Planet Construction Corp. v. Board of Education

Majority

p. 381

Planet Construction Corporation, Appellant, v. Board of Education of the City of New York, Respondent.

Argued January 18, 1960;

decided March 3, 1960.

Benjamin Jaffe and Ralph Stout for appellant.

I. Plaintiff’s uncontroverted proofs establish a waiver of the contract provision for the short period of limitation; and an estoppel to assert the same as a bar to plaintiff’s right to recover. (Bowen

p. 382

v. Preferred Acc. Ins. Co., 82 App. Div. 458 , 175 N. Y. 497 ; Hennessey v. Knights of Columbus, 239 App. Div. 409 , 264 N. Y. 668 ; Jackson v. Metropolitan Life Ins. Co., 69 Misc. 265 , 144 App. Div. 912 ; Woodcrest Constr. Co. v. City of New York, 185 Misc. 18 , 273 App. Div. 752 ; Dravo Corp. v. City of New York, 198 Misc. 161 ; Amex Asphalt Corp. v. City of New York, 263 App. Div. 968 , 288 N. Y. 721 ; Triple Cities Constr. Co. v. Maryland Cas. Co., 4 N Y 2d 443 ; Vandeweghe v. City of New York, 150 Misc. 815 ; Matter of Buffalo Lib. v. Wanamaker, 162 Misc. 26 ; Van Dolsen v. Board of Educ., 162 N. Y. 446 ; Rason Asphalt v. Town of Oyster Bay, 6 A D 2d 810 ; Benedict v. Van Dusen, 221 App. Div. 304 .) II. The cases cited below by defendant-respondent are so far different in their facts that none may be deemed applicable to the case at bar. (Bravo Corp. v. City of New York, 198 Misc. 161 ; Lord Burnham Co. v. City of New York, 251 N. Y. 198 ; New York City Employees’ Retirement System v. Eliot, 267 N. Y. 193 ; Oakhill Contr. Co. v. City of New York, 262 App. Div. 530 ; Matter of City of New York [Elm St.], 239 N. Y. 220 ; George C. Diehl, Inc., v. City of Lackawcmna, 233 App. Div. 348 , 258 N. Y. 579 ; Woodcrest Constr. Co. v. City of New York, 185 Misc. 18 , 273 App. Div. 752 .) III. The courts below erred in ruling that the contract presented no ambiguity. (Hauer Constr. Co. v. City of New York, 193 Misc. 747 .)

Charles H. Tenney, Corporation Counsel (Beatrice Shainswit and Seymour B. Quel of counsel), for respondent.

I. Plaintiff’s action is plainly barred by the contractual one-year period of limitation. (Soviero Bros. Contr. Corp. v. City of New York, 286 App. Div. 435 , 2 N Y 2d 924 ; Bronx Water Works Corp. v. City of New York, 5 Misc 2d 874 ; Woodcrest Constr. Co. v. City of New York, 185 Misc. 18 , 273 App. Div. 752 .) II. Plaintiff’s acceptance of the adjustment price offered by defendant in settlement of plaintiff’s claim constituted an accord and satisfaction. (Hudson v. Yonkers Fruit Co., 258 N. Y. 168 ; Gerace & Castagna v. City of New York, 307 N. Y. 707 ; Nicholas v. City of New York, 293 N. Y. 704 ; Cauldwell-Wingate Co. v. City of New York, 242 App. Div. 626 , 269 N. Y. 539 ; MacArthur Bros. Co. v. City of New York, 177 App. Div. 725 , 224 N. Y. 629 ; Oakhill Contr. Co. v. City of New York, 262 App. Div. 530 .) III. No element of waiver or estoppel existed in this case. (Oakhill Contr. Co. v.

