Case Name: The North River Electric Light and Power Company, Plaintiff, v. The City of New York, Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900-02
Citations: 48 A.D. 14
Docket Number: 
Parties: The North River Electric Light and Power Company, Plaintiff, v. The City of New York, Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 48
Pages: 14–38

Head Matter:
The North River Electric Light and Power Company, Plaintiff, v. The City of New York, Defendant.
Municipal contract, made without complying with the statutory requirements — when enfoi'dble against the city of Mew Yorh.
The municipal assembly of the city of New York having, in December, 1898,. refused to pass ordinances and resolutions for lighting the city, the commissioner of public lighting and supplies, acting in good faith under the misapprehension that no written contract for public lighting could be let without, the authority of the municipal assembly, in order to prevent the city from being left in darkness after January 1, 1899 (the date at which the previous. contracts expired), made an oral agreement with the lighting companies by which the latter agreed to continue to furnish light after January 1, 1899, at the prices, conceded to be reasonable, which were fixed by the contracts in force prior to that date, upon being assured by the city authorities that the bill therefor would be paid.
Held, that the lighting companies were entitled to maintain an action against the city to recover for the light furnished under the oral agreement, and were not obliged to-seek relief in the Legislature.
Rumsey and Ingraham, JJ., dissented.
Submission of a controversy upon an agreed statement of facts, pursuant to section 1219 of the Code of Civil Procedure.
The statement of facts which the parties agreed to submit to the court for the determination of their controversy is as follows :
“ First. That the plaintiff is a domestic corporation, duly incorporated and existing under the laws of the State of New York, located and doing business in the city of New York.
“ Second. That the defendant, the City of New York, is and was, at all the times hereinafter stated, a municipal corporation.
“ Third. That in the regular course of its corporate business the plaintiff did, on or about the 1st day of January, 1898, duly enter into a written contract with the defendant to furnish electric lights, for the purpose of lighting certain streets, public places and public buildings of the defendant, from the 1st day of January, 1898, to the 1st day of January, 1899, at an’ agreed price, payable monthly, and fixed and determined by the terms of said contract, which said terms were in all respects reasonable and fair.
“ Fourth. That, pursuant to said contract, the plaintiff did furnish such lights to said defendant from 1st January, 1898, to 1st January, 1899, and the said defendant did have and. receive the same and paid monthly therefor said agreed price, as provided by said contract.
“ Fifth. That, at the expiration of said contract, no contract in writing was executed between the parties hereto, for the reasons hereinafter stated, but that from the said 1st day of January, 1899, and from month to month thereafter, to and including the 30th day of September, 1899, the plaintiff did, at the request of the Commissioner of Public Buildings, Lighting and Supplies, one of the officers of the defendant corporation, having charge on its behalf of the lighting of the streets, public places and public buildings of said city, furnish to the defendant lighting as had been furnished under the contract already mentioned, and did continue to furnish and supply electric lighting to the defendant in the streets, public places and public buildings of said defendant in the same manner and át the same price as provided by said contract, and as it had theretofore done, and that said defendant has had, received and used such service and lights from said plaintiff for said time.
“ Sixth. That said lighting was furnished to the amount set forth in the itemized account thereof hereto annexed and marked ‘ Exhibit A,’ which is hereby referred to and made a part hereof, with the same effect as though set forth in full herein.
“ Seventh. That the lighting furnished by plaintiff to defendant at the times above set forth, namely, from January 1, 1899, to September 30, 1899, was reasonably worth the sum of $119,146.85. That no part of said sum has been paid, that there were and are no offsets or counterclaims thereto, and the claim in this controversy is for that sum, with interest on the various parts thereof, as hereinafter stated. That notice of this claim, with a demand for payment of $65,639.70 thereof, was duly served on the Comptroller, of the City of New York on the 1st day of June, 1899; and a further notice for a demand for payment of $53,507.15 was duly served on the said Comptroller on the 7th day of October, 1899, pursuant to the provisions of section 261 of the Greater New York charter, and that thirty days have elapsed since the service and demand, and that said Comptroller has neglected and refused to make an adjustment or payment thereof for thirty days after such presentment.
“ Eighth. That at the time of the furnishing of the lights as above set forth there was, in the part of the city, in which the said lights were furnished, no other corporation having wires, appliances or apparatus for supplying electric lighting, and that the lights furnished by the plaintiff were the only lights available for said lighting at such time.
