John Cowan, Inc. v. Meyer

94 A. 18 | Md. | 1915

This suit is on the common counts, and a special count which alleges "that on or about the 19th day of August, 1912, the plaintiff contracted with the defendant to perform all the work in excavating at the Baltimore Fidelity Warehouse, corner of Hillen and High streets, in the City of Baltimore, according to drawings and specifications prepared by Emory Nussear, Architects, including all trenches and footing foundations, at and for the price for excavating and hauling of $1.35 per yard. Said work to be done within forty working days from the date of said contract," and that "The plaintiff has performed all of said work, and done all of the hauling provided for in said contract in accordance with the terms of said contract, and has fulfilled and done all things required to be done by him thereunder, together with extra work ordered by the defendant, but the defendant has not paid in full amount of $9,981.45, which it agreed to pay, and there remains overdue and unpaid the sum of $2,181.45." There was filed with the declaration an account in which the defendant is charged with the cost of digging 7,350 cubic yards of dirt at $1.35, amounting to $9,922.50, and a number of small items bringing the total charges to $9,981.45, against which there is a credit of "By cash, $7,800.00," leaving a balance of $2,181.45.

The defendant pleaded that it "never promised" and that "it was never indebted as alleged," and, for a third plea, that the plaintiff was indebted to the defendant in an amount greater than the plaintiff's claim, etc. The seventh count of the plea of set-off charges "that on or about the 19th of August, 1912, the plaintiff contracted with the defendant to do certain excavating at the corner of Hillen and High streets, in the City of Baltimore, in accordance with certain plans and specifications, and all hauling at and for the sum of $1.35 per cubic yard; part of said work to be done in the manner following: `Beginning at the north end of the building and working toward the front to a distance of one hundred and twenty-five feet (125') to a depth required, including all trenches and footing foundations, same to be completed in twenty working days from the said 19th day of August, 1912.' And the said plaintiff further agreed to complete the whole work in forty working days. And the said plaintiff further agreed with this defendant to pay to it the sum of ninety-five dollars ($95.00) per day as liquidated damages for each and every day thereafter exceeding either the twenty days or forty days time limit," and "that the plaintiff did not complete that portion of the work which under the terms of the said agreement was to have been completed in twenty working days, but on the contrary exceeded the time limit by twenty-nine working days. And the defendant claims $2,755.00, which amount the defendant is willing to set off against the plaintiff's claim, and prays judgment for the excess."

The plaintiff joined issue on the first and second pleas and replied to the third plea that he never promised, etc., as alleged.

It appears from the evidence that a number of contractors, including the defendant, bid for the work of erecting, for the Baltimore Fidelity Warehouse Company, a large warehouse on the corner of Hillen and High streets according to drawings (blue prints) and specifications prepared by Emory Nussear, architects, and that the plaintiff, a sub-contractor, submitted to the contractors bids for the work of excavating for the building in accordance with those drawings and specifications. The contract was awarded by the Warehouse Company to the defendant on the 17th of August, 1912. The building was to be two hundred and fifty feet long, and the contract between the defendant and the Warehouse Company provided that it should be completed within six months from the 17th day of August, and that the defendant should pay to the Warehouse Company a fixed sum per day for each and every day the completion of the building was delayed beyond that time, as liquidated damages, etc. It does not appear from the record what sum per day the defendant agreed to pay, but it is stated in the briefs of counsel for the appellant and appellee that the amount was $95.00. The record contains the following extracts from the specifications, which are said to be the only provisions relating to the necessary excavations:

"Excavation — Excavate for all foundation walls, piers, cappings to piles, etc., as may be shown or required. The earth taken from such excavations shall be used for leveling and filling in up to basement floor slab, and shall be filled in and well wetted and rammed in place around all walls, piers, etc., as the work progresses. Where necessary this contractor shall furnish and ram in place additional fill of good and substantial quality, and shall remove from the premises all superfluous earth, rubbish, debris, etc.

