Board of Water Commissioners of Detroit v. Burr — 32 N.Y. Super. Ct. 25

Majority

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THE BOARD OF WATER COMMISSIONERS FOR THE CITY OF DETROIT, Plaintiffs, v. HENRY A. BURR and CHARLES ST. JOHN, Defendants.

Headnote

Where a contract for certain engines, pumps, and boilers provided that plaintiffs’ engineer should be at liberty at all times to require the rejection of any work which he should deem inferior, and of any material which he might deem of improper or inferior quality or strength, and to require the substitution of other work and materials, and the contract further provided for the payment of advances, as the work progressed, based upon the relative amount of the work furnished to the whole sum, and the principal contractors thereupon made a sub-contract through plaintiffs’ engineer with other parties, as to part of the work, according to drawings approved by plaintiffs’ engineer, and such work was subsequently accepted by said engineer as satisfactory; but where the contract also provided that, when completed, the said engines, pumps, and boilers should perform a stipulated duty; and where upon the trial of an action brought against the sureties of the principal contractors for the general non-performance of the contract, a conflict of evidence arose upon the following points:

1. Whether or not the principal contractors were improperly influenced by plaintiffs’ engineer in the award of the sub-contract to the sub-contractors;

2. Whether or not plaintiffs’ engineer, in order to bring about this award, agreed to be responsible that the sub-contractors would perform their work perfectly, and in full compliance with and satisfaction of the original contract;

3. Whether or not plaintiffs’ engineer in all which he did in regard to the sub-contract, acted as the agent of the principal contractors;

'á. Whether or not an interference took place by plaintiffs’ engineer with the subcontractors without the acquiescence of the principal contractors; and

5. Whether the acceptance of the work done under the sub-contract by plaintiffs’ engineer, was an acceptance on behalf of the principal contractors, or on behalf of the plaintiffs, and if on behalf of the latter, whether it was an absolute one or made for the sole purpose of making it the basis for an estimate for advances to be made under the original contract:

Meldy That by such conflict of evidence, clear issues of fact were raised for the determination of the jury under proper instructions from the court.

That it was error for the court below to determine as matter of law upon this evidence and to charge the jury in effect, that Any acceptance or approval of the work done under the sub-contract by plaintiffs’ engineer, no matter in what capacity or in what manner or for what purpose, relieved the sureties, although it did not relieve the principal contractors from their obligation that, when completed, the entire machinery should successfully perform the stipulated service, and that this was so, if the acceptance took place for the principal contractors only, under authority derived solely from them, and not for the plaintiffs.

That a contractor cannot appoint an agent and by that agent do an act which, would release his own sureties and destroy plaintiff’s right of action.

Where sureties have bound themselves by the provisions of their bond, that the contractors will perform and abide by any alterations which the parties to the contract

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may make therein, a direction to the jury contained in the general charge of the court, that if they come to the conclusion that material alterations have been made in the contract by the parties thereto, without the knowledge and consent of the sureties, or that there was any interference on the part of the plaintiffs without the consent of the sureties, to stop^there and find a verdict for the defendants, without any qualification of the language at the time, although the court, prior to the general charge, had, on plaintiffs’ motion, laid down a proposition containing the true rule of law—

[Decided December 4, 1869.]

Seld, That the general charge, if not erroneous, was at least calculated to mislead the jury, and that a new trial should he granted upon that ground.

Before Barbour, C.J., Monell and Freedman, JJ.

This case was tried before Mr. Justice MoCmsnsr and a jury.

The action was against sureties on a bond as follows:

“ Know all men by these presents, that we,, Henry A. Burr and Charles St. John, of the City of Hew York, are held and firmly bound unto the Board of Water Commissioners of the City of Detroit, incorporated by the Legislature of the State of Michigan, February 14, 1853, in the sum of fifty thousand dollars, to -be paid to the said commissioners, for which payment, well and truly to be made, we bind ourselves, our heirs, executors, and administrators, firmly by these presents. Sealed with our seals, and dated this nineteenth day of July, in the year eighteen hundred and fifty-six.

“ The condition of the above obligation is such, that if Edward H. Dickerson and Frederick E. Sickels, who have executed the annexed contract for engines and machinery, shall in all respects well and faithfully execute and perform, live up to and abide by the same, according to the terms thereof, and shall perform and abide by any alterations which the parties may make therein, then the above obligation shall cease and become null and void, otherwise the same shall be and remain in full force and virtue.

