People ex rel. Dady v. Prendergast

Carr, J.: The relator entered into a contract with the city of New York in August, 1905, to perform certain work for the city in the construction of its water works system in Nassau county. In November, 1905, a .supplemental contract was made between the same parties for additional work .on the same water supply system. While engaged in the performance of these contracts — 310 — he received oral directions from the engineer of the department of water supply to do other work in connection with the testing of wells in certain pumping stations owned by the city and connecting said stations ¡with the work then being done under his original and supplemental contracts, and also in the construction of a box for measuring coal for use at the pumping stations, and various other details. The work so ordered and done was estimated at the reasonable value of $2,298.17. For this work the city refused to pay on the ground that it did not become liable therefor, because there was no compliance with various provisions of the Greater New York charter which regulate and control the1 manner under which contracts' could ■ be entered into for the -doing of. the work in question. The contractor thereupon brought an action to recover the reasonable value of the work. ¡On the trial it was stipulated that the reasonable value of the work so done, and of which the city got the benefit, was.$2,298.77, but it was decided by the court that-the plaintiff could not recover against the city because the charter requirements as to letting contracts for the performance of such work were entirely ignored, and judgment was entered accordingly, dismissing the plaintiff’s complaint. ' (See Dady v. City of New York, 65 Misc. Rep. 382.) Some time thereafter the contractor presented a petition to the board of esti- ■ mate and apportionmenjt of the city of New York, setting forth, in detail the facts 'above outlined and' praying that said body may audit and alloy his claim against the city of New York as one which it was equitable, and proper for the city to pay.. That, body referred’ the petition to the comptroller of the city of New York for investigation and his opinion, as provided in section 246 of the Greater New York charter. The comptroller declined to give i the claim any official consideration whatever, solely because j he was advised by the corporation counsel that he had no power whatever to consider the same. If section 246 of the Greater New York charter confers upon the comptroller a power | in his discretion to investigate this claim and to report his opinion thereon, then should he refuse. to exercise his official discretion solely on the mistaken ground that he has no legal power to exercise discretion in the premises,' he may be compelled by ia writ of mandamus to exercise his — 311 — official discretion, though the result of such exercise may not lie controlled hy the court. That such may be done generally is too well settled to require any extended citation of authorities. This rule was applied in Matter of Kane v. McClellan (110 App. Div. 14) to the board of estimate and apportionment of the ©ity of New York, when it refused to exercise certain powers of audit and allowance conferred upon it by section 231 of the Greater New York charter (Laws of 1897, chap. 378, as amd. by Laws of 1901, chap. 466) on the plea that said section was unconstitutional. The relator in this proceeding did apply for a writ of peremptory mandamus against the comptroller, requiring him to exercise his discretion on the relator’s claim, and from the order directing the issuance of the writ this appeal has been taken to this court. Section 246 of the Greater New York charter (Laws of 1901, chap. 466) was added to that instrument as a new section by chapter 601 of the Laws of 1907, and reads as follows: “The board of estimate and apportionment may in its discretion inquire into, hear and determine any claim against the city of New York which has been certified to said, board in writing by the comptroller as an illegal or invalid claim against the city, but which, notwithstanding, in his judgment it is equitable and proper for the city to pay in whole or in part, and if upon such inquiry the board by an unanimous vote determines that the city has received a benefit, and is-justly and equitably obligated to pay such claim, and that the interests of the city will be best subserved by the payment or compromise thereof, it may authorize the comptroller tó pay the claim, and the comptroller shall thereupon pay the claim in such amount as the board of estimate and apportionment shall so determine to be just, in full satisfaction of such claim, provided that the claimant shall fully release the city, upon any such payment, in such form as shall be approved by the corporation counsel. The provisions of this section shall not authorize the audit or payment of any claim barred by the Statute of Limitations, nor any claim for services performed under an appointment in violation of any provision of the Civil Service Law. For the purpose of carrying out the provisions of this section it shall be the duty of the comptroller of the city of New York, on .being thereunto authorized by — 312 — the said hoard