Court Opinion

ID: 6151820
Source: CourtListenerOpinion
Date Created: 2022-02-05 16:02:20.888947+00
Date Added: 2024-06-11T08:55:03.886173
License: Public Domain

Morschauser, J.
(concurring). The claim herein is made by a contractor who has had a contract for the construction of a public highway with the state to build a state road. The claim is filed under chapter *251459, Laws of 1919, commonly known as the Knight Act. Section 6 confers jurisdiction upon the court, and reads as follows:
“ | 6. Jurisdiction is hereby conferred upon the court of claims to hear all claims for alleged increase in the cost of labor, materials or transportation of materials incurred after April sixth, nineteen hundred and seventeen, in the doing and performance of war contracts which have been completed, accepted and for which final payment has been made, including contracts advertised for letting between April sixth, nineteen hundred and seventeen, and April seventeenth, nineteen hundred and seventeen, on estimates prepared by the department of highways prior to April sixth, nineteen hundred and seventeen, and also of any war contract terminated under the provisions of this act. The court of claims shall determine the increased cost, whether the whole or a part, which is properly chargeable against the state and the portion of such increased cost, if any, which may be paid by a subdivision or subdivisions of the state as hereinafter provided on the basis on which the state and the subdivisions of the state were obligated to pay for the work done under the contract and render judgment against the state for the amount so determined as chargeable to the state, which judgment shall be paid as other judgments against the state are paid. No judgment shall be rendered, however, for an amount greater than thirty-five per centum of the contract price of labor, materials and the transportation of materials furnished or supplied during the year nineteen hundred and seventeen, nor greater than fifty per centum of the contract price of labor, materials and transportation of materials furnished or supplied during the year nineteen hundred and eighteen. No claim for relief under this section shall be main*252tained against the state unless the claimant shall file his claim within six months after his right of action shall accrue under the provisions of this act. Any subdivision of the state is authorized and empowered to raise by taxation or by an issue of its obligations such an amount as may have been found by the court of claims to be the proportion which said subdivision may pay for the increased cost as so determined, and to pay said amount to the contractor entitled to receive the same.”
Among other defenses made by the state, it challenges the constitutionality of the Knight Act and asserts that the same is unconstitutional under the provisions of section 19, article III, and section 28 of article III of the New York State Constitution. Section 19, article III, reads as follows: ‘ ‘ The legislature shall neither audit nor allow any private claim or account against the State, but may appropriate money to pay such claims as shall have been audited and. allowed according to law.”
Section 28, article III, reads as follows: ‘ ‘ The legislature shall not, nor shall the common council of any city, nor any board of supervisors, grant any extra compensation to any public officer, servant, agent or contractor.”
Both section 19 and section 28 of article III were recommended by the Constitutional Convention in 1867 and were adopted and became a part of the provisions of the Constitution in 1874. In addition to these amendments of the Constitution, sections 6 and 9 of article VII and sections 9 and 10 of article VIII were all under discussion by the Constitutional Convention of 1867 and were all adopted in 1874, and in that year became part of the Constitution of the state of New York. All of these sections were amendments to the Constitution and were adopted in 1874 to remedy the *253many evils of special legislation, which had grown so extensive as to become a public scandal. Prior to the adoption of these amendments the power of the legislature was not restricted, so that it could pass private bills (or change the terms of a contract) or increase the pay of contractors, increase salaries and do many things that these amendments were intended to prohibit, and before these amendments special legislation became subject to great abuses, which the various amendments above named to the Constitution were intended to remedy. After the adoption of these amendments to the Constitution and after they became a part of the Constitution of the state there arose many instances in which the state, recognizing its moral obligation, where in its judgment justice and right demanded it, by enactments through the legislature conferred jurisdiction on the Board of Claims, and afterwards the Court of Claims, directing them to disregard legal defenses and award judgment against the state, if the court found that the claim was founded on equity and justice, although the claims were not such as could have been enforced in a court of law. if the state had not been immune from suit. Under such circumstances many enabling acts have been passed by the legislature; and the several amendments of 1874, above named, have been the subject of judicial construction, arising out of claims presented under such special legislation. Almost without exception the courts have held in such cases such enabling acts to be constitutional and not in violation of the provisions of the various amendments, if the claim and demand against the state was one founded on justice and equity. Munro v. State of New York, 223 N. Y. 208; Lehigh Valley R. R. Co. v. Canal Board, 204 id. 471; Trustees Exempt Firemen’s Benev. Fund v. Roome, 93 id. 313; Wheeler v. State of New York, 190 *254id. 406; Matter of Boston & Albany R. R. Co., 64 App. Div. 257; 170 N. Y. 619; Oswego & Syracuse R. R. Co. v. State of New York, 186 id. 384; affd., 226 N. Y. 351; Cole v. State of New York, 102 id. 48.
