Brady v. Mayor of New York

By the Court. Woodruff, J.— The referee has found, as a conclusion of law from the facts proved, that it was the duty of the street commissioner, (in his notice inviting proposals for the work directed to be done by the Common Council) to state the probable amount of rock excavation required, and to include that among the data by which the bids or proposals would be tested, and had no power, after excluding that part of the work from such data, to still go on and contract for its performance; and that the contract, made by the street commissioner with the plaintiff, was illegal and void as regards rock excavation; and that the plaintiff cannot, by virtue of his contract, recover the stipulated price for rock excavation. These conclusions are obviously fatal to the plaintiff’s claim to recover, as such claim is alleged in his complaint.' He has alleged a special contract, and the performance thereof, and claims to recover the stipulated price. The contract proved is found to be illegal and void, and it cannot, therefore, be the ground of recovery. The referee, however, concludes that the plaintiff is entitled to recover the unpaid balance of the contract price, and upon several distinct grounds, viz.:— — 179 — That the plaintiff, having done the work, was entitled to receive what the work performed in making such rock excavation was reasonably worth; and that the defendants have legal power to pay for work, on the basis of a quantum meruit, though it was done without contract, or under an illegal and void contract. That, notwithstanding the contract under which the work was done was illegal and void, the confirmation of the assessment, made to provide for the expense thereof, amounted to a valid agreement, by the defendants, that the plaintiff should be paid the contract price. That such confirmation was, in legal effect, an accord, and that satisfaction should be enforced. And finally, that the plaintiff’s claim was a disputed claim which the defendants had power to settle, and that their acts amount to a valid binding settlement, which the plaintiff is entitled to enforce. It is obvious to observe, that there are no issues in this action adapted to raise' the questions, upon the consideration of which the referee has decided in favor of the plaintiff. The ground of claim set forth in the complaint is, simply, a special contract made with the defendants, duly performed by the plaintiff and his work accepted. But assuming that the state of the pleadings may be disregarded, and that the plaintiff could be permitted to claim payment as upon a quantum meruit, and might recover for the rock excavation what the work of making the same was reasonably worth; then, so far as the judgment proceeds upon this ground, it is subject to what we deem these fatal errors: The referee awards to the plaintiff the whole contract 'price, and disregarded such evidence, as appeared in the case, tending to show that the rock excavation was not worth twenty-five dollars per yard, (the contract price,) when,'in truth, proposals were made to do it at five dollars; and further, the referee refused to receive evidence, offered by the defendants of the actual value of the work, which evidence, so far as the plaintiff’s claim was a title to recover what the labor was reasonably worth, was clearly, we think, admissible. It was, perhaps, rejected under the idea that the contract itself fixed the value, by stipulating the price to be paid, and that the value so fixed is conclusive. — 180 — Where parties have, by a valid binding agreement, fixed the price to be paid for work and labor, such agreement is of course conclusive, and even though, by reason of departures from the strict terms of such an agreement, by mutual consent, the claimant finds it necessary to claim payment according to the fair value of his work, the agreement may still bind both, as to the rate of compensation, in particulars conforming to such agreement. But this rule has no application to an agreement which is itself illegal and void. An illegal and void agreement no more bound the defendants to pay the price stipulated, if the work was done, than it bound them in any other aspect. If it was void, it could neither form the basis of recovery, nor bind the defendants to the measure of liability. To hold this contract conclusive in respect of price, would be indirectly to sustain it in the very particular out of which the illegality arises. It was not a contract with the lowest bidder; and yet to hold it conclusive as to price, is to bind the Corporation to pay the highest price bidden, without any valid contract or legal consent to any price. The requirement, binding the Corporation to give contracts to the lowest bidder,, has especial reference to the price which they may become bound to pay, and the manner in which that price shall be ascertained; and to hold a contract not so awarded, conclusive on that point, is not only subversive of the law, but wholly inconsistent with the conclusion, that the contract is itself illegal. If the plaintiff claimed the value of his work, he should have proved its value; and the defendants were at liberty to give such evidence, relevant to that point, as they might be able. If the instrument alleged to be a contract was entered into by the defendants’ officers, in a manner not authorized by law—in a manner