of estimate and apportionment, to issue arid sell corporate stock or revenue bonds of the city of New York in such amounts as may be- necessary, and at such a rate of interest as may be fixed by said comptroller. No consent or approval of any board or public body other than the said board of estimate and I apportionment .shall be necessary, to authorize the comptroller to issue such stock or revenue bonds for the .purposes of this, section. ” (See, also, Laws of 1910, chap. 683, amdg. said § 246.) The history of this enactment is shown in various pujolic documents of the State.; It had happened quite frequently that the Legislature had passed laws enabling the board • of estimate and apportionment of the city of New York ¡to. audit and allow as obligations of the city claims made by various persons for work done or material furnished to arid received and used by the city for its benefit, but which claims were not legal claims, against the city and enforeible in the courts because of a failure on the part of the city to enter into á binding contract therefor in compliance with the various statutory provisions regulating and controlling the letting of ' contracts by the city. These laws, however, were not of general scope, but were corifined to particular claimants and| claims. At the legislative session of 1907 two separate bills- of this tenor were passed by both houses of the Legislature but each was vetoed by the Governor with a memorandum in each case, in which the Governor suggested to the Legislature that such matters should not be dealt with by special acts applicable only to particular claims, but should be covered by an amendment to the charter with a scope general to all claims of such nature as the Legislature might see fit to embrace within a general scheme. (Public Papers of Governor Hughes, 1907, pp. 62, 101, 102, 151, 152.) 'The Legislature thereupon enacted the law now known as section 246, which is quoted above. The respondent (appellant • herein) contends that this law of 1907 is unconstitutional if it be interpreted to apply to the claim of the relator, and, therefore, contends that to uphold! the constitutionality of the statute, which should be done if possible, the statute must be so interpreted as to exclude the relator’s claim. Before proceeding to a ¡consideration of the argument of the — 313 — appellant, it may be well to recall to mind some of the basic principles of law affecting legislative action with regard to municipal corporations. The general rule is that a municipal corporation is a State agency and creature over which the Legislature has general power save as limited by the provisions of the ' State Constitution. (Atkin v. Kansas, 191 U. S. 207; Williams v. Eggleston, 170 id. 304; New Orleans v. New Orleans Water Works Co., 142 id. 79; Essex Public Road Board v. Skinkle, 140 id. 334.) While the Legislature has in the- various charters of municipal corporations surrounded the letting of contracts for public work with defined restrictions, a violation of which excuses a-municipality from liability at law even for work done and materials furnished for the benefit and to meet the necessity of the municipal corporation, the Legisla: ture in its power could have refrained from imposing such restrictions and could have left a municipal corporation subject .in its work to the same rule of liability as would attach to any private person or corporation, within such limitations as the Constitution prescribes. The Legislature has general power, again within the constitutional limits, to legalize invalid acts of public officers. What it could have dispensed with lawfully in the beginning, it may dispense with lawfully in the end. A familiar example of the exercise of the latter power is to be found in the various acts which confirm taxes which were void in law because of a substantial failure to comply with the directions of the statutes under which an attempt was made to levy a tax. The rule in such cases is that, where a tax is void because of a failure to comply with a provision of statute which the Legislature could have omitted lawfully from the statute, that is, where the defect was not jurisdictional, then the tax so levied' improperly .may be legahzed by a confirmatory act. The principle underlying this rule is not confined to tax cases, but is one of general application. The provisions of our Constitution which prescribe the limitations of the Legislature as to municipal. corporations, and also of the acts of the latter themselves, with regard to the payment of public moneys or the incurring of public obligations, are to be found in section 10 of article 8 thereof. It is there declared in part as follows: “No county, city, town or village shall — 314 — hereafter give any money or -property, or loan its money or credit to or in aid of any individual, association or corporation, or become directly or indirectly- the owner of stock in, or bonds of, any association or corporation; nor shall any such county, city, town or village oe. allowed to incur any indebtedness except for county, city, jtown or village purposes.” While this section of jthe Constitution has been the subject of repeated judicial interpretation, it has not been attempted ' by any