Mayor of Baltimore v. Ault

94 A. 1044 | Md. | 1915

In June, 1910, the Mayor and City Council of Baltimore passed an ordinance for the widening of Pratt street from East Falls avenue to President street, the next street east, by establishing the southern building line of Pratt street about seventy feet further south. East Falls avenue runs along the east side of Jones' Falls, and was from thirty to thirty-four feet wide. Pratt street, which was a much used thoroughfare about sixty-five feet wide, crossed the Falls by a bridge on which there were two tracks of the United Railways and one track of the B. O. Railroad. The space between East Falls avenue and President street, which was to be acquired by the City and included in the bed of Pratt street, was covered by buildings occupied by William G. Scarlett and others, and on the opposite or west side of the Falls the City had constructed a pier known as Pier 6, which extended from Pratt street into the harbor. The proposed improvement involved the acquisition by the City of the strip of land referred to to be added to the bed of Pratt street east of the Falls; the removal of the buildings thereon; the erection of a new steel and concrete bridge, about one hundred and twenty-eight feet wide, over the Falls; the removal of the old bridge and two large gas mains which spanned the Falls just south of the old bridge; the paving of the new portion of Pratt street, and the repaving or paving of the approaches to the new bridge, etc. After the ordinance was passed the Commissioners for Opening Streets, as required by the Baltimore City Code, published a notice that they would meet to assess damages and benefits for the widening of Pratt street, and that their first meeting would be held on August 1st, 1910. Bids for the work of constructing the new bridge, removing the old bridge, paving and repaving, etc., were received until August 17th, 1910, and on the 31st of August, 1910, the contract for the work was awarded by the Board of Awards to the appellees, David V. Ault and Martin J. Beach, co-partners trading as D.V. Ault Co., who on the 7th of September, 1910, entered into a contract with the City to furnish the labor and materials, etc., and to do the work in accordance with the specifications thereto attached and made a part thereof, at and for the rates and prices in the schedule attached to the contract, and to complete the "whole contract * * * within 150 working days after August 31, 1910." Persons proposing to bid for the work were notified that the specifications and plans for the work could be obtained at the Harbor Engineer's office, and the specifications required bidders to make a "personal examination of the plans, the site and surroundings thereof, and of the nature and character of the work required." The specifications also contained the following provisions:

"Disputes and Litigation — To prevent disputes and litigations, the Harbor Engineer shall in all cases determine the amount, quality and acceptability of the work which is to be paid for under the contract; shall determine all questions in relation to said work, and the performance thereof, and shall in all cases decide every question which may arise relative to the fulfillment of the contract on the part of the contractor. His estimate and decision shall be final and conclusive, and in case any questions shall arise between the parties touching the contract, such estimate and decision shall be a condition precedent to the right of the contractor to receive any monies under the contract.

"Time Required — Bidders must state the number of consecutive working days required to complete the work. A working day shall consist of eight hours of each and every day except Sundays and holidays as set aside by the National Government, the Governor of Maryland, or the Mayor of Baltimore. If it is raining too hard at 8 A.M., in the judgment of the Engineer, to permit work, such day shall not constitute a working day. In computing the lapsed number of working days, no allowance for bad weather or other delays not covered by the preceding clause, will be made unless claim for exemption has been made within 48 hours of the time the delay occurs. The Contractor must begin the work within 15 days after notice to do so, and must complete the work within the time specified. Should the Contractor fail to complete the work within the time specified, he shall forfeit to the City as liquidated damages, and not as a penalty, the sum of $25.00 for each and every day which may elapse between the limiting date and the completion of the work.

"Payments — Monthly estimates will be made on 80 per cent. of the work done, and 40 days after the completion and acceptance of the work by the Engineer all sums then remaining due will be paid to the Contractor. Payments may at any time be withheld if the work is not proceeding in accordance with the contract, or if, in the judgment of the Engineer, the Contractor is not complying with the requirements of the contract and specifications. Whenever, in the opinion of the Engineer, the Contractor shall have completely performed the contract on his part, the Engineer shall so certify in writing to the Harbor Board, and in his certificate shall state, from actual measurements, the whole amount of the work done by the Contractor and also the value of such work under and according to the terms of the contract. On the expiration of 40 days after the completion of the work herein to be done by the Contractor, and the filing by the Contractor in the office of the Comptroller of a certificate of the completion and acceptance of the work, made by the Engineer and the Harbor Board, the City shall pay to the Contractor the amount or value stated in the above-mentioned certificate, after deducting therefrom all such sums as shall theretofore have been paid to the Contractor under any of the provisions of this contract, and also all sums of money which by the terms hereof the City is or may be authorized to reserve or retain, * * * All monthly estimates upon which partial payments have been made, being merely estimates, shall be subject to correction at any time without notice to the Contractor.

