Seaside, City of v. Randles

BEAN, J. Defendants’ first contention is that the complaint fails to state facts sufficient to constitute a cause of action against either of the defendants. Under this division of argument, defendants also submit two assignments of error: Number XLIY. That the court erred in giving to the jury, over the objection and exception of defendants, instruction, to wit: “If you find for the plaintiff in the particulars complained of, as I have heretofore instructed you, then it will be your duty to determine the fair and reasonable amount it will cost the plaintiff to repair the sewer in the particulars wherein defendant Bandies failed, to the end that plaintiff will have a sewer of the character contracted for, and bring in your verdict accordingly.” And also assignment Number XLV. That the court erred in giving the instruction to the effect that: “If you should find that the defendant Bandies failed to lay this sewer in the particulars complained of and that the plaintiff accepted the same without knowledge of such facts, in order to determine the amount, 'if any, the plaintiff is entitled to recover in this case, you have the right to take into consideration — 663 — the cost to plaintiff of the necessary excavations and work and labor and materials necessary to be employed in making such repairs, as in your judgment from the evidence in this case, shall be required in order to make the sewer correspond with the contract." It is the main contention of counsel for defendants that the plaintiff cannot recover for the reasons; First. Under the circumstances presented by the complaint the acceptance of and the payment for the work as completed in accordance with the contract precludes the recovery of damages for patent defects, unless such acceptance and payment were obtained by defendants’ fraud. Second. The allegations of the complaint failed to state- any facts constituting fraud in the procuring or inducing of the acceptance of payment of the work. Third. The complaint fails to allege that the city removed the alleged defective work and properly reconstructed the same, stating the expense thereof. Fourth. That it appears on the face of the complaint that the surety has been released and discharged from all liability. 1. It is convenient first to state the rule of law by which the facts of the case are to be measured. An acceptance of work done under a construction contract does not constitute a waiver of latent defects of which the owner was ignorant at the time, or which may appear thereafter: 9 C. J., p. 798; Fike v. Stratton, 174 Ala. 541 (56 South. 929); Steltz v. The Armory Co., 15 Idaho, 551 (99 Pac. 98, 20 L. R. A. (N. S.) 872); Monahan v. Fitzgerald, 164 Ill. 525 (45 N. E. 1013); Korf v. Lull, 70 Ill. 420; Holslag v. Morse, 188 Ill. App. 607; Toronto Radiator Mfg. Co. v. Alexander, 2 Ter. L. R. 120; Eaton v. Gladwell, 108 Mich. 678 (66 N. W. 598); — 664 — Dutton v. Million, 114 Ark. 330 (169 S. W. 1183); Utah Lumber Co. v. James, 25 Utah, 434 (71 Pao. 986). In order for an acceptance to be a waiver it must be under such circumstances as to show that the party accepting knew or ought to have known that the contract was not fully performed. 6 R. C. L., p. 991, Section 359, where the rule is stated thus: “Where work is accepted with knowledge that it has not been done according to the contract, or under such circumstances that knowledge of its imperfect performance may be imputed, the acceptance will generally be deemed a waiver of the defective performance. But this rule does not apply to latent defects. The acceptance of work which has been defectively done, the defects being unknown and not discoverable by inspection, does not amount to a waiver of the imperfect performance”: Flannery v. Rohrmayer, 46 Conn. 558 (33 Am. Rep. 36); Van Buskirk v. Murden, 22 Ill. 446 (74 Am. Dec. 163); Brent v. Head, Westervelt & Co., 138 Iowa, 146 (115 N. W. 1106, 16 L. R. A. (N. S.) 801); Ludlow Lumber Co. v. Kuhling, 119 Ky. 251 (83 S. W. 634, 115 Am. St. Rep. 254, and note); Thompson Mfg. Co. v. Gunderson, 106 Wis. 449 (82 N. W. 299, 49 L. R. A. 859); Iaege v. Bossieux, 15 Gratt. (Va.) 83 (76 Am. Dec. 189). The evidence introduced upon the trial tended to support the allegation of plaintiff’s complaint and to show that soon after the sewer was accepted and Randles, had received his- pay therefor, the sand at many points caved in from the top of the excavation and a large quantity of sand was discovered at the outlets ; that an island of sand was thereby formed in the Necanicum River near where the outlets were. This would cause the ground on top of the sewer to cave in and large holes in several places occurred in the street where the sewer was laid. In many instances, where — 665 — these cave-ins occurred, the city