“ Ninth. That at the times during which the light was furnished as above mentioned, the furnishing of light in the said streets, public places and public buildings of the portion of the city already mentioned, was a public necessity. That such lighting was absolutely necessary, not only for the purpose of permitting the use of saicj streets or other public places by the citizens of the City of New York, but also for the further purpose of the prevention of accidents arising from the absence of lights in said streets, avenues, public places and public buildings for which the City of New York might be liable in damages. There was also absolute necessity for the furnishing of the said lights as aforesaid in order that the Fire Department, the Police Department and the other departments of the city government should perform their functions for the protection of the city and of its citizens.
“ Tenth. That the reason no written contract has been entered into for the.furnishing of said lights is as follows :
“ On December 5, 1898, resolutions for gas and electric lighting in the various boroughs of the City of New York were duly adopted by the Board of Public Improvements, and proper ordinances to the same effect forwarded to the Municipal Assembly by the said Board of Public Improvements for adoption.
“ That said Municipal Assembly refused to take any action whatever, and there being pressing necessity for the lighting of the city the said ordinances were recalled from the Municipal Assembly by the Board of Public Improvements and resolutions were passed by the said Board to let the said contracts.
“ In pursuance of the same policy of obstruction which had prevailed in the Municipal Assembly, no sooner had bids been called for by public advertisement and obtained for public lighting by the Commissioner, among others the bid of the plaintiff, which was the only bid for lighting the territory already mentioned — that is to say, almost the entirety of the Borough of The Bronx — than there appeared the usual taxpayer, one Joseph Blank, who brought in the second district an action to enjoin Henry S. Kearny, the Commissioner of Public Buildings, Lighting and Supplies of the City of New York, and the City of New York, from awarding or executing any contract for the lighting hy gas or electricity of any of the streets, parks, highways, piers or public places in any of the boroughs of the City of New York until such light shall have been first authorized by resolution of the Board of Public Improvements and the Municipal Assembly of the said city, etc.
11 The allegation of the complaint was that the defendant, the Commissioner of Public Buildings, Lighting and Supplies, had adver tised that he would open bids for lighting the streets, buildings and parks in the city, * * * and that he would, after opening such bids, award such contract as he might deem for the best interests of the City of New York.
“ The result of this action was an injunction pendente lite restraining the letting and execution of these contracts * * * (only a day or two since reversed). * * *
“ The attempt to block the execution of these lighting contracts having been thus successful, the Commissioner of Public Buildings, Lighting and Supplies, having no other course to pursue, resubmitted to the Board of Public Improvements the resolutions for lighting the city for 1899. * * *
“ It may be stated that there was appropriated for the lighting of the city for this year the sum of $2,685,869.26. * * *
“ That these companies have proceeded with their lighting at the earnest solicitation of the Law Department, which hoped to find some way to solve the difficulty.
“ The Law Department has been notified lately, however, by several of these companies that they cannot proceed further with this lighting, without receiving payment, without crippling themselves financially.
“ That thereafter public advertisement having been duly had, the only bid made upon the said letting of the contract for electric lighting of the Borough of The Bronx for the year 1899 was the bid of this plaintiff, which was at the same prices as those stated in the prior contract already mentioned.
“That on October 3, 1899, the said ordinances were duly resubmitted by the Board of Public Improvements to the Municipal Assembly for adoption, but that the said Municipal Assembly again refused and neglected, and does still refuse and neglect, to take any act whatever upon the said proposed ordinances for lighting the boroughs of the city.
“ Eleventh. That bills for the lighting above mentioned by plaintiff, from 1st January, 1899, to 30th September, 1899, have been duly rendered at the expiration of each month to the Department of Public Buildings, Lighting and Supplies, and that the said bills which were for the amounts specified in Exhibit ‘ A,’ hereunto annexed, have been approved-by the Commissioner of Public Build ings, Lighting and Supplies, and duly filed with the Comptroller of the City of New York.
“ Twelfth. That the only objection of the Comptroller of the City of New York to auditing and paying the said bills is that no written contract has been entered into between the plaintiff and the defendant. And defendant admits that its liability for all lighting furnished after 22nd May, 1899, and mentioned herein ; that is, from the date of the granting of the injunction by the Special Term of the Supreme Court in the action of Blank v. Kecurny, leaving in dispute only the lighting furnished between January 1 and May 22, 1899.
“ Thirteenth. That there is an apppropriation available for the purpose of legally paying the said bills.
“ Fourteenth. It is claimed on the part of the plaintiff that the defendant is liable for the amounts for which judgment is hereinafter prayed.
“ Fifteenth. It is claimed on the part of the defendant that it is not liable for any part of the amounts claimed by plaintiff.
