Gleason v. Dalton

Hatch, J.:

The injunction granted in this action restrains the defendant Dalton, as commissioner of the water supply of the city of New York, from entering into a'contract with the defendant The Cith zens’ Water Supply Company of Newtown, for the supply of Water to the borough of Queens in the city of New York, unless proposals for the supply of water to such locality shall first have been invited by public advertisement, as provided by section 419 of the charter of the city of- New York (Chap. 378, Laws of 1897)) known as “ the Greater New York charter.” It is admitted that no- advertisement for bids containing proposals for such water supply has been made, and that none is intended to be made; that the commissioner of the- water supply'and the board of public improvements propose to approve a contract, in general terms the same as appears in the record, subject, however, to such modifications as may be suggested by the board. These modifications, however, will not affect the price to bé paid) the quantity of water to be furnished or the length -of time the contract is to run. ■

The theory of the complaint is that the proposed contract is unauthorized, by reason of the failure to advertise for bids containing proposals to furnish this water supply. There are no averments of fraud in the complaint, or other breach of duty, than the one specified. The only question before the court has reference solely to the illegality of the proposed contract. (Talcott v. City of Buffalo, 125 N. Y. 280.) The averment that the price to be paid for the water, under the contract, is excessive, does not have the effect of charging that the payment of such price is an illegal, wrongful or fraudulent act upon the part of the commissioner or the board of public improvements. (Ziegler v. Chapin, 126 N. Y. 342.)

It may'be assumed that it is the scheme of the Greater New York charter to require that contracts, which have for their object the furnishing of supplies to the city in its various departments, and involve an expenditure exceeding $1,000, shall be founded upon sealed bids or proposals received in pursuance of a public notice duly advertised. It is also recognized in the charter that there are exceptions to this rule. Consequently, it may be said that the exception to such rule, either by the express provision of the charter, or by judicial construction in reaching the intent conveyed by its language, is equally the scheme of the charter. We have, therefore, to consider whether the proposed contract and its subject-matter is of a character which subjects it to the provisions of the charter requiring advertisement and sealed proposals before it may be executed, or wliether it falls within the excepted class.

It may be conceded that, in a broad etymological sense, the word “ supply ” embraces anything which may be furnished to meet the need of any particular department of the city or of its inhabitants. And ye't it is manifest that the use of such word in public charters-was not intended to be construed in terms as broad as its etymological sense, and has been many times made to yield to incompatible conditions. Indeed, its enforcement at all times would fail to accomplish the purpose for which it was created. Quite a considerable number of cases have arisen where the rule has been held inapplicable, and the exception has been enforced. The purchase of fire works was held to be an exception {JDetwiller v. The Mayor, eta., of N. 7., 46 How. Pr. 218), for the reason that such articles-were of a peculiar character, depending upon the skill of the rnanufacturar. Contracts for furnishing coaches, used hy members of the common council in the discharge of their official duties, were held to be excepted, for the reason that such contracts from their very nature were not intended to he embraced within a regulation requiring public advertisement and sealed proposals. (Smith v. Mayor, etc., of N. Y.,. 21 How. Pr. 1.)

In The People ex rel. Smith v. Flagg (17 N. Y. 584) it was observed by Judge Comstock: “It would bean unreasonable and mischievous construction of the statute, to apply it to services which require in their proper performance scientific knowledge or professional skill.” The particular phrase under consideration-in that case was,“ all work to be done and supplies to be furnished.” The character of the service . therein was making a survey and furnishing a map of the wharves and piers of New York city. While the question was not determined in that case, yet the language- of Judge Comstock has received .Uniform confirmation since.

In Farmers’ Loan & Trust Go. v. The Mayor, etc., of N. Y. (4 Bosw. 80) the prohibition was_ held not to apply to a contract for the use of a pier for the removal of offal. It was suggested in that case that “ supply ”. was used in a commercial sense, “ relating- merely to personal property, going into- or forming part' of something else or contributed for the use of something else, or towards its efficiency. The maritime doctrine as to supplies for ships, the State statutes in aid of materialmen, are instances of this nature. * * * It is in this sense that the phrase is used in various enactments connected with the government of New York.”

