Gage v. City of New York

Laughlin, J. : The first ground upon which 'we are asked to reverse the order continuing the injunction is that the action is brought in bad faith. The suggestion requires consideration in weighing the evidence and in a doubtful case might determine the view of the court on the , facts. The plaintiff;, however, shows that he is- qualified as a taxpayer to bring the action. It is to be borne in mind that few others than the public officials and bidders and those employed by them understand or become acquainted with the plans and specifications of a work of this magnitude and intricacy involving as it does special skill and knowledge. If there be a disposition to show favoritism and special provisions are incorporated in the specifications that will enable that to be done, those who have come in contact with the officials and their representatives and have examined the plans and specifications with a view to acquiring knowledge to enable them to submit a proposal may be best qualified to show it, and when they present a meritorious case they should be commended rather than condemned. If the plaintiff in a taxpayer’s action shows fraud or collusion or an illegal contract he is entitled to the favorable consideration of the court although he may have — 410 — been moved by some private grievance to bring the action. The plaintiff’s connection, therefore, with an unsuccessful competitor of the Pennsylvania Steel Company cannot defeat the action, and, as already stated, its only relevancy is that it is to be considered in weighing the evidence. ' It is no doubt a great hardship and at first blush it appears quite unfair to a successful bidder to have its. proposal rejected and the work readvertised.. After proposals have been invited and submitted in good faith they should not be rejected by the officials without good cause, and their rejection may not be compelled by the court ; without proof of fraud or illegality in the proposed' contract. Where,- however, the action is brought before the contract’is let or any rights have become fixed, the court may enjoin the making of the contract with more,freedom than would be warranted had the contract been executed. . . - The objection that the proposal was not duly verified is without merit. Officials in opening proposals for public work should ordinarily reject those which do not cqnform to tlie requirements of the -advertisement. Provisions requiring that such proposals shall state who are' interested therein, and that there is no collusion with the public officials who are to award the contract or their representatives and the like requiring an affidavit as to their truthfulness, .are important and should not be overlooked. In the case-at bar thq /proposal was in fact verified before a notary public hi the -city - of Philadelphia. It was made oil a blank form prepared and furnished by the commissioner of: bridges, and had printed thereon as a veil tie for the verification,The City, County and State of New York.” The notary, .without canceling this printed venue and writing in a new one, duly, filled, out a jurat. and subscribed his, name and /official title, and then had a prothonotary attach a certificate and stamp his official seal, “ Court of Common Pleas, Philadelphia, Pen na.,” "over the printed venue, and the notary says lie then adopted the. same and treated that as a venue. In these cir-" cumstances the commissioner of bridges was not obliged to reject the proposal. ' At most it was irregular,, but the irregularity could he waived (McCord v. Lauterbach, 91 App. Div. 315), and we think it was the. duty of .the commissioner to waive it and receive this proposal, which was $200,000 lower than any other submitted. — 411 — The provisions of the charter and ordinance with respect to the . preparation of plans and specifications are very meagre. Ordi- • narily, the Legislature incorporates in municipal. charters a provision requiring the preparation, in advance, of definite plans and specifications as to work which is required to be let by public competitive bidding; but this does not appear to have been done concerning the city of Hew York. The courts long ago, for the protection of the public, were obliged to spell out of these some- . what indefinite provisions a requirement that there should be plans and specifications with reasonable definiteness, and in the various amendments and revisions of the charter clear and definite express legislation does not appear to have been enacted. The original provisions were re-enacted subsequently substantially as they existed, and for their true meaning recourse must b'e had to the decisions of the courts, for literally the ordinance would seem to provide that the bidder, is' to furnish the plans and specifications. The courts have, however, held that plans and specifications of sufficient definiteness to require competition on every material item are required and must state the quantity of work required as definitely as is practicable. (Matter of Merriam, 84 N. Y. 596 ; Matter of Rosenbaum, 119 id. 24 ; Matter of Anderson, 109 id. 554.) Definite plans and specifications are necessary to -insure the economical performance of the work by getting the best results from competitive bidding. Another object of letting public work to the lowest bidder after inviting public proposals is to prevent “favoritism and jobbing” on the part of public servants intrusted with authority to make contracts for public work and supervise the execution thereof. (Brady v. Mayor, 20 N. Y. 316.) The learned counsel for the defendants very properly drew attention to the magnitude and complexity of this work and to the disastrous consequences in the destruction of life and property fliat may attend any mistake or error with respect to the nature of the material used or the workmanship in the construction of the bridge. Attention is also drawn to the fact that this contra'ct is only for