Case Name: Westinghouse, Church, Kerr and Company, Respondent, v. The Long Island Railroad Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-01-09
Citations: 160 A.D. 200
Docket Number: 
Parties: Westinghouse, Church, Kerr and Company, Respondent, v. The Long Island Railroad Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 160
Pages: 200–205

Head Matter:
Westinghouse, Church, Kerr and Company, Respondent, v. The Long Island Railroad Company, Appellant.
First Department,
January 9, 1914.
Contract—“percentage ” contract for labor performed and mate-' rials furnished, construed — liability of employer for injuries to contractor’s employees — evidence.
Plaintiff entered into a “percentage” contract with the defendant for the construction and completion of the electrification of certain lines of defendant’s railroad, under the terms of which the plaintiff was to receive “ the actual cost incurred * * * with ten per cent added.” The term “actual cost” included “all disbursements for machinery, apparatus, materials, supplies, labor and services required to carry out the” contract; also “miscellaneous charges, such as fire and casualty insurance * * * cost of accidents * * * and all other sums of money which we [plaintiff] shall necessarily or reasonably pay in the conduct of the work,” excluding overhead charges. Plaintiff secured accident insurance of $5,000 on account of an accident to any one person, and of $10,000 on account of all loss or injury resulting to several persons from one accident. One of plaintiff’s employees, seriously injured through plaintiff’s negligence, recovered a verdict of $25,000, of which $5,000 was paid by the insurance company, and the remainder, including costs and expenses, was paid by the plaintiff, who brought this action to recover such amount. It appeared that the plaintiff had settled a prior claim with defendant’s approval, and there was evidence of a recognition on defendant’s part of its responsibility for personal, injuries resulting from accidents.
Held, that the defendant was liable, under the provisions of the contract, and that a judgment for the plaintiff should be affirmed.
Ingraham, P. J., dissented, with opinion.
Appeal by the defendant, The Long Island Railroad Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 18th day of April, 1913, upon the decision of the court, after a trial at the New York Trial Term, before the court without a jury.
William C. Beecher, for the appellant.
Martin Conboy, for the respondent.

Opinion:
Hotchkiss, J.:
Plaintiff and defendant entered into a contract by which plaintiff agreed to act as designing and " contracting engi neers " for defendant and as such to prepare the plans, specifications and other preliminary work, and also to furnish, install and house all material, apparatus, etc., incident to the construction, and the completion of the electrification of certain lines of defendant's railroad, for which plaintiff was to be paid (1) for designing, five 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, labor and services required to carry out the" contract, also "miscellaneous charges, such as fire and casualty insurance, freights cost 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 employees 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 interpretation invoked by defendant. The contract was (so far as the construction part is concerned) what' is known 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 compelled 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 accident 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 residís 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., concurred; Ingraham, P. J., dissented.