Summary
In Matter of Brennan v. Board of Education (245 N.Y. 8, 15) the court said that the right of municipal inquiry into the board of education was applicable in the case of a fraud, the opinion reading in part: "The audit, therefore, by the board of education of this amount due under the agreement with P.J. Brennan Son for the construction of the public school was final unless set aside for fraud * * *."
Summary of this case from Matter of Zacharkow v. BerryOpinion
Argued February 21, 1927
Decided March 29, 1927
Appeal from the Supreme Court, Appellate Division, First Department.
Charles L. Craig for appellant. George P. Nicholson, Corporation Counsel ( Willard S. Allen, J. Joseph Lilly and Joseph L. Pascal of counsel), for respondent.
This is another dispute between the city of New York and the board of education, regarding the expenditure of appropriations for educational purposes. The real question is whether the board of estimate or the board of education shall audit the claim of a contractor for work on a high school. The claim has been audited by the board of education. The board of estimate insists that the contractor shall submit to it his claims for re-examination or "sub-authorization." Similar cases have been here before, and we have consistently upheld the right of the board of education to control its own funds as long as they were disbursed for the purposes authorized by statute. The facts of this case call for no departure from this fundamental principle.
On the 13th of June, 1923, the board of education awarded to P.J. Brennan Son, the petitioners, a contract for the general construction of the School for Deaf, known as Public School No. 47, on East Twenty-third and Twenty-fourth streets, between Second and Third avenues, in the borough of Manhattan, for the sum of $758,700. The work was delayed for over a year by the failure of the city of New York through its sinking fund commission to have the site cleared of buildings so as to permit construction to proceed. Inaction was in no way attributable to the board of education. In the meantime, the cost of labor and material had very much increased, and the contractor hesitated to proceed. Under these circumstances, the board of education sought the opinion of the corporation counsel. He advised the board under the circumstances to make an arrangement and settlement with the contractor for the delay, and thus enable him to proceed with the work. His opinion was couched in this language: "In view of the circumstances surrounding the clearing of the site for the first section, and the delay of over one year on handing it over to the contractor so that he might proceed with the erection of the first section, I am of the opinion that the Board of Education since the first section has been completed and turned over to the Board of Education may enter into negotiations with P.J. Brennan Son to adjust any claim that said contractor now may have by reason of the delay occasioned the contractor in the performance of the work for the first section."
The building of the school was to be carried out in two sections. After clearing the site, the first section was to be erected, which would be used for school purposes while the second section was being built. The contractor declined to proceed with the construction of the second section of the school because of the delay incident to clearing the site. The old buildings on the site were being used for school purposes.
As a result of negotiations between P.J. Brennan Son and the superintendent of school buildings, the committee on buildings and sites, on the oral advice of the corporation counsel, who was present, agreed to the settlement of the claims of said contractor on the first and second sections in the sum of $64,000, $21,432 representing damages sustained by the contractor in connection with the first section which had been completed and occupied for school purposes to be paid immediately; and the balance, $42,568, representing damages sustained and to be sustained in connection with the second section to be paid as follows:
$11,000 with the first progress payment $11,000 with the second progress payment $11,000 with the third progress payment $9,568 with the fourth progress payment.
Thereupon the board of education took the following action:
" Resolved, That the Board of Education hereby agrees to a settlement of a claim of P.J. Brennan Son, contractors for the general construction of the School for the Deaf (Public School 47), Manhattan, for delay occasioned the contractors in the performance of the work for the first section of the new building and for damages sustained and to be sustained in connection with the second section of such new building, for the sum of $64,000, in full settlement and satisfaction of the contractors claims for delay herein actual and prospective, the said contractors to execute a general release of all claims for damages incurred or anticipated by reason of any delays that have heretofore occurred in connection with the performance of the work."
The contractor thereafter executed and delivered the release in accordance with this resolution.
There was plenty of money with the city of New York to the credit of the board of education to pay this amount. By the appropriations in the budget for the year 1926, together with the amount receivable from the State of New York, there was available to the board of education in that year $103,584,942.77. On April 8, 1926, the board of estimate made an appropriation of $7,482,600 to the board of education for expenditures required for the construction of new schools, and on June 17, 1926, an additional sum of $1,736,000 for a like purpose.
For some reason, the board of education requested the board of estimate and apportionment to set aside from these funds an amount sufficient to pay the $64,000 in accordance with this settlement and agreement made with P.J. Brennan Son. On June 17, 1926, there was forwarded to the board of estimate a certified copy of the report and resolutions of the board of education, above mentioned, and the board of estimate on that day voted its approval. At a later meeting, on June 22d, the matter was reconsidered and tabled.
No further action having been taken, this mandamus proceeding was commenced to require the issuance of the appropriate vouchers in accordance with the Education Law (Cons. Laws. ch. 16) for the payment of this sum, agreed to and audited by the board of education.
