Laudani v. Vulcan Engineering Co.

LeBoeuf, J. The original contract provided that, in case of default in the performance of the contract by the contractor (which would include his assignee), the contract might be relet, or might be completed by the State, and that the 'State Engineer might pay “ fór such contract or completion from any moneys due or to become due under this contract ; and in case such expense shall exceed the amount due or to become due the contractor on the final completion of the work herein embraced, then it is expressly understood and agreed that the said contractor and his surety shall be jointly and severally liable for such excess.” It appears conceded that the State properly relet this contract. It is also conceded that the result of this reletting was the payment of a large amount in excess of the original contract price. For this damage so sustained the Vulcan Engineering Company was responsible to the State. It is ele [389] mentary that as between the two no recovery whatever could have been had by the engineering company against the State upon the theory that the State owed it any sum of money for the work already performed on the contract. Under the authorities, therefore, there was nothing to which the liens of the various laborers could thus attach. Van Clief v. Van Vechten, 130 N. Y. 571; Brainard v. County of Kings, 155 id. 538. Viewed from the standpoint of the ordinary situation' of principal and surety, the State was under no obligation whatever to hold the fund for the benefit of the lienors and proceed against the surety to recoup its damage. Indeed, apart from the question which is raised as to the peculiar provision of the bond in favor of employees, the duty of the State was to lessen the liability of the indemnity company rather than to increase it. It must follow, therefore, that, so far as the State of Eew York was concerned, the liens of the lienor attach to no fund, and no foreclosure of the mechanics’ liens as against the funds withheld by the State can be allowed in this action. The plaintiffs, however, insist that if no foreclosure of their liens may be permitted by law, they have the right to recover the amount of their claims against the ¿Etna Indemnity Company. The bond provides as follows: “ If the above bounden Principal, his heirs, executors or administrators or assigns, shall and do well and truly pay or cause to be paid in full the wages stipulated and agreed to be paid to each and every laborer employed by the said Principal or by his agents, then this obligation s'hall be null and void, otherwise to remain in full force and virtue.” It is conceded by all parties that no provision of statute existed which authorized or required this provision to be inserted in the bond. The ¿Etna Indemnity Company asserts that it was placed in the bond by sheer inadvertence. Eo proof is given as to this inadvertence. The proposals, estimates, specifications, contract and bond comprise the bound printed book which appears to have been delivered at the outset to intending proposers for the contract. [390] . In the “ Information for Proposers ” with which this book starts, it is stated that “ the person or persons whose proposal is accepted will be required to execute the contract and furnish bonds within ten days.” “ The amount of bond required for the faithful performance of the contract is fifty per centum (50 per cent.) of the amount of the contract-price.” “ On the faithful performance of the work herein embraced” the contractor is by the contract entitled to réceive the full consideration expressed in the contract. So far as these provisions are concerned, they seem to solely relate to the performance of the work, and not to any collateral agreement, such as one to pay the wages of employees. There appears upon the face of the contract, however, something which was not referred to by any of the parties plaintiff or defendant in the course of the- trial. In the printed conditions of the contract on page 37 there appears the following: “ The Contractor further agrees that each laborer, workman or mechanic employed by such contractor, or by any sub-contractor or any other person, on, about or upon the work herein contracted to be done, shall receive not less than the prevailing rate for a day’s work in the same trade or occupation in the locality within the -State where such public work, on, about or in connection with such labor is performed in its final or completed form is to be situated, erected or used; and that this contract shall he void and of no effect unless the said Contractor shall comply with the foregoing provisionStamped across the face of this section and another section which referred to an eight hour day for laborers, there appears the following: “ These two paragraphs are not applicable to highways outside the limits of a city or incorporated village. See section 18, chapter 468, Laws of 1906, and section 3 of the Labor Law, as amended by chapter 50i6, Laws of 190-6.” While no testimony was given as to this fact, nor reference made to it by the parties, it would seem that the intention of the stamping of this legend upon these two printed provisions of the contract was to strike them out and make [391] them wholly inapplicable. If this were true they absolutely ceased to be a part of the contract. The description contained at the commencement of the contract shows a road running from the city line of Little Falls through a portion of country, in a town, and which from the face of the agreement does not appear to be part of an incorporated city or village. Indeed the' court might take judicial notice of the geographical situation. Referring then to the bond, the words “ to be paid in full the wages stipulated and agreed .to be paid to each and every laborer ” in the absence of any other statute appear to have referred to the printed prevailing rate of wages clause which had been stricken out of the contract. If those provisions had remained in the contract, the contractor would have stipulated and agreed that he would pay not less than the prevailing rate of wages; and, if special reference was to be made to this agreement in the bond, the words on which these plaintiffs now rely might reasonably have referred to such purpose. If this were the intention, the condition in the contract having been stricken out, no force could be given to the provision in the bond referring to the provision so stricken out. It appears to me that this was the real inadvertence under which the provision- now relied upon was actually inserted in the bond. The stipulation as to wages being stricken out of the contract, the promise of the bond on the same subject became inoperative. Inasmuch as the parties, however, do not specifically point this out, the plaintiffs’ able brief makes it necessary to consider this provision of the bond entirely irrespective of the provision stricken from the contract. It is claimed that this is an agreement on the part of the indemnity company'to pay the claims of the laborers, and that under the rule laid-down in Lawrence v. Fox, 20 N. Y. 268, that agreement can be directly enforced against the indemnity company. This claim appears to me to be untenable. Probably no decision of the highest court of this ¡State has been the subject of more consideration than that in Lawrence v. Fox. The rule which was there established is [392] still enforced but strictly within the limitations embraced by that and many later decisions. Without attempting to analyze these many decisions, the limitations within which this rule shall be enforced are well stated in Vrooman v. Turner, 69 N. Y. 280: