Ferguson Contracting Co. v. State

Swift, J. This claim is for damages arising out of a contract for the construction of a portion of the Barge canal, pursuant to chapter 147 of the Laws of 1903 and the amendments thereto. The contract was entered into between the claimant and the State April 3, 1905. The contract provided for the construction of about seven-eighths of a mile of the improved Champlain canal from the Mohawk river, near the village of Waterford, N. Y., and westerly therefrom, and was known as contract FTo. 2. Under this contract the claimant was to be paid for the performance of the work, according to the plans and specifications accompanying the contract, the sum of $852,330. The claimant asks judgment against the State for $420,-375.36, and the claim contains twenty-four separate causes of action for delays claimed to have been caused by the State in failing to furnish plans for different parts of the work, and for failure to give entire possession of the land upon which the work was to he done, and for loss in rentals of machinery during such delays, and including an item of $69,-439.93, which was the ten per cent, of the estimated work — 474 — completed which was retained by the State under the provisions of the contract until the work should be finally completed and approved by the State Engineer and the 'Superintendent of Public Works. There is a large mass of testimony in this case covering the different causes of action set forth in claimant’s claim; and, before passing upon such testimony and the amount of damages which is claimed to be proven by such evidence, it is best to consider whether the claimant'is entitled to recover any damages or not. During the progress of the work, several alterations to the plans and specifications were made by the State which increased the expense of the work and also the amount to be ■paid to the claimant, by about $35,88-0', which the claimant assented to. On or' about the 14th day of April, 190-9, the State Engineer and Surveyor issued to the claimant an order, known as alteration ETo. 7. The claimant refused to comply with this order; -and, under section 12 of the contract, the contract with claimant was canceled, and the unfinished work relet in the manner provided by chapter 147 of- the Laws of 1903. The claimant abandoned the contract, refusing to perform the work required by alteration ETo. 7, and files this claim for damages. The question of the State’s liability depends upon the construction to be given to paragraph 7 of the contract. This paragraph provides as follows: “ It is mutually agreed that the State reserves the right, until the final completion and acceptance of the wrork, to make such additions to or changes in the plans and specifications covering the work as may be necessary, and the contract -shall not be invalidated thereby, and no claims shall be made by the contractor for any loss of profits because -of any such change, or by reason of any variation between the quantities of the approximate estimate and the quantities of the work as done.” Ordinarily, -contracts mean just what they say; and, where parties execute a contract with full knowledge of its terms and conditions, they are bound thereby, even though it may result in a hardship for one of the parties. — 475 — I think^the fair interpretation of this clause of the contract to he this: That the State, in the construction of such an important work as the improved Barge canal involving an immense detail of plans and construction, knowing the fact that in practical experience in the progress of work it is often found that .some changes in the original plans of construction and in the details thereof would be for the better interest of the State, intended to and did reserve to the State the right to make such changes in the plans and specifications whenever it became necessary so to do. I am aware that the courts hold that such reservation does not include the right to make such a radical and fundamental change in the plans and specifications as would compel the contractor to perform a different work, or in a substantially different manner from that which he had contracted to do; and the real question here is whether such alteration Ho. 7 was such a radical and fundamental change of contract Ho. 2 that the State had no right to make such order, and that ’ claimant was not required by law to continue the contract as changed by alteration Ho. 7. Alteration Ho. 7 provided for the following changes in the construction of the work under contract Ho. 2: (1) To change the plans for retaining wall at the head of lock Ho. 2 from station 182+63 to station 184. (2) To extend the wall at the crossing of the present Champlain canal so as to form a junction with sides of same between station 184+55 and station 186+95. (3) To substitute a concrete lining for the puddle lining in the bottom of the canal from the head of lock Ho. 2 to the west end of the present dock walls, station 182+63 to station 194+40. (4) To substitute concrete retaining walls for piled dock-. ing on each side of the canal from the west end of the present dock wall to the lower end of lock Ho.- 3, station 3 84+14 to station 201+79. (5) To eliminate the puddle lining on the sides and bottom of the canal from the west- end of the present dock wall to lower end of lock Ho. 3; station 184+40 to station 202+50. — 476 — (6) To raise the grade of by-pass channel around lock No. 3, station 200+18 to station 2'06+2‘5. (7) To change the specifications for crushed stone to he -used in concrete. These were the changes and alterations ordered by alteration No. 7. Were the changes reasonable and necessary ? The reasons why these alterations were to be made were stated in said order, issued to the claimant, as follows: For the first change proposed: “ The section of the Canal at the head of Lock No. 2 has been eroded by the flow of water in Cemetery Greek. This erosion has taken place along the line of the retaining walls on each side of the Canal. It will therefore be necessary to carry the foundation of these Avails to a lower level, -so that the base of the walls will rest" in undisturbed material. It is therefore -proposed to change the plans of the retaining walls from the head of Lock No. 2, Station 182+63 to Station 184.” The reason for the second change was as follows: “At the crossing of the present Champlain Canal, the walls along the sides of the new Canal were not carried sufficiently far to form a good connection with bulkheads and masonry aa'uIIs of the old Canal. These walls have been extended slightly so as to remedy this defect.” The reason given for the third change Avas as follows: “ The original plans provided for -a puddle lining one foot thick on the bottom of the Canal to prevent seepage of Aváter into the sand and gravel through