#### Asphalt Paving & Contracting Company, Plaintiff, *v.*The City of New York, Defendant.

(Supreme Court, New York Trial Term,

November, 1910.)

Building and construction contracts: Performance in general — Sufficiency of performance — Following defective plans and specifications: Time and conditions of payment — Right to withhold payments to cover repairs—Sufficiency of notice to repair.

Where a paving company contracts with a city to lay a pavement consisting of an asphalt surface over a stone block pavement and to keep it in repair for fifteen years, and by the terms of the contract the city retains thirty per cent, of the contract price to be paid to the contractor at the rate of three per cent, per year provided the contractor makes the repairs, and it appears that with a proper and sufficient foundation and with the best of material and workmanship an asphalt pavement on the street in question would begin to need repairs in four or five years, the provisions of the- contract must be construed as contemplating the necessity of repairs during at least ten of the fifteen years and not as in the nature of a guaranty that the pavement if laid with the best of *589material and workmanship would not require repairs for fifteen years.

Under such a contract, the contractor cannot excuse himself from making repairs within the prescribed period on the ground that the defects in the pavement are not due to inferior workmanship or material, but to a defect in the plan of the pavement itself.

Semble, if the case were such that the contractor should be excused on the ground that the defect of plan, or insufficiency of the pavement, rendered the contract for repairs impossible of performance, the effect of the rule would be to excuse both parties from further performance, without giving to either the right to recover damages for the part not performed.

A notice to repair given by the municipality under such a contract is not subject to the strict requirements that obtain in cases against sureties and against life insurance companies where notice to pay premiums or assessments is required to forfeit the insurance; and, where the contract provided that the notice should be served on the contractor either personally or by leaving it at his residence or on its agent in charge of the work, service upon the agent of the contractor in charge of the work of repairs under the contract will be held sufficient.

Motion by plaintiff on the minutes of the court to set aside tbe verdict and for a new trial on all the grounds permitted by section 999 of the Code of Civil Procedure.

Kellogg & Rose, for motion.

Archibald R. Watson, Corporation Counsel (Francis Martin and William H. Kehoe, of counsel), opposed.

Foote, J.

The street paving contract which is the subject of this action required the contracting company, plaintiff’s assignor, not only to lay the pavement but to keep it in repair for a period of fifteen years. Thirty per cent, of the contract price, or $90,835.90, was reserved by the city to be paid to the contractor during the last ten of the fifteen years, at the rate of three per cent, per year, provided the contractor made the repairs, on being notified so to do. The contractor made the repairs during ten of those years, refused or neglected to make the repairs for the eleventh year (1908), and then assigned its claim for further payments on the reserved fund to plaintiff, who brings this action to *590recover the installment of $9,083.59, which by the contract would be payable in 1908, provided the repairs were made after notice.

The street was out of repair in the spring of 1908, the city gave notice to repair (the sufficiency of which will be considered later) and the contractor refused ox neglected to repair, whereupon the city proceeded to have the repairs made, as the contract permitted it to do, at an expense greater than $9,083.59, the installment payable that year. Notwithstanding this, plaintiff has brought this action to recover the installment payable in 1908, alleging full .and complete performance of the contract.

•At the trial it gave evidence intended to excuse nonperformance in respect of the repairs for 1908, or upon which to predicate a waiver of performance. This was upon the theory that the provision for maintaining the pavement in repair was in the nature of a guaranty of the quality and workmanship of the original pavement, that the defects in the pavement were not due to inferior workmanship or material, but to a defect in the plan of the pavement itself, which consisted in laying an asphalt surface over a stone block pavement; and the 'claim was that the best material and workmanship would not produce a pavement suitable or sufficient for the traffic conditions on Hirst avenue, and that the contract should he interpreted as not intended to provide for repairs due to defective plans. It was claimed that the stone block foundation was not sufficiently stable to support the pavement under the traffic conditions on that street and that hence the pavement was a failure for that reason, and that the fault was that of the city in designing such pavement. On that theory plaintiff claimed the right to recover the whole contract price as upon performance upon its part.

