Lew Morris Demolition Co., Inc. v. Board of Ed. of City of New York

• Decision Date: 08 July 1976
• Citation: 355 N.E.2d 369,387 N.Y.S.2d 409,40 N.Y.2d 516
• Parties: , 355 N.E.2d 369, 10 A.L.R.4th 925 LEW MORRIS DEMOLITION CO., INC., Appellant, v. BOARD OF EDUCATION OF the CITY OF NEW YORK, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 409

387 N.Y.S.2d 409

40 N.Y.2d 516, 355 N.E.2d 369, 10

A.L.R.4th 925

LEW MORRIS DEMOLITION CO., INC., Appellant, v. BOARD OF EDUCATION OF the CITY OF NEW YORK, Respondent.

Court of Appeals of New York.

July 8, 1976.

Paul M. Godlin, New York City, for appellant. W. Bernard Richland, Corp. Counsel, New York City (Leonard Koerner, Stanley Buchsbaum and L. Kevin Sheridan, New York City, of counsel), for respondent.

COOKE, Judge.

The issue here is whether a contractual period of limitations bars plaintiff's claim for money due under the contract.

The facts are not in dispute. On October 18, 1956, plaintiff, Lew Morris Demolition Co., Inc., entered into an agreement with defendant, the Board of Education of the City of New York, for the performance of certain demolition work at P.S. No. 3, a public school site in Brooklyn, for $18,850. While work was in progress and in May of 1957, an employee of another contractor performing tasks at an adjacent building was struck by a brick and fatally injured. The administratrix of the estate of the deceased employee instituted a wrongful death action against Lew Morris Demolition Co., the Board of Education and decedent's employer. In turn, the board served a cross claim seeking indemnity against its codefendants. On January 22, 1959, the board passed a resolution accepting plaintiff's work and recommended payment of $16,650. Payment, however, was withheld because of the pending lawsuit and a condition set forth in article 49 of the contract, which so far as pertinent, provided: 'Art. 49. If any claim is made against The City or The Board for any act or omission of The Contractor, The Comptroller may withhold the amount of such claim or so much thereof as he may deem necessary, as security against such claim, from any money due or to become due hereunder, until such time as the commencement of an action thereon would be barred by law or until final adjudication of such action by a Court of competent jurisdiction.'

In the wrongful death action, a verdict was returned in favor of the administratrix and against the board, but Lew Morris Demolition Co. was exonerated. The trial court, however, granted the board's cross claim against Lew Morris Demolition Co. On appeal, the Appellate Division reversed the judgment, which directed recovery by plaintiff therein against the board and recovery over by the board against Lew Morris Demolition, and dismissed both the complaint and the cross complaints (Senkbeil v. Board of Educ., 23 A.D.2d 587, 256 N.Y.S.2d 831). On October 20, 1966, this court affirmed the order of the Appellate Division (18 N.Y.2d 789, 275 N.Y.S.2d 273, 221 N.E.2d 813).

Thereafter and on December 27, 1966, plaintiff filed a notice of claim with the board for $24,383.24. On the same day, the parties entered into a written stipulation under which defendant 'hereby determines and offers to make partial settlement in the amount of $13,650.00', receipt thereof being acknowledged upon the understanding that said amount is paid 'not as a final payment or payment of any character under said contract, but as a partial settlement, pursuant to the above resolution of the Board of Education, of and on account of the aforesaid claim and without prejudice to the rights of either party with respect to the balance of the above numbered claim.'

It was not until January 26, 1968 that plaintiff served upon defendant a summons and complaint demanding payment of the claimed $10,733.24 balance. This figure was arrived at by adding to the contract price of $18,850 a '(c) laim for increased cost of work and extra work entailed In performing the contract during winter weather not contemplated in plaintiff's bid for the work' (emphasis supplied) in the sum of $5,533.24, for a total of $24,383.24, and then deducting the $13,650 payment. Defendant moved for summary judgment, contending that the action was time-barred by the limitation period found in article 67 of the contract. Said article, in part, provides: 'Art. 67. No action shall lie or be maintained against The Board of The City upon any claim based upon this contract or arising out of this contract or out of anything done in connection with this contract, unless such action shall be commenced within one year after the date of acceptance of the work under this contract by The Board; or if the contract provides that any part of the moneys earned under the contract be retained for any periods after such acceptance, actions to recover such retained moneys be commenced within six months from the date when such retained moneys shall become payable under the terms of the contract'. The Civil Court ruled that the December 27, 1966 stipulation constituted an acknowledgment of the debt by defendant so as to revive, pursuant to section 17--101 of the General Obligations Law, the one-year limitation period. It was reasoned that the suit, commenced one year and a month after the stipulation, was timely since plaintiff was required to wait one month after filing its notice of claim before initiating suit.

In reversing and granting summary judgment to defendant, the Appellate Term, one Justice in dissent, held that the stipulation did not revive the contractual limitation period because the 'acknowledgment that plaintiff had a claim against defendant was not tantamount to the acknowledgment of existence of a debt.' An Appellate Division majority of three Justices affirmed, without opinion, two Justices dissenting on the dissenting memorandum at Appellate Term.

Section 17--101 of the General Obligations Law provides: 'An acknowledgment or promise contained in a writing signed by the party to be charged thereby is the only competent evidence of a new or continuing contract whereby to take an action out of the operation of the provisions of limitations of time for commencing actions under the...