Deverho Const. Co., Inc. v. State

Decision Date08 June 1978
Citation407 N.Y.S.2d 399,94 Misc.2d 1053
PartiesDEVERHO CONSTRUCTION COMPANY, INC., Claimant, v. The STATE of New York, Defendant.
CourtNew York Court of Claims
Berman, Paley, Goldstein & Berman, New York City, by George D. Cochran, New York City, of counsel, for claimant

Louis J. Lefkowitz, Atty. Gen. by John F. Forner, III, Asst. Atty. Gen., for the State.


This claim seeks payment for work performed by Deverho Construction Company, Inc. (Deverho), under a contract with the State of New York (State), which provided for the reconstruction of a portion of the Newburgh-Campbell Hall State Highway. The contract was let on April 25, 1974, and was awarded to claimant on April 30, 1974. Pursuant to section 112 of the State Finance Law, the Comptroller's approval was obtained on June 14, 1974.

Claimant's first cause of action concerns item 619.01 of the contract entitled Basic Maintenance and Protection of Traffic, and relates to two distinct time periods one at the beginning and one at the end of the contract's duration. 1 Basic Maintenance and Protection of Traffic is defined by the Standard Specifications of 1973 under paragraph 619-102 as follows:

". . . '(t)raffic shall be maintained over a reasonably smooth traveled way which shall be so marked by signs, delineators, guiding devices and other methods that a person who has no knowledge of conditions may safely and with a minimum of discomfort and inconvenience ride, drive or walk, day or night, over all or any portion of the highway under construction where traffic is to be maintained.' " (Transcript, Vol. I, pp. 150, 151.)

". . . 'maintain the drainage facilities and other highway elements, old or new, including detours,' . . ." (Transcript, Vol. I, p. 155.)

Also pertaining to this item, the following appears on page 26 of the contract documents under "Maintenance of Traffic":

"The Contractor shall be required to maintain and protect two-way traffic and protect the public from damage to person and property, within the limits of and for the duration of the contract in accordance with all specifications for Basic Maintenance and Protection of Traffic, Item 619.01.

In order to maintain effective traffic control, the Contractor shall be responsible for continuous maintenance to make sure all signs, cones, flashing lights, etc. are in place and in good condition and that the traveled way is in a safe and reasonable condition. The Engineer will be the sole judge of the effectiveness of the Contractor's efforts towards protection of traffic and personnel.

The Contractor shall maintain and protect traffic by so conducting his work operations that the public is subjected to a minimum of delay and hazard."

The nature of this item was characterized by Nathaniel Gartmen, a part owner and one of the managers of Deverho on this contract, as "payment for exposure" (Transcript, Vol. I, p. 69), representing the cost of The dispute over this item concerns two periods one from May 21st to June 19th and the other from October 16th to December 20th (1974). In regard to the former, claimant contends that payment is owed for Basic Maintenance and Protection of Traffic starting on May 21st, by virtue of the contractor's having performed work at the site on that date, pursuant to a request by the State. The facts are that on May 14th a pre-construction meeting was held at which a plan for performing the work was discussed. Subsequently, Mr. Gartman was instructed to provide certain assistance to the State's surveyors. Deverho was informed by Mr. Lawrence Porvaznik, the State's Engineer-in-Charge, that it was obligated to do so under the contract. 2 These instructions were given at a time when the contract had not yet been approved by the Comptroller. On May 21st, the State surveyors commenced their work and claimant supplied the necessary assistance. Claimant had men on the job on May 21, 22, 23, 24, and 28 and June 12, 13 and 14, whose duties consisted of clearing brush, marking and removing trees and laying out stakes. Nothing of a positive nature was done by way of Basic Maintenance and Protection of Traffic on those dates, since the work was not near the highway. During this period, claimant was aware that if the Comptroller's approval were not obtained, no payment for work performed would be forthcoming. Subsequently, however, on June 17, 1974, Deverho was notified that the contract had been approved by the Comptroller, and on June 19th, it resumed work at the site.

procuring insurance for the protection of the public and to offset any potential liability, as well as for providing flagmen and other services as the need arose. Payment for Basic Maintenance and Protection of Traffic was on a per calendar day basis at the rate of $130.00 per day for the duration of the contract.

