Source: http://masscases.com/cases/sjc/358/358mass354.html
Timestamp: 2019-04-18 18:56:33+00:00

Document:
HENRY B. BYORS & SONS, INC. vs. BOARD OF WATER COMMISSIONERS OF NORTHBOROUGH & others.
BILL IN EQUITY filed in the Superior Court on June 4, 1969.
The suit was heard by Leen, J.
Stanley G. Walker for the Board of Water Commissioners of Northborough.
Edward O. Proctor for Sarno Construction Co., Inc.
Robert T. Gabriel, for Northborough Housing Authority, submitted a brief.
TAURO, C.J. This is a bill in equity for a declaratory decree brought by the plaintiff, Henry B. Byors & Sons, Inc. (Byors), a plumbing subcontractor of the defendant Sarno Construction Co., Inc. (Sarno), the general contractor. Other defendants are the Northborough Housing Authority (the housing authority) and the board of water commissioners of the town of Northborough (the water commissioners). The bill seeks a declaration as to the validity of a "demand charge" imposed by the water commissioners as a condition precedent to providing water service to the building units owned by the housing authority and constructed by Sarno; and if it is valid, whether Byors is legally obligated to pay the demand charge under the terms of the subcontract with Sarno and the terms of the general contract between Sarno and the housing authority.
housing authority was justified in withholding payments from Sarno; and that Sarno was justified in withholding payments under its contract with Byors up to the amount of the charge. From this decree Byors appealed.
The facts are summarized: On or about July 17, 1968, Sarno and the housing authority entered into a general contract for the construction of a housing project for the elderly in Northborough. Byors and Sarno entered into a subcontract whereby for the sum of $99,000 Byors agreed to supply the labor and materials for the plumbing work on the project.
There was no item in the subbid of Byors or in the general bid of Sarno concerning the payment of a demand charge to the water commissioners as a condition precedent to providing water service to the project.
Sarno about its dispute with the water commissioners. The water commissioners refused to permit the connection.
On June 3, 1969, Byors commenced the present suit. On or about June 3, 1969, Beacon Architectural Associates, the architect hired by the housing authority in connection with the construction of the housing project, in accordance with contractual provisions, notified Sarno of its decision that Byors was required to pay the demand charge under the subcontract with Sarno. [Note 2] Byors was notified of the architect's decision on June 8, 1969. Although the contract provides for an appeal from the architect's decision, Byors has not appealed.
On or about June 24, 1969, the housing authority paid the demand charge, informing Sarno at the same time of its intention to withhold the amount of the charge, $10,950, from its payment to Sarno. Sarno, likewise, has withheld the amount of the charge from payments to Byors under the subcontract.
VALIDITY OF THE DEMAND CHARGE.
The first issue to be determined is whether it was within the power and authority of the water commissioners to demand a charge of $10,950 before permitting a connection between the town water main and the housing project. We hold that the water commissioners had such authority. The relevant legislative provisions are c. 192 of St. 1882, G. L. c. 40, Section 42G, and G. L. c. 41, Section 69B. Each one has been accepted by the town of Northborough, acting through its town meeting.
determining whether and upon what terms to make extensions of its lines."
Byors contends further that the demand charge is unreasonable and discriminatory. The burden of proof here is on Byors. Souther v. Gloucester, 187 Mass. 552, 556. Paragraph 24 of the statement of agreed facts provides the only evidence on the point. It clearly delineates the reasons for the demand charge and for the expenditure of large sums in order that adequate service might be provided to the units already built and those to be built. [Note 4] We feel, therefore, that Byors has not sustained its burden of proof. See Souther v. Gloucester, supra, at 556; Brand v. Water Commrs. of Billerica, 242 Mass. 223, 228.
LIABILITY FOR THE DEMAND CHARGE UNDER THE CONTRACT.
of the demand charge, this court and the court below necessarily accepted the contention that the "demand charge" is a charge for use of water. A property owner, in the absence of a binding agreement, is obligated to pay for water service and for charges connected therewith. We believe that the contract documents in this case do not place this responsibility on a party other than the owner.
Both the architect and the trial judge cited the contract provision requiring Byors to "[o]btain all necessary permits and licenses and pay all connected fees." In his decision the trial judge emphasized the word "connected" and concluded that Byors is required "to pay all legitimate charges of the Board of Northborough Water Commissioners for connecting the project water service to the town main." The words "permits and licenses" and "connected fees" in their natural interpretation within the provisions of the general contract and subcontract refer only to those permits and licenses that the contractor or subcontractor is required to obtain before beginning the work under his contract. Byors did obtain ten permits to do the plumbing work. This requirement insures that the work will be done in accordance with the rules, regulations and ordinances of the municipality. Conversely, the words cannot be construed as requiring the subcontractor to pay the "demand charge" which is a prerequisite to the sale of water by the water commissioners to the housing authority. In other words, we read the clause in question to require that Byors pay only the fees connected with the work and materials it is obligated to furnish under the contract. The demand charge of $10,950 is not such a "fee."
supplied in the rule). The natural and logical construction of these documents is that the application form is to be executed by the housing authority as owner and that the housing authority alone assumes the responsibilities created thereunder. Rule 1 of the rules and regulations and Section 8A, subdivision 1, in the contract required merely a routine handling by Byors of the application for water service. The obvious reason for these provisions is that the plumbing subcontractor would be in the best position to determine when the plumbing work and the installation of outside water pipes had progressed to the point where the housing authority project could be tied into the eight inch water main in the street. In "handling" the application Byors acted only as an agent for the housing authority in accordance with the "rules and regulations" and did not thereby assume personal obligation to pay the demand charge. See Porshin v. Snider, 349 Mass. 653, 655.
