Mayor of New York v. Brady

The questions in this case arise upon demurrers to the complaint, interposed by the respective-defendants, alleging that it does not state facts sufiicient to constitute a cause of action. The complaint purports to be a bill in equity, asking that several judgments, theretofore recovered by some of the defendants against the plaintiff, be. vacated and set aside; that they be adjudged inoperative as adjudications between the respective parties in any subsequent litigations; that certain actions pending in the Supreme Court between some of the defendants, as plaintiff, and the said plaintiff, as defendant, to recover alleged balances due on contract, be perpetually stayed, and that an accounting be had between the plaintiff herein and the several defendants, in respect to work done under such contracts, and .judgment for the parties entitled thereto according to the account thus-found. The relief demanded is predicated upon allegations, of fraud against John Brady in obtaining the contract on which the judgments were procured, and also frauds in its. performance. The frauds alleged.relate wholly to the cause of

The complaint proper is exceedingly voluminous and is-much extended by the addition thereto, as an appendix of the proceedings, evidence, affidavits and other documents used in several actions resulting in the judgments now sought to be vacated. It was apparently drawn with a view of presenting all of the facts in the case, for the purpose of securing a final decision as to the matters in controversy between the parties, without other litigation. Tire action grows out of transactions between the plaintifi and John Brady in respect to the construction of a street, which, concisely described, are substantially as follows: In March, 1883, the plaintiff ordered Minetyfifth street, between Tenth avenue and Riverside drive, to be regulated, graded, curbed and flagged. A surveyor was thereupon duly appoined to make the necessary surveys and estimates of the work required to be done for the purpose of advertising the letting of a contract for its performance, and the supervision of the work to be done thereunder. Such estimate was made and showed one thousand nine hundred and thirty cubic yards of earth excavation; fwenty-one thousand five hundred and forty cubic yards of rock excavation; two thousand eight hundred and fifty lineal feet of curb stonie, and ten thousand one hundred and twenty-five square feet of flagging, as the quantities of the respective kinds of work to be done. The contract was advertised under proposals, which stated that “ as the above-mentioned quantities, though stated with as much accuracy as is possible in advance, are approximate only, bidders are required to submit their estimates upon the following express conditions, which shall apply to and become part of every estimate received: 1. Bidders must satisfy themselves by personal examination of the location of the proposed work, and by such other means as they may choose, as to the accuracy of the foregoing estimate, and shall not, at any time, after the submission of an • estimate, dispute or complain of such statement, nor assert that there was any misunderstanding in regard to the depth of the excavation to be made or

Several bids for earth excavation largely exceeded Brady’s and others, although below it, exceeded a fair price therefor. Fair prices for this work were forty cents per yard for earth excavation; one dollar and fifty cents per yard for rock excavation, seventy cents per foot for curb stone, and twenty-five cents per square foot for flagging.

Upon the engineer’s estimates, Brady was the lowest bidder and the contract was thereupon awarded to him. The specifications attached to the contract provided that “boulders, blasted rock or broken stone will not be allowed for as rock, but must be included in the earth excavated, unless they are of a size to require blasting in order to be removed, which fact will be determined by the engineer. ÜSTo soft or disintegrated rock that could be properly removed with a pick will be allowed for 'as rock.”

The contract was executed in July, 1883, and the work commenced ' in August thereafter and Continued for a period of about one year. In September, 1883, the surveyor certified that the contractor had excavated two thousand cubic yards of earth and that there was due him therefor $11,200, after deducting thirty per cent authorized to be retained by the contract.

The city voluntarily paid the contractor the sum appearing to be due upon this estimate. In October thereafter the surveyor made a further certificate for three thousand five hundred additional cubic yards of earth excavation and one thou

A trial was had upon the issues thus joined, and judgment was rendered for the plaintiff February 9, 1885, for the amount claimed. This judgment was voluntarily paid by the city in March, 1885.

