Court Opinion

ID: 5202206
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:54:34.648465+00
Date Added: 2024-06-11T08:27:13.323089
License: Public Domain

Soott, J.:
I should find no difficulty in concurring in the affirmance of this judgment, as modified in accordance with the views of Hr. Justice Clarke, were it not for the provisions of clause O of the contract respecting the damages to be paid by the contractor in case of his abandonment or non-fulfillment of the contract. That clause reads as follows:
“ O. The said contractor further agrees that if the work to be done under this contract shall be abandoned, or if at any time the engineer shall be of the opinion and shall so certify in writing to the company that the said work is unnecessarily and unreasonably delayed, or that the said contractor is wilfully violating any of the conditions or agreements of this contract, or is not executing said contract in good faith, or fails to show such progress in the execu*674tion of the work as will give reasonable grounds for anticipating its completion within the required time, the said company shall have .power to notify the said contractor to discontinue all work or any part thereof under this contract; and thereupon the said contractor shall cease to continue said work, or such part thereof as the said company may designate, and the said company shall thereupon have ' the right, at their discretion, to contract with other parties for the delivery or completion of all or any part of the work left unexpended by said contractor, or for the correction of the whole or any part of said work. And in case the expense so incurred by said company is less than the sum which would have been payable under this contract if the same had been, completed by said contractor, then the 'said contractor shall be entitled to receive the- difference; and in case such expense shall exceed the last stated sum, then the contractor shall on demand pay the amount of said excess to the said company on notice from the said com/pany of the excess so due; but such excess to be paid by the contractor shall not exceed the amount of the security for the performance of this contract.”
As I read that clause it is intended to cover and provide for the cases in which the water company would be justified in treating the. contract as at amend and taking the work into its own hands. This it might do either (1) if the contractor abandoned the work; or if (2) the work should be unnecessarily or unreasonably delayed ; or if (3) the contractor should willfully violate any of the conditions or agreements of the contract; or if (4) the contractor should not be executing the contract in good faith; or if (5) the contractor should fail to show such progress as would give a reasonable ground for anticipating the completion of the work within the required time. In case any of these conditions arose the company reserved the right to treat the contract as forfeited and to proceed with the work itself. In examining these conditions it will be seen that the first, to wit, abandonment of the work, was of such a nature that its existence, if it should exist, would be patent and apparent, while the other conditions implied the formation of an opinion based upon patent facts. Thus if there were delay, it would be a matter of opinion whether or not that delay was necessary and reasonable; if it was claimed that the contractor willfully violated the terms of his contract, a question of judgment or opinion would at once arise, and *675so as to the good faith in executing the contract or the probability of completing the work in time, a like question of judgment or opinion was necessarily involved, while an abandonment of the work by the contractor would be visible and apparent, as a fact, to any observer, and involved no exercise of judgment or expression of opinion. So we find in the clause quoted a provision that as to any of the possible breaches by the contractor, except abandonment of the work, the action of the company in electing to terminate the contract must be predicated upon a certificate of the engineer, by another clause created arbiter bétween the parties, that in his opinion the contractor has failed in some of the particulars mentioned in the clause, but in case of an abandonment of the work no such certificate is provided for, for the obvious reason that no such certificate would be appropriate or necessary to establish a patent fact. By the strict letter of the clause, and from the nature of the case no certificate of the engineer expressive of his opinion is required, when, as in this case at bar, the contractor’s default consists of an abandonment of the work. The plaintiff’s liability rests on the finding that it unwarrantably abandoned the work, and this was the position assumed by the defendant when, under date of December, 1900, it finally notified the plaintiff that the latter had abandoned the work, and that the water company elected to treat such abandonment as a breach of the contract, and would itself at once proceed with the work. It seems to me that there was then presented the precise condition contemplated by and provided for in the clause quoted above to wit, an abandonment of work by the contractor, and election by the water company to treat such abandonment as a breach of the contract; a notification of such election to the contractor, and the completion of the work by the company. There was no certificate by the engineer, but as already shown that was not required where there was a complete abandonment.