[l, s.] “ H. A. Bttbb.

[l. s.] “ Charles St. Johtt.

“Sealed and delivered in 1 presence of j

“ (Signed) ■ Geo. D. Sebgeabt.”

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The complaint alleged that a contract was made between the plaintiffs and Edward H. Dickerson and Frederick E. Sickels, by which Dickerson & Sickels agreed to build, furnish, and erect for the plaintiffs two engines, known as square engines, together with all and singular the pumps, boilers, and all other fixtures and apparatus necessary to put the engines and machinery in full and complete order for the purposes, and to perform the service mentioned in the proposals and specifications thereinafter referred to.

That by the contract it was provided that the engines/so to be constructed, should in all respects conform to the proposals and specifications appended to the contract, and that the engines should also, in all respects, conform to plans of the work, which had been certified by Dickerson & Sickels, and by the engineer of the plaintiffs, and that every thing in said proposals, plans, and specifications required to be done and furnished by Dickerson & Sickels should be done or furnished as therein set forth, except where the same were modified or changed by the contract, and that in all such cases the express provisions of the contract should prevail.

That by said contract it was further provided, that the engines should be capable of bearing a cold-water pressure of two hundred pounds to the square inch; that by the contract, it was provided, in case every thing contemplated or required by the contract should be built, and completed, and should successfully perform all that it was agreed to perform, that then the plfl.int.iffs should pay therefor, to the said Dickerson & Sickels, the sum of fifty thousand dollars as the contract price thereof.

That with the making of the contract, the defendants made and delivered to the plaintiffs the bond hereinbefore set forth.

It was further alleged, that the time for the completion of the work was from time to time extended; that the plaintiffs had fully performed the contract on their part and had made the payments therein specified. Then followed allegations of non-performance of the contract by Dickerson & Sickels; the expenditure by the plaintiffs of large sums of money in consequence of such non-performance, and a claim to recover therefor against the defendants.

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The defendants, in their answer, after denying performance by the plaintiffs and averring performance by Dickerson & Sickels, further alleged that the plaintiffs, by their engineer, assumed and undertook to make a building for said engines upon a plan which Dickerson & Sickels disapproved, but which the said plaintiffs insisted upon and guaranteed to be sufficient, and that when the engines were started it was found to be insufficient, and the plaintiffs refused to have it made safe by proper bracing necessary to enable the engines and pumps, to be built by Dickerson & Sickels, to perform the work provided to be done in their agreement.

Then follow allegations of acts of the plaintiffs, and of insufficient work procured by them under the contract, which hindered and delayed the contractors in completing the work.

On the trial, it was proved that one Houghton was the plaintiffs’ engineer, and had charge of the work to be done under the contract; and there was evidence tending to show his approval and acceptance of the work, but not that he had any special authority to do so. There was also evidence of alterations required by the plaintiffs to be made in the work from time to time.

The court charged the jury, among other things, that although Houghton had no special authority to approve of or accept the work, and snch approval or acceptance did not release Dickerson & Sickels, yet it did release the defendants as their sureties. The court further charged that if material alterations were made in the work by direction of the plaintiffs without the knowledge and consent of the sureties, the defendants were released.

The plaintiffs excepted to the charge.

The jury gave the defendants a verdict. ■

The exceptions were ordered to be heard at the General Term.

Mr. J. E. Burrill for plaintiffs.

The alleged approval or acceptance by the plaintiffs’ engineer during the progress of the undertaking of any part of the machinery prior to the completion of the whole, did not relieve

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Dickerson & Sickels, or the defendants, from their obligation, that when completed, the engines, pumps, etc., should perform the stipulated service.

Such right of approval did not authorize Houghton to reject any portion of the machinery in which the workmanship and. materials were good, and which was of the description called for by the contract, but he was bound to receive all such.

It was, therefore, error to charge that although Dickerson and Sickels were not relieved from their obligations in regard to the sufficiency or capacity of the work by any alleged approval or acceptance by Houghton, that such • acceptance did exonerate and discharge the sureties.

It is difficult to see how the defendants could be discharged from them obligation that the contractors shonld perform and fulfil their contract, by an act which did not afford to the contractors any excuse or justification for such non-performance and non-fulfilment. H the contractors could not set up such an act in defense of themselves, upon what principle can the defendants claim to be thereby relieved and discharged from their obligation that the contractors shall perform the contract ?

The court also erred in the charge that if alterations had been made by the original contractors without the knowledge or consent of the defendants, they should find a verdict for the defendants.

