City of Marlborough v. Cybulski, Ohnemus & Associates, Inc.

• Decision Date: 21 April 1976
• Parties: CITY OF MARLBOROUGH v. CYBULSKI, OHNEMUS & ASSOCIATES, INC. (and a companion case 1 ).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 716

346 N.E.2d 716

370 Mass. 157

CITY OF MARLBOROUGH

v. CYBULSKI, OHNEMUS & ASSOCIATES, INC. (and a companion case

¹

).

Supreme Judicial Court of Massachusetts, Middlesex.

Argued March 4, 1976.

Decided April 21, 1976.

Robert B. Stimpson, Lynn, for Cybulski, Ohnemus & Associates, inc.

David P. Gadbois, City Solicitor (Allen Robinson, Boston, with him) for the city of Marlborough.

Before HENNESSEY, C.J., and REARDON, QUIRICO, BRAUCHER and WILKINS, JJ.

QUIRICO, Justice.

These are two cases brought in the Superior Court under G.L. c. 251 (Uniform Arbitration Act for Commercial Disputes), one an application by Cybulski, Ohnemus & Associates, Inc., an architectural firm (architect), to confirm the award of an arbitrator, and the other an application by the city of Marlborough (city) to vacate the award. The architect's application to confirm was denied, and the city's application to vacate was allowed. The architect has appealed in both cases. We affirm.

We summarize the relevant facts. On January 25, 1971, the city of Marlborough appropriated $5,000 for the hiring of an architect 'to provide estimates and plans to renovate the Old Post Office into a Central Kitchen and Bakery.' It is alleged by the city in its application to vacate and in an affidavit which is made a part thereof that 'since January 25, 1971 and to the present there has been no further appropriation relative to . . . (this project).' This allegation was not denied by the architect in a responsive pleading or otherwise. Mass.R.Civ.P. 8(b), 12, 365 Mass. ---, --- (1974). On February 11, 1971, the mayor of the city entered into a contract with the architect by which the architect agreed to perform the services described above. The contract provided for an initial payment of $4,000 by the city to the architect and payment thereafter for specified additional services at the rate of $25 an hour. The contract contained an arbitration clause which provided in part that '(a)ll claims, disputes and other matters in question arising out of, or relating to, this Agreement or the breach thereof shall be decided by arbitration . . . (and that t)he award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.' ²

Subsequent to entering into the contract, the architect commenced the performance of its obligations thereunder, in the course of which it submitted bills in an amount which equalled and then exceeded the sum of $5,000, which had been appropriated by the city for the project in question. The architect has conceded that it received payment in the amount of $5,000 under the contract. It is apparently undisputed, however, that the architect received no payment for its bills in so far as they exceeded this amount. Despite the nonpayment by the city of the excess amount, the architect continued for some time to render performance under the contract. Thereafter, a dispute arose out of the refusal of the city to make further payments, and the matter was submitted to arbitration pursuant to the provisions of the arbitration clause in the contract. Hearings were conducted, and the arbitrators made an award of $17,800 to be paid by the city to the architect, with the fees and expenses of arbitration to be borne equally by the parties.

The issue thus presented is whether in the circumstances of these cases the city may be held liable on its contract with the architect for an arbitration award which is in excess of the amount appropriated by the city for payment of the obligations incurred under such contract. We hold that it may not.

General Laws c. 44, § 31, as amended through St.1969, c. 505, § 7, provides in pertinent part that '(n)o department financed by municipal revenue, or in whole or in part by taxation, of any city or town, except Boston, shall incur a liability in excess of the appropriation made for the use of such department . . . (with an exception for certain emergency situations which is not material to the present cases).' It is well settled that '(p)ersons dealing with a municipality must take notice of limitations of this kind upon the contracting power of the municipality and are bound by them and cannot recover upon contracts attempted to be made in violation of them.' Duff v. Southbridge, 325 Mass. 224, 228, 90 N.E.2d 12 (1950), quoting from Adalian Bros. v. Boston, 323 Mass. 629, 631, 84 N.E.2d 35, 36 (1949), and cases cited. Arthur R. Murphy, AIA, & Associates, Inc., v. Brockton, 364 Mass 377, 380--381, 305 N.E.2d 103 (1973). McHenry v. Lawrence, 295 Mass. 119, 122, 3 N.E.2d 262 (1936). Dyer v. Boston, 272 Mass. 265, 273--274, 172 N.E. 235 (1930). Moreover, we have noted that the purpose and policy of G.L. c. 44, § 31, is 'to set rigid barriers against expenditures in excess of appropriations.' McCarthy v. Malden, 303 Mass. 563, 565, 22 N.E.2d 104 (1939). Arthur R. Murphy, AIA, & Associates, Inc. v. Brockton, 364 Mass. at 380, 305 N.E.2d 103.

The...