Rapid Transit Subway Const. Co. v. City of New York

• Decision Date: 19 July 1932
• Parties: RAPID TRANSIT SUBWAY CONST. CO. v. CITY OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

259 N.Y. 472

182 N.E. 145

RAPID TRANSIT SUBWAY CONST. CO.

v.CITY OF NEW YORK.

Court of Appeals of New York.

July 19, 1932.

Action by the Rapid Transit Subway Construction Company against the City of New York. From a judgment of the Appellate Division (231 App. Div. 721, 246 N. Y. S. 869), affirming a judgment on a directed verdict for plaintiff, as modified with defendant's consent by increasing the amount of the verdict, plaintiff appeals.

Reversed, and new trial granted in part and modified and affirmed as modified in part.

Appeal from Supreme Court, Appellate Division, First Department.

James L. Quackenbush, Albert J. Kenyon, and Frank D. Allen, all of New York City, for appellant.

Arthur J. W. Hilly, Corp. Counsel, of New York City (Charles Blandy, Willard S. Allen, Frank R. Rubel, and Charles V. Nellany, all of New York City, of counsel), for respondent.

LEHMAN, J.

On or about August 7, 1914, the city of New York, acting by the Public Service Commission, entered into a contract with the plaintiff, Rapid Transit Subway Construction Company, whereby the plaintiff agreed to furnish at unit prices all the labor and materials necessary for the construction of a part of the Seventh Avenue-Lexington Avenue Rapid Transit Railroad, known as route 5, section 7, in accordance with the terms of the contract and the plans and specifications incorporated in it.

The contract required the plaintiff to begin actual work within sixty days after the date of delivery of the contract and to complete the work within thirty-one months after such delivery and, in the event of delay in completion of the work, ‘beyond the period prescribed or beyond the period to which such time may be extended by resolution of the Commission for good cause shown,’ the plaintiff agreed to pay the sum of $300 as stipulated damages for each day's delay. According to the certificate of the engineer of the Public Service Commission, the work was completed on November 1, 1918, more than eighteen months after the expiration of the period prescribed in the contract, but the commission duly extended that period by resolution.

The contract provides that ‘whenever in the opinion of the Engineer the Contractor shall have completely performed the contract the Engineer shall so certify in writing and in duplicate to the Commission, and in his certificate shall state from actual measurement the whole amount of work done by the Contractor * * *. Upon the receipt of such certificate the Commission shall forthwith prepare and certify two final vouchers * * *. One of such final vouchers shall be payable by the City. * * * The City shall pay the amount due on such voucher payable by it on or before the expiration of ninety (90) days after the acceptance of the work herein agreed to be done by the Contractor and the filing of a certificate of the completion and acceptance of the work in the office of the Comptroller signed by the Engineer and the Commission.’

Promptly after the work was completed the plaintiff requested that a certificate of the completion and acceptance of the work should be prepared and signed. The final certificates and vouchers for payment were not prepared and signed till December 7, 1920, more than two years after the date of completion.

During the interval the engineer made five partial estimates of the work, theretofore performed by the contractor, for which the contractor had not been paid. The plaintiff received payments aggregating $66,045.44 upon such partial estimates. The final estimate and certificates showed that a balance of $61,119.65 remained due and payable to the plaintiff from the city of New York. The plaintiff claimed that a much larger amount was due for work under the contract and as damages for various alleged breaches by the city of its own obligations under the contract. The contract provides that: ‘The acceptance by the Contractor of the final payment by the City aforesaid * * * shall be and shall operate as a release to the City from all claim and liability to the Contractor for anything done or furnished for, or relating to the work. * * *’ The plaintiff refused final payment for its work and presented its claim to the comptroller. Then it began this action. Thereafter, under a special agreement with the city, it received from the city the sum of $61,000, leaving only the sum of $119.65 due to it under the final certificate.

