Seymour v. Long Dock Co.

| New York Court of Chancery | Oct 15, 1869

The Master.

The Long Dock Company is a company incorporated by act ■ of February 26th, 1856, (Pamph. Laws, p. 67,) for the purpose of constructing a tunnel through Bergen hill, and ,certain accessories, intended for-the use of the New York and Erie Eailroad Company. The Long Dock Company-made a contract, dated May '28t-h, 1856, with one James H. Mallery, for the excavation of this, tunnel. The contract is set out in full in the complainant’s bill. Mallery had performed but a small part of the work undertaken when he abandoned it, in October, 1857.

John P. Cumming, February 14tli, 1859, entered into a contract with the company to complete the tunnel, as also to perform some additional work undertaken by him; the complainant, A. B. Seymour, being a partner with Cumming, with the knowledge of the officers of the company, though, for some reasons unexplained, the contract was in the name of Cumming only. Under the contract, Cumming agreed to finish and complete all the rock work remaining to be done at its date, and to complete the tunnel and its approaches, according to the location, form, dimensions, conditions, and. requirements of said work, in the terms specified in the contract of James II. Mallery, and more particularly according to certain clauses in the specifications of that contract, and also according to certain clauses of the “conditions” of the same contract, specifically referred to, and thereby thus made a part of this second contract. The Mallery contract in these particulars, and as to these several “specifications” and “ conditions,” so far as not conflicting with the provisions of the Gamming contract, was made a part thereof. It is not necessary now further to recite this second contract, which is also set forth in full in the complainant’s bill. Cumming, June 2d, 1859, with the assent of the company, assigned his contract to Seymour, who thus became in name and in fact the contractor.

With much additional matter prescribed in the specifications and .conditions set forth in the Cumming contract, by it the contractor, in substance, undertook to complete what Mallery had begun.

The company, by the Cumming contract, had engaged to furnish cars to receive the materials excavated by the contractor, and to transport those materials to the places of deposit with such promptness as not to delay the work; to free the tunnel from water; to repair the shafts; and to repair the track, &c., in order to enable the contractor to proceed in his work with the diligence and - promptness- required by his own interests as also those of the company. It is not necessary to refer to 'these stipulations on the part of the company with more particularity for the present purpose. They will be found in the contract itself already referred to.

As the work progressed, claims for additional compensa.tion on the part of the contractor were made, as well because of the allegéd inadequacy of .the contract prices, as also for damages sustained by him in consequence of the company failing to furnish cars when required, failing to ■promptly free the tunnel and shafts from water, and other alleged delinquencies. The company, on the recommendation of its engineer, about the 10th day of September, 1859, agreed to add a considerable sum to the contract price, provided for in the Cumming contract. It agreed about that day to add the sum of $27,500 to the schedule prices, in consideration of Seymour, by an instrument under seal bearing date on that day, agreeing to release and discharge the company from all right or claim to damage by reason of any violation, neglect, or non-performance of any stipulation or undertaking in said (Gumming) contract.

This agreement, I do-not deem to be any settlement of the long and voluminous accounts, which then existed between the company and its contractor. It seems to have been only an allowance of an extra amount of $27,500 on the contract as recomménded by Mr. Kirkwood, but in consideration of which-Mr. Seymour released all claim to the damages alleged to have been sustained by reason of any default on the part of the company. Eelinquishing such claims, he consented, from that time, to rely for his remuneration on the contract prices thus increased, to be paid to him by the company for his work.

I stop at this point of the case to say that I see no reason sustained by the evidence upon which this release, as it has been called, can be set aside for fraud. The company, on the recommendation of its engineer, made this large addition to the contract price, but it did so on the express condition incorporated into the written instrument executed by Mr. Seymour, that the contractor should set up no claim for damages by reason of any violation, neglect, or non-performance of any stipulation or undertaking in said contract, on the part of the company, to date, &e. By the same instrument, Mr. Seymour also further proceeds to sell and transfer to the Long Dock Company all the machinery, sheds, workshops, fixtures, and tools on the premises, or used for the work, not absolutely, but it would seem by way of security, as the same were to be re-transferred on the fulfillment of the contract. I see no ground, as the case is presented to me, on which this instrument is to be invalidated. The contractor knew the condition of the work, and, it must be presumed, knew the effect of the instrument he then executed. He relinquished no part of the remuneration which had been stipulated to be given him. For the large sum of $27,500 thus paid, he simply relinquished his claim for damages alleged to have been sustained by the default of the company in the matters referred to. But, on the other hand, the agreement settled no questions as to the amount of the work, leaving them to be settled by a subsequent account between the parties. It simply estopped him from setting up any claim for these damages prior to the date of this release.