If such alterations were so made without defendants’ consent, the latter were (according to the charge) entitled to a verdict.

How can this charge be reconciled with the clause in the bond by which the sureties (defendants) became responsible for the due performance by Dickerson & Sickels of the contract, and any alterations which may be made therein.

Mr. John K. Porter, for defendants.

Houghton was the general agent of the plaintiffs in all that related to the contract and to work done under it, and all that he did and said in connection therewith, has the same precise

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legal effect as if it had been said and done by the^ plaintiffs when convened in full board.

“ Municipal corporations, acting within the limits of the powers conferred upon them by the legislature, in the exercise of a special franchise granted to them, and the performance of a special duty imposed upon them, are responsible for the acts and contracts of their agents, duly appointed and authorized, within the scope of the authority of such agents, in the same manner as other corporations and private individuals are responsible on their promises, express and implied ” (Clark v. Mayor of Washington, 12 Wheaton, 40; Devereux, Court of Claims R., 55; Sharp v. The Mayor, etc., of N. Y., 40 Barb., 274 ; Olcott v. Tioga R.R. Co., 27 N. Y. R., 558).

The plaintiffs, who were unable to fulfil their contract, and obtained an extension from the sureties by the representations of their engineer that he was their authorized agent, and that they guaranteed the boiler, the sufficiency of which was then in question, precludes them from taking the benefit of the extension, and repudiating the representations upon which they procured it.

It is also to be borne in mind, that the defendants neither became, nor assumed to become sureties, either for the performance by the plaintiffs of their portion of the undertaking, or for the competency, fidelity, or skill of Houghton, their engineer, or for the substitution of other parties to do the work undertaken by Dickerson & Sickels.

Again: The changes made by the plaintiffs in the plan of the foundation for the machinery in the building, their refusal to adopt the necessary expedients of internal walls, or external buttresses or braces, and their interference in regard to the construction of the boilers, constituted essential changes in the contract, going to its very root, and absolving the sureties, who never gave their assent, from all further liability.

The ' contract provided for model alterations in the work contracted for, such as the substitution of better work and materials for any the engineer might disapprove ; and this is the class of alterations to which the clause in the undertaking of the

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sureties appties; but no right was reserved to the plaintiffs and the contractors, to uproot the foundations of the written contract, and substitute other and more onerous burdens on the sureties, without their assent.

The sureties, by their undertaking, made themselves parties, as such, to the contract, and they were in no sense bound by fundamental alterations therein, made without their concurrence or approval.

The defendants not only did not consent, but they did not authorize Dickerson & Sickels to consent, that the plaintiffs be relieved from thevr obligation to furnish adequate foundations for the machinery, thus leaving the sureties at their mercy and converting the written agreement into a mere unilateral contract.

“Any agreement with the creditor, which varies essentially the terms of the contract,' without the assent of' the sureties, will discharge him from his responsibility ” (Sprigg v. Bank of Mt. Pleasant, 14 Peters, 208).

“If a surety be held upon" his contract, that contract must remain unchanged, unless by his consent, and he must be held according to the tenor of his contract, or not at all ” (Henderson v. Marvin, 31 Barbour, 297; McWilliams v. Mason, 6 Duer, 276 ; Smith v. United States, 2 Wallace, 219).

Again: The acts of the plaintiffs in respect to the foundations and the boilers, amounted not merely to a radical and vital change in the contract, without the assent of the sureties, but to a waiver and prevention of complete performance, which absolved the sureties from liability.

“ There can be no question but that hindrances by the defendant, rendering it impossible for the plaintiffs to fulfill their contract, would afford a legal excuse for their non-performance ” Stewart v. Keteltas, 36 N. Y. R, 390 ; Young v. Hunter, 6 N. Y. R., 206).

There was, therefore, no error in the charge of the court.

