Dale Engineering Co. v. State , 114 Misc. 233 ( 1921 )

Ackerson, P. J.

On the 9th day of May, 1917, the above named claimant, the Dale Engineering Company, entered into a contract with the state of New York through the commission of highways, whereby said claimant agreed to improve -a county highway in the county of Onondaga known a¡s Jordan-Baldwins-ville, part 1, county highway 1506, in accordance with the terms of .said contract, and. with the plans and specifications accompanying the same for the gross aggregate item prices of $63,995.75. The claimant completed the work under this contract, the highway was accepted by the state, and payment made therefor to the claimant by the state prior to May 7,1919. The claimant alleges, and there is evidence in the case which tends to prove, that by reason of the declaration of war between the United States of America and the Imperial German government, and the acts of the government of the United States and of the state of New York consequent upon such declaration of war, ■and the conduct of such war, the cost of performance of the said contract to the claimant, the contractor, for labor, material and the transportation of material was increased in the sum of $27,405.98. It can readily be conceded that owing to the world war above referred to the claimant was confronted with a situation which made it much more difficult and expensive to perform its contract than would otherwise have been the case, but this in and of itself would have created neither a legal nor a moral liability on the part of the state to pay to this claimant any other or different compensation than that mentioned in the contract which was entered into on the 9th day of May, 1917. Columbus Ry. Power & Light Co. v. City of Columbus, 249 U. S. 399.

The legislature of this state, however, by chapter 459 of the Laws of 1919, endeavored to relieve to some extent the alleged unfortunate condition in which many contractors with the state found themselves by reason of the increased cost to them of labor, material and transportation caused by the said war after they had entered into their contracts with the state. This act was entitled “An act authorizing the termination of certain highway contracts, conferring jurisdiction upon the court of claims to hear and determine claims and make awards for increased costs incurred in war contracts, and making an appropriation for the completion of unfinished work.” It became a law on the 7th day of May, 1919.

By section 1 of this act, “ war contracts ” were designated as those which were made and executed prior to the 6th day of April, 1917, the date of the declaration of war between the United States of America and the Imperial German government, or those which were entered into after that date on bids submitted to the highway commission before said April sixth. Section 6 of the act extends the benefit of the act to still another class of contracts, namely, those contracts, the actual letting of which took place after the declaration of war on April 6,1917, but before the introduction of the Draft Act in congress on the 17th day of April, 1917.

It will be seen, therefore, that the whole theory of this legislation was to compensate a contractor for the loss which he had suffered in performing a contract which he had entered into with the state before he had notice that the country was going to be involved in war during the time of the performance, of the contract, or at least before he had notice of the drastic provisions of the Draft Act which would necessarily very much limit his opportunities to get the necessary labor to perform his contract. It was apparently not the intention of the legislature to extend any relief to a contractor who, after war had been declared and after the Draft Act had been introduced in congress, deliberately and with his eyes open, with full knowledge that the country would be in turmoil and that the cost of labor and material and transportation would necessarily greatly increase in value, entered into a contract with the state to perform the necessary labor and furnish the necessary material to build a highway. When a man has notice of those things which, it is evident, must greatly increase the difficulties of his task, he has no one to blame but himself if he gets into trouble. The state, under such circumstances, could not be considered under any ldnd of an obligation to assist him. The contract in question was not made prior to April 6, 1917; it was not made upon bids submitted prior to April 6, 1917; it was not canceled or abrogated for non-performance, but was fully completed by the claimant -as mentioned aforesaid. This contract, therefore, does not come within the provisions of section 1 of chapter 459 of the Laws of 1919. This contract was not let between April 6, 1917, the date of the declaration of war, and April 17,1917, the date of the introduction of the Draft Act in congress, and, therefore, does not come within the provisions of section 6 of the aforesaid act. But this claimant on the 9th day of May, 1917, more than a month after the declaration of • war between the United States of America and the Imperial German government, and more than three weeks after the 17th day of April, 1917, when the aforesaid Draft Act was introduced in congress, signed and executed the contract in question with the state by which he obligated himself to furnish the necessary labor and material to build the highway in question. The officers of this claimant were then in full possession of the facts which must have made it plain to them that the performance of their contract would be accompanied with great difficulty and with greatly increased expense on all items of labor, material and transportation, and it was not the intention of the legislature that contractors, who were willing to take those chances and who signed their contracts with full knowledge of those facts, should later on be permitted to come in and make any claim against the state for the increased cost which they ought to have anticipated when they executed their contracts. And, therefore, we say, without any reference to the constitutionality of chapter 459 of the Laws of 1919, that the contract in question does not come within its terms and does not give this court, therefore, any jurisdiction of a claim against the state based upon such a contract.