court to define generally what is “ a county, city, town or village purpose ” within the meaning of this section, but each decision has proceejded upon the special facts, of each case. Many things which confront Us to-day as municipal activities would not have seemed (within a “ city purpose ” a generation or two- ago. The first j contention of' the appellant as 'to the inapplicability of section 246 of the Greater New York charter, within the limits of the Constitution, to the case at bar, is that section 246, if applied here, would operate t© deprive the. city, of New York of the benefit of its judgment against the plaintiff in the action which the relator brought against the city as hereinbefore described. ! Siich a result is asserted to be beyond the legislative power, and Matter of Greene (166 N. Y. 485) is cited as a controlling authority in support of the cónténtion.' The opinion of LandonJ J., in that case is a comprehensive though terse exposition jof many of the principles of law which affect the determination of the case at bar, but, when exa,m7 ined carefully, it does n|ot support the contention in support of which it is here advanced. The facts involved there were, briefly stated, as follows: The receiver of the Merchants’ Bank of Lock-port brought an action against the county of Niagara to recover the proceeds of certain alleged overdrafts which Arnold as county treasurer had mjade on said bank and the proceeds of which he had applied to the payment of certain qounty obligations. Arnold was a defaulter and had stolen or misappropriated' considerable"of the funds of'the county.' He was both county treasurer and cashier Of the bank in question. When making the overdrafts, jhe left with the bank as security therefor a certain promissory note and likewise a. draft, both made, by parties named Helmjer; Thése instruments came into the possession of a Mr. Ellsworth who refused to surrender them to — 315 — the receiver of the bank on the ground that they were equitably the property of the county. In an action brought in equity by the receiver of the bank to determine the equitable ownership of said instruments, it was found by the court that the alleged overdraft on which the plaintiff relied was a fiction and but the result of a juggle in bookkeeping, and that the bank, .through its managing officers, knew that Arnold was a defaulter to the county at the time of the alleged overdraft and was in fact advancing to it unlawfully county funds which went to create by species of juggled bookkeeping apparent overdrafts by Arnold. It was, therefore, adjudged that the county was the equitable owner of the instruments in question. The judgment in the- action in favor of the county was affirmed in the Court of Appeals finally. In 1900 the Legislature passed an act known as chapter 614 of the Laws of 1900. “Its letter and purpose are. to vacate the judgment obtained by the county and to grant a new trial to the receiver before a referee to be specially appointed for the purpose.” (Opinion of Landos, J.) The Court of Appeals held that the act in question was unconstitutional and void. It pointed out the rule that as between private parties it was beyond legislative power to deprive a party ty a litigation of a judgment obtained by him therein. It then declared as follows: “ Individuals not under legal disability can wage their litigations upon equal terms as to their liability for their acts, omissions, contracts and representations; but the liability of municipal corporations or of their officers is often so dependent upon the power given them by statute that the limitations'upon that power sometimes compel a judgment against thé individual contrary to the merits.” The court, through Landon, J., then proceeded to point out numerous instances where that court had upheld legislation which had legalized claims against municipal corporations which were invalid because of the violation of statutory requirements, even after the invalidity of said claims had been determined judicially. What are now sections 9 and 10 of article 8 of the present Constitution of 1894, with the later section as amended in 1899, 1905, 1901 and 1909, were adopted originally as sections 10 and 11 of article 8 of the Constitution of 1846 by amendments passed in 1814, which took effect January — 316 — 1, ■ 1875, and the later ¡section was amended in 1884, taking effect January 1, 1885, Many of the cases so cited related to laws enacted- prior to said amendments, hut the case of Wrought Iron Bridge Co. v. Town of Attica (119 N. Y. 204) arose under an a'ct passed in 1887 (Ohap. 205), while the Constitution stood in 'form, as to this point, as it does now. In that case the legislative power "to legalize a - claim "based on equity and justice, though void at' law because of a failure to observe statutory requirements was upheld, notwithstanding a judgment had been entered determining the invalidity of the claim. The Court of Appeals, however, in Matter of Greene (supra), distinguished the case before it from- the earlier decisions on the ground that in those cases the judgments relieved from were based not upon the substantial merits, but rested ■ upon the statutory disabilities of the municipal corporations in question. In