
    James B. Pennell and Thomas O’Hern, Respondents, v. The Mayor, Aldermen and Commonalty of the City of New York, Appellant.
    
      Hew Yoidc— acceptance of a bid—when thereof ter the commissioner of public works cannot reject all the bids—approval of sureties—oral notification to execute the contract.
    
    A bidder for the work of paving a street, for which proposals were asked by the ' city of New York, presented the lowest bid, which was sent to the comptroller for his approval as to the adequacy and sufficiency of the sureties; the comptroller returned it to the commissioner of public works with a statement that he was riot fully satisfied with one of the sureties, and that the bidder proposed, with the consent of the commissioner of public works, to substitute a surety company in the place of such surety. The bidder was immediately thereafter informed orally by the commissioner of public works that he would execute a contract for the doing of the work in question, which, however, the commissioner subsequently refused to do unless the bidder would agree to wait until a railroad had laid its tracks in the street.
    
      Held,, that, after such decision that he would execute the contract, the commissioner of public works had no right to reject all the bids;
    That, under the circumstances, he could not excuse his refusal to sign the contract on the ground that the sureties had not been approved by the comptroller; That an oral notification by the commissioner that he would execute the contract was sufficient;
    That the bidder was entitled to recover the damages sustained by him by .reason of such refusal.
    Appeal by the defendant, The Mayor, Aldermen and Commonalty of the City of New York, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the-clerk of the county of New York on the 23d day of October, 1896, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 24th day of November, 1896, denying the defendant’s motion for a new trial made upon the minutes.
    
      Chase Méllen, for the appellant.-
    
      L. Laflin Kéllogg and Alfred G. Petté, for the respondents.
   Parker, J.:

The judgment awards to the plaintiffs $5,000 as damages, because of the refusal of the defendant to permit them to execute a contract which the plaintiffs claim was awarded to them by the commissioner of public works.

• The undisputed facts are, that the common council of the city of New York, on the 20th of November, 1894, passed an. ordinance for the paving, of the roadway of Kingsbridge road, from One Hundred and Ninetieth street to the Harlem river, with Macadam pavement and Telford foundations. The advertisements for proposals for doing the work were duly published by or under the direction of the com- ■ missioner of public works, in pursuance of which the plaintiffs filed a bid to do the work, together with an agreement and affidavit of sureties as required by law, and deposited a certified check for $2,500, being five jDer cent of the security required for the faithful performance of the contract. There were several other bidders; but when the bids were opened by the commissioner of public works it was ascertained that. the plaintiffs were the lowest bidders, and it was so declared, Subsequently their bid was sent to the comptroller for his approval as to the adequacy and sufficiency of the sureties, and, on-the day following, June 5, 1895, notice was given to the plaintiffs by the .comptroller to present their sureties to him for examination. One of the plaintiffs’ proposed sureties was out of town, and the .comptroller was asked whether he would accept one of the surety companies in place of the absent surety, and the plaintiffs, receiving an affirmative answer, secured the necessary agreement and affidavits from the American Surety Company, paying it therefor; and thereafter these papers were transmitted by the comptroller to the commissioner of public works without his formal approval of the sureties. This was about June 18, 1895. Immediately afterwards .the plaintiffs, together with Senator Burns, called upon the commissioner of public works with reference to their bid.

As to what took place at' that interview and a subsequent one the parties are not in agreement. On the one side it is claimed that the commissioner of public works announced that he would execute the formal .contract in the course of two or three days, and invited the plaintiffs to come to his office for that purpose. On the other hand, the commissioner denies that he ever, at' any time, promised to execute the contract.

This difference we will refer to later, the questions to be immedi- . ately taken up being whether the commissioner, of public works was at liberty to reject all bids as he did nearly six months after his alleged promise to execute the contract with the lowest bidder; and, second, whether the modifications required by the statute might be given orally.

The element of fraud or intentional wrongdoing on the part of the plaintiffs or the commissioner of public works is not involved. The bids were honestly made and the plaintiffs were the lowest bidders. But it seems that in the meantime the Third Avenue Railroad Company had made application for a franchise to extend its line over ■ this road or some part of it; and this fact came to the knowledge of the commissioner of public'works subsequently to the receipt of the bids by him and his determination that the plaintiffs were the lowest bidders. He offered to execute a contract with the plaintiffs with a modification which should relieve the city from the paving of one-third of the street in the event that the railroad company should get permission and should get possession and should build its road over and along the street. But this modification the plaintiffs refused to accept, for reasons which were apparently well considered. This situation led the commissioner of public works to put off the signing of the contract until the following January, when he rejected all bids.