"General Method of Procedure — The bridge will probably have to be constructed in three sections. The first section will extend from the south end up to the gas mains of the Consolidated Gas Company. When the first two or three ribs are completed, with the necessary beams, etc., the Gas Company will change their mains over to this new portion and remove the old mains, and the Contractor will remove the south sidewalk of the present bridge, or perhaps the entire south half of it, after which another section of the new bridge may be completed. This latter section will include at least two of the ribs designed to carry the railway tracks, and upon its completion the railway tracks will be laid thereon and permanent or temporary paving will be laid on the completed portion of the bridge. Traffic will then be turned on this part of the new bridge, when the rest of the old bridge may be removed and the new one completed. * * * There are a number of pipes, conduits, etc., within the lines of the excavation which will be abandoned or removed by the City, as the work progresses. All abandoned conduits, pipes, etc., shall be removed by the Contractor, as excavation.

"Special Items to be Included in Unit Prices Provided — The Contractor will be furnished with a pipe to carry a 24-inch sewer through the east abutment, and with other pipes, etc., that may be required for openings through the new work, but the labor of placing and caring for these openings must be borne by the Contractor without expense to the City. * * * Attention is called to the location of the 76-inch interceptor sewer adjacent to the bridge. The new abutments will be built up against the walls of this sewer, but excavation will not extend under the sewer foundations, etc.

"Suspending Work — The Harbor Board reserves the right to suspend the whole or any part of the work to be done hereunder, if it shall deem it for the interest of the City to do so, without compensation to the Contractor for such suspension, other than extending the time for completing the work as much as it may have been delayed by such suspension."

The work under the contract was, according to the testimony of Mr. Ault, begun between the 10th and 15th of September, 1910, and was not completed until the 15th or 20th of April, 1913. In the meantime monthly estimates and certificates of the work and material and the value of same were made by the Harbor Engineer, and Ault Co. were paid the amounts shown to be due, less the "percentage" retained under the terms of the contract and specifications. In April, 1913, Ault Co. received from the Harbor Engineer an estimate designated "Estimate No. 29," showing that the value of the work done and material furnished by them from March 15 to April 15 was $5,070.13; that the total value of work and material to date was $98,356.70; that the amount previously paid was $74,629.28; that the amount due under that estimate, after deducting the 20 per cent., was $4,056.10; that the total percentage retained was $19,671.32, and, as appears from the estimate and certificate offered in evidence, that the $4,056.10, due under that estimate, was paid to them April 29th, 1913. The work and material referred to in that certificate included all the work done and material furnished by Ault Co. under the contract, and to the amount there shown to have been paid them there should be added $1,833.60 paid by the City "on account of piling" and $100.00 which Ault Co. agreed to pay for the old bridge. On the 12th of April, 1913, the Mayor of Baltimore wrote the Harbor Engineer that there would be no waiver of penalties chargeable under the contract until the question had been passed upon by the Board of Awards, and requesting the Engineer to let him know the status of Ault Company's account before any further payments were made, and the Harbor Engineer notified Ault Co., by letter of April 15th, 1913, that he had been directed to withhold further payments until matters pertaining to the delay in the construction of the bridge had been presented to the Board of Awards. On June 12th, 1913, the Harbor Engineer wrote to Ault Co. enclosing them "a final statement for work done" under the contract, in which he deducted from the total value of the work and material shown by "Estimate No. 29" $12,400.00 for a delay in the completion of the work of 496 working days, at $25.00 per day, and later the Board of Estimates wrote Ault Co., offering to pay them the balance due them after deducting $12,050.00 for 482 working days' delay and certain claims against them. Ault Co. refused to accept the amount so offered, and in March, 1914, brought this suit in the Superior Court of Baltimore City against the City to recover $17,837.72, balance due for work done, etc., under the contract; $1,277.15 for extra work, and $19,382.34 as damages resulting from delays in the work caused by the City, less $100.00, the purchase price of the old bridge.

This appeal is by the City from the judgment recovered against it for $17,310.46. The record contains nearly one thousand pages of testimony and twenty-one exceptions to the rulings of the lower Court on the evidence and prayers. The evidence offered in support of the plaintiffs' claim for damages was excluded by the Court below and is not in the record, and the lower Court having instructed the jury that the plaintiffs were not entitled to recover the amounts claimed by them for extra work and materials, we are only concerned on this appeal with the claim of the City to liquidated damages for the failure of the plaintiffs to complete the work within the time limited in the contract.

As in our view of the case the judgment will have to be reversed and the case remanded for a new trial, we will refrain from referring to or discussing the evidence further than is necessary in order to pass upon the questions raised by the exceptions, the most important of which are presented by the prayers.