In May, 1884, the surveyor gave a further certificate stating that the amount of work done since the date of his third certificate was seven thousand one hundred and sixty-seven cubic yards of earth excavation and other items, making a gross amount of $57,386.91. The payment of this claim was refused by the city, and suit was brought thereon by the contractor’s assignee, Bernard Brady, in the Superior Court of Mew York in June, 1885. • An investigation of the claim was then made by the city and it concluded that it had no defense to the action. Mo answer or demurrer was interposed by the defendant, and judgment by default was taken by the plaintiff on August 21, 1885, for $37,670.84. This judgment was also voluntarily paid by the city. A final certificate was executed by the surveyor in September, 1885, stating that the total amount of work performed by the contractor was fourteen thousand six hundred and sixty-seven cubic yards of earth excavation at $117,336; ten thousand eight hundred and thirty-one cubic yards of rock excavation at $27.07; two thousand

The frauds, now alleged as the ground for setting aside the judgments referred to, consist of repetitions of the allegations used on the motion for a new trial, and others claiming that the plaintiff was induced to enter into the contract in question by the fraud of the contractor; that the original estimates were erroneous, and the contractor knew it, and the plaintiff, suspecting the fact, employed one Duffy to re-examine the locality, with a view of obtaining further information as to the correctness of such estimate ; that the contractor fraudulently procured said Duffy to omit such re-examination and report to the city officials that the original estimates were correct, and that the city officials were ignorant of such fraudulent intervention of the contractor until shortly before this suit was brought.

It is not claimed that the city has any additional proof of the frauds stated, except in respect to Brady’s alleged collusion with Duffy. The relief demanded is extraordinary and abnormal in its character, and violates the general rules relating to the determination of legal propositions. The plaintiff seeks to overthrow the rule by which the judgments of courts of competent jurisdiction are considered final and conclusive against collateral assaults, and to retry in another court issues which have already been tried and determined. It claims the right to recover back moneys from a person to whom they have been voluntarily paid in satisfaction of the obligations of a contract, and to rescind its own voluntary admissions made in legal proceedings, which have been used as the-basis of the judgments of the court. The conditions under which such claims can be supported require at least the proof of extraordinary circumstances, the absence of laches, and the establishment of a case showing no reasonable doubt as to the conclusiveness of the discovered proof, the justice of the claim, and the merits of the controversy.

We do not think that the case made by the complaint is of

The entire grievance of the plaintiff, when reduced to its simplest form of statement, consists of a complaint that its own surveyor has classified certain excavations as earth, which should have been described as rock, and the measure of the relief demanded is that the court make a classification, which the contract requires the surveyor to make. There is no com

By the contract the surveyor was to determine the nature of the excavation, and he has adjudged it to be earth and not rock; and in the absence of fraud or collusion, this determination is conclusive upon the parties.

Neither does the complaint establish any foundation for the claim that the contract was fraudulently obtained by Brady. It is obvious from a mere inspection of the bids submitted on the letting of the contract that the various bidders based their expectation of profits from the work, upon an erroneous classification by the city engineer of earth excavation. Eight of the bidders proceeded upon this assumption, and, therefore, bid exorbitant prices for that work and an inadequate price for other work. It is thus apparent .that after full notice that a large majority of the bidders believed the true quantity of earth excavation to be much larger than that estimated by the city officers, the latter voluntarily made the contract by which they bound their principal to piay to the contractor more than twenty times the real value of such excavation. This was apparently done under an expectation that other work would be secured at such prices as would reimburse the city for any contemplated excess over its value, which the city would be called upon to pay for earth excavation. In view of the extreme latitude of the specifications in regard to earth excavation, it is manifest that this was an act of great improvidence on the part of the agents of the city, but we know of no principle upon which a contract entered into under such circumstances can be avoided upon the ground that one of the parties erred in judgment in respect to the advantages to be derived therefrom.

While the complaint alleges, with persistent iteration, that the city was ignorant of the real nature of the material to be excavated and had no means of discovery, it, nevertheless,

In view of the broad requirements contained in the specifications, the exorbitant price agreed to be paid for earth excavation and the uncertainty attending any preliminary estimate, it would seem quite unnecessary to resort to imputations of fraud against the contractor to account for the disparity between the original estimate and the results shown by the performance of the contract. The unfortunate condition of the city seems altogether attributable to a defective system of letting contracts, and a careless and lax administration of their authority, under such system, by the municipal agents. This clearly appears from the evidence given on a former trial by the plaintiff’s surveyor Yiele. In answer to a question by the plaintiff as to what the differences consisted of, which revealed so great an amount of earth to be excavated, he said: “ The rock that stuck out lay in ridges, and between them were pockets, and in the pockets of earth there were quantities of boulders of different sizes; then a great deal of the rock that stuck out was soft and they could pick it to pieces with a pick, that rock which is soft goes as earth under the contract.” There is no pretense that Brady made or could make any preliminary investigation of the character of the materials to be excavated, except such as was open to other persons, and the excuses now made by the plaintiff’s agents for making the contract are wholly inadequate to relieve them from the imputation of improvidence and carelessness in entering into it. They were at liberty to reject this as well as all other bids; but with ample notice of the expectations of the contractor, they voluntarily and understandingly executed the contract and deliberately subjected the city to liability for its performance. The city knowingly took the chances of what was obviously a

