People ex rel. Wells & Newton Co. of New York v. Craig

• Decision Date: 22 November 1921
• Citation: 133 N.E. 419,232 N.Y. 125
• Parties: PEOPLE ex rel. WELLS & NEWTON CO. OF NEW YORK, v. CRAIG, City Comptroller, et al.
• Court: New York Court of Appeals Court of Appeals

232 N.Y. 125

133 N.E. 419

PEOPLE ex rel. WELLS & NEWTON CO. OF NEW YORK,

v.CRAIG, City Comptroller, et al.

Court of Appeals of New York.

Nov. 22, 1921.

Application by the People of the State of New York, on the relation of the Wells & Newton Company of New York, for a peremptory writ of mandamus against Charles L. Craig, as comptroller of the City of New York, and others. From an order of the Appellate Division (197 App. Div. 407,189 N. Y. Supp. 324), reversing an order of the Special Term, granting the writ, relator appeals.

Reversed, and order of Special Term reinstated.Appeal from Supreme Court, Appellate Division, First department.

Thomas F. Conway, Joseph A. Kellogg, Thomas E. O'Brien, and John Power Donellan, all of New York City, for appellant.

John P. O'Brien, Corp. Counsel, of New York City (Willard S. Allen, John F. O'Brien, Arthur J. W. Hilly, Samuel J. Resnick, and Harold Taylor, all of New York City, of counsel), for respondents.

HOGAN, J.

October 25, 1915, relator entered into a contract with the board of education of the city of New York through its committee on buildings, for the installation of a heating and ventilating apparatus in Evander Childs High School, borough of the Bronx, New York City, the same to be completed within 120 days.

Due to defaults of contractors having in charge the construction of the building, relator was prevented from proceeding with the work under its contract within the time prescribed therein and for a period of upwards of two years subsequent thereto. About June, 1918, the relator, still deprived of opportunity to complete its contract, appreciating that the continued defaults on the part of the city had resulted in serious damages to it, announced to the board of education that it refused to continue the work under its contract, and refused to longer be bound thereby, unless the city and board of education would enter into a binding agreement with it to pay its claim then and theretofore asserted by it for extra expense incidental to the delays caused it in the carrying out of the contract in the previous prosecution of the work thereunder and in completion of the further work covered thereby.

July 3, 1918, the vice president of the board of education addressed a communication to the attorney for relator, in which he stated that no disposition existed on the part of the board of education to treat the situation other than with a spirit of fairness to relator, but in so doing it was essential that the board should act with caution, so as to preserve its rights against the sureties of defaulting construction contractors; further, that he was prepared to submit a resolution to the board of education reciting the facts and complications that had arisen, providing for a continuation of the work by the relator under the terms of the then contract until completion; that the board of education acknowledged that the relator would have a claim for extra expenses incidental to the carrying out of the contract, the amount of which was not definable at that time, that ‘said extra expenses arise because of certain delays and the enhanced prices of labor and materials due to present day extraordinary conditions'; that upon completion of the work to be performed under the existing contract the board of education will entertain a claim in detail and settle the same either (1) by agreement, (2) by arbitration, or (3) by judicial decision on agreed state of facts. ‘If you will assent, I will offer the requisite resolution.’

Upon receipt of such communication relat, or indorsed upon the same its acceptance of the terms proposed and an agreement to immediately resume work. Thereafter, and on the same day, July 3, 1918, the board of education adopted a resolution, the preamble of which recited the contract of October 25, 1915, between it and the relator; that relator had been paid thereon the sum of $50,823, leaving a balance of work in a state of performance or being performed amounting to $23,947; that completion of the work thereunder had been delayed by reason of the failure of the original construction contractor to perform the work required under his contract, and such contractor had been declared in default and his contract terminated in the interest of the board; that the construction work had been relet three times, due to defaults, and the interests of the board demand the completion of the high school building without further delay. The resolution adopted was in substance that work under the contract with relator be continued until completion; that the board of education acknowledges that, by reason of continuation of the contract by relator, the latter will have a claim for extra expense, the amount of which is not definable at this time, the said extra expense arising out of delays on the part of other contractors and the enhanced prices of labor and materials due to present-day extraordinary conditions; that the board of education, upon completion of the work required to be performed under the existing contract, will entertain a claim in detail and settle the same by either one of the following methods: (1) By agreement; (2) by arbitration; or (3) by judicial decision on an agreed state of facts; that the work called for under the contract be proceeded with, without delay, under the direction of the superintendent of school buildings.

