People ex rel. Cranford Co. v. Willcox

The relator is a contractor for building .a section of the underground Rapid Transit Railway. The defendants are the Public Service Commissioners for the First’ District in the state of New York, who have succeeded to all the powers and duties of the Board of Rapid Transit Commissioners (chapter 429, Laws 1907). The purpose of this proceeding is to compel the defendants to certify to the comptroller of the city of New York for payment the amount of an award in arbitration. The relevant facts, although somewhat complicated, are not in dispute.

On May 27, 1907, the Board "of Rapid Transit Commissioners, in the name and behalf of the city of New York, contracted with relator for the construction of a section of the' subway. On February 18, 1908, the contract was amended in certain particulars with the consent of the relator and the Public Service Commission, which had then succeeded to the powers and duties of the Rapid Transit Board. There is no question made as to the validity of this amendment. - The powers of t-he Commission are very broad "in that respect, and the contract itself provided for changes in the plans and specifications at the will of the commissioners, and for compensation for increased or additional work necessitated thereby. It also provided that it might be altered in more material- provisions by a written instrument duly authorized by the board and consented to by the contractor.

The contract, as amended, called for the driving of certain wooden piles of a specified size and length at the intersection of Canal and Centre streets. As the work progressed the engineer determined that it was impracticable or inadvisable to use wooden piles, and directed that steel piles filled with concrete should be used instead. The contractor, as he was bound to do, complied with this requirement, but promptly notified the Commission that he should claim that the work thus ordered was additional to that included in the contract, and that it would be more expensive than the piling required by the contract. The contractor has fully completed his contract, his work has been accepted and wholly paid for, except as to the matter involved in this proceeding, the determination as to which has been expressly reserved, so that relator is not concluded as to this claim by reason of having accepted payment for the amount conceded to be due him.

The contract provided that, in case there should be a dispute as to whether any work required was within the contract price, the contractor should do the work as ordered, leaving the question of its

“Now, therefore, the parties to this agreement do agree that the said Charles Strauss, said Edward S. Clinch, and said Edward G. Whitaker be and they hereby are constituted and appointed arbitrators (the determination of any two of them to be binding) to hear and determine the question of the amount of additional compensation which the contractor is entitled to receive on account of all of said pile driving work (including so much of said work as was in arbitration as aforesaid), and that all fees and expenses of said arbitrators shall be borne and paid equally by the parties to this agreement.

“In making their determination said arbitrators shall assume as having been finally determined that the contractor is entitled to receive from the city as extra compensation the excess in cost of driving the piles in the man

ner in which, they were driven over and above the cost of driving the piles required under said contract, as modified, the city not conceding, however, by this agreement that the cost of driving the piles in the manner in which they were driven exceeded the amount which it would have cost to drive the piles as required under said contract, as modified.

“If said arbitrators shall determine that reasonable profit and administration expenses should be added to the actual cost of the work as done and to the actual cost of the work required to be done, as aforesaid, the word ‘cost’ as hereinbefore used shall be interpreted to include such profit and administra-' tion expenses.”

The arbitrators in due course made an award to the plaintiff of the sum of $59,867.64, with interest from August 4, 1910, being the date of the certificate of final completion of plaintiff’s work under said contract.

The Commission having refused to certify this amount to the comptroller of the city of New York for payment, this proceeding was instituted to compel such certification.

[1] The Special Term, without passing upon the validity of the award, denied the motion upon the ground that mandamus was not the proper remedy, but that the plaintiff should enforce! his right by action against the city)' of New York; and this presents the first question to be considered. In dealing with this question it is desirable to keep in mind the fact that what the relator claims is for work done under the contract, and not damages for a violation of the contract. If its claim were of the latter nature, it may well be that relator’s appropriate, perhaps its exclusive, remedy would be by a suit at law. The contract, as amended,- provided that:

“The board shall * * have the right, by notice to the contractor to require additional work to be done, or additional materials to be furnished or both. * * * If additional work or materials shall be so required, then the reasonable value thereof shall be additionally paid to the contractor.”

Again:

“The contractor shall complete the entire work * * * for the prices hereinbefore agreed upon; except that for extra work, if any, ordered by the board there shall be additional payment.”

And all the" negotiations, agreements, and contracts between relator and the Public Service Commission recognize the fact that the work done by the contractor for which he now seeks payment was ordered and performed under the terms of the contract, and that payment therefor, if due, would be a payment under the contract. We do not understand that there is any difference between the parties on this point. Treating the claim, therefore, as one under the contract, and assuming, for the present at least, that the relator’s right to be paid has been established by the award of the arbitrators, is mandamus a proper remedy? Section 37 of the Rapid Transit Act (chapter 4, Laws 1891, as amended by Laws 1909, c. 498, § 17), after providing for the issue of bonds to meet the expenses of construction, provides that payment on account of construction contracts shall be made by the comptroller of the city of1 New York only “upon vouchers certified by the Public Service Commission,” and the contract provides that payments shall be made to the contractor only upon vouchers certified by

To the same effect was Dannat v. Mayor, etc., 66 N. Y. 585 , wherein it was held that a contractor with the board of education could not recover against the city until he had obtained a draft or order from the board. In a subsequent appeal in the same case ( 77 N. Y. 45 ), it being shown that the board of education had given the necessary voucher, the contractor was held to be entitled to a mandamus against the comptroller for the payment of the amount due. Matter of McDonald, 80 App. Div. 210 , 80 N. Y. Supp. 536 , arose under a contract similar to the one held by relator. The contractor had been required to do extra work, not specified in his contract, in order to provide for operating the railroad by electricity. The Rapid Transit Board gave the necessary voucher, which the comptroller refused to honor. It was held that the board had authority to order the extra work under the contract, that it formed a part of the work of construction, and that, the proper voucher having been given, the contractor was entitled to a mandamus to compel payment.