dug down to the sewer and discovered that while there, was cement in the joints on the top of the sewer-pipe, there was no cement on the part underneath for about one-fourth the diameter of the pipe; that the part of the pipe underneath was entirely open and no cement mortar had ever been placed therein. The main sewer was laid along Seventh Street, the principal street in the City of Seaside. These cave-ins became so numerous on this street that about 250 yards of the main sewer was excavated and it was discovered that in almost every joint no cement mortar had been placed on the underneath side of the bell, while on the top for about three fourths of the diameter of the pipe, which would be visible to one standing on the bank of the trench at the time the pipe was laid, the cement mortar seemed to have been well filled in. Although the mortar in practically all instances was not two parts sand to one part cement, but was filled with earth and dirt, making the joint practically worthless. The sand was so fine that it ran into the sewer-pipe and was carried down into the Necanicum Eiver and entirely stopped up the outlet of the pipe. That there were about 3,000 feet of the main sewer laid below an elevation of seven feet, which, according to the contract, was required to be laid with a gasket of oakum dipped in hot asphaltum of the proper consistency, and the oakum gasket when thoroughly compacted with a calking iron to fill the bell to one half of its length, after which the joints should be cemented in the manner provided for in the specifications. As a matter of fact, there was no oakum gasket placed in any of the sewer joints at all. The sewer-pipe laid below the elevation of seven feet was laid in the same manner as hereinbefore indicated with an inferior — 666 — mortar, and the part underneath left entirely open; that although the contract required all openings in laterals to be closed with vitrified or cement cover, puttied in with cement mortar on the outside only, this was not done. That the openings in all the laterals were not closed at all, while a part of them had shingles placed on top of the openings, leaving space for sand to go through, whereby the sand filled the laterals and they became useless. The evidence also tended to show that there were a number of instances where the sewer-pipe was laid in water. The specifications Required that where water is encountered, it must be drained away before any pipe or concrete is placed in the trench; that Randles, without regard, to this provision, laid the pipes and filled in the cement joints as before indicated, in many instances in running water; that the result was that whatever mortar was placed in the joints was washed out. The proof indicated that Randles designedly and deliberately failed to perform his contract in the manner specified, and perpetrated a fraud upon the city. That the city, officials had no notiée or knowledge of these things, or the fact that the sewer was not constructed according tq the contract at the time of the acceptance; that the contractor deceived the engineer in charge and the inspector; that the pipe being laid in a deep, narrow trench, the defects or failures to cement the joints of the pipe underneath could not be discovered by an ordinary inspection, and the defects should be termed latent; that the city officials believed that the sewer system was constructed in accordance with the contract and did not discover otherwise until 'about the tenth day of January, 1916. It thereupon notified Randles and the surety company to Make the contract good. Randles came several times and made — 667 — various excavations and temporary repairs to the joints and then refused to do anything at all. The surety company denied liability and refused to do anything in regard to the matter. According to the contract and specifications, neither the engineer nor the inspector was the final arbiter between the parties, it being specially provided in Specification Number 8: “No inspector shall have the power to waive the obligation of the contractor to furnish good materials or perform sound and reliable work as herein specified; and any failure or omission of the Inspector or Engineer to condemn any defective material or work shall not release the contractor of the obligation to at once tear out, remove and properly reconstrnct the same at his own cost at any time upon the discovery of the defect, and upon receipt of the notice of the Engineer to do so.” 2. The contract for the improvement does not authorize either the engineer or the inspector to accept or approve the work when not done according to the contract. It is expressly stipulated that they have no such power. The municipality alone reserves the power to accept and approve the work. Therefore, the