The complaint herein sets forth six causes of action involving numerous items of work for which, the plaintiff urges, it has not been paid in accordance with the terms of the contract and, in addition, several claims for damages for alleged defaults by the city under the contract. It demands judgment for sums which, with interest as claimed by the plaintiff, would amount to approximately one million dollars. After a protracted trial, a verdict in favor of the plaintiff was directed for the sum of $84,949.17. From the judgment entered on that verdict the plaintiff appealed to the Appellate Division, which modified the judgment by addition of the sum of $119.65, concededly due to the plaintiff under the final certificate, which through inadvertence had not been included in the original judgment.

Since the defendant did not appeal, we are concerned now only with those claims and items set forth in the complaint which were not allowed in the final certificate and for which recovery was denied by the courts below. The appellant urges that the trial judge erred in denying recovery for a considerable number of unrelated items. Each of these items must be examined separately, but in most instances the questions presented are narrow. The most serious questions, both in the amount involved and in the importance of the governing legal principles, relate to the denial of recovery for alleged neglect of the city in failing to furnish, within a reasonable time, drawings and directions which were requiredfor the prompt and orderly performance of the work.

In Litchfield Construction Co. v. City of New York, 244 N. Y. 251, 261, 155 N. E. 116, 118, this court held that, under a similar contract, the city was liable for damages caused to the contractor, by the failure of the engineer of the commission to furnish, with reasonable promptness, such directions and drawings as under the contract he was required to give. He acts for the city, and a ‘duty may be implied under such circumstances that he should act with due promptness, and not by delay or other act of commission or omission unreasonably hinder progress.’ The same rule applies here, and so the trial justice correctly held. The contract was signed in August, 1914. The contractor was required to construct a section of a subway railroad under the street. In the construction of the railroad steel beams and columns were required. Those beams and columns could be supplied only after they had been fabricated in accordance with ‘shop drawings' prepared by the contractor and approved by the commission, and the contractor could not prepare such drawings until the commission had furnished to it ‘working drawings' and plans. The section of the subway railroad which the plaintiff was required to erect was, for convenience, divided into seven subsections. Drawings were furnished by the commission for subsection 5 before the work of excavation, under the contract, was begun. Steel for that subsection was supplied by the mills before the excavation had progressed to the point where the erection of the steel could be begun. Work there proceeded in the order, and according to the method, planned in advance by the contractor, and the work in that subsection was completed within the stipulated period of thirty-one months. The drawings for subsections 1 to 4, to the south of subsection 5 and for subsections 6 and 7 to the north, were received from the commission between July and December, 1915; i. e., more than fifteen months after the plans were furnished for subsection 5. The evidence produced by the plaintiff indisputably establishes that the delay was due to the fact that the commission did not even begin the preparation of the necessary drawings till months after the contract was signed. It also appears that, as a result, the work could not be carried on as originally planned and its completion was delayed. Nevertheless the trial court denied the plaintiff any recovery for such delay, on the ground that, in fact, such delay caused no damages, and, at least as to subsections 1 to 4, that the delay was caused rather by the Interborough Rapid Transit Company, which controlled the plaintiff through stock ownership, than by the defendant. We can, in this opinion, state only the salient considerations upon which the trial judge reached these conclusions.

The Interborough Rapid Transit Company was the record and actual owner of all the stock of the plaintiff, except a few shares which were registered in the names of plaintiff's directors to enable them to qualify. In March, 1913, the city of New York entered into a contract, known as ‘Contract number 3,’ with the Interborough Rapid Transit Company, by which that company agreed to share the expense of the construction of a rapid transit railway and to operate the railway, when completed, in conjunction with other routes already operated by it. The earnings of all the routes so operated were then to be placed in a common fund and divided, in the manner specified in the contract, between the city and the company, after certain preferential payments were made to the company.

That contract provides, among other things: ‘Article 5. The precise number and the general location of tracks, and dimensions and other characteristics of the railroad, are generally indicated on the contract drawings and plans which bear date the 25th day of January, 1913 * * *. The railroad is to be constructed generally in accordance with such contract drawings and with the specifications (differing, however, so far as necessary to care for...