Camden Iron Works v. City of New York

Ingraham, J. : . The plaintiff filed a lien upon'an amount due to the defendant Masterson under a contract by which the plaintiff was to supply to Masterson certain iron pipe to be used by him in the performance of a contract with the city of New York. The plaintiff, after furnishing some pipe under the contract for which it was paid, refused to complete the contract upon the ground that the inspectors appointed by the city to inspect the pipe before delivery had acted unjustly and arbitrarily in rejecting pipe that the plaintiff proposed to deliver, and stated that it would not continue supplying the pipe under the contract unless this complaint was remedied. After considerable correspondence Masterson gave the plaintiff notice that, unless it complied with its contract within a specified time, he would procure the pipe elsewhere, and the plaintiff not complying with this notice, Masterson procured other pipe and so completed his contract with the city. After this notice was given the plaintiff shipped certain pipe to Masterson which he declined to accept, and it was to recover for this pipe so shipped that this action was brought. The contract between the plaintiff and Masterson was dated December 24, 1900,and recited that Masterson had, on the 16th day of November, 1900, entered into a contract with the city of New York to furnish and lay certain cast iron pipe and special castings, all as set forth in the specifications in said contract between the city and Masterson specifically referred to, and that the plain-. tiff agreed to furnish and deliver to said Masterson “ One-third (-J) — 274 — of the Cast Iron Pipes, and one-half (£) of the Special Castings named on page nine (9) of said specifications, and to ■ deliver them on cars at Aqueduct and Baldwin Stations and at stations between them, on the. Long Island Railroad, and the said William H. Master-son does hereby agree to receive the pipes and special castings at the above-named stations, and' to pay for them at the rate of Twenty-five dollars and forty cents ($25.40) per ton of 2,240 pounds for the straight pipes; three cents (3c) per pound for ordinary special castings’ and six cents (6c) per pound for such breeches pipes, as ’ may be needed. All of the1 said pipes and special castings are to be made in accordance with the specifications and plans of the Department of Water Supply, New York City, and are to be delivered by hot later than the first day of July, A. D. Nineteen hundred and two.” Subsequently, on February 5,-1901, by a subsequent contract, it was agreed that the plaintiff should furnish and deliver to Masterson one:half instead of one-third of the cast iron pipes therein mentioned. The contract between Masterson and the city of New York specified the quality of pipe and castings that were required and provided for certain tests to determine the quality of the pipe to be delivered under the contract. These tests were to be made by inspectors appointed by the city of New York at the cost and expense of Masterson. The specifications upon .which this contract was made between the city and Masterson provided for the- tests to-be made. One clause of these specifications provided: “ -The castings shall be free from scoria, scabs, cold shuts, sand holes, blow gates, gate shrinks, checks and core cuts, together with any and all imperfections ■ caused by cracked or crushed cores, or other defects- or imperfections caused by improper materials or manipulation. No plugging, cementing or other stopping up of the holes and flaws will be allowed, and no painting shall be done until after the castings have been inspected by the authorized agent.” Another clause provided : “ All the 48 inch pipe and special' castings shall be subjected to a proof by water pressure of 200 pounds to the square inch; all of the 36 in. and 30 in. pipe and special castings shall be subjected to' a proof by water pressure of 250 pounds to the square inch; all the pipe and special castings. of a smaller diameter than 30 in. shall be subjected to a proof by water pressure of 300 pounds to' the square inch. Each pipe while under the — 275 — required pressure shall be rapped with a hand hammer from end to-end to discover whether any defects.have been overlooked. Any pipe or special casting which fails under this test shall be rejected.. This inspection and test shall be made at the foundry under the direction of the Inspector and at the expense and risk of the Contractor.” Another clause provided: “ The Contractor shall notify the 'Engineer at léast seven (7) days previous to the commencement, of the manufacture of the castings, of the time and place where the; manufacture is to commence, in order that the Inspector may be present and supervise tile same; any or all castings which may be made without complying in every respect with the terms of this paragraph shall be rejected.” On the 3d of January, 1901, Masterson inquired of the plaintiff’s agent when the plaintiff would be' ready for the inspector of pipes,, and the plaintiff’s agent answered that it would require the inspector-in one or two weeks. Subsequently, on January 15, 1901, the-plaintiff wrote to Masterson, saying that it would be ready for-the inspector on the seventeenth. Shortly after the plaintiff commenced to complain of -the inspectors, and stated that the experience that it had had with this inspector in the past was such as-to warrant it in strongly objecting to his selection for this part of the work; that it was impossible to make pipes which were absolutely perfect in all points, and that the inspector referred to, on previous work, made it a practice to reject thoroughly good pipe fully coming up to the spirit of the specifications, and pipes that would be accepted by other inspectors. Again, on January 24, 1901, the plaintiff asked whether Masterson had been able to secure “ satisfactory inspection.” And on January twenty-fourth Masterson