143 F. 218 | 8th Cir. | 1906
The Westinghouse Electric & Manufacturing Company sued the Roberts, Johnson & Rand Shoe Company to recover the value of certain electrical machinery sold and delivered to the latter. By its answer, which was in two counts, and the evidence in support thereof, the defendant asserted (1) that the machinery had been sold to defendant and installed in its factory pur
During the trial, which was to a jury, the Circuit Court held that the provisions of the contract with reference to submission of differences between the parties to the engineer and what appeared to have been done thereunder were insufficient to constitute a defense to the plaintiff’s action. Thereafter, and at the conclusion of the evidence, the Circuit Court in charging the jury also announced its opinion that, while defendant had doubtless sustained damage by the plaintiff’s delay in installing the machinery, the evidence introduced furnished no reliable data for the ascertainment of the amount thereof. Thereupon the defendant withdrew its counterclaim set up in the second count of its answer. The charge of the court was in effect a direction to find for the plaintiff for the amount of its claim and a verdict of that character was accordingly rendered. The defendant now asks to have the action of the Circuit Court reviewed as to both branches of its defense. It contends that it suffered an involuntary nonsuit as to its counterclaim, and that it is therefore the duty of this court to review the evidence and the ruling of the court thereon. We do not think so. At the conclusion of the charge to the jury, in the course of which the Circuit Court announced that the evidence under the counterclaim was insufficient to show with proper definiteness the amount of damage sustained, the defendant reserved a general exception, but failed to indicate any part thereof which it claimed to be objectionable. With the permission of the court the defendant then withdrew its counterclaim. In other words, it voluntarily dismissed it without prejudice. It did not comply with the practice which obtains in respect of involuntary nonsuits, and no exceptions were preserved so as to impose upon this court the duty to review the evidence to determine whether the view of the Circuit Court was well founded. We therefore turn to a consideration of that branch of the case which relates to the submission of the controversies between the parties to the engineer, and his decision.
The evidence conclusively showed that a draft of a written contract between the parties had been prepared, and, although it was not signed by them, it was thereafter recognized as containing the
“Changes: Should it prove desirable to make any changes in the work, the architect or engineer may direct such changes in writing, and a fair and equitable addition to or deduction from the contract price shall be made, the amount to be determined by the architect or engineer. Such changes shall not extend the date of completion, nor modify the obligations of the contractor in any way.”
The only important change in the contract which we need advert to here was one in respect of an item of machinery. A few days 'after the date of the contract the defendant found that it was advisable to have a generator of lower speed than the one specified, and it was thereupon ordered of the plaintiff by the engineer in-charge. The letter which contained the order, July 29, 1903, recited: “The contract of July l? 'to remain unchanged in all other respects.” There was a conflict in the testimony whether this change was responsible for the delay of between three and four months in the final installation of the machinery and whether there was' an agreement or understanding that the time limitation in the written contract for full compliance, namely, November 1, 1903, was thereby dispensed with. But whether this question was open to investigation under the defense now being considered depends upon the proper construction of the sixth paragraph of the contract and the effect to be attributed to the submission by the parties of the matters in controversy between them to the engineer and the decision which he rendered.
Paragraph 6 of the contract:
“Questions arising. Should any questions arise during the progress of the work, at the acceptance of the plant, or regarding settlement, such questions shall be referred to the architect or engineer for decision; but there is reserved the right of final decision by two disinterested parties; one chosen by each party to this agreement, and in the event of the parties so chosen failing to agree, they are to choose a third, the decision of two of said referees to be binding upon both parties.”
The differences which arose between the parties resulted in the. following correspondence:
March 4, 1904, a letter from the engineer to the plaintiff, the Westinghouse Company:
“I beg to acknowledge receipt of your Mr. Baetz several favors of 11th ult. reference f. o. b., and 1st inst. reference F. P. B., regarding payments on the Roberts, Johnson & Rand Shoe Co. contract of July 17th, 1903. Answering will say, that paragraph 6 of this contract reads as follows:
*221 “ ‘Questions Arising. Should any questions arise during the progress of this work, at the acceptance of the plant, or regarding settlement, such questions shall be referred to the architect or engineer for decision.’
“Some questions regarding settlement have arisen and the Roberts, Johnson & Rand Shoe Co., are preparing the details of certain claims they expect to make on account of expense they have been put to on account of your failure to deliver this apparatus within the time agreed upon. The justice of these claims is now being considered by the architect and myself, and you will be advised further about them in the near future.”
March 17, 1904, a letter from the engineer to the plaintiff:
“In re Your Contract of July 17, 1903, with the Roberts, Johnson & Rand
Shoe Co., of this City, for Electrical Apparatus:
“Answering the request of your Mr. Clegg for further particulars regarding the claim made by the Shoe Co. I have to advise you as follows:
“Paragraph 6 of this contract provides that, ‘Should any questions arise •during the progress of the work, at the acceptance of the plant or in regard to settlement such question shall be referred to the architect or engineer for decision.’ I should like to have your interpretation, as well as that of the Shoe Company, as to what each of you consider my duties are under this clause of the contract An early expression of your views on the subject will be much appreciated. I shall not shirk any responsibility by reason of having been the engineer under this contract, but I should like to have the views of both sides before being called upon to discharge this unpleasant duty.