in which they had no power to bind the Corporation—then the stipulations in that contract did not bind the defendants for any purpose. And, once more, there was some evidence bearing on the value of rock excavation in the testimony, showing that one of the proposals offered the performance of that part of the work at five dollars per yard. It may be true, (doubtless it is,) that even this is much more than the fair value; but if so, the defendants were not permitted, on the trial, to prove it. How, it is obvious, that — 181 — if this rate had been taken as the fair value, the plaintiff would not, upon the basis of a quantum, meruit, have been entitled to recover any thing. He had, upon this basis, been already overpaid. We are, therefore, for these reasons, of opinion, that even if any claim, in the nature of an assumpsit for the value of the work, could be sustained, a new trial must be ordered. The suggestion, that the confirmation of the assessment, laid upon the lands adjacent to the work, amounted to an agreement with the plaintiff, that he should be paid, appears to us unwarranted. By the terms of the contract, which is held illegal and void, payment to the plaintiff was to be made on the confirmation of the assessment; and, had the contract been valid, such confirmation would have been material as respects him, because the time of payment was thereby made definite. But, in every other aspect, the act of confirmation was, as respects the plaintiff, a purely ex parte proceeding, operating between the Corporation and those whose lands were to be charged, but, in no sense, constituting an agreement with the plaintiff; and, notwithstanding such confirmation, the inquiry, whether the plaintiff is entitled to be paid, is, we think, clearly open to investigation. The remark of Mr. Justice Strong, in Brady v. The Mayor, etc., of Brooklyn, (1 Barb. Rep. 591,) that a resolution to add a sum in question to an assessment, was an acknowledgment of the debt, and a promise to pay it, if recognized at all, must be understood with reference to that particular case. There, a matter in dispute had been informally referred. The persons selected had reported a sum due: the mutual assent of the parties to the amount reported due, amounted to a statement of an account between the parties: the resolutions showed the defendants’ assent, and the Court say, that when also assented to by the plaintiff, the claim became valid, however informal the reference and the award thereon. Aside from the peculiar circumstances of that case, we can see no propriety in calling a confirmation of the assessment an agreement with the plaintiff. Such confirmation may be evidence that the work was done, — 182 — and that the Corporation accepted it as performance of the contract, and an admission of the amount thereof, and that is all. The same observations are applicable to the idea, that this confirmation was a valid accord. It has none of the elements of an accord ; there was no mutuality; and no consideration gives to it validity in this sense: it is simply, and only a recognition of the plaintiff’s right to payment, under his contract. As an admission that the money was payable, it. would be material to the plaintiff, as evidence, if, notwithstanding the illegality of the contract, the Corporation had power to bind themselves by mere admissions. In regard to the argument, that the plaintiff’s claim was a disputed claim, which the defendants had power to settle, and that their acts amount to a binding settlement, we observe, first, that the facts, as found by the referee, in this case, lay no foundation for any such proposition. Nothing in the facts, as found, intimates that there was any' dispute or controversy on the subject prior to the commencement of this action. They show a confirmation of the assessment, a compliance by the plaintiff with the conditions of the special contract, and a part payment by the defendants of the stipulated price, and that is all. ' We find, it is true, in the case, some evidence that the plaintiff’s claim was the subject of inquiry and investigation,' by a committee of the Common .Council; but the finding of facts would not inform the Court, that any thing in the nature of a settlement of a disputed claim had taken place, upon which the plaintiff can rely, if he is not entitled to recover upon other grounds. Nor, second, do we think the evidence showed such a settlement. The investigation, had before the committee, was, for the information of the defendants, and as a guide to the Common Council, in their action upon the" subject, not for the purpose of negotiation, nor did it result in negotiation or arrangement, inter partes. Whatever operation the confirmation by the Common Council, after that investigation, may have, as evidence of an acceptance or approval of the work, has been already noticed, and will be hereinafter further considered. We have thus considered briefly the specific grounds, upon which the plaintiff claims to recover, notwithstanding the illegality of the contract, so far as they are distinguishable from — 183 — the general ground, that the work being performed, accepted and approved by the defendants, they are bound to pay for it, whether there was a valid contract or not. - This ground of claim, we think, is all that arises out of the performance of the work or the acts of the Common