Gleason v. Dalton , 51 N.Y.S. 337 ( 1898 )

Goodrich, P. J. (dissenting):

I am unable to concur with tlie views of my associates in this action, and. feel called upon to state my reasons.

This is a taxpayer’s action brought by the plaintiff, a citizen and resident of the borough of Queens, for the purpose of restraining certain official acts which are alleged to be illegal, and the waste of public funds. An injunction order was made by one of the justices of this court, forbidding the defendant Dalton, as commissioner of water supply, to make any contract in behalf of the city with the defendant corporation, the Citizens’ Water Supply Company of Newtown, for the supply of water to said city, within the borough .of Queens, to be used by the city, unless prior to the making of such contract, jiroposals for the supply of such water had been invited by public advertisement, pursuant to section 419 of “the Greater New York charter” (Laws of 1897, chap. 378), and requiring the defendants to show cause why such injunction should not continue dúring the pendency of the action. On the argument of this motion the injunction was so continued, and from this order the defendants appeal.

The complaint alleges that the Citizens’ Water Supply Company is a domestic corporation organized under the Transportation Corporations Law (Chap. 566, Laws of 1890), and that on February 16,1898, an application was made to the board of public improvement of the city of New York for the approval of a proposed contract between the city of New York and the defendant corporation for the supply of water to the city of New York, and the authorizing of the defend-, ant Dalton to execute said contract in behalf of the city, although the charter forbade the making of any such contract without public advertisement for. proposals and bids for the work; that the price proposed was excessive ; that if bids were advertised for, a bid would be made by the Woodside Water Company at a lower rate than that named by the defendant company in the proposed contract; that the supply could be obtained at a much lower rate than that named in the contract; and that the making of said contract, with-* out advertisement for bids, is illegal and would result in waste and injury to the property and funds of the city.

The defendant Dalton answered and presented affidavits denying the equities of the complaint, and while under ordinary circum-_ stances this would prevent the issuing of an injunction pendente lite in an action between individuals, I do not think the rule necessarily controls in a case of the character of the action at bar. No advertisement was made, and for the purpose of the argument the defendant company concedes that the board of public improvement proposes to approve a contract of the. same general nature as such proposed contract. The proposed contract of the defendant company provided for the purchase of water to be supplied to the mains of the town of Newtown, to the extent of, at least, 500,000 gallons of water per day, the amount to be increased to 3,000,000 gallons when required by the city, all at the rate óf sixty-five dollars per million gallons, the contract to continue for three years, with the option to the city to purchase the plant at a valuation to be. determined according to the provisions of the charter. .

The principal question involved is whether a contract for a supply of water cair be executed without opportunity for public competitive bids; and this requires a somewhat extended statement of the provisions of the act known as “ the Greater New York charter” (Chap., 378, Laws of 1897).

Section 410 establishes the hoard of public improvements, which consists of the mayor, president of the board, and eight heads of departments, including the commissioner of water supply and the borough presidents. Section 415 (Subd. 7), among other things, confers upon the board power over “ superintendence of water supply of private water companies, contracts for water supply with -private companies.”

Section 416 authorizes the. board of public improvements to prepare and recommend to the municipal assembly all ordinances and resolutions regulating “ contracts for public work or supplies, and agreements in relation thereto by which the city shall be liable to pay money; and such ordinances, among other matters, must provide that the award, if any, must be made to the lowest bidder, unless the hoard of public improvements, by the vote-of a majority of its members, of whom the mayor and the comptroller shall be two, shall determine that -it is for the public interest that a bid other than the lowest should be accepted, and that no contract shall be made until the comptroller certifies thereon that the necessary funds are provided and applicable thereto.”

Section 419 provides that “All contracts to be made or. let for work to be done, or supplies to be furnished, * * * shall be made by the appropriate heads of departments under such regulations as shall be established by ordinance or resolution of the municipal assembly. Whenever any work is necessary to be done to complete or perfect a particular job, or any supply is needful for any particular purpose, which work and job is to be undertaken or supply furnished for the city of Rew York, and the several parts of the said work or supply shall, together, involve the expenditure of more than one thousand dollars, the same, shall be by contract, * * * and all contracts shall he entered into * * * and shall * * * be founded on sealed bids or proposals, made in compliance with public notice, duly advertised. " * * ”

Section 468 provides for the appointment of a “ commissioner of water supply.”