acceptance by the city and payment of the contract price, where the work is not done in accordance with the contract, made without knowledge of the defects complained of, such defects not being discoverable by an ordinary inspection, will not be construed as a' waiver or an estoppel to claim damages for such defects upon discovery thereof: Rogue River Assn. v. Gillen-Chambers Co., 85 Or. 113-115 (151 Pac. 728, 165 Pac. 679); United States v. Walsh, 52 C. C. A. 419 (115 Fed. 697); Ritchie v. City of Topeka, 91 Kan. 615 (138 Pac. 618); Mercantile Trust Co. v. Hensey, 205 U. S. — 668 — 298 (27 Sup. Ct. Rep. 535, 10 Ann. Cas. 572, 51 L. Ed. 811). The evidence produced on behalf of plaintiff tended to prove defendant Randles guilty of the fraud, alleged in the complaint, all without knowledge of plaintiff, and that on account of the fraud practiced the sewer was worthless; that plaintiff was thereby induced to and did accept the sewer system under the belief that it was completed according to the terms of the contract ; that Randles not only represented that the work was completed according to the plans and specifications, but after his attention was directed to the condition of the sewer, when he excavated some of the pipe, all that he could on account of the mud around it and reached around under the pipe, he claimed that “there was no trouble with the joints.” 3. A contract which provides for work of construction to be performed in the best manner and the materials of the best quality, subject to acceptance or rejection of an architect or engineer, all to be done in strict accordance with the plans and specifications, does not make the acceptance by the architect or engineer final and conclusive, and will not bind the owner or relieve the contractor from the agreement to perform according to plans and specifications: Mercantile Trust Co. v. Hensey, 205 U. S. 298 (27 Sup. Ct. Rep. 535, 10 Ann. Cas. 572, 51 L. Ed. 811); General Fireproofing Co. v. Wallace & Son, 175 Fed. 650 (99 C. C. A. 204); Hartupee v. City of Pittsburg, 97 Pa. 107. 4. The acceptance by municipal officers of work done on a contract for a municipal improvement is only prima facie evidence that the work has been done in substantial compliance with the terms of the contract: Sweeney v. Jackson Co., 93 Or. 96, (178 Pac. 365); Gulick v. Connely, 42 Ind. 134; Barker v. Nichols, 3 — 669 — Colo. App. 25 (31 Pac. 1024); Korf v. Lid, 70 Ill. 420; Kilbourne, Jenkins & Co. v. Jenning & Co., 40 Iowa, 473. 5, 6. A principal is never charged with the consequences of the misconduct of his agent in violating his instructions, except for the protection of some third person who has been misled by a reliance of an ostensible authority of the agent: United States v. Walsh, 52 C. C. A. 419 (115 Fed. 697). Randles had no right to suppose that the engineer for the city or the inspector was authorized to permit any deviation from the. contract. The testimony tended to indicate that the municipality did not know that any such deviation had taken place, and under the circumstances of this case such knowledge could not be imputed to it. Therefore, the acceptance of the work and the making of the final payment did not prejudice the right of the municipality upon discovering the truth to maintain its action for the breach of the contract as exemplified by the authorities above cited. 7. The contract provided that Randles should furnish all the material, implements and perform the labor necessary to construct the sewer system in conformity with the terms, conditions and requirements of the plans and specifications therefor. , The bond obligatory executed by him and the surety company was conditioned that he should “truly keep, perform and fulfill all and every of the covenants, conditions, stipulations and agreements in said contract mentioned to be performed and fulfilled.” The plans and specifications were made a part of the contract. While provision was made that, “Upon the neglect or refusal of the contractor to reconstruct work rejected by the Engineer within 24 hours after receipt of notice, the same may be removed and reconstructed under the direction of the Engineer at the expense of the contractor,”— — 670 — thus giving the city the right to so reconstruct the work — yet it was not compelled to do so, and the fact that the municipality did not see fit to reconstruct the sewer contracted for by Randles in precisely the same manner and according to the same plans and specifications would not affect the right of the municipality to recover damages for the breach of the contract on the part of Randles. This is plainly held in United States v. United States Fidelity & G. Co., 236 U. S. 512 (35 Sup. Ct. Rep. 298, 59 L. Ed. 696). The contention .made by defendants that the city must first reconstruct the sewer system cannot therefore be maintained. 