Case Name: The Expanded Metal Fire-Proofing Company v. Noel Construction Company et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1913-02-25
Citations: 87 Ohio St. 428
Docket Number: No. 12907
Parties: The Expanded Metal Fire-Proofing Company v. Noel Construction Company et al.
Judges: Shauck, C. J., Donahue, Wanamaker, Newman and Wilkin, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 87
Pages: 428–444

Head Matter:
The Expanded Metal Fire-Proofing Company v. Noel Construction Company et al.
Principal contract made, part of sub-contract — As to inconsistent provisions in two contracts — Those in sub-contract prevail— Question of waiver of provisions of contract — Effect of additional plans and drawings — Consent of all parties equivalent to written waiver, when — Liquidated damages provided in both contracts — Will not conclude sub-contractor, when — Charge to jury as to same — Law of contracts.
1. Where a principal contract is adopted and made part of a subcontract, all of the provisions of the former are binding on the parties to the latter, so far as they are consistent therewith. As to inconsistent provisions in the two contracts, those of the subcontract will control.
2. Where the principal contract for a building has been made part of a sub-contract in relation thereto, a provision in the former that no alterations shall be made except on the written order of the owner or his agent, the extra amount to be paid being stated therein, is binding on the sub-contractor unless otherwise provided in the sub-contract.
3. Such requirement will be held to have been waived by the parties when alterations have been made with knowledge and participation of all concerned, the evidence of which is clear and convincing, no fraud being shown.
4. Where plans and drawings are made part of a contract which contains such a provision as to alterations, and additional plans and drawings are afterwards prepared (which require extra work and material) with the written approval of the owner thereon, signed by his authorized agent, and which work and material is done and furnished by a sub-contractor with the knowledge of all concerned, the additional plans and drawings so approved, will be held to be the equivalent of a written order, and a waiver of a more formal one.
5. Where liquidated damages are provided for, in both a principal contract and a sub-contract, on account of delays, a settlement b3r the owner and principal contractor of a claim by the former for such damages, to which settlement the sub-contractor was not a party, will not conclude the latter, and in a suit by the principal contractor to recover the amount of such settlement from the sub-contractor, it is not error for the court to charge the jury that the claimant must show that the sub-contractor caused the delay, and that the amount allowed the owner in the settlement could have been recovered at law.
(No. 12907
Decided February 25, 1913.)
Error to Circuit Court of Montgomery county.
The National Cash Register Company made a written contract with the Noel Construction Company, of Baltimore, on June 16, 1906, to build a new factory, known as Building No. 7, on the premises of the former at Dayton, Ohio. On the 28th day of July, 1906, the Noel Construction Company entered into a written contract with The Expanded Metal Fire-Proofing Company, of Chicago, to construct the reinforced concrete work of said factory building. It was agreed in the principal contract that the building should be completed by January 1, 1907, and, in the sub-contract, that the concrete work should be completed to such an extent by November 15, 1906, as would not interfere with the progress of the building thereafter. Each of the contracts contained a stipulation for liquidated damages in the event of delay. As the work progressed, a number of labor and material men, creditors of the sub-contractor, filed attested accounts with the owner and contractor, in order to secure statutory liens on funds which might become due.
The Cincinnati Iron Store Company, in September, 1907, brought suit in the common pleas of Montgomery against the Expanded Metal Company on an account and to enforce its lien. In this suit, the owner and principal contractor, and all other lien holders, were made defendants. The Noel Construction Company filed an answer and cross-petition in the case, in which it claimed the right to' recover from the Expanded Metal Company the sum of $8,000, as liquidated damages paid by it to the Cash Register Company for delays which it claimed were caused by the Expanded Company.
