Case ID: ad_130/html/0182-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Williams and Robert J. Gerstle, Respondents, v. The City of New York, Appellant.
    First Department,
    January 15, 1909.
    Municipal corporations — contract for construction of dam in connection with water works, city of New York — liability of city under chapter 490 of the Laws of 1883 — when no breach of contract by city.
    The aqueduct commissioners in contracting for the construction of -a dam in connection with the water supply - of the city of New York - can impose no other or greater liability upon the city than authorized by chapter 490 of the Laws of 1883, as amended. As section 30 of said act provides that in no event shall the city be held on any contract to a greater liability than that, expressed therein, nor be required to pay any sum of money for work or material greater than that stipulated in the contract, where such contract merely imposes, upon the city an obligation.to pay the contract price from time to time under certificates issued by the aqueduct commissioners, the city is liable only for payments due under such contract. If the contractor treats the refusal of the city to pay an installment as a breach of contract and abandons the work, it cannot hold the city for damages caused by such breach, or for the value of. the work done under the contract.
    Where mechanics’ liens are on file against the work at a time when a certificate for payment of an installment is received from the aqueduct commissioners,' the contractor is not entitled to payment until the liens are discharged, and the comptroller of the city has a a reasonable time thereafter within which to pay the sum dué. .
    As section 261 of the city charter allows an action against the city only where the comptroller has neglected to pay a claim within thirty days after it is presented, thirty days must be considered as the reasonable time within which the city must pay, and the contractor cannot charge the city with a breach, as a, matter of law, in failing to pay within sixteen days after mechanics’ liens upon the work have been discharged, in the absence of any express repudiation of liability upon the part of the city, especially so where all' prior payments have been delayed between ten and thirty days without objection.
    Appeal by the defendant, The City of New York, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 3d day of January, 190Y, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 31st day of December, 1906, denying the defendant’s motion for a new trial made upon the minutes, and granting the plaintiffs an extra allowance.
    
      Terence Farley, for the appellant.
    
      L. Laflin Kellogg, for the respondents.
   Ingraham, J.:

In the year 1901 the aqueduct commissioners, acting under the authority conferred upon them by chapter 490 of the Laws of 1883 (and acts amendatory thereto), in connection with the water supply of the city of New York, determined to construct a dam on the Croton river which was known as the Muscoot Dam.” They issued proposals for bids to do the work required by certain specifications which were annexed to the proposals for bids; the plaintiffs submitted a bid which was accepted, and a formal contract was executed on the 10th day of May, 1901. The contract in form is between The City of New York, acting by and through the Aqueduct Commissioners, by virtue of the power vested in them by Chapter 490 of the Laws of 1883, of the State of New York, and the amendments thereto, parties of the first part, and John Williams and Robert J. Gerstle, composing the firm of Williams & Gerstle, of 347 East 44th St., New York City, parties of the second part.” By the contract the plaintiffs agreed that they would commence the work within twenty days from the date of the contract; “ that the rate of progress of their work shall be such, in the opinion of . the engineer, and that they will so conduct the said work that on or before July 1, 1902, the whole work covered by this contract and specification shall be entirely completed,” with a penalty of $250 for each day that the contractors should be behind in the performance and completion of the work, and with a further provision that “ neither an extension of time for any reason beyond that fixed herein for the completion of the work, nor for the doing and acceptance of any part of the work called for by this contract, shall be deemed to be a waiver by the said aqueduct commissioners of the right to abrogate ■ this contract for ábandonment or delay, in the manner provided for in the .paragraph marked ‘ p ’ in this agreement.” Paragraph “ p ” of the contract provided that the contractors “ agree that if the work to be done under this agreement shall be. abandoned, or if the conditions as to the rate of progress hereinbefore specified are not fulfilled, or if this contract shall be. assigned by the parties of the second part otherwise than as is herein-before specified, or if at any time the engineer shall be of opinion and shall so certify, in writing,, to the said aqueduct commissioners that the said work or any part thereof is unnecessarily or unreasonably 'delayed, or that the said contractor is violating any of the conditions or covenants of this contract, or executing said contract in bad faith, or if the work to, be done under this contract be hot fully and entirely completed within the time herein stipulated for its completion, the said aqueduct commissioners shall have the power to notify the aforesaid contractor to discontinue all work, Or any part thereof under his contract, by a written notice to be served upon the contractor either personally or by leaving said notice at his residence or with his agent in charge of the work; and thereupon- the said contractor shall discontinue said work, or such part thereof as sejfid aqueduct commissioners may designate, and the said aqueduct commissioners shall- thereupon have the power to place such and. so many persons, and obtain by purchase or hire such materials, * * * by contract or otherwise, as said aqueduct commissioners deem. necessary to complete the work herein described, * * * and the expense so charged shall be deducted and paid by the "parties of the first part out of such moneys as either may be due, or may at any time, thereafter become due to the said contractor under and by virtue of this agreement, or any part thereof.” And it was further agreed that “ if the work under this contract is not, in the opinion of the aqueduct commissioners, practically completed as hereinbefore provided (Clause L) on or before the first day of July, 190.2, that "one-half of the moneys retained by The City of Mew York under Clause T shall be and is hereby forfeited by the said parties of the second ■part to the said The City of Mew York, and the aqueduct commissioners shall have the. right to take possession of the work.” The contract "also contains the further provision that -in order to enable the said contractor to. prosecute the work, advantageously the engineer shall once a month make an estimate in writing of the amount of work done and materials delivered to be used in the work, and the value thereof, according to the terms of the contract; that the ' first such estimate shall be of the amount or quantity and value of the work done since the parties of the second part commenced the performance of this contract on their. part, and every subsequent estimate (except the final one) shall be of the amount or quantity and value of the work done since the last preceding estimate was made; that such estimates of amount and quantity shall not be required to be made by strict measurement or exactness, but they may at the option of said engineer be approximate only, and that upon each such estimate being made the parties of the first part will pay to the parties of the second "part ninety per cent of such estimated value.