"Bailing — Bail and pump out all soil and water that may collect in the excavations from drains, springs, rain, or otherwise, and see that the excavations are well drained before any mason work is done in them.

"Note — Bidders shall visit site before submitting estimate on this work, and shall acquaint themselves with existing conditions. The work of this contract shall be so conducted and executed that it will not interfere in any way with the business of the Owner in and about the premises, and no street shall be blocked or so obstructed as to impede traffic.

"Piling — This Contractor shall furnish and properly place in position all piles necessary to properly support the building so that no settlement shall occur, all as shown and called for on drawings and in these specifications. Piles shall be of concrete, etc."

The plaintiff having submitted a bid to the defendant for the work of excavating for the building, the defendant, on the day it entered into the contract with the Warehouse Company, sent for the plaintiff, and the plaintiff and defendant entered into the following contract, in the form of an offer by the former and an acceptance by the latter:

"Baltimore, August 19, 1912.

Mess. John Cowan, Inc.

Gentlemen: —

I hereby propose to do all the excavating at the Baltimore Fidelity Warehouse, corner Hillen and High Sts., according to drawings and specifications prepared by Emory Nussear, Architects, as follows:

Beginning at the north end of the building and working toward the front to a distance of 125 feet and to the depth required, including all trenches and footing foundations, same to be completed in twenty working days from above date. I also further propose to complete the entire excavation necessary for the building within forty working days from above date.

The price for excavating and hauling away same to be One Dollar and Thirty-five Cents ($1.35) per yard.

I also further agree that if at any time you should see fit to put a steam shovel on the works I will haul the dirt away after being loaded on my wagons by the steam shovel for the sum of One Dollar ($1.00) per yard and will agree to take from this shovel 300 yards per day.

I further agree to pay to you the sum of $95.00 per day as liquidated damages for each and every day thereafter exceeding either the twenty or forty day time limits.

Terms: eighty per cent. of the value of the work completed each week, balance within thirty days after completion.

Yours respectfully,

Accepted: (Signed) Wm. Meyer. (Signed) John Cowan, Inc., (Seal) By Wm. B. Norris."

Plaintiff states that he began excavating for the building on the 19th of August, 1912, and completed the work on the 25th of the following October. During that time there were nine Sundays and twelve days on which he could not work on account of rain, making in all twenty-one days which were not working days. He says that he "was to complete the first half of the contract in twenty days, and twenty days additional for the second half"; and that he completed the excavations in forty-six days, which, "according to his calculation, was six days over the forty days' period in the contract"; that he could not tell when he completed the first half of the work because he "didn't keep any dates at all for the first half," and does not deny that it was not completed until the fifteenth of October. Referring to a conversation between the plaintiff and Mr. Tase, the vice-president of the defendant, on the day the plaintiff entered into the contract, and immediately preceding its execution; plaintiff was asked by his counsel the following question: "What, if anything, was said by Mr. Tase and you at that time about the character of the soil or the character of the digging that was to be done by you?" The question was objected to by the defendant, but the Court below overruled the objection, which ruling is the subject of the first exception, and the plaintiff replied: "Mr. Tase said to me, Meyer, you know that this job must go on in a hurry, and I said, I am the man that can do it in a hurry. Now, then, I said, Mr. Tase, how many yards of dirt have you there? I don't understand blue prints; tell me how many yards of dirt you have there, and I will tell you how long it will take me to dig it out. He said about 6,000 yards, and I said, If you have 6,000 yards of dirt there I will move it in 40 days, and he said, Couldn't you give me half of the cellar in twenty days and the balance in 40 days? and I said, Well, I don't think there would be any trouble to do that, but we can start from one end and go out at the other end. I said, I guess the digging will be very good there, because they have a test-hole over there at the corner and they are going to drive piles and the digging is going to be fine, and he said, The digging is going to be lovely, because a test-hole has been dug and there is going to be good digging, and I said, If that is the case I can get the job out in 40 days." Plaintiff further testified that before making any bids for the work he examined the test-hole, which had been dug by the Warehouse Company or the Railroad Company, and the blue prints and specifications, which provided for piles to be driven, etc., and that the statement of Mr. Tase, the conditions shown by the test-hole and the provision in the specifications in regard to piles led him to believe that the earth would be "soft" and that "the digging would be good"; that after he and his employees had worked about sixteen days, and "had the cellar at grade" and "were digging the footings where the piles were to go" they "struck nothing but a bed of solid rock"; that he had to go to the City Hall to get a permit to "blast out the rock"; that the rule of the Engineer's Department prohibited blasting "where teams are passing," except after six o'clock in the evening and early in the morning; that he "took out" 456 cubic yards of rock and 7,350 cubic yards of dirt, and that the delay in completing the work within the time specified in the contract was due to the rock and the fact that he could not do any blasting except at the hours named; that the defendant did not pay him "for all the dirt he dug and hauled away"; "that there was still due him the sum of $2,181.46, figured out on the basis of $1.35 per cubic yard for the dirt taken out," and that he had demanded the $2,181.45 from the defendant, but that it had declined to pay it on account of the delay in completing the work.