But in no instance where the enabling act was passed in aid of any one who rendered services to the state or who was entitled to recover from the state did the legislature assume to determine the question of the equity or justice of such a claim, but submitted it to a tribunal to hear, audit and determine, and usually conferred jurisdiction upon the Court of Claims and invested such tribunal with judicial powers to determine the equities and justice of a claim so presented, and permitted it to decide such questions. The state, recognizing its moral obligation, could at all times do justice even though it had a legal defense to claims presented, and the courts have uniformly held that under such circumstances the amendments to the Constitution of 1874 did not prevent the state through its legislature from enacting laws whereby these claims could be submitted to some tribunal for determination. The legislature itself could not make such determination, and, therefore, jurisdiction to make such determination and hear the claim and audit and determine the same was usually referred to its tribunal known as the Court of Claims, created for that purpose. The legislature could not in any orderly way, such as the taking of testimony and the observation of legal rules governing evidence, determine these questions. By referring it to the Court of Claims there was an orderly way of determining it upon evidence, and the right to appeal and review was provided by the Code. And where this was done, the courts have uniformly held that such enabling act conferring such jurisdiction was not in violation of the constitutional provisions above named.
*255At the time of the declaration of war of the United States with the Imperial German government, the state of New York was under contract with many contractors to build or repair state highways. This war created a great demand from the ranks of labor for men and great increase in the costs of labor and material and in the costs of transportation; industries were converted into ammunition factories and all labor was either used in the manufacture of ammunition and other articles used in the war or the laboring man was converted into a soldier; railroads were busily engaged in transporting war necessities, with the result that the costs 'of all labor and material were greatly increased. The war and these conditions were not contemplated at the time the contractors entered into the contract for the improvement or construction of highways, and it certainly never was intended by either contracting party to be one of the hazards usually encountered in the carrying out of contracts; and the contractor when making his bid could not be expected to anticipate such a condition; and the costs of material, labor and transportation after the war reached such a high mark that to compel the contractor to complete his contract would mean in many cases absolute bankruptcy for him.
While it is a well-settled rule of law that a person may be relieved from an obligation of his contract when it becomes impossible of performance or when such performance has become impossible on his part by some superior force without his fault, it was nevertheless held in Columbus Railway, Power & L. Co. v. Columbus, 249 U. S. 399, that the high cost of labor and the increased costs of material and transportation brought about by the World War, did not make a contract impossible of performance and was not such superior force as to prevent its performance. *256Justice Day in writing the opinion for the court, among other things, says: “ It certainly was not intended to question the principle, frequently declared in decisions of this court, that if a party charge himself with an obligation possible to be performed, he must abide by it unless performance is rendered impossible by the act of God, the law, or the other party. Unforeseen difficulties will not excuse performance. Where the parties have made no provision for a dispensation, the terms of the contract must prevail. * * * The latest utterance of this court upon the subject is found in Day v. United States, 245 U. S. 159, in which it was said: ‘ One who makes a contract never can be absolutely certain that he will be able to perform it when the time comes, and the very essence of it is that he takes the risk within the limits of his undertaking. * * * ’ ”
In that case one of the contracting parties sought to'enforce the contract against the other party, and the effect of this decision was that the "World War and the condition created by it did not excuse either contracting party from fulfilling the obligations of his contract.
