Degnon Contracting Co. v. City of New York

Greenbaum, J.: The third, sixth and seventh causes of action alleged in the complaint are the only ones involved on this appeal. The “ seventh ” is for damages alleged to have been sustained from the defendant’s breach of the contract occasioned by the delay on the part of the engineer of the Public Service Commission in furnishing the plaintiff with certain steel drawings as required by the contract for long — 392 — and unreasonable periods of time and in furnishing the drawings at irregular intervals and in a non-consecutive order, thereby increasing the cost of performance of the contract. The “ third ” and “ sixth ” causes of action are for the construction of what is called “ By-passing.” By that term is meant the temporary cutting out or non-user of the gas mains under the street and the laying of substituted temporary overhead gas pipes until all danger attendant upon the use of the original pipes is passed. The plaintiff, respondent, claims that it is entitled to be recompensed for the expense involved in constructing the “ by-passing.” The jury found in favor of the plaintiff on both claims, i. e., the sum of $153,553 for the item of delay and $31,263 for “ by-passing,” to which the court afterwards directed the clerk to add interest. The first question that confronts us is whether the defendant is liable for the delays in furnishing the steel drawings to the plaintiff on the part of the engineer of the Public Service Commission. There were three general sets of plans or drawings provided for by the contract. The first set of plans are known as contract drawings, which are delivered to bidders for the contract at the charge of five dollars for a set. The second set of plans are known as construction or amplifying drawings showing the location, elevation of the structure and its appurtenances and the various details connected therewith and are required to be furnished from time to time by the engineer of the Public Service Commission. The third set of plans are made from the amplifying drawings and are known as shop drawings giving minute details of the steel construction. These last-named drawings are made in the first instance by the contractor and are submitted to the engineer of the Public Service Commission for his approval. The theory of the plaintiff’s claim is that if it had been furnished with the amplifying plans at the time operations were started in January, 1913, the performance of the contract would have been completed by September, 1914. The rule ordinarily applicable to the construction of contracts between private individuals and private corporations is that where the language of the agreement manifests a clear intention that the parties shall do certain acts, an action for damages for non-performance thereof will lie. It is upon this proposition that the plaintiff rests its claim, relying upon the case of Mansfield v. N. Y. C. & H. R. R. R. Co. (102 N. Y. 205) and which Mr. Justice Merrell cites in his dissenting opinion. But it must be manifest that where a contract between the parties does not clearly indicate that one of them will be responsible for certain acts complained of, the rule is not applicable. — 393 — The Public Service Commission of the First District, at the time in question, was charged by law with the preparation of plans for the construction of subways, and the contract in terms states that it was made under the authority of the Rapid Transit Act. (See Laws of 1891, chap. 4, § 6, as amd. by Laws of 1909, chap. 498, and Laws of 1910, chap. 205; Id. § 26, as amd. by Laws of 1909, chap. 498; Laws of 1910, chap. 205, and Laws of 1912, chap. 226, renumbering § 34, added by Laws of 1894, chap. 752, as amd.) It has been repeatedly held that the Rapid Transit Railroad Commissioners, as they were formerly termed, or the Public Service Commissioners of the First District, as their successors at the time in question were called, and who have been since superseded by the Transit Commissioners, are not agents in a general sense of the city of New York, nor are any of their employees to be regarded as such agents. The Public Service Commission is a State body, independent of the municipal government. (People ex rel. New York Dock Co. v. Delaney, 192 App. Div. 734, 739.) In actions for injuries brought on the theory of negligence it has frequently been held that the negligence of the Commissioners or their agents is not imputable to the city. (O’Brien v. City of New York, 182 App. Div. 810, 813.) The Massachusetts Supreme Court has also so held. (Mahoney v. Boston, 171 Mass. 427; Murphy v. Hugh Nawn Contracting Co., 223 id. 404; McGovern v. Boston, 229 id. 394.) In the last-mentioned case (McGovern v. Boston, supra) the plaintiffs had made a contract with the city of Boston through the Boston Transit Commission, a body created by law,* similar in its essential aspects to our Public Service Commission of the First District. The action was brought to recover from the city of Boston the sum of $240,000, the alleged additional sum required in the performance of the contract by reason of certain acts of commission or omission on the part of the Boston Transit Commission and its engineer in concealing from them the true character of the material which would be necessary for them to remove and of which the commission was apprised as a result of borings which had been made. The court held that in making the contract in question “ the members of the Boston Transit Commission * * * were not servants or agents of the city, but acted as public officers. As such the city is not liable for their negligence.” The court further stated (pp. 397, 398): “As the city cannot be chargeable upon an express contract entered into in