The Expanded Metal Company, in its answer to this cross-petition, denied the right of the Noel Construction Company to recover liquidated damages, claiming that the delays were not caused by it and that the Noel Construction Company was not legally compelled to pay damages to the Cash Register Company. By way of cross-petition, it set up a claim for $19,122.00, balance due on the contract from the Noel Construction Company, and $21,306.06 for extra labor and material in the completion of its contract. The Noel Construction Company replied and denied the right of the Expanded Company to any relief other than the balance due on the contract reduced by the claim of liquidated damages and by some items' as to which the parties agreed. The issues thus made were tried in the court of common pleas and resulted in a verdict and judgment in favor of the Expanded Company, denying the right of the Noel Company to recover its damages, the judgment in favor of the Expanded Company on its cross-petition being $41,892.46. On proceedings in error in the circuit court, this judgment was reversed, in so far as it sustained the right of the Expanded Company to recover for said extras. It is to reverse this part of the judgment of the circuit court that the Expanded Metal Company prosecutes the proceeding in error in this court.
The circuit court affirmed the judgment of the common pleas court, denying the Noel Company the right to recover its liquidated damages, and upheld the Expanded Company’s right to recover on all items' included in the verdict other than for extras not ordered in writing.
The Noel Company has filed a cross-petition in error, seeking to reverse the order of affirmance in so far as its right to recover damages is concerned.
Mr. F. H. Atwood; Messrs. Gottschall & Turner and Mr. D. B. Van Pelt, for plaintiff in error.
Mr. B. F. McCann and Messrs. Wilson & 'Rector, for defendants in error.

Opinion:
Johnson, J.
The circuit court, in entering its judgment, deducted from the judgment of the common pleas seven items for extras, which amounted, with interest thereon, to the sum of $20,376.36, and affirmed the balance of the judgment,- amounting to $21,506.10. It found that the common pleas court erred in its construction of Clause 6 of the contract between the Noel Company and the Expanded Company, and in charging the jury "that for the making of -the changes provided for in said sixth clause of the contract between the Noel Company and the Expanded Metal Fire-Proofing Company, no written order or orders were required." Clause 6 is as follows:
"The party of the second part further agrees that in the event of any changes being made by the architect or owner in the plans and specifications, affecting any of the work or materials herein agreed to be done, furnished and set in place, such changes shall be assented to and executed by the party of the second part, upon condition that party of the first part shall pay for same at the fair market price, if said changes add to the cost of the work, and if such changes decrease the cost of the work, a proportionate allowance shall be made to the party of the first part, without in any way invalidating, changing or avoiding this contract, and if such changes cause delay to the party of the second part, additional time to be extended by party of the first in which to perform the work."
The preamble of the contract recites that the Noel Company had entered into a contract with the Cash Register Company for the construction of the building referred to, and provided "the said contract, together with the plans, drawings and specifications therein referred to, are made part hereof to the same extent as if herein fully written."
In the third clause of the Cash Register contract with the Noel Company, it is provided as follows:
"No alterations shall be made in said specifications or drawing's nor shall there be any deviation in the doing of the work or furnishing the material covered by this contract from the manner, character or quality designated and required by said drawings and specifications, unless such alterations or deviations be authorized or required upon the written order of said engineer of works, the extra amount to be paid by said owner or the credit to be allowed by said contractor on account of said alterations or deviations being stated therein. But should the owner and contractor not be able to agree as to such amount to be paid or allowed, the work shall go on under the order provided for, and the determination of said amount shall be referred for arbitration as provided for in paragraph fourteen (14) of this contract."
The contention, substantially, of the Expanded Company is that, inasmuch as the sixth clause of its contract with the Noel Company does not specifically require that the changes provided for in said cause shall be ordered in writing, no such written order was necessary. That the provision in the preamble, that the Cash Register contract, with its plans, drawings and specifications, are made part of the Expanded Metal Company contract • cannot control in the matter of the extras, because the specific provision in the Expanded Company contract for extras is inconsistent with the provision in the Cash Register contract with reference thereto. That in such case, the actual contract between the parties must prevail.
