Case Name: O'Rourke Engineering Construction Company, Appellant, v. The City of New York, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1910-11-11
Citations: 140 A.D. 498
Docket Number: 
Parties: O’Rourke Engineering Construction Company, Appellant, v The City of New York, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 140
Pages: 498–503

Head Matter:
O’Rourke Engineering Construction Company, Appellant, v The City of New York, Respondent.
First Department,
November 11, 1910.
Contract — municipal contract for extra work, city of New York—when surety of contractor completing work on demand of city can recover under contract authorized to be made with original contractor — estoppel—appropriation for work pending performance of contract.
During the performance of a contract for the erection of a municipal building in the city of New York it was found impossible to proceed without sinking a caisson not called for by the contract. By resolution of the board of aider-men, approved by the mayor, a supplementary contract for the extra-work was authorized to be made with the original contractor without a public letting. Before the execution of the supplementary contract the original contract was repudiated by the city upon the ground of unreasonable delay, and the sureties of the contractor were notified to complete both the original and supplemental contracts. Subsequently funds necessary for the completion of the supplemental contract wore provided by the proper municipal authorities and the sureties of the original contractor completed the work required by both contracts.
In an action by the assignee of the sureties to recover for work done under the supplemental contract the city contended that it had no power to execute such contract with the sureties of the original contractor as the resolution only authorized such contract with the latter.
Held, that when the sureties acceded to the demand that they take the place of their principal with respect to the original and unexecuted supplemental contract, the latter must b'e deemed to have been made with them, not as strangers to the contract, but as sureties acting for their principal, so that it was fairly within the purpose and intent of the resolution;
That the city, having received the benefit of a full compliance with its demands, was estopped from asserting that the demand on the sureties was unauthorized, or that it had no power to require them to perform the original and supplemental contracts;
That although the supplemental contract was executed at a time when there was no appropriation for the cost of the work, the sureties are entitled to recover where all the requirements in that respect were complied with before the work was actually completed.
Appeal by the plaintiff, the O’Rourke Engineering Construction Company, 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 13th day of January, 1910, upon the decision of the court, rendered after a trial at the New York Trial' Term, dismissing the complaint upon the merits, the parties having stipulated at the close of the evidence to submit all questions of law and fact to the court.
The opinion delivered at Trial Term is reported in O'Rourke E. G. Go. v. City of New York (65 Mise. Rep. 320).
L. Laflin Kellogg, for the appellant.
Terence Farley, for the respondent.

Opinion:
Miller, J.:
This action is brought to recover the stipulated sum of $50,000 foi work performed by the plaintiff's assignors, the Metropolitan and People's Surety Companies, in the performance of a contract entered into between them and the defendant, the city of New York. There is no question but that the work was performed in exact accordance with the contract. Although it was made and all the preliminary steps were taken, pursuant to the advice and direction of the corporation counsel, the city is now defending on the ground of want of power to make the contract.
To understand the question presented it is necessary to state in chronological order the different 'transactions involved. On tlie 12th of December, 1905, the defendant, through the commissioner of public charities, entered into a contract with the Church Construction Company for the erection of the new municipal lodging house in the borough of Manhattan, and the plaintiff's assignors executed an undertaking for the faithful performance of the contract. After a considerable portion of the work contracted for had been done, a situation arose making it impossible to proceed without sinking a caisson, which was not called for by the original contract. Thereupon, upon the advice of the corporation counsel, the commissioner applied to the board of aldermen for permission to make a contract with the original contractor for the additional work, without a public letting, and the board of aldermen ón March 25,1907, adopted a resolution conferring such authority, which was approved by the mayor on the 2d day of April, 1907. On the 29tli of April, 1907, the architect, pursuant to the terms of the original contract made a certificate that the performance of the contract was unnecessarily and unreasonably delayed, and thereupon the commissioner notified the contractor to discontinue work and declared the contract abandoned. Thereafter, and on the fourth day of May, the commissioner notified the plaintiff's assignors to complete both the original and the supplemental contract, a requirement which, he was advised by the corporation counsel, he had a right to make. Whereupon said assignors took possession of the work and continued the force of men then at work pumping until the work under the supplemental contract could be begun. Obviously, tbe work of the original contract could not be continued until that of the supplemental contract was done, and the supplemental contract could not even be entered into until funds were provided. On June 21, 1907, the board of estimate and apportionment adopted a resolution authorizing the issuance of corporate stock to an amount not exceeding $1,300,000 for various purposes, including, among others, the work to be done under said proposed supplemental contract. The resolution of the board of aldermen, concurring in the resolution for the issuance of the corporate stock, was passed July 23, 1907, and approved by the mayor July 30, 1907. The contract in suit bears the date of June 27, 1907. It was acknowledged by the plaintiff's assignors on that day. The commissioner of public charities acknowledged it on the 8th day of July, 1907, and on the 2d day of August, 1907, transmitted it to the comptroller for certification. On the 14th of September, 1907, the comptroller attached his certificate pursuant to section 149 of the charter (Laws of 1901, chap. 466, as amd. by Laws of 1904, chap. 247) that there remained unapplied and unexpended sufficient funds to pay the estimated expense of executing the contract, and on the 16th of September, 1907, the contract was delivered by the commissioner to the plaintiff's assignors. Work on the contract was in fact begun about July 1, and it was completed October 14, 1907.
