Reilly v. Mayor — 54 N.Y. Super. Ct. 463

Majority

p. 463

WILLIAM J. REILLY, Respondent, v. THE MAYOR, ETC., OF NEW YORK, Appellants.

Headnote

Lowest bidder under chapter 410, Laws 1882, relative to work done for, and material furnished to, the city of New York.

To constitute the lowest bidder to whom under chapter 410 of the Laws of 1882, a contract for the doing of work for the city of New York is authorized to he awarded, it must at least appear, where the biddings are under an advertisement by the city stating an estimate by its surveyor of the nature and extent of the work to be done and inviting proposals therefor, that such estimates were made by the use of the best means of making certainty as great and uncertainty a# slight as practicably possible, so that they shall be an approximate description of the work actually done and so that a calculation of the cost of the work based on them, will be more or less (disregarding inevitable and relatively unimportant inaccuracies) the same as if the calculation were made as to the work when done, and that the cost of the work under his

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• bid calculated on the basis of such estimate was lower than its cost would be under any other bid calculated on the same basis.

Estimates founded merely upon guess as to the facts on which they are based do not constitute either a proper or legal means or element by which to determine the facts as to the lowest bidder for the work to be done.

As in the case at bar, there was evidence to the effect that the official who made the estimate on which the calculations were made, based on the bidding, and under which the contract was awarded to the plaintiff as the lowest bidder, was in ignorance of the quantity of the work to be done and the proportion of rock and earth, and merely guessed at these matters; and as the defendant was not allowed to give evidence that would have helped to determine the character of the estimate as a description of the work to be done, and would have tended to show that proper means were not used to make the estimate certain to any extent —the judgment was reversed and a new trial ordered.

Before Sedgwick, Ch. J., Trtiax and Dugro, JJ.

Decided May 8, 1887.

Appeal by defendants from judgment at Trial Term entered in favor of plaintiff against the defendants.

The action was brought to recover the contract price for work done by plaintiff under a contract awarded to him as the lowest bidder for the regulating and grading 185th street from Tenth avenue to the Kingsbridge road, and setting curb-stones and flagging sidewalks therein.

The trial court directed a verdict for the full amount claimed.

E. Henry Lacombe, counsel to the corporation, and D. J. Dean, of counsel for appellants on the questions considered in the opinions, argued.

I. The contract in question, not having been given to the lowest bidder, is void and no ^recovery ca,n be had for work done thereunder. Section 64 of the Consolidation Act requires that such contracts shall be made with the lowest bidder therefor, founded upon sealed proposals, received in compliance with public notice, duly advertised.

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The statute requires that the work which is to be done shall be publicly advertised.

An advertisement, which fails to state correctly the work which is to be done, does not comply with the intention of the statute, but evades its requirements and defeats the intent thereof.

Therefore, the courts have uniformly condemned contracts, which have been founded upon proposals and advertisements, which state the work to be done, partially or incorrectly, and invite bids upon a false basis ; which exclude bona fide competition for the actual value of the work to be performed. Brady v. The Mayor, 20 N. Y. Rep. 312 ; Appleby v. The Mayor, 15 Howard, 428 ; McSpeddon v. Stout, 4 Abbot, 23 ; Matter of Mahan, 20 Hun, 301 ; Affirmed by the Court of Appeals in 81 N. Y. 621 ; In the Matter of Merriam, 84 N. Y. Rep. 596 ; Starin v. The Mayor, decided at General Term of the Supreme Court, October, 1886 ; Bigler v. The Mayor, 5 Abbott's New Cases, p. 51; Smith v. The Mayor, 10 N. Y. Rep. 504 .

Miller & MacFarlane, attorneys, and Wallace MacFarlane, of counsel for respondent, on the questions considered in the opinions, argued.

I. The claim made by the defendants in this case, that while the plaintiff’s prices, as stated in his bid, for the several classes of work to be done multiplied by the estimated quantities, made him the lowest bidder, those estimated quantities were so erroneous that if plaintiff’s prices are multiplied by the quantities of work actually done, as shown by actual performance, he will not be the lowest bidder, is not sustainable.

This claim leads necessarily to the position that the lowest bidder should be determined after the quantities of work to be done have been shown by actual performance—that is, after the contract has been awarded and performed.

The law required this contract to be awarded to the

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lowest bidder whose bid complied with certain statutory-requirements, about which there is no question in this case. Consolidated Act, chap. 410, Laws 1882, § 64.

