained, before payment thereof 
 sliall be made. The comptroller shall not reduce the 
 rate of interest upon any taxes or assessments below 
 the amount fixed by law. No contract hereafter 
 made, the expense or the execution of which is not 
 by law or ordinance, in whole or in part, to be paid 
 by assessments upon the property benefited, shall 
 be binding or of any force, unless the comptroller 
 shall endorse thereon his certificate tliat there re- 
 mains unexpended and unapplied, as herein pro- 
 vided, a balance of the appropriation or fund ap- 
 plicable thereto, sufficient to pay the estimated ex-
 
 25 
 
 pense of executing such contracts as certified by 
 the officer making the .same. Bnt tliis provision 
 shall not apply to work done, or supplies furnished, 
 not involving the expenditui'e of more than one 
 thousand dollars, unless the same is required by 
 law to be done by contract at public letting. It 
 shall be the duty of the comptroller to make such 
 endorsement upon every such contract so presented 
 to him, if there remains unapplied and unexpended 
 such amount so specified by the officer making the 
 contract, and to thereafter hold and retain such sum 
 to pay the expense incurred until the said contract 
 shall be duly performed. And such endorsement 
 shall be sufficient evidence of such appropriation 
 or fund in any action. In the case of conlracts 
 payable in whole or in part from assessments upon 
 the property henefited, the aggregate amount there- 
 of to be entered into by tJie city of Neio York in 
 any one calend.ar year, shall not exceed the amount 
 thereof which shall be authorized, by the board of 
 estimate and apportionment for such year by reso- 
 lution adopted by the concurrent vote of all the 
 members thereof ; and no such contract shall be 
 Innding or of any force, unless the comptroller 
 shall indorse thereon his certificate, that the 
 amount thereof together loith the amount of all 
 similar contracts previously entered into duriitg 
 the current year does not exceed the aggregate 
 amount thereof so authorized by the board, of esti- 
 mate and, apportionment. The comptroller shall 
 furnish to each head of department, weekly, a 
 statement of the unexpended balances of the ap- 
 propriation of his department. Wages and sala- 
 ries, except as otherwise provided in this act, may 
 be paid upon payrolls, upon which each person 
 named thereon shall separately receipt for the 
 amount paid to such person, and in every case of 
 payment upon a payroll, the warrant for the ag- 
 gregate amount of wages and salaries included 
 therein may be made payable to the superintend- 
 ent, foreman or other officer designated for the
 
 26 
 
 purpose. The comptroller shall enter into, npon 
 behalf of the city of New York, any lease autho- 
 rized by the commissioners of the sinking fund of 
 property leased to the city. The assent of the 
 comptroller shall be necessary to all agreements 
 hereafter entered into by any city officer, hoards 
 comviission or department for the acquisition by 
 purchase of any real estate or easement therein, 
 when such an agreement involves an obligation to 
 pay or an expenditure of any money on behalf of 
 the city, and in any proceedings that may hereafter 
 be had to acquire real estate or hereditaments for 
 or on behalf of the corporation of the city of New 
 York, before an award shall be confirmed, impos- 
 ing an obligation upon the city to pay any moneys, 
 the comptroller shall have thirty days' notice in 
 writing, stating before whom and at what time 
 such proceeding will take place. The comptroller 
 of the city of New York shall be elected and shall 
 hold office as provided in this act and he shall re- 
 ceive an annual salary of ten thousand dollars. 
 
 § 2. This act shall take effect immediately.
 
 27 
 
 APPENDIX NO. III. 
 
 CITY OF NEW YORK, 
 finance department, 
 comptrollek's office. 
 
 March 14th, 1898. 
 
 Hon. John Whalen, 
 
 Corporation Counsel. 
 Sir-: 
 
 I have received your coninuinication of the 
 8th inst. transmitting, with your approval, a 
 transcript of Judgment in the case of Edward R. 
 Schafer, as administrator, against The Mayor, etc., 
 in wliich you state that this suit was compromised 
 by your offer of judgment in pursuance of a settle- 
 ment of the claim which you effected witli tlie at- 
 torneys. Of this settlement the Comptroller had 
 no notice. 
 
 I desire to submit for your careful considera- 
 tion, certain questions in regard to the settlement 
 of claims against the City which have been put in 
 litigation. 
 
 Both under section 123 of the Consolidation Act 
 and under section 149 of the Charter, the Comp- 
 troller is the officer charged with the duty of set- 
 tling and adjusting "all claims in favor of or 
 against the corporation." I am aware of the fact 
 that it has always been asserted by the Law De- 
 partment that this grant of power was not ex- 
 clusive to the extent of barring the Corporation 
 Counsel from settling claims against the City with- 
 out the ai:)proval of the Comptroller where an action 
 has once been begun. 
 
 In this contention the Finance Department has 
 never acquiesced, and tlie subject has been the 
 cause of lengthy and exhaustive correspondence, 
 which is to be found on the files of our respective 
 departments.
 
 Fortunately for the City, this disagreement be- 
 tween the two departments has never, to my knowl- 
 edge, reached the practical stage of submission to 
 the Courts ; for wliile each Corporation Counsel 
 has always maintained his right in law to settle all 
 claims in litigation without concurrence by the 
 Comptroller, such settlements have for many years, 
 bj^ amicable agreement, been sulnnitted to the 
 head of the Finance Department for his considera- 
 tion. On the other hand no Comptroller, has. as I 
 am informed, stood on his undoubted right to ef- 
 fect settlements of claims against the City, without 
 the co-operation of the Corporation Counsel, but 
 such settlements liave been uniformly submitted 
 to the judgment of the head of the Law Depart- 
 ment. "Whatever exceptions there may liaA'e been 
 in the last twenty years to this rule, they will be 
 found to be so few or unimportant as onlj' to em- 
 phasize the good faith with which this agreement 
 has been maintained. 
 
 This friendly co-operation of the two depart- 
 ments has been of great advantage to the City. It 
 need be taken as reflecting in not the slightest de- 
 gree on the good faith of any of your predecessors 
 or their assistants to state that the records of 
 this department show a large number of instances 
 where settlements submitted by the Law Depart- 
 ment have been finallj^ compromised at amounts 
 considerably smaller after action thereon by the 
 Comptroller. I have no doubt also that the con- 
 verse has been true in the case of settlements ini- 
 tiated by the Comptroller. Whatever the actual 
 amount of saving to the City has been as the result 
 of this practice, I feel that it scarcely needs an ar- 
 gument to demonstrate the desirability of main- 
 taining such a check ; since the unlimited power of 
 compromise granted by both the Consolidation Act 
 and the Charter is too vast to be properly exer- 
 cised by the fallible judgment of any one j)ublic 
 servant. 
 
