Opinion
July Term, 1902.
Terence Farley, for the appellant.
L. Laflin Kellogg, for the respondent.
It is claimed by the appellant, as a first ground upon which to defeat a recovery in this action, that by the provisions of the contract there could be no assignment of the same without the previous written consent of the commissioner of public works, or his successor, indorsed thereon, and as such consent was never given no cause of action vested in the plaintiff as against the defendant. In Fortunato v. Patten ( 147 N.Y. 277) it was held that such a provision of the contract was for the protection of the city and to secure for it the skill and intelligence of the person with whom the city contracted. It was recognized in that case, however, that there was a wide distinction between the assignment of a contract and the assignment of moneys falling due thereunder after performance. For the purpose of disposition of this question, we assume that there was a breach of the contract upon the part of the city, and, if so, the contractor became entitled to have and receive the sums of money which had been earned thereunder and for such damages as might have been occasioned by the breach. An assignment, therefore, of these claims would not be an assignment of the contract but of a cause of action against the city for the recovery of moneys which it was obligated to pay, and in this view of the question there would be no violation of that clause of the contract which prohibited its assignment without the consent of the commissioner of public works. The clause in question is a restriction solely upon the assignment of the contract as such and not of the moneys earned thereunder which the city is bound to pay. ( Mellen v. Hamilton Fire Ins. Co., 17 N.Y. 609; Brichta v. N.Y. Lafayette Ins. Co., 2 N Y Super. Ct. 372.) Such an assignment is not an assignment of the contract. ( Brace v. City of Gloversville, 167 N.Y. 452.) If, therefore, the evidence authorized a finding that the city has been guilty of a breach of the contract, and that there was money due and payable according to its terms, the plaintiff in this action acquired title thereto and was authorized to maintain this action for its recovery. It also appeared that the assignment was not made until the work had been completed by another contractor, so that at the time when this assignment was made there was no contract in existence to assign; consequently, the city could not be deprived of the services of the particular contractor in the performance of the contract, nor could it be vexed by being compelled to deal with other parties with whom it had entered into no contractual relation. There was nothing, therefore, in existence which could be assigned at the time when this assignment was made, except the claim which was held by the contractor against the city, predicated upon its breach of the contract.
By the terms of the contract it is insisted that the commissioner of public works was justified in declaring the contract abandoned. Upon this subject the contract provides that the commissioner may at any time, if he shall be of opinion and shall so certify in writing that the work, or any part thereof, is unnecessarily or unreasonably delayed, or the contract is being willfully violated, or for other cause of bad faith on the part of the contractor, direct the contractor to discontinue all work by written notice to that effect, and thereupon the contractor is required to discontinue. Under that clause of the contract relating to payments by which thirty per cent is authorized to be retained, the payment of the seventy per cent is to be based upon the determination of the commissioner of public works, as he shall deem advisable. It is evident that this authority, which is vested in the commissioner of public works, both as to performance of the contract and payment thereunder, is not to be exercised arbitrarily at the mere will of the commissioner. There must exist some basis therefor, and the commissioner must fairly exercise his judgment and discretion thereon, and, in the absence of any ground, the commissioner would not be justified in directing the contractor to cease performance of the contract or withhold the payment of the seventy per cent when the contractor was clearly entitled thereto by the terms of the contract. It is evident that if the contract had been performed by the contractor so as to entitle him to the payment under the ninth certificate, then it became the duty of the commissioner of public works to authorize a payment, and if there was a breach upon the part of the city by refusing payment of the ninth certificate, and also in withholding the delivery of the tenth, then the commissioner of public works was not justified in declaring the contract abandoned. Such declaration was of a time considerably subsequent to the date when the contractor became entitled to these payments, and if he should have received them at that time the city could not, through the commissioner of public works, by subsequent declaration, declare the contract conceled, nor could the contractor be placed in default by any such declaration, if he had been guilty of no breach himself. To permit the city so to do would authorize it to take advantage of its own wrong. ( Graf v. Cunningham, 109 N.Y. 369; Wright v. Reusens, 133 id. 298.)