8. It is further maintained on behalf of defendant that the surety was released. The payment by the city for the work accepted by it under an honest belief that it was done in the manner required by the contract did not release the surety: Mayor etc. of City of Newark v. New Jersey Asphalt Co., 68 N. J. Law, 458 (53 Atl. 294-296). By the express stipulations of its bond the surety company under the circumstances of this case is liable for the breach of the contract by Randles. 9. The measure of damages in this case is the reasonable cost and expense of procuring the work and labor to be done and furnishing the necessary material in order to make the sewer system to conform to the provisions of the contract: 3 Sutherland on Damages (3 ed.), § 699; Williams v. Island City Milling Co., 25 Or. 573 (37 Pac. 49); United States v. Walsh, 52 C. C. A. 419 (115 Fed. 697). There was no-error in denying the motion for a nonsuit which was interposed at the appropriate time by counsel for defendants. 10. The trial court instructed the jury in conformity with the law here laid down, and we find no error in that respect. The plaintiff had the right to prove — 671 — such damages without waiting for the sewer system to be reconstructed. Iu United States v. United States Fidelity & G. Co., 236 U. S. 512 (35 Sup. Ct. Rep. 298, 59 L. Ed. 696), the court held that where a contractor had agreed with the United States to erect a certain structure and had failed to do so, the United States had a cause of action against it immediately upon his failure to finish the work and it was not necessary for the government to complete the work, but might abandon it and prepare entirely new plans and specifications. Counsel for defendants in conformity with their contention requested the court to instruct the jury in substance that the city could not avoid knowledge of how the work was done by proving that its agents failed to perform their duty of inspection, and that defendants were not responsible for such inspection, and predicates error upon the refusal of the court to so instruct the jury, the request was properly refused. It appears that the trench for the sewer-pipe was not entirely excavated; about eight feet being excavated and then two to four feet tunneled, so that it was practically impossible for the inspector to see whether all of the pipe joints were properly cemented. He could not, of course, see the under side from the bank of the trench and he trusted Randles to a certain extent. Randl,es should not be permitted to take advantage of his own wrong and say that the engineer and inspector for the city were negligent in permitting him to deceive them. 11. An owner is not bound as against his contractor by the acts of a supervising engineer or inspector in approving work done by the contractor where such approval is the result of either bad faith, collusion or gross negligence: Reid v. Alaska Packing Co., 47 Or. 215, 221 (83 Pac. 139); 2 C. J, p. 834; Chandler v. — 672 — Wheeler (Tenn. Ch. App.), 49 S. W. 278; Rogue River Assn. v. Gillen-Chambers Co., 85 Or. 113 (151 Pac. 728, 165 Pac. 679, 1183). 12. Contention is made on behalf of defendants that under the provisions of the contract: “No part of this sewer shall be constructed in the absence of an inspector, and any work so performed shall be deemed in. violation of these specifications, and the engineer may order the same to be removed by the contractor and reconstructed at once. ’ ’ That the larger part of the sewer was laid in the absence of the inspector; that the inspector and engineer had knowledge of this fact. Therefore, it is contended that this was negligence on the part of the plaintiff which released the surety. This stipulation should be considered with the other provisions of the contract contained in Specification Number 8 to the effect that no inspector shall have power to waive the obligation of the contractor to furnish good material or perform sound and reliable work as therein specified; that any failure of the inspector or engineer to condemn any defective material or work shall not release the contractor of the obligation to properly reconstruct the same at any time upon discovery of the defect, v and upon notice to do so. The fact that work was done in the absence of the inspector or engineer which was not in accordance with the contract, although not objected to either by the inspector or engineer at the time, even if either or both knew the' work 'was being imperfectly done would not be a waiver on the part of plaintiff according to the express terms of the contract. 