contravention of the statute,† it is equally — 394 — plain that no recovery can be had upon an implied contract: to permit such recovery would be to defeat one of the purposes for which the statute was enacted. To allow the plaintiffs to recover upon a quantum meruit would be contrary to the spirit as well as to the letter of the statute, and would be in plain disregard of its terms. (Bartlett v. Lowell, 201 Mass. 151.) The statute evidently was enacted to safeguard the interests of the defendant; it cannot be evaded or annulled, and must be held to be in full force and effect.” In the instant case the theory of the complaint is that the acts of the Commission or its chief engineer were careless, in that they delayed in giving certain plans to the plaintiffs. In other words, the real basis of the claim is the negligence of the engineer or his subordinates. The contract in suit specifically provided as to detail drawings as follows: “ Section No. 36. The Engineer [referring to the engineer of the Public Service Commission] will prepare and furnish to the contractor, from time to time as required, drawings and plans amplifying such details of the contract drawings as may be necessary; and drawings and plans necessary to show the adjustment and reconstruction of all surface and sub-surface structures wherever the reconstruction of the same is necessitated by the construction of the railroad. These plans must be strictly followed, unless local conditions should develop, during the construction, suggesting changes, when, with the approval of the engineer, such changes may be permitted.” Under article 24 it is provided that the engineer “ shall determine all questions in relation to the works and the construction thereof and shall in all cases determine ■ every question which may arise relative to fulfillment of this contract on the part of the contractor. His determination and estimate shall be final and conclusive upon the contractor, and in case any question shall arise between the parties hereto, touching this contract, such determination and estimate shall be a condition precedent to the right of the contractor to, receive any money under this contract.” It thus appears that the parties by express agreement have recognized that the engineer occupies a position over which the defendant has no control and that both the defendant and the plaintiff would in many instances be absolutely bound by the decision which the engineer may make, assuming, of course, that it is not made as the result of fraud or of bad faith. It is difficult to understand upon what theory the city may be held liable for the acts of the engineer in delaying the delivery of plans to plaintiff who knew or was presumed to know the provision of the statute and the con — 395 — tract, which conferred the power upon the engineer to prepare plans and furnish them to the contractor. It would seem to follow that it must have been understood by the parties that for any negligence or delay occasioned by the engineer in respect of a matter under his jurisdiction and over which the city had no control whatever, the city could not be held responsible. Moreover, the contract contains a provision which requires the construction work to be performed thereunder to be completed within a certain time and also provisions to the effect that if the contractor is delayed by causes over which he has no control he would be entitled to additional time for completing the work, to the extent to which he has thus been delayed. Even if wre assume that the city might under certain circumstances be liable, it should at least then be made to appear that the defendant was duly notified of the delay to which the plaintiff was put, to afford an opportunity to the city to remedy the troubles complained of, if it was within its ability or power so to do. Article 43 of the contract reads as follows: “ Contractor’s claims for damage. Statement of damage to be filed with the engineer. Article XLXII. If the contractor shall claim compensation for any damage sustained by reason of the acts of the Commission, or its agents, he shall, within ten days after sustaining such damage, make a written statement of the nature of the damage sustained to the engineer. On or before the 15th day of the month succeeding that in which any such damage shall have been sustained, the contractor shall file with the engineer an itemized statement of the details and amount of such damage, and, unless such statement shall be made as thus required, his claim for compensation may be forfeited and invalidated, and he shall not be entitled to payment on account of any such damage.” It seems to me that this was a precautionary provision which was designed to prevent such a claim as the one here asserted. Assuming, however, that a liability against the city under this clause could be predicated under the acts of the engineer of the Commission, then we must treat this clause as meaning that there would be a strict compliance thereof by filing the statement as therein required, and a failure so to do is fatal to a recovery. But assuming that the city is liable for damages, it is clear that it is incumbent upon the plaintiff to establish damages which directly resulted from the acts complained of. In this case it appears that the plaintiff had subcontracted the work. There was no evidence to show that the plaintiff had either voluntarily adjusted any claim flowing from the delay by the subcontractor asserted against it, or that any judgment for damages resulting from the delay com — 396 — plained of in this case was recovered by the subcontractor against the defendant. The rule has been stated in Dunn v. Uvalde Asphalt Paving Co. (175 N. Y. 214, 218) as follows: “ The contract of indemnity implied