Under the sweeping provision that the entire Cash Register contract, with its plans, drawings and specifications, are made a part of the Expanded Metal Company contract, the former became part and parcel of the latter agreement, in so far as their provisions are consistent. No provision of a contract is to be disregarded as inconsistent with other provisions unless no other reasonable construction is possible. A special provision will be held to override a general provision only where the two cannot stand together.
It is clear that the purpose of Clause 6 of the sub-contract was to require the sub-contractor to "assent to and execute" the changes ordered by the owner, and to provide a plan by which the sub-contractor should be paid for the making of such changes. The principal contract provided for the fixing of the amount to be paid by the owner to the principal contractor for extras, and, in as much as the sub-contractor was not a party to such arrangement, it would not be fair to compel him to be bound by the price so fixed. Therefore, in justice to him, the provision was added that he should be paid the fair market price and should'not be subjected to claims for delay, if the changes caused delay. It must be noted that the Expanded Metal Company, in its contract, bound itself to "assent to and execute" any changes which the owner might make, but with knowledge that any such changes could be made by the owner only on a written order to the principal contractor, in which the amount to be paid was provided for, thus protecting the interests of all concerned.
We think the "change being made by the owner," referred to in Clause 6, and which the sub-contractor bound itself to assent to, is only such a change as the owner was entitled to make under its contract with the principal contractor, and which was made in writing in accordance therewith, the terms of which the sub-contractor had embodied in its own contract. Otherwise, the owner could order extras without reference to their value and without reference to the requirements of his contract with the principal contractor, and the sub-contractor could execute them and hold the principal contractor to payment for them without the former having been, in any way, a party to the arrangement. Clause 6 of the sub-contract is not inconsistent with Clause 3 of the principal contract, when the two are considered in view of the object each was to subserve.
A consideration of all of the provisions of the contract leads us to conclude that the parties intended that the owner could not order changes to which either the principal contractor or the subcontractor was bound to assent, or for which the sub-contractor would have a valid claim, unless the order was in writing, or unless this requirement was waived by the parties in some manner by which they were bound.
The circuit court found that the error of the common pleas, in construing the contract, affected only the following items of extras, included in the verdict of the jury:
(3) For changes in corner columns, the sum of.................$ 327.60
(4) For extra steel in parapet walls in main building, the sum of.. 130.45
(5) For change in parapet walls of wings . 99.90
(6) For extra concrete parapet walls of wings................... 40.50
(7) For wrought iron pipes through the floor slabs.............. 980.00
(8) For tearing nine columns, first floor, and changing forms in connection with curtain walls. 4,000.00
(10) For extra rods in beams and extra size of beams......... 12,340.00
The verdict of the jury was not a general one on the issues between the parties in favor of the Expanded Metal Company, but it named specific items, among which were those above stated, and found the total amount due.
It is contended, substantially, by the Expanded Metal Company, that the conduct of all parties concerned as the work progressed was such as to amount to a waiver in law of the requirements that the orders for alterations and extras should be made in writing, if the court should find that written orders were required.
As to Item No. 7, "for wrought iron pipes through floor slabs, $980.00," the Expanded Com pany claimed it was not required by its contract to furnish the wrought iron pipes referred to. That is, that the pipes were not included in the specified material which it was to furnish. There was a dispute between Mr. Ramsey of the Expanded Company, and the Noel Company as to this, and considerable evidence was offered touching it. The undisputed testimony shows that the pipes were furnished by the Expanded Metal Company. The Noel Company was bound to furnish them as between it and the Cash Register Company. In its pleadings, the Expanded Company claimed that it had furnished these pipes and that they were of the value as stated, and, on the issue made by the pleadings, the jury found as to this item in favor of the Expanded Company. This item, not being an extra ordered by the owner, Clauses 3 and 6 of the contracts have no application, and the error of the court in its charge, as found by the circuit court, could have, in no way, affected the finding of the jury on the issue made, and it should have been allowed to stand.
