Court Opinion

ID: 6809324
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:51:34.821941+00
Date Added: 2024-06-11T16:03:35.347163
License: Public Domain

Buchanan, J.,
dissenting:
I am unable to concur in the opinion and conclusion reached by the majority of the court in this case.
As I understand the law, the trial court erred in giving and refusing instructions to the jury to the prejudice of the defendant company, the plaintiff in error here, for which its judgment ought to be reversed.
By the third clause of the contract sued on it was agreed between the parties that it should be the duty of the chief engineer of the defendant company to make and certify monthly estimates of the work done and the' materials furnished, and the charges for the same according to the contract, and without his certificate no estimate was valid and no payment could be demanded; and, in all questions connected with such estimates and the amounts payable thereunder, the decision of such engineer was final and conclusive. It is clear from this provision of the contract that the parties thereto considered the possibility of differences of opinion, and of disputes arising upon the execution of the contract. It is to be presumed that it was also in their minds that it was possible that the engineer might err in the performance of his duties and in the determination of the matters which were left to his decision.
In order, therefore, that the interests of neither party might be placed in peril by dispute as to any of the matters covered by their agreement, or in reference to the work to be done, or the compensation to be pail, it was expressly stipulated that the engineer’s determination of those matters should be “final and conclusive on all parties.” That such was the effect of the provision of the contract referred to is settled by the decisions of this court and of the Supreme Court of the United States, and by the great weight of authority in this country. Kidwell v. B. & O. R. R. Co., 11 Gratt. *643676; Condon v. Southside R. R. Co., 14 Gratt. 302; Baltimore & O. R. R. Co. v. Polly, Woods & Co., 14 Gratt. 447; James River and Kanawha Co. v. Adams, 17 Gratt. 441 (note); Martinsburg & Potomac R. R. Co. v. March, 114 U. S. 549.
There is a provision in clause four of the contract for a final estimate, but it is clear that this final estimate provided for after the work was completed, did not nor was it intended in any way to destroy the finality or conclusiveness of the monthly estimates which are by the express terms of the third clause declared to be “final and conclusive on all the parties.’’ It was argued in the case of James River & Kanawha Co. v. Adams, referred to above, 17 Gratt. 441-442, that there was a difference between the conclusiveness of the monthly estimates and the final estimate, but Judge Moncure, in delivering the opinion of the court, showed with convincing force, that such monthly estimates as are provided for in the contract sued on were as final and conclusive as far as they went as the final estimate itself.
He says in that case: “Whether either are conclusive or not depends upon the contract which may make either or both conclusive, according to the intention of the parties. Sometimes these monthly or periodical estimates are obviously designed as mere approximations, to enable the company to make safe and reasonable advancements to the contractor during the piogiess of the work. All that is required to the validity of such estimates (it has been held) is, that they were made bona fide and with the intention of acting according to the exigency of the contract. Redfield on Railways, 207; Rouger v. Great Western Railway, 27 Eng. L. & E. R. 35-46.
If evidence at all in an action for the balance due on the completion of the work, they would be prima facie • or, if conclusive, it could only be an estoppel in connection with *644evidence of the assent of the parties. But ordinarily these monthly estimates are designed to be accurate and final, as far as they go; and sometimes the contract expressly provides that they shall be final and conclusive. Redfield R. R. 207; Herrick v. Belknap's estate, &c., 27 Vt. 673; Barker &c. v. Same, 27 Vt. 700. The contract in this case so provides. It prescribes the same mode of proceeding in regard to the final as in regard to the monthly estimates, and declares both alike final and conclusive. Indeed, it directs the final estimate to be made, not of the whole work, but of all work not embraced in former estimates. Thus showing that, in effect, the final estimate is the last monthly estimate, and all the monthly estimates, as far as they go, are final estimates. It is true that these monthly estimates are not final and conclusive as to matters not embraced therein, or not considered and estimated by the engineer in making them. In this respect they are unlike the final estimate which was intended and expressly directed to embrace £ all work not embraced in former estimates’; so that, while a part of the work might have been omitted in former estimates, because of its unfinished state or otherwise, it must of necessity be embraced in the final estimate. But, as to matters embraced in the monthly estimates, they are as conclusive as the final estimate. ’ ’
These monthly estimates being final and conclusive in their character, they could only be attacked for fraud, or for a mistake so gross as to imply fraud upon the part of the chief engineer. Whether there was such fraud or mistake is the gravamen of this action; and, without the allegation of fraud, or mistake so gross that it necessarily implied fraud, and proof thereof, the plaintiff was not entitled to recover.
