186 Misc. 385 | N.Y. Sup. Ct. | 1946
This action, novel to say the least, was brought by the State of New York against the City of Schenectady to recover on an implied contract to reimburse the State for certain revenues it had lost by decreased power production at the State’s dam at Vischer Ferry.
Prior to January 1, 1944, the city obtained its water supply from wells sunk in the. water bearing gravel strata adjacent to the Mohawk River a few miles upstream from a hydroelectric plant which the State owned and operated at Vischer Ferry. During various periods in 1936, 1940, 1942 and 1943, the water in the city’s wells became dangerously low, whereupon the State, at the request of certain city officials, namely, the City Manager, the City Engineer and the Engineer in charge of the Department of Water, placed “ flash boards ” on the top of the Vischer Ferry Dam, thereby raising the head of water which in turn raised the level of water in the city’s wells and relieved the emergency. In doing so the State necessarily curtailed the production of electric energy during these periods, and thus it was deprived of the revenues it was accustomed to receive from the sale thereof. From the very outset the State insisted that it be reimbursed for the loss of these revenues. Bills were sent to the city and demands for payment were repeatedly made, all of which was brought to the attention of the Common Council. Throughout this period, however, the city officials contacted, took the position that although “ the policy of the city is to meet its just and legal obligations,” they had no authority to bind the city and that the question of reimbursement was for the Common Council, which body in fact,,never took official action in regard to the matter.
The complaint sets forth and the action was tried on the theory that the State, in raising the level of water at the dam, acted under and pursuant to an implied contract with the city for reimbursement for the revenues lost thereby. Apart from general denials of all material matters, the answer sets
It must, of course, be recognized that cities generally, and Schenectady in particular, owe their existence to statute, and that neither the city nor its officials have any greater powers than are therein prescribed. It is also well understood that the various statutory safeguards and restrictions placed upon the authority of a city to incur debt and expend public funds, as a general rule, must be scrupulously observed. However, a municipal corporation, like a private corporation or individual, can be bound by implied contracts “to be deduced by inference from corporate acts, without either a vote or deed or writing ”. (Peterson v. Mayor of New York, 17 N. Y. 449, 453; Port Jervis Water Co. v. Port Jervis, 71 Hun 66, affd. 151 N. Y. 111; 3 McQuillin on Municipal Corporations [2d ed. rev.], § 1364, p. 1314; 44 C. J., Municipal Corporations, § 2247.) Although the principle seems clear, the practical application of it is fraught with considerable difficulty; for even in the field of implied contracts, statutory and charter provisions to which municipal corporations owe their existence, and which circumscribe their powers, must not be violated. Speaking generally, the implied contract must fall within the scope of the corporate powers and may not be one which by charter or statute must be made in a particular way. (Kramrath v. City of Albany, 127 N. Y. 575, 581.)
The late Chief Judge Irving Lehman, in Seif v. City of Long Beach (286 N. Y. 382) although recognizing the applicability
In the instant case there seems to be no question but that the City of Schenectady had the necessary power and authority to contract for sufficient water to satisfy the needs of the inhabitants. (General City Law, §§ 19, 20, subds. 7, 12, 13; § 21.) The controversy really arises over whether such power was properly and legally exercised.
The duty of providing “ an abundant supply of pure and wholesome water for public and private use ” is specifically delegated to the Commissioner of Public Works. (Schenectady City Charter, § 17; L. 1907, ch. 756; Second Class Cities Law, § 94.) He is authorized to “ adopt plans ” for the acquisition of additional supply, to be submitted to and approved by the Common Council and the Board of Estimate and Apportionment. (Schenectady City Charter, § 19.) Hnder the Plan C form of government, the duties and prerogatives of the Commissioner of Public Works devolve upon the City Manager. (Optional City Government Law, §§ 90-92, as added by L. 1914, ch. 444.
Lack of formal action by the Common Council and Board of Estimate and Apportionment was not fatal in the case
The defendant urges by- answer and motion that the failure to comply with other statutory restrictions and inhibitions made a valid contract impossible. In the first place, it is pointed out that no appropriation was ever made to cover the moneys herein involved. Sections 75 and 76 of the Second Class Cities Law provide for annual estimates and appropriations for the expenses of operating a city. Section 79 prohibits any officer, board or department from entering into a contract involving the expenditures of money “ for any of the purposes for which provision is made in the annual estimate in excess of the amounts appropriated ”. Since the contract in question did not involve the expenditure of money for any of the purposes for which provision had been made, there is considerable question whether or not the section has any application whatsoever. (People ex rel. Kiehm v. Board of Education, 198 App. Div. 476.) But even if this were not so, the exigency of the crisis with which the city was confronted would take the case from .out the operation of the statute. Moreover, as was pointed out in Port Jervis Water Co. v. Port Jervis (71 Hun 66, supra) and Kramrath v. City of Albany (127 N. Y. 575, supra) under proper circumstances and despite restrictions similar to those herein involved, a liability may nonetheless be incurred by implied contract, in advance of an appropriation.
Pursuant to section 55 of the Second Class Cities Law and section 51 of the Optional City Government Law (L. 1914, ch. 444), the authority to sign contracts is vested in the mayor. These provisions obviously relate only to express contracts. Here we are concerned with an implied contract w'hich no one signed. Under the Plan C form of government the actual signing is at best purely a ministerial function. It is the City Manager who is the actual head of the city government. (Optional City Government Law, §§ 90-92; L. 1914, ch. 444.) It was he and his subordinates who took part in the conferences and carried on the correspondence resulting in this
Section 64 of the Second Class Cities Law, as amended by Local Law No. 4 of 1925 of the City of Schenectady, in its application to said city, provides that claims shall be verified, approved, audited and allowed by the comptroller. No such claim was filed or audited in the instant case, and on the authority of Port Jervis Water Co. v. Port Jervis (71 Hun 66, supra) it was not essential to the validity of the contract.