The work done by the plaintiffs consisted mainly of constructing the new bridge, removing the old bridge, paving the addition to the bed of Pratt street, and paving or repaving the approaches to the new bridge. In order not to stop the travel on Pratt street, the specifications provided that the new bridge would have to be constructed in three sections. The evidence adduced by the plaintiffs is to the effect that when they began the work in the fall of 1910, and undertook to erect a derrick on East Falls avenue to be used in excavating for the foundation of the east abutment of the first section of the bridge, they were prevented from doing so by Mr. Scarlett, who occupied the building on a part of the land that was to be acquired by the City for the widening of Pratt street, and who, claiming that it would interfere with the use of the side entrances of the building in receiving and shipping produce, threatened to apply for an injunction against them. Mr. Ault reported the matter to the Harbor Engineer, who said that he would see the Commissioners for Opening Streets about it and let him know. The title to the land to be included in the bed of Pratt street was obtained by the City during the spring and summer of 1911, and the Scarlett building and other buildings were not removed until about the first of December, 1911. In the meantime the plaintiffs completed the first section of the bridge, which was fifty-five feet wide, but Mr. Ault stated that owing to the fact that the proximity of the building did not leave them sufficient room for the full use of their appliances, and they did not have the use of the land covered by the buildings as a place to deposit the "excavation," it took them five times as long to do the work as it would have taken if the building had been out of their way, and that the plaintiffs claim that the 150 working days in which they contracted to do the work should therefore be "accounted from" the first of December, 1911, when the buildings were removed. Other evidence was offered by the plaintiffs that their work was further delayed by the moving of gas mains, etc., by the Gas Company; by the transfer of the tracks from the old bridge to the new bridge by the Railways and Railroad Companies; by work done by the Electric Commission, Sewerage Commission and Water Board, and that they were also delayed because the Gas Company, which, by reason of the fact that the Scarlett and other buildings were not removed from the land referred to, had to extend its mains down East Falls avenue in order to connect with its mains on President street, instead of following the bed of Pratt street. The claim of the plaintiffs is that the time lost by the delays referred to, when added to the number of Sundays, holidays and rainy days on which they could not work, accounts for their failure to complete the work within the 150 days allowed by the contract.

They also offered evidence for the purpose of showing that the statement or estimate of the Harbor Engineer of the number of days delay for which they were responsible, and for which they were liable, under the terms of the contract, to be charged $25.00 per day as liquidated damages, was not his decision, but that his judgment in the matter was influenced and controlled by the conduct and views of the Mayor and other City officials. This evidence will be more particularly referred to when we come to consider the prayers.

The defendant offered evidence tending to show that in the summer of 1910 the plaintiffs were paving Pier 6, which is on the west side of the Falls and opposite the Scarlett building, under a contract with the City, and that at the time the ordinance for the widening of Pratt street was being passed and they were bidding for the contract for the construction of the new bridge, and at the time the contract was awarded to them, they knew that the City had just begun proceedings for the acquisition of the Scarlett and other properties to be included in the proposed addition to Pratt street east of the Falls; that the Scarlett building did not prevent the building of the bridge, the first section of which was completed before the building was removed, and did not delay the work; that the east abutment of the first section of the bridge, which was about thirty feet from the building, was built in a shorter time than the west abutment of that section, where there were no buildings to interfere with the work; that the only use the plaintiffs could have made of the land covered by the Scarlett building and the other buildings was as a place to store their materials, and that the City had at the beginning of the work given them permission to use Pier 6, the area of which was greater than the space occupied by those buildings. The testimony of the Harbor Engineer, the inspectors on the work, the timekeeper of the Harbor Board, who kept the record of the number of men at work on the bridge, etc., and other witnesses for the defendant, was to the effect that the work done by the Railroad and Railways Companies, the Sewerage Commission, Water Board, Electric Commission and Gas Company did not cause the delays testified to by Mr. Ault; that the plaintiff did not commence the work until October, 1910, and did not complete it until May 9th, 1913, and that the real causes of the delay in the completion of the bridge were the failure of the plaintiffs to employ sufficient force and equipment and the lack of competent direction and supervision of the work. Repeated complaints were made to the Mayor and Harbor Engineer about the delay in the construction of the bridge, and the plaintiffs were advised of these complaints. In September, 1912, the City authorities threatened to "annul" the contract, and Mr. Ault appeared before the Board of Estimates and promised that if he was allowed to finish the work he would put on an extra force and complete it by the following November. According to a strict interpretation of the specifications the bridge was not completed until the 9th of May, 1913, but as the "traffic had used the bridge on April 5th, 1913," the plaintiffs were allowed the twenty-four days between the 5th of April and the 9th of May, 1913. Between the 31st of August, 1910, and the 9th of May, 1913, there were thirty-two holidays, one hundred and thirty-nine Sundays and one hundred and eight rainy days, and after deducting the number of holidays, Sundays, rainy days, the 150 days in which he was allowed to do the work, the 24 days between April 5th and May 9th, 1913, and 46 days for such other delays as the plaintiffs were entitled to claim credit for, there remained a delay of 482 working days for which the plaintiffs were responsible. The defendant also offered evidence for the purpose of showing that the Harbor Engineer, in determining the number of days for which the plaintiffs were entitled to credit, relied upon his personal knowledge of the manner in which the work was performed and the records kept during the progress of the work, and that he was not influenced or embarrassed in his decision by the conduct or views of other City officials.

