Belmar Contracting Co. v. State

• Decision Date: 18 April 1922
• Citation: 135 N.E. 240,233 N.Y. 189
• Parties: BELMAR CONTRACTING CO., Inc., v. STATE.
• Court: New York Court of Appeals Court of Appeals

233 N.Y. 189

135 N.E. 240

BELMAR CONTRACTING CO., Inc.,

v.STATE.

Court of Appeals of New York.

April 18, 1922.

Action by the Belmar Contracting Company, Incorporated, against the State of New York. From a judgment of the Appellate Division (194 App. Div. 69,185 N. Y. Supp. 734) modifying and as modified affirming a judgment of the Court of Claims in favor of the claimant, the State appeals.

Judgment of the Appellate Division and judgment of the Court of Claims entered thereon reversed, and original judgment of the Court of Claims affirmed, with costs.

See, also, 110 Misc. Rep. 429,180 N. Y. Supp. 494.

Crane, J., dissenting.

Appeal from Supreme Court, Appellate Division, Third Department.

Charles D. Newton, Atty. Gen. (C. D. Davie, of Albany, of counsel), for the State.

Charles B. Sullivan, of Albany, for respondent.

ANDREWS, J.

On August 5, 1915, the state advertised for bids for the improvement of a portion of a state highway. It called attention to the ‘information for bidders,’ the ‘specifications,’ and the ‘contract agreement’ on file in the office of the commission of highways. These papers stated that every bid must be accompanied by a cash deposit or a certified check or draft for 5 per cent. of the amount of the proposal, which would be forfeited if the bidder failed to enter into a contract should the same be awarded to it. Unless all the proposals are rejected, this award is to be made to the lowest responsible bidder, who within 10 days of notice of the award is to execute the contract in the form provided by the commission and furnish satisfactory bonds for its faithful performance. The work is to be finished within 80 working days. Time is said to be of the essence of the contract, and the contractor must pay as liquidated damages $10 for each day's delay not ordered by the commission. A bid under these conditions was submitted by the claimant. On August 25th it received notice in writing that it had been successful, and it was directed at once to execute the contract. It did so on September 1st and filed a bond. The form of its papers and the bond seem to have been satisfactory to the commissioner, and he placed upon them the indorsement ‘O. K.’ and his initials. Before he could execute the contract, however, on behalf of the state, it was necessary to secure the approval of the comptroller. State Finance Law (Consol. Laws, c. 56) § 16. This was obtained on September 14th, but the contract was not executed by the commissioner until October 20th, although he was repeatedly urged to sign it by the claimant. Because of this delay the latter was not able to complete the work in the fall of 1915, as it might have done had the contract been promptly executed after September 14th, and had it been permitted to begin construction within a reasonable time thereafter. It was not thought wise to leave the work partly finished during the winter, and by mutual consent the commencement was postponed until the spring of 1916. The work was finished during that year, but, because of the increased cost of labor and materials, at an expense of $10,716.05 greater than would have been required had it been completed during the preceding fall. For this amount a claim against the state was filed. It was rejected by the Court of Claims, but allowed by the Appellate Division. We are to determine whether this result may be sustained.

If the claimant is to succeed, it must be upon the theory that the parties, at least when the approval of the comptroller had been obtained, had come to an agreement upon a contract with all its terms and conditions. Then such an agreement may be enforced even if there be an understanding that it is to be embodied in a formal written instrument. A binding contract being thus in effect, the delay caused by the action of the state in preventing the bidder from beginning its work until the contract was formally executed was a breach thereof, and the resulting damages may be recovered against the state. Or it must be upon the theory that the state has contracted to make a contract within a reasonable time, and that it has broken this agreement. These are the positions taken by the Appellate Division. Or finally, upon the theory that, although there was no contract upon the acceptance of its bid, the claimant became bound under the penalty of forfeiting its deposit to execute it. These were not merely preliminary negotiations from which it might withdraw at pleasure. It must follow that, independently of any theory of contract, a correlative duty to complete within reasonable promptness all formal requirements rested on the state. Neither might it withdraw or repudiate the transaction. This would have been a wrongful act. So was unjustifiable delay. In either case, did this wrong damage the claimant, it should be compensated. On none of these theories do we think an award may be sustained.

There is no doubt of the general principle suggested by the Appellate Division. Sanders v. Pottlitzer Bros. Fruit Co., 144 N. Y. 209, 39 N. E. 75,29 L. R. A. 431, 43 Am. St. Rep. 757. But this principle is not applicable, as indeed that court admits, where, by legislative fiat, the parties may only be bound where a contract in writing is in fact executed. However fully their minds may have met, however complete their agreement as to every term and condition, all is unavailing if the subject-matter is the sale of real property. There is a like situation here. Section 130 of the Highway Law (Consol. Laws, c. 25) clearly...