Fisher Electric Co. v. Bath Iron Works

Grant, C. J. (after stating the facts). 1. Assuming that there was delay on the part of the inspector to furnish to plaintiff the drawings, specifications, and other information mentioned in the contract, is the defendant liable for such default? It is urged by counsel for the defendant that plaintiff accepted all the chances of delay on the part of the inspector, and thereby relieved it from. any duty in regard to this information. There was no contractual relation between plaintiff and the government. The contract for the construction of the boats was be — 298 — tween defendant and the government. Defendant had agreed with the government to furnish these boats with electric light plants. Whether defendant installed them itself or let the contract was immaterial to the' government. The agreement to furnish these drawings, etc., was made with the defendant, and the plaintiff could look to it, and no one else, for the failure to furnish them. The original specifications were furnished to plaintiff, and formed the basis of the contract. The inspector represented the defendant, not the plaintiff. The court was therefore correct in holding the defendant liable for any damages which resulted from delay in furnishing the drawings, etc. 2. During the period from the date of the contract, in 1891, to its completion, in 1893, various improvements had been made in electrical apparatus, and plaintiff furnished some more expensive articles than those commonly known and in use at the time the contract was made. The court instructed the jury that the contract was made with reference to fixtures and appliances best known and in common use at the time the contract was made, and that, if plaintiff was required to and did furnish more expensive articles than those which were in common use at that date, it was entitled to recover for them. The correctness of this instruction depends upon the construction to be given to the term “plant,” used in the specifications; under the title “Plant.” Houston’s Electrical Dictionary defines the term as follows: “Plant — -a word sometimes used for installation, or for the apparatus required to carry on any manufacturing operation. An electric plant includes the steam engines or other prime motors, the generating dynamo or dynamos, the lamps and other electro-receptive devices, and the circuits connected therewith.” It is insisted that the term in this contract means a plant as above defined. Defendant’s position is based upon that clause of the contract which' says: — 299 — “ All working parts of the plant * * * must be the most compact, the lightest, and best adapted for marine .work, particularly when at sea, of any that can be obtained at the time it is placed in the ship.” It is insisted that this clause includes everything in every part of the boats which is covered by the numerous specifications. But, clearly, this language is restricted to the plant as defined in the subdivision in which it is used. The parties have there seen fit to define the plant to which this language applies, and have confined it to two engines and two dynamos. All the language of this subdivision is peculiarly appropriate to the plant as described in the first sentence. The mere fact that the term “plant” is used in its broader sense in other subdivisions of the specifications does not affect the construction of the term as restricted by the subdivision in question. The court was therefore correct in holding that the plant meant the engines and dynamos. 3. All labor charges for overtime were made by the plaintiff at $1.50 per hour, or $15 a day. For most of this work plaintiff actually paid $26.50 a week. Upon this point Mr. Fisher testified as follows : ‘ ‘ The labor charge was agreed upon by Mr. Hanscom and myself at $1.50 per hour. I had the conversation fixing the charge for labor at $1.50 per hour with Mr. Hanscom, the superintendent of the defendant company, in December, 1891. ‘ ‘ Q. What was that conversation ? “A. The conversation was with reference to the extras, and Mr. Hanscom said: ‘Of course, we expect to make a good deal of money out of this extra work. The government expects to be soaked on it, and we will help you get all you can for it — for anything extra. “Q. What was said about the price ? “A. I think that I told him at that time that we should charge on all labor at the rate of $15 a day for extra work. “Q. And this deal was made in accordance with this arrangement ?' “A. Yes, sir.” On cross-examination he testified: — 300 — ltQ. You had a positive agreement with Hanscom to allow you $15 a day? “A. Yes, sir. “Q. That was upon the understanding that the government would be soaked ? “A. Yes, sir.” The circuit judge instructed the jury that, if the parties entered into an agreement to charge an excessive price to the government, or “soak” it, such an agreement was against public policy, and void; and added: “But, if you believe that the agreement between Fisher and Hanscom was, as counsel for the plaintiff claims, that the United States government expected to be ‘soaked’ in the matter, and that the agreement was that the Bath Iron Works would allow $1.50 an hour, if that agreement was made, then it is binding; and if you believe from the testimony that such an agreement was made between Hanscom and Fisher, that settles the question of extra labor, and you must allow $1.50 an hour.” .The charge is grossly excessive. Under the instructions, plaintiff was permitted to recover about four times what the actual damages were. As an illustration, one Moag, plaintiff’s employé, who was paid $26.50 per week, was engaged on board the boats in putting in the