the superstructure which is to be erected on columns of masonry already constructed under another contract, and that in some instances in the past it has been found that the foundations of bridges were insufficient to support the superstructure or gave way thereunder. — 412 — We are admonished that unforeseen accidents of this or a like nature are possible and are very properly asked to examine, the specifications, .drawings, proposal and contract having' those things in mind. Counsel for ■ the plaintiff urges that the contract is invalid on account of the alternative provision of paragraph 254 of the specifications with respect to whether high carbon‘steel, of nickel steel shall be used for certain parts of- the work therein specified. This provision is somewhat 'blind as to who has the election and is to’ decide which material shall be selected. It appears by the affidavit of one. óf the experts presented -by the defendants that.he had charge of the examination of the specifications, drawings and contract and of the preparation of a bid by one of the five who submitted a proposal for the work, and that he - understood and interpreted the provision as; giving-the option to the contractor. The plaintiff, however,, alleges and the successful bidder now concedes — the learned judge at Special Term, as stated ■ in his opinion, understood its counsel to contend 'otherwise, notwithstanding the fact that its general superintendent assisted,, as' one' of the commission, in preparing the specifications and contract — that taking the'contract and specifications as a whole, although there is no express provision on the subject,-the apparent intention was to-give the option to the, commissioner of bridges. ' ■ The specifications and Contract not being definite or clear oh this point, it will be still open to the contractor to claim that the election rests with it and the engineer Will be free ' to so interpret them. Thus, regardless of which may be the better material,, the contractor may be permitted to -use that which is the cheaper. It appears that this material will not be needed-for two. years after the contract is let for the reason that the anchorages, • steel towers and steel cables, also -embraced in. this proposed contract, must 'bé constructed or substantially constructed first. It was shown on behalf of the plaintiff that the present market' price of nickel steel, such as is required by these specifications, is from thirty dol- • lars to thirty-five dollars per ton more than that of high carbon steel. . The specifications prescribe the requirements for both kinds of steel, but neither the quantities nor the dimensions are therein shown or stated, and for these reference is made to the drawings which it is conceded only represented the dimensions and quantities that Would be necessary if nickel steel should be used. -'' It appears — 413 — to be conceded that if high carboñ steel is used a greater quantity will be required to make as strong and durable a bridge, but it does not appear, not clearly at least, as it should, as will be shown presently, either by the contract or specifications, that the contractor shall furnish the larger quantity of high carbon steel required without extra charge if that material should be selected. The defendants show by affidavits that if nickel steel is used only 16,247*000 pounds will be required, while if carbon steel is used 19,408,000 pounds will be required. There is at present, as has been seen, a great difference in the cost of the material ■—■ over a quarter- of a million dollars — assuming that the same quantity only is required to be furnished, and a very considerable difference even if the larger quantity of carbon steel must be furnished, but it is conceded that on account of the greater bulk and weight, if the larger quantity of carbon steel should be required, the cost of handling it, including transportation and putting in place, will be more than if nickel steel is used. It is claimed on behalf of the defendants and many affidavits are presented tending to show that taking into consideration the fact that if high carbbn steel is used a larger quantity will be required, the handling of which will cost more and more work will be required because the holes for rivets must be drilled, whereas part of them may be. punched in nickel steel, and that the inspection of the material while in the process of manufacture will necessarily be very rigorous, the extra cost of nickel steel over high carbon steel would not be more than $7,721 to $10,000. On the other hand, the plaintiff presents affidavits of certain engineers, with less apparent’technical education and experience than those offered in behalf of the defendants, tending to show that the additional cost of nickel steel over. high carbon steel even if the contractor should be, obliged to furnish the increased quantity of the latter figured on the present prices, would be a very large sum, approximating $120,000. It is evident that the difference in cost of material'and construction would be much more if the contractor were obliged only to furnish the same quantity of high carbon steel as if nickel steel had been required. The reason assigned by the professional experts for not now definitely specifying one or the other of these materials'is that it has only, recently been discovered that nickel steel is probably a superior material for this — 414 — purpose to high carbón steelj owing principally -to the fact that greater strength is given with less weight and bulk, but that it is still somewhat experimental and has not-had a satisfactory practical test for work of this character. ' The commissioner testifies that in connection- with the construction of the Blackwell’s Island bridge, lie is having tests made of the relative value ¡of these materials for this purpose; and. that within two years and before the use of such materials becomes necessary, the result of those tests