“ Plaintiff demands judgment for the sum of $119,146.85, together with interest, as follows :
“ On $13,419.90 thereof from the 1st day of February, 1899 ; on $12,121.20 thereof from the 1st day of March, 1899 ; on $13,437.45 thereof from the 1st day of April, 1899; on $13,087.80 thereof from the 1st day of May, 1899 ; on $13,573.35 thereof from the 1st day of June, 1899 ; on $13,135.50 thereeof from the 1st day of July, 1899; on $13,584.15 thereof from the 1st day of August, 1899; on $13,598 thereof from the 1st day of September, 1899; and on $13,169.50 thereof from the 1st day of October 1899, together with the costs and disbursements of this action.
“ Defendant demands judgment that this proceeding, controversy and action be dismissed, with costs.”
Henry J. Hemmens, for the plaintiff.
Theodore Connoly, for the defendant.
David McClure, for the Consolidated Gas Company of New York and the Brush Electric Illuminating Company of New York.

Opinion:
O'Brien, J.:
The precise question we are called upon to determine is, whether the failure to make a written contract between the parties hereto is fatal to the plaintiff's right to recover; or, differently expressed and using the language of the submission, " the only objection of the Comptroller of the City of New York to auditing and paying the said bill is that no written contract has been entered into between the plaintiff and the defendant." That would imply that all the requirements leading up to a valid contract had been complied with except the reduction of the same to writing and its formal execution. The changes effected by the Greater New York charter in establishing departments of the municipal government, and in conferring upon the heads thereof powers of administration, subject to the right of the municipal assembly to regulate by general ordinance the exercise of such powers, led to a contrariety of opinion as to the person by whom or the body by which particular public duties should be performed. As a consequence, in December, 1898, a controversy arose, which still continues, between the department of public buildings, lighting and supplies, and the board of public improvements on the one hand, and the municipal assembly on the other, as to their respective rights, ¡mwers and duties relative to contracts for lighting the streets and public buildings of the city. Assuming that it was necessary for the assembly to first pass ordinances, the board of public improvements prepared suitable resolutions and ordinances on that subject and forwarded them to the assembly for adoption. Notwithstanding the urgent necessity for action, the assembly absolutely refused to act, and various lighting companies having threatened to cut off the supply of light unless contracts were made in writing, the resolutions were withdrawn from the assemby in March, 1899, and suitable contracts, among others the one here in question, were made by the proper officers.
It appears as a result of that contest that the city would have been plunged in darkness after January 1, 1899, had it not been that the various lighting companies on being applied to expressed a willingness to proceed, without written contracts, provided assurances were given that the city authorities would see to it that they should be eventually paid. Such assurances were given by the commissioner and the board, who were the officers upon whom the duty devolved of attending to the lighting of the streets of the city; and, us stated by the corporation counsel, the lighting was furnished " at the earnest solicitation of the Law Department, which hoped to find some way to solve the difficulty."
Thus the officials, alive to the necessity and importance of having the city lighted at night, were anxious to discharge their duty, in the performance of which they had been hampered and obstructed by the assembly. That there was serious doubt as to where the power resided when the question was presented is apparent from the view taken by the judge at Special Term in the second department in the case of Blank v. Kearny, who enjoined the municipal officers from proceeding to execute any lighting contracts without the approval of the assembly ; and though it was subsequently held by the Appellate Division in that department, reversing the Special Term (44 App. Div. 592), that those officers, namely, the commissioner of buildings, etc., and the board of public improvements, could proceed without any affirmative action of the assembly, still the fact remains that their doubt had a. reasonable foundation. Their attitude and action, therefore, should be viewed not in the light of their position subsequent to the decision of the Appellate Division, when, having their rights confirmed, they entered into contracts with the lighting companies, but rather of their position as it existed in December, 1898. They then honestly believed that they were without power to make a written contract without the approval of the assembly — which they could not obtain; ana although it was thereafter decided that they were mistaken in that view, such mistake had a reasonable basis. This fact does not affect the good faith and honesty of the course they pursued, their mistake being natural under the new conditions which arose upon the Greater New York charter taking effect.
Regard being had to the fact that the only objection made is that the contract was not in writing, it would appear that all the necessary preliminary steps essential to a binding contract had been taken, and thus all the evils were avoided which the statute was intended to guard against, such as favoritism in awarding contracts without obtaining bids. Hence the failure to execute a written contract would not be fatal to the plaintiff's right to recover. (Paul v. City of New York, 46 App. Div. 69.) If, however, that is not so, we are still of opinion that upon the conceded facts the city is liable to pay for the light furnished.