Section 471 reads as follows: “ It shall not be lawful for the commissioner of water supply to enter into any contract whatever with any person or corporation engaged in the business of supplying or selling water for private or public use and consumption, unless, preliminary to the execution of the contract, the assent of the board of public improvements, after submission to it of the proposed contract in all its details, shall be given by resolution to the execution of such contract as submitted, and it shall not be lawful for the said city of Rew York, or for any department thereof, to make any contract touching or concerning the public water supply, and especially the increase, thereof, with any person or corporation whatsoever, save in accordance with the provisions and requirements of this act, which said provisions mid requirements are hereby declared to establish the exclusive rule for the maJ&mg of 'such contracts.”

Section 472. “ * * * The commissioner of water supply is hereby authorized to examine into the sources of water supply of any private companies supplying The City of Rew York, or any portion thereof, or its inhabitants, with water, to see that the same is wholesome and the supply is adequate, and to establish such rules and regulations in respect thereof as are reasonable and necessary for the convenience of the public and the citizens. * * * ”

The general scheme of the charter is that all supplies are to be contracted for only upon the initiative of the board of public improvements and after an ordinance or resolution of the municipal assembly, and then only after public advertisement for proposals and opportunity given for competition. The only exception, so far as supplies are concerned, appears, by section 419, to be those cases where it is 'otherwise ordered by a vote of three-fourths of the municipal assembly. There is also the provision that a contract need not be awarded to the lowest bidder where the board of public improvements, by a vote of a majority of its members, of which the mayor and comptroller shall be two, shall determine that it is for the public interest that a bid other than the lowest shall be accepted. This would seem specifically'tO' provide for a case where there is anything unusual in the character of the supplies to be furnished, or where some emergency arises, and, taken in connection with the provision that the commissioner of water supply is empowered to.examine the character of water and sources of water supply, would appear to be exactly adapted to the situation involved in the case at bar.

Section 419 is substantially the same as section 64 of the New York City Consolidation Act (Laws of 1882, chap. 410), and section 1608 of the Greater New York charter provides that where its own provisions are the same in terms or in substance and effect as the provisions of the said Consolidation Act, the charter is intended to be, not a new enactment, but a continuation of the Consolidation Act of 1882, and shall accordingly be so construed and applied.

The abuses which have blackened the histories of cities in modern times have occasioned the introduction into nearly all the municipal charters of our country of the requirement that work to be done and supplies to be furnished should be subjected to competition, and the contract awarded to the lowest bidder.. The Greater New York charter, so far from' being exceptional on this point, is replete with the requirement. (§ 416, subd. 13, §§ 419, 541, 562, 587, 618, 675, 704, 1076, 1077, 1528.) The appellants, I think, mistake the only exception it contains. The board of public improvements cannot, in the first instance, relieve the commissioner of the water supply from the obligation to let the contract to the lowest bidder. In all cases, a resolution of. authority must emanate from that board and receive the sanction of the municipal assembly, but this authority, if to purchase, must follow the regular method and call for competitive bidding; After bidding has been had and a contract is proposed, then, but not till then, can the board of public improvements— the mayor and comptroller participating — relieve the commissioner of water supply from the binding obligation to make the contract with the lowest bidder.

In Harlem Gas Co. v. Mayor, etc., of N. Y. (33 N. Y. 309, 329) the court said : “ The purpose of the statutes is to insure economy in the public administration, and honesty, fidelity and good morality in the administrative officers. Competitive offers or bids have no other object but to insure economy and exclude favoritism and corruption in the furnishing of labor, services, property and materials for the uses of the city.”

If, by any limitation of definition, water is not included in the word “ supplies,” it certainly cannot be excluded from the words “ property and materials,” as used in the above citation.

The familiar principle of statutory construction, that all the provisions of a statute must be taken into consideration in deriving its meaning, needs no citation of authority. It is said in Beekman v. Third Avenue R. R. Co. (153 N. Y. 144, 160): “It is. a statute conferring power upon local authorities and regulating the procedure for the disposition of .public franchises, and, even if open to two constructions, that must be preferred which best safeguards the public interests, conduces to -the harmonious operation of all its parts, and promotes purity and simplicity of administration.”

It is contended, however, that an exception is made by the charter, in reference to a supply of water; that water is not within the purview of “ supplies,” as that term is used in section 419, and that it must be shown that a supply of the quantity and quality can be furnished by two or more persons, and at the time required. This contention finds an apparent sanction in the three cases, Harlem Gas Co. v. Mayor, etc., of N. Y. (supra). Matter of Dugro (50 N. Y. 513), and Baird v. Mayor, etc., of City of N. Y. (96 id. 567). The last two cases related to patented articles, and, in my opinion, do not control the question. One of these cases related to a patented pavement, known as the Nicholson, and the other to Navarro’s patent water meters. There could be no competition in these articles, and the court held that the provisions of the old charter, which required competitive bidding, could not be held applicable to such a case.