 From another point of view, also, it seems to me
 
 29 
 
 that the co-operation of our two departments 
 shoiikl be maintained in the future as in tlie i^ast. 
 
 I liave the utmost confidence in tlie judgment 
 and discretion of the present head of the Law De- 
 jiartment, and it is by no means because I have 
 any overweening regard for my own judgment that 
 I am addressing this communication to you. The 
 liistory of municipal government, unfortunately 
 shows, however, that at some time in the future it 
 may transpire that the conduct of the Law Depart- 
 ment will pass under the control of some one less 
 able or less zealous in the public service than your- 
 self. Should this hajipen the City would certainly 
 have cause to regret a departure from tliat salutary 
 check in the settlement of claims against the City, 
 which has heretofore prevailed. It is, therefore, 
 largely on account of the importance of the prece- 
 dent which you would be setting if you should 
 establish the position that the Comptroller and the 
 Corporation Counsel should not consult each other 
 in the settlement of claims against the City that I 
 respectfully urge upon your attention the desir- 
 ability of continuing the i-elation of our two re- 
 spective departments on the same basis as has 
 heretofore existed. 
 
 It will be quite sufficient, if, as heretofore, in 
 cases which you propose to settle, you notify the 
 Comptroller of the terms of the proposed settle- 
 ment, with the statement that if no objections are 
 submitted within a certain number of days, an 
 offer of judgment will be made. 
 
 In view of the importance of this matter, I would 
 be gratified at receiving an early reply. 
 Very truly yours. 
 
 Bird S. Coler, 
 
 Comptroller.
 
 80 
 
 APPENDIX NO. IV. 
 
 LAW DEPARTMENT 
 
 OFFICE OF THE CORPORATION COUNSEL. 
 
 New York, May 16th, 1898. 
 
 Hon. Bird S. Coler, 
 
 Comptroller. 
 
 Sir. — I am in receipt of your communication, 
 bearing date 14 March, subaiitting to me certain 
 questions in regard to the settlement ot claims 
 against the city, which have been put in litigation. 
 
 Tlie matter whicli gave rise to your communica- 
 tion, was the transmission to you by me, with my 
 approval, of a transcript of judgment in the case 
 of Edward R. Schafer, as Administrator, against 
 The Mayor, etc., in which I stated that this suit 
 was compromised by my offer of judgment, in 
 pursuance of a settlement of the claim, and you 
 correctly state that of this settlement the Comp- 
 troller had no notice. 
 
 Your letter is quite lengthy, but I take from it 
 the following passages, which state, in substance 
 your suggestion and contention : 
 
 " Both under Section 123 of the Consolida- 
 " tion Act and under Section 149 of the Char- 
 " ter, the Comptroller is the officer charged 
 " with the duty of settling and adjusting 'all 
 " claims in favor of or against tlie coi'poration.' 
 "1 ain aware of the fact that it has always 
 " been asserted by the Law Department that 
 " this grant of power was not exclusive to the 
 " extent of liarring the Corporation Counsel 
 " from settling claims against the city with- 
 " out the approval of the Comptroller where 
 " an action has once been commenced. 
 
 •' Li tliis contention the Finance Depart- 
 " ment has never acquiesced, and the subject 
 " has been the cause of lengthy and exhaustive 
 " correspondence, which is to be found on the 
 " files of our respective dejiartments.
 
 31 
 
 " Fortunately for the city, this disagree- 
 " ment between the two departments has 
 " never, to my knowledge, reached the prac- 
 " tical stage of submission to tlie Courts ; for, 
 '• while each Corporation Counsel has always 
 " maintained his right in law to settle all 
 " claims in litigation without concurrence by 
 " the Comptroller, such settlements have for 
 " many years, by amicable agreement, been 
 " submitted to the head of the Finance De- 
 " partment for his consideration. On the 
 "other hand, no Comptroller lias, as I am in- 
 " formed, stood on his undoubted right to 
 " effect settlements of claims against the city, 
 " without the co-operation of the Corporation 
 "Counsel, but such settlements have been 
 " uniformly sulimitted to the judgment of the 
 " head of the Law Department. ^Vhatever 
 " exceptions there may have been in the last 
 " twenty years to this rule, they will be found 
 "to be so few or unimportant as only to 
 " emphasize the good faith with which this 
 " agreement has been maintained. 
 
 " This friendly co-operation of the two de- 
 " partments has been of great advantage to 
 "the City. It need betaken as reflecting in 
 " not the slightest degree on the good faith of 
 " any of your predecessors or their assistants 
 " to state that the records of this department 
 " show a large numlier of instances where set- 
 " tlements sulunitted by the Law Department 
 " have been finally compromised at amounts 
 " considerably smaller, after action thereon by 
 " the Comptroller. I have no doubt also, that 
 " the converse has been true in the case of 
 " settlements initiated by the Comptroller. 
 " Whatever the actual amount of saving to 
 " the city has been as the result of this prac- 
 " tice, I feel that it scarcely needs an argu- 
 " ment to demonstrate the desirability of 
 " maintaining such a check ; since the uulim- 
 " ited power of conii^romise granted by both 
 " the Consolidation Act and the Charter is too 
 " vast to be properly exercised by the fallible 
 " judgment of any one public servant." 
 
 If I were to take the literal wording of your 
 commiinication, there would be no particular
 
 32 
 
 reason for answerina; it at any great length, because 
 there has been no change from the commencement 
 of my administration to tlie present time, from the 
 policy pursued by this office towards the Finance 
 Department. 
 
 But, in spite of its courteous Avording, your 
 communication is not only a suggestion for har- 
 mony and co-operation between the two depart- 
 ments, a suggestion which in every respect coin- 
 cides with my views and wishes, and I may add, 
 with my conduct of the Law Department, there is 
 iinderlying your suggestion an expression of the 
 theory so often, so unifoi ndy, and I may add, so 
 unsuccessfully maintained by your predecessors, 
 that the Finance Department has the right of su- 
 pervision over the Law Department of the city in 
 regard to the settlement by the latter department 
 of claims in litigation. ,, 
 
 This claim on the part of the Finance Depart- 
 ment has been made with unfailing regularity by 
 each succeeding Comptroller, almost from the 
 origin of the two departments. And the Law De- 
 partment has always successfully resisted it, as an 
 assumption of authority which would simply add 
 this department to the five bureaus in the Finance 
 Department. 
 
 The position of the Law Department has always 
 been very simple and perfectly consistent. It is, 
 that the Corporation Counsel is in no sense the at- 
 torney of the Comptroller, but is the law officer of 
 the public corporation. 
 
 The only right which the other departments 
 have, as regards the Law Department, is to call 
 U])on it for legal advice and assistance . 
 
