Case ID: misc_60/html/0423-01.html
Source: Caselaw Access Project
Author: {"author": "Stapleton, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Daly, Plaintiff, v. John H. O’Brien, as Commissioner of Water Supply, Gas and Electricity of the City of New York; Herman A. Metz, as Comptroller of the City of New York; The City of New York, and Home Water Main Cleaning Company, Defendants.
    (Supreme Court, Kings Special Term,
    September, 1908.)
    Municipal corporations — Contracts: Form, of bid—Authority to regulate— Sufficiency of form: Letting contract to lowest bidder — Unauthorized rejection of lowest bid for informality.
    Where a municipal corporation is required to advertise for bids for performing work in connection with the maintenance of its system of water supply, the bid of a corporation,- signed by a duly authorized officer thereof with the addition of his official title, is a sufficient bid and cannot be disregarded because it violates a provision of a rule established by a municipal department requiring bids by corporations to be signed with the corporate name.
    In such a case, the rejection of the lowest bid, for its want of conformity to the rule requiring it to be signed with the corporate name of the bidder, is arbitrary and unwarranted and tends to nullify the statute which was designed to prevent favoritism, and the contract made with the next higher bidder is illegal and void, and a payment thereunder would be a waste of the funds of the municipality and will be enjoined at the suit of a taxpayer.
    
      Taxpayer’s action. The opinion states the case.
    John H. Taylor (Wayland E. Benjamin, of counsel), for plaintiff.
    Francis K. Pendleton (J. L. O’Brien, of counsel), Corporation Counsel, for defendants City of New York, John H. O’Brien, Commissioner of Water Supply, Gas and Electricity of the City of New York; and Herman A. Metz, Comptroller of the City of New York.
    Edward M. Grout and Paul Grout (Edward M. Grout, of counsel), for defendant Home Water Main Cleaning Company,
   Stapleton, J.

This is a taxpayer’s action. The complaint in its allegations embodies all the essential requirements of chapter 301 of the Laws of 1892, the act for the protection of taxpayers, and of section 1925 of the Code of Civil. Procedure. The concrete application is for a temporary injunction.

The undisputed facts are:

The defendant commissioner of water supply, gas and electricity invited sealed hids or proposals for cleaning water mains and cutting in stopcocks, connections and blow-offs on water mains in the borough of Brooklyn, to be submitted at his office on Friday, June 26, 1908.

Three bidders responded to the invitation. The names of the bidders and the amount of their respective bids were as follows: Donlon Contracting Company, $108,417.50, Home Water Main Cleaning Company, $122,978.50; RyanParker Construction Company, $149,346.30.

The Donlon Contracting Company was in fact the lowest bidder, and the difference in amount between its bid and that of its nearest competitor was $14,501. On July 3, 1908, the defendant commissioner awarded the contract for the work to the second lowest bidder, the defendant the Home Water Main Cleaning Company. Before the commencement of this action and the date of this application, the precise date not being volunteered by any of the defendants, the city through its commissioner of water supply, gas and electricity entered into a contract with the defendant the Home Water Main Cleaning Company for the performance of the work at the price bid by it.

The defendant commissioner seems to recognize that it was his legal duty, if he did not deem it for the interest of the city to reject all bids, to award the contract to the lowest bidder. Greater N. Y. Charter, § 419,

He asserts the right to declare informal ” and disregard the bid of the Donlon Contracting Company, solely because it was signed Patrick McMeel, Vice Prest.”, although in the body of the instrument it purports to be the bid of the Donlon Contracting Company, as it was violative of a regulation made by him and noted on the blank bid or proposal prepared by his department, to wit: “ In case a bid shall be submitted by or in behalf of a' corporation it must be signed in the name of such corporation by some duly authorized officer or agent thereof who shall also subscribe his own name and office. If practicable the seal of the corporation should also be affixed.,”

It is obvious that a statutory provision designed to prevent favoritism or extravagance might be easily nullified by conferring upon the officer sought to be restrained by its terms the right to establish arbitrary or fanciful regulations and vesting him with the power to disregard lowest bids for noncompliance with them.

I have searched the charter in vain for his warrant to make such a regulation and impose such penalty for its violation. In sections 419 and 420 thereof, the Legislature has established such rules as it was willing to express, and committed, by the provisions of section 419, extensions, elaborations or detail to the establishment by ordinance or resolution of the board of aldermen.

Hone of the parties has furnished legal proof of the ordinances or resolutions on the subject matter and clearly judicial notice cannot be taken of them. I am inclined to think this was not an oversight, in view of a judicial utterance where the ordinances were in evidence, to-wit: “ There is no provision of law or ordinance which requires that the bid should be signed.” Matter of Clamp, 33 Misc. Rep. 250, 251.

At all events I can find no provision of law, and I have no proof of an ordinance or resolution requiring the bid to be signed.

It was argued that the protection of the city against straw bids demanded such action on the part of the commissioner, because the Donlon Contracting Company could not be held to its bid, signed by its vice-president, through an action for damages.

If an obligatory contract in any event can be created by an invitation bid and award the signature was efficient. It made the bid as binding upon the defendant as if its name had been formally prefixed to the signature. Booth v. Farmers & Mechanics’ National Bank, 50 N. Y. 396, 401, and cases cited; Castle v. Lewis, 78 id. 131, 135; Oakes v. Cattaraugus Water Co., 143 id. 430; Hastings v. Brooklyn Life Insurance Co., 138 id. 473, 479; Olcott v. Tioga R. Co., 27 id. 546.

The Legislature deemed a retention as liquidated damages of a deposit of money in an amount not less than three nor more than five per cent, of the amount of the bond required by the commissioner as adequate protection. Greater N. Y. Charter, § 420.

The rejection of the lowest bid in this case for the pretext assigned was arbitrary and unwarranted, nullified the statute designed to prevent favoritism; and the contract entered into between the city and the defendant Home Water Main Cleaning Company was illegal and void; and the act of entering into it on the part of the defendant commissioner was an illegal official act. People ex rel. Coughlin v. Gleason, 121 N. Y. 631, 634.

It has been done, however, and cannot be restrained.

To make a payment under this void contract illegally entered into with others than the lowest bidder at an excess cost of $14,501 would be waste which it is the aim of the statutes to thwart.

An order may be entered prohibiting the defendant comptroller from paying and the Home Water Main Cleaning Company from collecting any claim or demand for work done in performance thereof during the pendency of this action upon the plaintiff’s executing a bond with two sureties, in the sum of $5,000, conditioned to pay all costs and damages of the defendant Home Water Main Cleaning Company, and a bond with two sureties in the sum of $500 conditioned to pay all costs that may he awarded to the defendant comptroller.

Ordered accordingly.