A contract to do work and furnish materials must be awarded before the work is done or the materials furnished. Therefore, to award the contract to the lowest bidder, as the law commands, the defendants were constrained to devise and follow some method of determining the lowest bidder before awarding the contract. The method of determining the lowest bidder followed in this case, and which it was conceded on the argument at trial term had been followed for a generation in New York city, was as follows : The defendants, acting through their department of public works, had the site of the proposed work surveyed, and estimated the quantities, of work to be done, to wit: 7000 cubic yards of earth excavation ; 9000 cubic yards of rock excavation; 3124 lineal feet of curbing excavation; 11,540 square feet of flagging excavation. These estimated quantities were published in the proposals to bidders Avho were required to bid a price per yard or foot for each class of work. When the bids were opened the prices bid were multiplied by the estimated quantities, and the lowest aggregate bid determined the lowest bidder. The plaintiff was determined by this method to be the loAvest bidder, and the contract was aAvarded to- him.

It is clear that this method determined with certainty the loAvest bidder for the estimated quantities of work to be done, Avhich is all that is .possible as a compliance with the law. The nature of the case did not admit of certain estimates. Nobody could tell Avith certainty hoAV much earth or rock avouM be found in excavating the piece of land in which the street «was to be made.

The defendants support their claim, that plaintiff, tested by the actual result of the work, is not the lowest bidder, by a curious argument drawn from the case of Brady v. The Mayor, etc., 20 N. Y. 312 . It appeared

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in that case that the street commissioner in his proposals to- bidders, stated estimated quantities of all classes of work, except rock excavation; he called on bidders to state the price per cubic yard for removing rock, should any be found. Of course, in determining the lowest bidder the prices bid for rock did not enter into the aggregate of the bids, because there was no estimated quantity of rock by which to multiply the prices bid on that item. The plaintiff bid $25.00 per yard for removing rock, and was declared the lowest bidder. This result was reached by a comparison of the bid on the other items of the contract. This contract was declared illegal because the law called for competitive bidding, and there was no competition as to a substantial part of the work, viz., rock excavation. The principle of this decision is that the contract was awarded on non-competitive bids. See in re Merriam, 84 N. Y., page 604.

The defendants now argue that though an estimated quantity of each item was stated in the prop.osal in this case, yet the actual result shows that the estimate of earth was much less than the actual quantity; that, therefore, the estimate did not contain a portion of the work to be done, viz., the amount of earth excavated above the estimated quantity; and so like the Brady case left out a substantial portion of the work to be done.

This argument leads the defendants again to the untenable conclusion that the lowest bidder is to be determined after the contract has been awarded and performed, but a complete answer to puch argument is found in the case of Brady v. The Mayor, etc., itself.

The opinion shows that the court clearly understood that the estimated quantities could be approximate only. At page 318, Judge Dentó says:.....“ I cannot persuade myself that this was a case in which it was impossible, or really difficult, to ascertain and state in the invitation for bids that the work in question would require the blasting and removal of a quantity of fixed

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rock, and to give an estimate of the number of yards sufficiently exact to enable persons desirous of competing to propose with prudence and safety for each item of the work. If this had been done, and if the result of all the offers had been taken into account in selecting the lowest bidder, a contract given to that person would have been awarded according to the statute.” See also Bonesteel v. Mayor, etc., 22 N. Y., p. 169.

According to the defendants’ argument, every contractor to whom a contract is awarded as the lowest bidder, tested by the data in the proposal, takes his contract subject to a condition subsequent, which releases the defendants from any obligation to pay him, if on actual performance by him it appears that had the quantities of work actually done been in the proposal, instead of the estimated quantities, he would not have been the lowest bidder. This should be a sufficient reductio ad absurdum, especially when the law vesting the contract in the lowest bidder at the opening of the bids had been repealed at the time this contract was made, and the defendants given full power, if they distrusted the estimates, to order a re-examination and re-let the work.

Section 64 of chapter 410 of Laws of 1882 provides that all contracts shall be awarded to the lowest bidder. The lowest bidder for the work actually to be done is intended, and not the lowest bidder for an estimate of the work to be done.

The contractor Reilly was certainly not the lowest bidder for the work provided for by the contract in the matter before us; for in this case, only an estimate of the quantities of material to be removed was obtained, and these estimated quantities were relied upon as factors in determining the lowest bidder; the actual work to be done was no factor whatever in the dótermination.