 Up to the time of the bringing of an action, this 
 department has nothing to do with a claim, except 
 to examine it when you so request, and has not the 
 slightest control over your action, nor, indeed, any 
 desire to exercise such control, leaving to your de- 
 partment, its full, legal right of settlement.
 
 33 
 
 But, from the moment' that the summons has 
 been served, and the action commenced, the situa- 
 tion is entirely changed. Your dejjartment then 
 loses all jurisdiction over the settlement of the 
 claim which has taken the form of litigation. 
 
 Within the legal bounds of his authority, as law 
 officer of the city, the Corporation Counsel has the 
 right and diity to settle such a claim, if, in his 
 opinion, after an examination of the law applic- 
 able to the case, such a settlement is advisable, and 
 as to that settlement you have neither power, duty 
 nor discretion or responsibility. 
 
 The difference between the powers of the two 
 departments is tlierefore sharply defined, and the 
 cooperation and harmony which your letter sug- 
 gests, can only be carried out by an adherence of 
 each of them to its own special jurisdiction. 
 
 Upon this question, some coirespoudence was had 
 in former years between the Finance and Law De- 
 jiartments, ujion the question of their rights and 
 duties of law, and in the course of the controversy 
 which had then arisen between them, there were 
 procured by the then Corporation Counsel, Hon. 
 William H. Whitney, two letters, one from the 
 Hon. William M. Evarts and the other from the 
 Hon. George Ticknor Curtis. 
 
 Of the correspondence, including the letters of 
 Mr. Evarts and Mr. Curtis, I herewith enclose you 
 a copy, and request you to peruse the same. 
 
 I may add that I shall in the future, act in 
 every case which is in litigation, in the manner 
 which, in my judgment and belief, and within the 
 limits of my powers, shall be most advantageous 
 to the interests of the city. 
 
 And if those interests, in my opinion, require a 
 compromise, a compromise will be made by me. 
 
 All of the foregoing communication has been writ- 
 ten in answer to tliat portion of your letter which 
 treats the question as one of power, but there is 
 another side to it, however, which you also touch 
 upon, and which has two different aspects.
 
 34 
 
 The first of these is the question of the advan- 
 tage to the city of the conference or consultation 
 between the two departments, prior to the settle- 
 ment of claims. 
 
 The other aspect of the question is shown in that 
 part of your letter, wherein you seek to point out 
 to me that whatever may be the honesty or ability 
 of the present administration of this ofiice, yet, in 
 the future, the office may be controlled by some 
 one who may be wanting in either or both, and 
 therefore, that the precedent should not be estab- 
 lished of acting without the advice of the Finance 
 Department. 
 
 As to the question of advisability. I have always 
 been ready to consult your Department in regard 
 to pending matters, whenever I thought I could 
 obtain from you any information which would 
 assist me in the conduct of the affairs of my de- 
 partment, and I shall always, in every case in this 
 office, wherein 1 have any reason to suppose that 
 you are in possession of any information or knowl- 
 edge which I should obtain before settling a case, 
 communicate with you in regard to the matter. 
 
 As you must know, the actual settlements made 
 by this office without any communication with 
 your department are very rare, and they have 
 always been made entirely for legal reasons, which 
 no information from your department could in anj' 
 way alter. 
 
 The case of Shafer against The ^Mayor, referred 
 to in your letter, is an illustration of what I mean. 
 
 This was a very close case, but, when the Court 
 of Appeals had decided all the questions of law 
 which were in the case, it became very evident that, 
 on a new trial, before a jury, the City would an 
 mulcted very heavily. 
 
 Therefore, the settlement to which you refer, be, 
 which might on its face seem somewhat large, 
 was made, and I have no doubt saved the City 
 several thousands of dollars.
 
 35 
 
 As the settlement in this case was based entirely 
 upon a question of law, this was a matter in which 
 your assistance would have been entirely unavail- 
 ing, and I had excellent reason to believe, that as 
 to the amount, a settlement could not be procured 
 upon lower terms tlian those agreed upon. 
 
 As to the last suggestion in your communication, 
 that some future Corporation Counsel, unchecked 
 by your department, may take some action to the 
 city's injury, I can only say that I hope for better 
 things. 
 
 The head of any department can, by his negli- 
 gence, or i^ositive wrongdoing, do the City very 
 great damage, but the fact that some future official 
 will misuse his power furnishes no reason for the 
 present head of a dei^artment for refusing to fid- 
 hll the duties imposed upon him by law. 
 
 Tlie Finance Department is a most imjtortant 
 one, but it has no right to review the discretion 
 which the law has given to other departments. 
 (People ex rel. Andrews v. Fitch, 9 App. Div., 
 439). 
 
 I will say in terminating, what I have already per- 
 haps made clear, that while T do most emphatically 
 deny that the Finance Department has any power 
 in relation to the settlement of cases which are in 
 actual litigation, and while I shall not fail to ex- 
 ercise the powers and f nihil the duties cast upon 
 me by law, I shall always seek to obtain from the 
 Finance Department such evidence or other infor- 
 mation as may seem to me needful for any guid- 
 ance in my action upon matters of law. 
 Yours, 
 (Signed) John Wiialen, 
 
 Corporation Counsel. 
 
 One enclosure.
 
 86 
 
 APPENDIX No, V. 
 
 SUPREME COUKT. 
 
 Ill re O'Bkiex 
 
 AGAINST 
 
 The Mayor. 
 
 McLAt'GiiLix, ,/. (dissenting) — 1 cannot agree 
 with the othei- members of the Court to affirm this 
 order. The Corporation Counsel, in my opinion, 
 had no authority to make the offer upon which the 
 judgments were entered, and. tlierefore, his act is 
 not binding on the City. All the power which the 
 City has is specifically expressed in or necessarily 
 implied from the Charter : and the Corporation 
 Counsel, the legal adviser of the City, has no power 
 other than that derived from the City through the 
 Charter, and every act assumed to be done by him 
 in excess of that power is void. The charter in 
 effect at the time the offer was made (Consolida- 
 tion Act, Laws of 1882. chap. 410) did not confer 
 upon the Corporation Counsel, either directly or 
 impliedly, the power to do what he did, and his 
 act is not sustained by any precedent that I have 
 been able to discover. An attorney acting for an 
 individual cannot, in the absence of express au- 
 thority, make a compromise for his client, or con- 
 clude him in relation to the subject-matter of 
 an action (Barrett vs. Third Avenue Railroad 
 Co., 45 N. Y., 635) ; he cannot satisfy a judg- 
 ment without payment in full, and if he does the 
 satisfaction will be set aside (Beers vs. Hendrick- 
 son, 45 N. Y., 665); he cannot release his clients 
 rights or subject him to a new obligation (Lewis vs. 
 Daane, 141 X. Y., 314). The Corporation Cou.nsel 
 has no larger powers, as such, to bind the City 
 than those connected with the ordinary relations of
 