In support of this view plaintiff’s counsel relied upon People ex rel. North v. Featherstonhaugh, 172 N. Y. 112; Cameron—Hawn Realty Co. v. City of Albany, 134 App. Div. 722.

The first case is distinguishable from this case. It was there held that the contract for maintaining the pavement in repair for a period of eight years was but a guaranty as to *591the quality aud character of the pavement and so that the property owners upon whom the expense of the pavement was to-be assessed could not be heard to object to such a form of contract, although the city was required by statute to keep pavements in repair at the expense of the city after they had been once constructed at the expense of the adjoining-property. Although the contract for repairs in that case was construed as a guaranty as to the durability of the pavement, the court, in the course of its opinion, said: “ There does not appear to he any controversy that the asphalt pavement properly constructed with proper material upon a concrete base will remain in good condition for the period named in the specifications, or even for a longer time.” And further, “A guaranty on the part of the company as to the durability of the pavement affords a simple and complete remedy which fully protects the public, and when the time for which the guaranty continues is no longer than the ordinary durability of the pavement when laid with the best workmanship and material, it is not in contravention of the provisions of a municipal charter requiring repairs to be made at the expense of the city at large.”

In the present case, it appears from the testimony of the only witness who spoke upon that subject, who was an expert on asphalt pavement, that with a proper and sufficient foundation and with the best of material -and workmanship an asphalt pavement on this street would begin to need repairs in four or five years. Had that fact appeared in the Featherstonhaugh case, a different construction of the contract in that case would necessarily have been adopted, although the period for repairs there was only for eight years. But, had the contract in that case required repairs, over a period of fifteen years, the court could not, consistently with the above quotations from its opinion, have 'construed the contract for repairs as a mere guaranty of the quality and character of the pavement. The provisions for maintenance repairs in the present contract must he construed, in view of the testimony, as contemplating the necessity for repairs during at least ten of the fifteen ^ears and not as in the nature of a guaranty that the pavement, if laid *592with the best of material and workmanship, would not require repairs for fifteen years. Hence, a considerable part of the contract price was intended to pay for repairs in addition to the first cost of the pavement. How much was so included does not appear.

Nevertheless, plaintiff claims that it may recover from the city the full contract price and at the same time hold itself excused from making any repairs during the last five years of the fifteen-year period, when more repairs might be expected to be required than during previous years, and for •this plaintiff relies upon the eases of Cameron-Hawn Realty Co. v. City of Albany, 134 App. Div. 722; MacKnight Flintic Stone Co. v. Mayor, 160 N. Y. 72.

In the first case a pavement was constructed in the city of Albany and the contract and specifications provided for a concrete foundation and an asphalt surface. The contractor complied strictly with these plans and specifications, and it developed within two years that the foundation was wholly insufficient. Five per cent, of the contract price was reserved for two years, the contractor being required to keep the pavement in repair during this time. There was nothing in that case to show that anything was added to the contract price for future repairs, but the case was disposed of on the theory that the reserve fund was intended only as a guaranty for good workmanship and material. In that respect, the case is entirely different from the present case.

Moreover, the ease was decided on the authority of Mac-Knight Flintic Stone Co. v. Mayor. In that case the contract was to make a boiler room for the city according to certain plans and specifications provided by the city and to turn the same over to the city, guaranteed water-tight and damp-proof for five years from the date of the acceptance of the work. Plaintiff did the work exactly in conformity with the plans and specifications and the boiler room proved not to be water-tight. The court held that the guaranty of the plaintiff applied to his own work and materials, and that, as the failure of the room to be water-tight was due to the defective plans and not to plaintiff’s workmanship, the plaintiff was entitled to recover.

*593There was no question in this ease of an addition to the contract price for the expense of maintenance over a period of years.. Hence, these cases do not seem to he applicable .here.