In the case on trial before this court, while the question arose between the contracting parties, one of the contracting parties, namely, the state of New York, by legislative enactment did relieve the other party from carrying out his contract and relieved tim from his obligations thereunder which were brought about by the World War, as chapter 585 of the Laws of 1918, commonly known as the Walters Act, permitted the state upon consent of the contractor to terminate such contracts, and if the state had not by legislative enactment waived the performance of the contract, under the decision in Columbus Railway, Power & L. Co. v. Columbus, supra, the conditions created by the World *257War would not have permitted the contractor to abandon his contract.
We think the legislature had the power to allow any contractor who had a contract with the state, with the consent of the contractor to cancel the same. As was said in People ex rel. Williams v. Dayton, 55 N. Y. 374: “ No constitutional provision can prevent a failure, on the part of the contractor, to perform his contract nor his abandonment of it; and it is conceded that the legislature may cancel or authorize contracts to be canceled.” And we think that the legislature had such power if assented to by the contractor, and that the legislature could go further and confer upon the Court of Claims jurisdiction to hear, audit and determine the equities of the claim and, if the state should as a moral obligation by reason of the World War pay the contractor the difference between the stipulated price under the contract and the increased cost, allow the Court of Claims to do so. This the legislature attempted to do by the enactment of chapter 459 of the Laws of 1919, commonly known as the Knight Act. Had the legislature done so we do notj think that the provisions of the Constitution named ¡ would have been violated. But by the Knight Act the legislature did not confer jurisdiction upon the Court of Claims to hear, audit and determine the claim. It simply directed that the Court of Claims shall determine the difference in the cost and then commanded the Court of Claims to award judgment for such sum in favor of the contractor. While it states in the act that the Court of Claims shall hear the claim, it nowhere confers any jurisdiction to audit and determine the same, but simply directs that the Court of Claims shall make a computation of the difference in the cost and determine the amount thereof and then award judgment against the state and in favor of the *258contractor for the amount so ascertained. The legislature by the Knight Act assumed to decide the equities and the moral obligation of the state, and left nothing for the Court of Claims to do except to compute the amount. This, we think, is precisely what the amendments to the Constitution intended to prevent the legislature from doing. While the state was ready to do equity and observe its moral obligation, the decisions hold that the question as to whether a claim presented against the state should in good conscience be paid and whether there was any moral obligation upon the part of the state in equity and justice to pay the same although the state may have had some legal defense, should always be submitted to a constituted tribunal with judicial functions so that the matter could be judicially determined and properly reviewed upon appeal. This principle of law is clearly stated by Judge Rapallo in Cole v. State of New York, 102 N. Y. 51. In this case the claimant, while acting as a captain and harbor master of the port of New York, rendered certain services to the state of New York, which he was authorized to do by chapter 436 of the Laws of 1860 and it was afterwards determined that he could not be legally paid for such services. He having rendered services to the state, the legislature by chapter 238, Laws of 1885, conferred jurisdiction upon the Board of Claims to hear, audit and determine such claim. The act was challenged as being unconstitutional and in violation of section 19, article III, of the New York State Constitution. Judge Bapallo, writing the opinion for the court, says:
“ It is apparent that the act does not come within the prohibition against the auditing by the legislature of any private claim. The act does not purport to audit the claims. This the legislature could not do, however just the claim, or however legal it might be *259if preferred against an individual. The Constitution prohibits the legislature from exercising the power of itself auditing claims, which is in its nature judicial, but provides for the payment of claims which shall have been audited or allowed according to law; thus recognizing the power of the legislature to provide by law for the auditing and allowing by some appropriate tribunal of claims against the State.
