North American Ry. Const. Co. v. R. E. McMath Surveying Co.

116 F. 169 | 7th Cir. | 1902

SEAMAN, District Judge

(after stating the facts as above). On ■this record it is obvious that the case on the part of the plaintiff was presented below upon the theory of its right to recover for work performed under the contract in suit, when the work was beyond the specifications, or classified as “extra,” on proof of such fact and ■of neglect or refusal on the part of the engineer named in the contract for that purpose to estimate and certify such work for allowance, and this view appears to have been adopted by the trial court in the instructions to the jury. As the court held and further instructed the jury that “from the evidence there can be no recovery •except under the contract and the terms” thereof, the judgment rests primarily upon the interpretation so adopted of the contract provisions; and the assignments of error, aside from the first, raise the •question: What effect is to be given the contract provisions which make the engineer of the North American Company the umpire between the parties of matters respecting performance of and allowance under the contract? These various provisions are unmistakable in this: that the engineer was so named “for the purpose of avoiding all cause of difference between the parties to this contract relative to its true intent and meaning,” and “for the purpose of .adjusting in an amicable manner any difference” arising thereunder; that he was to decide every question arising “relative to the execution thereof,” and that “his, decision shall be conclusive and binding upon both parties”; that he was to fix all prices for work not ■covered by contract prices, or, when “performed by the contractor without protest or notice in writing to the engineer before such prices shall have been fixed for such work, then the engineer shall estimate the same at such prices as he shall deem just and reasonable, and his decision shall be final”; and that his estimates and certificates were made conditions precedent to liability on the part of the North American Company for performance or allowance. With an arbiter of disputes so constituted by agreement of the parties and the dispute involved in this suit plainly within such agreement, the general doctrine governing the case is well settled for this jurisdiction, and the citations which are submitted as authority for a different rule are not applicable. In Crane Elevator Co. v. Clark, 53 U. S. App. 263, 26 C. C. A. 100, 80 Fed. 705, this courf passed upon the question in reference to a provision in a building contract, made in Illinois, which is mentioned in. the opinion as one making the architect “the arbiter of disputes between the parties,” and Judge Jenkins, speaking for the court, cites the cases in the supreme court of the United States, and thus summarizes the doctrine thereby established : “That, with respect to the subject-matter submitted to the umpire, his determination is final and conclusive; that it may be impeached only for fraud, collusion, or such gross mistake as would necessarily imply bad faith, or for a failure to exercise an honest judgment.” The authorities in Illinois are also cited as in accord with such rule. In the leading case of Railroad Co. v. March, 114 U. S. 549, 5 Sup. Ct. 1035, 29 L. Ed. 255, and in Railroad Co. v. Price, 138 U. S. 185, 11 Sup. Ct. 290, 34 L. Ed. 917, the engineer of one of the contracting parties was named umpire as in the present case; and for further exemplification see Mundy v. Railroad Co., 31 U. S. App. 606, 14 C. C. A. 583, 67 Fed. 633, and 11 Rose, Notes U. S. Rep. 1099. The doctrine thus stated excludes recovery for the alleged extra work in suit, in the absence of allowance by the engineer, unless the proof further establishes conduct on the part of the engineer amounting to fraud in disapproving the claim or withholding allowance.

Passing the questions raised as to the sufficiency of either declaration, or testimony to support the verdict and judgment, we are of opinion that error is well assigned upon the instructions to the jury, which not only fail to observe the rule thus governing the subject of controversy in either proposition, but are inconsistent with it, both in general theory and in substance. The several instructions-to the jury were substantially as follows: (1) That the issue of fact to be determined was whether the plaintiff was entitled to recover the value of alleged extra work performed under the contract; (2)' that “when the contract does not fix the amount of money to be allowed for any extra work,” if the jury find from the evidence “there was such extra work,” “or the price thereof has not been fixed by any person directed to fix it under the contract, then the plaintiff was entitled to recover” therefor “the fair, cash, reasonable value” of such work; (3) that if the jury find from the evidence “that the defendant’s engineer, mentioned in the contract, failed or refused to give estimates or certificates of work” performed, or refused a final certificate, they were then authorized “to consider that part of the contract waived by the defendant, as it is made for its benefit, and the plaintiff will not be bound thereby”; (4) that if the jury find from the evidence that the engineer, “by reason of his neglect, his mistakes, or his incompetency, caused the plaintiff to do a large amount of extra work,” and “did refuse to allow the plaintiff anything therefor, then the jury will further consider whether such conduct” was “such willful disregard of duty as amounts to a fraud upon the plaintiff,” and, so finding, “the plaintiff should be allowed to recover for whatever extras” were furnished, “according to the reasonable value thereof,” if unpaid, “under the terms of the contract.” ■

The jury were not instructed in reference to the nature and effect of the contract terms whereby the engineer was made the umpire to determine, primarily at least, the issues of fact, whether the work in suit was extra and what was reasonable compensation in such case; and the instructions which were given neither explain the narrow issue which thus remained open to controversy between the parties, nor define §uch issue-in conformity with the doctrine applicable thereto. With that doctrine in. mind the infirmity of the instructions is manifest without further comment, and the fourth assignment of error must be sustained accordingly.

The fifth assignment is based' upon the defendant’s motion in arrest of judgment for insufficiency of the declaration. Upon the authority of Elevator Co. v. Clark, supra, and the Illinois cases cited, it is unnecessary to determine the sufficiency of the allegations in the special count to admit proof tending to absolve the plaintiff from compliance with the condition precedent of the contract, as the proof is there authorized under the common counts; and the common counts of this declaration justify the order overruling the motion in arrest of judgment; although a different view was adopted by the trial court in .the instructions. The errors assigned in various forms for insufficiency of evidence under the contract do not call for decision at this time, as the judgment must be reversed for the erroneous rule adopted, and in the event of a new trial the doctrine to be applied to such case as may be presented is sufficiently indicated in the opinion thereupon. In reference to the first assignment based on the admission of testimony which tends only to show the cost of the work in controversy, and at the utmost that reasonable rates were named for men and teams used therein, no other evidence was offered to show the actual amount of work so performed, or its value, measured by the terms of the contract or otherwise. If admissible for any purpose, it is plain that this testimony was not primary evidence of the measure of liability under the contract, in any view, and the objection accordingly is well founded.

For the reasons stated the judgment is reversed, and the case remanded, with direction to award a new trial.