Council, in relation thereto; and, if it be sound, then the plaintiff was entitled to payment, either at the contract price, 'or according to the fair value of the work. Before noticing further this general ground of claim, it is proper that we should say, that we concur fully with the referee in his conclusion, that the contract itself was illegal and void, and that the plaintiff could not, by virtue of the contract, recover the stipulated price for rock excavation. And it is material to notice, that the invalidity of the contract results from the want of power to make a contract in the manner this was made, for the purposes for which it was made. It was entirely competent to prescribe, in the charter of the city, the mode in which, and in which alone, contracts should be made. When the powers of a corporation are limited in the charter, the acts of its officers and agents, beyond the scope of those powers, do not bind the corporation. And when the mode, in which the powers of a corporation may be exercised, is specially restricted, the officers and agents may not bind the corporation in any other manner. As Welles, J., in The Farmers' Loan and Trust Company v. Carroll, (5 Barb. Rep. 649,) says: “ Where a corporation relies upon a grant of power from the Legislature to do an act, it is as much restricted to the mode prescribed by the statute for its exercise, as to the thing allowed to be done.” Those who deal with a corporation, whose mode of dealing is prescribed in their charter, must take notice of such prescription, at their peril. In this case, the contract in question was not given to the lowest bidder. The officers of the Corporation did not take proposals from those who offered to perform the work in a form in which it was possible to determine who was the lowest bidder. The plaintiff, not only was bound to know this, but he had actual knowledge, that neither the invitation for bids, nor his offer connected therewith, could enable any one to say, who was the lowest bidder. — 184 — The ease is pot one, in which all the proper elements have been taken into view, in considering whose bid was the lowest, and in which the erroneous determination, by which .the work was awarded to the plaintiff, resulted from unforeseen circumstances developed in the progress of the work; as where, notwithstanding estimates made in good faith, the amounts or quantities were found .more or less than the estimates. But .it is a case, in which the great bulk of the work was laid entirely out of view, and the bids-tested by what has proved a small portion.of the labor stipulated for, when the residue of the work was deliberately, expressly and designedly excluded from the comparison. Not only was the statute provision of the charter- violated, but the general ordinances of the city were disregarded. We feel no hesitation in concurring that a contract, so made in violation of the charter, and of the general ordinances, was illegal and void; and imposed no obligation on the. Corporation of any kind in respect to its stipulations, whether as to price or other terms or conditions thereof. We also observe, on the subject generally, that the Corporation of the city, in the matter of contracts of this description, are acting not simply as an individual acts, in respect to his private interests, nor as a private corporation acts in relation to its property or concerns. .They derive no property, and gain no corporate benefit from the improvement of streets, or other .public work. And whatever they may pay or contribute toward the expenses, (by reason of the great cost of the improvement, assessed upon the city at large,) they pay out of the public treasury, from moneys raised by taxation for public purposes. They act as a public corporation in discharge of duties, and in the exercise of powers which they hold, as trusts, for the benefit not .of the Corporation as such, but for the citizens at large and for the public. . . Not only so, they are trustees and agents in another sense;. the exercise of their powers, in matters such as are' included in this contract, proceeds upon the assumption of benefit to contiguous landowners, tobe secured through the agency of the Corporation, not at their own cost, but 'at the landowners’ expense. And that agency involves, further, the creation of alien upon the lands, — 185 — and the enforcement of the rights of the landowners bound to contribute, as between themselves. So that the defendants, as a private corporation, may be said to have no interest in the subject, but to act throughout as trustees and agents of the public and the landowners; and to be clothed with the requisite powers, only, for the benefit of such owners and the public. Danger of abuses, under such circumstances, is to be regarded as the reason and ground of the restriction, which requires that contracts for work, etc., shall be given to the lowest bidder; to the end that the tax-payers, or those charged with the expenses, may not be unjustly or unduly burthened, while the benefits contemplated by the proposed contracts may be secured. The question then recurs: Are the defendants liable for work done, the contract therefor being illegal and void, because entered into in violation of the charter ? And this question remains to be discussed in two aspects, in the present case. Are they liable to the plaintiff, as upon a quantum