Reilly v. Mayor of New York — 19 N.Y. St. Rep. 72

Majority

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William J. Reilly, App’lt, v. The Mayor, Alderman, etc., of New York City, Resp’ts.^[1]

(Court of Appeals,

Filed November 27, 1888.)

Headnote

1. New York City—Contract for work—Lowest bidder.

In the action brought by the contractor to recover from the city for work done by him for the city under a contract, the city defended on the ground that the contractor was not in fact the lowest bidder. There was no allegation or proof of fraudulent collusion between the contractor and the corporate agents or officials. The error in the estimate for the work arose from the inadvertence, ignorance, carelessness or error of the surveyor employed by the corporation, and it did not appear that the contractor influenced the estimate or knew anything about it when it was made. The only allegation as to the contractor was, that he knew the estimate to be erroneous, and relying on his own judgment made an unbalanced bid which gave him the contract as the lowest bidder while the work showed that he was not such. Held, that 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. Distinguishing Matter of Anderson, 109 N. Y., 554 ; 16 N. Y. State Rep., 168.

2. Same—Estimate eor contracts, how made.

The validity of a contract to do work in excavating for the city of New York does not depend under the statute upon the result of the work. The statute does not prescribe the modes of arriving at estimates of the quality and kind of materials to be excavated, nor does it require boring to be made, or expensive tests. It is enough if the proper officer charged with the performance of the duty executes it honestly and makes such examination as in the specified locality he in good faith deems sufficient for the purpose, and frames the proposals for contracts accordingly. The validity of the contract does not depend upon the accuracv, but upon the honest effort to be accurate.

Appeal from a judgment of the New York superior court, general term, reversing a judgment of the trial term entered in favor of the plaintiff against the defendant.

Wallace MacFarlane, for app’lt; F. J. Fean, for resp’ts.

The doctrine established in Matter of Anderson ( 109 N. Y., 554 ; 16 N. Y. State Rep., 168), does not control the present case. The controversy there was between the city, seeking to enforce an assessment, and the land

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owner resisting. The latter succeeded upon the mixed ground of corporate negligence and fraud in the letting of the contract. It appeared that no effort of any kind had been made on behalf of the city, to ascertain the extent of the woi’k; and, beyond the computation of arears, the amounts of earth and rock to be severally excavated were fixed by a mere guess, without effort of any kind to obey the statutory requirement that the quantities should be ascertained as nearly as possible. Coupled with this total neglect on the part of the city, was an unbalanced bid, and the two facts together, considered in the light of the result, justified an inference of fraud and collusion between contractor and surveyor which made a case of substantial error.

But here the question is between the city and its own contractor, and without any allegation or proof of a fraudulent collusion between the latter and the corporate agents or officials. On the contrary, the error in the estimates is explicitly alleged to have arisen from “ the inadvertance, ignorance, carelessness or error of the surveyor,” and is not charged to have been a fraudulent act on his part, or the result of collusion with the contractor. The surveyor testifies that he made his estimates from the surface indications, and as correctly as he could; that what he supposed to be rock, turned out to be boulders; and that the formation in the locality of the work, is so irregular as to make any estimate in advance, unreliable. It does not appear that the contractor influenced that estimate, or knew anything about it when it was made; and the only allegation as to him is, that he knew the estimate to be erroneous, and, relying on his own judgment, made an unbalanced bid, which gave him the contract as the lowest bidder, while the result of the work showed that he was not such. That state of facts fails to establish a fraud; for, the innocence of the surveyor being conceded, and the absence of any collusion between him and the contractor, which in the Anderson Case was a possible and reasonable inference, 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. Galling 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 at his own peril in making his bid.

Dismissing, therefore, any defense founded on fraud, or

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dependent upon the total absence of an effort to ascertain quantities as near as possible, the contention remaining is that the plaintiff was not, in fact, the lowest bidder, as demonstrated by the result. The doctrine involved in that theory is that the city, having through its surveyor made an estimate founded upon a surface examination of the locality, and being contented with it, may invite bids upon that basis for the actual work to be done, award the contract to one who is the lowest bidder, tested by the proposals, hold him to the contract and require of him its performance, and when it has been completed, annul it because the actual so varies from the estimated result as to make his bid in fact higher than others which had seemed to he above his own.

We cannot approve that doctrine. Its injustice is very great. Under the law, bids are to be made and the contract 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. He may lose it through fraud., but if guilty of none the city cannot urge against him its ignorance or error. The land-owner resisting an assessment might justly complain of the city’s negligence or carelessness, but the latter cannot plead its own fault when it has complied with the law requiring estimates to be made, or declare the contract illegal which it made with full knowledge of the facts.

I think the rule is stated fully in accordance with this _ view in the Anderson Case. It is there said in substance that where the quantities advertised are mere random guesses, without any basis whatever to rest upon, the statute requirement is in no sense obeyed; hut “the case would be different if a bona fide effort had been made to comply with the ordinance, and there had been a mistake or error as to the quantities of different kinds of materials to be excavated.”

The rule thus stated does not make the validity of the contract depend upon, the result of the work. It does require an effort in good faith to ascertain the quantities. That effort, in this case, was made. Not its good faith, but only its accuracy is assailed. The statute and the ordinance are silent as to the precise mode of arriving at the estimate. Neither require borings to be made or other expensive tests, although in many cases they might be wise precautions. It is enough if the proper officer charged with performance of the duty executes it honestly, makes such examination as in the specified locality he in good faith deems sufficient for the purpose, and frames the proposals accordingly. The validity of the contract does not depend

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upon his accuracy, but. upon an honest effort to be accurate.

For these reasons the judgment should be reversed and a new trial granted, costs to abide event.

All concur; Huger, Ch. J. and Gray, J., in result.