Brown v. Decker

Opinion, Mr. Justice Green: The defendant, being a contractor for the erection of a large building at Hoboken, N. J., made a sub-contract with the plaintiffs to do the plastering work of the building. The contract between the parties, which was in writing and under seal, contained the following recital and condition, to wit: “Whereas, the said party of the first part (defendant) has entered into articles of agreement with the trustees of the Stevens Institute of Technology, at Hoboken, N. J., bearing date June 7, 1887, for the construction and completion of certain high-school buildings at Hoboken, according to certain plans and specifications, their terms and conditions therein referred to, which said plans and specifications, their terms and conditions, are to be considered as if hereto attached, all information concerning the same being known to the said parties of the second part. After reciting that the parties had agreed upon a sub-contract for part of the work, the agreement proceeds: “ And whereas, it has been agreed that, as to so much thereof as has been thus sub-contracted for, the said parties of the second part (plaintiffs), for the consideration hereinafter named, are, as between themselves and the said party of the first part, to stand in the place of the latter, and to do everything in, about, and concerning the same, as is provided in said party of the first part’s contract with the said trustees of the Stevens Institute of Technology, subject to all its terms and restrictions, so that the said party of the first part shall be indemnified and saved harmless from all loss, costs, and charges in and about said portion of work and materials: No>v, this agreement witnesseth,” etc. The third clause of the agreement provides that the plaintiffs shall supply all materials and do all the work according to [647] the requirements of the original contract between the defendant and the institute, so that the defendant shall be enabled to complete the buildings in the time stipulated by the contract, the materials and workmanship shall be of the best quality, “ and shall be furnished and performed to the fullest extent that the said party of the first part under his contract with the said trustees of the Stevens Institute of Technology can be obliged to furnish and perform the same.” Other provisions of a similar character are contained in the agreement, fully subordinating it to the operation and effect of the principal contract between the defendant and the trustees of the institute. It cannot be doubted, therefore, that the contract between the present parties was completely subject to all the provisions of the principal contract, so far as the plastering was concerned, with the same effect as if they had been literally incorporated into the present contract. The language is, “ their terms and conditions are to be considered as if hereto attached,” and the plaintiffs “ to stand in the place of the latter,” (defendant) and be “ subject to all its terms and restrictions.” One of the provisions of the principal contract is in these words: “ And it is mutually agreed and distinctly understood that the decision of the engineers and architects shall be final and conclusive in any dispute which may arise between the parties to this agreement, relative to or touching the same; and each and every of said parties do hereby waive any right of action, suit or suits, or other remedy in law or otherwise, by virtue of said covenants, so that the decision of the said engineers and architects shall, in the nature of an award, be final and conclusive on the rights and claims of said parties.” In that part of the annexed specifications which relates to the form of bid the following clause is contained: “ Also that any disagreement or difference between the owners and contractor upon any matter or thing arising from these specifications, or the drawings to which they refer, or the kind or quality of the work required thereby, shall be decided by the engineers and architects, whose decision and interpretation of the same shall be considered final, conclusive, and binding upon both parties.” We are clearly of opinion that both of the foregoing provisions of the principal contract are to be considered as of the same [648] legal effect as if they were bodily incorporated into the contract between the present parties, and it only remains to consider what effect they have in determining the present contention. In the case of Reynolds v. Caldwell, 51 Pa. 298, in which the subject of contention arose out of a contract between a principal contractor for work on a railroad and a sub-contractor under him, the final clause of the contract was in the exact words of the final clause of the principal contract in the present case. A dispute having arisen between the sub-contractor and the principal contractor, the former brought an action of covenant on the contract between them, and sought to recover damages for its breach. A recovery having been obtained, the cause was removed to this court, where the judgment was reversed in an exhaustive opinion by Mr. Justice Strong, who held that no action at law could be maintained upon the contract, but that the parties must resort to the tribunal appointed by the agreement. He further held that, even if the final estimate was erroneous, and the contractor’s covenants were broken, and although recourse to the tribunal selected was not reasonably possible, and although the engineer refused to act, and although there were such gross and palpable mistakes in the estimates as amounted to fraud in the engineer, the agreement of submission was binding, and the remedy was only by action against the engineer, and not by an action on the contract. In the course of the opinion, Strong, J., said: “ Provisions similar to this are often introduced into such contracts, and they have been more than once under consideration in this court. Even when much less stringent than the present, they have been held effective to preclude any resort to an action at law.” In O’Reilly v. Kerns, 52 Pa. 214, Thompson, J., said: “It is not necessary to cite authorities for what is so well settled, as that where a railroad or canal company and its contractors, or in a contract between original and sub-contractors, it is agreed that to prevent disputes the engineer of the work shall in all cases determine the amount or quality of the several kinds of work which are to be paid for under the contract, and decide every question which can or may arise relative to the execution of the contract on the part of the contractor, that his decision has been uniformly held to be final and conclusive.” The same [649] doctrine was applied and enforced in Hartupee v. Pittsburgh, 97 Pa. 107, in which we held that the right of action was waived under the stipulation to that effect in the agreement. In the present case, all right of action was waived in the precise terms contained in the agreement under consideration in the case of Reynolds v. Caldwell, supra, and we know of no reason why we should not follow that ruling. The learned judge of the court below, while recognizing the doctrine, declined to apply it, for the reason that the stipulation only applied to the interpretation of the contracts, and not to defective work which might flow from defendant’s acts. We are unable to agree to that view. There is no such restriction contained in the contract. There was a clear and well-defined dispute between the defendant and the plaintiffs as to the character and quality of the plastering and blackboard work done by the plaintiffs, the defendant alleging that it was defectively done. There seems to be no doubt that there were serious defects in the work, .which the defendant was obliged to correct at his own expense. But the plaintiffs claimed that the defendant had failed to furnish steam-heat to dry the rooms, and that this caused the defects in question. The defendant replied that he was not bound to furnish steam-heat, and that the plaintiffs did not ask him to do so; and he also testified that the work was badly done. Thus the parties were at issue upon the question of the character and quality of the work done, and that question was one which was not only within the proper function of the architects, but was exclusively within their jurisdiction to hear and determine. It may be conceded that the dispute included an alleged fault of the defendant, but the trial of that question was not taken away from the selected tribunal; and, as it came within the category of “ any dispute which may arise between the parties to this agreement,” it was just as certainly embraced within the jurisdiction conferred upon the arbitrators as any other question touching the character of the work. The case of Reynolds v. Caldwell goes very much further than it is necessary to go in this case, denying the right of any action on the agreement. To hold that if a jury, in an action on the contract, should determine that the defects in controversy were in any manner traceable to the negligence of one of the parties, al [650] though such alleged negligence was denied and formed .part of the dispute, therefore the reference to the engineer or architect must be abrogated, and the waiver of all right of action, suit, or other remedy stricken out of the contract, would make the question of jurisdiction depend, not upon the agreement of the parties, but upon the finding of the jury on one of the disputed facts. We cannot agree to such a result. The appellees suggest that a right to sue was reserved in the contract,. and therefore, the reference to the engineer is avoided. But the right to sue is given only to the defendant, and it is limited to the recovery of any money which he could not recover, by withholding out of the money payable under the contract the damages he might suffer from the plaintiffs’ defective performance. We are clearly of opinion that all right of action on the contract was waived, except to recover upon an award made by the engineers and architects, and, as there was nothing of this kind in the case, The judgment must be reversed.