Williamson & Adams, Inc. v. State , 33 N.Y.S.2d 346 ( 1942 )

Ryan, J.

(dissenting). I dissent. The prevailing opinion entirely disregards the equities. Relying upon technicalities it arrives at a conclusion the effect of which is to give the State of New York the benefit of extra labor performed and materials furnished, worth $2,165.76, without paying therefor. The decision which accompanies this opinion recites that work of the value stated was installed by the claimant corporation in the State’s building at the instance of the State’s representatives on the job although the construction contract did not require it to be done. I cannot concur in the proposition that the assignment here under consideration was not an assignment of the contract. We have previously determined that similar language gave the right to the assignee to recover not only the moneys due under the contract but also for extra work performed and, as well, damages for breach of the contract. Our holding was twice challenged upon appeal and twice upheld. (Dowd v. State of New York, 239 App. Div. 141; 248 id. 805.)

In that case Earl C. Jones, Inc., entered into a contract to build a State highway and, encountering some financial difficulties, executed an instrument, addressed to the State Department of Public Works, Bureau of Highways, and to the State Comptroller, which read as follows: “ the undersigned as such contractor of record hereby sells, assigns, transfers and sets over to the Wyoming County National Bank, Warsaw, New York, all moneys due or to become due the undersigned on monthly and final estimates, for labor and material furnished in connection with said contract; and you and each of you are hereby authorized, empowered and directed to pay to the said Wyoming County National Bank the full amount of such monthly and final estimates as the same become due and payable.”

In turn the Wyoming County National Bank assigned to Thomas H. Dowd “ whatever right, title and interest the said bank had in and to the payments under the said contract.” Dowd sued the State. This court held that the contractor had assigned to the bank “ all of its right, title and interest in and to any and all claims against the State of New York growing out of the performance of said contract, or any damages for a breach thereof, and the same was thereafter, and before the filing of this claim, for a valuable consideration, duly assigned by said Wyoming County National Bank to the claimant herein.”

The construction work was completed according to the exactions' of the State engineer in charge and paid for according to his computations and measurements. This court found that these exactions were in breach of the contract and that the engineer’s measurements were incorrect and had been made in bad faith. We awarded compensation for the damages sustained to the assignee, the claimant Dowd. Upon appeal from the judgment following the first trial, a new trial was directed in order that matters relating to a certain provision of the contract might be “ fully litigated.” Upon appeal from the award and judgment following the second trial there was unanimous affirmance. Upon both appeals the issue of the validity and effect of the assignment was squarely raised,' but the-findings of the trial court in this regard in each instance remained undisturbed.

Here “ Williamson & Adams, Inc., the claimant herein, at the request of the trustees, undertook to complete the furring and lathing as subcontractors.” (Prevailing opinion, 2.) The State recognized these subcontractors and accepted their work but now refuses to pay for extra work which they performed beyond the requirements of the contract. I believe that the assignment by Benstock, Inc., to Morrell and Bratte contemplated that these trustees should do exactly what they did do, viz., complete the contract in good faith. This involved engaging subcontractors and seeing to it that they carried out the instructions of the State’s engineer on the job even when there was a dispute and such instructions were followed under protest. The necessary corollary was that the State of New York should exercise good faith. When it made demands in excess of the requirements of the contract a breach arose for which the State should respond in damages.

In respect to the previous decision of this court, made upon motion to dismiss (171 Misc. 763), it must be noted that the affirmance thereof in the Third Department was “ upon the ground that the period prescribed within which claim must be filed had expired before claim was filed.” (259 App. Div. 758.) That this was the sole and only ground of affirmance was evidently the interpretation of the Legislature because in adopting the Enabling Act under which the instant claim comes before us only the defect in filing is cured. (Laws of 1940, chap. 874.) Certainly there existed a. moral obligation which would have supported legislation to vitiate what my colleagues find to be the limitations of section 27 of the Lien Law, which, in its entirety, is already repealed. That no such legislation was adopted implies that it was deemed unnecessary.

The prevailing opinion and decision about to be entered thereupon dismiss the claim “ upon the merits.” Nevertheless it is my understanding that the real basis of the dismissal is the absence of privity of contract between Williamson & Adams, Inc., and the State. In other words, the holding is that this claimant is not the real party in interest, in effect a jurisdictional determination. I doubt that this basis supports a dismissal upon the merits when at the same time the decision contains findings to the effect that the State demanded and received labor and materials not required by the contract. I call attention to this because at some future time, if this decision stands, the judgment about to be entered herein may be pleaded as a bar to recovery in a suit which may be instituted to compel the State to pay for what it has had. It is my understanding that it cannot be so regarded. (Clark v. Scovill, 198 N. Y. 279.) However, that issue ought never to arise because at this time the direction of this court, in right and justice, should be for the entry of a judgment in favor of this claimant in the amount of $2,165.76 and interest thereon from the date of final certificate of payment on the contract.