39 N.Y.S. 881 | N.Y. Sup. Ct. | 1896
The plaintiff brings Ms action to recover interest, which he asserts accrued on certain claims he held against the city of Buffalo. Thomas Dark & Sons, in pursuance of contracts with the city, performed work in 1888 and 1889 in repairing its sewers. The accounts for the work in each instance were properly audited, and were assigned to the plaintiff by the contractors. Most of these claims were arranged by the issuance of warrants to the plaintiff, although a few were paid directly by the law department of the city. The times intervening the auditing of the accounts and their payment or the issuing of the warrants where they were given varied from 16 months to over 4 years, and considerable time preceded the auditing after the completion of the work; and the contention of the plaintiff is that, after a reasonable time has elapsed after the several accounts were audited, he is entitled to interest up to the time of the issuance of the warrants, which are interest-bearing, or until payment where no warrant was issued. By the practice in vogue, and by resolution referred to later, six months have been recognized by the city authorities as a reasonable time in which to raise the money, and in Ms claim and computation the plaintiff deducts that period from the time following the allowance by audit and the payment or date of the warrant. By the charter of the city (sections 277, 278) the board of public works cause the sewers, etc., to be repaired, and the expense thereof is certified to the common council, and that body orders warrants to be drawn in payment thereof; and by section 105 of such charter such warrants bear interest at 5 per centum. Laws 1891, c. 105, § 105. The corporation counsel con
But the embarrassing question in this case is not over the right of the contractors or their assignee to collect interest on the demands after audit. That act makes a liquidation an adjustment of the verity of a judgment against the city, and, under principles that are elementary, interest would thereafter be enforceable. It is the conduct of the plaintiff that brings the serious complication into the case. In each instance as to each of the 28 claims making up his -demands against the city he accepted either payment in cash or a warrant drawn under the direction of the common council in payment of the principal of these several claims. Ordinarily, the effect of such acceptance is to extinguish the interest. Generally speaking, interest is allowable as damages for the nonpayment of the principal debt, and an acceptance of this principal in full satisfaction of the claim prevents a subsequent recovery of the interest,—the incidental damages sustained by reason of the failure to make payment at maturity. Tillotson v. Preston, 3 Johns. 229; Pacific Railroad v. U. S., 158 U. S. 118, 15 Sup. Ct. 766; Middaugh v. City of Elmira, 23 Hun, 79; In re Hodgman’s Estate, 140 N. Y. 421-428, 35 N. E. 660; Cutter v. Mayor, etc., 92 N. Y. 166. And where interest is allowable as damages on breach of contract, or on failure to pay when due, the fact the creditor received payment of the principal, exclusive of interest, under protest, as was done in this case, is unimportant, for the acceptance of the principal wipes out the indebtedness absolutely. Cutter v. Mayor, etc., 92 N. Y. 170, and cases there cited. In that case damages were awarded an abutting owner for widening a street, and subsequently payment of the award was made without interest, .¡and was received under protest. There was no contract or statute -providing for interest, and the court held the interest was simply .damages for the detention of the money, and the acceptance of the ■principal operated to extinguish the claim for interest; that they were inseparable, the interest being merely an incident to the principal, and when that was destroyed by payment the interest could not continue as an independent indebtedness. It will be observed that all these cases rest upon the principle that the interest is pure and simple damages for failure to pay, and is not inherent in the demand itself. So interest has a twofold interpretation: First,
The local legislative authority of the city of Buffalo is vested in the common council. On the 17th day of February, 1890, that body passed the following resolution:
“That the comptroller be and he is hereby directed to include in the estimates a sum sufficient to pay the interest on all claims for sewer repairs from six months after the dates of audit of said bills respectively to the dates when*884 warrants were drawn, or probably would be drawn, in favor of the contractor, upon the district sewer assessment roll for the amount of said bill.”
At the time oí its passage all the claims which are the basis of plaintiff’s cause of action were in existence. They were all for “sewer repairs.” While they had not all been audited, they were demands the city was liable to pay. The resolution, therefore,, became an enactment importing in these demands interest, not as-damages, but as part of the compensation to which the contractors became entitled. Presumably the resolution was complied with, as-no evidence to the contrary was adduced. The money thus raised was set apart for the specific purpose of paying the interest on the claims of plaintiff and those of a similar kind. This resolution introduced no new custom into the municipal affairs. The direction thereby prescribed was in conformity to the practice then in vogue. The plaintiff had owned two other series of demands against the city for work done by contract in the repairs of sewers, and interest was paid him thereon, computing from six months after audit. He had. a right to rely upon that practice. The city authorities instituted it. They gave currency to its validity as an established mode of payment. That, by implication, made the agreement as to the interest, and when clinched by the authority of the common council by an enactment directed specifically to claims of this nature, then interest was-injected into the agreement as part of the compensation awarded. Both by the resolution of the common council and by implied agreement interest is recoverable on these claims, and not as damages for the detention of the pay, but as part of the agreement itself.