Case ID: ad_124/html/0184-01.html
Source: Caselaw Access Project
Author: {"author": "Clarke, J. Ingraham, J. (concurring) :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John H. Devlin, Respondent, v. The City of New York, Appellant. (Action No. 1.)
    First Department,
    February 7, 1908.
    Municipal corporations — withholding of engineer’s certificate — refusal-to pay contractor -- breach by municipality —question for jury.
    Where the certificate of the engineer in charge- of-public work is a condition precedent to payment of installments to the contractor as the work progresses, the city is not guilty of a breach of the contract on failure to pay an installment claimed, in the absence of such certificate, unless it appears that the withholding of the certificate was. either fraudulent, arbitrary or unreasonable.
    In an action for breach of contract the burden of proving.the breach is upon the , party asserting, it.
    Evidence examined and held, that it was error to direct a verdict for the plaintiff; ■ that it was a question for the jury as to whether the withholding of- the certificate was fraudulent, arbitrary dr unreasonable..
    
      Held, further, that it was for the jury to determine whether the' contractor had furnished the amount of labor and material necessary to entitle him to the engineer’s certificate, and the amount of damages to which he was-entitled, if any.
    
      Appeal by the defendant, The City of New York, from á judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of tile county of New York on the 13th day of April, 1906, upon the verdict of a jury for'$22,450.10, rendered by direction of the court after a trial at "the New York Trial Term.
    
      Terence Farley [Theodore Connoly with him on the brief] of counsel [Francis K Pendleton, Corporation Counsel],. for the appellant.
    
      L. Lafiin Kellogg. [Alfred C. Pette with' him on the brief] of counsel [Kellogg ds Pose, attorneys], for the respondent.
   Clarke, J.

This is an appeal by the defendant from & judgment entered upon a verdict directed by the court in favor of the plaintiff for the sum of $22,350 damages and costs. The action was brought to recover the sum of $25,000 as damages for the breach by the defendant of a contract made and entered into by it with the plaintiff for the improvement of Crotona parkway from One Hundred and Seventy-fifth street to One Hundred and Eighty-second street, in the borough of the Bronx, New York city. The contract was made on October 11, 1902. In accordance with the terms thereof the plaintiff was notified to commence work thereunder on November 3, 1902. Under the contract tile work was to be completed within 2Q0 working days aftey the date-fixed for its commencement.