 37 
 
 attorney and client. This is precisely what was 
 held in The People and Taylor vs. Mayor (11 Abb. 
 Pr., 66). There judgment was rendered against the 
 City of New York, and the Corporation Counsel, 
 doing what he believed to be for the best interest 
 of the City, stipulated not to axipeal. Subsequently 
 a motion was made to set aside the stipulation, and 
 the Court held that it would not inquire into the 
 merits of the action by considering whether the 
 opening of the judgment would result in gain or 
 loss to the City ; that the Corporation Counsel had 
 no power to make the stipulation, and, therefore, 
 the City had a legal right to have it vacated. In 
 the course of the opinion, delivered by Mr. Justice 
 iNGRAHAjr, he said : " It would be almost imjiossi- 
 ble to form a correct idea of the consequences if it 
 were ever established tliat any head of a dejiai't- 
 ment had the power, without the authority of the 
 Common Council, to dispose of City rights and 
 property, either directly or indirectly ; and if tlie 
 head of the Law Department can, at his pleasure, 
 make the corporation a party to suits, and when a 
 large recovery is had against the city can stipulate 
 that the city shall not have any means of review or 
 redress, he would possess an absolute (control over 
 the city property far beyond that possessed even 
 by the Common Council. It appears tome that lie 
 possesses no such power, and the stipulations were 
 unauthorized and cannot be sustained." 
 
 Here the Corporation Counsel had no power to 
 make the offers, and the city has the legal 
 right to have the judgments vacated, and 
 it is no concern of the Court whether it 
 is for the best interest of the city or not. The Court 
 discharges its duty by determining the question 
 according to the legal rights of the parties. The 
 power to settle and compromise these actions, if 
 the power existed jit all (which it is not necessary 
 now to determine), after the claims had been pre- 
 sented to and rejected by the Comptro'der (McGin- 
 niss vs. Mayor, 26 Hun, 142), was lodged in the
 
 38 
 
 Common Council. The actions are all based upon 
 contracts, and before they were commeticed the 
 claims forming the basis of each were presented to 
 and rejected by the Comptroller, and after such re- 
 jection, in the absence of some act of the Common 
 Council, no other body or officer could obligate the 
 city to pay the same or any part thereof. Section 
 74 of the Consolidation Act supports this view. 
 That section, among other things, provides that 
 "no additional allowance beyond the legal claim 
 which shall exist under any contract with the cor- 
 poration, or with any department or officer thereof, 
 or for any services on its account or in its employ- 
 ment, shall ever be passed by the common council 
 except by the unanimous vote thereof ; and in all 
 cases the provisions of any such contract shall de- 
 termine the amount of any claim thereiTnder, or in 
 connection therewith, against the said corporation, 
 or the value of any such services." 
 
 But it is said — or such inference may fairly be 
 drawn from the prevailing opinion — that the Cor- 
 jioration Counsel had power to do what he did, be- 
 cause his act was approved by the Mayor, the spe- 
 cial counsel and the Aqueduct Commissioners, and 
 that the Comptroller, If he did not consent, at least 
 did not object. There is no doubt but that 
 the officers connected with the City Government 
 referred to, with the exception of the Comptroller 
 deemed it wise, and for the best interests of the 
 city, that the settlement should be made, and 
 that they approved of the Corporation Coun- 
 sel's act in making it. But I am unable to see 
 that this has any eiTect upon the question of au- 
 thority. The Corporation Counsel either had the 
 power to make tiie offer or else he did not. if he 
 did not have the power under the charter, then I 
 do not see how it can be held that the jiower could 
 be conferred upon him by special counsel retained 
 solely to defend the acti(ms, or by the Aqtieduct 
 Commissioners, whose powers were specified and so 
 limited by the act creating them that thev could
 
 39 
 
 not obligate the city to pay any sum wliatever for 
 work done or materials fnrnislied in the construc- 
 tion of the aqueduct not specified in the contracts 
 which they were authorized to make ; or by the 
 Mayor, because he, an ex officio member of the 
 Aqueduct Commission, happened to be j^resent at 
 the meeting when the resolution authorizing the 
 settlement to be made was passed. The Comptrol- 
 ler did not consent to the settlement, and it was 
 not necessary for him to object to it in order to 
 prevent the city being bound by it. 
 
 The Corporation Coiinsel, as we have seen, had no 
 authority under the charter to authorize the Judg- 
 ments to be entered, and something morn than the 
 facts which appear in the record must be shown 
 before he could obligate the city to pay $700,000. 
 The settlement may have been a wise one, but that 
 has nothing to do with tlie question of whether or 
 not he had the power to make it. The fact re- 
 mains that the act of the Corporation Counsel was 
 unauthorized, and the city having attacked it, as it 
 had a legal right to do, the judgments should be 
 vacated. 
 
 I am also of the opinion that the judgments 
 should be vacated for want of consideration. The 
 city is not an eleemosynary corporation. It must 
 be just, but it cannot be generous. It must pay its 
 obligations, but it cannot give its property away. 
 
 The claims involved in these actions, in the con- 
 dition in which they were when the judgments 
 were entered, could not be legally enforced against 
 the City. This has been decided by the Court of 
 Appeals in O'Brien rs. Mayor (139 N. Y.. 343). A 
 comparison of the complaint in the O'Brien action 
 with the complaints in these will show that a recov- 
 ery was sought in all the actions upon substantially 
 the same grounds, and that a determination of one 
 necessarily determined the rights of the parties in 
 the others, and it was so considered by the Cor- 
 poration Counsel, by the special counsel and by the 
 plaintiffs themselves. These actions and the
 
 40 
 
 O'Brien action were all broiio-ht in 1891. The 
 O'Brien action was tried in June or July of that 
 year, and from that time until after the determina- 
 tion of the Court of Appeals nothing further was 
 done in any of these actions. After the Court of 
 Appeals had decided the O'Brien action in favor of 
 the City, then the plaintiffs in these sought to se- 
 cure some relief from the Legislature, and, failing 
 in that, applied in one of the actions to the Court 
 for leave to amend the complaint so that the certifi- 
 cate of the engineer might be attacketl as fraudu- 
 lent. The Court, however, refused to allow the 
 amendment and the plaintiffs a]>pealed, and there- 
 after the moving papers show that it was practically 
 conceded by all the parties that a recovery could 
 not be had unless relief in some form could be ob- 
 tained from the Legislature or the order refusing 
 the amendment could be reversed. 
 
 The only consideration, therefore, for the judg- 
 ment, was prospective or threatened legislation, 
 once applied for and refused, or judicial action, 
 once applied for and denied. That this was the 
 consideration clearly appears from the corresj^ond- 
 ence between the Corporation Counsel and the 
 special counsel and the Aqueduct Commissioners. 
 