Finally, the architect referred to "[i]nstructions to bidders" which required, "General Bidders and Plumbing Sub-Bidders are required to obtain, prior to the submission of bids, the rules and regulations of the Town of Northborough Water Department . . . ." There is nothing in the rules and regulations to put Byors on notice that he was to pay a demand charge of $10,950 for water service to the housing authority. On the contrary, a reasonable interpretation of the rules and regulations, together with the application form, leads to an opposite conclusion, namely, that the obligation for paying the demand charge rested solely on the housing authority. In the circumstances here presented we rule that nothing in the contract documents requires that either Byors or Sarno pay the demand charge and that they obligated themselves "to do only precisely the work on which . . . [they] had bid." Fred C. McLean Heating Supplies, Inc. v. Jefferson Constr. Co. 339 Mass. 356, 362.
Division of Housing, whose decision shall be final." [Note 7] Pursuant to this provision, and for reasons stated, the architect decided that Byors was required to pay the demand charge.
attempts to pass on matters not contemplated by the contract. Thus in Morgan v. Burlington, supra, the contract gave the architect broad powers to interpret the plans, specifications and contract; nevertheless, the court held that the architect had exceeded his authority in taking work from one party and awarding it on bids to another person. See Derby Desk Co. v. Conners Bros. Constr. Co. 204 Mass. 461. In the instant case, "[a]lthough . . . [the architect's] power was broad, it was not without rational limits." Morgan v. Burlington, supra, at 420. There is nothing in the contract that imposed the responsibility of payment of the demand charge (not covered in the contract) upon Byors. "The power to interpret the contract did not give him the power to make a new contract for the parties . . . . He could translate the contract and ascertain its meaning but he could not add to or detract from the text." Id. at 420. The architect was acting beyond his authority in deciding that Byors was responsible for payment of the demand charge. Therefore, his decision must be regarded as a nullity. See Morgan v. Murdough, 216 Mass. 502, 505; J. F. Fitzgerald Constr. Co. v. Southbridge Water Supply Co. 304 Mass. 130, 134. See generally, 54 A. L. R. 1255.
The final decree is reversed; a new decree is to be entered that the demand charge is valid and that the housing authority is liable for it.
[Note 1] Paragraph 24 of the statement of agreed facts states: "The demand charge referred to herein and in the pleadings and exhibits was voted by the Board of Water Commissioners to pay a portion of the cost of supplying sufficient water at adequate pressure to meet the increasing demands for water by the cumulative effect of new household units being supplied with water. To adequately serve five hundred new household units it is necessary to purchase a new well site, construct a well with pumping station, filtration equipment, appurtenances and attachments to the mains at a cost, based on prior expenditures, of between $75,000 and $100,000. To serve 1,000 new household units with sufficient pressure, it is necessary to locate and construct additional storage and pressure facilities at a cost, based on prior expenditures, of about $80,000. Other costs, which are the direct result of such added demands for water, are the replacement of existing water mains with larger pipes, capable of carrying sufficient water to meet the increasing loads."
[Note 2] The statement of agreed facts states the following: "The general contract provides in its general conditions that all disputes arising under this contract shall be decided by the Architect subject to the right of appeal to the Deputy Commissioner for the Division of Housing, whose decision shall be final."
[Note 3] Statute 1882, c. 192, provides in part as follows: "SECTION 1. The town of Northborough may supply itself and its inhabitants with water . . . and may fix and collect rents for the use of such water. . . . SECTION 7. . . . All the authority granted to the said town by this act and not otherwise specifically provided for shall be vested in said board of water commissioners . . . ."
[Note 4] See fn. 1, supra.
[Note 5] The trial judge, in his decision, stated: "I have characterized the question for determination here as `troublesome' because it might well have been expected that a charge of the magnitude of the demand charge with which we are concerned here would be borne by the Housing Authority, which is in the position of an owner in terms of normal building contracts. Neither the plaintiff nor the defendant Sarno contemplated that this charge should be borne by either of them. In the event they had, the bids which were submitted could reasonably have been expected to include an item of such magnitude. In fact neither of the bids contained any provision for such a charge. It is clear from the record that what the contractors, both the general contractor Sarno, and the subcontractor, the plaintiff expected to pay were what may be fairly characterized as nominal charges for permits from the municipal authorities."
[Note 7] See fn. 2, supra.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.