Court Opinion

ID: 5223429
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:39:18.688009+00
Date Added: 2024-06-11T08:27:33.047806
License: Public Domain

Laughlin, J. (dissenting):
The facts are sufficiently stated in the opinion of Mr. Justice McLaughlin, I think, with the exception that the proposed contract and specifications upon which proposals were invited contained express references to certain sections of the ordinances of the city as authority for requiring certain things, and, among others, that the proposals should be accompanied by an undertaking in the form thereby required, which is the form of undertaking executed by the respondent surety company. It would have been more satisfactory had the city proved the ordinance, but I think that we may fairly assume that the undertaking was required thereby. I concur in the view that the surety company is not liable if the bidder is not; but I am of opinion that although the bidder did not execute the undertaking it became bound to the same extent as the surety, for its proposal could be regular and received only in the event that it submitted it in writing with such an undertaking. The liability of the principal, therefore, is to be read into the undertaking. I am of opinion that the provisions of section 420 of the charter are not exclusive, and that it was competent for the municipality to require, as it evidently has required by ordinance, that the bidder shall accompany his proposal by an undertaking to the effect that if the contract shall be awarded to him, and he fails to execute it, he and his surety shall be liable to the city for the difference between his proposal *107and the proposal upon which the city is obliged to award the contract at a subsequent letting. This is a provision for additional protection to the city over and above the protection which section 420 of the charter was designed to give. Doubtless the liquidated damages over and above the expense of readvertising would have to be applied in reduction of the liability of the bidder and his surety. We are not now concerned with the return of the check deposited with the bid for manifestly the action of the comptroller and of the sinking fund commissioners in returning the check does not constitute an adjudication that the defendants are not liable on the undertaking. The Legislature, I think, did not intend that the forfeiture of the check would in all cases make the city whole for the damages it sustained. Such a construction would leave it open to bidders by collusion to withdraw all of their bids, one after another, and to submit higher proposals on a reletting of the work, and would open the door to collusion and fraud between them and public officials. A person submitting a proposal for public work under the Greater New York charter is of course not entitled to have the work awarded to him even though he be the lowest bidder, and he cannot recover damages against the city for the wrongful letting of the work to a higher bidder without readvertising (Molloy v. City of New Rochelle, 198 N. Y. 402); but I agree with the views expressed by Judge Vann in Molloy v. City of New Rochelle (supra), that if the bidder should proceed with diligence he would be entitled, in the event that the contract is awarded without reletting, to a mandamus commanding that it be let to him. The proposal, however, submitted pursuant to the provisions of the charter, and the ordinance and plans and specifications and proposed contract, obligated the bidder to enter into a formal contract if the contract should be awarded to him, and he cannot, in my opinion, withdraw his proposal at will, or even for a mistake made by himself in calculating the items upon which he based it. When, therefore, the contract was awarded to the respondent Seely-Taylor Company, and it refused to execute the same, both it and the surety company became liable pursuant to the provisions of the undertaking. Thereby the record discloses a legal contract obligation by which the bidder and its surety are *108held. It is, however, competent for a court of equity to relieve it from its obligations and to cancel its and the surety company’s liability, or to enjoin the municipality from enforcing the liability. This, however, is an action at law to recover on the legal liability of the contractor and the surety company, and, if they wish to avoid their apparent legal liability, they must plead by way of counterclaim the facts entitling them to a cancellation of the proposal and the undertaking, or to an injunction against the enforcement of the undertaking. (Born v. Schrenkeisen, 110 N. Y. 55; Moffett, Hodgkins, etc., Co. v. Rochester, 178 U. S. 373; City of New York v. Dowd Lumber Co., 135 App. Div. 244.) The equitable counterclaim should be first tried at Special Term. Of course this regular method might be waived by consent, and the defendants might in that event be relieved by proof of the facts. (Born v. Schrenkeisen, supra; City of New York v. Dowd Lumber Co., 140 App. Div. 358.) The court, however, in the case at bar was not at liberty to dismiss the complaint, for a question of fact was presented as to whether or not there was an error in the proposal which resulted from an excusable mistake on the part of the bidder, and the testimony of its president was not conclusive on that point, and even if the trial of that issue by the court was waived, it presented a question to be determined by the jury.
It follows, therefore, that the judgment should be reversed and a new trial granted, with costs to appellant to abide the event.
Judgment and orders affirmed, without costs.