Williams Press, Inc. v. State, 37 N.Y.2d 434 (1975)
When contract language is ambiguous, a court may consider prior dealings between the parties to ascertain their intent at the time of contracting, especially when one party drafted the ambiguous language.
Summary
Williams Press, a printing corporation, sued the State of New York after the state deducted $87,701.85 from payments due under a 1971 contract, alleging overcharges from 1965-1970 based on ambiguous bidding specifications for legislative printing. The ambiguity stemmed from a change in the 1961 contract format regarding amended budget bills. The Court of Appeals reversed the lower court’s ruling, holding that the specifications were indeed ambiguous and that the prior course of dealing between Williams Press and the State supported Williams Press’s interpretation of the contract. The court emphasized that contracts should be interpreted to give effect to their overall purpose and that the State, as the drafter of the ambiguous specifications, should not benefit from an inequitable interpretation.
Facts
Williams Press had been the primary printer for the New York State legislature for many years. A dispute arose over the interpretation of the specifications for budget and amended budget bill printing, specifically from 1965 to 1970. The core issue concerned how Williams Press bid on and invoiced for amended budget bills, given changes made in the 1961 contract specifications. Before 1961, the state had separate bid lines for Senate and Assembly amended budget bills. In 1961, the state consolidated these into a single line, creating ambiguity. Williams Press continued to invoice each house separately, charging half the total bid price to each. In 1972, the State claimed this was an overcharge and offset the amount from a subsequent contract payment.
Procedural History
Williams Press sued the State in the Court of Claims. The Court of Claims found in favor of the State, holding that the contract specifications were unambiguous and that Williams Press had overcharged the State. The Appellate Division affirmed, with a divided court. Williams Press appealed to the New York Court of Appeals.
Issue(s)
Whether the contract specifications for legislative printing, specifically regarding amended budget bills from 1965-1970, were ambiguous.
Holding
Yes, because the change in the contract specifications in 1961 created an ambiguity as to how amended budget bills should be bid and invoiced, and the prior course of dealing between the parties supported Williams Press’s interpretation.
Court’s Reasoning
The Court of Appeals found that the lower courts erred by focusing solely on the budget bill paragraph in isolation, ignoring the broader context and prior dealings between the parties. The court emphasized that a contract must be read as a whole to give effect to its general purpose, quoting Empire Props. Corp. v Manufacturers Trust Co., 288 NY 242, 248-249: “A written contract will be read as a whole, and every part will be interpreted with reference to the whole; and if possible it will be so interpreted as to give effect to its general purpose.’ (3 Williston on The Law of Contracts, § 618.)” Because of this ambiguity, the court considered the prior course of dealings between Williams Press and the State. The court noted that the State had honored Williams Press’s invoices for several years, suggesting that the State also initially interpreted the contract in the same way. The court found it significant that Williams Press bid $9.33 per page for each 2,000 copies delivered to each house, totaling $18.66 for 4,000 copies, which was consistent with prior bidding practices. The court rejected the State’s argument that Williams Press should have explicitly doubled its bid, stating that this would have been “hazardous and misleading” given the specifications. The court concluded that the State received exactly what it bargained for and should not benefit from its own ambiguously worded specifications. “The State received exactly what it bargained for, and, in the words of one of the dissenting Justices at the Appellate Division, ‘is attempting to advance a construction of the contract which not only is erroneous in light of prior bids for the same work but unfair to claimant who did the work on a reasonable assumption based on prior bidding that it would be paid $9.33 per page for each 2,000 copies printed.’”