p. 383

City of New York, 262 App. Div. 530 ; Matter of City of New York [Elm St.], 239 N. Y. 220 ; Matter of Long Is. R. R. Co. [8th Ave., Brooklyn], 174 Misc. 1037 , 261 App. Div. 914 ; George C. Diehl, Inc., v. City of Lackawanna, 233 App. Div. 348 , 258 N. Y. 579 ; Matter of Huie [McElligott], 7 A D 2d 599 ; Lord & Burnham Co. v. City of New York, 251 N. Y. 198 ; New York City Employees’ Retirement System v. Eliot, 267 N. Y. 193 ; Wood-crest Constr. Co. v. City of New York, 185 Misc. 18 , 273 App. Div. 752 ; Amex Asphalt Corp. v. City of New York, 263 App. Div. 968 , 288 N. Y. 721 ; Califano v. Citizens Ins. Co., 163 Misc. 542 , 252 App. Div. 731 ; City of New York v. Alpha Contr. Corp., 182 Misc. 115 ; Rason Asphalt v. Town of Oyster Bay, 6 A D 2d 810 ; Benedict v. Van Dusen, 221 App. Div. 304 .)

This is an appeal of the plaintiff, by permission of this court, from a summary judgment dismissing the complaint granted at Special Term and unanimously affirmed by the Appellate Division, First Department.

The action is to recover a balance alleged to be due for extra labor and materials furnished in connection with a construction contract. The contract contains a provision limiting the time for the commencement of such an action, or any claim arising out of the contract, to one year from the date of the acceptance of the work by the defendant Board of Education. Aside from some denials irrelevant to the issues here, the answer set up an affirmative defense of payment and the contract limitation for the commencement of an action. In granting summary judgment Special Term held that waiver of the contract limitation, and estoppel to assert it as a bar to the action, were not available to plaintiff.

The record indicates without dispute that on November 10, 1955 the defendant Board of Education issued its final payment certificate which bore this notation: ‘ ‘ Note. Additional amount not exceeding $45,000.00 is due Contractor for extra work performed.” On March 28, 1957, one year and about five months after the date of the final payment certificate, the board issued a change order addressed to plaintiff fixing a balance due for extras at $16,599.63. This order stated that the adjustment was made subject to certain conditions, among which was the following: “ all claims against the Board of Education of the City of

p. 384

New York which are incidental to or as a consequence of the aforementioned change are satisfied.” Plaintiff refused to sign the acceptance slip containing this stipulation, which in effect would have amounted to a release, but accepted a check for the amount stated which was received later, some time in May, 1957.

On May 22,1957, one year and about six months after the date of the final payment certificate, plaintiff filed a claim for $31,700.43, the total amount it claimed for extras, but later credit was given by plaintiff for the payment of $16,599.63 and the claim reduced to $15,100.80. Payment of the reduced amount was refused and thereupon the plaintiff commenced the present action.

In opposition to the motion for summary judgment at Special Term plaintiff took the position that the one-year time limitation in the contract began to run from the date of the change order and not from the date of the final payment certificate. Apparently for present purposes plaintiff claims only that the conduct of the defendant board, and its representative officers, with respect to the claim amounted to a waiver of the time limitation or an estoppel to enforce it. In support of this position the affidavit of the plaintiff’s president states that, after the final payment" certificate was issued on November 10, 1955, plaintiff requested the board, through its director of construction, to inspect and audit the items for extras, and the board, through its superintendent of construction, made numerous promises to have the items for extras audited but the matter was delayed until March 28,1957, before a change order was issued. It is on the basis of such promises and delay, plus a deduction of certain items from the contract price, that plaintiff claims triable issues as to waiver and estoppel. Defendant argues that under long-recognized principles of law, and subdivision 5 of section 20 of the General City Law, neither the doctrine of waiver nor estoppel is available to plaintiff.

