F. H. Mills Co. v. State

110 A.D. 843, 97 N.Y.S. 676, 1906 N.Y. App. Div. LEXIS 87

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: January 8, 1906
• Status: Published

Opinion

Chester, J.:

'■ The respective claims made against the State will be. considered in the order in which they are mentioned in the foregoing statement of facts. .. . - '

First. The claimant appears to have'.abandoned on the trial its' claim to recover damages for withdrawing certain inmates from the employment of the claimant for military services upon Wednesday and Saturday afternoons,, as what little evidence there is, on this subject is- of the most general character and not sufficient to form any fair basis for t,he award of damages on account thereof, so that no consideration of that phase of the casé need here be given.

Second. The claim for damages for the alleged breach of the contract on the part of the State has'reference to a condition which it seéms to me-the parties sought to provide against in the contract. For years prior to the.date of the contract there was much public agitation upon the question- of 'the conflict between convict and other labor, and there came to be quite a "settled conviction in the minds of many that the labor of prisoners should not be contracted or employed in such a way as.to bring it in competition with other labon This agitation .was uppermost in the public mind at the time the contract in question Was entered into. It is apparent, that, the provision in" the contract, “ that in case by the intervention of legislation,. or olhei'-authoritative ruling outside of and beyond, the reasonable control' of the first party, it shall at any timé become necessary to discontinue the business,. * * ' * that then the second

party shall not have for. that reason any claim for damages against the first party,” was inserted" in .the .contract by the parties with a view of saving the State from damages in casé Such anticipated changes were made in the law as would' render' the employment of convict labor unlawful. The question for us to determine; therefore, is as to whether such provision was effective to save the State from damages, because -the managers of the reformatory withdrew the inmates from the employment of the claimant pursuant to the provisions of the Constitution of 1894 and the legislation enacted pursuant thereto. The language employed in the contract it is true is somewhat inapt and not as comprehensive, as it might be, yet the intention of the parties appears to be perfectly plain and such intention should be given effect, unless some legal obstacles stand in the way.

It may well be questioned whether the language of the contract, “ outside of and beyond the reasonable control of the first party,” had any reference to “ legislation ” and whether it refers only to “ other authoritative ruling,” but if we assume that the language refers to both, the result is not changed, for the legislation hereafter referred to was clearly beyond the control of the managers of the reformatory.

The contract was executed March 15, 1893. The Constitutional Convention convened May 8, 1894. It concluded its labors on the twenty-ninth day of the following September. The revised Constitution proposed by it was approved by the People at the general election November 6, 1894, and took effect January 1, 1895. Among' the new provisions of the Constitution was the one which provided that “ on and after the first day of January, in the year one thousand eight hundred and ninety-seven, no person in any * * * prison, penitentiary, jail or reformatory shall be required or allowed to work, while under sentence thereto, at any trade, industry or,occupation, wherein or whereby his work or the product or profit of his work shall be farmed out, contracted, given or sold to any person, firm, association or corporation.” (Const, art. 3, § 29.) The Legislature by chapter 429 of the Laws of 1896 amended the statutes to conform the same to the provisions of the revised Constitution, by prohibiting contract labor in the prisons, penitentiaries, jails and reformatories of the State after January 1,1897, in substantially the same language as that contained in the constitutional provisions.

So that we have here an “intervention of legislation”-by reason of which, if lawful, it became “ necessary to, discontinue the business agreed to be carried on ” under the contract. • This intervention of legislation was beyond the reasonable control of the party of the first part,'which, although nominally The People of the State, was in fact and in law the.board of managers of the reformatory, for the reason that the managers alone under the- law were authorized to, conduct the labor of prisoners in the reformatory under the public account system or piece-price system,- and, therefore, alone empowered in their official capacity to make the contract in question. (Laws of 1889,. chap. 382, ,§ 3.) This legislation was enacted by the Legislature pursuant to the command of' the sovereign people expressed in their approval of the revised Constitution at the polls. dSTor is there anything in the legislation ■ which impairs the obligation of the contract, for the parties had by the contract itself provided that in case it became- necessary to discontinue the • business by reason of legislation the claimant should not for that reason have any claim for. damages against the State. That was one of the "conditions or obligations which the parties imposed upon, the claimant in the contract and the obligation has not been impaired, but ■ ■ on the contrary has been made effective by. the subsequent legislation. ■ The -denial of damages by the Court of Claims to, the claimant on' this portion of its claim was simply giving effect to the ,evident intention of the parties when the provision in question was put. into the. contract. • \,

