North River Electric Light & Power Co. v. City of New York

O’Brien, J.:

The precise question we are called upon to determine is, whether the failure to make a written contract between the parties hereto is fatal to the plaintiff’s right to recover; or, differently expressed and using the language of the submission, “ the only objection of the Comptroller of the City of New York to auditing and paying the said bill is that no written contract has been entered into between the plaintiff and the defendant.” That would imply that all the requirements leading up to a valid contract had been complied with except the reduction of the same to writing and its formal execution. The changes effected by the Greater New York charter in establishing departments of the municipal government, and in conferring upon the heads thereof powers of administration, subject to the right of the municipal assembly to regulate by general ordinance the exercise of such powers, led to a contrariety of opinion as to the person by whom or the body by which particular public duties should be performed. As a consequence, in December, 1898, a controversy arose, which still continues, between the department of public buildings, lighting and supplies, and the board of public improvements on the one hand, and the municipal assembly on the other, as to their respective rights, ¡mwers and duties relative to contracts for lighting the streets and public buildings of the city. Assuming that it was necessary for the assembly to first pass ordinances, the board of public improvements prepared suitable resolutions and ordinances on that subject and forwarded them to the assembly for adoption. Notwithstanding the urgent necessity for action, the assembly absolutely refused to act, and various lighting companies having threatened to cut off the supply of light unless contracts were made in writing, the resolutions were withdrawn from the assemby in March, 1899, and suitable contracts, among others the one here in question, were made by the proper officers.

It appears as a result of that contest that the city would have been plunged in darkness after January 1, 1899, had it not been that the various lighting companies on being applied to expressed a willingness to proceed, without written contracts, provided assurances were given that the city authorities would see to it that they should be eventually paid. Such assurances were given by the commissioner and the board, who were the officers upon whom the duty devolved of attending to the lighting of the streets of the city; and, us stated by the corporation counsel, the lighting was furnished “ at the earnest solicitation of the Law Department, which hoped to find some way to solve the difficulty.”

Thus the officials, alive to the necessity and importance of having the city lighted at night, were anxious to discharge their duty, in the performance of which they had been hampered and obstructed by the assembly. That there was serious doubt as to where the power resided when the question was presented is apparent from the view taken by the judge at Special Term in the second department in the case of Blank v. Kearny, who enjoined the municipal officers from proceeding to execute any lighting contracts without the approval of the assembly ; and though it was subsequently held by the Appellate Division in that department, reversing the Special Term (44 App. Div. 592), that those officers, namely, the commissioner of buildings, etc., and the board of public improvements, could proceed without any affirmative action of the assembly, still the fact remains that their doubt had a. reasonable foundation. Their attitude and action, therefore, should be viewed not in the light of their position subsequent to the decision of the Appellate Division, when, having their rights confirmed, they entered into contracts with the lighting companies, but rather of their position as it existed in December, 1898. They then honestly believed that they were without power to make a written contract without the approval of the assembly — which they could not obtain; ana although it was thereafter decided that they were mistaken in that view, such mistake had a reasonable basis. This fact does not affect the good faith and honesty of the course they pursued, their mistake being natural under the new conditions which arose upon the Greater New York charter taking effect.

Regard being had to the fact that the only objection made is that the contract was not in writing, it would appear that all the necessary preliminary steps essential to a binding contract had been taken, and thus all the evils were avoided which the statute was intended to guard against, such as favoritism in awarding contracts without obtaining bids. Hence the failure to execute a written contract would not be fatal to the plaintiff’s right to recover. (Paul v. City of New York, 46 App. Div. 69.) If, however, that is not so, we are still of opinion that upon the conceded facts the city is liable to pay for the light furnished.

Deeming themselves to he without power to execute a written contract, the officials pursued the only course open by authorizing the companies to furnish the light upon terms and conditions which it is admitted were reasonable, and which were the same as those that had been imposed by the written contracts of the previous year and which, after public letting, had been entered into between the companies and the city. It is conceded that the prices agreed upon were fair and reasonable, and the obligation sought to be enforced is just. But it is urged that no recovery can be had for the reason that the contract was not made in the particular way and manner prescribed by the charter.