The particular language upon which the claimant relies, however, and which it contends brings this claim within the benefit of the act, is found in section 6 in these words-: “ Including contracts advertised for letting between April 6th, 1917, and April 17,1917, on estimates prepared by the Department of Highways prior to April 6th, 1917.” The advertisement which resulted in the letting of this contract to claimant was published once between April 6 and April 17, 1917, viz., on April 16, 1917. The date therein advertised for the letting of the contract was thereby fixed as May 7,1917. Claimant’s bid or proposal, pursuant to such advertisement, was dated May 7, 1917, and the contract bears date May 9, 1917.

Claimant claims that it is the fact of the publication of the advertisement between April 6 and 17,1917, which was intended by the legislature to be the test of whether a contract was to be entitled to the benefit of the act under the language above quoted.

I do not agree with that construction of the statute. In my view, the words “ between April 6th, 1917 and April 17th, 1917 ” relate to the advertised date of letting and not to the date of advertising. This seems to me to be the plain meaning of the language, apart from any other consideration, and is supported by the situation which confronted the legislature when the act in question was pending before it. April 6, 1917, was the date of declaration of war between the United States and the Imperial German government; April 17, 1917, was the date of introduction in the senate of the United States of the Federal Draft Act, of which fact judicial notice is taken. It was the passage and the consequences of the enforcement of the Federal Draft Act which claimant contends so disastrously affected the cost of performance of large construction contracts. No other reason is apparent or assigned for the fixing by the legislature of the period between April 6 and April 17, 1917, than the facts of the declaration of war and the introduction of the Federal Draft Act, and it is probable that that period was fixed with reference to those two events.

The freedom of action of claimant and other contractors was not and could not be affected by the mere • fact of advertising a notice of the letting of highway contracts or by the dates of the publication of such advertising. The date advertised for letting, however, was of great importance to the contractor, for on or before that date his proposal must have been duly formulated and filed with the highway commission, together with cash or a certified check equal to five per cent of the amount of the proposal as required in the information for bidders and in the public advertisement. If between the date of the declaration of war and the date of the introduction in the senate of the United States of the Federal Draft Act, a contractor had obligated himself by the filing of a proposal accompanied by cash or a certified check, the legislature evidently concluded there was some justice and equity in affording him relief from the consequences of so important a fact as the Draft Act, of which he had and could have had no knowledge at the time of making his proposal, and this, I conclude, is what was intended by the legislature.

If this is the correct construction of the statute, claimant is not within the benefit sought to be conferred by it, for the reason that the advertised date of the letting of this contract was May 7, 1917, on which date claimant’s proposal was dated and submitted, and, therefore, I conclude that the court has not jurisdiction of this claim.

The state has not raised this question of jurisdiction nor asked for the dismissal of the claim on this ground. The court, however, feels it to be its duty, being of the opinion that it is without legal jurisdiction, not to assume it.

We now come to the question as to whether this act of the legislature is in violation of the provisions of the Constitution. Section 19 of article III of the Constitution reads as follows: “ The legislature shall neither audit nor allow any private claim or account against the State, but may appropriate money to pay such claims as shall have been audited and allowed according to law.”

One of my colleagues in his opinion holds that this act of the legislature is contrary to the provisions of that portion of the Constitution. I agree with him and concur in the following language which he uses : “ In the case at bar the Legislature not only allowed the claim, but directed the Court of Claims to compute the amount found due under such conditions and. award judgment, the language of the act being that the Court of Claims shall determine the amount of the difference between the contract and the cost price, and award judgment. The Legislature cannot do indirectly what it cannot do directly.”

The act places no burden of responsibility upon the court to determine either the legal liability or the moral obligation of the state. That has been determined by the legislature. All that is left for the court to do is to subtract the amount which would represent the cost of performance of the contract before the war from the amount which represents the actual cost of the performance of the contract and give the claimant an award for such proportion of that as under the terms of the act should be paid by the state. There is absolutely nothing judicial about the act that the court is called upon to perform. It is entirely administrative and clerical. Such being the case, the act is clearly in contravention of section 19 of article III of the Constitution.

We now come, however, to a more serious question than either of those considered above. This claim is one for extra compensation to this contractor. It is conceded to be such by both the state and the claimant. The Constitution, by section 28 of article LEI, provides as follows: “ The legislature shall not, nor shall the common council of any city, nor any board of supervisors, grant any extra compensation to any public officer, servant, agent or contractor.”