The statute cited provides that no city shall have the power to waive the defense of the Statute of Limitations. Thus, a plaintiff was held barred by the Statute of Limitations from collecting a warrant in a condemnation award despite the fact that the money was unquestionably due (Matter of City of New York [Elm St.], 239 N. Y. 220 ). That case, however, dealt with the Statute of Limitations and not with a period of limita

p. 385

tion fixed by the parties in a contract. There are also cases which hold that a defense of the one-year period of limitation fixed by contract is a good defense bnt waiver or estoppel was not involved in those cases, or else found not to exist (Amex Asphalt Corp. v. City of New York, 288 N. Y. 721 ; Califano v. Citizens Ins. Co., 163 Misc. 542 , affd. 252 App. Div. 731 ; City of New York v. Alpha Contr. Corp., 182 Misc. 115 ). Those cases did not reach the issues presented here, nor did the case of Oakhill Contr. Co. v. City of New York ( 262 App. Div. 530 ) relied upon by Special Term. There it was held that a reservation for extras in a general release, accepted by a subordinate, was unauthorized and in violation of the contract. We have no such situation here. The final payment certificate issued in this case, and clearly authorized by responsible authority, expressly noted that an additional amount not exceeding $45,000 was due the contractor for extra work performed.

Section 10 of the Civil Practice Act provides generally that the limitations prescribed in the act apply, except in one of the following cases: “ 1. A case where a different limitation is specially prescribed by law or a shorter limitation is prescribed by the written contract of the parties.” We are constrained to the belief that this section is merely permissive and was not intended to raise a shorter period of limitation provided for in a contract to the dignity of a statute. Thus a shorter limitation by written contract may be examined as to whether it is unreasonably short (Sapinkopf v. Cunard S. S. Co., 254 N. Y. 111 ). Of course, a statute may not be subjected to such an examination. Doubtless this section was enacted to prevent a claim that an agreement for a shorter period of limitation was contrary to public policy. The prohibition contained in subdivision 5 of section 20 of the General City Law against a municipality’s waiving a defense of limitation applies, in our opinion, only to a statute. In other words a limitation clause in a contract stands on no other or different footing than any other clause, and may be waived in a proper case, or estoppel may bar its enforcement. Estoppel may apply to a municipality as well as to an individual (Vermeule v. City of Corning, 186 App. Div. 206 , affd. 230 N. Y. 585 ; Vandeweghe v. City of New York, 150 Misc. 815 , affd. 242 App. Div. 762 ).

Dissent

p. 386

The query remains whether on the motion for summary judgment there were triable issues as to waiver and estoppel. We think this query should be answered in the affirmative. The change order was issued to plaintiff one year and about five months after the final payment certificate. In the interim, plaintiff pressed for an audit of its claim for extras which, according to the affidavits submitted by plaintiff, was promised but not performed until the one-year period had expired. Moreover, the change order, in addition to setting forth items which the board was agreeable to pay, also deducted certain items from the contract price to the extent of $405.33. Thus the board was deducting from the amount under the contract a sum of money at a time when it claims plaintiff had lost its right to sue. This is a somewhat inconsistent position and would appear to have a bearing on the issues of whether the board did not waive the short period of limitation or is estopped from asserting it. The superintendent of construction apparently had wide power to determine the extent to which plaintiff was entitled for extras, and until such a time as he acted the plaintiff was in an anomalous position to say the least. Under the circumstances we think that triable issues of waiver and estoppel were present in the case and that summary judgment was improvidently granted.

The defendant board also urges a defense of accord and satisfaction, but this defense was not pleaded in its answer or presented to the Special Term. It is well settled that accord and satisfaction to be available as a bar to a plaintiff’s cause of action must be pleaded affirmatively (Reilly v. Barrett, 220 N. Y. 170 ; Habrich v. Donohue, 51 App. Div. 375 ; Wise v. Powell, 216 App. Div. 618 ; Ziegler v. Mancuso & Alessio, 283 App. Div. 813 ).

The judgment should be reversed, with costs in all courts, and the motion denied.

(dissenting). I dissent and vote to affirm. There is no sufficient proof as against the city of any waiver or estoppel and, furthermore, public policy as matter of law forbids the waiver by a public officer or employee of a standard, valid contractual time limitation for the filing of claims (see Civ. Prac. Act, § 10; Soviero Bros. Contr. Corp. v. City of New York, 286 App. Div. 435 , 439, 441, affd. 2 N Y 2d 924 ; Sapinkopf v. Cunard S. S. Co., 254 N. Y. 111 ; Woodcrest Constr. Co. v. City of New York, 185 Misc. 18 , affd. 273 App. Div. 752 ).

p. 387

Judges Fuld, Froessel and Van Voorhis concur with Judge Foster; Chief Judge Desmond dissents in an opinion in which Judges Dye and Burke concur.