“It is contended, however, that the act does come within the prohibition against allowing claims against the State.
“ It must be observed that the act of 1885 does not even assume to allow these claims. It simply submits them to the arbitrament of the board of claims, a judicial body established for the purpose of passing upon claims against the State. It gives jurisdiction to that tribunal to hear and determine those claims, but does not dictate how it shall decide upon them. The only limitation upon the power of the board to decide is, that it shall confine itself to a reasonable compensation for services performed and expenses incurred during the year specified. Under the authority conferred by the act, that tribunal, if it deemed the claims unjust, might have rejected them in toto. The power to hear and determine includes power to reject as well as to allow. Construing the constitutional restriction literally, it was not violated by giving to the board jurisdiction to hear and determine. The enactment was consequently purely legislative and in no sense an exercise of judicial power.
“ It is contended, however, that the enactment was violative of the spirit and intent of the constitutional prohibition, if not of its letter. That it was intended not merely to prevent the legislature from itself acting judicially in passing upon private claims, but from passing any law under which a private claim could *260be recognized by or established against the State, however just and equitable it might be, unless it was founded on a legal liability which could be enforced by the courts of justice against an individual or a corporation. We find no such restriction upon the legislative power in the State Constitution. The act establishing the board of claims (Laws of 1883, chap. 205, amended by Laws of 1884, chap. 60) confers upon the board jurisdiction to hear, audit and determine all private claims which shall have accrued within two years, except such as are barred by existing statutes. But that restriction was imposed by the legislature and is subject to modification by it.
“ The statute of limitations and other legal defenses are, under the general law, available to the State as against a private claim preferred to the board of claims, and as a general rule it has been considered that the authority of the board is confined to the allowance of legal claims. But can it be maintaned that it would be beyond the power of the legislature, in special cases, where in its judgment justice and right demanded it, to give power to the board of claims to disregard defenses strictly legal? We are unable to find in the Constitution anything which deprives the legislature of the power of giving to the board of claims, or any other proper tribunal, jurisdiction to hear and determine claims against the State which are founded in right and justice, solely for the reason that they could not be enforced against an individual in the courts. * * *
‘ ‘ Where the creation of a particular class of liabilities is prohibited by the Constitution, it would of course be an infraction of that instrument to pass any law authorizing their enforcement, but in the absence of any such prohibition there is no good reason why the State should be powerless to do justice, or to recognize *261obligations which are meritorious and honorary and to provide tribunals to pass upon them. The legislative power is sufficient, even as between individuals, to afford new remedies and to create liabilities not before existing, where they are based upon general principles of justice.
“As a general rule money expended or services rendered by one individual for the benefit of another, but without his request or authority, do not create a legal liability on the part of the person benefited to make compensation. But a law which should provide that in every such case, if the party benefited ratifies the acts of the other, and accepts the benefits, he should be liable, would be free from objection, so far, at all events, as it should apply to future transactions. Where the legislature is dealing with the imperfect obligation arising from such a state of facts, it seems to us that it does not transcend its power by passing a law affording a remedy éven in respect to past transactions, where the State adopts the acts and is the party to make the compensation, and no rights of individuals, which are protected by the Constitution, are invaded.”