The State contends that the contract officially began on June 19th and that claimant is not entitled to any payment for Basic Maintenance and Protection of Traffic prior to that date, even though some work was admittedly performed prior thereto. The basis for its contention is section 112 of [94 Misc.2d 1058] the State Finance Law, which provides in relevant part as follows:

"Before any contract made for or by any state department, board, officer, commission, or institution, shall be executed or become effective, when such contract exceeds one thousand dollars in amount, . . . it shall first be approved by the comptroller and filed in his office."

Claimant's position is that the contract commenced when it first rendered performance (May 21st). Claimant relies on the contract's definition of "duration", as set forth in the Standard Specifications of 1973, p. 394, par. 619-1.10, as follows:

". . . 'the duration of the Contract for the purpose of this work, Shall be from the date any work is started on the Contract, including any preparatory work or moving in equipment, signs, offices, shops and the like, until the date the Contract is officially accepted.' " (Transcript, Vol. I, p. 107.) (Emphasis added.)

The State maintains that the word "contract" in the definition of "duration" presupposes the existence of a valid, legally binding contract which, under section 112 of the State Finance Law, did not occur until June 14th. Notwithstanding this position, the State did in fact pay claimant for a number of items of work which were also performed prior to June 14th. The State seeks to distinguish these items from Basic Maintenance and Protection The State's argument raises two issues: (1) whether a contractor has a legal right to be paid for work performed after a contract has been awarded, but prior to its approval by the Comptroller, and (2) whether in this case, the word "contract" in the definition of "duration" presupposes the prior approval of the Comptroller.

of Traffic on the theory that they were bid on a "lump sum" basis as opposed to per calendar day. Of these lump sum items, the State says in its brief at page 7: "They are paid for when the contract becomes effective, regardless of when performed. 3

Within the scope of its application, section 112 of the State Finance Law constitutes a complete bar to any payment for work performed on the State's behalf pursuant to an incipient contract which is never approved by the Comptroller. (Blatt Bowling and Billiard Corp. v. State of New York, 14 A.D.2d 144, 217 N.Y.S.2d 766; Starling Realty Corp. v. State of New York, 286 N.Y. 272, 36 N.E.2d 201; Belmar Contracting Co. v. State of New York, 233 N.Y. 189, 135 N.E. 240.) In the present case, however, the contract Was approved by the Comptroller; the question is whether the Statute's application should be extended to bar payment for work performed on the contract prior to the time when approval takes place. In interpreting this provision of law, it is the Court's duty to ". . . give it a reasonable and sensible meaning in the light of the evil at which it was directed." (Matter of Excelsior Pictures Corp. v. Regents of the University of the State of New York, 3 N.Y.2d 237, 245, 165 N.Y.S.2d 42, 48, 144 N.E.2d 31, 36.) The purpose of section 112 of the State Finance Law is to prevent officers and agents of the State from creating liabilities for which there is no appropriation and to provide a check upon the making of improvident or extravagant contracts to the detriment of the State. (See 1915 Op.Atty.Gen. 28.) The public policy underlying the Rule is sound and of great benefit to the State, although its application may have harsh consequences. It sometimes happens, for example, that a State agency solicits and accepts substantial benefits from a contractor in advance of the Comptroller's approval. If the contract is subsequently rejected, the contractor may suffer substantial loss. In such a case, there is no recourse to the equitable remedies of Quantum meruit and estoppel. (Blatt Bowling and Billiard Corp. v. State of New York, supra.)

The result sought here by the State is equally harsh though hardly justified by any legitimate policy. The Comptroller's approval was in fact obtained, indicating that funds were available to pay for the work and that the contract was not considered improvident. Hence, the policy underlying the Statute was fully satisfied and effectuated. To construe the Statute as constituting a bar to recovery in the instant case would extend its application far beyond its intended purpose. Moreover, it would result in a manifest injustice. As Judge CONWAY stated in Matter of Breen v. N.Y. Fire Dept. Pension Fund, 299 N.Y. 8, 19, 85 N.E.2d 161, 166:

"The general rule of statutory construction is that it is always presumed, with reference to a statute, that no unjust or unreasonable result was intended by the Legislature and the statute, unless the language forbids, must be given an interpretation and application consonant with that presumption. (Matter of Mayer, 209 N.Y. 386, 389, 103 N.E. 713, 714; People v. Santoro, 229 N.Y. 277,...

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