32 N.J. Eq. 43 | New York Court of Chancery | 1880
Thomas H. Niven and John A. Middleton entered into a contract, dated November 7th, 1874, with the defendants, who are the Bull’s Ferry road commissioners, to do certain work (road and sewer construction) for them, finding the materials therefor; the price to be paid in monthly installments as the work progressed, and the installments to be based on monthly estimates made by the defendants’ engineer, of eighty-five per cent, of the work done at the time. The like percentage was to be paid at the completion and acceptance of the work on the price of the work on which the percentage had not been paid, and of the remaining fifteen per cent., two-thirds were to be paid in six months, and the rest in twelve months, after the date of the final certificate of the engineer. The contractors entered upon the performance of the work, but discontinued it, while it was still unfinished, on the 19th of March, 1875. On the 31st of that month, Middleton assigned his interest in the contract to Niven, who entered into an agreement
Niven proceeded with the work under the agreement until December 29th, 1875, when he abandoned it, it being .still unfinished. A few days prior to that date he made an assignment to the complainant for the benefit of his creditors. His sureties, by an agreement dated January 22d, 1876, agreed with the defendants to finish the work for the .price payable by the original contract, and did so accordingly, to the satisfaction of the latter.
After the work was finally discontinued by Niven, and before the sureties entered upon the work of completing the contract, the defendants were compelled to take measures at some cost to protect the work. When the sureties entered into the agreement to complete the work, they gave to the defendants their consent in writing, that the defendants might pay all laborers and materialmen whose claims remained unpaid, for work done and materials furnished subsequently to the contract of April 13th, 1875 (Niven’s), out of the unpaid fifteen per cent, then as yet unpaid and out of the eighty-five per cent, then as yet unpaid, for work and materials and other performance of the contract as far as it had then been performed by Niven and Middleton together or by the former alone, and that the materials furnished prior to the date of the contract of April, 1875, might also be paid for out of the fifteen per cent, or the balance thereof when earned by the completion of the contract, the eighty-five per cent, to be first exhausted in such payments. And, subject to such payments, the defendants then assigned to the sureties the fifteen per cent, of the remuneration for work theretofore done and materials furnished by Niven or by Niven and Middleton under the contracts which would have become due to Niven if he had completed the work.
The foregoing statement contains all the material facts of the case—quite all that it is necessary to take into consideration in deciding the questions submitted. Those questions which, under the conclusions I have reached, it is necessary
The right of Niven or his assignee to an account for the eighty-five per cent, is not questioned, but their right to an account for the fifteen per cent, is denied on the ground that, by the declaration of the defendants, duly made under the provisions of the contract of April 13th, 1875, between Niven and them, and -by their discharging him and his assignee from employment under the contracts, and declaring that their claim to the fifteen per cent, was null and void, and by the failure of Niven or his assignee to complete the contract, the fifteen per cent, was forfeited, and the complainant has no title or claim, legal or equitable, thereto.
By. the original contract no forfeiture was, in terms, provided for, but no more than eighty-five per cent, of the contract price was payable until after the completion of the work. By the contract made with Niven alone, he agreed to bo bound by all the provisions of the original contract, and he expressly agreed that there should be a forfeiture of the fifteen per cent, in certain events therein specified. The object of the forfeiture was to secure the satisfactory performance of the work according to the contract, and the payment of the laborers and the security of those furnishing materials. This provision for the payment of laborers was
That the work on. the sewer was suspended from about the middle of August to the 5th of November, cannot be doubted. The report of the engineer of the defendants on the-subject of Niven’s claim for damages on that account, leaves, no room for doubt. But Niven settled his claim for damages on that account, and it does not appear, in any way, that the stoppage was the occasion of his failure to finish the work, or to pay the laborers, or secure the materialmen. There was, on the part of the defendants, a strict observance of the provisions of the agreement of April 18th, 1875, on the subject of the forfeiture. They omitted nothing that was necessary to effectuate the forfeiture under the agreement. The fifteen per cent, was not due, by the terms of the original contract, until after the work was completed, and Niven never completed it. He, therefore, was not entitled to the fifteen per cent. Hennessy v. Farrell, 4 Cush. 267; Faunce v. Burke, 16 Fa. St. 459. The contract was entire, notwithstanding the fact that payment was to be made in installments as the work progressed. Hennessy v. Farrell, ubi supra; School Trustees v. Bennett, 3 Dutch. 513 ; Phelan v. Albany R. R. Co., 1 Lans. 258. It was an agreement expressly to do the whole of the work, and part of the compensation was not to be payable until after the completion of the whole of the work.
But, again, Niven expressly agreed that the defendants, in a contingency (which happened), might discharge him
There is no reason why this court should not recognize the obligation of the contracts under «consideration. It is quite probable that, unless Niven had agreed to the special terms of forfeiture before referred to, he could not have obtained the opportunity to proceed with the work which was given him by the contract of April 15th, 1875, and there appears to be no reason why his assignee should not be held to the agreement. In Faunae v. Burke such a provision was regarded as a provision for liquidated damages, and not as a penalty or forfeiture. No equitable ground of relief from the provision under consideration is presented. It is enough, however, to say that the fifteen per cent, is not payable, according to the agreement.
But it is urged that the contract was completed by the sureties, and that they are to be regarded as having done the work for Niven. But, in fact, they did it for themselves, to protect themselves from loss by reason of his default. That the defendants saw fit to apply the fifteen per cent, to the payment of wages and claims of materialmen, and to assign any balance of it which might remain after such application, to the sureties, would not in anywise give the complainant a claim to it. If it was forfeited, it was due to nobody; the price payable for the work done was so much less.
The defendants, in April, 1875, lent to Niven, as before stated, $4,000 to enable him to pay the wages of laborers. Of this sum he has repaid them $1,100, and the rest is due. There can be no doubt that they are entitled to repayment from him of that balance and interest, and may lawfully retain it out of any money coming to him in their hands. The complainant resists this claim on the ground that, in making the loan or advance, the defendants exceeded their powers as commissioners. By the instrument given to the commissioners to secure the repayment of the advance,
The letter of the 20th of December, 1875, by which Niven requested the defendants to make payments to laborers, sub-contractors and certain materialmen, was authority to them to apply the moneys in their hands, coming to him, to those purposes, and they were at liberty so to apply it, and, for their protection in the payments, they could lawfully take the assignments which they took from the laborers, and are entitled to the benefit of them accordingly.
There will be no decree for an account, and the bill will be dismissed, with costs.