Judgment reversed, with costs in all courts, and matter remitted to Special Term for further proceedings in accordance with the opinion herein.

Cases cited

Wanstall v. Preferred Accident Insurance 175 N. Y. 497 N.Y. 1903-06-05 p. 382
Hennessey v. Knights of Columbus 264 N. Y. 668 N.Y. 1934-05-29 p. 382
Jackson v. Metropolitan Life Insurance 69 Misc. 265 N.Y. Sup. Ct. p. 382
Woodcrest Construction Co. v. City of New York 185 Misc. 18 N.Y. Sup. Ct. 1945-05-16 at 273 p. 382, p. 383, p. 386
Dravo Corp. v. City of New York 198 Misc. 161 N.Y. Sup. Ct. 1947-05-16 p. 382
Amex Asphalt Corp. v. City of New York 288 N. Y. 721 N.Y. 1942-06-18 p. 382, p. 383, p. 385
Triple Cities Construction Co. v. Maryland Casualty Co. 4 N Y 2d 443 N.Y. 1958-06-25 p. 382
Vandeweghe v. City of New York 150 Misc. 815 N.Y. Sup. Ct. 1934-03-14 p. 382, p. 385
Buffalo Library v. Wanamaker 162 Misc. 26 N.Y. Sup. Ct. 1937-02-20 p. 382
Van Dolsen v. Board of Education 162 N. Y. 446 N.Y. 1900-04-17 p. 382
Lord & Burnham Co. v. City of New York 251 N. Y. 198 N.Y. 1929-05-28 p. 382, p. 383
New York City Employees' Retirement System v. Eliot 267 N. Y. 193 N.Y. 1935-04-17 p. 382, p. 383
In re the Mayor of New York 239 N. Y. 220 N.Y. 1924-12-19 p. 382, p. 383, p. 384
George C. Diehl, C. E., Inc. v. City of Lackawanna 258 N. Y. 579 N.Y. 1932-02-09 p. 382, p. 383
Hauer Construction Co. v. City of New York 193 Misc. 747 N.Y. App. Term 1948-11-24 p. 382
Soviero Bros. Contracting v. City of New York 2 N Y 2d 924 N.Y. 1957-03-08 p. 382, p. 386
Bronx Water Works Corp. v. City of New York 5 Misc 2d 874 N.Y. Sup. Ct. 1957-05-03 p. 382
Hudson v. Yonkers Fruit Co. 258 N. Y. 168 N.Y. 1932-01-05 p. 382
Gerace & Castagna, Inc. v. City of New York 307 N. Y. 707 N.Y. 1954-07-14 p. 382
Nicholas v. City of New York 293 N. Y. 704 N.Y. 1944-07-19 p. 382
Cauldwell-Wingate Co. v. City of New York 269 N. Y. 539 N.Y. 1935-11-19 p. 382
MacArthur Bros. v. City of New York 224 N. Y. 629 N.Y. 1918-10-22 p. 382
In re Long Island Railroad 174 Misc. 1037 N.Y. Sup. Ct. 1940-03-16 p. 383
In re Huie 7 A D 2d 599 N.Y. App. Div. 1959-04-29 p. 383
Califano v. Citizens Insurance Co. of New Jersey 163 Misc. 542 N.Y. Sup. Ct. 1937-04-19 p. 383, p. 385
City of New York v. Alpha Contracting Corp. 182 Misc. 115 N.Y. App. Term 1944-06-23 p. 383, p. 385
Sapinkopf v. Cunard Steamship Co. 254 N. Y. 111 N.Y. 1930-06-03 p. 385, p. 386
Alberti v. Heineman 230 N. Y. 585 N.Y. 1921-01-11 p. 385
Reilly v. Barrett 220 N. Y. 170 N.Y. 1917-02-27 p. 386

Statutes and regulations cited

General City Law
- § 20 p. 384, p. 385