If the proof in the case showed that the engineer -was guilty of such fraud or of a mistake in making up and certifying the monthly estimates, still the conduct of the plaintiff, although *645he was not satisfied with the determination of the engineer, was such as to conclude him for recovery in this action. In contracts where there is no provision for the arbitration or settlement of disputes and differences, as there was in this case, the rule is, if monthly statements are made by one party, upon an erroneous construction of the. contract, and the other party accepts such estimates, receives payments of the amounts shown to be due him, and gives receipts for such amounts, with full knowledge of all the facts, he is concluded by such statements, payments, and receipts, and cannot go behind them.
It was said by this court in Amer. Mang. Co. v. Va. Mang. Co., ante p. 272, that “if the defendant knew of any irregularity or had ground of complaint at the time these monthly statements, returns, and payments were made, it was the duty of the defendant to have made known and insisted upon its objections then; but if, instead of doing so, it accepted such payments, and gave receipts in full for the amounts shown to be due by such settlements and returns, it is concluded by the original amounts as fully as if formal and final settlement of acounts had been made between the parties, and the defendant cannot now go behind such settlements and receipts in full, without showing there was fraud or mistake in weighing the ore, or in making returns thereof according to the method actually adopted for weighing and making such returns. ’ ’
But in the case before us, the estimates made, and upon which the parties settled, were not made by either party to the contract, but by the chief engineer of the defendant company, selected by the parties for that purpose. His determination of the work done, materials furnished, and charges therefor, were declared to be final and conclusive on all parties, by an express stipulation of the contract. In such case, if there be objection to such estimate by either party, it is the duty of such party to make his objections at once, if he *646intends to instist upon them. He cannot accept them, receive what appears by them to be due him, give receipts in full for such sums, and afterwards question their correctness for any cause of which he had knowledge when he accepted such payments and gave such receipts. These monthly estimates and certificates were the awards of the chief engineer, who, by agreement of the parties, had been made the arbiter of these matters, and his determination or award was conclusive and final upon the parties, unless he was guilty of fraud, or such gross mistake as necessarily to imply fraud, in making such estimates. If such fraud or mistake existed, either party had the right to reject them and to refuse to be bound by them ; but neither party could act upon them and after-wards repudiate them, if he knew at the time he acted upon them by paying or receiving money, that the engineer or arbitrator -was guilty of fraud, or of a mistake so gross as necessarily to imply fraud. There can be no question in this case that the plaintiff, when he received the money shown by those monthly estimates to be due him, and gave receipts in full therefor; had full knowledge of every fact he now relies upon to show fraud or mistake. These monthly estimates, if fraudulent or so erroneous as to imply fraud, were voidable. The plaintiff had the right either to avoid them, or to conform them. He could not take under them and deny their validity,
Mr. Pomeroy says, in discussing the ratification of voidable transactions, that “while the party entitled to relief may either avoid the transaction or confirm it, he cannot do both; if he adopts a part of it, he adopts all; he must reject it entirely if he desires to obtain relief. Any material act done by him with full knowledge of the facts constituting the fraud, or under such circumstances that knowledge must be imputed, which assumes that the act is valid, will be a ratification.” 2 Pom. Eq. J’ur. sec. 916.
*647Wheie an award, either because the arbitrators have exceeded their authority, or because all matters submitted have not been considered, or for any other reason, is voidable, the parties may expressly or impliedly ratify it. After such ratification it can no more be objected to. 1 Amer. & Eng. Ency. of Law, 714.
In a note to the same volume of the Encyclopedia, page 714, it is said, that it was decided in Nell v. Fried, 72 Ga. 201, “that where matters of controversy between two parties were submitted to arbitration, and the party in whose favor the award was made received money and notes of other persons from the opposite party, in full settlement thereof, knowing at the time that there was a mistake in the calculation, by which the full amount of interest due him had not been allowed, he could not retain the amount received under the arbitration, and also sue- for the balance due by reason of the mistake. If he received the money and notes in full settlement under the award, after notice of the mistake, he must abide the settlement. ’ ’
In Morse on Arbitration and Award, page 530, it is said that where, as often occurs, an award is voidable, it is perfectly capable of being ratified, and that such ratification may be either express or implied; “it may be made by a written or verbal assent or acceptance, or it may arise from acts done by a party of such nature as to raise a presumption of assent or acceptance, which he will thereafter be conclusively estopped to deny.” Culver v. Ashley, 19 Pickering, 300.
One of the reasons why these monthly estimates are made final and conlusive is Ihat as the work progresses the difficulty of accurately measuring the different kinds of work done, whether in rock, coal, or clay, increases. The substances removed or covered up in the fills and the cuts or tunnels show less clearly how much of each substance they contained. The result is that it is simply impossible after a *648short time for even engineers of approved skill to make estimates that are correct, and any estimate which a jury may afterwards make is, at best, merely conjectural. Such provisions are therefore dictated by convenience, if not by necessity, tend to do justice to both parties, and are upheld and encouraged by the courts. Baltimore & O. R. R. Co. v. Polly, Woods & Co., 14 Gratt. at page 459-60.