its opinion it speaks as follows: “The distinction between the gratuity which the Constitution now forbids and' the meritorious claim "which it permits municipal bodies to satisfy, notwithstanding judgment adverse to the claimant, is apparent. Where such; final judgment is upon the merits) for-the Legislature to vacate or disregard it and direct the levy of a tax to pay it, either without a.new trial or with judgment upon it," would be the bestowal of a gratuity. But where such judgment is not upon the merits, but because of some defect in the authority of" the officer^ to bind the municipal body for which they assume to act, and) thus in good conscience is not decisive against the justice of the claim, the Legislature may, in order that justice shall" prevail, direct its re-examination and determination,, and, if found to be just, direct that it be provided for by taxation. " The limitations which the law wisely imposes upon the powers of public officers and their methods of exercising them, may sometimes result in vesting in the municipal body, without any fault of the individual, his! money or labor or their products beyond remedy or recall, except by special legislative action. The¡ Legislature may ratify what it might originally have authorized, and it seems to be right that it should have the power! to relieve against-the special injustice which may sometimes result from the limitations it has imposed upon the authority of : the officers which it has empowered — 317 — with the administration of its rhunicipal creations.” The principle upon which the court in that case declared the statute there in question unconstitutional and void, was that the - judgment from which relief was sought was based upon the substantial merits of the controversy, and in no way rested upon any statutory exemption of the defendant from liability as a municipal corporation. It is not intelligible why Matter of Greene (supra) has been cited to this court as an authority for the proposition advanced by the appellant. It is further contended by the appellant that, if section 246 of the charter is to be upheld as constitutional, it must be so interpreted as to exclude claims which are “void” and restricted to. claims which are “invalid.” It is argued that “invalid” claims are those only which arise from some irregularity in the method of following the statutory requirements, while “ void ” claims are those which arise from a total failure to follow the statutory directions. The distinction is rather shadowy and has ho sub-' stantial basis so far as this case is concerned. A claim which cannot be enforced at law against a municipal corporation because of statutory hmitations, is in the eye of the law as void as it is invalid. It is simply without legal force. There are, of course, a class of claims against municipal corporations which, under the Constitution, cannot be legalized - by statute, and these claims are “invalid” or “void” because they do not arise from the performance of “a county, city, town or village purpose,” as provided in section 10 of article 8 of the Constitution as aforesaid. But the claim set up in the petition herein arises from the performance of a “city purpose,” for it is based Upon work done and materials furnished to the city in the exercise of a “city purpose” in constructing a city water supply system. Examples of claims which cannot be legalized against municipal corporations may be found in the decisions in the following cases: Matter of Chapman v. City of New York (168 N. Y. 80); Stemmler v. Mayor, etc. (179 id. 473); Matter of Jensen (44 App. Div. 509); Matter of Straus (Id. 425). None of these cases last cited has any application to the facts in the case at bar. The learned counsel for the appellant calls our attention to two authorities in California which support the contention of the appellant. These decisions are Con — 318 — lin v. Board of Supervisors (99 Cal. 17) and Conlin v. Board of Supervisors (114 id. 404). Each of-these decisions relates to a statute which directed a hoard of supervisors to audit and allow at a defined sum a claim against the county for wprk done' for the county, but which was invaliil because of failure to'observe the statutory regulations as to the letting of public contracts. The legislation in question was held unconstitutional by the Supreme Court of California as an attempt to make a gift or gratuity of public funds! The constitutional provision (Art. 4, § 31) there in question provided as follows: The Legislature shall not have power “.to make any gift, or authorize the making of any gift, of any public nioney, or thing of value, to any individual, municipal or otheii corporation whatever. ” In both of these cases the California court declined to recognize. any distinction between a merje gratuity and the -payment qf a claim resting upon a moral obligation, but without enforcible legal basis. As before indicated, a broader rule of interpretation has been applied in this Stale, ■ and one which commends itself to a common sense of justice1. The. order should be | affirmed, with ten dollars costs and disbursements. j • Jenks,'P. J., HirschbERg, Burr and Thomas, JJ., concurred. Order affirmed, with jen dollars costs and disbursements.