Some of the bids for the estimated quantities of rock and earth, etc., were as follows :—

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Cubic y’d Cubic y’d

earth. rock. Curb. Flag. Total.

W. E. Dean,.............$0.25 $1.45 $0.78 $0.26 $20,672.12

M. H. Foley,............. 1.78 1.20 1.20 1.2Ó 12,848.32

John B. Devlin......... 70 1.25 55 22 20,782.00

R. J. Mills,............... 65 1.35 75 30 22,955.00

Wm. Phelan,____________ 40 1.60 65 26 23,131.00

John Slattery,..-_________ 68 1.75 65 26 26,891.00

Thomas E. Crimmins,.. 50 1.75 60 25 24,909.40

Wm. J. Reilly,.......... 1.69 .01 01 01 12,336.64

The amount of these bids attested by the actual quantities of rock, earth, etc., were :

W. E. Dean, $15,309.50 ; M. H. Foley, $27,121.47 ; John B. Devlin, $19,681.24; R. J. Mills, $21,311.85; Wm. Phelan, $18,220.37; John Slattery, $23,472.06 ; Thomas E. Crimmins, $20,045.85; Wm. J. Reilly, $25,255.23.

The lowest bidder, therefore, for the actual work to be done, was W. E. Dean. •'

There is no warrant in law for making estimated quantities of the respective classes of work to be done, factors in the determination of the question as to who the lowest bidder is for public work, the lowest bidder for the contract (not the presumed lowest bidder) is the bidder intended by the statute. Sec. 65 of chap. 410, Laws of 1882.

It is unnecessary to say that if the work were -all of one class, as the removal of earth, or of a mass as amass, no trouble would arise in determining the lowest bidder, but when it is proposed, as in the case at bar, to make one contract which shall provide for the removal of a mass made up of earth and rock, in unknown proportions, a difficulty arises. For then it is apparent that if the price fixed for the removal of earth be other than that fixed for the removal of rock, the only manner in which the question can be determined in the method adopted by ttie city officials in this case, is by a computation in which the respective prices for earth and rock removal, and the respective quantities of earth and rock

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will be the factors. And if it is not possible to determine the proportions of the earth and rock no determination of the question can be made.

The method adopted in the case at bar of estimating the respective proportions of earth and rock, and making the amounts of these estimated quantities factors in the determination of the question, is manifestly no solution, it is a mere conjecture dependent for its verity upon whether the estimates be correct or not.

The lowest bidder for the actual work to be done is intended, and not the lowest bidder on the estimated quantity of work to be done. Appleby v. The Mayor, 15 How. Pr. 428 .

“ The party aggrieved was employed in contravention of the policy and terms of the statute. He could not contract with the city except through its authorized agents, and he is chargeable in law with notice of the limitations of official authority imposed by general laws.” Donovan v. The Mayor, etc., 33 N. Y. 293 ; McDonald v. The Mayor, etc., 68 Ib. 23.

To make a contract for removing a mass containing unknown proportions of rock and earth, it is not necessary to resort to such a system as was adopted in the case at bar.

Many lawful methods of contracting for the wqrk suggest themselves to our minds in which the lowest bidder for the work actually to be done can be ascertained with certainty.

The object of the statutes and the ordinances was to invite real competition for work and to secure its performance for the lowest price which fair and real competition would produce. Matter of Ralph Marsh, 83 N. Y. 434 .

The system adopted in the present case is neither sanctioned by law, nor warranted by necessity; it is permissive of pernicious and dangerous results, and could never have been intended to be authorized by law.

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We have now before this court a case wherein, under this system of accepting a lowest bidder for estimated quantities as the lowest bidder for a contract, one whose bid (by a computation based on estimated quantities of earth and rock and the bidders’ prices for their removal per cubic yard) was $15,526.28, and who by the application of his figures to the actual quantities, as they were ascertained on the completion of the work, received from the city $117,395.68, while the reasonable cost of doing the work was $26,541.79.

It will probably be claimed that, as the city stated its estimate of the respective quantities, and then called for estimates of price per cubic yard only for the various works to be done, with notice that it would not be bound as to quantities, no injustice could be done by an award—in other words, that all the bidders, knowing that the estimated quantities were to be factors only in ascertaining the lowest bidder, were aware that they must determine for themselves the actual qualities. Such reasoning is plausible but specious, «and cannot control this court. The estim«ated quantities were used as though they were the true quantities in the letting of the work, and the city was thereby made a party to a venturesome speculation far removed from the letter and the spirit of the Law. A bidder’s figures will of necessity be fixed by him with regard to the proportionate quantities of earth and rock, as he believes them to exist; and his selection of factors in the determination of the award will be such as will make his bid in amount as he desires, while the factors he selects may be such as will cause the city to pay the highest possible price for the variance between the quantities as estimated by the city and the quantities as they actually exist.

