Section 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.