The plaintiffs commenced work under this contract and proceeded thereunder until January, 1901. The work was not then completed, although according to the terms of the contract it was to have been completed on or before July 1, 1902, but the time for the completion of the work appears to have been extended from time 'to time by the aqueduct commissioners. On February 18, 1901, the engineers of the aqueduct commissioners certified that the contract between the city of Mew York, acting by and through the aqueduct commissioners, and John Williams and Robert J. Gerstle, dated May 10, 1901, for the building of the “Muscoot Dam” on the Croton river at Muscoot mountain and the work thereunder “is unnecessarily and unreasonably delayed, and the contractors are violating the conditions or covenants of the contract and executing the same in bad faith, and the work done under the contract is not fully and entirely completed within the time therein specified in the said contract for its completion; ” whereupon, and on February 29, 1901, the aqueduct commissioners served a notice on the plaintiffs .to discontinue all work under their contract, stating that the notice was served pursuant to the terms and conditions of the contract'and because of their failure to comply therewith; that the aqueduct commissioners would proceed to complete the work under the provisions of the contract, and to charge the cost thereof as therein provided, and take such other steps as might be legal and proper under the provisions of chapter 190- of the Laws of 1883 and the amendments thereto. Subsequently, and in May, 1901, the plaintiffs commenced this action, alleging the making of the contract; that" as soon as permitted the plaintiffs proceeded to execute, perform and carry out the said contract in all respects as therein required, and have performed, executed and carried out the said contract in all respects as far as permitted by the defendant; that while the plain tiffs were proceeding in good faith to perform, execute and carry out the terms of the said contract as aforesaid, ■ the defendant wholly failed to perform and carry out the conditions and covenants of the said contract to be kept by it, in that it obstructed, hindered and delayed the proper performance thereof, in that it wrongfully interfered with the workmen employed by the plaintiffs, and refused to allow them to work as ordered by the plaintiffs; in that it compelled the plaintiffs to -work under obstructions and difficulties interposed by the defendant, and at an increased price; in that it forced the plaintiffs to com. ply with the provisions of the Labor Law which have been declared unconstitutional and void by the courts of this State; in that it compelled the plaintiffs to do other and additional work to that specified in the contract; in that it failed and refused to make the payments provided for in the said contract at the times provided therein, and failed and refused on demand to make the said payments due and payable December, 1903, of two monthly payments earned and due according to the estimates duly made ■ covering moneys earned by the plaintiffs and due under the contract; in that it wrongfully and against the terms,, conditions and covenants of the said contract wholly refused to permit the plaintiffs to perform the same, and that on or about the 24th of February, 1904, forcibly took possession thereof, and have since refused to permit the plaintiffs to proceed further thereunder. It was further alleged that the total amount of work.done at the time of the breach under the said contract, including the work done and estimated thereunder, and the value of materials taken and appropriated by the defendant, and the increased cost of the work caused by the obstructions, hindrances and delays in the performance of said contract and the said profits was the sum of $260,309.35 ; that the amount of money actually received by the plaintiffs from the defendant was the sum of $107,763.30; and demanded judgment for the sum of $152,897.92. Upon the trial thé-court'held as a matter of law that the defendanfhad violated the contract by failing to make payments on two provisional estimates, and charged the jury that the plaintiffs were entitled to a verdict, leaving it to the jury to assess the damages. To this the defendant excepted, and requested the court to submit the question as to whether or not the defendant had violated, the contract to the jury. The jury found a verdict for the plaintiffs for $91,000, and from the judgment entered thereon the defendant appeals.