 In the letter of the Corporation Counsel to the 
 special counsel, under date of November '25, 1896, 
 he said: "The decision already rendered in 
 the one case which has been tried doubtless affords 
 ample protection to the City so far as litigation is 
 concerned, but offers no assurance against legisla- 
 tive attacks. Last year, as you are aware, a bill 
 was introduced in the Legislature looking to the 
 appointment of a commission to make awards upon 
 these claims, and I am informed upon autliority 
 which appears to me worth}' of credence that a simi- 
 lar attempt will be made during the forthcoming 
 session. I am very apprehensive that either this 
 year or some other year such a measure will be 
 passed, and I feel that if it should our chance of 
 comj)lete success before a commission would, for
 
 41 
 
 many and obvious reasons, be very remote * * *. 
 As you are aware, I have always maintained the 
 position, as well since I have been Counsel to the 
 Corporation as when I was a member of the 
 Aqueduct Board, that the contractors had already 
 been i)aid upon their iinal estimates all that they 
 were justly entitled to, and that the construction 
 given to the contract * * * for tunnel excava- 
 tion was the true legal construction, and this view 
 has been sustained by the Court of Appeals." To 
 this letter the special counsel, under date of De- 
 cember 3, 1896, replied: " We have at all times 
 been of the opinion, in which, while occupying a 
 place on the Board of Aqueduct Commissioners, 
 you concurred, that in equity and justice none of 
 the claims of the contractors which have been put 
 in suit or upon which demands have been made 
 are valid or should be acceded to." 
 
 And, in a letter of the special counsel to the 
 Corporation Counsel under date of October 25, 
 1897, referring to the previous advice as to the ad- 
 visability of a settlement, they said: "We were 
 not influenced in any considerable degree by any 
 opinion or belief that the claims of the contractors 
 had any foundations whatever in law, justice 
 or equity. Our advice was founded upon 
 the possibility that the City nught, through 
 the chances and changes of time, lose the 
 benefit of evidence now accessible to it, or that the 
 Legislature might be induced, under the pressure 
 of the contractors, into some ill-advanced measure 
 of indulgence toward them. We regard the de- 
 cision of the Court of Appeals as a final determina- 
 tion adverse to all the claims of the contractors, 
 and that it would be equally available against any 
 of such claims. * * * In giving our former ad- 
 verse we assumed that there was some danger of 
 such indulgence, notwithstanding the entire want 
 of justice and equity in the claims. * * * It 
 may reasonably be supi)Osed that they selected 
 what they supposed to be their strongest claims
 
 42 
 
 for active prosecution, but we do not regard this as 
 a sufficient assurance against legislative inter- 
 vention * * *." 
 
 And, in a letter of the Corporation Counsel to 
 the special counsel under date of November 17, 
 1897, he said : "So far as any strictly legal claim 
 is concerned, its non-existence has been determined 
 by the Court of Appeals ; and, if the I'ule of stare 
 decisis applied to the Legislature as well as the 
 courts, there would be no reason for making any 
 compromise at all " ; and, in a letter to the Aque- 
 duct Commissioners in the same month: "As I 
 have repeatedly said to the members of your Board, 
 so far as strict legal liability exists it has been 
 authoritatively settled by the Court of Appeals 
 that there is none such on the part of the City. 
 The only justification for settling at all, therefore, 
 would l)e that, upon the whole, it was wise for the 
 City, as it would be wise for any other litigant, to 
 purchase peace by the payment of a sum which, 
 while it is considerable in itself, is very much 
 smaller than the aggregate of the claims which 
 have been asserted." 
 
 The property of the City cannot be used to jtre- 
 vent hostile legislation or to "purchase peace" 
 by preventing the prosecution of claims which have 
 no legal existence. I cannot conceive of a more 
 dangerous precedent to the City than this one if 
 the other be affirmed, as it practically puts the 
 disposition of the property of the City in the hands 
 of the Corporation Counsel. 
 
 The order appealed from should be reversed and 
 the motion granted, with costs. 
 
 Patterson, /., concurred.
 
 APPENDIX VI, 
 
 July 5, 1898. 
 Hon. John Whalen, 
 
 Corporation Counsel. 
 Sir.— Ui^on assuming the office of Comptroller I 
 found a number of claims existing in favor of the 
 city which had been from time to time submitted 
 by the Department of Finance to your prede- 
 cessors for action, and which still remain unsettled. 
 
 The following are the most important of these : 
 
 Claim for balance due on rental of Staten Island 
 ferries, amounting to $36,969.72. 
 
 Claim against the Manhattan Elevated Railroad 
 Company for ^ per cent, of the gross receipts of the 
 Ninth Avenue line for a large number of years 
 (such receipts having formerly been credited to the 
 fund known as the Greenwich Street Elevated 
 Railroad Fund). 
 
 Claim against the Thii'd Avenue Railroad Com- 
 pany for .$10,020, for car-license fees. 
 
 Claim against John Rourke, lessee of the city 
 property at Nos. 8 to 14 Chambers street, amount- 
 ing to $1,387.50. ' 
 
 Please inform me what is the present status of 
 these claims. 
 
 Very truly yours. 
 
 Bird S. Colek, 
 
 Comptroller. 
 
 July 21, 1898. 
 Hon. John Wiialen, 
 
 Corporation Counsel. 
 
 Sir.— On July 5, 1898, I transmitted to you a 
 request for certain information in regard to claims 
 appearing unpaid on the books of the Bureau of 
 City Revenue in this Department, and which had 
 been from time to time transmitted by the De-
 
 44 
 
 partment of Finance to yoiir predecessors for ac- 
 tion by the Law Department. 
 
 On July 20, 1898, I received from Mr. diaries 
 Blandy, of your office, the following letter : 
 
 LAW DEPARTMENT, 
 
 OFFICE OF THE CORPORATION COUNSEL. 
 
 New York, July 19th, 1898. 
 
 Hon. Bird S. Coler, 
 
 Comptroller. 
 
 Sir. — I beg to acknowledge the receipt of your 
 favor of the oth inst., enquiring as to the status of 
 a number of claims existing in favor of the City 
 which had been from time to time submitted by 
 the Department of Finance to mj' predecessors for 
 action, and which you say still remain unsettled. 
 
 The claims were duly received by this Depart- 
 ment for such legal action as was proper and they 
 are receiving and will receive the same. 
 
 If this office has occasion to require further in- 
 fornuition from your Department a communication 
 to that effect will be sent to it, and when the liti- 
 gations are terminated the Finance Department 
 will be made aware of the fact in one or other of 
 the many ways in which the attention of the Fin- 
 ance Department is usually brought to such deter- 
 minations. 
 
 Respectfully yours, 
 
 Chas. Blandt, 
 Acting Corporation Counsel. 
 