The consequences following upon an election by" the water company to terminate the contract are precisely defined by the clause quoted. It was authorized to contract with other parties for the completion of all work left uncompleted by the contractor, and this the company proceeded to do. The clause then provided, as is usual in such contracts, that if the expense incurred by the company in completing the work should be less than would have been payable *676to the contractor if it had completed it, then said contractor should be entitled to receive the difference; and if the expense should exceed the amount which would have been payable to the contractor if it had completed the work according to the contract, then said contractor should, on demand, pay to .the company the difference. Then follows an unusual clause, which as I consider limits the amount which defendant may recover under its counterclaim.- It reads as follows: “ but such excess to be paid by the. contractor. shall not exceed-the amount of the security for the performance of-this contract.” This clause is, as has been said, unusual, and, as the event discloses, affords the defendant most inadequate damages for the contractor’s default, but we cannot, disregard it merely because it is unusual, or will result in providing inadequate relief. It is not our place to make a contract for the parties, but merely to interpret and enforce the contract which they made for themselves. •
It is idle to speculate upon the reasons which led to the insertion of-that clause in the contract. It is sufficient that it is .there, and it would be difficult to compose a phrase which would more effectually or completely limit the amount of damages to be paid by the contractor under the circumstances disclosed by the record before •us. Unless,.therefore, the plaintiff has in some way waived -the right to insist upon this limitation of its liability, I can see no escape from its application. It is suggested that it lias waived it by its pleadings, and by its course in this litigation. The complaint alleges the making of the contract, its breach by the defendant and demands damages. The answer denying plaintiff’s allegations sets tip a counterclaim alleging abandonment of the work by plaintiff; that'defendant has thereby suffered damages, and asks judgment therefor. The reply is a general denial of the allegations of . the counterclaim. The plaintiff thereby denied both that it had broken its contract and that defendant had suffered damages thereby. The special clause under consideration could not have been pleaded either as a complete or a partial defense. It went not to the defendant’s right to recover damages, but merely placed a limit upon the amount which could ultimately be recovered. It, therefore, had no proper place in the reply, and its omission therefrom cannot be construed into a waiver.
It certainly seems to be a surprising fact that in the six years *677during which this case has been pending, including two long trials before referees, three appeals to this court and one appeal to the Court of Appeals, the attention of the court should not have been called to this particular clause in the contract until after the oral argument on this appeal, but that circumstance does not, in my opinion, justify us in holding that the plaintiff had waived its benefit. The first appeal to this court, and the appeal to the Court of Appeals, dealt only with a demurrer to-the answer. On the first trial judgment went for the plaintiff, and only the plaintiff’s right to recover was before this court on the appeal from that judgment. Of course no question then arose respecting any limitation there might be in the contract affecting a possible recovery by defendant against plaintiff.
Upon the last trial only did the question as to how much defendant should recover from plaintiff become important. ' The plaintiff might well then have called the attention of the referee to the limitation contained in clause O of the contract, but if it had done so, while a different judgment might have been entered, no different issues would have been presented for trial. The record shows that the plaintiff’s position throughout was that it was the defendant who was in fault, and the plaintiff who was entitled to damages, and notwithstanding the limitation upon defendant’s recovery, if it should recover, it was still necessary that defendant should offer proof of its damages, for the clause quoted was not a stipulation for liquidated damages, but merely a limitation upon the amount to be recovered by defendant in case of a breach by plaintiff. The defendant could not recover, in any event, more than the amount as limited, and could not recover even that, unless it proved so much.
In point of fact the defendant proved vastly more, and, in my opinion, this being an action triable by a referee, it is unnecessary to direct a new trial, but the judgment should- be reduced to §25,000, with interest from date of service of the counterclaim, • and the costs included in the judgment, and as so modified affirmed, without costs in this court.
Judgment reversed, new trial ordered, costs to appellant to abide event unless defendant stipulates to reduce the judgment as indicated in opinion, in which event judgment as so modified affirmed, without costs. Settle order on notice.