by law, in favor of one who is legally liable for the negligence of another, covers loss or damage, and not mere liability. (Sedgwick on Damages,* sec. 785; Oceanic S. N. Co. v. Compania T. E., 134 N. Y. 461; Village of Port Jervis v. First Nat. Bank, 96 N. Y. 550.) On the other hand, such loss or damage may be voluntarily paid by the innocent party who is legally liable without waiting for judgment. (Thompson on Negligence, p. 789; Gray v. Boston Gas Light Co., 114 Mass. 149, cited with approval in Oceanic S. N. Co. v. Compania T. E., 134 N. Y. 461), but, in that event, he undoubtedly assumes the risk of being able to prove the actionable facts upon which his liability depends as well as the reasonableness of the amount which he pays.” I think the measure of damages is also criticizable for other reasons. Thé court permitted expert testimony to be given to show how long it would take to complete the work under ideal conditions. While it may be true that the engineer of the Public Service Commission had a right to give defendant certain latitude in the manner of continuing and progressing the work, nevertheless, the engineer of the Public Service Commission was really the only one who could determine how the work should be performed, so that what may be regarded by others as an ideal condition cannot control the rights of the parties. The theory of damages allowed by the court was based upon the difference between the contract price and the cost of doing the work in the most approved manner as evidenced by the testimony of alleged experts as to what in their opinion would be the most economical and most expeditious way of doing the work. The contract did not provide when the drawings were to be furnished by the engineer. The engineer had the absolute power to determine in what manner the work was to be done. In the absence of proof that the actions of the engineer were corrupt or malicious, they should not be subject to review by the court. If outside testimony should be permitted to be given that the work could be prosecuted more expeditiously than by the method adopted by the Commission’s engineer, the value of a public contract would be nil. The rule of damages applicable to a case like this was discussed in the case of Uvalde Asphalt Paving Co. v. City of New York (196 — 397 — App. Div. 740). It was there pointed out that the rule of damages applicable to a breach of an executory contract is different from that arising upon an executed contract. We there stated with reference to the rule of damages under an executed contract (p. 762) that “ in such a case it is incumbent upon the one who claims to have been damaged to show how much the cost of doing the work was increased by the improper acts of the other party. He should be limited to the precise damages that he actually sustained by reason of the interferences.” In other words, in such a case the party claiming damages is or could be in a position to testify with reasonable certainty as to the actual cost to which he was subjected by the breach of the other party. In the case at bar the proofs are that the plaintiff kept no records showing the additional expense to which it claims it was put from time to time by the acts of the defendant. The theory of damages which the plaintiff urged and which was sustained by the court was that it had the right to determine the plan or method of operation of the work contracted for and to proceed therewith according to the method which it had deemed most economical and desirable. The contract, however, confers upon the engineer the power of determining the way, method and sequence in which the work is to be carried on. Plaintiff was permitted to submit opinion evidence or estimates of what the additional cost was to the plaintiff by reason of the alleged delay in furnishing plans. A few illustrations will suffice to indicate the impropriety of permitting plaintiff’s expert witnesses to give such opinion evidence. For example, one of the claims made was that the plaintiff was subjected to extra cost of labor due to shifting various kinds of machinery used in the construction of the subway. Testimony was given in behalf of the plaintiff that it involved the expense of the whole outfit that was employed at the derrick for the length of time “ that it took to do it.” “ Q. Do you know how long it took to do it? A. I testified to that yesterday, I think; I don’t remember what I said. I think I said it might have taken two weeks and might not have taken more than a week. Q. Do you know what the expense was? A. No, sir. Q. You haven’t made any preparation on that? A. No, sir.” Here was an item which could definitely have been proven if any records thereof were kept. The same witness testified that he could not give any record or any date as to the exact amount of expense involved in making the various shifts in plant, the reason for that being that no records were kept. Another item of damage was for $24,667, the extra cost of timber due to the acts of the engineer of the Commission. The witness was asked how he arrived at the extra cost of the timber — 398 — and answered as follows: “Why, assuming that had the work been carried on continuously instead of interruptedly, 3,500 linear feet of timber trench in the first cut and 1,500 linear feet of trench in the second cut would have provided substantially enough timber to have timbered the whole cut between 87th Street and 66th Street. Figuring the amount or cost of that timber at the prices which we paid and deducting that amount from the amount that we actually did pay, I arrived at the difference. Q. Of $24,667? A. Substantially that. Q. Well is it more than that or less than that? That is the amount stated in the itemized bill that was filed with