According to the evidence produced by the defendant, nothing was said by Mr. Tase to the plaintiff about the character of "the digging" to be done, and the plaintiff never intimated that the contract did not include blasting and moving rock until he testified in this case. The provisions of the contract between the defendant and the Warehouse Company in respect to the time allowed for the erection of the building and the obligation of the defendant in the event of its failure to comply with that requirement were made known to the plaintiff, and the clause in the contract we are now considering requiring the plaintiff to complete the first half of the excavations within twenty working days was inserted for the purpose of enabling the defendant to commence the erection of the foundation and walls of the northern half of the building while the plaintiff was excavating for the other half. Mr. Tase states that excluding Sundays and holidays, and counting only "the days on which the work could be done," twenty working days from the 19th of August extended to the afternoon of the 11th of September, 1912; that the first half of the excavations was not completed until the 15th of October, and that there were "thirty-four days overtime on the first half of the contract" for which the defendant was entitled to claim $95.00 per day; that he "has had a great deal of experience in excavating work of that character * * * and in his opinion there was no reason why the excavating" for "the first half of the building could not have been done in twenty working days;" that the defendant had made up the "time lost" through plaintiff's "delay;" but that it had cost the defendant a great deal of money to do it. On cross-examination he further stated that the building was not completed within six months, and that the Warehouse Company had deducted about $2,000.00 from the contract price for that reason.

There is no charge made in the account for blasting and moving the rock referred to, and the items of the account are not disputed. Nor is there any serious conflict of evidence in regard to the number of days the plaintiff was engaged in the work beyond the twenty days limit, which, according to the defendant's evidence was from twenty-six to thirty-four days. The record contains about eighty pages of testimony, most of which was offered for the purpose of showing the cause of the delay and that the defendant was not damaged by reason thereof, and there are thirteen exceptions to the rulings of the Court in respect thereto, but the brief reference we have made to the evidence is sufficient to show that the important questions to be determined are, first, whether the $95.00 per day mentioned in the agreement is to be treated as a penalty, or, in the language of the contract, as liquidated damages, and the effect of that provision upon the rights of the parties, and, second, whether the plaintiff can, under the circumstances and in this case, rely upon the fact that he encountered rock as an excuse for his failure to complete the first half of the excavations within the time specified.