At the conclusion of the testimony the plaintiffs offered eleven prayers and the defendant seven. The Court below rejected all of the plaintiffs' prayers except the ninth and all of the defendant's except its seventh, and granted an instruction of its own. The correctness of this ruling is challenged in the twenty-first exception. The Reporter is requested to set out the plaintiffs' ninth prayer, the defendant's rejected prayers and the Court's instruction in his report of the case. The general rules and principles by which we are to be governed, in disposing of the questions thus presented are fully recognized in the decisions of this Court.

In the case of Geiger v. The Western Md. R.R. Co.,41 Md. 4, the contractor undertook to complete a certain division of the appellee's railroad within eight months. The work was begun in June, 1871, but owing to the financial embarassment of the railroad company and its difficulty in securing the right of way, it was in a measure suspended and was not actively resumed until April, 1872. The contract provided that in case it should appear to the chief engineer that the work did not progress with sufficient speed he might annul the contract. The work not having progressed as rapidly as the engineer thought it ought to have done, the contract was annulled, and in disposing of the question of the right of the engineer to do so after the work had been resumed under the circumstances stated, the Court said: "There is no proof to show that the contractors were hindered or in any manner delayed in the progress of the work, by the company, after it was resumed in April, 1872. * * * Whatever may have been the delay in the progress of the work in 1871, resulting from the failure of the appellee to acquire the right of way, or whatever inconvenience and loss the contractors may have sustained by the non-payment of the monthly estimates, these facts in no manner affected or impaired the right of the engineer to annul the contract for the failure to prosecute the work with proper speed after it was begun in April, 1872. Owing to financial embarrassments of the appellee, the work was in a measure suspended in the latter part of 1871, and when by the aid of city's subscription, it was enabled to resume the construction in 1872, the work was to be prosecuted according to the terms of the contract." In the case of United Surety Co. v. Summers, 110 Md. 95, the suit was on the contractor's bond for breaches of the contract which contained a provision that the work was to be completed in seventy working days, and that the contractor should pay fifty dollars per day for each day the completion of the work was delayed beyond that time. There were cross-appeals, and one of the exceptions of the plaintiff was to the refusal of the lower Court to grant his second prayer, which was as follows: "Upon the prayer of the plaintiff the Court instructs the jury that if they shall find from the evidence that the said work was not completely finished within seventy working days, accounting from the day of the commencement thereof and adding to said seventy working days all working days during which the jury shall find from the evidence said work was delayed by the architects and builders of the plaintiff, then the plaintiff is also entitled to recover from the defendant by way of additional damages the sum of fifty dollars for every day in excess of said seventy working days occupied by said Lawrence and the defendant upon said work, and said additional days during which the jury shall find said work was delayed by the architects and builders of the plaintiff down to the time when they shall find the plaintiff took possession of said building." This Court, after holding that the provision in the contract in regard to fifty dollars per day was a stipulation for liquidated damages, said that the plaintiff's second prayer should have been granted. The same principle was followed in the case of Pittsburg IronCo. v. Nat. Tube Co., 184 Pa. 251, 39 A. 76. In the case at bar the contract provided that the bridge was to be completed within 150 working days, and, according to the rule stated, the fact that the work was unnecessarily or unreasonably delayed by the City or its agents, or by the Railways Company, Railroad Company or Gas Company, would not deprive the City of the benefit of that provision or the stipulation in regard to liquidated damages, but the contractors would be entitled to credit for such delays in arriving at the number of working days the work was extended beyond the 150 days' period.

It is said in 6 Cyc. 40: "Where the building contract expressly provides that a certificate, estimate, determination, or decision of an architect, engineer, or some third person shall be final and conclusive, it is a well settled rule that such certificate, estimate, determination, or decision is conclusive and binding in its legal operation and effect upon the owner, the builder, and the other parties, if any, to the contract, including those guaranteeing its faithful performance, * * * provided the decision concerns matters within the scope of the submission to him, and also provided the decision, determination, estimate, or certificate is made by such architect, engineer, or third person in the exercise of an honest judgment." In the case of the Annapolis and Baltimore Short Line Co. v. Ross,68 Md. 310, JUDGE ROBINSON, speaking for the Court, said: "That alterations were made and that the cost of constructing the bridges was thereby largely increased is not denied; and the real question is whether the alterations were such as the defendant had the right under the contract to make. If they were, then in the absence of bad faith or fraud on the part of the engineer, and this is not imputed, his award is final and conclusive. On the other hand, if the alterations are not fairly within the scope of the contract, his award is not binding, because his arbitrament was to be final only in regard to the work done under the contract." In the case of Mayor and City Council of Balt. v. Talbott, 120 Md. 354, where the specifications contained the same provision found in the specifications in this case, CHIEF JUDGE BOYD, after quoting the above statement of JUDGE ROBINSON, said: "It was of course for the Court to construe the contract in so far as it was necessary to determine whether the work was done under it. It is true the engineer was to be the sole judge of the quantity and quality of the work, and his decision was to be final and conclusive between the parties; but, as the Court said, `only in regard to work done under the contract.' There were no such provisions in that contract as some of these in this.