Relator thereupon resumed work under its contract, and fully completed the same in May, 1920, notwithstanding additional delay caused by defaults of construction contractors, and thereupon employed two several certified public accountants to make an examinationand audit of its books of account relating to the contract with the board of education. The pay rolls for labor, the bills for purchase of materials, etc., of relator were compared with its books and found to be correct, and a detailed statement of the same rendered by the accountants to relator. The statement, together with supporting tabulations or schedules of cost, was submitted to the board of education. The statement prepared by the accountants fixed the total direct cost to relator $105,480.69, plus overhead of $18,986.52, or a total of $124,467.21, and added thereto as a profit for doing the work 10 per cent., amounting to $12,446.72, making in the aggregate $136,913.93.

In June following, the board of education requested and relator furnished to it affidavits of the public accountants who had made the examination and audit for relator. Such affidavits made reference to the statement already made, and further stated that the rates and charges for labor and materials agreed with the rates and charges appearing on the pay rolls, records, and books of account of relator; that the rates charged for labor were the rates actually paid; that the prices charged for materials were the prices actually paid for the same; that no interest charges had been made for money used; that the profits and overhead expenses were reasonable. The affidavits were supported by an affidavit of the president of relator.

The claim was referred to the auditor of the board of education, who made further inquiry as to correctness of the same. On July 12th one of the accountants made a further report to such auditor, in which was contained a detailed statement of the wages paid by relator to various classes of mechanics during the various years from the time the work commenced in October, 1915, to the completion of the same in 1920. Accompanying the statement there was furnished the auditor of the board of education a detailed statement of rates of compensation paid to mechanics, etc., which rates appeared in a schedule prepared by the Building Trades Association, also a like statement furnished by heating and piping contractors of the city of New York.

On July 22, 1920, the auditor of the board of education submitted a report to the president of the board, in which he recited at length all the foregoing facts in detail and submitted all documents relating thereto, and stated that from the evidence which the bureau had secured, it seemed that the total direct cost plus overhead was $124,467.21, and plus 10 per cent., for profit, $136.913.93, and——

‘The bureau is without any evidence which we can use to offset or deny the claim, nor does it appear that it was the original intention of the board of education to do other than meet the situation in a fair and reasonable way.’

He suggested the settlement of the claim was a matter for determination by the board, either by allowance in full or by some method of compromise which might be agreed upon and acceptable to all parties concerned, and, whatever sum or allowance the board deemed proper to make, he believed it would be necessary to submit to the board of estimate and apportionment a special estimate, under subdivision 8, section 877, Education Law (Consol. Laws, c. 16), to meet same.

July 30, 1920, a resolution was adopted by the board of education wherein it requested the board of estimate and apportionment to——

‘appropriate the sum of $62,143.93, such appropriation or so much thereof as may be required to be used for the purpose of making payment to the Wells & Newton Company of New York of the amount found to be due and resulting from work performed at the Evander Childs High School, Borough of the Bronx, in accordance with the terms and stipulations contained in preambles and resolutions adopted by the board of education on July 3, 1918, the said preamble and resolutions continuing in performance a contract for the work of installing heating and ventilating apparatus at the named school building, entered into between the Wells & Newton Company of New York and the board of education on October 25, 1915.’

The amount of $62,143.93, stated in the resolution, was the difference between the sum of $136,913,93, hereinbefore referred to, and $74,770, theretofore paid to relator.

August 6, 1920, when the board of estimate and apportionment...