The rules by which we are to be guided in the solution of the first question with which we are here confronted are clearly stated in the very recent case of The Baltimore Bridge Companyv. United Railways and Electric Company, Ante, page 208, where the previous decisions of this Court and of other courts are referred to and fully discussed in the opinion prepared by JUDGE PATTISON. It is there said: "From the authorities given above, it may be stated as a settled rule of law, that where the parties, at or before the time of the execution of the contract, agree upon and name a sum therein to be paid as liquidated damages in lieu of anticipated damages which are in their nature uncertain and incapable of exact ascertainment, that the amount so named in the agreement will be regarded as liquidated damages and not as a penalty, unless the amount so agreed upon and inserted in the agreement be grossly excessive and out of all proportion to the damages that might reasonably have been expected to result from such breach of the contract. And whether it is excessive or whether the damages are incapable of exact ascertainment should be determined from the subject-matter of the contract considered in the light of all the surrounding facts and circumstances connected therewith and known to the parties at the time of its execution." It appeared in that case that the Railways Company had entered into a contract with the City in reference to the work referred to in the contract between the Railways Company and the Bridge Company, and JUDGE PATTISON, after referring to the fact that the contract with the City had not been admitted in evidence, said in reference to it: "What covenants, if any, were made by the railway company to the City in the aforesaid contract by which they were to become liable to the City for the loss or damage it might sustain because of the failure to complete the work within the time named, are not disclosed by the record. If the said contract contained such covenants, then any anticipated damages resulting to the company by reason of a breach thereof, occasioned by the aforesaid breach of the contract with the appellant company, could have been properly considered with the other anticipated damages in determining the amount of the liquidated damages to be inserted in the agreement."

In the case at bar the defendant had entered into a contract with the Warehouse Company to erect the warehouse within a definite time, and had agreed to pay to the Warehouse Company a fixed sum per day (which, according to briefs of counsel, was $95.00) as liquidated damages for every day the completion of the building was delayed beyond that time. The plaintiff was fully advised of these provisions of the contract between the defendant and the Warehouse Company, and that the time consumed in the work he was about to undertake was a matter of great importance to the defendant. The position of the parties was such as to render it difficult if not impossible to anticipate with any degree of accuracy the consequences to the defendant of a failure to do the work within the time the plaintiff agreed to do it, and the damages which the defendant would sustain by reason of such failure were, in the language of this Court in United SuretyCo. v. Summers, 110 Md. 95, "in their nature uncertain and unascertainable with exactness," and might "be dependent upon extrinsic considerations and circumstances." We cannot say that the amount named is "grossly excessive and out of all proportion to the damages that might reasonably have been expected to result from such a breach of the contract," especially in view of the statement of counsel that a like sum had been agreed upon as the measure of damages for a similar breach of the contract between the defendant and the warehouse Company. Having regard therefore to the subject-matter of the contract, the position of the parties and the surrounding facts and circumstances existing at the time of its execution, there is no reason why we should not give effect to the terms of the agreement and treat the sum designated as "liquidated damages," as the measure of compensation to which the defendant is entitled by reason of the breach.

This construction of the contract eliminates the question of the actual damages the defendant sustained by reason of the failure of the plaintiff to complete the first half of the excavations within the time specified. In other words, the effect of the clause we are considering is to substitute the amount agreed upon as liquidated damages for the actual damages resulting from the breach, and, as said by Mr. Brantly in his excellent work on Contracts, "the party who failed to perform the contract will not be heard to say that the other party has not suffered any damages from the breach, or that his loss did not equal the sum named. The very object of the clause is to prevent such a controversy." Brantly on Contracts (2nd Ed.), section 163; Willson v. Baltimore City, 83 Md. 203;Baltimore Bridge Company v. United Railways, etc., Company,supra.