This is a solemn prohibition by the fundamental l.?W of this state, placed there for the protection of 'the funds of the people of the state, and which is absolutely controlling not only upon the legislature, but upon all the courts of the state. The claimant’s counsel seems to think that the difficulty with which he is confronted in this provision of the Constitution can be -easily evaded by the contention that it is not the legislature which is granting the extra compensation, but that it is the Court of Claims which is called upon to grant the extra compensation. Again I refer to the language of my colleague, above quoted, wherein he says: “ The Legislature cannot do indirectly what it cannot do directly. ’ ’ The Court of Claims -of this state is a creature of the legislature. It was instituted by a legislative act. The Constitution prohibits the le-gislature from -awarding extra compensation to a contractor. And it contains no language authorizing the creation of a tribunal to award extra compensation. The provisions of the Constitution are not to be so easily evaded. If they could be, they would be of but little value. Our form of government can -continue to exist only by maintaining in its integrity the Constitution upon which it is based. The Constitution can be maintained only by courts and legislatures which have the firmness to resist the assaults made upon it for either personal gain, or the public benefit, or in the cause of pure philanthropy. Such a-ss-aults must be overcome whether the motives which inspire them are good or bad.

The state of Wisconsin has a similar clause to this in its Constitution. Section 26 of article IV of the Constitution of the -state of Wisconsin declares that the legislature shall never grant -any extra compensation to any public contractor after the contract shall be entered into. The Supreme Court of that .state, in the case of Carpenter v. State, 39 Wis. 271, uses lan-. guage which may well be borne in mind in passing oil thei present case. The court there said:

‘ For, in any construction of the statute before us, it assumes to compensate the plaintiff for all work and material under his contract, not at the prices of the contract itself, but at prices ascertained dehors the contract -and by a rule wholly independent of the contract. Suich compensation of a public contractor is prohibited by the Constitution.” (p. 282.)

“ The exact measure of his right is determined absolutely by his contract, under the constitution; and there exists no where a discretion to vary it.” (p. 283.)

“ Legislative history points and -sanctions the policy of the constitution. It indicates the purpose of the section to save the legislature from the importunity of public contractors and servants, and the treasury from the discretion -of the legislature in their favor; to limit contractors with the state, beyond pretense and device, to the precise compensation fixed by their contracts. Under this salutary restraint, no misfortune or rapacity can ever avail in a court of justice, by any artifice of circuity, to change the rule of recovery on a contract with the state. Where there is no fraud or mistake which would authorize a court to avoid or reform any contract, the contract itself must govern. If the compensation be too high, the state must bear the loss; if too low, the contractor must -suffer it. The constitution leaves no room to legislature or court for equitable considerations of quantum meruit. We cannot say that the statute before us is not equitable; but we do hold that it is not constitutional.” (pp. 284X85).

These words of the Wisconsin judge apply here with-great force. This statute before us is remedial in its nature, and the end aimed at is undoubtedly justifiable, but that it is in defiance of the plain mandates of the Constitution is sufficient to work its condemnation, no matter how laudable its purpose.

That the legislature cannot evade the prohibition placed upon it by the Constitution, by creating a tribunal, and then, without constitutional authority, delegating power to that tribunal to do what it cannot do itself, seems too plain for argument. Section 19 of article III gives the legislature such constitutional authority but section 28 does not. The Court of Appeals of this state, however, has clearly established that principle in a number of oases. Judge Allen in a very learned opinion in the case of People ex rel. Bolton v. Albertson, 55 N. Y. 55, used this very significant language: “A written Constitution must be interpreted 'and effect given to it as the paramount law of the land, equally obligatory upon the legislature as upon other departments of government and individual citizens, according to its spirit and the intent of its framers, as indicated by its terms. An act violating the true intent and meaning of the instrument, although not within the letter, is as much within the purview and effect of a prohibition as if within the strict letter; and an act in evasion of the terms of the Constitution, as properly interpreted and understood, and frustrating its general and clearly expressed or necessarily implied purpose, is as clearly void as if in express terms forbidden. A thing within the intent of a Constitution or statutory enactment is, for all purposes, to be regarded as within the words and terms of the law. A written Constitution would be of little avail as a practical and useful restraint upon the different departments of government, if a literal reading only was to be given it, to the exclusion of all necessary implication, and the clear intent ignored, and slight evasions or acts, palpably in evasion of its spirit, should be 'sustained as not repugnant to it. The restraints of the Constitution upon the several departments, among which the various powers of government are distributed, cannot be lessened or diminished by inference and implication; .and usurpations of power, or the exercise of power in disregard of the express provision or plain intent of the instrument, as necessarily implied from all its terms, cannot be sustained under the pretence of a liberal or enlightened interpretation, or in deference to the judgment of the legislature, or some supposed necessity, the result of a changed condition of affairs. (1 Kent’s Com. 162; Barto v. Himrod, 4 Seld. 483; Taylor v. Porter, 4 Hill, 144; Warner v. People, 2 Den. 272; People v. N. Y. C. R. R. Co., 24 N. Y. 485; Schenectady Observatory v. Allen, 42 id. 404.) ”

