Case ID: ad_124/html/0307-01.html
Source: Caselaw Access Project
Author: {"author": "Claeke, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank E. Phillips, Appellant, v. The City of New York, Respondent.
    First Department,
    February 21, 1908.
    Municipal corporation — auction of ferry franchise, city of New York — defaulting bidder cannot recover deposit.
    One who in competition with others bids at an auction of the lease of a ferry franchise held by the city of tíew York under the authority of sections 170 and 180 of the Consolidation Act, under terms of sale providing that the highest bidder must pay the auctioneer’s fee and deposit twenty-five per cent of his bid to be credited on the first quarter’s rent, or to be forfeited to the city if the lease be not executed by the bidder, is not entitled to recover the deposit when he refuses to complete the purchase on tender of the lease by the •municipal authorities.
    Appeal by the plaintiff, Frank E. Phillips, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county, of New York on the 31st day of December, 1903, upon the decision of the court rendered after a trial at the New York Trial Term, a jury having been waived, dismissing the complaint upon the merits.
    
      George W. Wingate of counsel [ Wingate & Cullen, attorneys], for .the appellant.
    
      Theodore Connoly [Alexander L. Strouse with him on the brief, Francis K. Pendleton, Corporation Counsel!], for the respondent.
   Claeke, J.:

The plaintiff, as assignee of Alrick EL Man and of the Bay Eidge and New York Ferry Company, instituted this action on July 31, 1900, to recover $3,750, with interest from October 8,1894, paid by the said Man as deposit in accordance with the terms of sale of the lease of the franchise of the so-called Bay Eidge ferry for the term of ten years.

The so-called Bay Eidge ferry ran from the foot of Whitehall street in the then city of New York to the foot of Sixty-fifth street in the then city of Brooklyn, and had been established by. the said ' city of New York and operated for a number of years- prior to 1893. In 1893 it was being operated by the Staten Island Rapid Transit Railroad Company under a lease from the city, which expired May 1, 1893. This company also operated a. ferry from the foot of said Whitehall street to Staten Island. • •

Plaintiff’s assignor, Man, was the president' of and largely interested in the New York and Sea Beach Railroad Company, a road running from Sixty-fifth street to Coney Island, and having its connection with Now York by way of the Bay Ridge ferry. There was at the same time a ferry which ran from a point on South street, between piers 2 and 3, East river, .New York city, to Thirty-ninth street in the city of Brooklyn, and- was operated by the New York and South Brooklyn Steam Transportation Company, of which one John W. Ambrose was then, and for a number of years subsequently, president. This ferry ivas an active competitor of the Bay Ridge ferry. '

Section 180 of the Consolidation Act (Laws of 1882, chap. 410) • provides that: “ The commissioners of the sinking fund possess the power and they are authorized to lease, in the manner provided by law, along with the franchise of a ferry within said city, such wharf property, including wharves, piers, bulk-heads, and structures thereon, and slips, docks^ and water fronts adjacent'thereto^ used or required for the purposes of such ferry, now owned or possessed, or which may be hereafter owned or acquired by said city, or to which the corporation of said city is or may become entitled, or which it may become possessed.”

Section 170 of said act provides that “* * * The said -board shall * * * have power to sell or lease, for the highest marketable price or rental, at public auction or by sealed bids, and always after public advertisement and appraisal under the direction' of said board, any city property except wharves or piers, but not -for a term longer than ten years, nor for a renewal for a longer term than ten years.”

The Court of Appeals construed these two sections-in Starin v. Edson (112 N. Y. 206): “ The effect of the two sections (170, 180) upon the powers of the Commissioners of the sinking fund is to place in their hands the right generally to sell or lease for the highest marketable price or rental at public auction or by sealed bids, any city property whatever, excluding wharves or piers; excepting that wharves or piers used or required for the purposes of a ferry, the right to run which .the commissioners are about to lease, may be leased ‘ along with the franchise to run such ferry,’ and such lease must be in the manner provided by law. The manner provided by law in reference to such a lease, is the law which governs the commissioners of the sinking fund in their selling or leasing city property, and that law is found in section 170'of the act in question. Taking their powers from those two sections (170, 180), the commissioners are invested with power to make a lease of the ferry franchise and, along with it and as part of it, a lease of the wharf or pier required for the purpose of using the ferry franchise and the whole subject of the lease is, in substance, one entire thing, a ferry franchise and a place to land, without which the franchise of the ferry" would be comparatively worthless. This whole piece of property (franchise and wharf) must be leased for the highest marketable rental at1 public auction or by sealed bids, according to the mandate of section 170. Construing the language of section 180 to mean that the wharf or pier is to be leased along with the ferry franchise as part thereof, and that the whole is to be put up as one entire piece of property, the leasing provided by law_ is to be a leasing of such property for the highest marketable rental" at public auction.”