will be known. That would seem- to be a good reason, for postponing the letting of this part of the contract if that be reasonably practicable. It is not .. claimed that there would- he any insuperable difficulty in awarding vit separately, even if another contractor should be-the lowest bidder. It is, however, claimed that it would be quite inconvenient to have another contractor employed on the work toward the finish, that being the time when the authorities contemplate having this high carbon or nickel steel work proceed. That seems reasonable and justifies letting the work together to the same contractor and manifestly that course is'advisable, if it may be done legally and without detriment’to the interests of-the'city from a financial standpoint. It would have been competent in these, circumstances to .have so framed the specifieatiqns and drawings as to show separately the quantity of material required if high carbon steel should 'be selected and the quantity that would be required. if nickel steel should be adopted and then to have the bidders, specify separately the amount for which they would furnish either.material and do the work. It is not blaimed that there would be .any legal objection to this method or that it would be impracticable. It would be' fair -alike to the city and the Contractor. It may be that no contractor would be the lowest bidder on the whole work whichever of these mate- * rials should be used ; but if. not pqine dther plan could be devised -for changing the specifications or invitations for proposals so that it could he -determined which proposal is lowest; However, if the contract could not be legally let - after inviting proposals with ■■ separate estimates on these different kinds of material because it could not be determined who was the- lowest bidder, it seems- quite clear that resort t'o the method that has been adopted could not be had for the purpose of removing ^the" illegality. That would be merely covering it up. It is not a case where it-is, essential that — 415 — the city should know in advance the total cost of the work as "if a local assessment were to be made to defray the expense. Under the provisions of the specifications forming part of the proposed contract, a successful contractor could not avail himself of the present market price and presently contract for the material. This could only be, done with'safety after the commissioner decides which material he will require, and that decision may not be made for two years. It has been sufficiently and satisfactorily shown that gt the present market prices of the material there is a substantial difference between the cost to the contractor of the two kinds of material, and that there may be a like or greater difference when. the. time for the use of the material arrives. It will then rest with the commissioner of bridges to decide which material the contractor shall use, or he may leave it to the contractor. If he interpret the ■ specifications as giving him the right to decide, he may in good faith decide that the cheaper material is the better, and the con-, ' tractor will reap the benefit with no-rebate to the city. The difference between the cost of these materials may then be very great. The greater the difference in cost to the contractor the' greater the incentive to improperly influence the public officials in deciding on the material the contractor shall,be required to use or in leaving the election to the contractor. Thus we have presented a situation which it has always been one of the objects of requiring the letting of public work on competitive bidding by public proposals to avoid. IFs have shown that it was unnecessary to frame this provision of the specifications in the alternative which necessarily required bidders to figure on the cost of construction with the mo'st expensive of the two materials as the basis for their proposals. We do not • wish to be understood as reflecting on the good faith of the public officials in this matter. This decision is to become a rule of law, not'merely for the government of the present officials, but for all time while the statutory law remains the same. If we should sustain this provision of the specifications the door would be opened to collusion between public officials and intending bidders by which one or more Of the bidders, might know in ad vanee which material - the officials would require under the alternative provision of the specifications and thereby obtain an undue advantage. Moreover, if the contract should be awarded on the proposal of — 416 — the Pennsylvania Steel Company a very serious question might arise as to whether it would be obliged to furnish more high- carbon steel, if that material should be adopted, than is required by the drawings. We do-not find that 'the drawings specify that they are for nickel steel, and it is not apparent that bidders would know whether they are for nickel steel or high carbon steel. That, however, is not the material point. It seems to be conceded that the dimensions and quantities- shown by the drawings, sso far as they relate to the Work to be constructed of either high carbon steel or nickel steel, ,are the dimensions and-quantitles .essential if nickel steel is used. It appears,' as already stated, that the quantity called for by the requirements of" the drawings — not specified in gross,, but ascertainable' by measurements and calculation—is 1.6,247,000 pounds. Our attention has not been called to any provision of the specifications shedding light on that question, other than paragraph 254, set forth in the statement of facts, and paragraphs 255 and 256, which are as fqllows : “,255. Connections . of chord splices and diagonal web members of the stiffening trusses shall be made with nickel steel rivets, as ■ called for onxthe plans, or shall' be made of equivalent ’strength with carbon steel rivets by increasing the size or number of the latter, “ 256. ■ The