American Pipe & Construction Co. v. Westchester County

• Decision Date: 06 July 1915
• Docket Number: 236.
• Citation: 225 F. 947
• Court: U.S. Court of Appeals — Second Circuit
• Parties: AMERICAN PIPE & CONSTRUCTION CO. v. WESTCHESTER COUNTY.

225 F. 947

AMERICAN PIPE & CONSTRUCTION CO. v. WESTCHESTER COUNTY.

No. 236.

United States Court of Appeals, Second Circuit.

July 6, 1915

This cause comes here on writ of error to review a judgment of the United States District Court for the Southern District of New York, which dismissed the complaint upon the ground that the plaintiff could not proceed at law.

The American Pipe & Construction Company, plaintiff herein, is a corporation organized and existing under the laws of the state of New Jersey, and duly filed the statement and designation required by the General Corporation Law of the state of New York in the office of the secretary of the state of New York, and has otherwise complied with the laws of that state authorizing foreign corporations to do business in New York. The Mack Paving & Construction Company, hereinafter mentioned, is a corporation organized and existing under the laws of the state of Pennsylvania, and it likewise has complied with the laws of the state of New York authorizing foreign corporations to do business in the state. The defendant is a municipal corporation created and existing under the laws of the state of New York and residing in the Southern district thereof.

The defendant, it is alleged, entered into a contract on January 16, 1908, with the plaintiff's assignor, the Mack Paving & Construction Company, hereinafter referred to as the Paving Company. The contract, however, was made directly with the Bronx Valley sewer commission. That commission was created by chapter 646 of the Laws of the State of New York for the year 1905, and by acts supplemental and amendatory thereto; and it is claimed that in what the commission did in this matter it was acting for and bound the county of Westchester. The contract of January 16, 1908, provided that the Paving Company should construct, complete, and equip for the county of Westchester certain sections of what is known as the 'Bronx Valley sewer.' That contract was modified subsequently by a farther contract of May 5, 1911. The contract as modified provided for the construction of a sewer of upwards of 15 miles in length, and is alleged to have been duly performed by and on behalf of the Paving Company, and the work was duly completed and delivered into the possession of the defendant, and was accepted by it on May 5, 1911.

The complaint covers 50 printed pages and sets up 55 claims amounting in the aggregate to $891,952.86, for which it asks judgment, with interest. It contains allegations of wrongful interpretation of the contract by the engineer in charge of the work of construction; the compelling of the contractor to construct the work in accordance with such erroneous and arbitrary adoption of prices for the work not provided in the schedule of unit prices; failure and refusal to certify, and false certification as to work done; arbitrary rejection of certain materials; arbitrary change of plan; prevention of work damages for delay; loss of interest from false certification of monthly estimates; wrongful deferring of part of final payment; wrongful delay in securing use of easements necessary for the prosecution of the work; increased cost of work, owing to arbitrary changes; arbitrary reduction of unit prices; additional expenses of removing debris accumulated during the delay wrongfully caused; and wrongful refusal to render decisions promptly.

The answer denies that there is any basis in law or in fact for the claims made by defendant, and it demands judgment against plaintiff for the sum of $223,330.44, with interest, for certain payments made to the plaintiff by the defendant which it is alleged were made illegally and without authority of law.

John C. Wait, of New York City (Herbert McKennis, of New York City, of counsel), for plaintiff in error.

Charles A. Van Auken, of New Rochelle, N.Y. (Arthur M. Johnson, of Mt. Vernon, N.Y., of counsel), for defendant in error.

Before LACOMBE, COXE, and ROGERS, Circuit Judges.

ROGERS Circuit Judge (after stating the facts as above).

This action has been brought against a public corporation to recover compensation for work done in the construction of portions of a public sewer. The court below has dismissed the complaint, and a question has been raised which is of great importance to these parties.

