Court Opinion

ID: 6599364
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:06:21.183633+00
Date Added: 2024-06-11T15:57:57.775402
License: Public Domain

By the Court,

Cole, J.
It will be convenient for ns to consider the two main points in this case in the inverse order from that in which they were presented by counsel on the argument.
It appears from the record that the defendant below — appellant here — on the trial, called witnesses to prove his counterclaim set up in the answer, and offered to show the damages which he had sustained in consequence of the breach of the contract on the part of the plaintiffs. This testimony was objected to and excluded, on the ground, as stated in the bill of exceptions, that by the contract between the parties the only consequence of a breach thereof on the part of the plaintiffs was to give the right to the defendant either to declare the contract at an end, or to employ men for the completion of the work at the plaintiffs’ expense; and that no damages for a breach of the contract by them were recoverable as an offset to their claim. In other words, because the contract expressly provides “ in case it shall appear to the said engineer that the work is not progressing with sufficient rapidity to insure its completion within the specified time, then said party of the second part may employ other or additional help to hasten the completion of the work, and the expense of such help shall be paid by the said party of the first part to the said party of the second part, or the said engineer may in such case determine that the contract has been abandoned by the said party of the first part,” &c. — in consequence of the contract containing these provisions, all other remedies for a breach thereof were necessarily waived by the defendant. The question therefore presented • is, is this the correct construction of the contract, and has the defendant only the right to terminate the contract or complete it at the plaintiffs’ expense, without the right to resort to the usual remedies for its non-performance; or *409may he recover, by way of counter-claim, any damages which resulted to him from the breach thereof on the part of the plaintiffs ?
According to our view there is nothing whatever in the contract which, upon any fair construction, can be said to deprive the defendant of the right to claim and recover any damages which he may have sustained by a breach of its provisions on the part of the plaintiffs. The reservation of the power to amend the contract, if the work was not progressing with sufficient rapidity, or to put men on to complete it at the expense of the plaintiffs, cannot have the effect of destroying this right. Such provisions are common in this class of contracts, and are obviously inserted to secure the prompt completion of the work in a case where perhaps such completion might be of the greatest possible importance. They have not been construed as having the effect of depriving the party in whose favor they are made, of the liberty of resorting to the usual legal remedies for a breach of the contract; and we see no good reason for saying such an effect should be given them. We therefore deem the position untenable, that because the contract secured to the defendant the power to put an end to it whenever the engineer was dissatisfied with the progress of the work, or to employ men to complete it at the plaintiffs’ expense, this is exclusive of all other remedies, and bars the defendant from all right to claim damages for any breach of the contract. It follows from this that the circuit court erred in not permitting the defendant to prove the counter-claim set up in the answer. The contract likewise provided that monthly estimates of the work done and materials furnished by the plaintiffs should be made by the engineer as the work progressed, and that eighty-five per cent, of these estimates should be paid by the defendant in the manner therein provided. It was further agreed and stipulated that the remaining fifteen per cent, on the estimates should be retained by the defendant until the contract was completed and accepted by the engineer. *410We regard this fifteen per cent, as a fund in the hands of the defendant to indemnify him against any damages which he might sustain on account of the breach of the contract by the plaintiffs. Such being the obj ect of the retention of this fund, the defendant should Of course apply upon his damages this fifteen per cent, retained by him, and only have judgment for any excess of damages, if any were found due him.
The question arising on the other branch bf the case is, could the plaintiffs recover the fifteen per cent, which the defendant was authorized to retain until the completion of the work, without showing a performance of the contract, or an excuse for non-performance ? This claim of the fifteen per cent, constitutes one of the principal causes of action on the part of the plaintiffs; and it is claimed that, under the facts of the case, they were entitled to recover it. This claim is controverted on the part of the defendant, who insists that to entitle the plaintiffs to recover it they must show that they have performed the contract according to its terms, or were excused under the circumstances from a strict performance. This position seems to us incontestable. We have already stated that according to our view this fifteen per cent, was a fund in the hands of the defendant to indemnify him against any damage which he might sustain in consequence of a nonperformance of the contract by the plaintiffs, and to secure the due completion of the work. This appears to us to be the manifest object of retaining this per centage of the estimates. The language of the contract upon this point, after providing for the time and manner of paying the eighty-five per cent., is as follows : “ The remaining fifteen 'per cent, to be retained until the contract is completed and accépted by the engineer.” This language shows, we think, that this fifteen per cent, is not to be regarded as in the nature of liquidated damages for a breach ■of'the'contract, but rather as a penalty or fund to insure the proper completion of the work. The counsel for the appellant referred us to a class of cases where it had been held, on *411analogous provisions in contracts, that the per centum retained was intended as liquidated damages on failure to perform the work according to the agreement; hut it will be found that there were features in those contracts which distinguish them from the one we are considering. But it is very clear that unless the plaintiffs perform their contract as they agreed to do, or show some valid excuse for not performing it, they cannot recover this fifteen per cent. This is in accordance with the stipulation of the parties, and in strict harmony with many well adjudicated cases upon the precise point. See Danville Bridge Company v. Pomroy et al., 15 Penn. St., 151; Faunce v. Burke et al., 16 id., 469 ; Easton v. The Penn. and Ohio Canal Co., 15 Ohio, 79 ; Hennessey v. Farrell et al., 4 Cushing, 269; Redfield on Railways, section 8, p. 199.
It follows from these views, that the circuit court certainly erred in refusing to give the first, third and fourth special instructions asked by the defendant. The court likewise erred in giving the sixth instruction contained in the general charge. The principle involved in the first and third instructions is, in substance, that if the plaintiffs, without any default of the defendant under the contract, abandoned the work and failed to perform it as they had agreed to do, then they cannot recover the fifteen per cent, which was payable only on the completion and acceptance of the work. We have no doubt but this is a correct proposition of law, and it was strictly applicable to the facts and issues in the case. The conflict between the sixth instruction given and the remarks above made, as well as the conflict between such instruction and the fourth refused, will be apparent at a glance.
The judgment of the circuit court must be reversed, and a new trial ordered.