Deeming themselves to he without power to execute a written contract, the officials pursued the only course open by authorizing the companies to furnish the light upon terms and conditions which it is admitted were reasonable, and which were the same as those that had been imposed by the written contracts of the previous year and which, after public letting, had been entered into between the companies and the city. It is conceded that the prices agreed upon were fair and reasonable, and the obligation sought to be enforced is just. But it is urged that no recovery can be had for the reason that the contract was not made in the particular way and manner prescribed by the charter.
Many cases may be found wherein the salutary rule is announced that the statutory provisions as to the manner of making a contract binding upon the city must be complied with and limiting the power of the city and its officers. But, on examination, these' cases will be found to be instances where an attempt has been made to ignore or evade the statute or to enter into a contract utra vires or one which the officers had no right or power to make. In Abells v. City of Syracuse (7 App. Div. 501, 506), after stating the " well-known principle that a municipal corporation finds the measure of its power in the statute creating it or imposing the power," it is said: " This principle has been invoked in many cases of local improvements in cases where fraud was apparent and collusion manifest between the corporation officers and the contractors; and when, under the guise of extra work, they have sought to avoid the publicity of advertising for bids for work and material, the courts have been careful to protect the people from such fraudulent contracts and contrivances, and hold the municipality strictly to its statutory duties and obligations; but in other cases, like the one at bar, where the corporation has received a substantial benefit and retained such benefit, and the work was necessary in carrying out the contract, either as extra work or to meet exigencies which were unforeseen when the contract was entered into, the courts have been more lenient in their construction of corporate powers upon principles of equity."
Again, in Moore v. The Mayor (73 N. Y. 248), the court say: " When there has been a bona fide performance of a contract, of which the city has had the benefit, there is a strong equity in favor of the contractor seeking his pay, entitling him to the benefit of a ratification even of a void contract, upon slight evidence, if the ratifying body has general power over the subject of the contract, and of an estoppel when an estoppel fairly results from the conduct of the general agents of the city." Here, when the power of the officials who could make a written contract was subsequently determined, they complied with all the preliminary steps as to advertising for bids, etc., and in April, 1899, made a written contract which in terms covered the whole year of 1899, and thus, so far as they were able, ratified what had been done in the way of furnishing light for the prior months of the year.
In Port Jervis Water Co. v. Village of Port Jervis (151 N. Y. 117) the court say: " It is true that no express contract was entered into between the parties for the three years in controversy; but the water was furnished by the plaintiff and accepted by the defendant during that time under circumstances in which the law will imply a contract to pay what the water was fairly and reasonably worth for the period."
Here the officials who directed the furnishing of the light were the persons who had control and jurisdiction over the subject of lighting, and they did not attempt to violate or evade the requirements of the statute by entering into a contract contrary to its provisions. Doubtful of their powers concerning the execution of a written contract, and in an emergency thus created and under the pressure of a public necessity which required that they should act in order to avert a condition of affairs which would not only be a menace to persons and property, but if permitted even for a short time would be a public nuisance, they appealed to the lighting companies to furnish the light which was supplied, and which it is conceded in good faith and common honesty the city should pay for. It is further conceded that the course adopted was the result of an honest and conscientious desire on the part of the public officials and the lighting companies to meet a great public emergency with reference to a situation concerning which all thought no provision had been made by law. That the officials did what was honest and best in the emergency by entering into an arrangement by which light was obtained at reasonable rates, so as to avoid precipitating the city at night into utter darkness, is conceded, as are the facts that the city had the benefit of the light and that it should be paid for. The only question seems to be whether application for such payment should be made to the courts or to the Legislature.
We do not think that the court is without power to grant relief in a case where it is conceded that a thing of absolute necessity has been furnished at a reasonable price at the request of the officials having administrative charge of that department of the city's affairs, who, acting in entire good faith, but under a mistake of law, deemed themselves wanting in power to make a written contract. We do not think the statute was intended to take away the power of the city officials charged with the duty of making such contracts to incur obligations under such a state of facts as is here presented. We find many eases holding that a municipality having the legal power to contract for a thing may be bound by an implied contract in the same manner as an individual or a private corporation. (Harlem Gas Co. v. Mayor, 33 N. Y. 309; Matter of Petition of Anthony Dugro, 50 id. 513 ; Nelson v. The Mayor, 63 id. 535, 544; Moore v. The Mayor, 73 id. 238 ; Baird v. The Mayor, 96 id. 567, 583; Port Jervis Water Co. v. Village of Port Jervis, 151 id. 111; McCloskey v. City of Albany, 7 Hun, 472; Peterson v. The Mayor, 17 N. Y. 449, 453; Kramrath v. City of Albany, 127 id. 575; Central Transportation Co. v. Pullman's Car Co., 139 U. S. 24, 60 ; Dillon Mun. Corp. [4th ed.] § 459 ; Marsh v. Fulton Co., 10 Wall. [U. S.] 676; People ex rel. Gas Co. v. Board of Supervisors San Francisco, 11 Cal. 42; Argenti v. City of San Francisco, 16 id. 255; Brush Elec. Light Co. v. City Council of Montgomery, 114 Ala. 433; Pimental v. City of San Francisco, 21 Cal. 352; Taylor v. City of Lambertville, 43 N. J. Eq. 107.)
