F. H. Mills Co. v. State

The respective claims made against the state will be considered in the order in which they are mentioned in the foregoing statement of facts.

1. The claimant appears to have abandoned on the trial its claim to recover damages for withdrawing certain inmates from the employment of the claimant for military services upon Wednesday and Saturday afternoons, as what little evidence there is on this subject is of the most general character and not sufficient to form any fair basis for the award of damages on account thereof, so that no consideration of that phase of the case need here be given.

2. The claim for damages for the alleged breach of the contract on the part of the state has reference to a condition which it seems to me the parties sought to provide against in the contract. For years prior to the date of the contract, there was much public agitation upon the question of the conflict between convict and other labor, and there came to be quite a settled conviction in the minds of many that the labor of prisoners should not be contracted or employed in such a way as to bring it in* competition with other labor. This agitation was uppermost in the public mind at the time the contract In question was entered into. It is apparent that the provision in the contract “that in case by the intervention of legislation, or other authoritative ruling outside of and beyond the reasonable control of the first party it shall at any time become necessary to discontinue the business * * * that then the second party shall not have for that reason any claim for damages against the first party,” was inserted in the contract by the parties with a view of saving the state from damages in case such anticipated changes were made in the law as would render the employment of convict labor unlawful. The question for us to determine, therefore, is as to whether such provision was effective to save the state from damages, because the managers of the reformatory withdrew the inmates from the employment of the claimant pursuant to the provisions of the Constitution of 1894 and the legislation enacted pursuant thereto. The language employed

It may well be questioned whether the language of the contract, “outside of and beyond the reasonable control of the first party,” had any reference to “legislation,” and whether it refers only to “other authoritative ruling,” but, if we assume that the language refers tc both, the result is not changed, for the legislation hereafter referred to was clearly beyond the control of the managers of the reformatory. The contract was executed March 15, 1893. -The constitutional convention convened May 8, 1894. It concluded its labors on the 29th day of the following September. The revised Constitution proposed by it was approved by the people at the general election November 6, 1894, and took effect January 1, 1895. Among the new provisions of the Constitution was the one which provided that “on and after the first day of January, 1897, no person in any prison, penitentiary, jail or reformatory shall be required or allowed to work while under sentence thereto, at any trade, industry, or occupation, wherein or whereby his work or the product or profit of his work shall be farmed out, contracted, given or sold to any person, firm, association or corporation.” Const, art. 3, § 29. The Legislature by chapter 429, p. 387, of the Laws of 1896, amended the statutes to conform the same to the provisions of the revised Constitution, by prohibiting contract labor in the prisons, penitentiaries, jails, and reformatories of the state after January 1, 1897, in substantially the same language as that contained in the constitutional provisions. So that we have here an “intervention of legislation,” by reason of which, if lawful, it became “necessary to discontinue the business agreed to be carried on” under the contract.

This intervention of legislation was beyond the reasonable control of the party of the first part, which, although nominally the people of the state, was in fact and in law the board of managers of the reformatory, for the reason that the managers alone under the law were authorized to conduct the labor of prisoners in the reformatory under the public account system or piece price system, and therefore alone empowered in their official capacity to make the contract in question. Section 3, p. 531, c. 382, Laws 1889. This legislation was enacted by the Legislature pursuant to the command of the sovereign people expressed in their approval of the revised Constitution at the polls. Nor is there anything in the legislation which impairs the obligation of the contract, for the parties had by the contract itself provided that, in case it became necessary to discontinue the business by reason of legislation, the claimant should not for that reason have any claim for damages against the state. That was one of the conditions or obligations which the parties imposed upon the claimant in the contract and the obligation has not been impaired, but, on the contrary^ has been made effective by the subsequent legislation. The denial' of damages by the Court of Claims to the claimant on this portion of its claim was simply giving effect to the evident intention

The case of Bronk v. Barckley, 13 App. Div. 72 , 43 N. Y. Supp. 400 , is not contrary to the conclusion here reached. There it was held that a contract for the labor of prisoners in the Albany Penitentiary under the piece price system, which was in force at the time of the taking effect of section 39 of article 3 of the Constitution of 1894, and of chapter 439, p. 387, Laws of 1896, was not abrogated thereby, but in that case there was not, as here, a provision in the contract permitting the discontinuance of the business before the expiration of the contract without any claim for damages in case of prohibitive legislation.