 The impertinence of this reply needs no com- 
 mentary. 
 
 If it is necessary that the Comptroller should 
 give reasons for expecting answers from the Law 
 Department to inquiries in regard to matters of 
 official business, couched in respectful language, 
 I have to submit for youi- consideration the fol- 
 lowing fa(!ts bearing upon my letter of the 5th 
 inst, :
 
 45 
 
 First. — The claims refeiTed to have been in the 
 hands of the Law Department for so many years 
 that the presumption has naturally arisen that 
 some of these claims, at least, have proved to be 
 uncollectible. If this is so, the Department of Fi- 
 nance should be informed of that fact so that ficti- 
 tious balances should not be carried from year to 
 year on the books of the Bnreau of City Revenue. 
 If the claims or any of them are uncollectible, the 
 account should either be charged oflF, or at least 
 carried into a suspense account. The interests of 
 good bookkeeping are certainly not served by the 
 indefinite retention of these claims in the Law De- 
 partment for a. niimber of years and a refusal to 
 furnish any information in regard to the prospects 
 of their collection or settlement. 
 
 Secondly.— The: Department of Finance is prop- 
 erly interested in securing the information re- 
 quested, not only for the reasons above stated, but 
 also because upon the disposition of these claims 
 depends the conduct of the officials of the Bureau 
 of City Revenue in collecting amounts claimed by 
 th^ city to be due for years subsequent to those 
 covered by the claims transmitted to the Law De- 
 partment. This is especially true of such claims as 
 that against the Manhattan Railroad Company, 
 which, if collectible at all, is collectible during 
 each current year. 
 
 Until I have knowledge to the conti'ary I must 
 assume that the action of your subordinate in re- 
 fusing to furnish the information requested will 
 not meet vvith the approval of the head of the Law 
 Department, and I therefore respectfully renew 
 my request for the information asked for in my 
 letter to you of the 5th inst. 
 
 Respectfully, 
 
 BlED S. COLER, 
 
 Comptroller.
 
 46 
 
 February 18. 1899. 
 Hon. John Whalen, 
 
 Corporation Counsel. 
 
 Sir. — On March 28, 1890, and on several subse- 
 quent dates in that year, the Department of Finance 
 transmitted to the Law Department for its action, 
 the city's claim against the Manhattan Railway 
 Company for five per cent, of its net receipts from 
 passenger traffic on the Ninth and Third avenue 
 lines. 
 
 On June ^^. 1894, tlie Court of Appeals decided 
 the ensuing litigation in favor of the city so far as 
 the city's claim related to the net income from 
 said railway on its Ninth avenue line from Green- 
 wich street iip to Sixty-first street, and at one-half 
 of five per cent, from the latter street to Eighty- 
 third street. 
 
 In a communication dated July 19, 1898, Mr. 
 Charles Blandy, Acting Corporation Counsel, 
 refused to give me any information in regard to 
 the status of this claim, and in a communication to 
 you dated July 21, 1898, I renewed my request for 
 such infornuition. To this last mentioned letter I 
 received no reply. • 
 
 My object in again addi-essing you in regard to 
 this matter, is to inform you that since the litiga- 
 tion referred to, the Mahattan Railway Company 
 has made no payment to the city on account of this 
 claim for percentages of its net income, and to sug- 
 gest the possibility of the city's claim being barred 
 by the Statute of Limitations in the event of the 
 Liiw Department having- failed to begin another 
 action against said company for percentages accru- 
 ing since the dates mentioned in the complaint in 
 the original action. 
 
 Very truly yours, 
 (Signed) Bird S. Colek, 
 
 Comptroller.
 
 47 
 
 (Copy.) 
 
 LAW DEPARTMENT. 
 
 OFFICE OF THE CORPOEATION COUNSEL. 
 
 New York, March 2nd, 1899. 
 
 Hon. Bird S. Coler, 
 
 Comptroller. 
 
 Sir. — I am in receipt of your communication 
 bearing date 18 February, stating that on March 
 28, 1890, and on several subsequent dates in that 
 year. The Department of Finance transmitted to 
 the Law Department for its action the City's claim 
 against the Manhattan Railway Company for live 
 per cent, of its net receipts from passenger traffic 
 on the Ninth and Third avenue lines. 
 
 You state that on June 5, 1894, the Court of Ap- 
 peals decided the ensuing litigation in favor of the 
 City so far as the City's claim related to the net 
 income from said railway on its Ninth avenue line 
 from Greenwich street up to Sixty-lirst street and 
 at one-half of live per cent, from the latter street to 
 Eighty-third street. 
 
 You further state that in a communication, 
 dated July 19, 1898, Mr. Charles Blandy, Acting 
 Corporation Counsel refused to give you any infor- 
 mation in regard to the status of this claim, and 
 that in a conununication to me, dated July 21, 
 1898 you renewed your request for such information. 
 
 You further state that your object in again ad- 
 dressing me in regard to the matter is to inform 
 me that since the litigation referred to, the Man- 
 hattan Railway Comjiany has made no payment to 
 the City on account of its claim for percentages of 
 its net income, and to suggest the possibility of the 
 City's claim being barred by tlie Statute of Limi- 
 tations in the event of this department having failed 
 to begin another action against said company for 
 percentage accruing since the dates mentioned in 
 the complaint in the original action.
 
 48 
 
 I take due note of your statement that the Man- 
 hattan Railway Coiiii)any lias not paid any per- 
 centage since the institution of the suit in ques- 
 tion, and I will cause an examination of the situa- 
 tion to be made with a view of l)ringing a suit, or 
 suits, to enforce the rights of the City as defined in 
 the very unsatisfactory decision of the Court of 
 Appeals, a decision which in the dissenting opin- 
 ion of Judge Bartlett is rightly called " a very 
 great injustice to The City of New York." 
 
 I do not imagine that you desire any detailed 
 information as to proceedings had in this case, but 
 wish to ascertain merely the ]n'obability of pay- 
 ment by the company. 
 
 I will state generally that I have made an in- 
 vestigation as to the condition of the action which, 
 as you know, was brought by one of my predeces- 
 sors, and I Hud that condition to be as follows : 
 
 The suit was in the hands of the late David J. 
 Dean, and in its earlier stages in that of Mr. John 
 H. Strahan, who tried the case at Special Term. 
 
 Both Mr. Strahan and Mr. Dean are dead, and 
 their deaths make it very difficult at this time to 
 obtain information, of which they were j)0ssessed, 
 in reference to this case, for there are matters 
 which do not appear of record, of considerable im- 
 portance. 
 