. I do not contend that where bids can avail nothing it would be necessary to advertise for competitive bids. Such a construction would be absurd, and this was the ground of the decision' in Baird V. Mayor, etc. (supra) cited by Mr. Justice Hatch. This case related to the patented Navarro water meters, and the court (at p. 582) said : “ Under such circumstances it has been frequently held that provisions of law requiring contracts on behalf of a municipal corporation to be let to the lowest bidder are not obligatory upon its officers on account of their inherent inapplicability to the nature and circumstances of the case. If a desired article can be obtained from one person alone it would be not "only a farcical, but also a hazardous proceeding, to subject the city to the obligation- of making a contract at the lowest price offered, when there was but one person who could lawfully bid for the privilege of sale. Such a construction might compel a contract for a price dependent upon the arbitrary will and caprice of one only of its. parties. The object and design of the restriction is wholly in appropriate to the circumstances attending this contract, and can be made to apply -to it only by disregarding its plain purpose and intent. Similar provisions have heretofore- uniformly been held to be inapplicable to contracts of the character in question.”

In The Matter of the Petition of Merriam (84 N. Y. 596, 601), Miller, J., referring to a provision “ that supplies and work shall be furnished by contract; that no contract shall be made until proposals are advertised for,” used this significant language: “ The statute and ordinance passed in. pursuance of the same were intended to establish, a system by which work done for and supplies furnished to the city should be the subject of competition and allotted to the lowest bidder for the same, and. a substantial compliance with these requirements is essential to carry into effect the object of these regulations, which evidently were adopted to prevent a wasteful expenditure of the public money and to.promote economy, as well as practical convenience, in the administration of the .financial affairs of the city.”

In the case at bar the. record shows clearly that other persons are prepared to bid. and to furnish water from the underlying water supply of Long Island.

' The Harlem Gas case related to gas to be furnished by a gas corporation which had a part of its mains and pipes already laid and an apparent monopoly of the business;' but in the present charter it is specifically provided that even gas can be contracted for only after competitive bids have been sought, so that the intention of the charter is superior in effect to this decision of the Court of Appeals, which related' to a former charter provision,

The word “ supplies,” mentioned in section 419, is a generic term which, in common speech, is applicable to all articles furnished to a municipality. It is a familiar principle that resort may be had to other sections of a statute-to ascertain the meaning in which particular words are used. The word “ supply” appears in the actual title of the commissioner of water supply. The word “ sujDplies ” also appears in the title of the commissioner of public buildings, lighting and supplies. The latter department has charge of the gas supply of the city, and the gas supply can be contracted for only after competitive bids. This seems to me to create a very strong inference, as it was enacted after the decision of the:Harlem Gas case, that if the supply of gas can be had only after competitive bids water comes within a similar requirement. The words “ supply of water” or “water supply,” or “supplying water,” appear in almost every section of the title which creates and defines the duties of the commissioner of water supply except those which relate to proceedings for condemnation of land.

I should have hesitated to resort to admiralty ■ law as a guide for the definition of the term “supplies,” except that in his opinion Mr. Justice Hatch cites the case of The Farmers’ Loan,. & Trust Co. v. The Mayor, etc., of N. Y. (4 Bosw. 80), where the court speaks of the maritime use of the word. “ supplies,” and cites cases from the admiralty courts" in support of its opinion. It can hardly be disputed that water furnished to a steamer or other vessel would come under the term “ supplies,” in any action brought against the vessel or her owners for the value of the water thus furnished.

Under the Greater New York charter water is an article of merchandise as it had been under the charter of former New York It is sold and delivered for a price stated. Section 475 authorizes the use of water meters to measure water “supplied” to buildings, and section 575 contains provisions respecting gas meters to be used to measure the gas furnished either to the city or its citizens. "Water is just'as much a supply -as gas, and competitive bids must be had for the latter in all cases.

The exhaustive opinion.in Hennessey v.Volkening (30 Abb. N. C. 100) was for many years the standard authority on this subject and clearly establishes the point stated. Says the court (at p. 105): “ As regards water rents the city occupies the position of a merchant' with eommodities for sale. It collects a quantity of water, provides means for its distribution, fixes a rate at which it will supply with water, and proclaims that all requiring water can have it at that ate. The city does for water what the gas companies do for gas.” The court points out that .the rent or charge for water is not a tax or assessment, but an indebtedness as for goods sold and delivered, enforcible, like a mechanic’s lien, upon real property.