Although the foregoing seems to indicate that noncompliance with the various charter and statutory provisions should be excused in the instant case, there is still a br'oader ground upon which the implied contract should be held valid.
In raising the level of the Vischer Perry Dam, the State was exercising one of its sovereign prerogatives in the interests of a portion of its citizens, the residents of Schenectady. The protection of that group of its citizens from possible calamity arising from a shortage of water, clearly involved the “ interests ” of the State. I grant that the operation of a hydroelectric plant is not a sovereign act, and in matters connected with the sale of the power thereby generated, the State should stand on an equal footing with private enterprise. Such is not the case here, however. The State is not seeking pay for energy furnished the city; it is seeking to be reimbursed under an implied contract which the jury has found to exist for protecting the residents of Schenectady from imminent danger and misfortune. The fact that the measure of damages agreed upon happened to be the loss of revenue which the State suffered, seems to me to be only incidental. This implied contract was, in effect, an agreement between the State and one of its subdivisions to furnish water necessary for municipal purposes. Can it he seriously argued that it was not for the benefit of at least a portion of the State, i.e., the citizens of Schenectady, that such water be furnished? Can it be said that in so doing, the State was merely engaged in a business enterprise for profit? Clearly, the answer must be no to both interrogatories. It is, of course, a prerogative of the sovereign and clearly within its interests to ward off a possible epidemic, to guard against a possible conflagration, to protect its citizens from possible disaster. It must be equally apparent that this was the very purpose of the implied contract. Having secured the benefits and having thereby averted a threatened calamity, the City of Schenectady, now that the danger is past, seeks to avoid the agreement which the jury has found it entered into. The city’s
In Robinson v. State of New York (150 Misc. 593) it was held that certain sections of the Labor Law requiring the installation of safety devices on machinery in factories, did not apply to prison workshops. This holding was subsequently reversed (242 App. Div. 94) on the ground, however, that the enabling act supplied the necessary reference to the sovereign. Similarly, it was decided in Jewish Hospital of Brooklyn v. “ John Doe ” (252 App. Div. 581) that the same rule would exempt a charitable organization carrying out a governmental function, from compliance with section 876-a of the Civil Practice Act, and that the court could, therefore, grant an injunction pendente lite in the plaintiff’s favor, in a labor dispute, without a hearing. Prior to the enactment of section 292-a of the Civil Practice Act, it was repeatedly and consistently held under the same principle that section 288 et seq_. of the Civil Practice Act did not authorize an examination before trial where the defendant was a municipal corporation. (Kasitch v. City of Albany, 283 N. Y. 622; Rucker v. Board of Education, 284 N. Y. 346; Bush Terminal Co. v. City of New York, 259 N. Y. 509; Berryman v. Board of Education, 257 App. Div. 915; Mack v. School Board of Briarcliff Manor, 171 Misc. 165.) The case of People v. City of Yonkers (177 Misc. 406, affd. 267 App. Div. 959, affd. 293 N. Y. 880) bears a striking similarity to the case at bar. There too, the State was seeking reimbursement from the city, but in that case for fines improperly withheld, rather than for moneys due under a contract. There too, the city interposed as a defense the failure of the State to present a claim in the manner required by law, and there the court held that the State was under no compulsion to follow the statutory pro.
If it be assumed, as it must be, that the city had the inherent power to perform indispensable acts, such as providing its inhabitants with a supply of water, then the method of exercising such power, the manner in which it was done, what particular agency should let the contract, who should sign it, and what formalities should be followed, are purely procedural matters, and therefore, the statutes prescribing such methods are not binding upon the sovereign when its interests are at stake.
Another point raised by the plaintiff deserves attention. Subdivision 5 of section 20 of the General City Law, grants to every city the power “ to pay or compromise claims equitably payable by the city, though not constituting obligations legally binding on it * * *.” This is obviously an attempt on the part of the Legislature to give to municipalities the right to recognize moral as well as legal obligations. It will be noted that under this section there are no restrictions or inhibitions in the manner in which the granted power is to be exercised. An implied contract, arising as the one herein involved arose, to reimburse the State for the revenues it lost, would therefore seem to be entirely valid and binding on the city, for certainly the claim is just and equitable. Although the payment of such claims is customarily a subject for mandamus, there seems to be no reason why they may not be enforced by action. (Boland v. City of Niagara Falls, 178 Misc. 125; Rondout Savings Bank v. City of Kingston, 144 Misc. 880.)
Certain of the cases cited by the defendant are worthy of special reference. Matter of the City of Buffalo (78 N. Y. 362) and Matter of City of New York (Boulevard) (185 App. Div. 315) were condemnation cases and did not involve contracts, either express or implied. Scarborough Prop. Corp. v. Briarcliff Manor (278 N. Y. 370) held that under the then existing Village Law, a village had no authority to accept the dedication of a street, conditioned upon reimbursement to the owner thereof for certain improvements thereon. In other words, it was a question of lack of power. Williams v. City of New York
In accordance with the foregoing, all of the motions made by the defendant at the conclusion of the plaintiff’s evidence, and renewed at the close of the entire case, together with the plaintiff’s motion for a directed verdict, and the defendant’s motions for nonsuit and to set aside the verdict upon all of which motions decision was reserved, are hereby denied.
Submit order accordingly.
Repealed by chapter 765 of the Laws of 1939,'.which, however, provided that where a plan of government specified in the Optional City Government Law was in force in any city on Jannary 1, 1940, the plan and all portions of the statute applicable to said plan were continued in full force and effect until repealed or superseded by a local law enacted pursuant to the City Home Rule Law.