Upon this appeal the plaintiffs rely upon two alleged breaches of the contract. The first is the alleged refusal of the defendant to pay the amount stated in two of the provisional certificates, one known as estimate No. 31, which amounted to $2,405.20, of which the plaintiffs were entitled to ninety per cent, or $2,164.68, and estimate No. 32, which amounted to $283.90, of which plaintiffs were entitled to ninety per cent, or $255.51. The second breach charged against was founded upon the action of the aqueduct commissioners in requiring the contractors to comply with certain pro visions of the Labor Law in pursuance of a clause of the contract which provided that “ the contractor will comply with the provisions of chapter 415 of the Laws of 1897, as amended, known as the Labor Law, so far as it is constitutional and applicable thereto.” The court charged the jury that the plaintiffs were not entitled to recover for any loss of time, labor or increased cost of performance of the contract in consequence of the requirement in relation to the Labor Law, basing the 'right to recover solely upon the failure of the defendant to pay the amount of these two provisional estimates. If, as a matter of law, the failure of the defendant to pay these two provisional.estimates was not such a breach of the contract as justified the plaintiffs in abandoning the work and made the city of New York liable as for a breach of the contract, the judgment cannot be sustained.

The contract was made by the aqueduct commissioners, a commission appointed by the Legislature to' construct Certain aqueducts and reservoirs in connection with the water supply for the city of New York. Under this act there was imposed a duty upon the city of New York to pay the amount provided by such contract in accordance with its terms, and undoubtedly a failure by the city to perform this duty imposed upon it by the sovereign power of the State would subject the city to a liability for the amount of payments provided for by the contract. The question is, however, presented as to whether a failure of the city to comply with the terms of the contract in regard to these payments could be deemed a breach of the contract which would entitle the contractor, upon one of the provisional payments being neglected ór refused when demanded, to treat the contract as abrogated and impose a liability upon the city, not only for the amount to be paid' under the contract, but for the damages' caused by a breach thereof, of the value of the work done under the contract. -Section 30 of the Aqueduct Act (Laws of 1883, chap. 490), under the authority of which this contract was made and the terms of which became a part of it, provides: “But in no event shall the city of Hew York be held in any action- or proceeding brought or had under any contract so made to any other or greater liability than that expressed therein, nor required to pay out or otherwise dispose of any sum of money for the doing of such work or the furnishing of such material greater than is stipulated in such contract nor otherwise than in strict conformity to the terms thereof.” The aqueduct commissioners have made this contract under the provisions of this act. Their authority was limited in binding the city of Hew York to the power expressly given by the act, -and they could- impose no other or greater liability upon the city than the act authorized. The engineers, inspectors and employees of the commission had no power to bind the city of Hew York, and while the city, of Hew York was liable for all sums of money required by said contract to be paid, the statute under which the contract was made, by the provision above quoted, subjected the city of Hew York to no liability on account of such contract or on account of any action of the aqueduct commissioners except as was expressed in the contract, nor required it to pay out or otherwise dispose of any sum of money greater than was stipulated in said contract or otherwise than in strict conformity to the terms thereof. The municipal corporation had no power to make the contract, to enforce the contract, to terminate the-contract, or to do anything except to pay the money provided for by the contract when it became due, which liability had been imposed upon the- city by the Legislature.