Nor can the plaintiff rely upon the fact that he was compelled to blast and move rock in order to accomplish the work he undertook, to relieve him of the consequences of his failure to complete the excavation within the time agreed upon. The contract provided that he was "to do all the excavating at the Baltimore Fidelity Warehouse * * * according to drawings and specifications prepared by Emory Nussear, Architects, as follows: Beginning at the north end of the building and working toward the front to a distance of 125 feet and to the depth required, including all trenches and footing foundations, same to be completed in twenty working days from" the date of the contract. The time in which the work was to be done was not made dependent upon the kind of material he had to move, and there is no provision in the contract or specifications to the effect that if in the course of the work he had to blast and move rock the time limit should not apply, or to in any way qualify an absolute undertaking to complete the first half of the excavations within the time stated. The specifications cautioned bidders to "visit the site" and to "acquaint themselves with existing conditions before submitting estimates on" the work, and the plaintiff says he examined the test-hole and the drawings and specifications. If after doing so he was satisfied as to the kind of work required, and was willing to enter into a contract to complete it within a certain time without any provision to protect him from the consequences of a mistake in regard to the character of the material to be moved, he cannot in a suit at law to recover for the work he did under the contract avoid liability for his failure to comply with its terms by showing that the work was harder or more difficult than he had anticipated. The rights of parties to a contract must be determined by the terms of the agreement they have voluntarily made. Courts cannot make a different contract for them, or relieve them of the consequences of a bad bargain. This case is not unlike the case of Simpson v. United States, 172 U.S. 372, where the Court held, quoting from the syllabus: "That the contract imposed upon the contractors the obligation to construct the dock according to the specifications within a designated time, for an agreed price, upon a site to be selected by the United States, and contained no statement, or agreement or even intimation that any warranty, express or implied, in favor of the contractor was entered into by the United States concerning the character of the underlying soil." In the case of Taylor v. Turley, 33 Md. 500, JUDGE STEWART, in answer to the contention that subsequent events rendered the consideration for the defendant's promise so inadequate that it would be unjust to hold him bound by the terms of his contract, said: "Whether he made a good or bad bargain, or received a full equivalent for what he promised to pay, cannot affect the legal character of his obligation." In the case ofUnited States v. Gleason, 175 U.S. 585, the Supreme Court said that one of the well-settled rules of law "is that if a party by his contract charge himself with an obligation possible to be performed, he must make it good, unless his performance is rendered impossible by the act of God, the law, or the other party. Difficulties, even if unforseen, and however great, will not excuse him. If parties have made no provision for a dispensation, the rule of law gives none — nor, in such circumstances, can equity interpose." And it is said in 6 Cyc. 70, "A builder who has improvidently assumed an absolute liability when he might have undertaken a qualified one only, is not excused from performing his engagement unless prevented by the act of God, the law, or his employer; no hardship, no unforseen hindrance, no difficulty short of absolute impossibility will excuse him from doing what he has expressly agreed to do. Thus, he is not excused from performance because of a latent defect in the soil," etc. The plaintiff admits that the delay in completing the work was not caused by the defendant but claims that it was due in part to an ordinance or rule of the "Engineer's Department" forbidding blasting except during an early hour in the morning or late in the evening, and his counsel contends that the case comes within the exception which relieves a party where performance is rendered impossible by law. The obvious answer to this suggestion is, first, that there is no evidence to show that the ordinance or rule referred to was not in force at the time the contract was made, and it must be presumed that it was made with reference to all lawful rules and regulations affecting the work to be done under it, and, second, that the rule prohibiting blasting except during the hours named did not make performance impossible, but, at most, only rendered it more difficult. It is said in 9 Cyc. 631: "The exception does not apply, however, where the impossibility created by the law is only temporary, where the change merely makes performance more burdensome."

As we have said, the items of the plaintiff's account are not disputed, and as he did the work and it was accepted by the defendant, he is entitled to recover for it under the common counts at the contract price. But as the first half of the work was not completed within the time specified in the contract, the defendant was entitled under the pleadings to set off against the plaintiff's claim of $95.00 per day for every day consumed in the completion of the first half of the excavation beyond the twenty days mentioned, as the measure of defendant's damages for the breach, and to a verdict for any excess over plaintiff's claim the jury might find. 1 Poe (3rd Ed.), sec. 101; Orem v. Keelty, 85 Md. 337; Baltimore City v. Kinlein, 118 Md. 336; Code of 1912, Art. 75, secs. 12 and 13.