“In order that you may have a clear understanding of the claims submitted by the Shoe Company I will here enumerate them and ask for your views. * * *
“If I am to be called upon to adjust this matter I should like, as I said in the beginning, have your views in regard to these claims.”
The portion of this letter which is omitted for the sake of brevity is a statement in detail of the various items of damage claimed by the defendant.
March 8, 1904, a letter from the plaintiff to the engineer:
“Your letter of the 17th is received and I will give the claims made by Roberts, Johnson & Rand Shoe Co. very careful consideration. My understanding of the terms of paragraph six of the contract is that we can appeal to you for protection against precisely such unreasonable claims. Our understanding is that the contract selects you as an arbitrator to pass on claims because of your familiarity with the trade customs, and we will within the next few days lay our views before you and feel confident that you will find same so reasonable that they will have your approval.”
April 2, 1904, a letter from the engineer to the plaintiff, in which he says that he will do his “utmost to make a decision in accordance with the facts and the equities of all parties in interest”; that he cannot agree with plaintiff that there was any alteration in the contract date; that the change from high to low speed machine was made only after plaintiff’s promise that there should be no change in date of delivery, and that such matter was fully covered by the written order of the low speed machine on July 29, 1903. He also makes certain criticisms of the amount of defendant’s claim of damage, and invites the plaintiff to furnish him with data covering the period mentioned by the defendant.
It will be. observed from the foregoing that the plaintiff was fully and definitely advised of the character and extent of the defendant’s claims, that its attention was directed to the sixth paragraph of the
On April 26, 1904, the engineer announced his decision. In a letter of that date to the plaintiff and the defendant, he said:
“In reply to your verbal and written requests for some action on my part, under paragraph six, of tbe contract of July 17th, 1903, between you, for certain electrical apparatus, I find as follows:
“The controversy hinges upon the failure of the contractors to have the apparatus ready on the contract date, and the losses which the purchaser claims to have sustained by reason of such failure.
“I have given hearings and have received written data from both parties, and have considered all the points which have been advanced by each of them. .As a result of this investigation I am convinced that the Roberts, Johnson & Rand Shoe Co. has, through the delay of the Westinghouse Electric & Mfg. Co. in completing their contract, suffered loss in excess of the contract price.
“This being my conclusion, I cannot see my way clear to approve payment-of any part of the contract price.”
Though no witness testified that evidence was received and hearings were had, the reasonable inference is that the proceedings were conducted with full regard to the rights of both parties'. Affirmative support of such inference may be found in the recitals in the letters of intention to make presentation of the facts to the engineer, of his desire that it be done, and in the statement in his decision that such course had been _ pursued. Indeed, it is not asserted to have been otherwise. Nor is the decision attacked upon the ground of fraud, or such gross mistake as implies bad faith or a failure to exercise an honest judgment. Guild v. Andrews (C. C. A.) 137 Fed. 370.
The parties in interest having agreed that their contract contemplated a decision by the engineer of the claims of the defendant for damage caused by delay in performance on the part of the plaintiff, and this necessarily included the fact and extent of such delay, and the parties having also acted upon such construction by actually submitting those matters to the engineer and obtaining his decision, we are unable to perceive upon what just ground we may ignore their course of action and determine their rights upon an independent consideration of the letter of their stipulation. And by this observation we should not be understood as indicating an opinion that the-
The plaintiff invokes the doctrine of Hamilton v. Insurance Co., 137 U. S. 370, 11 Sup. Ct. 133, 34 L. Ed. 708, that a provision in a contract for submission to arbitration not making compliance therewith a condition precedent to a right of action is collateral and independent, and that a breach thereof will support a separate action for the damage sustained, but cannot be pleaded in bar to an action on the principal contract. The difficulty in applying that rule to the case before us is that here there was actually a submission and a decision. Had the parties not proceeded under the arbitration clause of their contract, the rule referred to might be applicable, for there was no provision therein suspending the right of action until arbitration or making it dependent in any way upon the result. But, when the plaintiff and the defendant came to the question of settlement under their contract the latter preferred its claims for damage caused by the plaintiff’s delay, they submitted the claims to the engineer, and after a hearing he decided in favor of the defendant. And that decision still remains in force and effect. The plaintiff simply ignores it upon the ground that the proceeding was an idle ceremony.
Two things were contemplated by the sixth paragraph of the contract: First, the decision of certain matters by the engineer; and, second, the reservation of the right to secure the decision of two disinterested persons selected in the manner specified. The decision of the engineer is not made final and binding by the express terms of the contract, while there is a definite provision to that effect in respect of a decision by the others. It is said, therefore, that the absence of such a provision in the former and its presence in the latter clause indicate that it was not contemplated that a decision of the engineer should be effective for any purpose. But this is not a reasonable construction of' the contract. If the first clause of the paragraph stood alone, a decision fairly made by the engineer as to matters within his jurisdiction to determine would be final and binding without an express stipulation to that effect in the contract. This would be so whether a favorable decision of the engineer be regarded as an agreed condition precedent to the right of the plaintiff to sue, or, on the other hand, the clause be construed to be a submission to arbitration. In the first instance the conclusive quality of the action of the engineer, not being attacked upon the ground of fraud or such gross mistake as implies bad faith or a failure to exercise an honest
The judgment of the Circuit' Court is reversed, with directions to grant a new trial.