The People ex rel. Navano v. Van Wort (64 Barb. 205) was a proceeding hy mandamus to compel payment for water meters furnished without public notice and previous |>roposals. The court liel'd it fell within the exception, using this language: “The object of the provision in the charter is to secure the advantages of competitive.offers for the work to be done, or the supplies to be furnished; and when the supply, as in this case, is one involving scientific results attained by mental and corporeal labor, the advantage cannot spring out of mere bids, hut of tests to which the thing offered shall be subjected.” In this case it appeared that there were other meter’s upon the market, and that other people could furnish them. When the meter was finally selected, of course,, but one person could furnish it, as but one person' had it to furnish. But the determination of what meter should be furnished was necessarily left to the discretion of the person charged with Such duty, and manifestly rested upon considerations of judgment, knowledge, test and the practical utility of the instrument desired, and for this purpose bids availed nothing. The same rule was also applied in Baird v. Mayor, etc. (96 N. Y. 567, 582). The rule of the above cases may be found amplified in Harlem Gas Light Company v. The Mayor, etc. (33 N. Y. 309), where Judge Brows, in a learned opinion, said: “ 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 eor.rect. The city needs lands in a particular locality for a public market, an engine house or other public building. It requires professional services, those of an engineer, a physician, a lawyer or an artist, or it may require services of any kind, and property to be furnished upon a sudden and unforeseen emergency, of greater value than the $250. If these things can only be obtained through the forms prescribed by the statutes, they cannot be obtained at all, for these things cannot become the subject of a competitive offer to be consummated by a written contract with the person making the most favorable offer. To this effect are the remarks of Judge Com-stock upon the sections of .the statutes referred to in the case of The People v. Flagg (17 N. Y. 584), and seem to me to be marked by reason and sound sense, and commend themselves as expressing the true construction of the legislative intention.” Other cases hold a similar doctrine. (Matter Petition of Dugro, 50 N. Y. 513; City of Hartford v. Hartford Electric Light Co., 65 Conn. 324.)

It is, therefore, evident that the question which we have before us is not a new question, and the provisions of the charter formulate no other or different rule than such as existed in former charters. The general rule which séems now to have been pretty firmly settled regarding the construction of this language, is that where the subject-matter of the contract is such that competitive proposals work ail incongruity and are unavailing-as affecting the final result,- or where they do not produce any advantage, but the nature of the supply requires that it be determined from inspection and' test, which are made up from present examination and trial and depend-upon special knowledge and judgment, or where the thing to be obtained is a monopoly, or the requirement is óf personal skill or professional service, or it is practically impossible to obtain what is required and observe such form, the language of the statute does not apply, and the particular case falls within the exception.

Having in mind these rules, let us proceed to an examination of the provisions of the charter and find, if we may, into which class this contract falls. We feel quite safe in saying that a contract for a water supply is not such a supply as is generally understood to be comprehended within that term as used in commercial language, and means something entirely different from a contract for the purchase and supply of nails, or a similar commercial commodity. The furnishing of water for a municipality is dependent upon many contingencies, such as its presence in a sufficient visible quantity for the purpose, the certain existence of its source of supply, and the purity of that source, without which it is worthless. It is quite evident that if there was but one company which could furnish the supply, an abun-. dance of authority establishes that it would not be embraced within the term supply as .used in the charter. The duty devolved upon the commissioner requires the examination of all sources of supply,'and I should be disposed to hold, if there were no other considerations, that there is such an incongruity in competing for such a supply, and that the determination, involving as it, does quality, quantity and source, rests so largely upon special knowledge and skill in determination as to remove it from the general provision of the charter and place it within the exception within the authority of the-cases heretofore cited. In this respect the case most nearly resembles contracts for furnishing gas for lighting, and, therefore,, falls within the decision of The Harlem Gas Light Co. v. Mayor, etc. (supra).

Modern invention and improvement have mastered in large measure the question of lighting with the result that competition in public lighting is quite as sharp and feasible now as in any other'branch of business, This condition led the framers of the charter, by section 587, to specially provide for competitive bidding in respect to such, contracts. We do not deny but that such conditions may hereafter exist as will bring about the same competition and condition of affairs in regard to' the supply of water. It is, however, quite clear that such is not the existing condition at the present time, and the fact that special provision was made in the charter for lighting contracts, and none as to water contracts, is a suggestive circumstance that such provision was not intended to apply thereto; and in view of the affirmative provisions of the charter, which we shall presently consider, as well as its omission to make special provision for emergencies in connection with the water department, tends strongly to lead the mind to the conclusion that the true construction of the charter excepts such contracts. It is not, however, necessary that we should determine whether it is feasible to apply competitive bidding to the supply of water. Other considerations control the case. We think that section 419 of the charter has no application to contracts for furnishing water to the municipality of New York. Section 410 of chapter 10 of the charter creates the board of public improvements and defines its membership: Other sections define its powers. By section 415, subdivision Y, the board, among othér things, is given power over “ water rents, superintendence of water supply of private water companies, contracts for water supply with private companies or other municipalities.” By section 419 it is provided that “ all contracts to be made or let for work to be done or supplies to be furnished, except as in this act otherwise provided, * * * shall * * * be founded on sealed bids or proposals,” after public notice. The provisions of the charter relating to the water supply are found in title 4 of chapter 10, under the head of “ Department of Water Supply.” By section 468 of that title the head of the department is created, and is called the commissioner of water supply. Section 469, subdivision 2, .gives such commissioner control “ of maintaining the quality of the water supply and of the investigation for and the construction of all work necessary to deliver the proper and required quantity of water with ample reserve for contingencies and future demands.” By section 4Y1 such commissioner is prohibited from entering into any contract with any person or corporation for supplying or selling water for public or private use, Unless, preliminary to the execution of the contract, the same be submitted to and have the assent of the board of public imprtivements, and the act itself is made the exclusive rule for the making of. such contracts.