Although the contract was made with the Bronx Valley sewer commission the act of the Legislature of New York which created the commission and which gave it authority to construct the sewer declared that the contracts should be executed 'in triplicate by the contractor or contractors on the one part and the said sewer commissioners, acting for the county of Westchester, on the other part. ' The county of Westchester needed a sewer in the Bronx Valley for the protection of the citizens living there. The law under which the work was done authorized the sewer commissioners to construct the sewer within the county of Westchester, with an outlet sanitary sewer through the city of Yonkers, for the purpose of preserving the health of the people of Westchester county. The commissioners are directed to file their oaths with the clerk of the board of supervisors of Westchester county and to report annually to that board. The county treasurer of Westchester county is ex officio a member of the board of sewer commissioners, who are to carry on the work for the best interests of the taxpayers and the people of Westchester county. In fact, the act authorizing this sewer recognizes in almost every paragraph that the work is for the benefit of the county, and is to be built and maintained by it. It is not necessary to complicate a very plain situation by a strained and technical interpretation of the relations of the parties. In entering into the contracts with the Paving Company the sewer commissioners acted for the county of Westchester, and the county is bound by the contracts made by its duly authorized agents, and is liable to pay for the work done in accordance with the terms of the contracts.

In Horton v. Andrus, 191 N.Y. 231, 83 N.E. 1120 (1908), the constitutionality of the act which created the Bronx Valley sewer commission and authorized it to construct the sewer was sustained. The question came up in a taxpayer's action brought against the commissioners to restrain them from undertaking or prosecuting the work. The decision of the New York Court of Appeals in that case established the fact that the act not only did not violate the Constitution of the state, but also that the obligations incurred under the act were county obligations. The act authorized the issuance of bonds by the county to raise the funds necessary for the construction of the sewer. The state Constitution prohibits a county from incurring any debts except for county purposes. The court held that the act required the county to incur a debt, and that it was a debt for a county purpose. 'We think that it plainly is' a debt for such a purpose, said the court; and it was also said that the fact that the county was ultimately to be reimbursed by the local assessments provided by the act did not relieve the county from its primary obligation. It seems that a large part of Westchester county, including the towns of White Plains, Greenburgh, Scarsdale, East Chester, the city of Mt. Vernon, and part of the city of Yonkers, is to drain into this sewer. This territory, constituting the Bronx Valley, drains into the Bronx river, which is described as an insignificant stream and utterly inadequate longer to dispose of the sewage of this area, which has become quite densely populated. The act, therefore, authorized the construction of a trunk sewer to collect all this sewage and divert it from the Bronx to the Hudson river. The court said that the Legislature might have prescribed some special method of joint action between the several municipalities through which the sewer was to be constructed, but that it was not obliged to take that course. It added that:

'It seems to us more in conformity with the general frame of the state government that the prosecution of a work which exceeded the domain of any one municipality should be conferred upon the next higher political organization which was capable of performing it and within whose territory lay the whole improvement.'

Assuming, then, that the contract made by the Bronx Valley commissioners is the contract of Westchester county, and that the obligation is the county's obligation, and that the plaintiff is the creditor of the county, we come to inquire whether he can assert his rights in this action.

It is claimed that under the County Law of the state of New York (chapter 16 of the Laws of 1909 (Consol. Laws, c. 11) formerly chapter 686 of the Laws of 1892), a creditor of the county has only a choice of remedy as against the county; that he must either submit his claim to the county auditing officials for audit, which in this case would be to the Bronx Valley sewer commission, or without presenting the claim for audit bring an action at law. The complaint shows that the claims involved here were presented to the Bronx Valley sewer commission and that the board refused to audit them. It is argued from this that the refusal remitted the plaintiff to mandamus and certiorari, or an action in equity. We cannot concur in this construction of the law. As to these claims the Bronx Valley sewer commission are legally constituted agents of the county of Westchester for the auditing of the claims. They had the sole authority to audit them, and when they refused to do so...