It is plain to see, under this authority, that water purchased of the city, from a legal standpoint, comes under the charter term “ supplies.” I cannot see why water purchased by the city does not fall within the same category, and believe that my view of the plan of the charter, as to the water, supply, is strongly reinforced by a consideration of what is generally supposed to be the subterranean water-supply on Long Island, from which much of the water, as at present- iised by the city, is derived. It is believed by eminent'professional engineers that a body of fresh water permeates the entire land below the, lines of the tides, and it is now yielding to the borough of Brooklyn alone, from 30,000,000 to 40,000,000 gallons a day, without giving any signs of diminution. Under pump-well inventions it is -only necessary to drive a gang of small pipes a short distance into the earth to extract, by a single engine,- several million gallons a day from this subterranean reservoir. That water thus furnished to and purchased by the city in vast quantities is a “supply,” as á matter of fact, is quite evident, and it'is a supply to which, in the largest and most effective sense, the competitive system provided by the charter ought, in the -interest of good government, to be applied by the rulings of our courts.

I do,not see that there is any practical difficulty in respect to bids for water. The record discloses that there are, at least, two other companies which are prepared to propose bids, and it cannot be assumed, for the purposes of this appeal, that they are any-less competent to carry out their proposals than the defendant corporation. The charter provides that a deposit of money must accompany a bid, and that, when a bid is accepted, a bond must be given for "the fulfillment of such contracts. (§ 420.) This affords protection to the city against incompetent bidders.

Nor can it easily be seen that if a bid is accepted from some other than the defendant corporation, the scrutiny of the board of public improvement, required by section 471, will be obviated. The proposed contract of a successful bidder must pass the scrutiny of that board just the same as the proposed contract of the defendant corporation.

The question of the ability of the Woodside or the Jamaica Water companies, or any other company to be formed or of private individuals, to furnish pure and wholesome water, is one of the subjects within the power of the department óf public improvements to consider, and if it should conclude that such companies or persons were not capable of fulfilling their proposals, either in quantity or quality or with celerity, such bid could be rejected under section 419, which gives authority to the board to reject all bids where it is deemed for the interest of the city so to do, or by a certain vote to award it to a person other than the lowest bidder, but this should be done only after all persons interested have had opportunity for competition.

I do not lose sight of the necessity for an early supply of water to the borough of Queens, which is set forth in the record. But the case can be tried at an early day, and a condition to that end might be made in the order upon this appeal.

The defendant corporation’s counsel contend that the affidavits used upon the motion show very clearly that no other company, except the •defendant corporation, is in a position to supply a sufficient quantity of pure and wholesome water; that the present supply of the town is wholly inadequate, and that there is immediate necessity for a supply of 5,000,000 gallons per day; that the price proposed is much less than the rate at which the city secures water from its own plant.

All these questions can be decided on .the trial of the action in a manner much better calculated to safeguard the interests of the city than can be done on a motion for an injunction. The issues are already framed by the service of an answer, and an early trial can be had.

I do not think it needful to add anything upon the question of “spoliation,” so clearly set out in the opinion of the learned justice at Special Term, but I venture to say that there is sometimes a possible danger that those who stand ready to enter into lucrative and profitable contracts with the municipality may take advantage of the necessity—-cry for an additional water supply and use it as a means of assisting in the addition of a new burden to the already strained resources of the city and of hurrying public officials into making an illegal contract, and then ask the courts to sanction its enforcement on the ground of a great public emergency. I can see no detriment to the public interest in pursuing the plain requirement' of section 419 of the charter, that all contracts for supplies shall be made only after opportunity for public competition.

It is to be observed that the injunction order does not absolutely restrain the making of a contract, but merely the making it without ten days’ previous advertisement for. bids, and if this course should be taken there will be only a short delay in furnishing water to the public, so that there can be little detriment to the public service; Indeed, if .the situation evoked by the injunction order of the eighteenth of March had been promptly accepted by the defendants, the ten days’ advertisement might have been already completed and the parties would have been in a condition to enter into a suitable contract without further delay.

These considerations bring me to the conviction that the injunction order should be continued during the pendency of the action, and that the order of the Special Term should be affirmed.

Order reversed and injunction dissolved, with ten dollars costs and disbursements. ,