Acme Builders, Inc. v. County of Nassau

Latham, J.

In this action to recover a balance allegedly due upon a contract to repair and alter the Nassau County Jail and to recover the value of extra labor and materials furnished, the *318plaintiff was awarded $40,000 by a jury verdict. The defendant has appealed from the judgment entered March 3, 1970 upon the verdict. The judgment included interest at 6% per annum from August 2, 1963, but the interest has been reduced to the rate of 3%, by an order made on May 8, 1970. The defendant has also appealed, as limited by its notice of appeal and its brief, from the portions of that order which denied the defendant’s motion to set the verdict aside as against the weight of the evidence and which, while reducing the interest rate, permitted the interest to be computed from August 2, 1963. The plaintiff has cross-appealed from the portion of the order which reduced the interest to 3% per annum.

I have no difficulty in concluding that the jury verdict should be permitted to stand. Further, insofar as the appeal by the defendant is from the portion of the order which refused to set aside the verdict, it should be dismissed, since such a determination, when made upon the minutes of the trial only, is not appeal-able. I therefore pass on to the issue of the award of interest.

In my opinion, the Special Term was correct in determining that, since the defendant is a municipal corporation, the proper rate of interest was 3% per annum, pursuant to subdivision 1 of section 3-a of {he General Municipal Law, and that interest at that rate runs from August 2, 1963, the date when the defendant refused to malp payment on the plaintiff’s claim. Subdivision 1 of section 3-a provides inter alia: ' ‘ the rate of interest to be paid by a municipal corporation upon any judgment or accrued claim * * f shall not exceed three per centum per annum ’ ’. CPLE 5004 states that interest with respect to a money judgment ‘ ‘ shall I be at the legal rate, except where otherwise prescribed by statute ’ ’.

The plaintiff argues that, since section 3-a of the General Municipal Law does not prescribe interest on a cause of action arising from a breach of contract, and since CPLE 5001 (subd. [b]) states, inter alia, that interest levied on an award after trial in a contract action should be computed ‘ ‘ from the earliest ascertainable date the cause of action existed ”, subdivision 1 of section 3-a does not apply and, therefore, interest at the rate of 6% per annum (the legal rate at the inception of this action) should be levied from the date when the defendant refused to make payment on the claim, to wit, August 2, 1963, to the date of the entry of the judgment. I do not agree with this contention so far as the rate of interest is concerned. I do not believe that the applicability of CPLE 5001 in the instant action excludes the applicability of subdivision 1 of section 3-a of the General Municipal Law.

*319CPLR 5001 does not specify the rate of interest that should be levied on an award in a contract action, but indicates when interest should start to run on the award, namely, from the earliest ascertainable date the cause of action existed. Similarly, CPLR 5002, captioned ‘ Interest from verdict ’ ’, etc., states that interest should run “from the date the verdict was rendered” (emphasis supplied) and CPLR 5003, captioned “ Interest upon judgment ’ ’, states inter alia that ‘ ‘ every money judgment shall bear interest from the date of its entry ” (emphasis supplied).

In contradistinction, both CPLR 5004 and subdivision 1 of section 3-a of the General Municipal Law, although silent as to the time from which interest should be computed, specify the rate of interest that should be levied, the former applying to awards not otherwise covered by statute and the latter applying to awards against municipalities.

I therefore conclude that, when an award is rendered against a municipality, subdivision 1 of section 3-a of the General Municipal Law, with its prescribed rate of interest, should be read and applied in pari materia with CPLR 5001 through 5003; and, in the same vein, CPLR 5004, which prescribes a ‘ ‘ legal rate ’ ’ of interest, should be so read and applied with CPLR 5001 through 5003 when no special interest-rate statute comes into play.

Thus, I construe the language used in the General Municipal Law to mean that, when an award is obtained against a municipality, interest of 3% per annum should be computed (1) from the earliest ascertainable date the cause of action existed * * * to the date the verdict was rendered” if the matter inter alia is a contract action (CPLR 5001, subds. [b], [c]; Adler v. Board of Educ. of City of N. Y., 33 Misc 2d 789, affd. 18 A D 2d 1053; Futia Co. v. Schenectady Municipal Housing Auth., 33 A D 2d 591); (2) upon the total sum awarded, including interest to verdict ”, if the matter inter alia is a contract action, and “ in any action, from the date the verdict was rendered * * * to the date of entry of final judgment ” (CPLR 5002 [emphasis supplied]; cf. Decker v. Dundee Cent. School Dist., 4 N Y 2d 462); and (3) from the “ date of * * * entry” of a money judgment against a municipality (CPLR 5003).

The plaintiff also contends that the language ‘ ‘ judgment or accrued claim ’ ’ contained in subdivision 1 of section 3-a of the General Municipal Law negates any suggestion that 3% interest should run from the date when the defendant was deemed to have refused to make payment on the claim, to wit, August 2, 1963. According to the plaintiff, its claim for damages did not “ accrue ” until the cause of action ripened into a judgment and, therefore, 6% interest should run from August 2, 1963 to the *320entry of the judgment and 3% thereafter. This reasoning has no merit.