The work was then proceeded with by the contractor down to March 22d, 1860, when a new arrangement was made between him and the company. This now arrangement was, by an agreement of that date, set forth at length in the com-' plainant’s bill.

In this agreement, after reciting that Seymour held the Gumming contract, that Seymour had requested an advance of $12,000 to pay wages, and that the company had agreed to advance that sum upon Seymour surrendering said contract, and releasing the company from all liabilities on account of the same, Mr. Seymour does, in terms, surrender this contract, and relinquish to the company all his rights under it, and all contracts supplementary, &c., and agrees to enter into the-employ of the Long Dock Company, as superintendent .and manager of the work necessary for the completing of the tunnel,'&c.; and the company agrees to employ him as superintendent and manager, and to pay him for his services a sum tó be' ascertained, in substance, as follows: the cost of finishing the work, according to the prices fixed in the Cumming contract, and such additions thereto as had been made by contracts and agreements since entered into by the company with Cumming and Seymour, or either of .them; and the prices of such work as were not covered by these contracts, to be ascertained and settled according to an unexecuted agreement thereto annexed, with other special stipulations not necessary to be now recited, but which are stated in the agreement; “it being the object of this agreement ” (as therein further stated) “ to give to said Seymour, as wages, such profits at the termination of the work as he would have made if the contract had continued.”

Under this arrangement, the work was then carried on'by Seymour until January 26th, 1861, when he relinquished it nearly completed, in submission to the action of the company, and the company took the entire charge. Seymour gave the work up on the demand of the company, and a controversy then ensued in relation to his compensation, which has resulted in this suit.

The bill of complaint filed by Seymour, upon allegations therein contained, prays that the releases set out in the bill may be declared fraudulent and void; that the Long Dock Company may be declared trustees for the complainant- of the- matters stated in the bill; that an account may be taken, &c.; and concludes with the prayer for general relief.

On the construction of this agreement, and on the force and effect of the “ unexecuted agreement” appended to it by way of schedule, as upon other questions arising in this cause, great and serious differences of opinion existing between the counsel have been presented to me, and to which, in turn, I have given my attention; and first as to the question of jurisdiction.

A preliminary objection has been taken by the counsel of the defendant, and pressed with much zeal and a large citation of authority, but to which I cannot yield my assent. It is urged that this is not a case for account, and that, if the complainant has any claim for further compensation, he has an action at law, to which he ought to be referred.

The equitable jurisdiction of this court in matters of account is said to be concurrent with that of courts of law, and no precise rule can be laid down as to the cases in which it will be exercised. It is often adopted, because, in many cases, a court of equity has better means of ascertaining the rights of the parties. The court reserves to itself a large discretion upon the subject, and often assumes or rejects the cognizance of such cases, as the circumstances of the particular case may render expedient. 1 Story's Eq. Jur., § 451; N. E. Railway Co. v. Martin, 2 Phill. C. R. 758.

The whole machinery of courts of equity is better adapted for the purposes of an account than that of the courts of common law; and in many cases, as has been said, when accounts are complicated, it would be impossible for courts of law to do entire justice between the parties. Courts of equity, in cases of complex accounts, take cognizance sometimes from the very necessity of the case, and from the incompetency of a court of law, at nisi prius, to examine it with the necessary accuracy. In this case, on this ground alone, I think jurisdiction of this cause must be maintained, even supposing the objection had been duly raised.

But while the court in its discretion, at the hearing may dismiss a bill for want of such jurisdiction as is necessary, according to the rules usually adopted; yet, if the defendant submits to the jurisdiction, and does not raise the objection by demurrer or in his answer, he cannot insist upon it as a matter of right, unless the court is wholly incompetent to grant the relief sought by the bill. Grandin v. Le Roy, 2 Paige 509; Hawley v. Cramer, 4 Cow. 727; Gifford v. Thorn, 3 Halst. C. R. 97; Truscott v. King, 2 Seld. 147.