No authority was given by the act to the common council to adopt any ordinance or regulation which should in any way interfere with or prevent the ascertainment of the lowest bidder for the contract, that is,

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for the actual quantity of any public work to be done, or which would leave the determination of such a lowest bidder to chance or conjecture.

Any system of letting contracts for public work is illegal which necessitates the determination of the “ lowest bidder” by conjecture, when it is possible to let a contract for the same work to “ a lowest bidder ” in whose selection no element of chance enters. The disposition of this question makes it unnecessary to consider the others, raised by the appeal.

The judgment should be reversed, and a new trial ordered, with costs to abide the event.

I agree with Judge Dugro in his opinion.

The statute provides that the head of the department shall award the contract to the lowest bidder. Of course, the bidding must refer to the work to be done. If the basis of ascertaining who is the lowest, bidder be an estimate of quantities or specifications, they are used on the assumption that they correctly describe, in an approximate way, the work to be done.

The necessary implication in the statute is, that means shall be used that are adequate to ascertain who is the lowest bidder. A bidder must abide the true construction of the statute as well as the city officials. He who claims to be the lowest bidder must justify his claim by the fact that he was lowest bidder, as ascertained according to the statutory intent.

The statute requiring, in substance, that it shall appear who is the lowest bidder, there can be no award of the contract if, after considering all the contingencies, it appears that one of several may be the lowest bidder, but that it is impossible to fix upon the one who is.

One of the implied conditions of the statute is that, if estimates and specifications be used, they are to be shaped so that a calculation upon them will be more or less—that is, disregarding inevitable and relatively un

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important inaccuracies, the same as if a calculation were made as to the work when done.

If it should appear, as in this case it does appear, that one of the bidders is lowest only on the assumption that the estimate properly describes the work and that another is the lowest, if the estimate does not properly describe the work, a decision would turn on the character of the estimate. Under the statute, it is not too late to prevent a contract being awarded illegally because the insufficiency of the estimate is discovered, or rather recognized, for the first after biddings are opened. The question would be: Does it appear that the estimate is an approximate description of the work, or does it appear that it cannot be affirmed that it is an approximate description, because it is no statement of things known to be facts, but is only a guess as to the facts ?

This must be determined by a comparison of the statements of the' estimate with the facts of the proposed improvement. An estimate does not import in itself any conclusively absolute verity. Its value as helping to ascertain who is the lowest bidder does not arise from its being made, but from its correspondence with the work to be done.

Testimony as to the proposed improvement might shoAv that it Avas possible to make a proper estimate, and that such Avas not made, or that it was not possible to make such, and that therefore the estimate as made afforded no means, of concluding whether a bidder upon its terms would be the loAvest bidder for the work in fact to be done.

The truth as to the estimate in the present case is, that it was very far from an approximately correct description of the work. The work done, of excavation, was of 18,973 cubic yards; the estimate called for the excavation of 16,000 yards. There were, in fact, 15,033 yards of earth excavated; the estimate named 7000 yards of earth. There were 3943 yards of rock excavated ; the estimate named 9000 yards.

Dissent

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The official who made the estimate was in ignorance df the quantity of work to be done and of the proportion of rock and earth. He and no one could say that the estimate was correct—he could not believe that it was. At the best it was a guess. These things appear in the facts and documents in testimony on the trial, and the defendant was not allowed to give testimony as to the facts of the proposed improvement that would have helped'to determine the character of the estimate as a description of the work to be done.

If, on all the facts, it should be inferred that the quantities of the estimate were only given which might or might not turn out to be true, then I am of opinion that, as matter of law, it was illegal and against the statute to find that the plaintiff, rather than others, was the lowest bidder. It was matter of chance at that time as to who was the lowest bidder.

It is argued that such a train of reasoning disregards the fact that, in estimates made before the awarding of the contract, there must be uncertainty. This is true; but that kind of uncertainty is not the result of an omission to use the best means of making certainty as great and uncertainty as slight as is practically possible. In the present case the facts may show that proper means were not used to make the estimate certain to any extent, but that as to rock and earth it was altogether uncertain.