( The case of Bronk v. Ba/rckley (13 App. Div. 72) is not contrary. to the conclusion here reached. There it was held that a contract ' for the ■ labor of prisoners in the Albany Penitentiary under the piece-price system, which was in: force at the time of the taking ' effect of section 29 of article 3 of the Constitution of 1894 and of chapter 429 of the Laws of 1896, was not abrogated thereby, but in that case there was not, as here,-a provision in.the contract permitting the discontinuance of the business before the expiration of the contract without any claim for damages in case of prohibitive legislation.

The conclusion reached will not be changed even if “ The People of the State of New York” is to,be,regarded as the contracting party.of the first part instead of the board of managers of the reformatory.' The term “The People of the State” as used in the contract-is used to signify the people as a body politic or as a political entity called the State, and not as meaning the people as the sovereign power in the State. The body politic or the State is, under our system/ always subject to the control, of the sovereign power •— the people. Hence when the work of a representative constitutional convention meets the approval of the sovereign peo: pie at the polls, and in that way a change is wrought in the fundamental law, that law in its changed condition binds the people as a body politic and the power which made the law and the law together constitute an “ authoritative ruling outside of and beyond the reasonable' control of ” the people of the State as a political entity and a contracting party, so in that view of the case- the result is the same as if the board of managers is regarded as the contracting party.

In any event the clause in the contract,was clearly intended by the parties to provide against damages against th'e State for the contingency which was foreseen and which actually happened.

Third. The dry kiln which Was,not furnished by the reformatory managers and for which failure damages are claimed, had reference to a kiln “ in process of building.” This as stated in the contract was at the north end of the lumber yard near the icehouse within the reformatory inclosure. It appears that no complaint was made of the lack of dry kiln facilities before the suspension of work by the claimant in August, 1893, nor did it ever ask to have the kiln-mentioned in the contract completed. During the suspension of work Mr. Beach was employed as manager for the claimant." Soon after the resumption of work he complained of insufficient dry kiln facilities and told the superintendent of the reformatory that the kiln mentioned in the contract would be of no use to the claimant if it was completed as it was too remote from the shops and was not constructed on the proper system. Beach and Mills, the president of the claimant company, thereupon entered into negotiations with the superintendent of the reformatory for the erection of a new kiln in a location more convenient for the claimant than the one mentioned in the contract. As an- inducement to the authorities of the reformatory to erect the new kiln the claimant -promised to pay its past due indebtedness in time to use the avails in paying for the cost of the new kiln, and upon that condition and understanding between the parties the board of managers of the reformatory authorized the superintendent on May 29, 1894, to construct, a new dry kiln for the use of the claimant at a cost of S2p00, which 'amount was afterwards increased to $3,00.0, There.is no proof that the delay in completing the new kiln was an unreasonable one, nor that the claimant. Was damaged by the delay, and it.was in. fact completed, ready for use the forepart of December, 1894. These facts show that the claimant waived any right which it might otherwise . have had to have the kiln mentioned in the contract furnished" or completed, and there is no foundation in the. testimony for damages . for any failure in this respect., The testimony -had reference to the failure to furnish suitable or adequate dry kiln facilities rather than to the failure to finish the kiln mentioned in the contract.' The contract' did not require the furnishing of adequate or suitable facilities of that character, and as the only obligation in the contract which is the foundation of this controversy has'been waived by the-claimant, it is in no position to claim damages on this account.