Thus disposing of the question of j urisdiction, and deciding that the complainant is entitled to an account, the great burden of the case is to decide upon what principles that account is to be made, and to what compensation under the successive contracts in this case, the complainant is entitled. I have already in a cursory way, and for a limited purpose, adverted to the new arrangement entered into between Seymour and the company, on 22d of March, 1860. Much discussion has occurred and much difference in their views has been presented by the counsel in the cause, and yet practically no difference in the result follows as to this contract. Embarrassed in his means, unable to obtain the moneys on his own credit necessary to go on with this great work, the contractor, Seymour^ agreed to place the whole contract, the machinery and equipments, in the hands of the company, and to go on to the completion of the work, under the name of superintendent and manager, devoting his time and energy to the work; tobe compensated substantially as provided for in-the preceding agreements; any work not provided for in the preceding contracts, to be ascertained and settled according to an unexecuted agreement thereto annexed; provi-' sion being also made for his receiving, on the completion of the work, the value of the machinery and tools transferred to the company, but belonging in fact to him.

I may here refer to the questions raised in regard to the character and effect of what is called the “ unexecuted agreement,” an instrument appended by way of schedule to' the contract of March 22d, 1860. Undoubtedly its weight or. influence in this cause, whatever that maybe, depends upon the character given to it by that contract. However or whenever drawn, it was never executed as a distinct contract between the parties. In the Mallery contract, and also in the. Gumming contract, there are vague and not very clear articles relating to extra work not provided for in those instruments. Thus, in the fifteenth specification of the Mallery- contract, the price of such work is referred to some future arrangement to be agreed upon before such work should be commenced." In the Gumming contract stipulalions of like character are to be found, leaving the company,' if no agreement could be made, to do such work in such* manner as the company might see fit. Such stipulations/ exceedingly loose and unsatisfactory, probably were intended’ to be superseded by a more definite arrangement embodied-' in this “ unexecuted agreement,” adopted by and appended* .as a schedule to the last contract, of March 22d, 1860. In; ■this connection it seems to prescribe that if extra work not-' ■expressly provided for as to prices by those two contracts or. any additional contract, should be done in accordance with' the specifications and under the directions of the engineer; the price “shall be ascertained and settled according to an x unexecuted agreement' herewith annexed, purporting to he,” &c. ;

While this schedule regulates the price of extra work not otherwise previously provided for. perhaps it goes somewhat; further, and stipulates what shall be the work which the engineer may direct and for which he may furnish specifications, and which the contractor should then perform for the1 -prices mentioned. >

The object, as I suppose, at any rate the effect of this new* arrangement of March 22d, 1860, with its new provision# and its additional schedule of prices, while it relieved Mr! Seymour from the responsibility of himself providing th# funds to go on with the work, in some respects was not td change his relations with the company. Although he had transferred the legal ownership (so to speak) of the contracts and his tools and machinery to the company, he still had afi interest in them. From the very nature of the transaction il would seem that they were so transferred rather as a security* to them for their advances and for his due performance of his undertakings, than as an absolute sale. Although he was to proceed as their superintendent and manager, expending their money and not his own, and relieved from many of thé risks of the undertaking, he was to proceed under the samé direction as before and to be paid and accounted with as provided for in the previous contracts for the work previously do.ney and-, to be compensated for future work substantially as before; he was to be charged' with all advances paid on account of the work, credited with the contract prices and entitled to all the profits accruing from the work, according to those terms. The leading feature in the change made by this last agreement, was that by which the company agreed to advance all the moneys necessary to complete the work under the contract, and his pay at its termination to be the profits ascertained in the mode therein prescribed, called his wages. His interest as contractor, though under another name, was to continue to the termination of the work. It is obvious then, that an account must necessarily be taken, upon principles consistent with these views, to settle, whether any profits have resulted to the complainant under these contracts, and whether anything is still due to him from the defendant..