Item 8 of the verdict, "for tearing out nine columns, first floor, and changing forms in con-, nection with curtain walls, $4,000.00," was also the subject of controversy between the parties.' The Expanded Company claimed that, after the work had progressed for some time, the Cash Register Company made and delivered a written order to the Noel Construction Company,^ as follows:
"Noel Construction Company.
"Stop pouring concrete columns separate from curtain walls. . Change forms so that curtain walls will be poured same time as columns.
"National Cash Register Company,
"By F. E. Chester."
This order was endorsed on the back, "To the Expanded Metal Fire-Proofing Company," signed, "Noel Construction Company, per Gobel."
In connection with this order, the Expanded Company offered in evidence a drawing made by the engineer of the Cash Register Company, indicating the process to be followed pursuant to the order above referred to. The Noel Company claimed, as to this order and drawing, that it was made for the purpose of requiring the Expanded Company to comply with the original plans, not for the purpose of making a change therein, and that it is not such a written order as contemplated by the contract.
Considerable testimony, touching this contention, was offered by the parties, and the jury found in favor of the Expanded Company, specifically allowing this item, as above stated. On the question as to whether it was such an order as comes within the provisions of Clause 3 of the principal contract, it is insisted that it does not comply with the provisions therein that the extra amount to be paid for said change shall be stated in the order. But it must be noted that Clause 3 contains another provision; namely, that the failure of the owner and contractor to agree as to the amount to be paid for alterations shall not operate to delay the work, and the amount to be paid for them shall be thereafter fixed by arbitration under the contract. So that the sub-contractor receiving such an order was required to "assent to and execute" the order without inquiring as to the amount, or the method by which the principal contractor was to be paid by the owner. The subcontractor's compensation would, of course, be ascertained under Clause 6 of his own contract, which provides that he shall be paid the fair market price. We, therefore, think that, as to this item, the error of the common pleas court in its charge to the jury could not have been prejudicial to the Noel Company.
Another element included in the verdict of the jury, which was deducted from the amount of the judgment by the circuit court, was No. 10, "for extra rods in beams and extra sizes of beams, $12,340.00." This is the largest and most important element involved in the controversy. It is shown by the testimony of the witness Pitkin that extensive changes in the plans were made by the Cash Register Company, which required a large amount of extra rods' and beams in the construction of the building; the amount of excess steel being 288,711 pounds; that detailed drawings and plans of these changes were made, to be used by the Expanded Company, as its instructions in the carrying out of such alterations. These detailed plans were approved by Mr. Waldron, the engineer of the Cash Register Company, in charge of the work. All of the changes, detailed drawings and plans were made and used and complied with, with the full knowledge of the owner and principal contractor. These detailed plans and drawings were offered in evidence. It is shown by the record that the extra material and work required thereby were furnished by the sub-contractor, and that they were of the value claimed. It is familiar law that stipulations in written contracts may be waived by the parties, and that a construction placed by the parties upon a written contract in the progress of its performance, with full knowledge of all the circumstances, will be binding. Ashley v. Henahan, 56 Ohio St., 559; Campbell v. Kimball, 87 Neb., 309; Cunningham v. Fourth Baptist Church, 159 Pa. St., 620; O'Keefe v. St. Francis's Church, 59 Conn., 551; 6 Cyc., 77; Norwood v. Lathrop, 178 Mass., 208; Board of Commissioners v. Gibson, 158 Ind., 471. The rule is peculiarly just when applied to building contracts, when changes are made, the necessity for which develops as the work progresses and while the parties are intent on the accomplishment of the undertaking, no fraud or undue advantage being shown.