The question as to the obligation of the city of Hew York under this act was before the Court of Appeals in O'Brien v. Mayor, etc., of New York (139 N. Y. 543, 591), where Judge Peckham, speaking for the Court oí Appeals, said : “ The position of this provision in the act is quite suggestive upon the question of the liability of defendant for the acts of those who were performing 'duties for the city by virtue of this statute. When those who confessedly were city officers, and thus to some extent or for some pur- . pose representatives of the city, were permitted by the terms of the statute and by .reason of their position to do certain work upon the aqueduct, if directed by the aqueduct commissioners, the provision for the non-liability of the city, excepting under the contract, follows such permission at once. The non-liability of the city is notin terms. or in fact confined to those officers thus specially named, but the principle is fittingly announced at that point. Even for the acts of city officers the city was not to be liable.” And it was further said: “ It was to cover just such claims as are now under discussion that the sections of the statute were enacted. I think the result of their enactment was to so place the contractors with reference to the defendant that the character-of its liability at any time was to be discovered by reference to the contracts themselves, and that no implied liability arising from-the acts or omissions of any person should be suffered to be created in favor of contractors, or the defendant compelled to answer in damages for any claims outside of the provisions and in accordance with the terms of the contract.” Here was a work involving hundreds of thousands of dollars, the cost of which had been by statute placed upon the city of Hew York. The contract had imposed upon the city of Hew York an obligation to pay the contract price from time to time under certificates issued by the aqueduct commissioners. The contractors had a cause of. action against the city for the moneys due to them from time to time under the contract, but under the express provisions of the statute which authorized the making of the contract, the liability of the city in relation to the. work or the contract was limited to the obligations imposed upon it by the contract. In the light of this clear and explicit- provision of the statute limiting the liability of the city of Hew York, it seems to me that there could be no liability imposed upon the city except to make the payment which ■became due under the contract. We will assume that the plaintiffs had a cause of action against the city to recover the amount which, by these provisional estimates, the city was required to pay, and that in an action brought against the city to recover the amount of those estimates the city would have had no defense. And it may be that if the city absolutely refused to pay these provisional estimates, so that the plaintiffs were unable to continue the work in consequence of their failure to receive what they were entitled to receive under the contract, that they would have been justified in abandoning the work and of recovering from the city the amount of the ten per cent of the estimates that had been reserved until the final completion of the work, for- that was work done under the contract according to the special prices to be paid for such work and for which under the contract the city was liable. But the statute expressly forbids, as I read it, the imposing of any other liability or obligation upon the city, and the city, therefore, could not be liable for' a breach of the contract, a liability outside of its provisions and not specifically imposed by its terms or by the act under which the aqueduct commissioners were authorized to make a contract which would bind the city of New York. I am, therefore, of the opinion that the city was not liable for the damages sustained by the plaintiffs by reason of their not completing the contract or for the valué of the work done under it, and that the judgment cannot be sustained.