. Mr. Seymour’s immediate interest commenced under the Cumming contract of February 14th, 1859, by which the contractor, upon certain terms, undertook' to complete the tunnel commenced and abandoned by Mallery. The Mallery contract controls the subsequent contract only as expressly incorporated in it by reference. Certain specifications and conditions of the Mallery contract.are in terms distinctly and specifically referred to in, and made a part of the Cumming contract. The work by those specifications and conditions, among other things, “ was to be so executed as to conform to the lines, levels, and sections.furnished by the engineer,” &e.; and further, the “work shall be executed under the.direction and constant supervision of the engineer of the Company, by whose measurements and calculations the quantities and amounts of the several kinds of work performed under, .the contract shall be determined,” &c.

The Cumming contract further, with some difference of phraseology, requires, in like manner, the work to be done un.d.er the supervision, direction, and control of the engineer. The. engineer spoken of, is expressly stated to be the engineer Of .the company; and while nothing, according to an express stipulation of the contract, could be done contrary to, the stipulations of the contract without the written consent of the company, yet also, by its terms, the contractor was entitled to rely on the actual “instructions and corrections of the-engineer,” within the scope of his authority.

Thus, it may be suggested, the working plans and directions of the engineer of the company, as to the size and direction of the tunnel, including his measurements and calculations, were matters upon which the contractor and his foreman were entitled to rely. If they were not correct, and extra or unnecessary work and expenditure should result, it does seem to me that the’ loss ought not to fall upon the contractor, but upon the company, whose special agent the engineer was. I do not yield to the suggestion that the engineer was the agent in this sense of the contractor as well as of the company; on the contrary, he was the special agent of the company, whose directions, to a certain extent, the contractor was bound to obey, and following those directions in good faith, he ought to be held harmless.

The extent of the control and authority of the engineer, under these contracts, has been the subject of considerable discussion ; and particularly as affected by the clause in the Cumming contract commencing with the phrase, “ If in any event, or from any oversight or other cause the party of the first part shall excavate any greater quantity or quantities than by this agreement he has undertaken, without the written consent-,” &c. It has been urged on the part' of the company that whatever might be the directions of the engineer, the contractor could claim no compensation for work outside of the contract, and not prescribed' by the contract itself. If this is meant to be carried so far as that the contractor could claim no compensation when led astray by the erroneous calculations aud measurements of the engineer, I cannot concur in this view. An overstrained and harsh construction is not, unnecessarily, to be given to this clause. If susceptible of a meaning consistent' tvith the rules, I will not say-of law merely, but of justice, such meaning will be given to it.

Consider the position of-the contractor. .■ -He-is bound to-V.pbey-the working-directions, of the engineer, whose, science ..and- skill- are- supposed to furnish sáfe guides to the con- •\ tractor and his workmen. In the: performance of the work, could the contractor or his foreman safely question the cor: .rectness- of .-his measurements and practical directions ? The ¡clause may be construed to mean, that in any case, if the ..Contractor, by oversight, (neglecting the directions of the ,-engineer, or without. them,) or other like cause, makes a. greater excavation than is called for by the contract, he shall bear the loss. I cannot think it can be properly called an (Oversight, or deemed to be any other cause standing in the-„like category, if the contractor is led astray by the errone- . ous working directions of the engineer.

: Neither do I think the contractor’s condition in this re•s-pect was changed by his agreement with the company of ^March 22d, 1860, when he surrendered his contracts, the ..character of which act I have already referred to. Nothing in, that contract, properly considered, changes the situation of the contractor as respects the engineer. Although now .called superintendent and manager, he holds the same relative position to the engineer. ’ It is not -necessary to add a •word on this point, if I am right in the general view I have--already taken of this contract.

; - Neither do I think, as suggested, that it was the duty of -the engineer to give mere general directions only. His duty.was to furnish -accurate, exact, and complete working, directions and instructions, according to the mode usual in-such works, by which workmen are enabled to operate with* certainty in their labor;'• As'these'directions, and the working-marks to be placed by the engineer to guide the labor, •required almost daily attention, which a chief engineer could .n.ot be expected to perform, duly qualified assistant engineers ;ar.e necessarily employed. Qui.faeit per alium facitper se, ,UJhe .directions of his-assistants-,-continued through months jand, years,,must be considered the directions of .th,e chief engineer himself. I do not here allude to that higher class-of duties, perhaps properly called judicial, which by these contracts are placed on the engineer, who is authorized to decide on the due performance of the work by the contractor, and the like; but the duties more properly to be called ministerial, in the giving of practical working directions. To make measurements, and to give such practical working directions I take to be duties of a very different character, and it is to these that I here refer, and in regard to which, as I take it, the act of the assistant engineer, acting as the agent of the company, stands on the same footing as if it had been performed by the chief engineer himself.

