In People ex rel. Graves v. Sohmer (207 N.Y. 450, 460) it was said: "An adjudication involves the exercise of judicial power through a hearing upon an issue, the receiving and weighing of evidence and the act of rendering a judgment."Summary of this case from Matter of Santa Clara L. v. Comrs. of Land Office
Argued January 8, 1913
Decided March 4, 1913
L. Laflin Kellogg and Alfred C. Petté for appellant. Thomas Carmody, Attorney-General ( Henry Selden Bacon of counsel), for respondent.
It is assumed by the parties that corruption, fraud, bad faith or collusion did not enter into the change in the contract eliminating the performance of that which had not been performed and providing for the work and material added by it. The integrity and accuracy of the estimates of the state engineer and the certificates of the state engineer and superintendent of public works are conceded by them. The statutory provisions involved in the transactions have been complied with. The attorney general, in behalf of the respondent, denominates the change as "a blunder" and "a mistake" on the part of the officers of the state which the canal board may correct.
If the canal board had taken no action subsequent to its assent to and approval of the final account and the recommendation of the state engineer and the superintendent of public works that it be paid, the respondent would be under the legal duty to audit the relator's draft and draw his warrant upon the state treasurer. ( People ex rel. Grannis v. Roberts, 163 N.Y. 70; People ex rel. Harris v. Commissioners of Land Office, 149 N.Y. 26.) If the comptroller in auditing the claim or draft exceeds his power in allowing as payment less than the contract prices, the relator's remedy would be a direct proceeding against him to review the audit. ( Quayle v. State of N.Y., 192 N.Y. 47. ) We are to determine whether or not the action of the canal board in adopting the resolution rescinding its assent to the change in the contract and its approval of the completion of the work and the recommendation of final payment, justified the comptroller in refusing to audit the draft of the superintendent of public works. In our consideration we will assume without discussion or decision that the assent and approval of the canal board were essential to the results had in view.
The attorney general asserts that the canal board could lawfully and effectively rescind and annul the assent and approval under a general power of reconsidering its action. The power to reconsider, he states, is a necessary consequence of the power to consider, and no specific grant of the power would be needed — a statement having manifest and undoubted inapplicability to contracts.
The barge canal act required that the making of the original contract of May 26, 1910, be approved by the canal board. It would be unreasonable and disclose a thorough ignorance of the meaning of the word contract to argue that the canal board might, after the contract had been lawfully and honestly approved, entered into and delivered, annul it by reconsidering its approval. A contract creates fixed and perfect legal obligations, wholly detached from a locus poenitentiæ and not subject to reconsideration. It is a contradiction in terms to speak of a contract revocable at the will of a contracting party. No one doubts the right or the capacity of the state to contract. In Danolds v. State of N.Y. ( 89 N.Y. 36), Judge EARL writing for the court said: "The sovereign can contract and has very many occasions to do so; it can build canals and public buildings, and engage in public works, and in carrying forward its projects it makes use of the instrumentalities which individuals use for the same purposes. It must be governed by the same rules of common honesty and justice which bind individuals. It is for its interest that its contracts should be binding upon all the parties thereto. If it can at pleasure violate or abandon its contracts, in the absence of any stipulation authorizing it to do so, there will be such uncertainty and risk attending all its contracts that it will go into the market for work and materials at a great disadvantage. As was well said by Judge ALLEN, in People v. Stephens ( 71 N.Y. 549): `There is not one law for the sovereign and another for the subject, but when the sovereign engages in business and the conduct of business enterprises, and contracts with individuals, whenever the contract in any form comes before the courts, the rights and obligation of the contracting parties must be adjusted upon the same principles as if both contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor and suitor.'"
There was the contract of May 26, 1910, between the state and the relator, the validity or effect of which is not in dispute. It, and the statute authorizing it, provided that the state might until the final completion and acceptance of the work make such additions to or deductions from such work, or changes in the plans and specifications of the contract, as might be necessary, and that the relator should do and complete the work in accordance with such additions to or deductions from or changes in the plans and specifications. The state did make deductions from the work and changes in the plans and specifications. They were made by the agents of the state authorized and empowered to make them, pursuant to and in the manner prescribed by the statute, and neither corruption nor fraud induced or developed them. They were complete and perfected and became a part of the contract, and through and by virtue of it binding upon the parties. It, as changed by them, was not in any of its parts more revocable or susceptible of retraction than it had been at any time subsequent to its execution on May 26, 1910. The provisions of the contract as changed had the same quality and effect as did the original provisions. The state is not superior to its valid agreements. Blunders or ignorance or lack of foresight in entering into contractual obligations do not dissolve or sterilize them. In determining whether or not the contract as changed bound the state, we need not consider the fact that the relator had completed and the state had accepted its performance. The inviolability and efficiency of a contract spring from the contract itself and not from the principle of estoppel. Undoubtedly the state might have, at any time before the final completion and acceptance of the work in accordance with the change in the contract, have restored the part eliminated or made other alterations, but such action would be obligatory by virtue of the authorizing agreements of the contract and not upon the principle that the power to annul or rescind its promises was within and a part of its right and power to make them. In the absence of a statutory empowerment, the right of the state to change the plans or specifications and contract came to its end when the relator had completed and the state had accepted the performance of the work in accordance with the additions to and deductions from or changes in the plans and specifications, and any action thereafter of the canal board or the respondent towards a future and further change in the contract was idle and inoperative.
The respondent argues further that subdivision 7 of section 15 of the Canal Law (Cons. Laws, chap. 5; Laws of 1909, chap. 13) vested the canal board with power to reconsider and rescind its assent to the change in the contract. Under such subdivision the canal board may "grant a rehearing in any case where they are authorized to adjudicate, when, in their judgment, justice may require it, if application in writing be made therefor within sixty days after such hearing or adjudication; but there shall not be more than one rehearing and the decision on any such rehearing shall be final and conclusive." The language of the section forcibly indicates that the assent of the canal board was not an adjudication within the legislative intent. The assent, moreover, was not an adjudication within the usual and ordinary significance of the word, which defines it as the solemn or deliberate determination of an issue by the judicial power, after a hearing in respect to the matter claimed to have been adjudicated. An adjudication involves the exercise of judicial power through a hearing upon an issue, the receiving and weighing of evidence and the act of rendering a judgment. The assent to the change was an administrative, not a judicial act. There may be other reasons why the statute did not authorize the canal board to nullify its assent, but that stated sufficiently disproves the argument of counsel.
The order of the Appellate Division should be reversed and the order of the Special Term modified by directing that the peremptory writ of mandamus command the respondent to audit the draft of the superintendent of public works and draw and deliver to the relator the warrant for the amount of the draft as audited, and as so modified affirmed, without costs to either party.
CULLEN, Ch. J., WERNER, WILLARD BARTLETT, HISCOCK, CHASE and HOGAN, JJ., concur.
Order reversed, etc.