. The city urges on this appeal that had the commissioner promised to execute the contract as contended by the plaintiffs, he yet had the right under the statute, at any time before its formal execution, to reject all bids. Because of the amendment of section 64 of the Consolidation Act (Laws of 1882, chap. 410) by chapter 327 of the Laws of 1893 that section now differs in substantial respects from the form in which it was before this court in the case of Lynch v. The Mayor (2 App. Div. 213). Because of these changes it is claimed that this case is distinguishable from that. The statute which controlled in that case gave to the commissioner of public works an opportunity to reject all bids, provided he deemed it for the best interests of the city to do so after the bids were opened. But if, instead of exercising the discretion thus conferred, notice was given to the successful bidder that the contract had been awarded to him, the commissioner no longer had the right either to reject the bids or to refuse to execute the contract; and it was held in Lynch’s case ■ that for his refusal to execute the contract the plaintiff was entitled to recover his damages.

Section 64 of the Consolidation Act, as amended, extends the period within which the commissioner of public works may reject all bids. It provides thatimmediately after the opening of the bids the head of department, unless he shall deem it for the interest of the city to reject all bids, shall notify the lowest bidder to present the persons proposed as sureties to the comptroller for examination within five days after'the receipt of said notice.” . Subsequent provisions relate to the manner of presenting sureties and the effect of neglect or refusal to do so,- and the section then provides that the comptroller, after approval of the sureties, shall transmit the same to the head of the proper department, who immediately there- . after if he shall not deem it for the best interests of the city to reject all bids, shall notify said lowest bidder to execute the contract for said work within five days after the receipt of such notice.”

•It will thus be seen that the commissioner of public works, . instead of being required, as he was under this section prior to the recent amendment,* to determine ©rice for all whether the. best interests of the city required a rejection of all bids, before the lowest bidder was called upon to present his sureties, is now permitted to consider anew that question after all intermediate steps have been taken, including the approval of the sureties. But then the statute seems to contemplate that he must proceed immediately and must hot postpone action, for it provides in terms that he shall immediately thereafter notify the lowest bidder to execute the contract if he shall not deem it for the best. interests of the city to reject all bids.

A fair and. reasonable construction of that provision requires a prompt exercise of the right of the commissioner to reject all bids, and also that such right is gone after he has notified the lowest: bid- , der to execute the contract. The commissioner of .public works in this case did not reject the bid on. the eighteenth of June when the papers were transmitted to him and the plaintiffs appeared before him, nor did he attempt to do so until January following. But how promptly he must act is not of moment here, for it is plaintiffs’' contention that immediately after the eighteenth of June the' commissioner notified them to execute the contract, and if that fact be true, and the notification was in accordance with the requirements of the statute, then it is our view that his right to reject all bids was at an end.

The point is made that the papers were returned by the comptroller to the commissioner without his formal approval of the sureties. But that fact in noway defeats or impairs the plaintiffs’ right to recover, provided there was an award of the contract. The statute does not make the approval of the sureties by the comptroller a condition precedent to an award. While the comptrollér did not formally approve of the sureties, it would seem that his letter was-intended nevertheless to constitute an approval. Outside of the letter it appears that one of the sureties being out of the city, the comptroller was asked to accept a surety company instead and he assented. His letter to the commissioner transmitting the proposals-reads:

“ Sir.— The proposal of Pennell and O’Hern for paving of Kings-bridge Road is herewith returned without my approval of the sureties, for the reason that I am not fully satisfied as to the adequacy and sufficiency of Thornton N. Motley, one of the sureties thereon.

“ Pennell & O’Hern propose, with your consent, to substitute The American Surety Oo. as a surety in the place of Mr. Motley.
The agreement and affidavits executed by The Surety Company are accordingly transmitted for such action in the matter-as you may deem proper.”