By the Court:

The contract provides that the contractors, Dickerson & Sickels, should build, furnish, and erect, in full

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and complete order, and according to certain proposals and specifications therein referred to, two square engines, with pumps, boilers, and all other fixtures and apparatus necessary to put the said engines and machinery in full and complete order for certain services to be performed by them, and that they should assume every risk and accident “ as their own responsibility.” The contractors bound themselves absolutely to furnish a completed contract in all particulars, and that the entire machinery should, upon actual test, successfully perform the stipulated services. By the express terms of the contract, the engineer of the plaintiffs was at liberty at all times to require the rejection of any work which he should deem inferior, and of any material which he might deem of improper or inferior quality or strength for the completion of the contract in the best manner, and to require the substitution of work and material which in his judgment would be proper and adequate. Provision was also made in the contract for the payment of advances, as the work progressed, based upon the relative value of the work furnished to the whole sum. The contracting parties evidently intended to leave a great many things open for subsequent arrangement between the contractors on one side and the engineer of the plaintiffs on the other side; they evidently foresaw that alterations in the contract even, might become necessary during the progress of the work. At any rate, the bond executed by the sureties, upon which this action is brought, expressly authorizes alterations to be made in the contract by the parties thereto without any qualification or reserve.

As a part of the entire machinery to be built and furnished, the contractors were bound to build and furnish certain boilers, which should bfe capable of bearing a cold-water pressure of two hundred pounds to the square inch. At the time the contract was signed, there was, as the learned justice presiding at the trial charged, and to which proposition no exception was taken by either side, no stipulation or condition in force by which Dickerson & Sickels were obliged to have the boilers built in any particular place, or by any particular person. They were entirely free to have them built by whomsoever they pleased, and were

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bound to have them well and properly built. They subsequently subcontracted with the firm of Johnson & Dunham, of the city of Detroit, for the building of the boilers, by written contract, bearing date January 27,1857, duly signed and executed by Dickerson & Sickels, as well as Johnson & Dunham. By that contract, the latter agreed, among other things, to make the said boilers according to certain drawings, which the evidence shows were agreed upon between Dickerson & Sickels and Mr. Houghton, plaintiffs’ engineer, and to warrant them to be tight under a cold-water pressure of two hundred pounds to the square inch, and to have them ready by a certain time, subject to the approval of plaintiffs’ engineer. Dickerson & Sickels, on their part, agreed to pay to the said Johnson & Dunham for the said boilers, when delivered and set up and proved to be tight, to the satisfaction of the engineer of the Waterworks of the City of Detroit, the sum of eleven and one half cents per pound for every pound weight of said boilers, in the following manner, to wit:

Fifty per centum of the whole sum during the construction of said boilers, whenever the engineer of the said Waterworks shall approve the work as far as it has gone, and the balance, fifty per centum, when the boilers are delivered according to contract and satisfactory to the engineer of the Waterworks aforesaid.

When the boilers were said to be completed by the boilermakers, they were subjected to the test pressure; they leaked and were rejected by plaintiffs’ engineer as insufficient. After that they were made sufficiently tight by men employed by the principal contractors, Dickerson & Sickels, for that purpose to stand, and they did successfully stand, a second test, and Mr. Houghton thereupon accepted them as satisfactory. It subsequently turned out, however, that although they had thus stood the test prescribed by the original contract, namely, the cold-water test, they could not during actual work stand the fire test, and' their insufficiency in this respect was one of the principal reasons assigned by the sureties for the general non-per

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formance of the contract on the part of the principal contractors. Now the court below charged that so far as Dickerson & Sickels were concerned, the alleged approval or acceptance by the plaintiffs’ engineer during the progress of the undertaking, "of any portion of the engines, boilers, machinery, or apparatus, prior to the completion of the whole, did not relieve Dickerson & Sickels from their obligations, that when completed, the engines, pumps, boilers, and other fixtures and apparatus, should perform the stipulated duty; but at the same time also charged, that so far as the sureties were concerned, it was otherwise; that the alleged approval by Houghton of the boilers, or of any of the work or material of them, relieved the sureties, and that this was so, if the acceptance took place for Dickerson & Sickels only, under an authority derived from them, and not for the plaintiffs. This part of the charge was in effect a direction for the jury to bring in a verdict for the defendants, and a compliance with this direction rendered it unnecessary, as the evidence stood, that the jury should consider, any other question submitted as a question of fact. According to this ruling, the contractors could appoint an agent, and by that agent do an act which would release their own sureties, and destroy the plaintiffs’ right of action, a result which they could not .accomplish by any act of their own. This is clearly error. There was a great conflict of evidence upon the following points among other questions:

1. Whether or not Dickerson & Sickels were improperly influenced by Houghton, plaintiffs’ engineer, to award the contract for building the boilers to the firm of Johnson & Dunham, at Detroit.

2. Whether or not Houghton, in order to effect this award, agreed to be responsible that the boiler-makers would make the boilers required in all respects perfect and in full compliance with and satisfaction of the original contract.