13. The plaintiff alleged that Bandies failed to perform the work according to the terms of the contract. The defendants denied this and pleaded that: — 673 — “Said defendant Eandles performed said work only-in the presence of and under the superintendence and directions of said City Engineer and Inspector and every piece of material and every bit of work furnished, laid and done by said defendant in the prosecution of said work was examined, inspected and approved by said City Engineer and Inspector, and said Engineer and Inspector examined and inspected all of said work and materials while said work was being done and knew how the same was being done and the quality thereof, and they approved and accepted the same.” And that defendant Eandles performed and completed said work in conformity and accordance with the said contract, plans and specifications. The issue, therefore, was squarely raised as to whether or not the work was done in accordance with the stipulation therefor. We fail to see that negligence on the part of the city engineer or inspector could become material. The surety company in effect claims that by reason of the fact that'Eandles did not construct the sewer in conformity with the requirements of the contract but deceived the engineer and inspector for the city, and made them believe that he did properly construct the system, and defrauded the city, the surety is released. Such claim is not in accordance with the spirit or letter of the bond. 14, 15. The defendants contend that whatever bad or defective conditions appeared in the sewers were the result of defective plans and specifications and not of any faulty material or workmanship. It was incumbent upon the city to prove that Eandles failed to perform the requirements of the contract specifically as mentioned in the complaint. It was no defense to this action for Eandles to say that had he completed — 674 — the sewer system in accordance with the terms of the contract, that the sewer would have been worthless or that the plan was a bad plan. Thb only issue presented by the pleadings was whether or not Bandies did those things that plaintiff claimed that he did not do. Defendants at the trial offered to prove by the testimony of expert witnesses that th.e condition of the sewer, as testified to by plaintiff’s witnesses, was in their opinion the1 result of defective and improper plans and specifications. The trial court sustained an objection on the ground that the result was for the jury to determine. The circumstances were all. detailed to the jury. Over the objection and exception of counsel for the defendants, the court charged the jury to the purport that it would not make any difference whether the plan adopted for this sewer was a good plan, or that a better plan could have been adopted; that this was no defense for Bandies ’ failure to lay the sewer according to the contract and specifications ; that the plaintiff was entitled to have the contract performed as agreed upon. If the contractor ’performed the work in accordance with the terms of the contract, he is entitled to pay without regard to the results. The court explained to the jury: “That if you find from the evidence that defendant Bandies constructed said sewer in accordance with the plans and specifications and that after the sewer was so constructed, it broke down and the joints went to pieced or were broken as alleged in the complaint and the caps or stoppers of the N’s and laterals were' driven out so as to leave the pipes open, but you further find that such breaking or opening of the joints complained of in the complaint were on account of the faulty or defective or unsuitable character of the plans and specifications themselves and.was not due to the faulty or defective material or work of the said de — 675 — fendant Randles, then the defendants would not be liable for such damage and your verdict in that case would be for the defendants. * * ” Under the testimony in this case, we think the ruling was correct and that the instructions properly submitted the question to the jury. Error is predicated upon the refusal of the court to permit John Matson, Randles’ foreman, to testify that the engineer in charge of the work instructed him to leave out the oakum gaskets at the places required by the specifications. The defendants, by their answer, expressly alleged that Randles had performed the contract fully in accordance with the terms and conditions thereof. The court plainly told the jury that: “If you find from the evidence that defendant Randles laid the pipe in accordance with the contract and specification in the instances I have indicated, then this will end the case and your verdict must be for the defendant.” The court further charged that: “If the plaintiff, through its council, at the time it accepted and paid for the sewer, knew that Randles had not performed his contract in these particulars and had not filled these joints accordingly as provided by the specifications, as I have heretofore suggested, and with such knowledge, approved and accepted the work, then plaintiff cannot recover.” 