§ 65. Actions and proceedings by and against towns. 1. Any action or
special proceeding for or against a town, or for its benefit, and upon a
contract lawfully made with it, or with any of its officers or agents
authorized to contract in its behalf, or to enforce any liability
created, or duly enjoined upon it, or upon any of its officers or agents
for which it is liable, or to recover damages for any injury to any
property or rights for which it is liable, shall be in the name of the
town. The town board of any town may authorize and direct any town
officer or officers to institute, defend or appear, in any action or
legal proceeding, in the name of the town, as in its judgment may be
necessary, for the benefit or protection of the town, in any of its
rights or property. It shall be the duty of any officer or officers so
authorized and directed to institute said action or legal proceeding or
to defend or appear therein, and the reasonable and necessary expense of
such action or proceeding, or defense or appearance shall be a town
charge. No such officer or officers, however, shall employ legal counsel
except as directed by the town board.

2. The town may sue and be sued at law for the breach of any lawful
contract entered into by it on behalf of a district wholly located in
such town. Any sum of money recovered by it in such an action shall be
paid over to the town treasury and be credited to such district. In the
event of the entry of any judgment against such town by reason of a
contract made on behalf of a district, the town shall forthwith satisfy
and pay such judgment, interest and costs, and the amount so paid in
satisfaction of any such judgment, interest and costs shall be a charge
against such district and the amount thereof shall be assessed and
levied against and collected from the several lots and parcels of land
within the district in the same manner as other district charges, or the
amount of any such judgment, including interest and costs, may be
financed pursuant to the local finance law in which event amounts
necessary to provide for the annual payments of principal of and
interest on any obligations issued by the town for such purpose shall be
assessed and levied against and collected from the several lots and
parcels of land within the district in the same manner as other district
charges.

3. On and after the first day of September, nineteen hundred
thirty-nine, no action shall be maintained against a town upon or
arising out of a contract entered into by the town unless the same shall
be commenced within eighteen months after the cause of action thereof
shall have accrued, nor unless a written verified claim shall have been
filed with the town clerk within six months after the cause of action
shall have accrued, but no such action shall be brought upon any such
claim until forty days have elapsed after the filing of the claim in the
office of the town clerk.