Florida Northern Railroad v. Southern Supply Co.

Lewis, J. The Southern Supply Company, hereinafter referred to as the “contractor,” contracted with the Florida Northern Railroad Company and the Florida Central and Peninsular Railroad Company, both of which for convenience will hereinafter be indicated by the collective term “railroad company,” for the construction of a line of railroad. Under the contract as originally agreed upon, the road was to be completed by September 15, 1893. Subsequently the time was extended to November 1st of that year. In point of fact it was not finished till about January 1, 1894. The contract provided that the railroad company should make monthly payments to the contractor upon estimates furnished by the engineer in charge, such payments to cover ninety-five per cent, of the value of the work actually done, and upon its completion a final estimate was to be made and a full settlement had. The contract, after specifying the date by which the railroad was to be finished, and reciting that it was “ expressly agreed that the time herein stipulated shall be of the essence of this contract, ” further provided as follows: “ And the failure on the part of [the contractor], the [railroad' company] having faithfully kept and performed all of [its] covenants, to complete the same in the time specified may be considered sufficient reason fo'r the forfeiture of the reserved five per cent.; and the [contractor] hereby consents ¡and agrees to this condition. Should, however, delays in the performance and completion of the work to be done by the [contractor] hereunder within the time herein be occasioned by epidemics, ¡strikes, or providential causes, a reasonable extension of time for the completion of this contract shall be made. Timely notice of all such delays shall be given ” by the contractor to the railroad company. After the railroad had been finished and turned over to the railroad company, the contractor brought against it an action for the recovery [3] of a balance alleged, to be dne upon tbe contract, and for tbe enforcement of a ben upon tbe railroad. An answer denying all babibty, and claiming a balance from tbe plaintiff, was filed, and tbe case was referred to Mr. W. W. Mackall as auditor, wbo made a report of tbe •evidence introduced before him, and of bis findings of fact and conclusions of law thereon. To this report tbe railroad company filed numerous exceptions of law and fact. All of tbe former were overruled by tbe presiding judge. Certain of tbe latter were submitted to a jury, wbo sustained tbe auditor throughout; and a judgment fohowing their verdict was entered in favor of tbe contractor. Tbe case is here upon exceptions to tbe order overruling its exceptions of law to tbe auditor’s report, and to a judgment refusing to grant a new trial. Tbe record is necessarily voluminous, but we are much indebted to the able counsel on both sides for their conscientious andsuccessful efforts to eliminate from it irrelevant matter. Quite a number of questions are presented by tbe bib of exceptions; but in tbe view we take of tbe case, it turns upon tbe legal propositions laid down in tbe beadnotes. These we will briefly discuss, stating in connection with wbat is said concerning each such facts necessary to an understanding of our rulings as have not already been mentioned. Before dealing specificaby with tbe points involved, we think it entirely proper to remark that both tbe auditor and tbe judge bandied this compbcated case with rare skill and ability. Save as to a single matter, which wib be taken up in its order, we are entirely satisfied with tbe accurate and admirable manner in which their work was done. 1. Tbe auditor, upon sufficient testimony, found that one half of the delay in finishing tbe railroad by tbe day agreed upon was ■due to tbe fault of tbe contractor, and one fourth to tbe fault of tbe rabroad company. He thereupon held, and tbe judge sustained him in so doing, that tbe company was not entitled to deduct from tbe contract price tbe five per cent, reserve, which amounted to .about $35,000.00. This, in our judgment, was correct. We may for tbe purposes of this case assume, without, however, so deciding, that tbe agreement respecting forfeiture could be treated as a stipulation for hquidated damages reasonable as to amount, and not for a mere penalty. Conceding to tbe rabroad company ab tbe benefits of this assumption, we are nevertheless firmly of tbe opinion that it could not retain tbe five per cent, as such damages. It certainly [4] could not do so outside of the contract, and it could not, under the facts as found by the auditor, do so within the contract. By the express terms of the written instrument the right of the railroad company to demand the forfeiture was conditioned upon its faithfully keeping and performing its covenants. This it failed to do; for, as has been seen, a considerable portion of the delay in completing the railroad was attributable to its fault. It makes no difference that the contractor was responsible for a greater portion of the delay. In any view of the contract, the right of the railroad company to arbitrarily hold back $35,000 of the price to be paid to the contractor was a purely technical one, having nothing to support it but the literal terms of the writing. We are unable to perceive upon what principle of law or justice the company could demand absolute, strict compliance on the part of the contractor without itself coming up to the letter of the agreement. It stipulated for a five per cent, forfeiture on condition that it faithfully kept and performed its own covenants. It did not meet the requirements of this condition, and its failure to do so resulted in delay, the very thing which was to bring about the forfeiture. It is true that the contract does contain a stipulation that the contractor “ shall be entitled to no damage from delays which may be occasioned by the ” railroad company, “ but for such delays a reasonable extension of the time for the completion of this contract shall be made”; but obviously this provision in the agreement can not fairly be invoked by the railroad company as having any bearing upon its right to claim the five per cent, forfeiture. Indeed it has no relation to that mat-, ter. An exemption of the railroad company from liability for actual damages to the contractor, occasioned hy delays for which the company was responsible, could not reasonably be held to entitle it to a. forfeiture the right to demand which was expressly dependent upon its keeping in all respects its own covenants. While it might escape, paying damages for causing delays, it could not cause them and still obtain the benefit of another and distinct stipulation in the contract-which practically required that it should be faultless in order to be entitled to such benefit. 