16, 17. Moreover, an examination of the record disclosing the terms of the contract reveals that the engineer had no authority to so release Randles from a necessary and important requirement of his contract, and the .evidence offered was properly rejected. Therefore, the court rightly refused to allow the defendants to amend their answer so as to set up the fact that the engineer had directed the oakum gaskets — 676 — to be left out; the specifications expressly provide that the engineer had no such power. The authorities above cited sustain this holding. 18. During the trial of the case, the defendants offered evidence of experts in regard to the lasting quality of cement mortar made of two parts sand to one part of cement; that such mortar would disintegrate in a very short time; that it was porous; that water would percolate through the pores, and sand would also work its way through. In order to rebut such testimony, the plaintiff excavated two joints of sewer-pipe which had been laid for six years in the sand, at Seaside, within six feet of the sewer laid by Randles. The evidence tended to show that the mortar used in the joints of this sample sewer-pipe was two parts sand to one part of cement; that the pipe was laid in the same character of soil as the pipe in question. The cement joints were produced, offered and received in evidence. Opportunity was given defendants to examine the place from whence the sewer-pipe came. The purpose of the evidence was to rebut the statement that the cement mortar of a consistency' of two parts sand and one part of cement in sewer joints was subject to disintegration in a short time. We think that the testimony was competent in order to rebut the theory of the experts to the contrary. The sewer-pipes and joints do not appear to have been offered or received in evidence as tending to prove that the sewer in question ought not to have failed. 19, 20. Error is predicated upon the instruction of the court to the effect that according to the terms of the specifications it was the duty of the defendant Randles to make a “tight joint” in each of the sewer joints with cement mortar of the required mixture, however difficult it would be to do this. This desciip-. — 677 — tion of “tight joints” was plainly qualified by the instruction complained of that defendant Randles’ contract to make these joints tight and to fill every part of the joint with mortar where required, or oakum where required “as required by the specifications.” The specifications were before the jury and it being the duty of the court to construe the written contract, we see no error in so describing the calking of the joints instead of again specifying the particular manner in which the joints should be filled, especially when the term is qualified by reference to the requirement of the specification. A careful examination of the instructions of the court given to the jury, taking them as a whole, leads us to believe that the questions at issue were fairly submitted to and understood by that tribunal. Assignment of error is predicated upon the overruling of the objection of defendants to the following question propounded to Mr. Bell, city engineer, to wit: “Q. Now, what are the facts as to whether or not you relied upon the statement made to you by Mr. Randles in your acceptance of this sewer? * * “A. I did.” 21. The testimony concerning this question shows that Mr. Bell stated what Randles had stated to him. It also claimed as error that it was incompetent for this witness to testify that he would not have done as he did had he known the true facts. Testimony of the party as to what he believed, intended and relied upon was admissible: Jarrell v. Young, Smyth, Field Co., 105 Md. 280 (66 Atl. 50). In Larson et al. v. Thoma, 143 Iowa, 338, 345 (121 N. W. 1059, 1062), the court there says: “The witness was further asked whether or not he would have bought that farm if he had not talked with — 678 — plaintiffs about it at all, and an objection to this question was sustained. We think the court might well have allowed the question to be answered. * * ” The question became important as to whether or not the municipality knew of the defect and what it would have done had it known of the same. This evidence was material: United States v. Walsh, 52 C. C. A. 419 (115 Fed. 697). After a careful perusal of the able and .exhaustive briefs and arguments of the respective counsel, and an' examination of the record,' we find no error. The judgment of the lower court is therefore affirmed. Affirmed. Rehearing Denied. Mr. Justice Bennett took no part in the consideration of this case.