. The contract contained the following provisions: “(G) To prevent all disputes and litigation the engineer shall in all cases determine the amount or the quantity of the several kinds of work which are to be paid for under this contract, and he shall determine all questions in relation to said work and the construction thereof, and he shall in all. cases decide every question which may arise relative to the execution of this contract on the part of the contractor, and his estimate and decision shall be final and conclusive; and such estimate and decision, in case any question shall arise, shall be a condition precedent to the right of the contractor to receive any money under this contract.” “(L).The engineer’s certificate that the work has been faithfully performed so far forth in accordance with the requirements of this contract, filed with the Park -Department, shall.he a condition precedent to the right of the contractor to the payment for the work or any part thereof done by him under this agreement.” “(D) The contractor .shall-not be entitled to demand or receive payment for any portion of the aforesaid work until the same.shall be'fully completed in the manner set forth in this agreement, and sucli completion..shall be duly certified in writing. by the engineer in charge of the work .as herein provided. * *■ * But in order to facilitate the performance of the work the engineer shall from time to time as.the work progresses, and not oftener than once a month, make in writing"an estimate such as in his opinion shall be just and fair, of the amount of the material furnished and delivered and work done by-the contractor, in the performance of ti lis contract on his part, and of the value thereof under and accord- . ing to the terms of this contract. The first sucli estimate shall be of the amount of-work done, and materials furnished and delivered since the con tractor commenced'the performance-of this contract on his part, and every subsequent estimate,>excep't the final one, shall be of the amount- of work done and materials furnished and delivered since the contractor commenced' the performance of this, contract. -Such estimate of' amount and quantity .shall not be ■ required to he made by strict measurement, but they maybe made by measurement or by estimation-, or partly by one and partly by the.other,■ and it shall be sufficient if they aré approximate only, and estimates strictly so-called. And upon each such estimate being made and certified in writing to the Commissioners' of the Department of Parks, the party of the first part will ,pay to the contractor eigl-ity-iive per centum .(85$) of the amount stated in such estimate or certificate to be tlie value of the materials therein certified to have been furnished and delivered, and work therein certified to have been done; provided, the value of the work certified in each such estimate shall amount to seven thousand dollars or more.. Provided, however, that no payment shall be made until a certificate, of the engineer that the payment -is due has been presented to . the commissioner, and that from each payment 15 per cent, shall be withheld until.'the final certificate shall be issued.-- * * *” “(V) The action of the-engineer, by which .the contractor is to be bound and concluded according to the terms- of this contract, shall be that evidenced by his final certificate; all prior certificates or estimates upon which eighty-five per cent payments may be made being merely estimates and subject to the corrections of such final certificate, which may be made without notice to the contractor thereof, or of the measurements upon which the same is based.” “ (AA) The City, its successors and assigns shall not, nor shall any department or officer of the City of New York be precluded or estopped by any return or certificate made or given by any engineer, surveyor, inspector or other officer, agent or appointee of the' commissioner, or party of the first part, under and in pursuance of anything in this agreement contained, from at any time showing the true and correct amount and character of the' work which shall have been done and materials which si i all have been furnished by the contractor, or any person or persons under this agreement.”

The complaint alleged that after the commencement of said work and on or about April 24, 1903, the engineer in charge of the work made a certificate or estimate as called for by the contract of the amount of work done thereunder amounting to $8,495, upon which the plaintiff received payment to the amount of $7,220.75. That after the making of said certificate or estimate and for a period of four months, said plaintiff proceeded with said work and furnished materials and labor to a large amount, and largely in excess in amount and value of seven thousand dollars, the sum which would entitle him, under the terms of the contract, to a certificate or estimate and the payment of another installment thereunder. That thereafter the said John IT. Devlin' repeatedly demanded of the city engineer in charge of said work and his representative that he should make a certificate or estimate of the amount of materials furnished and work done to which he Avas entitled to payment under the terms of said contract, in order to procure another monthly installment or payment. That notwithstanding the said demand for the certificate, the city engineer in charge of said work has refused to,make or deliver any certificate or estimate.” It further alleges that by reason of said breach the plaintiff suffered loss and damage in the sum of $25,000, the value of the Avork done, materials furnished at the time of said breach, increased cost and additional work .in connection with the performance of said contract.

The plaintiff ceased working and AvithdreAy his men on or about the 20th- day of August,. 1908, and thereafter commenced this action. He concedes that in order to recover he must prove a breach of contract by the city; that isy that he, had performed work under the contract after the date of the first eighty-five percent cer- • tificate, April 24, 1903, amounting to $7,000 at the time when he left the job, for which the. city refused payment.. It will be noted that the determination of the fact of whether or not he had performed sufficient work to entitle him to a payment was left by the contract to the engineer, w'hose certificate of that fact was made thereby a condition precedent to his receiving his payment. “ To prevent all disputes and litigation, the engineer shall in all cases determine the amount or the quantity of the several kinds of work which are to be paid for under this contract.” “But in order to facilitate the performance of the work the engineer shall from time to time as the work progresses * * * make in writing'an estimate, such as in his opinion shall he just and fair, of the amount of the material furnished and delivered and work done by the contractor in the performance of this contract on his part, arid of the value thereof under and according to the terms of this contract. * * *■ Such estimate of amount and quantity shall not be required to be made by strict measurement, but they may he made, by measurement or by estimation, or partly by one and partly by the other, and it. shall he sufficient if they are approximate only and. estimates strictly so-called. * * * Provided, however, that no payment shall be made until a certificate of the engineer that the payment is due has heen presented to the commissioner, and that from each payment 15 per cent shall be withheld until the final certificate shall be issued.”