By section 472 “ the commissioner of water supply, with the approval of the board of public improvements, shall have power throughout the State of New York to select and-to determine all sources of water supply that may be needed for the supply of the public water works of said city, and for the supply and distribution of water in said city.55 The power thus conferred is- very broad ; it gives the power to select and determine all sources of water supply that may be needed, subject to the approval of the board of public improvements. The imposition of such duty,, and the power com ferred in its exercise, are inconsistent with the view that such power and duty may.be limited and circumscribed by a form of procedure which may not- enable the commissioner to fulfill the obligation thus imposed. If he must contract only with the person who offers sealed proposals in pursuance of public -notice, then he is or may be deprived -of the power of selection and determination, and the power conferred may thereby be defeated. This section goes much farther* and makes any source of water supply selected by the commissioner, subject to the approval of the board of public works, the board of estimate and apportionment and of the .municipal assembly, the subject of proceedings in i/miivm which may be exercised upon all persons and water corporations, subject to certain specified except tions, not now important. Such commissioner is -further authorized . by this section “ to examine into the sources of water supply of any private companies supplying the city of New York or any portion thereof or its inhabitants with, water, to see that the same is wholesome and the supply is adequate, and to establish such rules and regulations in respect thereof as are reasonable and necessary for the . convenience of the public and the citizens.” .

By section 507 the commissioner is authorized, subject to the -approval of the board of public improvements,' to enter, into contracts for the purchase .of land for water purposes. Section 517 -devolves upon the commissioner all the rights, powers, privileges, duties and obligations theretofore existing by law or otherwise, to be by him exercised pursuant to the provisions and limitations of the ' act. By section 483 the commissioner is empowered to carry out the provisions of the act for the purpose of maintaining, preserving and increasing the supply of pure and wholesome water for the use of the city, .and for the purpose of preventing or removing contamination or pollution of any supply or source or sources of supply of water heretofore acquired by the city.

It is quite evident from a reading of these sections that it is the intent of the statute to confer upon the commissioner power to superintend the supply of water — to supervise not alone the source of public supply, but the source of private supply, to the end that the water furnished may be adequate for the need, and pure and wholesome in quality. Such power is ivholly at variance with the claim that it must be exercised in subordination to the right of any private company. All are under the supervision of the commissioner, and to enable him to properly discharge his functions much is and must be left to his judgment and discretion. Indeed, the construction which* contends that he must not contract except notice be given and bids be received, may defeat the'very end which the act seeks to accomplish. It is for him to determine, in the first instance, whether the source of supply is pure and wholesome. Competition in no wise determines this question. The reason which confers authority to test various meters to see which is best, and when the fact is determined authorizes a contract without competition, is the same which empowers the commissioner to determine that a supply of water is wholesome, and which then confers authority to contract for the supply subject to the approval of the board. In this connection it is noticeable that the authority conferred upon the board of public improvements by subdivision 7 of section 415 is the same in respect to contracts made with municipalities as with private' companies. It cannot be pretended that competitive bidding is applicable where the contract is made with another municipality, and yet there is the same provision of law with respect to each.

In addition to this it may be observed that, by the ¡provisions of section 419, the head of a department is authorized to enter into a contract, where the same is founded upon competitive bidding, without referring the same to the board of public improvements for their approval. It is only where the lowest bid is rejected that the matter becomes the subject of reference to the board, and the board may not then reject the bid and award the contract to another bidder unless by a vote of a majority of the board, of which majority the mayor and comptroller must form a part. It is, therefore, evident that the rule of this section is to award contracts to the lowest bidder, and that the departure from such rule furnishes the exception. In respect to water contracts the commissioner of water supply is given no power to enter into a contract until it has been submitted to the board of public improvements. On the contrary, as we have seen by section 471, the preliminary requisite is that the commissioner shall, before executing a proposed contract, submit the same to the board in all its details, and that the assent of the board to its execution shall be given by resolution.. This action is to be- taken, by the board, and undoubtedly requires a majority vote. But such majority is not required to be made up by the votes of the mayor and comptroller as is the case with competitive .bidding. In the first case the contract is not required to be submitted to the board, but is based upon the bid and executed by the' commissioner. In the second case the contract in all its details must be submitted to the board and authorized by it before it can be executed. In the one case the authority to contract is the bid; in the other it is the proposed contract and the act of the board. The difference seems to be radical, and to indicate two essentially different schemes for the execution of contracts.- The very reason why the contract was required to be submitted to the board for approval would seem to be' the inapplicability of competitive bidding for such contracts.