Fourth. The Court of Claims denied that portion of the claim "relating to the alleged overpayment to the State upon bills rendered, among other reasons, on the ground that all such payments were voluntary. The appellant claims that payments of the amounts charged in the monthly statements were: coerced and that the fair . meaning of the contract is that the-labor was to be-furnislied at its ., fair value.- Much of "the testimony in this voluminous Tecofd ‘is upon the question of "the value of convict, labor. -It seems to me that this "mass of evidence was immaterial upon. any. real"issue in the case. There is nothing said in the contract that would justify the-conclusion that the labor was to be furnished at its fair value. The " ■ parties had not so_ agreed, but tlie contract provided for, the. pay-, ment for labor -enployed in the manufacture of the specific articles therein mentioned at a-price specified, for each of such‘articles. The contract also provided that “ the price per piece agreed upon from time to time for the making of new and additional styles of tables or furniture, shall be'subject to readjustment and to be fixed . by mutual agreement, Provided: That in casé of irreconcilable dis-' agreement between the parties as to the price to be paid for the ■ labor of making any article or articles,' then it shall be at the option of the first party to refuse to make the same, or tlie price may be-determined by arbitration.” " Yone of the articles mentioned in the. contract were ever manufactured by the claimant, and there was never an agreement' between the claimant and the managers upon the piece price for the making of such other articles as were manufactured. There was an agreement, however, that the price should be charged upon a basis of fifty cents per day per man for eight hours’ labor. This arrangement continued for a time, but the price wás afterwards modified by agreement between the parties by a reduction to a basis of forty cents per day.

The claimant insists that these prices were understood to be tentative only and on that theory claims there has been an overpayment. The respondént on the other hand claims that the prices were final and so understood by the parties. There was a sharp conflict in the evidence as to the fifty-cent rate but there is enough to justify the conclusion that it was not tentative but final.. But if it should be assumed for the argument -that the fifty-cent rate was tentative only, as the appellant claims, and that the forty-cent rate thereafter determined on related back to the beginning of the contract, the difference between the compensation at the one rate and the other was not equal to the amount ■ of, the counterclaim of the State which has not been charged against the claimant.

■There is substantially no conflict in the evidence that the forty-" cent rate Was not in any sense tentative, and after the price was reduced to forty cents on May 29, 1894, no attempt was ever made by either party to adjust the price upon the “piece price system” until after the notice was given, pursuant to the constitutional mandate and the subsequent legislation, to terminate the contract and after all work under the contract had stopped and then it came in a letter from the claimant’s attorney to the managers.

It is claimed that the per diem basis agreed upon was an evasion of the former law requiring that the labor of prisoners in the reformatory should be conducted under the “ public account system, or piece price system.” (Laws of 1889, chap. 382, § 3.) Tliis may be conceded, yet it is apparent that for some undisclosed reason the basis adopted seemed most convenient for the parties at the time the arrangement was made. There is no claim that there was any fraud or imposition on the part of the reformatory managers in procuring the- adoption of the plan. Mr. Mills and- Mr. Stickley, the original contractors, were each men of large experience with prison labor and its value, the former having been employed in the reformatory and other penal institutions for many years, and ■the latter having been a contractor, for the labor of convicts at Auburn prison. The agreement fixing the basis for labor at fifty cents p'er day was made about the time the work commenced. This continued until the resumption of work after the temporary suspension hereinbefore alluded to-. When Mr. Beach, the new manager for the claimant, took charge; complaints were made that the fifty-cent rate was too high. There was an effort then made to secure an agreement upon the piece-price plan for the labor on the articles then being .manufactured. This did not result in reaching such an agreement, but it did result in an agreement to'reduce the rate to a basis of forty cents per day. This arrangement was made effective concurrent with and as á part of the agreement made May 29,1894, to erect a new dry kiln. There is no proof that after that there was any effort to agree upon a “ piece price ” basis. The bills presented were.thereafter paid, so far. as they were paid, without any protest and without any complaint as to the amount charged.. While the b^sis agreed and acted upon was a per diem one, yet the bills presented were not in form made out to the claimant by the day, ■ but were made for doing a certain amount of work as agreed, so that the bills upon their face did not show an evasion or an attempt at evasion,of the law. The parties halving agreed upon that course, and having followed it out not only in the presentation but in the payment of bills during the. entire period of the operation of the parties under the contract, there, has been no óverpayment by the claimant, and no part of such payments can be recovered from the State by the claimant on the- theory that it has paid more for the labor than it was worth, even if the basis upon which the charge for labor was made was an illegal one, where it appears, as it does here, that the payments were, made voluntarily and not by duress. (Flower v. Lance, 59 N. Y. 603.) There was nothing morally wrong in adopting a per diem basis. If it was wrong at all it was so simply because the Legislature 'had seen fit in-the exercise of its paternal care over the people to prohibit it. It was not malmn in se but ‘malum, prohibitum. There is no reason, therefore, why the courts should seek to find some method to compel the return of moneys voluntarily paid under such circumstances.