As stated before, the contention of the city is that the board of education to obtain money out of its appropriations for school building purposes must have the consent of the board of estimate and apportionment. The method of procedure is outlined in the brief of the corporation counsel as follows:
"That whenever the Board of Education requires funds for a specific purpose it makes an application to the Board of Estimate and Apportionment in conformity with the terms and conditions set forth in the foregoing resolution of the Board of Estimate and Apportionment and that Board after investigation and favorable report thereon by its engineers and investigators adopts a resolution authorizing and setting aside to the Board of Education of specific sums out of the aforesaid fund for specific purposes."
The resolution referred to authorized the issuance of bonds, the proceeds of which were to be used by the board of education for the erection of school buildings, which resolution contained this statement: "The amounts to be expended therefrom to be sub-authorized by the Board of Estimate and Apportionment from said appropriation, predicated upon requisitions from the Board of Education for stated amounts."
The board of estimate and apportionment cannot supersede the Education Law by tacking on to its appropriations for school purposes, limitations upon the power of the board of education given to it by the Education Law. The board of estimate may grant or refuse the appropriations, but once having made them, the Education Law enacts how they shall be used. After these funds have passed to the credit of the board of education, they are to be disbursed upon its audit. The only relation that the city has to the subject of public education is as the custodian and depositary of school funds, and its only duty with respect to that fund is to keep it safely, and disburse the same according to the instructions of the board of education. The city, as trustee, has title to the money, but it is under the care, control and administration of the board of education. We decided this in the case of Gunnison v. Board of Education ( 176 N.Y. 11 ), and repeated it in People ex rel. Wells Newton Co. v. Craig ( 232 N.Y. 125). In the latter case we reviewed fully all the provisions of the Education Law bearing upon this control and expenditure of public moneys for educational purposes, and the respective powers of the city officials and the board of education. We need not do this again. This court said:
"The powers conferred upon the board of education to administer the public educational system within the confines of the city of New York were exclusive. The grant of the same to the board of education negatives authority in the municipality to exercise like powers. * * * We cannot ascribe to the Legislature an intention to provide for two several boards of audit."
The audit, therefore, by the board of education of this amount due under the agreement with P.J. Brennan Son for the construction of the public school was final unless set aside for fraud, and there is no authority for requiring a second examination and audit by the board of estimate. If the latter board by the form of its appropriations could require such an audit or approval, the control of these matters by the board of education would soon pass to the board of estimate, and the whole purpose of the Education Law be subverted. "The intent of the Legislature in enacting the Education Law is clear. It imposes upon boards of education, as separate corporate bodies representing the State, the responsibility of furnishing an efficient system of public education, * * * and in this respect they are not subject to or controlled by the city authorities. In order to enable such boards to properly discharge the duties thus imposed, they are clothed with authority to act independently of the city authorities." ( Matter of Fuhrmann v. Graves, 235 N.Y. 77; Matter of Fleischmann v. Graves, 235 N.Y. 84.)
The question of classification of funds for the purpose of bookkeeping pursuant to section 880 of the Education Law does not arise in this case. The comptroller may require such classification as will insure upon examination that funds are being used for educational purposes.
The case of Clarke Co. v. Board of Education ( 156 App. Div. 842; affd., 215 N.Y. 646), relied on by the corporation counsel, passed upon a resolution of the board of education very different from this one now before us. Besides the law has been changed by chapter 786 of the Laws of 1917, since the beginning of that proceeding.
A motion was made to dismiss this appeal on the ground that the orders below were discretionary. The same point is made by the respondent on this appeal. There is no dispute about the facts, and it is apparent from the record that the only question involved is one of law relating to the powers of the board of estimate. The opinion of the judge at Special Term so indicates. An order denying mandamus cannot rest in discretion when there are no disputed facts, when the law is with the petitioner and when there is no reasonable basis for a holding that other remedies are adequate; and there is no element of hardship or laches or other unequitable conduct. ( People ex rel. Van Tine v. Purdy, 221 N.Y. 396, 399, 400; People ex rel. Flynn v. Woods, 218 N.Y. 124, 128; People ex rel. Perrine v. Connolly, 217 N.Y. 570, 574.)
If this application were denied as matter of discretion it would mean that the petitioners would have to resort to the remedy of suing the board of education. The contracts having been made with that corporate body, it and not the city of New York would be the proper and only defendant. Such an action would appear to be fatuous, as the board of education has admitted the petitioners' rights and audited their claim.
For these reasons the orders below should be reversed, and the petition for a peremptory order of mandamus granted as prayed for, with costs in all courts.
CARDOZO, Ch. J., POUND, ANDREWS, LEHMAN and KELLOGG, JJ., concur; O'BRIEN, J., not sitting.
Ordered accordingly.