We need not, however, be limited tó this assignment of a reason. The clause of the charter requiring competitive bids for supplies furnished has been found in the charters of New York city for over forty years, and under none of them has it ever been held or supposed that it embraced a supply of water for municipal use.' The present charter upon this subject is a revision or codification of former statutes, and in none of them was it .required that such contract should be the subject of competitive bidding. (Laws of 1883, chap. 512; Laws of 1884, chap. 292Transp. Oorp. Law [Laws of 1890, chap. 566], § 81.) Laws of 1882 (Chap. 410, § 351) authorized the city to contract with the city of Yonkers for a water supply. ' These statutes, so far as they affect the Greater New York charter, have been repealed and the charter provisions substituted therefor. It is a well-settled rule of judicial construction that the revision of a statute does not change the law, even though there be a change in phraseology,, unless such change clearly indicates an intention to enforce a different rule. (Davis v. Davis, 75 N. Y. 221.)

It is quite evident that there is nothing in the phraseology, or in the method of revision in the New' York charter, which indicates an intent to establish a different rule from that which had previously existed; and this is true both as to the provisions which require competitive bids before contracting and those which authorize an execution of the contract without it. This is further evidenced by the fact that, while the Consolidation Act (so called) (Chap. 410, Laws of 1882, § 351) is repealed, the provision in substance is found in section 474 of the charter. There is no more reason for holding that a change was intended by reason of the present provision contained in the charter than there was that the rule of competitive bidding should have been made applicable at the time when the previous statutes were passed. On the contrary, as we have seen, the large powers which are invested in the commissioner of water supply seem to be clearly inconsistent with the provision which requires competitive bidding before a contract can be executed;

This view finds still further support from' a consideration of the fact that, in sections 618, 675 and 704, relating to the departments of correction, parks and public charities, is found a provision authorizing, in case of an emergency, the purchase of articles immediately required without calling for competitive bids, while there exists no corresponding provision applicable to the. department of water supply.

It is clear that conditions may arise requiring the immediate use of water beyond the present supply. Indeed, the use of water is nearly as requisite to the well-being of the inhabitants as the use of air; so that the supply is always in immediate demand; and any contingency which would deprive the inhabitants of the usual source of supply would create an emergency as great as it is possible to have at any time in any department of the city government. The fact, therefore, that such an emergency was not provided for is a strong and pertinent circumstance in favor of the view that the framers of the charter did not intend to make section 419' applicable to contracts which should be executed in the department of water supply. We, therefore, reach the conclusion, from a consideration of the charter as a whole, that the purpose which it seeks to accomplish does, not embrace, within the section which requires, competitive bidding, contracts having reference to the supply - of water to the municipality. So far as circumstances, which involve the policy of the municipality in respect to whether it shall contract for water to be supplied by private companies, or shall adopt the policy of municipal ownership, are concerned, it cannot affect the question with which we are now dealing. Such considerations are outside the powers and duties devolved upon the courts. What the water policy of the municipality shall be has not been committed to their judgment, discretion or consideration, but in the distribution of the powers of municipal government such determination has, by the present charter, been committed to the officers of the municipal government, and whatever may be the private judgment of the courts with respect to the policy which ought to be pursued by the municipality, it nevertheless finds no place for the exercise of any of the powers which have been confided to it, and the policy may not, therefore, be properly considered.

■ If the Legislature desires to devolve such powers upon the court, it perhaps has the power so to do. If the Legislature desires to make the supply of water the subject of competition, it also has the power so to do, but until it shall have so legislated, the courts are powerless to- command a different rule.

We reach the conclusion that the Legislature has not yet so expressed itself, in" consequence of which the commissioner of water supply and the board of public improvements have power to authorize and make a contract -similar to the one now before us.

Upon the oral argument it was pointed out that the present contract needed correction for the protection of the city, in respect to the option clause and the amount of water to bé furnished. As it was stated that such provision was the result of misapprehension and would be corrected, the case needs no further discussion at our hands.

The order should be reversed and the motion to continue the injunction shouldbe denied, with ten dollars costs and disbursements.

. All concurred, except Goodbioh, P. J., who read for affirmance.