The conclusion reached will not be changed, even if “the people of the state of New York” is to be regarded as the contracting party of the first part, instead of the board of managers of the reformatory. The term “the people of the state,” as used in the contract, is used to signify the people as a body politic or as a political entity called the “state,” and not as meaning the people as the sovereign power in the state. The body politic or the state is, under our system, always subject to the control of the sovereign power—the people. Hence, when the work of a representative constitutional, convention meets the approval of the sovereign people at the polls, and in that way .a change is wrought in the fundamental law, that law in its changed condition binds the people as a body politic, and the power which made the law and the law together constitute an “authoritative ruling outside of and beyond the reasonable control of” the people of the state as a political entity and a contracting party, so in that view of the case the result is the same as if the board of managers is regarded as the contracting party. In any event, the clause in the contract was clearly intended by the parties to provide against damages against the state for the contingency which was foreseen and which actually happened.

3. The dry kiln which was not furnished by the reformatory managers and for which failure damages are claimed had reference to “a kiln in process of building.” This, as stated in the contract, was at the north end of the lumber yard near the icehouse within the reformatory inclosure. It appears that no complaint was made of the lack of dry kiln facilities before the suspension of work by the claimant in August, 1893, nor did it ever ask to have the kiln mentioned in the contract completed. During the suspension of work Mr. Beach was employed as manager for the claimant. Soon after the resumption of work he complained of insufficient dry kiln facilities, and told the superintendent of the reformatory that the kiln mentioned in the contract would be of no use to the claimant if it was completed, as it was too remote from the shops and was not constructed on the proper system. Beach and Mills, the president of the claimant company, thereupon entered into negotiations with the superintendent of the reformatory for the erection of a new kiln in.a location more convenient for the claimant than the one mentioned in the contract. As an inducement to the authorities of the reformatory to erect the new kiln, the claimant promised to pay its past-due indebtedness" in time to use the avails in paying for the cost of the new kiln, and

4. The Court of Claims denied that portion of the claim relating' to the alleged overpayment to the state upon bills rendered, among' other reasons, on the grdund that all such payments were voluntary. The appellant claims that payments of the amounts charged in the-monthly statements were coerced, and that the fair meaning of the-contract is that the labor was to be furnished at its fair value. Much of the testimony in this voluminous record is upon the question of the value of convict labor. It seems to me that this mass of evidence was immaterial upon any real issue in the case. There is nothing said" in the contract that would justify the conclusion that the labor was to be furnished at its fair value. The parties had not so agreed, but the contract provided for the payment for labor employed in the manu- - facture of the specific articles therein mentioned at a price specified for each of such articles. The contract also provided:

“The price per piece agreed upon from time to time for the making of new and additional styles of tables or furniture shall be subject to readjustment and to be fixed by mutual agreement, provided that, in case of irreconcilable disagreement between the parties as to the price to be paid for the labor of making any article or articles, then it shall be at the option of the first party to refuse to make the same, or the price may be determined by arbitration.”

None of the articles mentioned in the contract were ever manufactured by the claimant, and there was never an agreement between-the claimant and the managers upon the piece price for the making of such other articles as were manufactured. There was an agreement, however, that the price should be charged upon a basis of-50 cents per day per man for eight hours’ labor. This arrangement continued for a time, but the price was afterwards modified by agreement between the parties by a reduction to a basis of 40 cents per day.

