Newell v. Mayor of New York — 40 N.Y. St. Rep. 727

Majority

p. 727

William R. Newell et al., App’lts, v. The Mayor, etc., of the City of New York, Resp’t.

(Supreme Court, General Term, First Department,

Filed October 16, 1891.1

Headnote

1. Release—By contractor to municipal corporation.

A release under seal given by contractors to the city for the amount due under the contract is ordinarily an absolute discharge of the city from liability, but such a release may be attacked on the ground that it was given by misrepresentation or fraud on the part of the city.

2. Same.

The alleged misrepresentation was that at the time the release was given the contractor asked whether any deduction had been made for inspectors’ fees, and received a negative answer from the representative of the city. Held, that as the jury found the instrument to be void for fraud, it was •error for the judge to hold that the release was a bar to all claims except those for inspectors’ fees, and he should have submitted the whole case to the jury on the release.

L. L. Kellogg, for app’lts ; Edward H. Hawke, Jr., for resp’t.

The plaintiffs, on December 24, 1888, entered into a contract with the city of New York to regulate, grade, curb and flag One Hundred and Seventieth street, from Tenth to Eleventh avenues, in that city. They bring this suit alleging two causes of action; first, that the department of public works has wrongfully detained from them a certain amount as inspectors’ fees for twenty-nine days, at the rate of $3.50 a day; and, second, that by reason of wrongful acts and interferences on the part of the municipal authorities, in suspending the work and preventing its due performance and proper completion within a reasonable time and in a right way, the plaintiffs were compelled to incur great expense in transferring their work from one kind of excavation to another, and that they sustained great loss in other respects, and for which they now attempt to hold the city liable. The original answer is not before us, but at the trial an amendment was allowed and assented to and the affirmative defenses of payment of all that was due under the contract and a release under seal were set up, and the cause was tried on those defenses. The main subject now requiring consideration is the effect of the release. A receipt was given by one of the plaintiffs for the amount due according to the strict terms of the contract, and in giving that receipt he acted for himself and under the sanction of

p. 728

a power of attorney which he received from his copartner. The learned judge before whom the cause was. tried held that the receipt-of itself was not an obstacle to a recovery, that it might be-explained, and he undoubtedly at One stage .of the case recognized the settled rule that where work is done by a contractor, necessitated by the wrongful acts or omissions, or even mistakes of the municipal authorities, its cost may be recovered in an action for damages, and that such contractor is not limited simply to the contract price, Mulholland v. Mayor, etc., 113 N. Y., 631 ; 22 N. Y. State Rep., 347; but when the answer was amended and the release was put in evidence he held that such release was an absolute bar to all claims except those for inspectors’ fees ; or in other words, he limited the right of recovery to the first cause of action.

The condition of the. proof under which the question of the effect of the release arose is" as follows, viz: under the ruling as-to the receipt, the whole case was opened on both counts of the complaint, and some evidence was given to sustain the second cause of action. When the release, was put in it was at once attacked by the plaintiff on the ground of fraud, the specification of that fraud being that it was procured from the plaintiff by misrepresentation of the officer of the city to whom and when it was given, on payment being made of the ostensible balance due the Contractors under the contract

The only evidence of the alleged misrepresentation was that at the time the paper was given the plaintiff, Freligh, asked whether or not any deduction had been made for inspector’s fees; and the answer of the representative of the city was that no such deduction was made. A witness called on behalf of the city, who had the conversation with Freligh, testified that no such conversation occurred; but on his cross-examination it was apparent that he testified not from an actual recollection of the particular conversation, but from his general course of doing business in like matters. The learned judge submitted to the jury on this testimony the single question as to whether or not any misrepresentation had been made that would affect the validity of the release on the question of the inspectors’ fees, and he declined the request of the counsel for the plaintiffs to submit to the jury any other question relating to the liability of the city for anything more than those fees.

That a release of the character given in this case is ordinarily an absolute discharge of the city from liability, and that it must be taken in its widest and most comprehensive sense, and according to its full tenor and effect, was distinctly decided by the court of .appeals in the case of Phelan v. The Mayor, etc., 119 N. Y., 86 ; 28 N. Y. State Rep., 683. But that case, of course, does not go to the - extent, nor, indeed, could it be well assumed on any ground,- that such a release cannot be attacked on.the claim that it' was given by misrepresentation or fraud on the part of the city.

The -learned judge on the trial assumed that it was open to attack "(as it certainly was) so far as the inspectors’ fees were concerned, but if it were open to attack on that ground, .the effect of determining that it was procured by fraud would necessarily be-

p. 729

to avoid the whole instrument and not merely as to the particular subject concerning which the misrepresentation was made. It was left to the jury to say on the whole evidence whether or not any misrepresentation had been made. The necessary effect of that misrepresentation would have been to avoid the whole instrument, and not merely quad a particular subject. That fraud which will vitiate an instrument absolutely nullifies it, takes it out of the scope of judicial consideration and leaves the case precisely as if no such instrument had been executed. It was evidently in the mind of the learned j udge below, that inasmuch as the only subject then under discussion between Mr. Freligh and the representative of the city was the inspectors’ fees, that the effect of the release should only be considered with reference to that one particular topic. But there can be no limitation as to the effect of a void instrument An instrument such as this is either void or valid, and if it is void, it is beyond judicial cognizance as being a factor in the case. The jury found under the instructions of the judge that the instrument was void. Their verdict cannot be supported on any other hypothesis, and that release being void, the case necessarily was relegated to the situation in which it stood as upon a simple receipt given for the amount due, which receipt of course, as the learned judge held, was open to impeachment. We do not intend to pass -upon, or intimate in any way, an opinion as to the sufficiency of the proof, or the effect of that proof, relating to the second cause of action, but we think it was error not to submit to the jury the whole case on this release. .It was really (by the ruling made) a submission of only one question to the jury and the other was eliminated from the case ; and as said before the release was either good or bad. If it were ineffectual as to the inspectors’ fees it was equally so as to the second cause of action. Therefore we think the judgment should be reversed and a new trial ordered, with costs to abide the event.

Van Brunt, P. J., and Barrett, J., concur.