City of New York v. Seely-Taylor Co.

McLaughlin, J.: The plaintiff, acting through its commissioner of docks, on or about the 1st of March, 1905, advertised for proposals or estimates for performing labor and furnishing materials required for removing a ferry structure and building in place thereof a new one. The advertisement notified prospective bidders that sealed proposals or estimates would be received by the commissioner of docks until two o’clock p. M., March 13, 1905, and that security would be required in the sum of $90,000; that each bid or estimate “shall be accompanied by the consent in writing * * * of a guaranty or surety company duly authorized hy law to act as surety, and shall contain the matters set forth in the blank forms mentioned below; ” and that no bid or estimate would be considered unless, as a condition precedent to the reception or consideration of any proposal it was accompanied by a certified check upon one of the State or National banks of the city of New York, drawn to the order of the comptroller, or money to the amount of five per cent of the amount of the bond required as provided in section 120 of the Greater New York charter. In answer to the advertisement the defendant Seely-Taylor Company submitted a bid, accompanying which was a bond executed in the form required, by the respondent surety company. This bond recited that in consideration of one dollar paid by the city, the receipt of which was acknowledged, the surety company agreed if a contract were awarded to the Seely-Taylor Company it would become bound as its surety for the faithful performance of the same*, and “if the said person or persons shall omit or refuse to execute su'ch contract and give the — 101 — proper security within five days after written notice that the same is ready for execution, if so awarded, we will pay, without proof of notice or demand, to the said The City of New York, or its successors, any difference between' the sum to which such person or persons would be entitled upon the completion of such contract and the sum which The City of N ew York may be obliged to pay to the person or persons to whom the contract shall be awarded at any subsequent letting.” At the time the bid and bond were submitted, and accompanying the same, the Seely-Taylor Company delivered a certified check drawn on a National bank of the city of New York, payable to the order of the comptroller, for $4,500. There were several other bidders, and when all of the proposals were opened it was found that the Seely-Taylor Company’s bid was the lowest by upwards of $100,000. On the fourteenth of March, the day following when the bids were opened, the Seely-Taylor Company notified the commissioner of docks and the comptroller of the city, in writing, that it withdrew its bid. On the foEowing day the commissioner of docks acknowledged, in writing, the receipt of the notice, and at the same time notified the SeelyTaylor Company that it had no right to withdraw its bid, and “that if the contract be hereafter awarded to you, the Department will look to you and to your surety tc carry out the terms of your bid and to execute the contract accordingly.” Some time thereafter the contract was awarded to the Seely-Taylor Company, which it refused to execute, though requested to do so. The city then readvertised for bids, and subsequently let a contract to the lowest bidder on such readvertisement, which was about $144,000 in excess of the bid made by the SeelyTaylor Company. Some two years thereafter this action was brought to recover this difference from the Seely-Taylor Company and its surety, the city in the meantime having, on demand of the Seely-Taylor Company, returned to it the check for $4,500. There was no dispute at the trial between the parties as to the facts above stated, and in addition thereto it appeared from the testimony of the president of the Seely-Taylor Company, which was uncontradicted, that he submitted the bid for his company, and in doing so made an unintentional error of $93,000; — 102 — that this error occurred in transferring figures from a paper upon which he had made his estimate to the formal hid; that on the formal bid he put down the amount as $10,000, and it should have been $103,000; that the error was discovered the morning after the bids were opened, when he immediately communicated with the commissioner of docks, and at the same time gave notice that the Seely-Taylor Company withdrew its bid. At the conclusion of the evidence, and after both parties had rested, the trial court dismissed the complaint. The city appeals from the judgment to that effect, and the Seely-Taylor Company appeals from an order denying its motion for an extra allowance of costs. If it be true, as testified by the president of the Seely-Taylor Company, that it made an unintentional mistake of $93,000 in its bid, then undoubtedly, before the bid was acted upon, it could be withdrawn and the court in equity could relieve it from executing a contract which it never intended to make. (Moffett, Hodgkins, etc., Co. v. Rochester, 178 U. S. 373; City of New York v. Dowd Lumber Co., 140 App. Div. 358.) The conclusion at which I have arrived, however, renders it unnecessary to consider whether such a defense were pleaded, or if so, whether the testimony of the president of the Seely-Taylor Company bearing on that subject should have been submitted to the jury. When the Seely-Taylor Company made its bid it complied with section 420 of the Greater New York charter (Laws of 1901, chap. 466) by delivering a check as therein required. This section of the charter provides, among other things, that “ if the said bidder, whose bid has been accepted, shall refuse or neglect, within five days after due notice that the contract has been awarded, to execute the same, or to furnish the required bond, the amount of deposit made by him shall be forfeited to and retained by the said city as liquidated damages for such neglect or refusal and shall be paid into the sinking fund of the city * * If it be assumed that the Seely-Taylor Company’s bid were a valid and binding one, notwithstanding the mistake alleged, it could thereafter refuse to enter