basis of comparison of strength of nickel steel and carbon steel rivets shall be tlie allowable, unit stresses of each given in the table, Par. 125, Page 68 of the. Specifications, or shall be determined by. the Engineer after experiments. made by the Contractor under supervision of the Inspector for this purpose,” It will be observed that here is a specific requirement that certain rivets, if of high carbon steel, shall be larger or more-numerous than those shown on the drawings,, in order that they shall be as strong * as if nickel were used according to the requirements of the drawings. -It is not pretended that, the rivets specified in said paragraphs 255 and 256 embrace all the high carbon or nickel steel required. The affidavit of Mr. ’Moore, an expert for the plaintiff, shows _ that paragraphs 255 and. 256 only relate to a very small part of the material required to be of either high carbon or nickel steel,- and this is not controverted. Paragraph 254 expressly requires'that “ the main parts of the chords and of the diagonal web members of the trusses, the gusset plates connecting the diagonal web- members to - the — 417 — chords, and the chord splices shall be m.ade of nickel steel or of high carbon steel.” The rwets -specified in paragraphs 255 and 256 are . to be used to make the connection,s of the chord, splices and diagonal web members of the stiffening trusses. Manifestly the chords, ■ chord splices, diagonal web members of the trusses and gusset plates will- require most of the high carbon steel or nickel steel, "and the specified .connecting rivets will require but a comparatively small part thereof. There seems, therefore, to be no clear, if any, requirement, even 'ih the specifications, that if high carbon steel is used that part of the chords, chord splices,' diagonal' web trusses and gusset plates, which paragraph 254 provides, shall be constructed of either nickel steel or high carbon steel, shall be enlarged or increased in number to attain the same strength as would be afforded if nickel were used'according to the'drawings. It is evident that new drawings would be required if carbon steel should be used and these parts should be thus enlarged. The form of proposal pursuant to the provisions of the ordinance quoted in the statement of facts required bidders to specify the quantities of the different materials upon which they submitted estimates giving the unit and total price • on which they figured in making up. their bids. The blank forms of proposal, so' far as material on this point, contained four columns. The first was headed, “Class of Work,” and under this was printed in separate items a general description of the work called for, and, among others, “ Nickel steel or high carbon steel riveted work, pounds.” The second column was headed, “Total Quantity.” It was blank, but the defendant steel company filled in the figures “ 16,247,400,” which is the quantity required to comply , with the drawings. The third column --was' headed “ Unit Price,” and in that the bidder filled in “¡0878,” which evidently means the price per pound. The fourth column was headed “Total Price,” and the bidder filled -in the figures “ 1,426,522,” meaning,- evidently, ■ that it had in making up its gross bid estimated $1,426,522 for this part of the work, and had figured on 16,247,400 pounds. In these circumstances if, after the contract should be let, the commissioner - of bridges should decide to require high carbon steel and have drawings prepared enlarging the dimensions or numbers of the.parts required to be constructed of one or the other, so as to give the — 418 — bridge the same strength' according to the rivet- test prescribed in paragraph 256, as if nickel 6f the -dimensions and. as called for by the drawings had been used, it would seem that the contractor might Well claim that it was only obliged to furnish the quantity called for by the drawings, and .that it would be entitled td extra compensation both for material and labor above that quantity. And -it is not at all clear that such contention would not be sustained.. ,If it • Were intended to enlarge the other parts as. well as the rivets td be used for such connection it would ■ seem that it should have been so stated in the specifications arid would have been further stated that in that event new' drawings would be required. These matters were left altogether too vague and indefinite. This was entirely unnecessary and calculated to mislead' bidders and' increase the cost ,bf the work. Being of opinion that ;this .'paragraph of the specifications and the omission of drawings for high carbon steel would ren- ■ der the proposed contract illegal and that the illegality cannot be ■ obviated by evidence upon the trial, we deem it our duty, in view of the public, interest and urgency of the Work, to place ó Ur decision on the merits as' to this point, although there are other grounds upon which 'the temporary injunction should be sustained. The injunction must, therefore, be' sustained, but since, as we view the case, the work must be'relet, other provisions of the contract which -are assailed as illegal require comment, to the end that they may be so altered that they can be sustained if again attacked. ■ The learned counsel for the plaintiff contends that clause HH of the proposed contract'is illegal, in that it authorizes changes in the character of the work and in the- materials" Which may increase the cost, and then unlawfully delegates to the engineer the exclusive right to determine tlie additional amount, that' shall-be paid by the" city, and also authorizes the 'substitution, of other and different material,'and other changes in the work without any limitation upon the amount thereof, and provides for a supplemental contract or contracts to cover the price of the same, The defendants claim that the engineer is .a mere arbitrator as to whether the changes increase or diminish the cost Of the.work