 Upon my attention being called to the fact of the 
 pendency of the action, an attempt was made to 
 negotiate with the counsel to the Manhattan Rail- 
 way Company, Mr. Julien T. Davies, to shorten 
 what will be, in any event, a very prolonged trial, 
 by agreeing upon the facts relevant to the case as 
 left by tile decision of the Court of Appeals. 
 
 If a formal second trial could be avoided, except 
 iijion stipulated facts, it would very much abbre- 
 viate the proceedings without, I think, doing in- 
 justice to either side. 
 
 Mr. Davies promised to take the voluminous
 
 49 
 
 paiiers on appeal anrl to read them througii, and to 
 then see if he coiikl agree with this office as to a 
 method of procedure. 
 
 Since this, however, nothing lias been done ow- 
 ing to Mr. Davies' engagements, and to tlie very 
 great press of business upon this office inciden- 
 tal to the creation and administration of the 
 New City. 
 
 It has so far been found impossible for any one 
 in the office to give the necessary time to the i)rep- 
 aration for the examination of the accoixnts of 
 this road, although some effort has been made 
 to find a competent person thoroughly acquainted 
 witli railway accounts from wliom expert aid in 
 the case could be obtained. 
 
 The situation apparently is, at this time, that 
 the case must be retried in all its details so far as 
 it relates to the Ninth and not the Third avenue 
 road. 
 
 A reference will then be ordered by the Court 
 and a new referee appointed in the place of the 
 former referee, who is dead. 
 
 All this will be done as soon as is possible, al- 
 though it is a task very much beyond what you 
 would suppose it to be from a mere examination of 
 the papers, and I will, as I have already said, pre- 
 pare to institute such suits as may be necessary. 
 
 As to the possible loss V)y claims being barred by 
 the statute of limitations, that is something for 
 which I must decline to be held responsible, if 
 caused by the non-action of any of juy predeces- 
 sors. 
 
 It is one of the penalties which the city must 
 pay for the frequent change of its ofhcials at the 
 head of the depai'tments that the knowledge of the 
 officer is not transmitted to his successor, except as 
 to matters which are of record in the office, and, 
 therefore, there are many matters of importance 
 not called to the attention of the head of a depart- 
 ment in time to take seasonal)le action thereon.
 
 so 
 
 I may add that I am informed that Mr. Dean re- 
 garded the decision of the Court of Appeals as a 
 very barren victory for the city from which we 
 would obtain but little in the way of money. 
 Yours, 
 
 John Whalen, 
 
 Corporation Counsel.
 
 51 
 
 APPENDIX VII, 
 
 CITY OF NEW YOKK, 
 
 finance department, 
 
 Comptroller's Office. 
 
 May 25, 1899. 
 Hon. John Whalen, 
 
 Corporation Counsel. 
 
 Sir. — I acknowledge receipt of your letter of the 
 12tli Inst, returning the transcript of judgment 
 against the city, for $549.49, in favor of Henrietta 
 A. Mittnach and E. Hastings. 
 
 You state that there being no defence to this ac- 
 tion you oflFered judgment, and that "the judg- 
 ment was therefore pro^terly obtained and is a legal 
 charge against the treasury." 
 
 It seems that you must have been misinformed 
 about this matter. 
 
 On September 8, 1898 the Commissioner of Pub- 
 lic Buildings, Lighting and Supplies, ordered from 
 Mittnach' s Eagle Safe Co. a safe of certain speci- 
 fied dimensions and twelve name plates. The or- 
 der does not specify any price, nor does it appeal- 
 that any agreement as to price was ever entered 
 into between the Company and the Department. 
 In case of an excessive charge it would, therefore, 
 beperfectly proper for the auditor to refuse to audit 
 the bill and entirely competent for the city in case 
 of litigation to prove the just value of the articles 
 furnished. 
 
 The Insjiector of the Auditing Bureau in the 
 Borough of Brooklyn, who passed on this bill, re- 
 ported the charge as excessive and the Auditor de- 
 clined to audit the bill at any greater amount (for 
 the safe — the name plates being only $12.00 in all) 
 than $300. 
 
 The Department of Public Buildings, Lighting 
 and Supplies having insisted that the price was
 
 52 
 
 reasonable, 1 secured fi'om an impartial expert in 
 the safe business of more tlian twenty years stand- 
 ing, a report dated March 6, 1899, who after re- 
 porting that the casting sheet was broken and 
 alluding to other defects reported that a fair and 
 true valuation of this safe would be 8350. 
 
 A suit having been begun. Mr. McKinny received 
 a letter from Assistant Corporation Counsel, John 
 J. Walsh, dated March 27. 1899. requesting in- 
 formation. 
 
 In reply Mr. McKinny sent a communication to 
 Mr. Walsh, dated March 30, 1899, referring in sub- 
 stance to the facts on which the Department of 
 Finance contested this claim. 
 
 The next information in regai'd to the matter re- 
 ceived by my department was the receipt of the 
 transcript of judgment. 
 
 I submit that quite apart from the controversy 
 which has existed between our respective depart- 
 ments as to the right of the Corporation Counsel to 
 settle claims against the city by offers of judg- 
 ments, this cannot be regarded, in any event, as a 
 proper case for the giving awaj' of the City's rights. 
 The Department of Finance maintains a corps of 
 inspectors whose duty is largely to report on the 
 market value of goods furnished to the city. 
 Where no agreement as to price is entered into it 
 is certainly competent for the city to defend on the 
 ground that the price charged is excessive. 
 
 That this was true in this case my office stood 
 ready to prove in Court. 
 
 To make the City's case stronger, a report of an 
 expert was secured at considerable expense and 
 that expert was also prepared to testify in Court. 
 • I cannot assume that in such cases as this you 
 propose to wholly disregard the reports of the ex- 
 perts connected with or employed by the auditing 
 department of the city government, and to take 
 for granted any claim, not on its face fraudulent, 
 that may be presented against the city. For this 
 reason, as I stated above, I prefer to believe that
 
 53 
 
 you have been misinformed in regard to this claim, 
 or that the facts in regard to the city's defence 
 were not brought to your attention. 
 
 One of my objects in addressing you at length in 
 regard to this matter is that the same claimants 
 have presented to this ofBce a large number of 
 similar bills against the same Department which 
 the Auditors have declined to audit on the same 
 ground — that the charges are excessive — in some 
 cases outrageously so. I have reason to believe 
 that the mere interposition of a defense to the 
 actions that may be brought will result in the 
 claimants accepting in full satisfaction ])ayments 
 in amounts considerably less than the face of their 
 claims. In the event of these actions going to 
 trial, however, I have secured expert testimony 
 which cannot, in my opinion, fail to sustain the 
 contention of the several Auditors and Inspectors, 
 who in thoroughly independent examinations have 
 reached the same conclusions in regard to these 
 claims. 
 
 Respectfully, 
 (Signed) Bird S. Coler, 
 Comptroller.
 