In the first place, the General Municipal Law contains the words, inter alia, '‘ upon any judgment ’ ’, while the language in CPLE 5003 reads that every money judgment shall bear interest from the date of its entry ”. We believe that, if the Legislature intended that interest of 3% is to run only from the entry of a money judgment against a municipality, it would have employed language in the General Municipal Law comparable to that quoted above from OPLE 5003.

Secondly, the accruing of a claim under a contract occurs, not as the plaintiff intimates, at the time a verdict or judgment is rendered, but rather when the person aggrieved is able to ascertain the extent of his damages (cf. Edlux Constr. Corp. v. State of New York, 252 App. Div. 373, affd. 277 N. Y. 635). While such accrual may or may not occur eo instanti with the breach, it is nonetheless closely related to, and is the direct result of, the breach (cf. Edulx Constr. Corp. v. State of New York, supra).

While the term “ accrued claim ” with respect to a party’s rights under a contract does not seem to have been clearly delineated previously by the courts of this State, the terms claim accrued ” and accrual of such claim ” have been construed in actions by contractors arising out of claims against the State for work, labor and materials. Subdivision 4 of section 10 of the Court of Claims Act states: “A claim for breach of contract, express or implied and any other claim not otherwise provided for by this section * * * shall be filed within six months after the accrual of such claim ’ ’.

• In Edlux Constr. Corp. v. State of New York {supra) the contract which was the basis for the claim in suit, by a contractor, was approved by the Department of Public Works on December 28,1932. Final payment could be made only upon the certificate of the Superintendent of Public Works showing the amount of the final sum payable to the contractor. On October 27, 1934, such certificate and an estimate was approved and delivered to the claimant; it stated that $2,259,69 was due the claimant; and the latter accepted such sum and reserved the right to file a claim for additional sums claimed to be due. In December, 1934 the Comptroller refused to pay any additional amount and in January, 1935 the claim was filed. The Appellate Division, Third Department, in holding that the claim was timely filed, stated: “ ‘ The expression “ claim accrued ” is not identical with the expression ‘ cause of action accrued. ’ ’ The claim accrues when it matures, and the words ' ‘ claims accrued ’ ’ have the same meaning as “ damages accrued ” ’ ” (p. 374, quoting from Dufel *321v. State of New York, 198 App. Div. 97, 102); and ‘ ‘ the claim had not accrued ’ and the Statute of Limitations did not begin to run until the audit and rejection ” [by the Comptroller] (p. 375).

In Terry Contr. v. State of New York (51 Misc 2d 545) the Court of Claims held, under the circumstances of that ease, that the claim in suit accrued when the claimant contractor received the final estimate from the Department of Public Works, since, although the final estimate is subject to change, it enables the contractor to decide whether he has any claim against the State for breach of contract, for moneys due or miscomputed under the contract, or for extra work performed or extra materials supplied outside the contract (cf. Di Laura v. State of New York, 169 Misc. 912; Davison, Claims Against the State of New York [1954], p. 231).

In D’Angelo v. State of New York (200 Misc. 657) a suit was brought by a contractor for breach of contract and for extra work, labor and services performed. After the matter was in issue, the parties consented to entry of a judgment in favor of the claimants in the sum of $29,835.87 and a judgment in that amount was entered on July 26,1949, without interest. The question of interest was held in abeyance. Subsequently, the Court of Claims awarded interest from the date the State had completed the final estimate, February 9, 1949, to the date of the . entry of the judgment, to wit, July 26,1949, at 4% per year, pursuant to section 16 of the State Finance Law. The language then employed in the State Finance Law was similar to that used in the General Municipal Law here in dispute. It reads: '‘ The rate of interest to be paid by the state upon any judgment or accrued claim against the state shall not exceed four per centum per annum ”.

The conclusion to be drawn from the cases just discussed with respect to contract claims against the State is that an accrued claim exists not only before any verdict or judgment is rendered with respect to the claim, but before any action is taken to enforce it.

Applying to the instant case the rationale of the cases discussed with respect to claims against the State, it would seem that the claim of the plaintiff accrued against the County of Nassau on August 2,1963, the date, as found by the Special Term, that the county had, in effect, refused to make payment or attempt to resolve the dispute. At that date the plaintiff was able to ascertain its damages and had no other recourse but to institute suit. That such date is also deemed to be the date of the breach is of no moment.

*322I, therefore, conclude that the decision of Special Term computing interest on the $40,000 award at 3% per annum pursuant to subdivision 1 of section 3-a of the General Municipal Law from August 2, 1963 was correct. Accordingly, the judgment, as corrected pursuant to the order dated May 8, 1970, should be affirmed; likewise, so much of the order as directed the correction should be affirmed. As stated at the outset hereof, so much of the appeal as is from the provision of the order refusing to set aside the verdict should be dismissed. No award of costs should be made.