"But if we assume that the Court can determine whether the plastering was done under the contract, there can be no possible doubt about that. It was admittedly done under the contract, and the engineer was by its terms authorized to determine the question in dispute. If the engineer had determined that the plaintiffs were entitled to be paid half or a quarter of what they claimed, it could not be contended that his decision would not have been final, and when he determined that they were paid, in the price paid for the masonry, why is it not under the provisions we have quoted equally final and conclusive? The rules as announced in Lynn v. B. O.R.R. Co., 60 Md. 404; B. O.R.R. Co. v. Brydon, 65 Md. 198; Smith v. Jewell,104 Md. 269; Pope v. King, 108 Md. 45; Seventh Baptist Church v.Andrews Thomas, 115 Md. 535; Filston Farm Co. v.Henderson, 106 Md. 335, and similar cases are too well settled to require discussion of the general principles that parties can legally leave questions of this character to the decision of third parties, such as engineers, architects and others, and that when they do they are bound by such decision, if made in good faith, and there are many cases holding that they can leave the construction of the contract itself to them. It seems clear to us that these parties left to the engineer the decision of the question now being considered, and there was error in not admitting the evidence offered in the first bill of exceptions and in granting the plaintiffs' first prayer." To the cases referred to by CHIEF JUDGE BOYD we may add the recent case ofHughes v. Model Stoker Co., 124 Md. 283. In the case now under consideration, the specifications, in order to prevent disputes and litigations, provided that the Harbor Engineer "shall determine all questions in relation to said work, and the performance thereof, and shall in all cases decide every question which may arise relative to the fulfillment of the contract on the part of the contractor." One of the provisions of the contract to be fulfilled by the contractor was that the work was to be completed within 150 working days, and it is clear that the Harbor Engineer was authorized to decide whether that provision had been complied with, and in doing so to determine the number of days for which they were entitled to credit, in order to decide how many working days they were engaged in the work. He could not, of course, deprive the City of the benefit of the stipulation in regard to liquidated damages, or withhold from the contractors credit for any delays for which they were not responsible. These rights were secured to the City and to them by the contract. But he was authorized to decide what delays the contractors were subjected to and the extent of those delays, otherwise he would be unable to decide whether the contractors had fulfilled the contract. What we have said applies as well to the delay claimed to have been caused by the Scarlett building and other buildings on the land included on the bed of Pratt street. The buildings were there when the contract was executed, and there was no stipulation in the contract that the 150 working days were not to begin until the buildings were removed. The only work to be done by the plaintiffs on that land was paving, etc., and the extent to which that work, or any other part of the work contemplated by the contract, was unreasonably delayed by the fact that the buildings were not removed until December, 1911, and the plaintiffs were deprived of the use of East Falls avenue in consequence thereof was, by the terms of the specifications, left to the decision of the Harbor Engineer.

