Todd Dry Dock Eng. & Repair Corp. v. City of New York

• Decision Date: 16 November 1931
• Docket Number: No. 11.,11.
• Citation: 54 F.2d 490
• Parties: TODD DRY DOCK ENGINEERING & REPAIR CORPORATION v. CITY OF NEW YORK.
• Court: U.S. Court of Appeals — Second Circuit

54 F.2d 490 (1931)

TODD DRY DOCK ENGINEERING & REPAIR CORPORATION v. CITY OF NEW YORK.

No. 11.

Circuit Court of Appeals, Second Circuit.

November 16, 1931.

Arthur J. W. Hilly, of New York City (William J. Leonard and Lester W. Easton, both of New York City, of counsel), for appellant.

E. Curtis Rouse, of New York City, for appellee.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

L. HAND, Circuit Judge.

The city was the owner of a dredge which it wished to have generally repaired and overhauled. It advertised for bids at a lump sum under its usual form of contract with detailed specifications; the libellant was the lowest bidder, was awarded the job in June, 1922, and began to perform. As is usual in such cases, disputes at once arose between the libellant and the city's inspectors and engineers as to what work must be done, the officials demanding more than the contractor admitted to be required by the contract. After some fruitless correspondence the contractor appealed to the dock commissioner, who directed him to comply with the demands, and present any claim to the comptroller under section 246 of the City Charter (Laws N. Y. 1901, c. 466 as amended by Laws N. Y. 1910, c. 683). If he refused to comply, the commissioner threatened to take the dredge away, complete the work and charge the surety. The contractor acceded, and having done what was required, presented his claim to the comptroller, who presumably rejected it, though nothing appears in the record. Thereupon he brought suit, which came on to be heard in court and went forward until the judge, seeing that it would involve separate examination of all the sixty-seven items of the claim, sent it to a special commissioner, who completed the evidence, filed a report disposing of each item, and recommended that out of a total of about $20,000, $16,000 should be allowed. The judge confirmed this without change, and the city appealed.

In ordinary cases if an owner demands more than is called for by a contract like this, the contractor may protest and perform, and later sue on a quantum meruit, but he may not recover for the extra work as a breach. The fact that the contract provided that it should not be modified except in writing would not of course have affected a later oral contract if properly authorized, or an obligation upon a quantum meruit. However, section 419 of the City Charter (Laws N. Y. 1901, c. 466, as amended by Laws N. Y. 1922, c. 661) provides that contracts for supplies of over one thousand dollars shall be let on bids, and this prevents recovery for extra work though ordered by the proper authorities unless the formalities are complied with. Conceivably it might not prevent recovery on a quantum meruit, but that would be for the benefit conferred and not for the cost of the work; and there is no proof at bar of the first. Owing to this limitation a contractor with the city on being ordered to do extra work must get a new contract let on bids. Practically he can do nothing but stop the work, since he is forbidden to complete it as prescribed, and sue for what he has done and for his lost profits. To remedy the supposed injustice so arising the New York Court of Appeals decided that in cases of municipal contract the contractor might perform the extra work exacted and recover the cost. Gearty v. City of New York, 171 N. Y. 61, 63 N. E. 804. This has no relation to a quantum meruit, but is allowed as an action for damages on the breach. This doctrine is well-settled and we have ourselves followed it. American Pipe Co. v. Westchester County (C. C. A.) 292 F. 941. It is confined to public corporations, cities, towns and the like, and is rather a part of local and municipal, than of general or commercial, law. Detroit v. Osborne, 135 U. S. 492, 10 S. Ct. 1012, 34 L. Ed. 260; American Surety Co. v. Bellingham Nat. Bank, 254 F. 54 (C. C. A. 9); Boston v. McGovern, 292 F. 705, 712 (C. C. A. 1). We accept it as controlling, regardless of whether we could ourselves have reached the same result unaided.

There is a variant depending upon the case of Borough Construction Co. v. City of New York, 200 N. Y. 149, 93 N. E. 480, 140 Am. St. Rep. 633, under which, if the demand is flagrantly beyond the specifications, the contractor must stand his ground and refuse, come what may. It appears to us that this exception is not applicable here. It originated in a case where the officials compelled a contractor to put in an elevator and lights, by which access might be made more genial for those attending the festivities incident to the opening of a New York sewer, the work contracted for. That had so plainly nothing to do with the sewer that the contractor stood at no legal risk in refusing, however much he might suffer indirectly from the outraged sensibilities of those in charge. Here all the disputes affected to concern repairs or additions to the dredge, and really did; the only room for doubt was whether they fell within the contract. While it is clear to us that most of the items did not, we hold that fact irrelevant; else the exception will swallow the doctrine, which in any case necessarily presupposes that the demands are excessive.

All this is beside the question as to how far the orders of the dock commissioner or his representatives to perform the extra work, were conclusive upon the contractor. The contract gave the commissioner power to "determine the amount, the quantity or quality of the work," "all questions in relation to said work and the performance thereof" or "which may arise relative to the execution of this contract"; and his "decision shall be final and conclusive." In addition the engineer might reject all work as not complying with the specifications; but as no question of improper performance arises, we may disregard this. In Barker v. N. Y., 242 F. 350, we said, though it was not perhaps necessary to our decision, that a clause substantially identical with that just quoted gave an engineer general power to pass on all questions arising, apparently including the meaning of the contract, and that his decision was final, when it was honestly exercised, that is, really exercised at all; and so far as we know, it has not generally been held that such a power stops short of interpreting the meaning of the terms. Goltra v. Weeks, 271 U. S. 536, 46 S. Ct. 613, 70 L. Ed. 1074; U. S. v. Mason & Hanger Co., 260 U. S. 323, 43 S. Ct. 128, 67 L. Ed. 286; J. H. Sullivan Co. v. Wingerath, 203 F. 460 (C. C. A. 2); American, etc., Co. v. Westchester County, 292 F. 941 (C. C. A. 2); Thompson-Starrett Co. v. La Belle Iron Works, 17 F.(2d) 536 (C. C. A. 2). We did however squarely so rule in Dock Contractor Co. v. City of New...