the Comptroller. What are your figures? A. My figures that I testified to on direct testimony are more, but the same thing applies to that thing as applied to the explanation that I made of that difference in regard to the excavation. In other words it was a matter of judgment at the time that I made up the bill, arrived at substantially as I told you, through an effort to keep it as near right as I could from my judgment, with the expectation that when I had an opportunity to analyze it more thoroughly that the figure that I had given to the Comptroller and the one that is represented on the bill would at least not be higher than what a more careful analysis would show.” It seems to me that error was also committed with respect to the damages allowed for “ by-passing ” gas mains. The specifications which formed a part of the contract between the parties provided as follows: “ By-passing gas mains. Section No. 52. Wherever the excavations are decked, all gas pipes whose services cannot temporarily be dispensed with shall be by-passed, if directed by the engineer; temporary pipes to take their place being laid either upon or below the street or sidewalk surfaces. These temporary by-passing pipes will be paid for at the prices stipulated in Schedule Item 99-A.” (Italics mine.) Section 59 of the specifications reads as follows: “ Maintenance, support, etc. Section No. 59. The contractor shall at all times, by suitable bridging or other supports, maintain and support in,an entirely safe condition for the usual service and to the reasonable satisfaction of the owners, all surface, sub-surface and overhead structures and appurtenances encountered or affected during the prosecution of his work. Also, in order that access may be had in emergencies to gates or valves on water or gas mains and to electric manholes, where such gates or valves and manholes are decked over, trap doors of a suitable size shall be provided in the decking. All surface, sub-surface and overhead structures and appurtenances, and all surfaces of whatever character along — 399 — the line of the work shall be protected from injury, but should any injury occur the contractor shall fully restore such surface, sub-surface or overhead structures and appurtenances or surfaces to as good a condition as existed before the injury was done. All the above, including also all changes of surface, sub-surface or overhead structures and appurtenances made by the contractor for his own convenience in executing his work, shall be done at the contractor’s own expense and included in the prices stipulated in the schedule for excavation except as otherwise herein specifically provided.” The following articles of the contract or parts thereof are also apposite: “ Engineer’s determination to be final and conclusive upon contractor. Article XXIV. To prevent disputes and litigations, the engineer shall in all cases determine the amount, quality, acceptability and fitness of the several kinds of work and materials which are to be paid for under this contract; shall determine all questions in relation to the works and the construction thereof, and shall in all cases determine every question which may arise relative to the fulfillment of this contract on the part of the contractor. His determination and estimate shall be final and conclusive upon the contractor, and in case any question shall arise between the parties hereto, touching this contract, such determination and estimate shall be a condition precedent to the right of the contractor to receive any money under this contract. “ Engineer to explain. Article XXY. The engineer shall make all necessary explanations as to the meaning and intention of the specifications, shall give all orders and directions contemplated therein or thereby and in every case in which a difficult or unforeseen condition shall arise in the performance of the work required by this contract.” A reading of these paragraphs, I think, warrants the conclusion that the engineer has the sole power for deciding as to whether there should be “ by-passing ” or not, and that where the engineer decides that there was to be no “ by-passing ” of gas mains, the contractor would nevertheless have the right if he thought the situation warranted it to do such “ by-passing,” but in such a case the expense for that work is not chargeable upon the city. Unless it can be shown that the “ by-passing ” was done upon the direction of the chief engineer there can be no recovery upon that item. Testimony given under the objection of the defendant’s counsel for the purpose of showing that the work of “ by-passing ” was necessary was, to my mind, entirely incompetent. Such testimony tended to present the question as to whether or not the — 400 — judgment exercised by the chief engineer was correct. Under the terms of the contract the engineer was the sole judge in determining whether the “ by-passing ” should be done by the contractor, and unless it can be shown that the engineer acted corruptly or arbitrarily his decision on that matter was final. The letters of subordinates of the chief engineer that were admitted in evidence should have been excluded unless it could have been shown that they were sent with the approval of the chief engineer and that it was thereby intended to direct the “ by-passing ” to be done by the contractor for which it would be entitled to reimbursement on the part of the city. The judgment and orders should be reversed and a new trial granted, with costs to appellant to abide the event. Clarke, P. J., and Smith, J., concur; Latjghlin, J., concurs in result; Merrell, J., dissents. Footnotes [*] See Mass Acts of 1894, chap. 548, § 23 et seg.— [Rep. [†] See Mass. Acts of 1911, chap. 741, § 17.— [Rep. [*] See 8th ed.— [Rep.