The views thus expressed bring me to the examination of some of the particular claims set up by the complainant. As already indicated, I exclude all claim for damages set up by the complainant prior to the release of September 10th, 1859. I hold them to be expressly released by the agreement of that date; indeed, I may go farther, and say that I do not see how any claim for damages as such can be set up prior to the subsequent agreement of March 22d, 1860. The complainant is entitled to be paid for his work done, both under the contracts, where the prices are expressly stipulated, and also for all extra work legitimately done, as a matter of necessity or under the directions of the engineer. What is extra work ? I need not here attempt at large to particularize, as it will be the subject of examination before the master upon a reference, and where it must be shown, either from the testimony already produced, or by additional- evidence to be taken. As to matters that may be deemed necessary, and which will authorize the contractor on the account to receive compensation, whether under the stipulations of the contracts, or such as it may be reasonably worth upon the general principles of law, as the case may be, I may refer, as an illustration, to an instance given by one of the counsel in the case, that of the fall of rock from the roof of the tunnel, or the taking down of dangerous rock outside the lines of the tunnel; in either case work necessary to the .prosecution, of the undertaking of the company. So as. topther matters/perhaps, to, which the same rule may apply.

The contract price under..the Cumming contract seems to. have been $200,000 in Long Dock bonds, with the stipulation subsequently made in respect to. this payment in bonds, that. $90 paid, in cash should be credited as $100 in bonds;the- Mallery mortgage and note, to which was added the additional, sum of $27,500 allowed under the agreement of: September 10th, 1859; and the price of certain work specifically agreed upon under certain supplementary contracts.

Compensation for labor bestowed upon the tunnel in the-extra width to which it was excavated, either under theijecessity of the case, as in the instance of loose rock, -or under the express directions of the engineer, forms one of’ the leading items of the complainant’s claims. I think it. clear, upon the construction I have given to the clause in the: Cumming contract so much discussed, that no excavation outside of the lines of the tunnel, originating in the carelessness or oversight of the contractor or his workmen, can be taken into consideration; only such as was necessary in the meaning already explained, or was done in good faith, in obedience to working directions of the engineer. Neither do I think that any erroneous excavations made by Mallery, in his headings out of the true line, can be estimated for the benefit of the contractor. He took his contract with the knowledge- of, or he had the opportunity of knowing, what had been done by Mallery; and with this knowledge, he-undertook to complete the tunnel.

The claim- for moneys alleged to have been paid to Lavy to which he was not entitled in-consequence of the over-estimates made by the engineer, I think cannot be allowed. Ono examining the testimony of the complainant himself, I am not satisfied that the alleged error did not arise from his own. negligence. He should have called the attention of the-engineer to the work done by himself and by Lavy, in the immediate neighborhood, and pointed out to him what had been done by Lavy and what by himself, respectively.

I do not see any ground on which the claims of the complainant for damages for an alleged libel by Mr. Berdell, or for the profits of a store particularly specified in the bill of complaint, can be sustained. Rejecting these claims, it must be referred to a master to take an account of, and ascertain what still remains due, if anything, to the complainant on the case made by the bill for the work done under the successive contracts of the company, and for extra work, upon the principles settled in the opinion, charging contract prices for all work done under the contracts, and ascertaining the valuó of the extra work, according to the schedule in the “unexecuted agreement;” or, if not provided for, then allowing so much as the work would be reasonably worth, and charging the contractor with all the sums paid to him, the profit, if any, belonging to the contractor, as well subsequent as prior to the 20th day of September, 1859, and down to the period when, at the requirement of the company, he gave up the work to them.

It is to be added to the foregoing directions, that the machinery, tools, &c., conveyed to the company by the contracts of September 20th, 1859, and March 22d, 1860, having been so conveyed, not by way of transferring the interest of the contractor, but by way of security merely, he is to be credited with their entire value, to be ascertained by the result of a sale or sales, as provided for in the contracts; if not so ascertained, then by their value, to be ascertained by the master.