In the case at bar the legislature not only allowed the claim but directed the Court of Claims to compute the amount found due under such conditions and award judgment, the language of the act being that the Court of Claims shall determine the amount of the difference between the contract and cost price and award judgment. The legislature cannot do indirectly what it cannot do directly. In the case of Munro v. State of New York, 223 N. Y. 208, where the claimant had been injured while in the employ of the state by reason of the acts of an insane person at a state hospital (although the state was not legally liable) yet it was held that the enabling act was constitutional and *262not in violation of the constitutional principles above named. In that case, after reciting the facts, the legislature declared that such facts shall constitute a legal and valid claim against the state and the court shall award cmd render judgment for the claimant; and it was there held, Judge Crane writing the opinion, that the word ‘ ‘ shall ’ ’ was not intended to nullify the power of the court to hear, audit and determine or make it compulsory to award damage (the clear meaning of the intent of the legislature was to confer authority and power upon the Court of Claims and not to direct or control its action). This was the reason, and the court says: 11 It might appear at first reading as if the legislature had allowed Munro’s claim and merely left it to the Court of Claims to fix the amount of damages, but when we read more closely and apply the rules of statutory construction ■ this impression vanishes. ‘ The spirit, not the letter, must control, ’ said Miller, J., in Matter of Jensen v. Southern Pacific Co. (215 N. Y. 514,522) where ‘ may be ’ was held to mean * shall be. ’ By the first clause of the act the Court of Claims ‘ is authorized to hear, audit and determine the claim of John I. Munro. ’ It is then provided,‘ if the court finds such injuries were so sustained, damages therefor shall constitute a legal and valid claim against the state, and the court shall award to and render judgment for the claimant for such sum as shall be just and equitable. ’ The use of the word ‘ shall ’ in these latter phrases was not intended to nullify the power of the court to hear, audit and determine or make it compulsory to award damages.”
The word “ shall ” in the enabling act in the Munro case was held by Judge Crane to mean “ may ” for the reason that the word “ shall ” in that case, as Judge Crane said, did not intend to nullify the power *263of the court to hear or to determine or make it compulsory to award damages. “ The clear intent of the legislature was to confer authority and power upon the Court of Claims and not to direct or control its action.” In the enabling act in the Munro case the court was not directed to award judgment, but the statute merely directed the court in that case to render judgment for the claimant for such sum as shall be just and equitable.
The enabling act in that case still left the determination of the questions to the Court of Claims. We think that the act conferring jurisdiction upon this court, chapter 459 of the Laws of 1919, was clearly in violation of the provisions of section 19, article III, and section 28 of article III. It not only audited and allowed a private claim against the state, but gave extra compensation to a contractor in violation of section 28 of article III. “ Extra ” is defined by Webster—“ Beyond or greater than what is due,” and this is commonly understood to be the meaning of the word “ extra;” and when the Constitution provided there should .be no extra compensation it certainly was intended by the framers of the Constitution that no pay beyond that which is named in the contract should be allowed a contractor. Extra compensation was precisely what the legislature did grant the contractor, by virtue of chapter 459 of the Laws of 1919; and while under the decisions if the state was under a moral obligation so to do and it was founded on justice and equity, the legislature could so do, still the legislature by virtue of these amendments of the Constitution had no authority to determine that question itself, but was obligated to confer jurisdiction upon some judicial tribunal, where the equities could be determined. If this act had conferred jurisdiction upon some duly constituted judi*264cial tribunal to hear, cmdit and determine the equities and justice of the claim, we think it would not have been in violation of the provisions of the Constitution of this state, above named; but as the act did not do this but allowed extra compensation to a contractor and only authorized the Court of Claims to hear the claim and then directed the court to award judgment for an amount to be computed, we think was in violation of the provisions of the Constitution. We think that the Knight Act allowed extra compensation to a contractor and merely left it to the Court of Claims to fix the amount, and this amount was to be fixed by ascertaining the difference between the amount named in the contract and the increased cost brought about by conditions created by the World War, so that the act substantially directed the Court of Claims to award judgment. It left nothing for the Court of Claims to do. It did not call upon the Court of Claims ■ to exercise any judicial functions but the legislature assumed to allow extra compensation and through the Court of Claims compel the state treasurer to pay this contractor beyond the amount stipulated in the contract. The act might just as well have directed some person to have computed the amount and upon such computation directed the state treasurer to pay it. This was precisely what the Constitution as amended in 1874 intended to prevent. We must, therefore, conclude that the act is unconstitutional.
Claim dismissed.