These progress certificates differ in character from the final certificate made at the completion of the whole work upon which- the final payment is to be made. This final certificate i-s 'conclusive upon the contractor, but it is expressly provided that.all prior cer- ^ tificates or estimates upon which eightyffive per cent payments may he made are merely estimates and subject to the corrections of such final certificate. The progress certificate.is an estimate such as in the opinion of the engineer shall be just and fair, is not required to be made by strict measurement, but may he made by measurement or by estiniation, and is sufficient if approximate only ; but n'ever- " theless the opinion of the engineer that the contractor has done sufficient work to entitle him to a payment, as evidenced' by his certificate, is made a condition precedent to liis receiving such payment. The complaint does not allege that the engineer fraudulently, arbitrarily or unreasonably refused to give a certificate when the contractor was entitled to it. Had the contractor succeeded' in establishing that fact he might recover, even in the case of a final certificate made conclusive by the contract, but in such case it would be necessary both to allege and prove that fact. An issue of fact would then be raised to be submitted to and decided by the jury.

In this complaint the plaintiff has confined himself to an allegation that he had furnished materials and labor in excess of the amount in value of $7,000 ; that he had demanded a certificate and that notwithstanding the said demand the engineer had refused to make or deliver the certificate. It seems to me that' when, by the terms of the contract, the making of this certificate is confided to the discretion of the engineer, when his opinion is the test of what shall be just and fair, based upon the approximate estimate which he shall have made of the amount of work done, it was essential that the .jury should have been allowed to pass upon the question whethér his refusal was fraudulent, arbitrary or unreasonable, even assuming that the language of the complaint was enough to raise it, and this seems to have been the impression of the learned trial court at one time upon the trial, for when, at the close of the plaintiff’s case, the defendant moved for a dismissal upon the ground that the plaintiff had not established that the engineer had arbitrarily withheld a ' certificate, the court said: I think I will let the jury determine, that.” He did not do so, however, but at the close of the case directed a verdict. The testimony tends to establish that the reason the certificate was not given was that in the opinion . of the engineer sufficient' work had not been done to entitle the contractor to it.. Instead of going on and doing enough additional work to satisfy the engineer he abandoned the work. Standing upon a legal right, asserting affirmatively a breach by the city, the plaintiff held the burden of establishing the fact. When a contract provides a condition precedent to the payment of money, that condition precedent must be complied with or disposed of. Not having been complied with, whether it-was disposed of under the language of this contract and the circumstances of this case, was a question of -fact and not a question of law. It cannot be, where the amount of work done is only to be estimated, and where the amount of work done, as in this case, is not testified to by direct evidence, but has been attempted to be arrived at by a complicated course of inference and calculation, that a difference in a small amount between tbe approximation of the engineer and the' results of subsequent calculation by others is enough to make the engineer’s refusal in the exercise of his judgment fraudulent, arbitrary or unreasonable. ' This is clearly so as matter of law. This question, then, having been for the jury, it was error to direct a verdict.

Again, it is conceded that the burden was upon the plaintiff of showing, as matter of fact,- that he had done $7,000 worth of work' under the contract after the giving of the first progress certificate. He did not. do this by-direct evidence of the amount of work done. Taking the cross sections made by the city in the first instance from the- surface of the ground in place showing the work to. be done for the purpose of enabling proposed bidders to submit their estimate and.bids, the plaintiff attempted to, show the whole amount of work which he claimed to have done at the time that he abandoned the work, and, at the contract prices, calculated the amount he claimed to have earned for all the work done by him. From this he subtracted the amount of the -first progress certificate, and claimed that the result was the amount he had earned. The amount thus arrived at was more than the $7,000 provided in,the contract to entitle him to a second payment.' But' the first certificate was only an approximate estimate, expressly so provided, and there was' evidence given by the city which, if believed, would haver reduced the amount earned for the work done -thereafter considerably below the $7,000 required.