We entertain no doubt that, if the contractor is entitled to be paid in accordance with the award of the arbitrators, it must, before it can enforce payment by the city, obtain a voucher from the Public Service Commission, and that the only proceeding by which the Commission can be compelled to give a voucher is by mandamus.

[2] This suggests the second question, whether the award of the

As to the interest. The arbitrators found in favor of the contractor for interest upon the increased cost from the date that the whole work was finally completed and accepted. The relator claims that the question of the propriety of the allowance of interest is not open to discussion, citing numerous cases, and among others Matter of Wilkins, 169 N. Y. 494 , 62 N. E. 575 , in which it was said:

“Where the merits of a controversy are referred to an arbitrator selected by the parties, his determination, either as to the law or the facts, is final and conclusive, and a court will not open an award unless perverse misconstruction or positive misconduct upon the part of the arbitrator is plainly established, or there is some provision in the agreement of submission authorizing it. The award of an arbitrator cannot be set aside for mere errors of judgment, either as to the law or as to the facts. If he keeps within his jurisdiction, and is not guilty of fraud, corruption or other misconduct affecting his award, it is unassailable, operates as a final and conclusive judgment, and, however disappointing it may be, the parties must abide by it.”

The Commission claims, on the other hand, that it is entitled to question the award of interest because it appears on the face of the award that the arbitrators intended to be guided by legal principles in including interest in the award, and therefore that their award on this subject is open to review. It is not entirely clear that the arbitrators included interest in their award only because they understood that interest was allowable as a matter of law, but, even if they did, we are of opinion that the award can be sustained upon legal principles.

[3] In the first place, we are of opinion that the question of interest, although not mentioned in the submission, was included in it. In Matter of Burke, 117 App. Div. 477 , 102 N. Y. Supp. 785 , affirmed 191 N. Y. 437 , 84 N. E. 405 , the submission was general of all matters of difference and dispute between a building contractor and the owner of the building, but interest was not specifically mentioned. This court said:

“The appellant insists, first, that the matter of interest was not within the submission of arbitration, and, second, that the nature of the claims between the two parties was such that as matter of law interest could not be allowed. The question whether either, party should have interest on any sum which might be due him from the other was clearly within the terms of the submission of arbitration. All manner of claims and demands were submitted. It is not necessary there should be any agreement for interest in order to permit a party to recover it. Whenever a debtor is in default for not paying money, in pursuance of his contract, he is chargeable with interest from the time of

Ms default on the specified amount of money which should have been paid. * * * It was not necessary in the agreement of arbitration, therefore, to specify whether or not interest should be allowed, for interest followed as matter of law the determination that a certain sum known to the party obligated was due and payable to the other on a particular day. The question as to whether interest should have been allowed under any given state of facts was properly before the arbitrator and within the submission to arbitration.”

As to the legal right to an allowance of interest, it may be said, as was said by Judge Gray in Carricarti v. Blanco, 121 N. Y. 230 , 24 N. E. 284 :

“It must be conceded that this question of the allowance of interest is not one which may be said to be free from difficulty when considered in relation to unliquidated demands.”

[4] It is sometimes said that interest cannot be allowed upon unliquidated claims, but this is not always strictly accurate. It depends upon whether the amount due can be ascertained by the debtor by computation or means accessible to him when the demand is,made. Degnon-McLean Company v. City Trust Company, 99 App. Div. 195 , 90 N. Y. Supp. 1029 , affirmed 184 N. Y. 544 , 76 N. E. 1093 , was a case wherein a plaintiff sued to recover the extra cost of work caused by the failure of a contractor for whom the defendant was responsible to do work as agreed. The court said:

“Finally, it is claimed that interest was improperly added to the verdict. During the course of the trial the question was presented as to whether the plaintiff, in case it had a recovery, ws entitled to interest upon the damages sustained, and it was arranged between counsel that such question should be determined by the learned trial justice after a verdict had been rendered. He held that the plaintiff was entitled ,to interest, and the same was added to the verdict. The interest was properly allowed. It is true that the damages recovered in one sense were unliqmdated, but this did not prevent the allowance of interest, inasmuch as means were accessible to the defendant, at the time the demand was made upon it to pay, to ascertain by computation the amount to which the plaintiff was entitled. The general rule is that, even though damages are unliquidated, this does not deprive a party of interest if there are, at the time the demand is made for payment, means accessible to -the party sought to be charged of ascertaining by computation or otherwise the amount to which the other party is entitled. * * * ”

To the same effect are White v. Miller, 78 N. Y. 393 , 34 Am. Rep. 544 ; Carricarti v. Blanco, supra; Sweeny v. City of New York, 173 N. Y. 414 , 66 N. E. 101 ; Van Renssalaer v. Jewett, 2 N. Y. 135 , 51 Am. Dec. 275 .

[5] There is nothing in the case to suggest that the Commission, with the aid of their engineering staff, could not easily have ascertained the excess of cost of one kind of work over another. We are therefore of the opinion that interest was properly allowed, first, because it was within the scope of the submission, and, secondly, because the claim was of such a nature that interest was properly allowable from the date of the demand.

It follows that the order appealed from must be reversed, with $10 costs and disbursements, and the motion for a mandamus granted, with $50 costs. All concur.