The city contends (1) that the resolution of March twenty-fifth only authorized the commissioner to execute a contract with the Church Construction Company, and that he, therefore, had no power to enter into a contract with the sureties of that company ; (2) that, having declared the contract abandoned, the contractor and its sureties were in default and the commissioner was precluded by section 419 of the charter from entering into a contract with them < (3) that the contract was void because, when it was executed by the plaintiff's assignors, there was no appropriation out of which the cost of the work could have been paid ; and (4) that the contract was void because, at the time of the commencement of the work the comptroller had not indorsed thereon the certificate required by section 149 of the charter.
It was obviously the purpose of section 419 of the charter (Laws of 1901, chap. 466, as amd. by Laws of 1906, chap. 598) to require a public letting of all contracts involving an expenditure of more than $1,000 unless otherwise ordered by a vote of three-fourths of the members elected to the board of aldermen. The authority of the board of aldermen was requisite only to the making of a contract without public letting. Such authority was conferred, and thereby the requirement of the charter was complied with. Naturally, a supplemental contract would be made with the original contractor, and so the name of the said contractor was incorporated in the request for authority and in the resolution conferring it. Perhaps, literally construed, the. resolution only conferred authority to make a contract with the contractor named, but the obvious purpose of applying for such authority was to get the work done without the delay incident to a public letting, and the object of the resolution was to permit that to be done, and we are not disposed to adopt a technical and narrow view, utterly regardless of the purpose and intent of the resolution. After having declared the original contract abandoned, the commissioner, upon advice of the corporation counsel, took the position that he could require the sureties not only to complete the original contract, but to perform the supplemental contract, which had not even then been executed. The sureties acceded to the demand of the commissioner and took the place of their principal with respect to the original and the unexecuted supplemental contract, and the latter must be deemed to have been made with them, not as strangers to the contract, but as sureties acting for their principal, and it was, therefore, fairly within the purpose and intent of said resolution.
It is too late now for the city, after receiving the benefit of a full compliance with its demands, to change its position and assert not only that the commissioner was wrong in making the demand, but tliat he did not even have the power to allow the sureties either to finish the original contract or to perform the supplemental contract. That conclusion disposes of the first and second points of the city. The notice of the commissioner declaring the original contract abandoned must be read in connection with the subsequent notice to the sureties requiring them to perform both contracts. Having procured the sureties to step into the shoes of their principal with respect to both, the city is in no position to assert that they were in default, and that the commissioner was precluded by section 419 of the charter from even allowing them to do that, even if otherwise he would have been so precluded, which we are far from deciding.
The last two points may likewise be disposed of together for they 'relate to the same thing, namely, the existence of an unapplied and unexpended appropriation, and the certificate of the comptroller to that effect. All of the requirements of the charter under that head were complied with long before the work was completed, and indeed before the fully executed contract was delivered to the plaintiff's assignors. They executed the contract on the twenty-seventh day of June, and in good faith began the work almost immediately, without waiting for the city officials to perform the ministerial acts necessary to give validity to it. Fortunately for them, the present attitude of the city was not conceived until after all of those acts had been performed. Although the work on the original contract could hot proceed until additional work, not contemplated by it, was done, the commissioner declared the contract abandoned, and demanded that the sureties complete it and perform a supplemental contract, which had not been made, and which the city was not even in a position to make. It took the city officers from the fourth of May until the fourteenth of September to perform the various acts necessary to make the supplemental contract and to give i,t final validity. But the city was not harmed by the fact that the plaintiffs assignors took the hazard of receiving fair treatment. The charter provisions were designed to protect the city, and must be observed; but they were nob intended to 'enable the city to get the benefit of work done in good faith without paying for it.
The judgment should be reversed and a new trial granted, with costs to appellant to abide the event.
Ingraham, P. J., Laughlin, Clarke and Scott, JJ., concurred.
Judgment reversed and new trial ordered, with costs to appellant to abide event.
Since amd. by Laws of 1910, chap. 545.— [Rep.
Since amd. by Laws of 1910, chap. 554.— [Rep.