Case Name: WESTINGHOUSE, CHURCH, KERR & CO. v. LONG ISLAND R. CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-01-09
Citations: 145 N.Y.S. 201
Docket Number: 
Parties: WESTINGHOUSE, CHURCH, KERR & CO. v. LONG ISLAND R. CO.
Judges: 
Reporter: West's New York Supplement
Volume: 145
Pages: 201–205

Head Matter:
(160 App. Div. 200)
WESTINGHOUSE, CHURCH, KERR & CO. v. LONG ISLAND R. CO.
(Supreme Court, Appellate Division, First Department.
January 9, 1914.)
Contracts (§ 229*)—Construction Contracts—Personal Injuby Claims— Reimbursements. A contract to electrify lines of defendant’s railroad, which stipulated for a compensation to plaintiff of 10 per cent, of the actual cost, defined to include disbursements for machinery, materials, and labor, and miscellaneous charges such as fire and casualty insurance, “costs of accidents,” etc., but excluding overhead charges, imposed a liability on defendant on account of a judgment recovered against plaintiff by an employe sustaining an injury through plaintiff’s negligence, and plaintiff could recover from defendant the amount of the judgment less the sum paid by an accident insurance company; especially where, prior to the accident, defendant approved a payment by plaintiff in settlement of a prior accident.
[Ed. Note.—For other cases, see Contracts, Cent. Dig. §§ 1045-1057, 1059-1066, 1070, 1077; Dec. Dig. § 229.*]
Ingraham, P. J., dissenting.
Appeal from Trial Term, New York County.
Action by Westinghouse, Church, Kerr & Co. against the Long Island Railroad Company. From a judgment for plaintiff (80 Misc. Rep. 127, 141 N. Y. Supp. 644), defendant appeals. Affirmed.
Argued before INGRAHAM, P. J., and McLAUGHLIN, LAUGHLIN, DOWLING, and HOTCHKISS, JJ.
William C. Beecher, of New York City, for appellant.
Martin Conboy, of New York City, for respondent.

Opinion:
HOTCHKISS, J.
Plaintiff and defendant- entered into a contract by which plaintiff agreed to act as designing and "contracting engineers" for defendant and as such to prepare the plans, specifications, and other preliminary work, and also to furnish, install, and complete all material, apparatus, etc., incident to the construction and completion of the electrification of certain lines of defendant's railroad, for which plaintiff was to be paid (1) for designing, 5 per cent, of the cost of the completed work, and (2) for all other services, labor, material, etc., "the actual cost incurred with ten per cent, added." The term "actual cost," as defined by the contract, included "all disbursements for machinery, apparatus, materials, supplies, la bor and service required and to carry out the" contract, also "miscellaneous charges such as fire and casualty insurance, freights, costs of accidents, breakages and all other sums of money which we (plaintiff) shall necessarily or reasonably pay in the conduct of the work," excluding what are usually termed "overhead" charges; "it being the intent that only such expenses as are actually incurred by reason hereof shall constitute and be included in actual cost."
In the course of the work covered by the contract, one of plaintiff's employés was seriously injured through plaintiff's negligence, for which he recovered a verdict of $25,000, of which $5,000 was paid by a casualty insurance company in which plaintiff held a policy, and the remainder, plus costs and expenses, was paid by plaintiff, who brought this action to recover the sum so paid. The meaning of the contract seems to me very clear, giving rise to no necessity for resorting to the rules of construction invoked by defendant. It was (so far' as the construction part is concerned) what is known among contractors as a "percentage" contract, by which the contractor supplies labor and material at cost and receives as his compensation a fixed percentage thereon, in lieu of other profit. The plainly expressed intent and meaning of the parties was that, excluding its "overhead" expenses, plaintiff was to be reimbursed for all cost and expense incurred in the performance of the work. On the face of the contract it is apparent that it involved a work of considerable magnitude, and required the employment of many artisans and laborers, and that in the distribution of the forces employed plaintiff would necessarily be compelle'd to rely on the skill and prudence of many for whose negligence plaintiff would be responsible.
In a work of this description accidents are certain to occur, so certain in fact that the law of averages permits them to be made the subject of insurance and to be covered by policies issued by corporations organized by virtue of general laws and doing business under state inspection. The cost of such accidents, direct and indirect, including the expense of compensating the injured and of investigating and defending claims, is an incident of the work and a necessary part of its total cost. The fact that among the specific items of expense for which plaintiff was to be reimbursed was "casualty insurance" in no way weakens plaintiff's claim, because, if for no other reason, the "cost of accidents" was also included. It also appeared that in the case of an accident prior to that giving rise to the claim in suit, by defendant's express approval, plaintiff paid $200 in settlement; also, that shortly after the latter accident plaintiff called the matter to defendant's attention, referring specially to its seriousness, and asking whether defendant would approve of the payment of the victim's wages while he was incapacitated, to which defendant in reply through its chief engineer expressed its assent and further said:
"I think no steps should be taken to do this except on advice of the claim agent or legal department. I do not know what responsibility we are under in connection with accidents to these men, as I am not informed what the ac cident policy covers, but no steps should be taken to interfere with the proper settlement of claims."
That the defendant, presumably through some officer other than the writer of the above letter, was fully informed of the fact that such accident insurance was limited to $5,000 on account of an accident to any one person and to $10,000 on account of all loss or injuries resulting to several persons from any one accident, was expressly conceded on the trial. The course adopted by the parties with respect to the $200 claim and as well in the case of the claim in question, together with the express words of the letter above quoted, are evidence of a clear recognition on defendant's part of its responsibility to assume the cost of all claims for personal injuries resulting from accidents. I see nothing in the argument that, construed as a contract to relieve plaintiff from the results of its own negligence, the agreement was void as against public policy. The situation is one which affords no ground for applying the principle thus invoked.
The judgment should be affirmed, with costs.
MCLAUGHLIN, LAUGHLIN and DOWLING, JJ., concur.