The contract was comparatively large, took a considerable time for its completion, and necessarily involved a large expenditure of money in performing the work. It is necessarily to be presumed, therefore, that the seventy per cent payment was necessary from time to time as the work progressed, to enable the contractor to receive sufficient money therefrom to properly carry on the work. The payment of this sum, therefore, was evidently necessary and essential to enable the contractor to properly perform the contract. It is evident that in these respects, as well as in all others, good faith and fair dealing were required at the hands of both contracting parties. The question, therefore, comes ultimately to rest upon the question as to whether the contractor became entitled to payment under the ninth certificate. By the terms of the contract his right was to be evidenced by the certificate of the surveyor appointed by the city, subject thereafter to the proper scrutiny of the commissioner of public works. In the absence of fraud or mistake the certificate thus given was binding and conclusive upon both parties and entitled the contractor to payment according to its terms. ( Sweet v. Morrison, 116 N.Y. 19; Wyckoff v. Meyers, 44 id. 143; Smith v. Mayor, 12 App. Div. 391; New York Building Co. v. Springfield El. Co., 56 id. 294.)
It is undisputed that the surveyor, acting for the city, gave to the contractor the certificate contemplated thereby under and by virtue of which the contractor became entitled to have and receive, as a seventy per cent payment, the sum of $7,980. To this certificate the commissioner of public works made no objection. On the contrary, after consultation with the comptroller, the commissioner of public works examined the work, and recommended to the comptroller that the certificate be paid as certified and returned the same to the comptroller for payment. So far as the terms of the written contract are concerned, there is nothing therein which authorized the comptroller either to suspend the work under the contract or refuse payment when properly certified by the surveyor. While undoubtedly the comptroller by the terms of the contract was invested with authority to refuse payment when he had reason to believe that the same was improper and the result either of collusion and fraud or mistake, he could not arbitrarily refuse payment if the certificate was properly given for work performed. He had no power to work a forfeiture of this contract and place the contractor in default under the terms of the contract. That authority was invested in the commissioner of public works, and the comptroller was bound to act fairly and reasonably in refusing payment. It is clear, therefore, that so far as the contract is concerned, all of the persons who were charged with the duty of its immediate execution and supervision upon the part of the city acquiesced in the payment of the ninth certificate, and prima facie, therefore, the city was in default in refusing to pay according to its terms.
And so also the contractor, if he thereafter performed the contract, was entitled to the tenth certificate and payment thereunder. These two certificates carry the contract to completion so far as the filling and grading were concerned. It is, therefore, evident that the plaintiff showed himself entitled to recover, as he established a breach of the contract by undisputed proof so far as the action of the city and its agents are concerned, who were charged with the duty of executing this contract. These acts prima facie constituted breaches of the contract on the part of the city. ( Jones v. Judd, 4 N.Y. 411; Wharton Company v. Winch, 140 id. 287; Curnan v. D. O.R.R. Co., 138 id. 480.) And the refusal on the part of the city to pay the tenth certificate was not justified if the work had been performed. ( Bowery Nat. Bank v. Mayor, 63 N.Y. 336.)
The only ground, therefore, upon which the defendant could resist payment was by showing either actual fraud or collusion or mistake. No fraud or collusion was shown; at least, the evidence would scarcely have justified such finding. The defense came, therefore, to rest upon the ground that the certificate was mistakenly given under a misapprehension as to the extent of the work which had been performed. Upon this subject an immense volume of testimony was given upon both sides, running the whole gamut of the character of the soil upon which a part of the filling was placed, measurements of engineers based upon actual borings, amount of material actually transported upon the cars and used in the construction of the grade, expert testimony, soundings, and practical expert observation from every point of view of which the case admitted. It is not difficult, therefore, to see that there was a wide divergence in the testimony which was given by the various witnesses and conclusions diametrically opposed were drawn by experts and engineers from substantially the same conditions. It would serve no useful purpose to incumber this opinion with an exhaustive review of the testimony given upon the trial. We have carefully read the whole of the record and have no difficulty in finding the existence of evidence sufficient to support the findings and conclusions of the learned referee. Nor are we prepared to say that we should disagree with his conclusion; on the contrary, there is evidence which furnishes substantial support for the judgment which he has rendered, and while in many respects testimony has been given which, if credited by the referee, would have authorized a different conclusion, yet there is no such preponderance of such testimony as calls for interference with the judgment by this court. It follows, therefore, that the judgment should be affirmed, with costs.
VAN BRUNT, P.J., O'BRIEN, INGRAHAM and McLAUGHLIN, JJ., concurred.
Judgment affirmed, with costs.