The sinking fund commissioners adopted the following resolution on April 10,1894: Resolved, that the comptroller be and hereby is authorized to take measures to advertise and sell at public auction to the highest bidder, as provided by law, a lease for the term of ten years from June 1, 1894, of the franchise of the ferry from the foot of Whitehall Street, New York, to Bay Nidge at Sixty-fifth Street, Long Island, upon the usual terms and conditions; and, in addition to the yearly rental to be paid for the ferry franchise, a further condition of the sale is that the purchaser and lessee of such franchise may have the use for its ferry purposes of that portion of the landing and buildings at the foot of Whitehall Street which are now and were heretofore occupied and used in connection with the operation of the Bay Nidge Ferry, and of the privileges heretofore exercised in operating said Bay Nidge Ferry, by the payment of “ * * $8,000 per annum, payable quarterly, during the term of the new lease, beginning June 1,1894. * * * During the term demised the minimum or upset price of the franchise of said ferry for and during the term of the lease thereof 'is a-p¡D raised and fixed at five per centum of the gross receipts for ferriage of passengers, vehicles, freight, etc., the total amount • of which rental shall not be less than * * * $15,000 per annum payable quarterly in advance. * * * ”

The sale was duly advertised. and was from time to timé duly-adjourned until October 8,1894, wheil it took place. The terms of sale provided, among other things, as follows: “ The highest bidder for the lease of the. franchise and wharf property, of said ferry will be required to pay the auctioneer’s fee arid to deposit with the comptroller at the time of the sale a sum equal to twenty-five per cent of the amount of his bid therefor, which sum shall be credited on the rent of the first quarter of the first year of the -term of the lease, or to be forfeited to the city if the lease shall not be executed by the highest bidder or purchaser when notified and required by the comptroller.” It contained the terms and proVisions.provided by the resolution of the sinking fund commissioners, the requirement of a bond conditioned upon the faithful performance of the conditions of -the lease, and the following: “ The form of lease which the purchaser will be required to execute, cá,n be seen at the office of the . comptroller.”

At the public sale held in accordance with the 'resolution of the sinking fund commissioners, and terms of the sale as advertised, Mr. Ambrose and Mr. Man, representing rival interests, engaged in a spirited competition for this franchise, as the result of which Mr. Man bid twenty-one and one-eighth per cent of the gross receipts., which was one-eighth per cent higher than Mr. Ambrose offered-, and became the purchaser. He thereupon paid' $3,750 and received therefor a receipt, which reads as follows: “ Received for the corporation of the City of Hew York from Alrick H. Man, $3,750 for 2o% of bid for franchise of a ferry from the foot of Whitehall St., H. Y., to Bay Ridge at 65th St., L. I., which sum shall be credited on the rent of the first quarter of the first year of the term of the lease, or to be forfeited to the city if the lease shall'not be executed by the purchaser when notified and required by the comptroller.”

On the 7th of June, .1895, the comptroller wrote to Mr. Man, “ You are hereby respectfully requested to execute the lease of the ferry to Bay Ridge, Long Island,. purchased by you on October 8, 1894.” Mr. Man did not sign the lease as requested.

It is evident from this record that by reason of the business rivalry of the competitors upon the sale for this ferry franchise, the plaintiff’s assignor had been forced to make a bid resulting in a bad bargain. It appears affirmatively that neither Mr. Man nor the company which was formed to take over the lease and operate the ferry was ever willing to perform under the terms of the sale. Various propositions were made to the city officials looking towards-a modification of the terms, a resale upon other terms, or the giving of indemnity by the city to hold the lessee harmless. An effort was made to show that by reason of certain injunction suits the city was not in. a position to perform upon its part. It is true that certain preliminary injunctions were issued, but each of these was dissolved upon the motion to continue the same during the pendency of the actions, so that from the, 1st day of November, 1894, to the 27th day of May, 1896, and so, of course, when the comptroller notified plaintiff’s assignor to execute the lease on June 7, 1895, there was no injunction standing in the way of an execution of the lease.

It was not contemplated that the moneys deposited should in any event ever be returned to.the depositor. If the lease was executed it was to be applied to the payment of the rent reserved. If the lease should not be executed by the highest bidder and purchaser when notified by the comptroller the deposit was to be forfeited and said provision was incorporated not only in the terms of sale, but also in the receipt for the deposit given to the plaintiff’s assignor. We have seen that plaintiff’s assignor was notified to execute the lease.' This he never did. Having prevented the sale to another purchaser, almost as anxious as himself to obtain the franchise, he now seeks to recover back the amount of his deposit. The burden is upon him to make out a case. Plaintiff’s assignor never offered to execute the lease called for by the terms of sale; he never was willing to execute such lease.

The learned court at Special Term has found that the mayor, aldermen and commonalty of the city of New York was ready and able to complete the contract for the purchase and sale of such franchise and that neither it nor the defendant, -its-- successor, had .defaulted in any'manner iii relation to' such contract, of purchase . and salé of such franchise; that neither Alrick H. Man nor the New York and Bay Ridge. Ferry Company nór the plaintiff -ever completed the purchase of such franchise or complied with the terms and conditions of such sale or offered to the mayor, aldermen and commonalty of the city of. New York to perform.such contract of purchase and sale of such franchise or since the commencement of this action. Such findings-are. supported by the evidence, and upon this record wé are satisfied that the judgment dismissing the 1 complaint is right. '

The judgment appealed from should, therefpre, he affirmed, with costs'to the respondent.

Patterson, P. J., Ingraham, Laugh-lin and Houghton, -JJ., concurred. . ■ ‘

Judgment affirmed; with costs. ■'