meruit, because the work has been performed and is accepted ? And have the Common Council power to waive the original defect in the plaintiff’s claim, and by their action affirm his title to recover, so as to give him a right of action, notwithstanding the requirements of the charter have not been complied with ? The answers to these questions seem to us inevitable, and too obvious to allow of extended discussion. If either be answered affirmatively, the restrictions in the charter become practically null, and the officers and agents, through whom alone the Corporation can act, may disregard the statute, and in practice repeal it. This, to our minds, is the prominent objection to the plaintiff’s claim, and laying out of view every other objection above suggested to the recovery in this case, (except so far as they are connected with this consideration,) it seems to us fatal to the plaintiff’s case. The Corporation can only act through its chosen officers and agents. If those agents not only may pay for work and labor actually done without a compliance with the statute requisites, but are legally bound to such payment, then no contract is necessary, and the restrictions in the statute are a dead letter. — 186 — If those agents may dispense with a contract, then, and then only, can they confirm an illegal and void contract, and then, also, by an acceptance of the work and a confirmation of the contract by resolution, they repeal the statute pro hac vice. The relation which the Corporation and its officers bear to the subject; the duties they owe to the public, and those upon whom the burthen is to fall, and the nature of the powers they possess, forbid us to concede any such force to their acts. By the charter the power is limited, and it is a familiar rule that corporations can only bind themselves by contracts they are expressly or impliedly authorized to make. It may sometimes seem a hardship upon a contractor, that all compensation for work done, etc., should be denied him; but it should be remembered that he, no less than the officers of the corporation, when he deals in a matter expressly provided for in the charter, is bound to see to it that the charter is complied with. If he neglect this, or choose to take the hazard, he is a mere volunteer and suffers only what he ought to have anticipated. If the statute forbids the contract' which he has made, he knows it, or ought to know it, before he places his money or services at hazard. The analogy, drawn from the obligation of an individual to pay for work which he. accepts, although there has been no previous contract for its performance, wholly fails to reach the present case. Here, neither the officers of the Corporation, nor the Corporation, by any of the agencies through which they act, have any power to create the obligation to pay for the work, except in the mode which is expressly prescribed in the charter; and the law never implies an obligation to do that which it forbids the party to agree to do. And, for the like reason, the defendants cannot be treated as ratifying the unauthorized acts of its agents. The difficulty lies not merely in the want of original power in the agents to make the contract, but in the want of power in the Corporation itself to make the contract otherwise than in the mode prescribed by the charter. An individual, having power to make a contract, may ratify or affirm it, when made by one who, without authority, assumes to be his agent, but if the individual have himself no such power, he can no more bind himself, retro-actively, to its perform — 187 — anee, by affirmance or ratification, than he could have done so prospectively, in the first instance. The power to ratify ex vi termini implies a power to have made the contract, and the power to ratify in a particular mode, implies a power to have made the contract in that manner. An express resolution directing the plaintiff to perform the work would not have been valid or have bound the defendants, and a resolution, in very terms, ratifying what is done by the officers of the Corporation in violation of the charter, can have no greater effect. (Boon v. The City of Utica, 2 Barb. R. 104; Blood v. Goodrich., 12 Wend. R. 525; Hodges v. The City of Buffalo, 2 Denio R. 110; McCullough v. Moss, 5 Denio R. 567.) We have considered the case without noticing a further ground of objection to the validity of the plaintiff’s contract, and what was done in relation thereto, viz., that the general ordinances of the city were violated in making the contract, and that the subsequent acts of the Common Council in a particular case cannot be regarded as giving validity to an act in violation of those ordinances, and that those ordinances as effectually exclude the idea of a valid ratification of what was illegally done as if they were incorporated in the charter. In placing our opinion upon the grounds above stated, we do not design to express any opinion upon this ground of objection. The case of Russ v. The Mayor, etc., (December Special Term, 1853,) and also the cases of Smith v. The Mayor, etc., (4 Sandford Rep. 221,) and Christopher, et al. v. The Mayor, etc., (13 Barbour Rep. 567,) may be profitably consulted in reference to the whole subject. We are constrained to say that the judgment herein must be reversed, and a new trial ordered. Costs to abide the event. Ordered accordingly.