In the case of Lynn v. B. O.R.R. Co., 60 Md. 404, JUDGE MILLER said: "If Legge's refusal to approve was brought about at the instigation, or by the procurement of the defendant company, this would undoubtedly have dispensed with the condition and allowed a recovery." After stating that there was no evidence in the case to show that the refusal was procured by the company, he said in reference to the averment that Legge fraudulently rejected the ice: "In the present case the party to inspect and approve was in fact, and by the agreement was required to be, an agent of the company, and his sole duty was to determine whether the ice which the plaintiff proposed to deliver corresponded in size and quality with the specifications contained in the contract. We are all of opinion that if a jury, upon sufficient evidence, should find that this agent rendered a fraudulent judgment, or, what is the same thing, rejected the ice in bad faith, the company would be responsible." After referring to the case of Wilson v. R.R. Co., 11 G. J. 68, in support of the statement that gross negligence would not, in contemplation of law amount to fraud or want of bona fides, he said further: "By this contract, which is perfectly lawful, the parties expressly agreed to submit the question whether the ice supplied was `good, clear, and solid,' to the judgment of this third party, and his judgment, no matter how erroneous and mistaken it may be, or how unreasonable it may appear to others, is conclusive between the parties, unless it be tainted with fraud or bad faith. To substitute for it the opinions and judgments of other persons, whether judge, jury or witnesses, would be to annul the contract, and make another in its place." In the case of B. O.R.R. Co. v. Brydon, 65 Md. 198, the Court said: "The Baltimore and Ohio Railroad Company contracted with William A. Brydon to purchase from him a large quantity of coal. It was agreed that Brydon was to deliver to the Railroad Company, daily, not less than one hundred and fifty and not more than three hundred tons of coal, of such quality as should be satisfactory to the railroad's master of transportation and master of machinery; that the deliveries should commence on the 15th of July, 1875, and should continue for three years. The price agreed to be paid was $1.50 a ton. After a considerable quantity of coal had been delivered the Railroad Company refused to receive any more, because it was condemned as unsatisfactory by the masters of machinery and transportation. At the trial below, the Court ruled that if the rejection of the coal was not made in good faith it would not be a sufficient justification to the Railroad Company in refusing to accept it. The correctness of the opinion of the Court as a legal proposition was not questioned in the argument of the case. It was fully supported by the decision inLynn v. R.R. Co., 60 Md. 404. But it was earnestly maintained that there was no evidence in the case proper to be submitted to the jury to show want of good faith." After referring to the testimony in the case, and particularly to the statement of a witness that the master of transportation had said to him that the coal was satisfactory to him, "but that his action had been dictated by Mr. Garrett, his superior officer, because of the steamer trouble," the Court said further: "By the terms of the contract the whole decision was committed to them (the masters of machinery and transportation); if they made their decision against the coal in good faith, the defendant would not be obliged to accept it, but if they fraudulently rejected it, their judgment would be without effect in law, and the defendant would not be excused by it." The Court then stated that in such cases "the evidence should take a wide range. It was competent to show to the jury what knowledge, and what means of knowledge the defendant had of the coal from the plaintiff's mine before and at the time of the contract; and every fact and circumstance which would show what expectations it might reasonably and justly form in respect to its fitness for the purposes to which it was to be applied. It was proper also to show whether the coal fulfilled these expectations, and whether the officers who were to decide on its rejection knew, or had the means of knowing, its quality; and whether there were any circumstances which might induce them to make an unjust decision in the interest of the defendant. It was proper also to prove acts, declarations or statements of these officers which would show what opinion they really had of the merits of this coal." The cases of Filston Farm Co. v. Henderson, 106 Md. 335;Pope v. King, 108 Md. 37; M. C.C. of Balt. v. Talbott,supra; Hughes v. Model Stoker Co., supra, and Hickman Co. v. Roberts and others, L.R. App. Cases (1913), 229, are to the same effect. To constitute bad faith it is not necessary, however, that the decision of the person to whose judgment the matter is submitted shall be the result of a malicious and deliberate purpose to defraud or deprive a party to the agreement of the benefit of the contract. The agreement in this case was to submit the matters within the terms of the submission to thedecision of the Harbor Engineer, and not to the judgment of any other person. His honest decision, however erroneous, would be binding upon the parties because the contract makes it so, but nothing short of that would gratify the terms of the agreement, and any decision which was not his judgment, but the mere expression of the views, or the influence of others, whether intentionally or innocently exercised, would be outside of the contract and without force.

Applying these principles to the ruling of the Court below on the prayers we discover no reversible error in the rejection of the defendant's first, third, fourth, fifth or sixth prayers.