We reach this result from a most careful study of this voluminous ■ record. It is not necessary to set forth"the details.of the evidence, for we are clearly of opinion that' a question of fact was presented as to the amount done which should have been submitted to the jury.

Assuming that he had shown that .he bad performed sufficient' work to entitle him to a second payment, and that the refusal of the city to pay was a breach of the contract upon .its part which entitled.him to abandon the 'work arid to damages, the plaintiff undertook to show those datnages, not by showing what he would have earned under the contract if he had completed the same, but by attempting to establish the value of the work done and materials x furnished by him, not at the prices therefor stated in the contract, but at the fair market value thereof. Here again a question of fact was presented, because there was some conflict in the evidence as to certain of the work. For instance, the contract provided for . blue stone curbing of certain required, dimensions set in place at a dollar a foot. Certain of his witnesses testified to the value of said blue stone curbing, simply delivered upon the street and not set, at from one dollar and twenty-five cents to one dollar and forty cents a foot. The learned court, in making up the amount which he directed the jury to return; placed this item at one dollar and forty cents a foot. The jury should have determined the damages. . For this reason also the direction of a verdict was error.

The judgment appealed from, therefore, should be reversed and a new trial ordered, with costs to. the appellant to abide the event.

Patterson, P. J., Ingraham, Houghton and Scott, JJ., concurred.

Ingraham, J. (concurring) :

I concur with Mr. Justice Clarke that if there was any evidence that the failure of the city’s engineer to give .a certificate was either fraudulent, arbitrary or unreasonable, there would be a question for the jury; but I am in favor of reversing the judgment upon the ground that there was no evidence to sustain, a finding that the refusal of the engineer to give to the plaintiff the certificate which would entitle him to an ad interim payment was either fraudulent, arbitrary or unreasonable. As these certificates are not to be made by strict measurement, but may be made by the engineer by “ measurement or by estimation, or partly by one and partly by the other, and it shall be' sufficient if they are approximate only, and estimates strictly so-called,” it is necessarily the judgment pf the engineer as to the amount of work completed that the parties agree shall determine his action. While it- may be easy to imagine a case where the amount of work has been so great that no engineer could in good faith refuse to make an estimate and give a certificate that at least $7,000 worth of work under the contract-had been performed so as to justify a finding that the refusal to give a- certificate was arbitrary and unreasonable, there is nothing in this evidence to justify a finding that the amount of work performed by the plaintiff was so clearly in excess of $7,000 that the éngineer could not in good faith determine that it did not equal that amount. The fact that subsequently -exact measmuments disclosed that mere .than , $7,000 worth of work had been performed was not sufficient .of itself to sustain a finding that such an amount had actually been performed that it w.as arbitrary or unreasonable to refuse a certificate. No amount was due.under the .contract until such a certificate had been given. ■ There was, therefore, no breach, of the contract because of a refusal to pay any sum of money due to'tlié' plaintiff under it. The only breach of. the contract that would justify the plaintiff in abandoning the work was proof that, the engineer had fraudulently,- arbitrarily or unreasonably refused to give & certificate which the contract required that he should give; and where bv the express terms of the contract the question as to whether or not the certificate should be -given was necessarily left to the judgment and discretion off the engineer, more is required than- to show that the amount of work done would have justified a certificáté. , Facts must appear to justify a finding that the determination of the engineer was not an honest exercise of his judgment, hut was arbitrary, fraudulent or unreasonable. "Upon this evidence^ therefore, I think the plaintiff proved no cause of action, and the complaint should have been dismissed,

Judgment reversed, new trial ordered, costs to appellant to abide . event. .