The claimant insists that these prices were understood to be tentative only, and on that theory claims there has been an overpayment. The respondent, on the other hand, claims that the prices were final and so understood by the parties. There was a sharp conflict in the

It is claimed that the per diem basis agreed upon was an evasion of the former law requiring that the labor of prisoners in the reformatory should be conducted under the “public account system, or piece price system.”' Section 3, p. 531, c. 382, Laws 1889. This may be conceded, yet it is apparent that for some undisclosed reason the basis adopted seemed most convenient for the parties at the time the arrangement was made. There is no claim that there was any fraud or imposition on the part of the reformatory managers in procuring the adoption of the plan. Mr. Mills and Mr. Stiekley, the original contractors, were each men of large experience with prison labor and its value; the former having been employed in the reformatory and other penal institutions for many years, and the latter having been a contractor for the labor of convicts at Auburn prison. The agreement fixing the basis for labor at 50 cents per day was made about the time the work commenced. This continued until the resumption of work after the temporary suspension hereinbefore alluded to. When Mr. Beach, the new manager for the claimant, took charge, complaints were made that the 50-cent rate was too high. There was an effort then made to secure an agreement upon the piece price plan for the labor on the articles then being manufactured. This did not result in reaching such an agreement, but it did result in an agreement to reduce the rate to a basis of 40 cents per day. This arrangement was made effective, concurrent with, and as a part of, the agreement made May 29, 1894, to erect a new dry kiln. There is no proof that after that there was any effort to agree upon a “piece price” basis. The bills presented were thereafter paid, so far as they were paid, without any protest and without any complaint as to the amount charged. While the basis agreed and acted upon was a per diem one, yet the bills presented were not in form made out to the claimant by the day, but were made for doing a certain amount of work as agreed, so that the bills upon their face did not show an evasion or an attempt at evasion of the law. The parties having agreed upon that course, and having followed it out, not only in the presentation, but in the payment, of bills during the entire period of the operation of the parties under the contract, there has been no overpayment by the claimant and no part of such payments can be recovered from the

The claim of coercion is based upon the fact that when the claimant failed to pay the' monthly statements, as required by the contract, and began to run largely behind in such payments, it was told in substance that unless it paid the bills it could not have the men, and also upon a resolution of the managers instructing the superintendent that in case of further default of the claimant in making payments “to call a special meeting of the managers to take appropriate action.” There is no coercion or duress in this. In the contract the claimant had agreed to pay monthly, on the 20th day of each month, for the labor of the inmates the month previous. It was largely in default in making the agreed payments, and it was within the lawful, right of the superintendent and the managers to insist upon the payment of the moneys past due, even to the extent of saying that, if the payments were not made, the men would not be furnished. This, too, was within the express terms of the contract, which contained a provision that “in case at any time default shall be made by the second party in their payments * * ' * that the agreement may be annulled by the first party, and that the second party in such case shall not have or make any claim for damages against the first party.” There is nothing in the case of Horner v. State of New York, 42 App. Div. 430 , 59 N. Y. Supp. 96 , cited by counsel for the claimant, inconsistent with this view. There there was a successful effort on the part of the warden of Auburn prison to coerce a contractor to submit to a modification of a contract for the labor of convicts by increasing the price he paid for such labor upon threats of withholding the men from his service and of putting him out of the prison unless he complied. He yielded and paid the additional amounts under protest in order to save his contract, and a judgment of the Court of Claims dismissing his claim to be refunded the moneys so exacted from him was reversed. The Appellate Division, in its opinion, reversing the judgment, said (page 436 of 42 App. Div., and page 100 of 59 N. Y. Supp.:

“The money was demanded without a shadow of legal right, and was paid under protest and only to protect the appellant from what he apprehended would be a much greater loss.”

In this case, instead of attempting to extract from the claimant moneys it was not bound to pay, as was done in the Horner Case, the managers were endeavoring in a lawful way to compel it to do only what it had agreed and was lawfully required to do, by the very means which the contract authorized them to employ.

We are satisfied from an examination of the entire case that the judgment, so far as appealed from, is right and should be affirmed, with costs. All concur.