The leading case in this State .supporting the theory of an obligation upon an implied contract is Harlem Gas Co. v. Mayor (supra), which has been cited with approval in many subsequent cases, and which, so far as we have found, has never been expressly overruled. There the court said: " The power, and duty of the municipal government to furnish light for the streets and avenues of the city is not disputed or put in controversy in this action. Indeed it could not be with any show of reason or good sense. In our northern latitudes,, when darkness prevails over half the twenty-four hours for a large part of the year, light diffused through the public streets and avenues is a predominant and urgent necessity which no well-governed city can do without. The modern gaslight, diffusing its rays over every part of the public throughfare, is a source of pleasure and comfort and convenience, as well as a security against crime and disorder, which no other agency can supply. It is indispensable at all times, and no municipality can be said to be well governed which is not able to command its presence under all circumstances. Nor can it be maintained that a municipal corporation may not be made liable, like a natural person, upon an implied assumpsit unless the general rule is modified and changed by some positive legislation." And in speaking of the failure to comply literally with the provisions of the law in regard to lighting contracts, it is further said in the same case: " The purpose of the statutes is to insure economy in the public administration, and honesty, fidelity and good morality in the administrative officers. Competitive offers or bids have no other object but to insure economy and exclude favoritism and corruption in the furnishing of labor, services, property and materials for the uses of the city. This was the purpose and the only purpose of the framers of the statutes, and when they have this effect given to them nothing further is needed. They are not to have such a construction as to defeat this purpose, to impede the usual and regular progress of the public business or to deprive the inhabitants, even temporarily, of those things necessary and indispensable to their subsistence, their health, or the security and protection of their persons or property. Contingencies may arise when services, materials and property, above the prescribed value, may be immediately needed, and where competitive offers and written contracts would be unserviceable or impossible. In such a case the statutes would not apply, because such application could not have been intended. Whenever the nature of the service or of the property needed for the public uses, or the time within which it must be had to prevent irreparable mischief under competitive offers is impossible, then the provisions of the acts referred to cannot apply, because such could not have been the intention of the lawmakers, and such emergencies were not amongst the mischiefs which the provisions referred to were designed to correct."
Upon the agreed facts here, there was shown a great public necessity and an emergency not contemplated by the statute; one which would not permit of delay, but required immediate action by the defendant to protect its interests, as well as the lives and property of its citizens. There being, therefore, no attempt to override • the statute, or to do that which it prohibited, and a situation being presented to which the statute did not apply, we think the plaintiff may invoke the rule of liability similar to that relating to an implied contract.
It will be noticed that we have not thus far adverted to nor placed any stress upon the conceded fact that the plaintiff here was the only company having the ability to furnish lights in the territory in question and, therefore, had no competitor; and that under the former advertisement for bids, it was the only bidder. Upon the argument this fact was not relied upon, and request was made for a decision which would be equally ajsplicable to the other companies who, by permission of the court, were heard upon the argument, and in respect to which that fact did not exist — there being in the territory, or a portion of it in which they furnished light, other competitors. Considering, then, the question as we have done, stripped of that circumstance, we think that the usual and exceptional facts appearing of the light being furnished in an emergency at the request of the city officials, but at a price fixed by the officer having administrative charge of that part of the city's affairs — the failure to enter into a written contract having resulted from a technical mistake — together with the evident good faith and entire honesty of all parties, present a case never likely to create a precedent for unlawful raids upon the treasury. Whether we invoke the rule of an implied contract or not, there is, upon the facts here appearing, sufficient to justify our conclusion that the city should pay its just obligation incurred by its officers in the discharge of a great public duty and as the result of a pressing public necessity, to save its citizens from danger to person and property consequent upon the city being in darkness.
The judgment should, therefore, be for the plaintiff, but, under the circumstances, without costs.
Patterson, J., concurred ; Rumsey and Ingraham, JJ., dissented.