I am also of the opinion that the learned trial judge was quite wrong in holding that on the facts here disclosed there was as a matter of law a breach of the contract which justified the plaintiffs in abandoning the work under it. ■ The certificate for the work done dulring the month of December, 1903, known as estimate No. 31, was certified by the commission on January 12, 1904. One of the plaintiffs testified that he received this certificate from the aqueduct commissionersjon January 14,1904, but at'that time there existed on file with the comptroller a mechanic’s lien which applied to this payment, and that lien was not discharged until February 8,1904. Thus, according to the plaintiffs’ own testimony it was not until February 8, 1904, that they became entitled to the payment. The defendant had a reasonable time within which to pay to the plaintiffs the amount due, and a mere delay in payment for a reasonable time to enable it to make the necessary arrangements for that purpose was not upon any possible construction of the contract a breach thereof. The comptroller of the city of New York cannot be expected to have the money ready or warrants drawn for the payment of claims against the city immediately upon presentation. The fiscal officer of a large municipal corporation is entitled to a reasonable time after the claim is presented to make payments. There is nothing to show that the liability of the city to pay this amount was ever repudiated by the comptroller; there was a simple delay in making the payments. The necessity of time to make payment is recognized by the charter, which requires a claim to be presented for payment to the comptroller of the city of Hew York, and that he has neglected to pay it for thirty days before an action can be maintained upon it against the city. (Greater N. Y. Charter, [Laws of 1901, chap. 466], § 261, as since amd. by Laws of 1906, chap. 55Ó, and Laws of 1907, chap. 677.) This is to give the comptroller the' necessary time to make the proper investigation and provide for the payment of the claim, and the charter fixes thirty days as a reasonable time for that purpose.. Here an amount had been due from the city from the fourteenth o.f January, but the comptroller was prevented from paying it in consequence of liens that had been filed against the amount due under it. The lien had been removed on the eighth.of February, but the comptroller was entitled to make a proper investigation to see that no further liens had been filed; to see that the order discharging the lien had been complied with; and. to see that the city would be protected in making a- payment. , The charter has fixed thirty days as such a reasonable time before an action can be commenced against the city on a claim, but on February twenty-fourth, but sixteen days after this lien was discharged, so that plaintiffs became entitled to the payment, the plaintiffs served upon the aqueduct commissioners a notice that by reason of the failure of the city of Hew York to make monthly payments in the manner and form provided and called for in the contract, and for other reasons mentioned, they elected to treat the action of the aqueduct commissioners as a breach of the contract, to stop all work thereunder, and to hold the city of Hew York responsible for not only the amount already earned under and in connection with the contract, but also foi; the damages sustained by the plaintiffs by reason of the matter stated. On the twenty-ninth of February the aqueduct commissioners served the notice that the plaintiffs had. failed to comply with the contract and that the aqueduct commissioners, under the authority contained in the statute and in .the contract itself, had elected to complete’the contract and charged the plaintiffs with the costs. It certainly cannot be said as a matter of law that a mere delay of sixteen days to pay an. amount due under such a provisional estimate where there was no repudiation of the obligation to pay by the city and no repudiation of the contract by its authorized representatives was a breach of the contract which entitled the contracting party to maintain an action for its breach.. The learned trial court held that the question of a reasonable time was a question of law for the court and not' for the jury, and that, of course, is the correct rule of law under certain • restrictions. I am inclined to think that,, as a matter of law, sixteen days under the circumstances presented here was not an unreasonable time for the city to take to make, the necessary examination and preparation for the payment. But the utmost that could be said is that under these circumstances, with the knowledge of the course of business that had been established between the parties in relation to these' payments, it was a question of fact for the jury to say whether this delay was unreasonable. Thus in looking at the prior payments under this contract we find that estimate No. 1 was certified July 10, 1901, and paid August 2,1901, twenty-three days after the certificate was certified. Estimate No. 2, for July, 1901, was certified July 30, 1901, and paid August 12, 1901, fourteen days after the certificate was certified. Estimate No. 3, for August, 1901, was certified September 10, 1901, and paid September 26, 1901, sixteen days after the certificate was certified. Estimate No. 4 was certified October 8, 1901,. and paid October 23. Estimate No. 5, for October,; 1901, was certified November 7, 1901, and paid November 21, 19Ó1. Estimate No. 6, for November, 1901, was certified December 10, 1901, and paid December 24,1901. Estimate No. 7, for December, 1901, was certified January 7, 1902, and was apparently not paid until July 2, 1902. Estimate No. 8, for January,, 1902, was certified February 4, 1902,. and was paid July 2, 1902. Estimate No. 9, for February, 1902, was certified May 13, 1902, and paid July 2, 1902, and the subsequent monthly estimates were paid from ten to thirty days after the certificates were granted. The course of dealing, between the parties thus clearly indicates that a reasonable delay after the certification of these estimates to enable the city officials to make the payments was recognized, and the contiauance of this established custom, in the absence of any express repudiation of liability on the part of the city by its responsible officers^ was not a breach of the contract which justified a contractor in abandoning it and suing the city for damages as for a breach.

It is quite clear that the action of the aqueduct commissioners or their engineer or employees, in insisting on a compliance with the Labor Law, was not a breach, of the contract which imposed the liability on the city of New York. (O'Brien v. Mayor, etc., of New York, supra.)

• There are other questions presented upon this appeal which it is unnecessary to determine, as the conclusion as to these two. questions requires a reversal of the judgment.

The. judgment is, therefore, reversed and a new trial ordered, with costs to the appellant to abide the event.

Patterson, P.J., McLaughlin, Clarke and Houghton, JJ., concurred.

Judgment' reversed, new trial ordered, costs to appellant to abide event.