The claim of coercion is based upon the fact that when the claimant failed to pay the monthly statements, as required by the contract, and began to run largely behind in such payments, it was told in substance that unless it paid the bills it could not have the men, and, also upon a resolution of the managers instructing the superintendent that in case of'further default of the claimant in making payments, “ to call a special .meeting of the 'managers to take appropriate action.”. There is no coercion or duress in this. In the contract theclaiinanthad agreed to pay monthly on the twentieth day of each month for tlie -labor of the'inmates the month previous. It was largely in default in making the. agreed payments, and it was within the lawful right of the superintendent and the managers to insist upon the payment of the moneys past due even to the extent of saying that if the payments were not made the men would not be furnished. This, too, was within the express terms of the contract which contained a provision that “ in case at any time default shall be made by the second party in their payments," * * * the agreement may be annulled by the first party, and that the second party in such case shall not have or make any claim for-damages against the first party.”.

There is- nothing in the case of Horner v. State of New York (42 App. Div. 430), cited by counsel for the claimant,' inconsistent with this view. There,, there was a successful effort on the part of the warden of Auburn prison to coerce a contractor to submit to a modification of a contract for the labor of convicts by increasing the price he paid for such labor Upon threats.of withholding the men from his service and of putting him out of the prison unless he complied. He yielded and .paid the additional amounts under protest in order to save his contract, and a- judgment of the Court of Claims dismissing his claim to be refunded the moneys so exacted fr.om him was reversed. The Appellate Division, in its opinion reversing the judgment, said (p. 436): “ The money was demanded without a shadow of legal right and was paid under protest and only to protect the appellant from what he apprehended would be a much greater loss.”

In this case, instead of attempting to exact from the claimant moneys it was not bound to pay, as was doné in the Horner case, the managers were endeavoring in.a lawful way to compel" it to do only what it had agreed arid was lawfully required to do, by the very means which the contract authorized them to employ.

Fifth. The claim of negligence on the part of the State in relation to the fire which consumed a large amount of the claimant’s property is based wholly upon the allegation that the managers failed in maintaining proper discipline in the reformatory,, by reason of which the inmates caused the fire' and the destruction -of. property. While there is much in the evidence tending to criticise the management concerning the discipline of the inmates, yet there is nothing tó show how any failure in this respect resulted in the fire. In fact the cause of the fire was not proven and so far as the testimony goes it still remains a mystery. It originated in a room where the prisoners had been employed, but it originated nearly an hour after all the inmates and every employee of the State had left the building, and there was proof that the claimant’s manager and his bookkeeper were the last persons in the room where the fire started before it was discovered. The materials used in the business conducted by the claimant were of a-highly inflammable character and the claimant was quite as much under obligations to use caution against fire as were the managers of the reformatory. The fact that prisoners used .waste in the finishing room was known quite as .well, to the officers and employees of the claimant as to the officers and employees of the reformatory. So, too, the fact that the inmates were criminals and many of them viciously disposed was known to all parties. While it was incumbent upon the reformatory authorities to maintain discipline in the prison among the inmates, in the absence of proof that the fire resulted from lack of discipline, there is no foundation for the charge of negligence against the State. A witness on behalf of the State testified that just prior to the fire he had cleaned up all combustible material which had been left in.the .vicinity of the place where the fire started. While there was some proof that fires liad occurred upon former occasions, there was no proof that any of such fires were cansed by the prisoners or by- reason of any lack of discipline among them. The evidence is entirely insufficient upon which even to base an inference of negligence on the part of the State in this respect, and the conclusion of the Court of Claims upon the facts submitted to it, that the State has not been shown to be guilty of any acts or omissions making it fesponsible for the fire, is the only one that could be properly reached upon this evidence.

We are satisfied from an examination of the entire case that the judgment, so far as appealed from, is right and should be affirmed, with costs.

Judgment unanimously affirmed, with costs. Kellogg, J., not sitting.