into a contract, and if it did so the only damage to which it was subjected was that provided in the section of the charter referred to. Its refusal forfeited — 103 — to the city the amount of the deposit as “ liquidated damages.” Where a statute provides for liquidated damages, or where there is a stipulation in a contract as to the amount of damages that is to be paid to either party for a breach, then, in the absence of fraud or mistake, the only question which arises is as to the breach. In that case the actual damage is not involved. One cannot recover both. The recovery of one precludes the recovery of the other. (Cotheal v. Talmage, 9 N. Y. 551; Darrow v. Cornell, 12 App. Div. 604; Dunn v. Morgenthau, 73 id. 147; affd., 175 N. Y. 518; Shiell v. M’Nitt, 9 Paige, 101; Wood v. Niagara Falls Paper Co., 121 Fed. Rep. 818; United States v. Alcorn, 145 id. 995; Morrison v. Richardson, 194 Mass. 370.) To permit a recovery of actual damage, where liquidated damages have been provided for, is to nullify the statute or destroy a contract with reference thereto. The sole purpose of providing for liquidated damages is to prevent, in case of a breach, any question being raised as to the amount that shall be paid or recovered therefor. The city, when it advertised for bids, informed prospective bidders that they would have to deliver, at the time bids were submitted, a check or money, as provided in section 420 of the charter. The purpose of requiring such deposit to be made was not only to insure good faith on the part of bidders, but to indemnify the city against the expense of readvertising (Erving v. Mayor, etc, 131 N. Y. 133), and also to notify bidders if the contract were awarded to them and they refused to enter into it the precise amount of damage they would have to pay. If this be so, then the only damage to which the Seely-Taylor Company could be subjected for refusing to execute the contract after the same had been awarded to it was the forfeiture of its deposit. The fact that the deposit was returned after the city had requested the Seely-Taylor Company to enter into a contract and it had refused, does not seem to me to be at all pertinent or germane to the question presented on this appeal. The rights of the parties had previously been fixed. It may be assumed there was no authority on the part of the city officials to return the deposit, or the Seely-Taylor Company to receive it, and that the city has a cause of action therefor against one, or both, but this action is not brought to recover that — 104 — sum. It is not even suggested in the complaint, the proof or brief of counsel that this sum can be recovered in this action, or the action can be treated as one to recover that damage. It cannot be here recovered unless pleadings, proof, the theory upon which the action was tried, and the views of counsel are to be entirely disregarded. If the foregoing views be correct, then it follows that the complaint was properly dismissed as to the Seely-Taylor Company and the sole question remaining Is whether it was properly dismissed as to the other defendant, the Empire State Surety Company, The condition of its bond, in terms, made it liable, the Seely-Taylor Company having been awarded the contract and refused to execute it, for the damages here sought to be recovered. The Seely-Taylor Company was the principal and the surety company its surety. The bond was to indemnify the city against damage by the failure of the principal to do what it was legally obligated to. There was a legal obligation resting upon the Seely-Taylor Company, its bid having been accepted, to execute a contract. It refused to do this and by reason of such refusal became liable to pay whatever damage the city sustained. This damage had been agreed upon in advance, which sum was paid by forfeiting to the city the amount of the deposit. The principal having,,paid all the damage sustained by the city, the surety was thereby discharged. When a principal discharges his full obligation, then his surety is also discharged. The agreement on the part of the surety to pay any sum for which the principal was not liable was without consideration. That was not the purpose of the bond and to this extent it cannot be enforced. It is suggested that the bond was in the nature of a separate undertaking on the part of the surety and was authorized by section 349 of the revised ordinances of the city. This ordinance was not offered in evidence and the court cannot take judicial notice of it. (Porter v. Waring, 69 N. Y. 250; People ex rel. Cross Co. v. Ahearn, 124 App. Div. 840; City of New York v. Knickerbocker Trust Co., 104 id. 223.) But if considered as in evidence, it would not aid the city because so far as it relates to the payment of damages for the refusal of the prmcipal to enter into a contract awarded, it is inconsistent with section 420 of the — 105 — charter. The power on the part of the city to pass an ordinance is derived from its charter and an ordinance, in so far as inconsistent with the charter, is void. (Phelps v. Mayor, etc., 112 N. Y. 216; City of Rochester v. West, 29 App. Div. 125; affd., 164 N. Y. 510; Broadway, etc., R. R. Co. v. Mayor, etc., 49 Hun, 126; Cowen v. Village of West Troy, 43 Barb. 48; Dillon Mun. Corp. [5th ed.] 587.) Section 420 of the charter "provides what damages shall be paid by a bidder whose bid has been accepted, for refusing to enter into a contract. Any attempt on the part of the city by an ordinance to impose any greater damage is ineffectual and cannot be enforced. My conclusion, therefore, is that the complaint was also properly dismissed as to the surety company. As to the appeal by the Seely-Taylor Company, I do not think the court erred in denying its motion for an extra allowance of costs. The trial was not a long one, nor were there, in my view, difficult questions of law involved. The case was not difficult and extraordinary within the meaning of section 3253 of the Code of Civil Procedure for which an extra allowance of costs may be awarded. The judgment and order appealed from, therefore, should be affirmed, without costs to either party. Clarke and Scott, JJ., concurred; Latighlin, J., dissented.