wrote to the plaintiff to say that he hoped to be able to give definite information in regard to having the inspector transferred. Again, on February twenty-sixth, Masterson wrote to the plaintiff stating that he had endeavored .to obtain instructions for the inspector to accept certain pipes which he had rejected. On September 18 and 23, 1901, the plaintiff again' complained that certain of its pipes had been rejected for unimportant defects, and that the work had been stopped because of impracticable inspection. During all this time Masterson was insisting upon the plaintiff’s complying with its contract; that he had not the control of the inspector, and that. — 276 — plaintiff should supply pipe in accordance with- the contract that it had made, and there were constant promises by the plaintiff to Comply with these demands. In July and August, Masterson was insisting, upon the plaintiff-complying with its contract, and complaining of lack of pipe ■required for the work, to which plaintiff replied by constant complaint as to inspection, with promises to ship the pipe; and finally, on September 16, .190.1, the plaintiff wrote .the defendant: “We have been doing our utmost to furnish the needed castings on your order in spite, of most unreasonable, retarding and exceedingly ■costly Inspection. Rejections of large expensive pieces have been made steadily, for most trivial reasons, until now we are compelled to advise you Jhat until ,the difficulty is remedied, we shall’ be obliged to cease making any further pieces, either of specials or of pipe. It is impossible to work under the unprecedented treatment which we have suffered under this present inspection. * * * In the face of this experience we are helpless and we are compelled, therefore, to write as above that we cannot proceed under such experience.” In - answer to - this letter, on September., seventeenth, Masterson wrote the plaintiff : “ Answering your letter of 16th, regarding inspection we submitted your letter this a,,, m. to the Department ■ and were informed that- the trouble lies in the' pipe and castings which do not come, up to the requirements. Now of course We have done what we could in this matter previously and how, but can accomplish little. You state you shall be obliged to cease making the pipe and specials, and this Mull place us in a bad position as we need the specials in the.worst way as you are aware.. Can you not hurry the^36" pipe and 24" curves as per our telegram. ? These are essential to further progress in the work on the first section.” On November 19, 1901, Masterson wrote the plaintiff that he had not received a shipment of straight pipe since October second, and asking if the plaintiff had cast any since, as lie, would like to know how .the matter stood; and on- November twentieth the plaintiff Mu-ote , to Masterson: “We note your esteemed favor of the 19th as to 48" B. & S. pipe. We. wrote you that the inspection under which we have been compelled',to work had become unendurable, and we 'declined to make any more pipe until we could be kssured of fair and reasonable treatment. We have awaited the action of the( — 277 — Department on this point. When they are ready to furnish us with an inspector who will treat our work as do other inspectors — even the most exacting — we will arrange to put in your work in the space occupied by other work which we put in while this question was unsettled, and which will run out in two or three weéks. There are many pipes now in our yard — rejected fortrifling reason— which should be taken, and we hope consent will be given to ship them.” On December 4, 1901, Masterson wrote that the plaintiff had failed to observe the conditions of its contract from the beginning, not only in the quality of pipe delivered, but as to the time of delivery; that the damage that Masterson had suffered was very great; that in a letter of November twentieth from the plaintiff it refused to make further deliveries unless Masterson was able to control the inspection of the city' — a matter absolutely beyond Masterson’s power; and the letter continued: “ I therefore give you notice that unless you proceed at once, within five days to make proper, sufficient and continuous deliveries of pipe under my contráctil will treat your failure so to do as a breach of contract, purchase the pipe elsewhere, and hold you responsible, both for the past and future damages resulting from your conduct.” , It was proved on behalf of the defendant that the last delivery that was made by the plaintiff of any straight pipe was on October 2, 1901; that- there was some special sent after that, but no straight pipe delivered, and there was no attempt to comply with this notice of December 4, 1901, by the plaintiff until the latter part of December. There is no dispute but that the plaintiff, prior to its letter of November twentieth, had stopped work under the contract, had refused to make any more castings until an inspector was appointed who would meet with its views as to the sufficiency of the pipe, and then stood on its notice that it would refuse to further comply with the contract. The necessities of the situation required that Masterson should obtain pipe to complete his contract with the city, as he was under very severe penalties for a failure to comply with it, and immediately after the letter of December fourth he endeavored to secure pipe from other foundries, and finally succeeded in February in making a contract under which pipe was delivered and used. The inspectors who had acted on behalf of the city were called and testified as to the inspection. They testified — 278 — that they acted in entire good faith in rejecting the pipe, and that it did not comply with the contract and specifications, and the whole evidence shows that Masterson did everything that he could do to secure inspectors who would he satisfactory to the plaintiff. It is apparent from this testimony that when it made the