to the contractor and how'much, - and that this provision is analogous to those commonly inserted in such contracts and often sustained by the. coiirts, to- the effect that an engineer or architect shall determine, whether the work has — 419 — been performed according to the contract and certify to the fact as a condition precedent to the right of recovery on the contract. There is more difficulty,, however, with the latter part of the clause. It will be seen by the other provisions of the contract quoted that mistakes and omissions, mistakes and alterations by mutual consent and extra work and the compensation therefor had been carefully provided for. Counsel for plaintiff rightly contends that- the provision for new contracts in tlie clause HH musthave.been intended to provide for something not otherwise covered by the contract. It apparently was designed thereby to resérve general authority on the part of the commissioner to change the materials and work, and there is a provision in the fore part of the clause in effect requiring the contractor to-make any changes he may be called upon to make as if expressly required by the contract. The learned counsel for the city concedes that this was intended to authorize any change in the contract that might be required in consequence of any unforeseen difficulty, as by the giving way of the supports for the superstructure or any substitution of material, and also any substitution' that might be deemed advisable as the result of the development of scientific knowledge with reference to the construction of work of this character at any time before the material is needed. It appears to be conceded that contract work of this nature, involving an expenditure of over $1,000, is required to be let to the lowest bidder by the provisions of section 419 of the charter already quoted. We do not understand-it to be contended by counsel for the defendants that there is any statutory or other authority authorizing a new contract involving a greater expenditure than $1,000 without inviting public proposals or a three-fourths vote of the whole board of estimate and apportionment dispensing therewith. If any'substantial change involving an increase of more than $1,000 in the cost should become necessary or be deemed advisable, it is not within the power of the commissioner to negotiate a private agreement therefor with the contractor, but it would become necessary to invite public proposals therefor unless this should be dispensed with as already stated. This provision of clause HH is, therefore, both indefinite and misleading. No idea is given bidders of even the nature of the circumstances which may be assigned as the reason for making a material change in the contract, and they are given to understand that if — 420 — there be any change in the material a new contract will be made with them. Attention is not called to the fact that such contract cannot be made with them as matter of-right if it will involve: the expenditure of more than $1,000. . If the city wishes to reserve the right to cancel the contract in the event that a'ny unforeseen accident will prevent the performance thereof as contemplated, that should be done by a plain and.concise clause. It is claimed that without clause HH the city would guarantee the sufficiency of the plans and specifications and-become liable to tlie contractor in- the event that they should prove insufficient or that the foundation shohld not sustain the superstructure. There appears to-be no good reason why the contractor should take the risk of these contingencies ■ and requiring him to do so doubtless very materially ■ inci-eases the cost of the work. Provision might well be made limiting the recovery of the contractor in that event to a 'quantum meruit. Proposals for public work should be invited with reference to the use of specified material in the construction of the work contemplated. Competition is not fostered by a clause reserving the right" to change the material amd work without any limitation. ' It is possible to put a construction, on clause HH which wifi make it legal, and doubtless that would be done if .the contract had been let; but. that would have confined its operations to changes and alterations involving an expenditure of less than $1,00®, or if more than - that amount, to instances in which the board of estimate and apportionment by the vote required by section 419 of .the charter dispensed with the necessity of inviting public- proposals. Only five proposals were received and the difference; between the lowest and the highest is more than $2,000,000. These facts are quite significant and the cause may be found in these and other indefinite provisions of' the specifications and Contract which would-naturally, we think, deter bidders and,preyent that competition which the charter, as construed by the courts, was designed to require.. - The criticism of. the specifications as to the method .of manufac- ■ turing other material to be used in the work'which it is claimed render it necessary for .all bidders to purchase the materials from the Carbon Steel Company and render the proposed contract fraudulent and void, have been, so far as this appeal is concerned, fairly met. and overcome by the affidavits presented on behalf, of -the defend — 421 — ants. The charge,of fraud has not been sustained and the charge of illegality is answered by the case of Knowles v. City of New York (37 Misc. Rep. 195 ; affd., 176 N. Y. 430) where the court, construing those identical provisions in the Williamsburg bridge contract, held that it could not be said as matter of law, that they ■were illegal, even if the Carbon Steel Company were the only manufacturer of the material. It follows that the order should be affirmed, with ten dollars costs and disbursements. O’Brien,' P. J., Patterson and Clarke, JJ., concurred; Ingraham, J., dissented. Order affirmed, with ten dollars "costs and disbursements.