On April 12th, 1913, the Mayor wrote the Harbor Engineer that there would be "no waiver of penalties for the non-completion of the work" by the plaintiffs until the question had been passed upon by the Board of Awards, and requested the Engineer to let him know the status of the account before further payments were made, and on the 15th of April, 1913, the Engineer wrote Mr. Ault, in reply to a telephone message, advising him that he had been authorized by the Mayor to withhold further payments until all matters pertining to the delay in constructing the bridge had been presented to the Board of Awards. It appears from a letter of June 7th, 1913, from Mr. Field to the Board of Estimates, that the Engineer wrote the Mayor on April 16th, 1913, in response to the Mayor's letter of April 12th, that the number of working days, "as classified in the specifications," the plaintiffs were engaged in the work was 646, and that after deducting the 150 working days allowed by the contract there was a delay in the completion of the work of 496 working days. It is to be observed that in the letter of the Mayor no reference is made to the causes of the delay, and it only refers to thewaiver of penalties which the City alone could do, and asked for information in regard to the status of the account, and that the Engineer in his reply stated that there was a delay of 496 working days in the completion of the work. But Mr. Ault testified that after he got the Engineer's letter of April 15th, 1913, he went to see the Engineer, who told him that his "recommendation" would be that the plaintiffs were entitled to all the money shown to be due by Estimate No. 29, and "that the delays suffered by the City were fully offset by the delays caused the contractors." Mr. Bartlett, one of the attorneys for the plaintiffs, referring to a visit to Mr. Lackey's office after Mr. Ault received the letter of April 15th, 1913, testified as follows: "I called at Mr. Lackey's office in the City Hall and I told him that I represented Mr. Ault, and that Mr. Ault desired him to pass upon and decide the question as to who was responsible for the delays, and I pointed out to him that the contract named him (Lackey) as the officer of the City who was authorized by the contract to decide that question, and I asked him, on behalf of Mr. Ault, to decide it. He told me that he could not decide, because he had received instructions from his Honor the Mayor to do nothing further in the matter, and he had referred, and was about to refer, the whole question of the responsibility for delays to the Board of Awards. I said, `Mr. Lackey, you know that the Board of Awards has no authority to decide that question, and Mr. Ault is not willing that it should be decided by the Board of Awards, and he wants you to decide it.' Mr. Lackey said, `I know that, Mr. Bartlett; but my hands are tied.' He said, `I feel it would be insubordination on my part, if I were to pass upon that question in view of the instructions that I have received from my superior officer.'" On the 7th of June, 1913, Mr. Field wrote the Board of Estimates that the City was entitled to deduct $25.00 per day for the delay of the 496 working days stated in the letter of the Engineer of April 16th, 1913, to the Mayor, and on the 11th of June, 1913, the Board of Estimates wrote the Engineer that the Board had approved Mr. Field's recommendation of June 7th, a copy of which had been sent him, "in the matter of deducting liquidated damages from the final estimate of D.V. Ault Co., for the construction of Pratt street bridge," and added, "and you are directed to please be governed accordingly. Final estimate dated April 15th-May 15th is herewith returned." On June 12th, 1913, the Engineer sent the plaintiffs the estimate we have already referred to, in which they were charged with a delay of 496 working days, and on the 17th of June, 1913, the Board of Estimates wrote Ault Co., as follows: "Dear Sirs — Referring to your request, the Board of Estimates will give you an opportunity to be heard with your attorney and witnesses at its meeting next Tuesday, June 24th, in the Mayor's Reception Room, with regard to the City deducting liquidated damages from your final estimate for work on the Pratt street bridge. If, however, the City Solicitor is unable to attend, the hearing will have to be postponed." Mr. Bartlett stated that after Mr. Ault received this letter of June 17th, 1913, he went to see the Engineer on June 24th, prior to the hour of the meeting of the Board, and showed him the letter, and further testified as follows: "I said, `Mr. Lackey, it is my opinion that the City of Baltimore has no right to consult the Board of Awards or anyone else in place of yourself, and I have come here again to ask you on behalf of Mr. Ault to take up this question of responsibility for delays and decide it.' He said, `Mr. Bartlett, I told you before how I was fixed. My hands are tied, and I can't do it.' I said, `Mr. Lackey, how would you decide that question if you were allowed to decide it?' He said, `Mr. Bartlett, Mr. Ault was responsible for some delays in the construction of that work, but the delays for which the City was alone responsible greatly overbalanced any delays that can be charged to Mr. Ault.' I said, `Mr. Lackey, it looks very much to me as if this case would get into Court, and I would like to know what your position is going to be if the case gets into Court?' He said, `Mr. Bartlett, the City of Baltimore is entitled to all of my time and to the best energy and ability I have got, but it does not own my conscience. That is all I can say to you about my position in this matter.'" In view of this evidence, the defendant's first prayer was properly refused. While it does not contain any evidence of collusion, corruption or fraud on the part of the Harbor Engineer or other City officials, it was sufficient to go to the jury upon the question whether the estimate made by the Harbor Engineer of the number of working days the completion of the work was delayed was in fact his decision. The defendant offered evidence in rebuttal, and the Harbor Engineer explained the conversations referred to above, and stated that after the hearing referred to in the letter of the Board of Estimates he went over the records and papers with Mr. Field, and after giving the plaintiffs the benefit of every delay they could possibly be entitled to he reduced the number of working days for which they were responsible from 496 to 482, and sent the Comptroller a statement to that effect, and that his estimate of the number of days' delay for which the plaintiffs were responsible was hisdecision. But the weight of the evidence, and the inference to be drawn from it, was a matter exclusively for the jury.

Defendant's third prayer was defective because it failed to allow the plaintiffs for any unreasonable delays caused by the Gas Company, Railways Company and Railroad Company. Its fourth and fifth prayers were covered by the Court's instruction, and its sixth prayer, in so far as it was free from objection, was also covered by the Court's instruction. The plaintiffs offered some evidence tending to show that they were unreasonably delayed by the Gas Company and the Railways and Railroad Companies. The instruction granted by the Court was defective in several particulars. The second paragraph in effect instructed the jury that the Harbor Engineer had no authority to pass upon the question of delay caused by the failure of the City "to turn over the possession to the plaintiffs of any portion of the area within which any of the work was to be done," and that they should allow the plaintiffs for the number of working days "they may find from the evidence, if any, the plaintiffs were thereby actually delayed or interfered with." We have already said the Harbor Engineer was authorized by the contract and specifications to decide the extent of the delay, if any, caused by the failure of the City to remove the Scarlett building and other buildings prior to the beginning of the work. We also think that the expression "or interfered with" was misleading. The plaintiffs were only entitled to be allowed for such interference as delayed the completion of the work. The third and fifth paragraphs are open to the objection stated in reference to the second paragraph, and the third paragraph is open to the further objection that it assumes that the Harbor Engineer in making his decision encountered "opposition or interference on the part of other persons." The objection most earnestly urged by the defendant to the Court's instruction is that it nowhere instructed the jury that they should allow the defendant $25.00 per day for the number of working days the plaintiffs were engaged in completing the work in excess of the 150 days allowed by the contract. It is true, that instruction was asked for in the defendant's third prayer, and without it the jury may have supposed that the allowance of liquidated damages was left to their discretion. But the Court is not bound to prepare instructions of its own, and if it does do so, and its instruction is otherwise free from error, it can not be objected to on the ground that it fails to include instructions asked for in prayers that were properly rejected. We see no objection to defendant's second prayer, and as it was not covered by the Court's instructions there was error in the refusal of the Court to grant it. The exception to the granting of the plaintiffs' ninth prayer is not pressed in the brief of counsel for the appellant, but as the case will be remanded we call attention to the fact that the specifications provide that the final payment shall be made forty days after the completion and acceptance of the work by the Engineer.