That he intended to have the commissioner of public works-understand that, so far as he was concerned, he approved of the substitution of the American Surety Company for Mr. Motley is beyond question; that he expected the commissioner would take the same view is equally apparent, and that the latter did so-can fairly be inferred from the fact that he did not, at any time during the long period in which he was 'trying to find a way to relieve the city from the contract, make the point that the sureties-had not been approved by the comptroller from .the further fact that he asserted that the only reason why he did not execute the contract was on account of the Third avenue franchise, and from his conceded readiness to execute a contract with such modifications-as would relieve the city from paving part of the street in the event of the railroad company building its projected road. This last consideration indeed seems conclusive, inasmuch as the objection in regard to the approval of sureties. would be equally applicable to ■ the modified contract as to the contract in its original form.

The next question then is whether the plaintiffs have established ■ in this case .that they were notified by the commissioner of public works on of about the eighteenth of June to execute the contract within two or three days thereafter as contended by them. .

It is objected that as no notice in writing was given, it'has not ■ been proved that the plaintiffs were notified as required by statute. .But, as We read the provision, it is riot necessary that' the notice ■should be in writing. The commissioner is required, to notify the lowest bidder; but how such bidder shall, be notified, whether in writing or orally, is not stated; and it necessarily follows that the commissioner is at liberty to adopt' either method. It was, them fore, competent for the plaintiffs to introduce testimony tending to. show that the commissioner of public works orally notified them to execute the contract. . ..

Arid this presents the only question of fact which was in dispute on the trial. The plaintiff OHIern testified that, accompanied by Senator Burns and his partner Pennell, he called upon Oommisv sioner Brookfield on the eighteenth' of June, and that a Mr. North, the water purveyor, was with the commissioner.. He further tes^ tiffed, among other things, as follows :

■ “ We saw him .at his office in Chambers street, in his office as: Commissioner of Public Works ; the senator introduced us to Mr. Brookfield, and we asked the commissioner whether he was ready for us to execute the contract for the Kingsbridge road; and he then .asked for an explanation from Mr. North; Mr. North went on and made a statement to the effect that in his opinion it would not be advisable for the department to enter a contract just at that time on account of the railroad tracks that were to be laid on the street; and that the department would have to build on. the Ilingsbridge road, and the press of New York city would criticise their actions if they went oh and laid an expensive pavement, and in the course of' two or three months to have the road ripped up again to lay down railroad ' tracks; the commissioner replied in these words,, saying:. When did you discover that you were to take this particular course ? ’ the water purveyor, Mr. North, replied that he must confess that all of those details had been gone through by the old administration, naming Tammany, and that he did not discover that there was to be a franchise sold in that particular street by the city until after the bids had been opened ; the commissioner replied that it was too late, and that there was nothing left for them to do but to execute the contract; however, he would not enter into the contract that day, but that if we would come around in two or three days he would sign the contract with us; this conversation was in the presence of Senator B-urns, Mr. Pennell and myself, and Mr. North; we went around in a few days. Q. What happened then? A. We called around in the course of two or three days, and the commissioner said that he was ready to execute the contract, provided we could enter into a supplemental agreement agreeing to wait until the railroad company laid their tracks.”

The testimony of this witness authorizes a finding that the commissioner pot only decided at that time to execute the contract, but that he notified the plaintiffs, as he was required to do by statute, to come around and execute it, and fixed the time for so doing within the period of five days limited by the statute. The testimony of Mr. Pennell, the other plaintiff, and of Senator Burns is to the same effect. Commissioner Brookfield testified to several interviews with the plaintiffs and Senator Burns, but he insists that he never promised to sign a contract, and asserts that the only reason why he did not execute it was on account of the franchise to the Third Avenue Railroad Company, about which he learned subsequently to the receipt of the bids, in accordance with the printed proposals. The testimony of Mr. North corroborates Commissioner Brookfield to the extent that he says he did not hear the commissioner say that he would execute the contract while he was present at the first interview between the parties.

From all this testimony a question was presented for the consideration of the jury. The question wras whether the commissioner, having an opportunity to reject all hids or to award the contract, decided to award the contract, and notified the plaintiffs to execute it. This question the court carefully submitted to the jury; they answered it affirmatively, and their finding should stand.

It follows that.the judgment and order (appealed from must be affirmed, with costs.

Yah Beüht, P. J., Bumsey, Williams and Pattebson, JJ., -concurred.

Judgment and order affirmed, with costs.  