 54 
 
 CITY OF NEW YOEK 
 
 department of fixance 
 
 comptroller's office. 
 
 October 23, 1899. 
 
 Hon. John Whalen, 
 
 Corporation Counsel. 
 
 Sir. — I have received your communication of the 
 19th inst., in regard to certain actions brought 
 against the City of Xew York to recover the sums 
 ofsoOO.OO, 84aO.()0. S650.00. $290.00. S503.00, re- 
 spectively, for safes furnished by Mittnacht's Eagle 
 Safe Company upon orders of the Commissioner of 
 Public Buildings, Lighting and Supplies. 
 
 You state that, in your opinion, no sufficient de- 
 fense to these actions exists and that unless I 
 furnish you. within ;five days, with sufficient in- 
 formation to eiiable you to defend these actions 
 you will offer judgments for the amounts de- 
 manded. 
 
 In your letter you state that the only defense 
 must be placed on the ground of fraud ; and that, 
 as you do not understand me to allege fraud on 
 the part of the Commissioner of Public Buildings, , 
 Lighting and Supplies, you are aware of no de- 
 fense and are not willing to subject the City to the 
 almost inevitable imposition of costs. 
 
 Am I to understand you that the only fraud 
 which would be available as a defense would be 
 such fraud as resulted from a conspiiacy in which 
 the Commissioner of Public Buildings, Lighting 
 and Supplies was a party ? If so, you correctly 
 understand me as not imputing fraud of this kind, 
 as I have no knowledge upon which to base such 
 an allegation and, from what I know of the char- 
 acter of the head of that Department. I do not be- 
 lieve he would be guilty of any such reprehensible 
 conduct. 
 
 I do believe, however, that the Commissioner of
 
 55 
 
 Public Buildings, Ligiitino- and Supplies has been 
 imposed upon by one or more of his subordinates, 
 and that there has been fraud in this matter, of 
 which the City of New York is to be a victim. I 
 entertain no doubt whatever, nor do I think any 
 reasonable man could doubt that such a state of 
 affairs exists, after reading the evidence on file in 
 this department. 
 
 This evidence does not, as you state in your 
 letter, merely indicate that better safes than those 
 furnished could be procured at lower prices ; but, 
 rather, shows that deliberate and systematic effort 
 has been made to defraud the city. 
 
 In regard to the claim for 1500.00, based on 
 order No. 73 of the Department of Public Build- 
 ings, Lighting and Supplies, dated October 21st, 
 1898, the facts are that this safe was manufactured 
 by the Diebold Safe and Lock Company of Canton, 
 Ohio, bearing the stock number 86,223, the list 
 price of which, on the manufacturers' catalogue, 
 is $395.00, from which, however, according to busi- 
 ness usage, a commission of twenty-five per cent. 
 ^^25;?) is paid to agents, so that, after allowing a 
 reasonable profit to the Mittnacht Company, which 
 simply acted as a middleman, a fair valuation 
 would be $350.00. 
 
 In regard to the claim for $503.00, based on the 
 requisition of the Department of Public Buildings, 
 Lighting and Supplies, dated November 23rd, 1898, 
 it appears that this safe was also manufactured by 
 the Diebold Safe and Lock Company, bearing the 
 stock number 86,171, and the same conclusions are 
 to be reached. 
 
 In regard to the claim for $650.00, this is made 
 up of the following items : 
 
 For one folding door Marvin safe, $150.00. This 
 safe is second hand, and is an old style Marvin, 
 more than forty years old, not lire jjroof and prac- 
 tically valueless. 
 
 I leave it to you to decide, as a matter of law.
 
 56 
 
 whether the order of the Department (which says 
 nothing about second hand material), has been 
 complied with by the delivery of an antique cxiri- 
 osity of this kind. 
 
 The balance of this claim is based upon an order 
 for two safes of different dimensions, lumped to- 
 gether, however, for the sum of s500.00. 
 
 One ot these safes was manufactured by the Die- 
 bold Safe and Lock Company of Canton, Ohio, 
 bearing the stock number 77,278 and, comparing 
 ■with their published catalogue Xo. 36, is found to 
 be at least ten years old and worth, at the outside, 
 $160.00. It was second hand when delivered. 
 
 The second safe is of cheap Western manufacture, 
 made of hoop and piece front construction, with- 
 out solid angles, not tire proof nor burglar proof, and 
 worth the value of scrap iron. 
 
 In regard to the claim for §290.00, this safe was 
 manufactured by the Hall Safe Company of Cin- 
 cinnati. Ohio, has thin walls, is not fire proof, and 
 can readily be shown to be worth not more than 
 $•225.00 or, gt the outside, S250.00. 
 
 In regard to the claim for S4;")().()i). this is based 
 on a safe delivered to the Department of Health in 
 the Borough of Manhattan, on the order of the 
 Department of Public Buildings, Lighting and 
 Supplies, dated December 30th, 1898. I have not 
 at liand a detailed description of this safe, but an 
 expert report made to me orally shows the fair 
 value thereof to be S375.00. 
 
 In the case of all these safes, except the one last 
 mentioned, I have secured, in addition to the usual 
 reports lof my inspectors, reports by an expert of 
 twenty years standing in the safe business. 
 
 This gentleman is perfectly willing on the wit- 
 ness stand to substantiate the facts already re- 
 ported to me in writing, and his services are at 
 your disposal. 
 
 It is my desire, and I respectf iilh' request you to 
 defend these actions on behalf of the Citv, and in
 
 57 
 
 this connection I be"' to call your nttpntion to the 
 following facts : 
 
 Fraud rarely proves itself ; but is often made 
 easily discoverable in the course of legal proceed 
 ings. 
 
 The facts in the possession of this Department in 
 regard to these claims to which your attention has 
 in part been called, are such as to lead any hon- 
 estly fair-minded public officer to believe that fraud 
 exists. 
 
 The eliciting of further evidence lies within your 
 power ; it is outside of mine. 
 
 The Comptroller's examinations taken bj' your 
 office under Section 149 of the Charter in my be- 
 half — so far as they have been brought to my at- 
 tention — have been altogether inadequaete and read 
 more like an attempt to prove the claimants' case 
 than to elicit those elements in the case that might 
 be favorable to the City. 
 
 I sincerely hope that, after a consideration of the 
 facts stated above, you will see your way clear to 
 comply with the reqnest of the auditing branch of 
 the City government to defend these actions ; since, 
 otherwise, i shall consider it my duty to make 
 jniblic what I regard as a scandalous attempt to 
 swindle the City treasury and shall do all in my 
 power to aid in the taxpayers' action which I have 
 reason to believe will certainly be brought. 
 Very truly yours, 
 (Signed) Bird S. Coleh, 
 
 Comptroller.
 
 i