It may, perhaps, be said that there were no means of making a reasonably certain or approximately correct estimate. If that were the case, and for that reason it could not be ascertained who was the lowest bidder,-it is not a justification of awarding a - contract under the statute,'as if there were a known lowest bidder.

I do not agree with the conclusion of the majority of the court.

At the time the act of 1882 was passed (chapter 410), there was an ordinance of the common council of this

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city in force which provided the way in which it should be determined who was the lowest bidder. This ordinance the legislature continued in full force and effect by section 84 of chapter 410 aforesaid. When the legislature enacted this law they in effect made the ordinance of the common council which was then in force a part of the laiv of 1882, and pointed out the way in which it should be determined who was the lowest bidder.

The method of determining who was the lowest bidder, which was used in this case, is the method that has been in use in this city for a great many years—and particularly since the charter of 1873 was passed, in which charter there was a provision similar to section 64 of chap. 410 of the Laws of 1882.

The legislature knew the interpretation that was put upon the charter of 1873, and it is entirely fair to infer that, if the construction put upon that act by the public authorities of the city did not carry out the intent of the legislature, other language would have been adopted in the act of 1882, which would have carried' out such intent. The re-enactment of the provision of the charter of 1873, above referred to, by the legislature in 1882, should be deemed to be an adoption by the legislature of the construction put upon the act of 1873 by the city authorities. People ex rel. Outwater v. Green, 56 N. Y. 475 . This construction has almost the force of a judicial exposition. People ex rel. Williams v. Dayton, 55 N. Y. 367 .

In this connection it is to be noticed that section 64 of chap. 410 requires the counsel to the corporation to settle the terms of the contract “ as an act of preliminary specification to the bid or proposal,” and that the contract sued on here contained the very surveyor’s estimate of the nature and extent of the work to be done, which the majority of this court think did not furnish a basis on which to let the contract, and was settled by the law officer of the city.

That this method of determining who is the lowest

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bidder is not illegal, is supported, I think, by the Matter of Merriam, 84 N. Y. 601 .

The principal contention urged against the validity of the assessment which was the subject of review in that case was that the work was not let to the lowest bidder, as required by the charter and the ordinances of the common council of the city of New York, because the items of rock excavation were not submitted to competition, but a price was arbitrarily fixed therefor by the Commissioner of Public Works. Judge Miller, in writing the opinion of the court in that case, called attention to the fact that the ordinance, chap. 8, article 2, requires tha t supplies and work shall be furnished by contract; that no contract shall be made until proposals are advertised for; and that they shall state the quantity and quality of the supplies or the nature and extent as near as possible of the work required.” Sections 15, 16, 17, title 2. The city claimed that it would be exceedingly difficult to ascertain beforehand the quantity of rock excavation, which constituted the largest item in the contract, so as to make an estimate sufficiently correct to carry out the purpose of letting the contract to the lowest bidder. These suggestions, continues Judge Miller, “ are not without force, and while there is strong ground for the claim that the price fixed for one or more items is fair and reasonable, and there no evidence of fraud or extravagance, and the quantity could not be ascertained without a considerable expenditure of money, and that this could be done in some instances consistently with the interests of the public in view, and with the statute and ordinances, we are, upon the whole, of the opinion that to carry out intention of the law to award contracts to the low-bidder, it is requisite that the quantity of rock excavation as near as possible should be stated in the proposals—and that fixing the price for the same was disregard of the law, and a violation of the statute and the ordinance of the city which is cited.” And

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again, he says that “the intention of the lawmakers was to enforce a submission of every important item for competition, naming the quantity so far as it could he reasonably ascertained.”

It seems to me that the way provided by the regulations and ordinances of the common council is the only reasonable way in which the city could submit proposals for work to be done, and that the city is protected by the power which is given to the head of the department to reject all bids and re-advertise the work anew.

The only other way in which work could be let would be by submitting the whole work in a lump to competition, the effect of which would be to restrict competition.

Cases cited

In re Mayer 81 N. Y. 621 N.Y. 1880-04-13 p. 465
Brady v. Mayor of New York 20 N. Y. 312 N.Y. p. 466
Appleby v. Mayor of New-York 15 How. Pr. 428 N.Y. Sup. Ct. p. 470
People ex rel. Williams v. Dayton 55 N. Y. 367 N.Y. 1874-01-20 p. 475