In re Rapid Transit Subway Construction Co.

199 A.D. 45, 191 N.Y.S. 383, 1921 N.Y. App. Div. LEXIS 6601
CourtAppellate Division of the Supreme Court of the State of New York
DecidedDecember 16, 1921
StatusPublished
Cited by3 cases

This text of 199 A.D. 45 (In re Rapid Transit Subway Construction Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Rapid Transit Subway Construction Co., 199 A.D. 45, 191 N.Y.S. 383, 1921 N.Y. App. Div. LEXIS 6601 (N.Y. Ct. App. 1921).

Opinion

Greenbaum, J.:

The facts upon which this controversy arises as set forth in the moving affidavits and not denied may be summarized as follows: In 1900 the city of New York, through its then board of rapid transit railroad commissioners, entered into a contract with one John B. McDonald for the construction, equipment, maintenance and operation of the Manhattan-Bronx Rapid [48]*48Transit railroad. This contract is described in the papers before us as contract No. 1. Under that contract the city was to pay McDonald for the construction of the railroad the sum of $35,000,000, plus certain additional sums for real estate and for terminals, and the contractor was to equip, maintain and operate the railroad at his own cost for a term of years specified in the .leasing provision in the contract. Under the terms of the contract, the chief engineer of the board of rapid transit railroad commissioners was to determine, subject to review by arbitration, the reasonable value of any work or materials additionally required and the amount of deduction to be made from the contract price because of work omitted. The contractor presented claims for alleged additional work and materials, and the city made claims for deductions by reason of the omission of certain work required to have been done under the contract by the contractor. The chief engineer of the Public Service Commission made his determination in respect of the conflicting claims. This determination being unsatisfactory to both the city and the contractor, the matters in dispute were submitted under the provisions of the agreement to a board of arbitrators. The arbitration proceeding continued for about two and one-half years, and during its progress a protocol, as it was termed by the parties, was entered into between the counsel representing the city and the counsel representing the Rapid Transit Subway Construction Company, with a view of reaching a final settlement and adjustment of the matters in dispute. Under the provisions of the protocol, the parties had a series of conferences at Saratoga Springs during the summer of 1910, as a result of which an agreement was reached that the matters in dispute were to be settled and adjusted by the payment to the contractor of the net sum of $2,260,534.58. Final agreement of settlement was duly executed between the parties on December 30, 1911. Under the agreement the board of arbitrators was empowered to make the final award to the Rapid Transit Subway Construction Company, as assignee, under contract No. 1, in the net sum of $2,260,534.58. The final agreement of settlement was approved and consented to by the board of estimate and apportionment by resolution unanimously adopted at its meeting held on December 14, [49]*491911, accompanied by a further unanimous resolution authorizing and directing the comptroller to issue corporate stock of the city of New York required to pay the award. On February 2, 1912, the board of arbitrators made its final award and determination in favor of the Rapid Transit Subway Construction Company, as assignee, in the net sum of $2,260,534.58. On January 30, 1913, the Rapid Transit Subway Construction Company, with the consent of the Public Service Commission for the First District, acting under the Rapid Transit Act, duly assigned to the Interborough Rapid Transit Company so much of the said contract of February 21, 1900, as provided for the construction of the Rapid Transit railway, but there was an express reservation to the Rapid Transit Subway Construction Company that the moneys to be paid under the agreement of December 30, 1911, were to be paid to it.

The agreement of December 30, 1911, although providing for the payment of the sum above mentioned, was coupled with provisions which read as follows:

The City shall from time to time and in installments as hereinafter provided, pay to the Construction Company the said sum of $2,260,534.58 upon vouchers which shall include such final award and certificate of the Commission:

Provided, however, and it is expressly agreed, that payment of said sum, although made and deemed to be made as paid under the contract for extra work, shall be reserved by the City until required and when so required shall be made in installments as required for some of the following purposes: (a) For the construction of new subways. (b) For additions hereafter made to existing subways or for new equipment where the additions are not allowed by the City of New York as extras under existing contracts. The phrase ‘ new equipment ’ shall be deemed to mean any equipment delivered on the subway after the 22nd day of June, 1910;

“Provided Further, and it is hereby expressly agreed, that the use of said sum or any part thereof, for any of such purposes shall be subject to the approval of the Commission, which approval shall be given upon application of Construction Company and Interborough Company in case the Commission deem such purpose promotive of the public convenience.”

[50]*50It was also provided by article V of the agreement as follows:

“ The Comptroller of the City shall make such payment or payments upon a voucher or vouchers as aforesaid, accompanied by a requisition of the Construction Company and Interborough Company for the said sum or a part thereof corresponding with the amount stated in the voucher, which shall show that the sum for which requisition is made will be employed for one of the uses aforesaid, and which shall have annexed to it the written approval of the Commission.”

On July 12, 1920, an application was made by the Rapid Transit Subway Construction Company and the Interborough Rapid Transit Company to the then Transit Construction Commissioner, who had succeeded to the powers and duties of the Public Service Commission for the First District, for a request for the payment of $1,750,000, as the first installment of the award, to be used and expended for the purposes of installing a multiple unit car door control device upon 982 cars of the subway express service, which installation had been previously approved by the Transit Construction Commissioner by an order adopted by him on April 23, 1920.

On December 15, 1920, the Transit Construction Commissioner approved the payment to the Rapid Transit Subway Construction Company of $1,750,000 to be used for the purpose of installing such multiple unit car door control device. At the same time he made an order modifying his order of April 23, 1920, so as to provide that if and to the extent that the cost of such installation should be paid for from the said award of February 2,1912, * * * then the equipment so paid for should be deemed to have been provided as equipment under, the said Contract No. 1.” A stipulation to that effect dated December 20, 1920, was entered into between the city of New York; through the Transit Construction Commissioner, and the Interborough Rapid Transit Company. After the execution of the stipulation the Transit Construction Commissioner transmitted to the comptroller of the city of New York a voucher in favor of the Transit Construction Company, as assignee, for $1,750,000 as the first installment on account of the net amount of $2,260,534.58, to be paid by the city of New York to the Transit Subway Construction Company under the award of the arbitrators. Annexed to the voucher was a copy of the [51]

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Bluebook (online)
199 A.D. 45, 191 N.Y.S. 383, 1921 N.Y. App. Div. LEXIS 6601, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-rapid-transit-subway-construction-co-nyappdiv-1921.