Many cases may be found wherein the salutary rule is announced that the statutory provisions as to the manner of making a contract binding upon the city must be complied with and limiting the power of the city and its officers. But, on examination, these' cases will be found to be instances where an attempt has been made to ignore or evade the statute or to enter into a contract utra vires or one which the officers had no right or power to make. In Abells v. City of Syracuse (7 App. Div. 501, 506), after stating the “ well-known principle that a municipal corporation finds the measure of its power in the statute creating it or imposing the power,” it is said: “ This principle has been invoked in many cases of local improvements in cases where fraud was apparent and collusion manifest between the corporation officers and the contractors; and when, under the guise of extra work, they have sought to avoid the publicity of advertising for bids for work and material, the courts have been careful to protect the people from such fraudulent contracts and contrivances, and hold the municipality strictly to its statutory duties and obligations; but in other cases, like the one at bar, where the corporation has received a substantial benefit and retained such benefit, and the work was necessary in carrying out the contract, either as extra work or to meet exigencies which were unforeseen when the contract was entered into, the courts have been more lenient in their construction of corporate powers upon principles of equity.”

Again, in Moore v. The Mayor (73 N. Y. 248), the court say: “ When there has been a bona fide performance of a contract, of which the city has had the benefit, there is a strong equity in favor of the contractor seeking his pay, entitling him to the benefit of a ratification even of a void contract, upon slight evidence, if the ratifying body has general power over the subject of the contract, and of an estoppel when an estoppel fairly results from the conduct of the general agents of the city.” Here, when the power of the officials who could make a written contract was subsequently determined, they complied with all the preliminary steps as to advertising for bids, etc., and in April, 1899, made a written contract which in terms covered the whole year of 1899, and thus, so far as they were able, ratified what had been done in the way of furnishing light for the prior months of the year.

In Port Jervis Water Co. v. Village of Port Jervis (151 N. Y. 117) the court say: “ It is true that no express contract was entered into between the parties for the three years in controversy; but the water was furnished by the plaintiff and accepted by the defendant during that time under circumstances in which the law will imply a contract to pay what the water was fairly and reasonably worth for the period.”

Here the officials who directed the furnishing of the light were the persons who had control and jurisdiction over the subject of lighting, and they did not attempt to violate or evade the requirements of the statute by entering into a contract contrary to its provisions. Doubtful of their powers concerning the execution of a written contract, and in an emergency thus created and under the pressure of a public necessity which required that they should act in order to avert a condition of affairs which would not only be a menace to persons and property, but if permitted even for a short time would be a public nuisance, they appealed to the lighting companies to furnish the light which was supplied, and which it is conceded in good faith and common honesty the city should pay for. It is further conceded that the course adopted was the result of an honest and conscientious desire on the part of the public officials and the lighting companies to meet a great public emergency with reference to a situation concerning which all thought no provision had been made by law. That the officials did what was honest and best in the emergency by entering into an arrangement by which light was obtained at reasonable rates, so as to avoid precipitating the city at night into utter darkness, is conceded, as are the facts that the city had the benefit of the light and that it should be paid for. The only question seems to be whether application for such payment should be made to the courts or to the Legislature.

We do not think that the court is without power to grant relief in a case where it is conceded that a thing of absolute necessity has been furnished at a reasonable price at the request of the officials having administrative charge of that department of the city’s affairs, who, acting in entire good faith, but under a mistake of law, deemed themselves wanting in power to make a written contract. We do not think the statute was intended to take away the power of the city officials charged with the duty of making such contracts to incur obligations under such a state of facts as is here presented. We find many eases holding that a municipality having the legal power to contract for a thing may be bound by an implied contract in the same manner as an individual or a private corporation. (Harlem Gas Co. v. Mayor, 33 N. Y. 309; Matter of Petition of Anthony Dugro, 50 id. 513 ; Nelson v. The Mayor, 63 id. 535, 544; Moore v. The Mayor, 73 id. 238 ; Baird v. The Mayor, 96 id. 567, 583; Port Jervis Water Co. v. Village of Port Jervis, 151 id. 111; McCloskey v. City of Albany, 7 Hun, 472; Peterson v. The Mayor, 17 N. Y. 449, 453; Kramrath v. City of Albany, 127 id. 575; Central Transportation Co. v. Pullman’s Car Co., 139 U. S. 24, 60 ; Dillon Mun. Corp. [4th ed.] § 459 ; Marsh v. Fulton Co., 10 Wall. [U. S.] 676; People ex rel. Gas Co. v. Board of Supervisors San Francisco, 11 Cal. 42; Argenti v. City of San Francisco, 16 id. 255; Brush Elec. Light Co. v. City Council of Montgomery, 114 Ala. 433; Pimental v. City of San Francisco, 21 Cal. 352; Taylor v. City of Lambertville, 43 N. J. Eq. 107.)