No formal order, written in words, was given ' for these extras, but we think that the detailed drawings referred to, which show the additional rods and reinforcements, with the written approval thereon of the engineers in charge, taken in connection with the conduct of all parties concerned with reference to them, were the equivalent of a written instruction and amounted to a waiver, of a more formal order. In fact, we think it might reasonably be said to be a writing which was in compliance with the object and spirit of the provision of the contract, which required the change to be ordered in writing. It was a drawing made upon paper clearly outlined and giving the details and changes which the owner required, approved by his engineer, and which he was bound to pay for. And, although the price to be paid for them was not named above the signature of the engineer or agreed upon by the parties, yet, as already shown, the naming of the price to be paid for the extra was not an indispensable element in the written order required by Paragraph 3 of the original contract. We think that, from the facts shown in the record with reference to this item, substantial justice was done between the parties in the finding of the jury.
As to Items 3, 4, 5 and 6, which the jury specifically found in favor of the sub-contractor, the changes therein referred to appeared to have been made without any writing or other specification or. definite requirement therefor. We think the circuit court correctly deducted the amounts of these items from the judgment rendered by the common pleas court.
The Noel Construction Company has filed a cross-petition in error, contending that the circuit court erred in affirming any part of the judgment of the court of common pleas, and especially in affirming the judgment of the latter court in favor of plaintiff on the ninth finding in the verdict of the jury in the sum of $2,388.00, for extra labor on sand and gravel. The extra labor referred to in this item was not such an extra as was involved in the contract with the owner of the property. The gravel was to be provided for the Expanded Metal Company on the site of the building. The issue was raised by the claim of the Expanded Metal Company that this had not been done, and that it was compelled to secure the proper quality of sand and gravel itself. This sand and gravel was required by the original contract because that contract could not have been complied with without it. The plans and specifications required it. Therefore, the issue as to this item was simply one of fact to be submitted to the jury as to-whether or not, as between the Noel Company and the Expanded Company, the latter had performed this labor under the circumstances and in the manner described. On this issue, the jury found in favor of the Expanded Company, and the circuit court correctly affirmed the judgment of the common pleas court as to this item.
Another assignment of error made by the Noel Company relates to its claim for liquidated damages for $8,000.00, which it allowed the Cash Register Company for delays which were caused by the Expanded Metal Company. All of the allegations of the Noel Company, in connection with this matter, were denied by the Expanded Metal Company. It asserts that the deláys were caused by the alterations ordered by the owner; that it never had notice of any arrangement to compromise the claim of the Cash Register Company; that it was not a party thereto; that the amount fixed was purely arbitrary, and was not binding on it.
Much testimony was offered by the parties on the issue made by the pleadings in reference to the delays and the claim for liquidated damages therefor and the settlement thereof. It is insisted by the Noel Company that the court erred in its charge to the jury with reference to this issue. The court charged that the burden of proof was on the Noel Company to establish its claim that the delay was caused by the Expanded Company; that, by reason thereof, the Noel Company was obliged to pay or allow the Cash Register Company damages therefor; that the amount was reasonable and could have been recovered by the Cash Register Company against the Noel Company under the contract in an action at law; and that the number of days of such delay, including every working day, was forty days. The testimony showed that the Cash Register Company had originally made a claim for a much larger amount, and had claimed that there was a great many more days' delay than forty, and that, after many conferences, there was a final conference between the Cash Register Company and the Noel Company, in which it was arranged that the Cash Register Company should be allowed for forty days' delay at $200.00 per day.
Considering the issues made and the testimony offered by the parties concerning them, we think that the charge of the court was correct.
On a full consideration of the whole case, we conclude that the judgment of the circuit court should be modified in this respect, that it should have reduced the amount of the judgment of the court of common pleas by deducting therefrom the 3d, 4th, 5th and 6th items, as found by the jury in favor of the Expanded Metal Company, and should have affirmed that judgment in all other respects.
The judgment of the circuit court will be modified, as indicated.
Judgment modified.
Shauck, C. J., Donahue, Wanamaker, Newman and Wilkin, JJ., concur.