3. Whether or not Houghton, in all which he did in regard to the contract with Johnson & Dunham, acted at the request and for -the accommodation of Dickerson & Sickels.

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4. Whether or not material alterations were made by Houghton in the plans for the boilers without the full and hearty acquiescence of Dickerson and Sickels.

5. Whether the acceptance of the boilers by Houghton was an acceptance on behalf of Dickerson & Sickels, or on behalf of the plaintiffs, and, if on behalf of the latter, whether it was an absolute one, or made, as he testified, as all other acceptances of parts of the work during its progress were made by him, namely, for the sole purpose of making it the basis for an estimate for advances to be made under the original contract.

Upon all these questions evidence was permitted to be given both ways. A great portion of that evidence was received against the objections of the plaintiffs, and grave doubts may be well entertained as to the admissibility of most of such evidence, especially as it is very questionable whether Houghton could, under any circumstances, bind the plaintiffs by mere declarations, admissions, engagements, or acts on his part made and done outside of the line of the particular business, for which he was employed by the plaintiffs. There is no evidence that the plaintiffs ever had any thing to do with the giving of the sub-contract to Johnson & Dunham, or that they had ever heard of any arrangement between Houghton and Dickerson & Sickels in relation to it, or had in any way authorized it, and I do not find that the defendants make any such claim. But assuming that the whole of the evidence thus received under plaintiffs’ objection was properly admitted and was competent and material to the issues involved in the case, it follows as a necessary consequence that clear issues of fact were raised thereby for the determination of the jury under proper instructions from the court, and that it was error for the court, after the evidence had been thus received, to determine as matter of law upon the same, that ant acceptance or approval of the boilers by Houghton, no matter in what capacity or in what manner or for what purpose, or of any of the work or material of them, relieved the defendants as sureties from all liability whatever, although it did not relieve the principal contractors from their obligation, that, when

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completed, the entire machinery should successfully perform the stipulated service. Indeed I cannot perceive how the defendants as sureties could be thus held relieved even irrespective of the question of alterations in the contract, while the contractors remained bound.

Again the learned justice presiding at the trial appears to have tried the case throughout upon the theory that any subsequent alteration in the contract, even if made in perfect good faith and for the benefit of the contractors, if in point of fact made without the knowledge and consent of the sureties, had the effect to discharge the latter in the same manner as they would have been discharged, in case their bond did not provide for such alterations. It is true that in deference to a request made by plaintiffs’ counsel, the judge charged the following propositions :

1. By the condition of the bond, the defendants were required to perform and abide by any alterations in the contract with the plaintiffs, and the defendants were not discharged by such alterations, but were expressly bound by them; and

2. In determining the question whether Dickerson & Sickels, in fact, performed their contract with the plaintiffs, and whether the plaintiffs did any thing which excused Dickerson & Sickels from such performance, the jury should exclude any consideration of the defendants’ position as sureties, and determine sueh questions upon the evidence alone, precisely as they would upon the same evidence if Dickerson & Sickels were defendants.

But in his subsequent general charge to the jury, the judge used the following language :

“ The first question in order of consideration for you to determine is, whether material alterations have been made by the principal contractors (the Commissioners of the Detroit Waterworks and Dickerson & Sickels) without the knowledge or consent of these sureties. If you come to the conclusion that such alterations have been made, then your work is done, and you will find a verdict for the defendants.”

And in his closing remarks the judge again directed the jury, if they should find that material alterations took place in the

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boilers, or cmy portion of the work, between the contracting parties, Dickerson & Sickels, and the Commissioners of the Detroit Waterworks, without the knowledge and consent of the sureties, or that there was any interference on the part of the plaintiffs without the consent of the sureties, to stop there and find a verdict for the defendants.

These remarks were not confined to such alterations and such interference as prevented or .were calculated to prevent a proper performance of the contract; but according to them the jury was left free to render a verdict for the defendants for any alteration or cmy interference, without regard to its effect or consequence upon the work, or the performance of it by the contractors. This broad statement of a rule generally applicable to undertakings by sureties, cannot be reconciled with the special clause contained in the bond in this action, by which the defendants became responsible for the due performance by Dickerson & Sickels of .the contract, and cmy alterations which may be made therein. Therefore, if it was not error so to charge without any qualification of the language at the time, the charge was at least calculated to mislead the jury.

The views so far expressed render it unnecessary to pass upon the other exceptions taken by the plaintiffs.

The verdict should be set aside, and a new trial granted, with costs to abide the event.