2. That the railroad company was entitled to set off against the contractor’s demand such damages as were actually occasioned to the former by any delay in completing the railroad with which the latter was fairlychargeable can not, of course, be questioned. Ac-, [5] cording to the auditor’s report, one fourth of the entire delay in the present instance was due to an'epidemic of yellow fever, and to unusual rains and storms. He thereupon attributed this portion - of the delay to what he termed “unavoidable causes,” and held, as matter of law, that the contractor was not responsible for the consequences thereof. This ruling was sustained by the judge, and as a result the contractor was not debited with an item amounting to $2,406.50, with which it is properly chargeable if so much of the delay as was due to the causes last mentioned is to be counted against it. The second headnote sets out so much of the contract as relates to this matter. The auditor and the judge were of the opinion that such notorious things as the epidemic, floods, and storms were necessarily known to the railroad company, and that consequently it had, without more, the “ timely notice ” thereof which the contract required should be “ given ” to it. In this view we are unable to concur. We think the contract plainly meant that, in case of delays arising from such causes, it was incumbent upon the contractor to give actual notice thereof to the railroad company within a reasonable time after the delays occurred and make demands for proper extensions of time, or that, failing so to do, the contractor would be chargeable with the consequences of such delays. Otherwise,the whole matter would be left in an indefinite and undetermined condition, which we do not think was contemplated by the parties. The railroad company could not know that extensions would be claimed unless they were demanded, and certainly a stipulation that “ timely notice ” shall be “ given ” is not met by giving no notice at all, nor by the fact that the party to be notified must in the nature of tilings have known of the occurrence of certain events. There is no contention that the contractor gave any notice to the railroad company of delays occasioned by providential causes, or because thereof asked for extensions of time. We therefore hold that the plaintiff’s recovery should have been $2,406.50 less than it was, and have directed that the judgment below be corrected accordingly. 3. It was insisted by the railroad company, both in the trial court and here, that it was entitled to set off against the plaintiff’s demand certain damages arising from loss of profits which it would have realized during the months of November and December, 1893, if the railroad had been completed by the first day of the former [6] month, as agreed. Without stopping to inquire whether or not such damages were in contemplation when the contract was made or were covered by its terms, it .is enough to say that there was no evidence affording any reasonable basis upon which to compute damages of this character. The railroad company sought to furnish such a basis by showing what were its profits during the corresponding months of 1894. We agree with the auditor and the judge in holding that such a method was not legitimate.. What amount of business would have been done upon a new railroad during the first two months of its existence had the operation of it been begun two-months earlier than was actually the case, and what, if anything, would have been its net earnings during that period, can not be arrived at by ascertaining the results of operating it during the last-two months of the first year it was run. The conditions and surroundings for those two months would in almost every case, certainly in one like the. present, be so different from those prevailing at the beginning of the road’s business career, that figures relating to such months would at best afford no more than a basis for mere conjecture as to what results would have been obtained a year sooner. Conceding, for argument’s sake, that the railroad company was entitled to compensation for lost profits, it could not have the same allowed without furnishing better proof than it did in this case for arriving at the amount of .the same. 4. We have covered all the material questions that are presented in the record. As to the disputed issues of fact, we find that the auditor’s conclusions thereon, and the verdict of the jury sustaining the same, were too well supported by testimony to warrant any interference by this court. One of these issues related to an allowance to the plaintiff of the price of certain cross-ties. The railroad company contended that they were not actually furnished, but there was-sufficient evidence to warrant a finding that they were, or at least that-the company by its acts authorized the contractor to pay a subcontractor for them. The only remaining issue which need be noticed related to an allowance to the contractor, of ten per cent, upon the-cost of certain buildings. The original contract, as modified by a subsequent agreement, warranted this allowance, and the evidence fully justified the auditor in finding that the contractor was entitled to it. Judgment affirmed, with direction. All the Justices concurring.