The leading case in this State .supporting the theory of an obligation upon an implied contract is Harlem Gas Co. v. Mayor (supra), which has been cited with approval in many subsequent cases, and which, so far as we have found, has never been expressly overruled. There the court said: “ The power, and duty of the municipal government to furnish light for the streets and avenues of the city is not disputed or put in controversy in this action. Indeed it could not be with any show of reason or good sense. In our northern latitudes,, when darkness prevails over half the twenty-four hours for a large part of the year, light diffused through the public streets and avenues is a predominant and urgent necessity which no well-governed city can do without. * * * The modern gaslight, diffusing its rays over every part of the public throughfare, is a source of pleasure and comfort and convenience, as well as a security against crime and disorder, which no other agency can supply. It is indispensable at all times, and no municipality can be said to be well governed which is not able to command its presence under all circumstances. Nor can it be maintained that a municipal corporation may not be made liable, like a natural person, upon an implied assumpsit unless the general rule is modified and changed by some positive legislation.” And in speaking of the failure to comply literally with the provisions of the law in regard to lighting contracts, it is further said in the same case: “ The purpose of the statutes is to insure economy in the public administration, and honesty, fidelity and good morality in the administrative officers. Competitive offers or bids have no other object but to insure economy and exclude favoritism and corruption in the furnishing of labor, services, property and materials for the uses of the city. This was the purpose and the only purpose of the framers of the statutes, and when they have this effect given to them nothing further is needed. They are not to have such a construction as to defeat this purpose, to impede the usual and regular progress of the public business or to deprive the inhabitants, even temporarily, of those things necessary and indispensable to their subsistence, their health, or the security and protection of their persons or property. Contingencies may arise when services, materials and property, above the prescribed value, may be immediately needed, and where competitive offers and written contracts would be unserviceable or impossible. In such a case the statutes would not apply, because such application could not have been intended. Whenever the nature of the service or of the property needed for the public uses, or the time within which it must be had to prevent irreparable mischief under competitive offers is impossible, then the provisions of the acts referred to cannot apply, because such could not have been the intention of the lawmakers, and such emergencies were not amongst the mischiefs which the provisions referred to were designed to correct.”

Upon the agreed facts here, there was shown a great public necessity and an emergency not contemplated by the statute; one which would not permit of delay, but required immediate action by the defendant to protect its interests, as well as the lives and property of its citizens. There being, therefore, no attempt to override • the statute, or to do that which it prohibited, and a situation being presented to which the statute did not apply, we think the plaintiff may invoke the rule of liability similar to that relating to an implied contract.

It will be noticed that we have not thus far adverted to nor placed any stress upon the conceded fact that the plaintiff here was the only company having the ability to furnish lights in the territory in question and, therefore, had no competitor; and that under the former advertisement for bids, it was the only bidder. Upon the argument this fact was not relied upon, and request was made for a decision which would be equally ajsplicable to the other companies who, by permission of the court, were heard upon the argument, and in respect to which that fact did not exist ■— there being in the territory, or a portion of it in which they furnished light, other competitors. Considering, then, the question as we have done, stripped of that circumstance, we think that the usual and exceptional facts appearing of the light being furnished in an emergency at the request of the city officials, but at a price fixed by the officer having administrative charge of that part of the city’s affairs — the failure to enter into a written contract having resulted from a technical mistake — together with the evident good faith and entire honesty of all parties, present a case never likely to create a precedent for unlawful raids upon the treasury. Whether we invoke the rule of an implied contract or not, there is, upon the facts here appearing, sufficient to justify our conclusion that the city should pay its just obligation incurred by its officers in the discharge of a great public duty and as the result of a pressing public necessity, to save its citizens from danger to person and property consequent upon the city being in darkness.

The judgment should, therefore, be for the plaintiff, but, under the circumstances, without costs.

Patterson, J., concurred ; Rumsey and Ingraham, JJ., dissented.