The defect in the plan of the pavement in the present case is said to be that the stone block foundation was not sufficiently stable to hold the asphalt in place under the traffic conditions on Pirst avenue. These traffic conditions were as open and apparent to the contractor as to the city. It is said that the volume of traffic increased and that the city did nothing to regulate this traffic and prevent use of this pavement by vehicles too heavily loaded for the pavement, but these are conditions which might reasonably have been anticipated by the contractor as well as by the city and as to which some provision might have been inserted in the contract for the protection of the contractor. It was no breach of the contract for the city to refrain from adopting special traffic restrictions, nor is it suggested that the city has failed to perform all the conditions of the contract on its part. '

But if it be assumed that the defect of plan or insufficiency of this pavement rendered the contract for repairs impossible of performance within the rule formulated in the cases of Dolan v. Rogers, 149 N. Y. 489; Buffalo & Lancaster Land Co. v. Bellevue Land & Improvement Co., 165 id. 241; Labaree Co. v. Crossman, 100 App. Div. 499, then, as was said in the first ease, “ the effect of the rule is to excuse both parties from further performance without giving to either the right to recover damages for the part not performed.”

It follows, I think, that no matter how defective may have been the city’s plan, if plaintiff is entitled to be relieved of the burden of repairs on that account, it cannot recover from the city any further payments on the contract.

• It appeared from the evidence that all, or substantially all, of this pavement had been relaid during the ten years prior to 1908 in the form of repairs, and from that circumstance plaintiff contends that it is not bound by the contract to recreate • a pavement that no longer exists. There does *594not seem to be any merit in this contention. The contract was to keep the pavement in repair for fifteen years. This Would not be satisfied by once relaying a given portion of the pavement. !

The next contention is that the notice to repair was insufficient» It appeared that shortly after the pavement was first completed the W-arren-Scharf Company, the contractor, retired from business in the city of Haw York, and one of its officers notified an official of the city that the Barber Asphalt Company Would thereafter look after its contracts in the city of Hew York, of which it had several. From that' time On until 1908 notices to repair were sent to the offices bf the Barber Company, and that company made ali repairs under this contract and under others. In the spring of 1908 informal notice to make further repairs was given, as had been customary, -and, when it was found that the Barber Company did not intend to make further repairs, the city 'set about serving a more formal notice. The officers in charge of this work for the city had information to the effect that the Warren-Beharf -Company had assigned its contract to the Barber Company and that the Barber Company was acting as its assignee and successor. In this belief, notice to repair was addressed to the Barber Company as assignee, and was personally served at its office in the city of Hew York. The contract provided that such notice should be served on the contractor, either personally or by leaving it at his residence, or on its agent in charge of the work; and it was held at the trial that the notice as served on the Barber Company was sufficient notice under the contract, if the Barber Company was as that time the agent of the WarrenScharf Company in charge of the work of repairs under this contract. That question was left to the jury and by its verdict it has necessarily found that the Barber Company was such agent. Plaintiff did not see fit to giye any evidence as to the nature of the arrangement between the Barber Company and the Warren-Scbarf Company by which the former company had made all repairs under this and other contracts prior to 1908. The manager of the Hew York office of the Barber Company as a witness testified that he made *595these repairs by instructions from the executive office of the Barber Company in Philadelphia; that, in the spring of 1908, he was instructed by the same officers not to make the repairs demanded by the city under this contract • at that time. These facts were sufficient to make a question for the jury as to whether such au agency existed. There was no proof that it had been terminated, if it once existed.

On this motion plaintiff’s counsel refers to a number of cases in which the requirements of a certain form of notice have been construed strictly in actions against sureties.and against life insurance companies, where notice to pay premiums or assessments were claimed to have been given to forfeit the insurance. This is not such a case. There is no occasion here to construe the requirement as to notice with special strictness on account of any supposed hardship or as in the case of sureties, and I am satisfied that the case was properly submitted to the jury upon that question.

P-laintiff’s motion must'be denied, with ten dollars costs.

Motion denied.