It is, therefore, the duty of the party who objects to such monthly estimates to make his objection promptly. Unless it he so made, one of the chief objects for which these monthly estimates were made, wholly fails.
The chief engineer made the monthly estimates and certified them, as the work was done, beginning April 16, 1887, and continuing until June 20, 1888. Each of these estimates show ed the state of accounts between the parties up to that time, the balance due the plaintiff, which was then payable, and the amount reserved, as provided in the contract. When these estimates were made, from month to month, during that period, by the chief engineer, they were accepted by the parties, and settlements and payments made in accordance therewith. When each payment was made by the defendant, the plaintiff executed a receipt in full for the balance found to he due according to each monthly estimate, and such receipt was attached to the monthly statement, which showed clearly and distinctly the true state of accounts between the parties up to that date, according to the determination of the chief engineer. It is true that, during that period, the plaintiff showed some dissatisfaction with the prices that were allowed him by the chief engineer, hut he never declined to accept these monthly estimates, nor to receive the amounts which thej? showed he was entitled to, nor to give receipts in full therefor. Theie is no claim that he ever made any formal protest to the engineer of the defendant company, as to these monthly estimates.
*649He was asked these questions, among others:
Q. "When you were improperly estimated, did you make any objection to it, or did you state that you would claim the contract figures to the officers of the company, and if so, to whom ?
A. I stated once or twice to Mr. Coe that I considered that I 7?as entitled to $3.60 per cubic yard for the material, when the coal vein disappeared.
Q. "When was that ?
A. During the progress of the work. That I was not being properly estimated; that I was entitled to more money than I was getting, that is -what I told Mr. Coe.
Q. Did you have any further conversation with Mr. Coe on the subject ?
A. Not until I was informed that the last item sheet for the company had been sent into his office. Then I made an earnest protest to Mr. Coe that I would not receive the final estimate based upon $1.76 per yard.
On cross-examination he testified as follows:
Q. And when you went to him and complained about these things he told you that he did not think you were entitled to • any more ?
A. Yes sir.
The plaintiff had conversations during the progress of the work with some of the subordinate engineers of the defendant company, in which he claimed that he was not getting all-that he was entitled to under his contract, but during that same period, the plaintiff was, in effect, writing to the higher officials of the defendant company every month that these estimates were correct and satisfactory to him—for his receipts in full for the monthly balances must be construed to have that meaning. The action of the plaintiff in accepting such estimates, receiving payments in accordance therewith, and giving receipts in full therefor, were such acts, if true, *650as would estop the plaintiff from going behind the monthly estimates, and the jury should have been so instructed. If this view of the law be correct, the instructions of the court given upon the point, were clearly erroneous.
This court, upon the former writ of error in this case, in which the demurrer to the declaration was involved, construed the contract sued on; and by that construction we are, of course, bound. The only effect of the decision, however, was to hold that upon that construction of the contract, the allegations of each count in the declaration stated a good cause of action. But that decision did not deprive the defendant of the right to make full defense upon the merits of the case. Neither did it prevent it from showing that the parties themselves, as well as the chief engineer, had placed a different construction upon the contract from that placed upon it by this court, for the purpose of showing that the chief engineer was not guilty of fraud or mistake which implied fraud, in making his monthly estimates, and for the purpose of showing that the plaintiff had, with full knowledge of the facts upon which he relied to show the fraud or mistake, ratified and confirmed the monthly estimates, and was therefore estopped from denying that they were valid and conclusive as to the balances due him when made.
I agree with the majority of the court that the question whether or not the chief engineer was guilty of fraud, or of gross mistake in making and certifying the monthly estimates, was peculiarly within the province of the jury. It was of the utmost.consequence, therefore, that the jury should be properly instructed upon this question; and, whilst the instruction offered by the defendant company (No. 6), upon this point may not be an entirely correct statement of the law, the court ought not to have rejected it and refused to give any instruction in lieu of it.
Generally, if a party offers an incorrect instruction, the *651court is not required to give a correct instruction in lieu of it, unless its refusal to do so would mislead the jury. But where, as in this case, the court rejects the instruction of a party and gives its own instruction in lieu of his, it is clearly its duty to instruct upon every point upon which he asks instruction, if there be evidence tending to establish the facts upon which it is based. Upon this point, I think the trial court also erred to the prejudice of the defendant company.
I am of opinion that the judgment should be reversed and a new trial awarded.
Affirmed.