contract the plaintiff understood the situation and the conditions of the contract and specifications between Masterson and the city. It understood that the pipe which it' furnished for Masterson was to pass an inspection by the city inspectors, and the pipe whicli the city, inspectors refused to accept would be perfectly useless to Masterson as it could not be used by him in his contract with the city. A contractor under those circumstances would not be justified in refusing to comply with his contract because the inspectors, who- by the contract were to determine what pipes should be accepted as a compliance with the contract, refused to accept pipes which he claimed should be accepted. What the plaintiff wanted was to have its views as to the quality of, the pipe which it manufactured adopted, instead of the views of the inspectors who by the contract with the city were to determine whether or not the pipe was of the quality-required by the contract, and when plaintiff took the position that it would refuse, to deliver anymore pipe until the inspectors who were to determine whether the pipe was in compliance with the contract or not were changed, there was a distinct breach of its contract which justified Masterson in terminating it and refusing to accept any pipe subsequently offered, and when Masterson in his letter of December 4, jL901, gave the plaintiff five days’ notice to commence delivery of the pipe according to its contract, with a notice that unless it commenced such delivery within that time he would make other arrangements for the completion of the Contract, and the plaintiff failed to comply with that notice, there was an end of the contract, and Masterson was under no obligation to accept further, pipe shipped by the plaintiff. From beginning to end the plaintiff took an untenable position in regard to this inspection, and there is not a particle of evidence to show that there was any bad. faith on the part of Masterson or the city authorities. The utmost that can be said is that there was a difference of opinion as to the ■quality of the pipe manufactured by the plaintiff and the inspectors of the city, a condition which the -clauses in the contract and speci — 279 — fications requiring an inspection by the city inspectors was. expressly designed to meet, and by it the determination of that question was to rest upon the city inspectors. The principle stated in Montgomery v. Mayor (151 N. Y. 249), I think, applies. That was an action by contractors against the city for damages sustained in consequence of the arbitrary acts of the inspector in refusing to accept materials which the plaintiffs contended were a compliance with the contract, but which the inspector had declined to pass. In affirming a judgment for the defendant in that case the court said: “ The effect of these provisions was to vest in the inspector a right or capacity to pass upon the performance of the work, which came very near to constituting him, as • between the parties, the judge as to that matter. The plaintiffs’ ' cause of action for damages is based upon an increased cost of the work, alleged to be due to' the action of the inspector in delaying' the work, through his rejection of. materials which were in accordance with the plans and specifications. The plaintiffs’ evidence" shows that the inspector frequently did reject the pipe and cement intended to be used, and, possibly enough, that he was very arbitrary in doing so. * * * It may be true that his objections were not sound, and perhaps his superior officers should have listened more indulgently to the plaintiffs’ complaint concerning the inspector’s action. But, assuming the truth of all this, we fail to see how any cause of action has arisen against the city for these damages. It would be very extraordinary, and we think it would constitute an unsafe precedent in future cases, if contractors with the city under these contracts could maintain actions against it for damages, where the execution of the work contracted for was delayed, upon the ground that the delay was caused by the officers ■ who, by the force of the contract, were invested with the power of supervision.” While in this case the plaintiff was not executing a contract made between itself and the city, it was proceeding to supply to a city contractor pipes which were to be used under the contract with the city, with knowledge - of the fact that before Masterson could use these pipes they would have to be accepted by the city’s inspector who, under the contract between Masterson and the city, was given authority to pass upon the quality of the pipe to be used in the per280 , formance of the contract with the city. In the absence of any proof of bad faith on behalf of Masterson,. the city or the inspectors in rejecting pipe manufactured by the plaintiff, the plaintiff could not insist that its pipe should be. accepted when rejected by the inspectors. If, however, the pipé rejected did comply with .the contract and plaintiff was not bound by the decision of the inspect- . ors, it could havé 'délivered the pipe to Masterson and then insisted on such a: delivery as a performance of the contract. Whether or not this inspection was arbitrary or unnecessarily severe is not the question ; and the testimony which w.as excluded" by the court was entirely immaterial in determining the question at issue, for, upon the undisputed testimony;, the plaintiff gave notice to Masterson that it would refuse to proceed further with its contract, and Masterson' acted upon that assumption, treated the contract as terminated and proceeded to obtain the pipe necessary from other parties. I think that Masterson thus acted clearly within his right, and that the plaintiff had nó cause- to recover for the pipe subsequently delivered. My conclusion is that the. judgment appealed from’ should be affirmed," with costs. McLaughlin and Laughlin, JJ., concurred; Van Brunt, P. J., ’ and Patterson, J., dissented.