Judge Vann, in the case of People ex rel. Burby v. Howland, 155 N. Y. 280, quoted from this opinion of Judge Allen approvingly and ih addition said on this subject: “ When the main purpose of a statute, or of part of a statute, is to evade the Constitution by effecting indirectly that which cannot be done directly, the act is to that extent void, because it violates the spirit of the fundamental law. Otherwise the Constitution would furnish frail protection to the citizen, for it would be at the mercy of ingenious efforts to circumvent its object and to defeat its commands.”

True it is, therefore, that the legislature cannot do indirectly that which it is prohibited from doing directly. Otherwise prohibitions in the Constitution upon the action of the legislature would be powerless to accomplish the object for which they were framed.

If the contention of the claimant is correct that section 28 of article III of the Constitution is a limitation upon the act of the legislature alone, then it is entirely unnecessary and is surplusage, because section 19 of article III prohibits the legislature from auditing or allowing any private claim or account against the state whether it be for extra compensation or any other purpose. Section 19 then proceeds to' authorize the legislature to appropriate money to pay such claims as shall be audited and allowed according to law. Section 28 of article III, it will be noted, however, contains no provision authorizing the audit and allowance of claim's for extra compensation .anywhere by anybody. It prohibits the recognition of that class of liabilities against the state, and does not provide any way that extra compensation may be paid to any public contractor. In other words, section 28 of article III is entirely a prohibition, and does not contain, within itself, any recognition that “ extra compensation ” can under any circumstances be constitutionally granted. This is in accordance with what Judge Rapallo said in his opinion in the case of Cole v. State of New York, 102 N. Y. 48, where he says, at page 54: “ Where the creation of a particular class of liabilities is prohibited by the Constitution, it would of course be an infraction of that instrument to pass any law authorizing their enforcement, but in the absence of any such prohibition there is no good reason why the State should be powerless to do justice, or to recognize obligations which are meritorious and honorary and to provide tribunals to pass upon them.” (The italics are ours.) In the case of Cole v. State of New York it appeared that the captain and harbor master of the port of New York and their employees were to be paid out of moneys raised by a tax on the ships in the harbor according to their tonnage. The Supreme Court of the United States held such law to be unconstitutional, and, therefore, the captain and harbor master put in a claim to the state for their salary under and by virtue of chapter 238 of the Laws of .1885 which conferred jurisdiction on the Board of Claims “ to hear, audit and determine ” their claims for such salary. Judge Bapallo further said, in reference to this act: “ It grants no extra compensation. It merely gives jurisdiction to hear and determine a claim for reasonable compensation for services rendered in a case where the compensation attempted to be provided by law failed by reason of the invalidity, under the Constitution of the United States, of the provision for such compensation.” 102 N. Y. 59.

It seems plain to us, therefore, that the facts concerning the contract in question in this case do not bring it within the terms of chapter 459 of the Laws of 1919, so that even if such act is a valid exercise of legislative authority, this court would have no jurisdiction of this claim in any event. It further appears clear to us, however, as has been well expressed by Judge Morschauser,' that this act is in direct violation of section 19 of article III of the Constitution which prohibits the legislature from auditing or allowing any private claim against the state. It is apparent that this is just what it has done by this act. For this reason, therefore, if for no other, the act is unconstitutional, and the claim must be dismissed. But it appears further that the subject upon which the legislature has attempted to act here has been placed beyond its jurisdiction by the Constitution itself. The prohibition in the Constitution, as set forth in section 28 of article III, is not only binding upon the legislature but upon the courts of the state as well. That section places it beyond the power of the legislature or of any tribunal to make an award to any public contractor in this state for extra compensation. That provision of the fundamental law can neither be ignored nor evaded. Without it, public contracting would be reduced to a farce. The public treasury would be the constant object of attack by every public contractor who, through misf ortune or ignorance, had lost money on his contract. It would also he the constant object of attack by every public contractor whose rapacity for money was strong enough to throttle his integrity and induce him to commit fraud. The state, it is true, may recognize a moral as well as a legal liability. It may authorize the Court of Claims to determine whether the claim of a claimant is a moral obligation against the state, and, if so, to render such an award as shall be just and equitable in the premises, but it has no power either itself to recognize or to authorize the Court of Claims to recognize any claim for extra compensation. The claim before us must, therefore, be dismissed.