In the first, second, sixteenth, seventeenth and eighteenth exceptions the witnesses were asked to state conversations they had with the Harbor Engineer. The evidence elicited by these questions was admissible as tending to show the opinion of the Engineer as to the fact, extent and causes of the delays claimed by the plaintiffs, and as reflecting upon the question whether his estimate of the number of working days the plaintiffs were engaged in the work was his decision of the matter.

The evidence referred to in the third, fourth and fifth exceptions was offered by the defendant for the purpose of showing that the plaintiffs' bid amounted to $87,810.08 and that the bid of another bidder amounted to $84,856.95; that the plaintiffs offered to do the work in 150 working days, and the other bidder offered to do it in 270 working days, and that in consideration of the fact that the time stated in the bid of the plaintiffs was much shorter than that mentioned in the other bid the contract was awarded to the plaintiffs. This evidence was admissible for the purpose of showing that the provision in the specifications for the payment of $25.00 per day should be construed as a stipulation for liquidated damages, and not as a penalty. In the case ofUnited Surety Co. v. Summers, supra, this Court quotes with approval the statement in United States v. Bethlehem SteelCo., 205 U.S. 105, that "acceptance of the bid for the shorter time is evidence that the element of time is of essence, and a stipulated deduction of an amount per day equivalent to the difference between the long and short time for delivery is to be construed as liquidated damages, and not as a penalty, though the word penalty may have been used in some portions of the contract." There was also error in the refusal of the Court to strike out the answer of the witness in the sixth exception. It was not responsive to the question, and the evidence was not admissible for the purpose of varying the terms of the written contract.

What Mr. Ault said to Mr. Scarlett was not admissible, and the evidence objected to in the seventh exception should have been excluded, but we see no objection to the statement of Mr. Scarlett to Mr. Ault referred to in the eighth exception, as it tended to show that the work was delayed by the Scarlett buildings. The same may be said of the evidence admitted in the ninth and tenth exceptions. It was admissible for the purpose of showing that the plaintiffs could not use the most effective machinery by reason of the proximity of the Scarlett building. The weight of this evidence was, of course, a matter for the jury. The evidence admitted in the eleventh, twelfth and thirteenth exceptions should have been excluded. The specifications expressly stated that "no piling or other obstructions will be permitted in the bed of Jones' Falls," and evidence that the plaintiffs were delayed because they were not allowed to put "false work" in the bed of the Falls was not admissible. The particular question objected to in the fourteenth exception is not shown to have been answered, but the statement of the witness in answer to a further question, that "they would not let us set up the stiff-leg derrick" appears to be hearsay evidence. The witness should not have been allowed to answer the question objected to in the fifteenth exception. What Mr. Ault said to him was not admissible against the City. The defendant was not injured by the refusal of the Court to allow the witness to answer the question objected to in the nineteenth exception. He had just stated that the Gas Company employed a large force in moving the gas mains, and that "they did not lose a day from the beginning to the end," which was equivalent to saying that the work done by the Gas Company "proceeded promptly and with reasonable diligence." Nor was the defendant prejudiced by the ruling in the twentieth exception. The Court excluded from the consideration of the jury the claims of the plaintiffs for extra work, and what a member of the Harbor Board said to the Harbor Engineer in regard to those claims, even assuming that it was admissible as reflecting upon the Engineer's good faith in rejecting them, which we do not decide, it had no bearing upon the questions relating to delay, which were practically the only ones submitted to the jury.

It follows from what we have said that, because of the errors pointed out in the ruling of the Court on the prayers and the instruction given the jury, and in the third, fourth, fifth, sixth, seventh, eleventh, twelfth, thirteenth and fifteenth exceptions, the judgment must be reversed and case remanded for a new trial.

Judgment reversed, with costs to the appellant, and a newtrial awarded.

Case Details

Case Name: Mayor of Baltimore v. Ault

Court Name: Court of Appeals of Maryland

Date Published: Jun 23, 1915

Citation: 94 A. 1044

Court Abbreviation: Md.