Avhich the channel is excavated. A clay puddle lining is not thought to be satisfactory, as it would be subject to erosion by the currents stirred up by the propellers of boats, and a concrete lining nine inches thick has been substituted, extending from the head of Lock No. 2 to west end of the present dock wall, Station 182+63 to Station 194+40. Suitable concrete cut-off walls. are provided at the crossing of the present Champlain Canal and at the Avest end of the concrete lining.” The reason for change No. 4 was as follows: “ The -original plans provided for pile docking on each side of the channel from the end of the-retaining walls just — 477 — west of Saratoga Avenue bridge, extending to the lower end of Lock Ho. 3. This pile docking is subject to decay and would require renewal every few years. It has been thought desirable to substitute concrete retaining walls on each side of the channel through this portion of the canal, thus providing permanent structures and making water-tight sides for the prism. These walls will extend from Station 184+15 to Station 201+79.” 'The reason for the fifth change was as follows: “ The original plans provided for a clay puddle lining on the.sides and bottom of the Canal from the west end of the present dock walls to the lower end of Lock Ho. 3, Station 184+40 to Station 202+50. The Canal for this stretch is in deep excavation and the material in the bottom is compacted so that the leakage of water will be slight and a lining appears to 'be unnecessary. The clay puddle has therefore been eliminated.” The reason given for alteration Ho. 6 was as follows: ■ “A by-pass channel is provided around Lock Ho. 3. The original plans required that this channel should be excavated to about the grade of the Canal below the Lock, which would make a wide deep channel that would always be full of water, adjacent to the Lock. It has been thought desirable to raise the grade of this by-pass so that the bottom will -be above the normal water level and to provide a small concrete retention dam at its lower end, where the water drops to a lower level.” The reasons given for alteration Ho. 7 were as follows: “ The specifications for crushed stone to he used in making concrete provide, that all the material which will pass through a one-half inch circular hole shall be eliminated. As it has been demonstrated that the best stone for making concrete is that in which the proportion of small particles is sufficient to reduce the voids to a minimum it is thought desirable to allow the use of all particles of stone greater than 1/8'th of an inch in diameter, and a change is made in the specifications to admit of this being done.” The changes provided for in alteration Ho. 7 would increase the cost of the work to be done under the contract Ho. 2 and increase the amount to be paid to the claimant at — 478 — the unit prices stated in the contract, in the sum of $39,20i9.50. These were the alterations which claimant refused to perform hut insisted upon carrying out the original plans against the wishes of the State Engineer and Superintendent of Public Works for which reason the contract was canceled as before stated., I am of the opinion that these alterations, as specified in alteration Eo. 7, were not a radical and fundamental change of contract Eo. 2; that they were necessary changes which, arose during the progress of the work, and all of these changes were approved by the 'Superintendent of Public Works, by the ¡State Engineer and Surveyor, hy the Advisory Board and hy the Canal Board, and were filed in the office of the State Engineer under the office of the Canal Board and notice thereof properly given to the claimant. I am of the opinion that these alterations were just such alterations as were intended to he covered hy the reservation in the State to make such alterations as provided by paragraph 7 of contract Eo. 2, and that it was the duty .of the claimant to perform the work according to the altered plans and specifications. If the claimant had performed, as required by alteration Eo. 7, and the cost thereof had been in excess of the contract price for similar work, I believe it could have recovered against the State for such extra .cost of construction; but it was the claimant’s duty .to perform the contract as provided in alteration Eo. 7. - There was some evidence given upon the trial by experts of the increased cost of laying concrete bottom in place of the puddle lining, and that such cost was far in excess of the contract price for concrete; but one of the contractors to whom the unfinished work was let testified that he was laying the concrete lining at a less cost per yard than that provided to be paid in contract Eo. 2. The reason given by claimant on the trial for not complying with alteration Eo. 7 was the increased expense and cost of the work. I do not believe that this is a valid reason for — 479 — non-perforunance, because the claimant would have its remedy therefor. I am of the opinion that the claimant wrongfully refused to continue the work after alteration Eo. 7 was issued, and that such failure was a breach of the contract upon the part of the claimant. After the cancellation of contract Eo. 2, the unfinished work was relet, and at the time of the trial of this action had not been completed. The Canal Law provides that, in case of the cancellation of a contract entered into for construction of any portion of the Barge canal, the unfinished work may" be relet; and, if the expense of completing the unfinished work is in excess of that provided in the contract for the same work, such excess shall be paid by the original contractor. There was no evidence given upon the trial of this action of the cost of the completion of the unfinished work which was relet, and it is impossible to state whether there will be any amount to be repaid by the contractor under this provision of the Canal Law and for which the State would have a counterclaim. The amount of $69,439.93 which has been retained by the State, the claimant cannot at present recover, for the reason that the claimant agreed, in paragraph 30 of contract Eo. 2, that ten per cent, of all completed work should he retained by the State until the final completion of the work under the contract and until the work should be finally approved by the State Engineer and Surveyor and the Superintendent of Public Works. I am of the opinion that this approval is a prerequisite for the final payment by the State, and of the claimant’s right to recover. The amount above mentioned is ten per cent, of the completed work which was retained by the State under the provisions of contract Eo. 2. I am of the opinion that, upon the evidence given upon the trial of this action, the claimant cannot recover, and that the claim should be dismissed. Murray, J., concurs.