As was said by Judge Finch, in Reilly v. Mayor, etc. ( 111 N. Y. 478 ), a similar case: “ The charge of fraud rests only on the fact that the contractor had a'more accurate knowledge of quantities than the surveyor, and in ‘ bad faith ’ made his bid. Calling names does not alter facts. The contractor .had a right to the benefit of his own knowledge, honestly acquired, so long as he did nothing to mislead or deceive the city, and there was no bad faith either in the acquisition of his knowledge or the use of it in guiding his bid. On the contrary, the terms of the contract warned him that the estimates might not be correct, and left him to judge in that respect and in his own peril in making his bid. * * * Under the law the bids are to be made and the contracts awarded upon estimates of the work to be done, and he who is the lowest bidder upon those estimates is the lowest bidder under the law, and does not lose his right because the estimates are erroneous.”

Whatever might have been the improvidence of the city in making the contract, it is manifest that its evil effects could have been greatly mitigated, if not altogether cured, by the exercise of reasonable care and prudence in supervising the work done under it. It is obviously impossible that the work of drilling, boring, blasting and disposing of rock, prosecuted by a large number of men, in a populous city, could be carried on to any large extent in silence and secrecy, and without the knowledge of the city’s inspectors, even though they might be, from time to time, temporarily absent from the place of operation. The work to be performed was of such a character as would necessarily leave evidence of its manner of performance upon the material excavated and unexcavated, which could not be concealed from the observation of the most casual

We think the case made by the complaint fails to show that the charges of fraud, in the performance of the work, are well founded. However, this may be, we do not think the plaintiff has brought the case within the established rules authorizing a court of equity to vacate and set aside judgments duly recovered in an action at law.

The charges of fraud, as stated in the complaint, consist of two classes only, viz., those relating to the inception of the contract, and those involved in the performance of the work done under it.

It is not claimed but that these alleged frauds had been perpetrated, and, so far as they might constitute a defense to the city, existed and were available to the plaintiff when the first action between Brady and the city was tried. The gravamen of the charge is that .the city was then ignorant of evidence, which it subsequently discovered, that might have proved the existence of a defense. Ho sufficient reason is alleged why the city did not discover and prove the facts relating to the alleged fraudulent performance of the work in that action, and it is obvious that the exercise of very ordinary care and diligence on its-part, after notice that the earth excavation largely exceeded the estimate, would not only have prevented the possibility of any fraud in that respect, but would, at the same time, have furnished the proof of its existence, if any had been attempted. In fact, the testimony of the surveyor in charge and his assistants now shows that the amounts of earth excavation stated in the final certificate was, in fact, performed by the contractor; and against such evidence and

The claim with regard to collusion affecting the inception of the contract is, that after the engineer had made his certificate the city officers doubted its correctness and employed one Duffy to make further examination of the locality. Duffy was a subordinate of the city surveyor, and it is not claimed that he had any other means of discovering the true character of the material to be excavated than the surveyor had, and, indeed, the complaint substantially alleges that it was impossible to discover the real character of such material in advance of the performance of the contract. It is not even alleged in the complaint that the city now has any evidence of the fact of fraudulent collusion between Brady and Duffy, or, if they have, that such fact can now be proved. It simply alleges that, by an examination of Duffy or otherwise, such collusion might have been discovered; but it is nowhere alleged that it can be proved by him, or any other person having knowledge of the fact, or that, in the absence of such collusion, Duffy could have discovered and made known any fact that was not discovered and known to the surveyor when he made his original estimate. Neither does it follow that the city would not have followed the estimate of their surveyor, and made the contract whatever might have been the report made by Duffy, for they had abundant notice in the bids of the proposed contractors that skilled and competent men who had investigated the facts, believed the surveyor’s estimate to be inaccurate.

The character óf the fraud which will authorize one court, in a collateral proceeding, to revise the judgments of another

Pomeroy’s Equity Jurisprudence (§ 1361) says that: “ Equity will not restrain a legal action or judgment when the controversy would be decided by the court of equity upon a ground equally available at law, unless the party invoicing the aid of equity can show some special equitable feature or ground of relief, and, in the case assumed, this special feature or ground must necessarily be something connected with the mode of trying and deciding the legal action, and not with the cause of action or the defense themselves.”