The evidence embraced in the first exception, which we have set out above, was not admissible. The contract is free from ambiguity, and as it does not contain any warranty on the part of the defendant in respect to the amount of "dirt" to be moved or kind of "digging" to be done by the plaintiff, its terms cannot be varied or added to by evidence of what was said by the parties prior to its execution.

The remaining exceptions to the evidence refer to evidence introduced for the purpose of showing that the failure of the plaintiff to complete the excavations within the time allowed did not delay defendant in the erection of the building or result in any damage to the defendant, and for the reasons we have already stated there was error in the rulings of the Court below in admitting it.

At the conclusion of the evidence the Court below granted the plaintiff's first, second and fifth prayers, and the defendant's prayer. The Reporter is requested to set out plaintiff's first prayer in his report of the case. By the plaintiff's second prayer the jury were instructed that if they found that the defendant "made up and recovered all, or any part of the delay of the plaintiff," etc., "then the plaintiff cannot be charged with the delay which was made up and recovered by the defendant," and by his fifth prayer the jury were told that "under the true interpretation of the contract between the plaintiff and defendant * * * the blasting, and removal of rock is not contemplated or comprehended therein," and that if they found that the plaintiff "did blast and remove rock from the cellar and foundation of the warehouse * * *, and the completion of the work to be done by him under the contract was thereby delayed, then the delay caused by the limited hours said blasting was done by direction of the City authorities, cannot be charged against the plaintiff." These prayers are covered by what we have already said in regard to the construction of the contract, the rights of the parties under it and the plaintiff's reliance upon the fact that he had to blast and move rock, and cannot therefore be approved. The second prayer is open to the further objection that it is in conflict with the plaintiff's first prayer and the defendant's prayer which were granted by the Court.

The plaintiff's first prayer is based upon the theory that the defendant is entitled to an allowance of the $95.00 per day mentioned in the contract as liquidated damages, which is in accordance with the proper construction of the contract, but we think in other respects it was calculated to mislead the jury. By the terms of the contract the plaintiff was allowed twenty working days within which to complete the first half of the excavations and forty days for the completion of the "entire excavations." He could not, of course, escape responsibility for a breach of his agreement in regard to the first half by hastening the completion of the second half, and if he had complied with the contract in reference to the first half, but failed to do so in respect to the remaining half he would have been liable to the extent that he exceeded the forty days limit. But if the delay occurred in the first half of the work and he was charged with the number of days he exceeded the twenty days limit, he could not, under any fair construction of the contract, be charged with the same time in allowing the defendant for a breach of the contract in respect to the forty days period. That would result in a double charge. In the seventh count of the plea of set-off the defendant only alleges the breach of the agreement to complete the first half of the excavations within the twenty days. It could, of course, under a different state of facts, have recovered also on the common counts, the $95.00 per day for a breach of the time limit in respect to the remainder of the work, but notwithstanding the plaintiff testified that he exceeded the forty days limit for the "entire excavations," the evidence shows that all of the delay occurred in the completion of the first half of the work, and the only claim made by the defendant in the evidence is for that delay. The form of the prayer might have led the jury to believe that they should add, to the number of days, the time consumed in the completion of the first half of the work, exceeded the twenty days limit, the six days delay in the completion of the entire excavation beyond the forty days, whereas, in allowing the defendant for the breach of the contract they should, under the evidence in the case, have been confined to the number of days the completion of the first half of the work was delayed beyond the twenty days period. This error in the prayers could not have prejudiced the defendant, but inasmuch as the case will be remanded for a new trial we deem it advisable to call attention to it, and for a like reason we may add that the same criticism applies to the defendant's prayer, which is not strictly before us on this appeal. Another objection to plaintiff's first prayer is that it instructed the jury that they could allow the plaintiff, interest on the balance found to be due him from the date the excavations and hauling were completed, whereas the contract provides that eighty per cent of the cost of the work should be paid each week and the "balance within thirty days after completion."

For the errors indicated the judgment will be reversed and case remanded for a new trial.

Judgment reversed, with costs and a new trial awarded.