In United States v. Throckmorton ( 98 U. S. 68 ), it was held that “ the acts for which a court of equity will, on account of fraud, set aside or annul a judgment or decree between the same parties, rendered by a court of competent jurisdiction, have relation to frauds, extrinsic or collateral to the matter tried by the first court, and not to a fraud in the matter on which the decree was rendered.” It was there said that the doctrine was well settled that the court would not set aside a judgment because it was founded on a fraudulent instrument, or perjured evidence, or for any matter which was actually presented and considered in the judgment assailed. Ignorance of the facts constituting the defense does not excuse the omission of the party to make it, nor entitle him to the aid of equity, unless it can be shown that he could not have acquired

The rule is inflexible that a party seeking the aid of a court of equity must show diligence, and that the obstacles which prevented him from maintaining his legal rights could not have been overcome or avoided by any reasonable care or diligence on his part. (Pom. Eq. 401.)

It' was said by Judge Andrews, in Stilwell v. Carpenter ( 59 N. Y. 423 ), that “ the general rule, that the decision and judgment of a court, as to any matter within its jurisdiction, is conclusive upon the parties, and those in privity with them, is fundamental. It secures respect for judicial decisions and terminates litigation. It gives stability to rights of persons and property once established in courts of justice, and a wise policy demands that in cases falling within the reason • of the rule it shall be adhered to.” The judge then refers, with approval, to the rule governing courts of equity in exercising jurisdiction over the judgments of courts of law, as stated by Chief Justice Marshall in Marine Insurance Company v. Hodgson ( 7 Cranch, 332 ), “ that any fact which clearly proves it to be against conscience to execute a judgment, and of which the injured party could not have availed himself in a court of law, or of which he might have availed himself at law, but was prevented by fraud or accident, unmixed with any fault or negligence in himself or his agents, will justify an application to the court of chancery.” The judge then - proceeds, and says: “ It is not sufficient to authorize the interference of the court that it is shown that the claim upon which the judgment was obtained was unfounded, or that there was a good defense to the action, or that the court erroneously decided the law, or that the defendant omitted to avail himself of his defqnse, if before the judgment the facts were known, or might, by the exercise of reasonable diligence, have been ascertained by him. It is the duty of a defendant to make his defense, if he has any, when he is sued, and if he omits to do it, he is in general concluded by the judgment.”

Judge Folger, in Stilwell v. Carpenter ( 2 Abb. N. C. 263 ), upon a reargument of that case, said: “ A court of equity may set aside the judgment or decree of another court when it has heen obtained by the fraud of the party. The question of fraud, which is open to examination in such case, is as to something which intervened in the proceedings by which the judgment was obtained, and it must have occurred in the very concoction or procuring of the judgment, and not have been known to the opposite party at the time, and for not knowing which he is not chargeable with neglect or inattention. The fraud must consist in something of which the complaining party could not have availed himself in the court giving the judgment, or of which he was prevented from availing himself then by fraud.”

Illustrations of the character of the fraud, for which courts of equity will grant relief, are found in the authorities cited in Pomeroy’s Equity Jurisprudence, at page 400. As, for instance, when the defendant is prevented from defending, by false and fraudulent promises or representations, that the proceedings against him will not be prosecuted further, or when his witnesses have been fraudulently tampered with or removed, or he is absent from sickness, accident or other justifiable reason, or where he has not been properly summoned or notified.

In Ross v. Wood ( 70 N. Y. 10 ), it was held that “the fraud which will justify equitable interference, in setting aside judgments and decrees, must be actual and positive and not merely constructive. It must be that which occurs in the very concoction or procuring of the judgment or decree, and something

Tested by these rules, the plaintiff must be considered negligent in not discovering and availing itself of its defense, upon the trial of the actions, resulting in the judgments referred to, and it must also be held that the alleged frauds were not of such a character as authorized the interference of the court with the ■ judgments rendered. It follows that the relief demanded, so far as the judgments already recovered are concerned, must be denied. These judgments standing, there is no relief asked for by the complaint to which the plaintiff is entitled, that is not now available to it, -in the action still pending against the city.

The judgment should, therefore, be affirmed.

All concur.

Judgment affirmed.