plant. Under the contract, defendant was to drill holes through the framework of the boats for the insertion of wires, etc. Moag testified that during the absence at various times of one Swanton, who superintended this work for the defendant, he directed the drillers, and estimated his time at 600 hours, and plaintiff charged for it $900. He “kept no track of his time, because he didn’t think he had to.” In the absence of a special agreement, plaintiff could only recover what such services were reasonably worth. The agreement is positively denied by defendant, and when the bill was rendered it made an emphatic protest. The contract, therefore, rests entirely upon the testimony of Mr. Fisher. The sole ground he urges to sustain such a grossly-excessive charge is that it was made “upon the understanding that the government would be soaked.” — 301 — All such contracts, whether based upon an express agreement or simply an understanding, are against public policy, and void. The law does not permit the accomplishment of such an illegal pux*pose under the guise of an “understanding..” This contract, based upon any view of Mr. Fisher’s version of it, is void. The court should have so instructed the jury, and further should have instructed them that plaintiff could recover only what such servcies were reasonably worth. 4. By the terms of the contract, plaintiff agreed to furnish search-lights for $800. The contract contained this clause:' “If the department insist upon imported lamps, or we are unable to satisfy them with lamps of American manufacture which shall not exceed $800 in price, you are to pay the additional net cost.” On January 15, 1892, defendant wrote plaintiff: “Webelieve that, if an approved type of search-light can be bought outright for a reasonable price, much delay will be saved, and should like to get the price of the 18-inch light befox’e doing more about it.” In reply to this, January 21st, plaintiff wrote: “Notingyour remarks of January 15th, the search-light outfits will cost, according to quotations made us by the Thomson-Houston Electric Co., $1,715 each, and we, ourselves, consider delay would be avoided if they are purchased outright. Under the contract, you are to pay all in excess of $800. We think the search-lights can be duplicated for not more than $1,200. If you wish to autlxorize the additional expense, kindly do so in writing, and we will place the .order for them, that delivery may not be delayed.” To this defendant replied, January 26th: “The matter of obtaining search-light has been referred by me at length to Mr. Hanscom and Gen. Hyde. Their decision is that it is desirable to obtain all our apparatus as soon as possible, and do everything to forward the work, and I am authorized to say that, if two searchlight outfits, guaranteed to pass government inspection, — 302 — can be bought for approximately 81,715 each, the Bath Iron Works will pay the excess in cost over 8800 each, or about nine hundred and fifteen dollars (8915) each.” Plaintiff purchased the search-lights, and rendered a bill of 83,430. Mr. Fisher obtained a reduction of $430. After obtaining the reduction, plaintiff did not credit defendant with the $430, and was permitted to recover it in this case upon the ground that he had made two trips to New York to purchase the lights, and that this was a proper charge for his services and expenses. Fisher made no charge for this upon plaintiff’s books, kept no account of his expenses, and rendered no bill for it at the time. His testimony is very indefinite. He- says he made two or three trips to New York, was gone four or five days each trip, and probably allowed himself $20 per day. No such charge was contemplated by the contract, or agreed upon, and the court should have directed its disallowance. 5. On October 20, 1893, plaintiff wrote defendant as follows: “Inclosed please find bills for ‘placing the switchboard on the Machias,’ repairing switchboard for ‘Castine,’ and ‘testing circuits.’ The switchboard and armatures will be sent forward when you deposit with the agent of the United States Express Co. at Bath the sum of bills rendered to date ($1,943.80).” Bills covering this amount, it appears, had previously been rendered, and in reply to them, on September 30, 1893, defendant wrote to plaintiff: “I have answered your telegram as follows: ‘Have not sent check. Bills excessive.’ You should be ashamed of sending out such prices. They are much more than double what the thing is worth. * * * You may as well understand first as last that we shall pay no such bills. How do you justify charging $1.50 per hour?” In reply to the letter of October 20th, defendant wrote: “We have today given the American Express Co. check for $1,944, and they have promised to wire their — 303 — people to send the switchboard and 'armature along. We do not feel satisfied with the bills, but have had no chance to write you about it before. Please explain on what grounds you charge $1.50 per hour for Moag and his helpers. Also would like to have you tell me if the other bills are based in a similar manner, because I have to put in a bill for fixing the armature to the government, and do not want to put in a bill they will refuse to pay. If you will assure me that the charge of the armature is a fair one, I can put in a bill. As far as the $15 a day is concerned, you know as well as we do that no jury will allow it, and we do not suppose for a moment that you intend to insist upon such a ridiculous charge.” It is manifest that plaintiff was endeavoring to force a payment. It was necessary for defendant to have the goods, which were placed in the express office at Detroit, immediately. Its own witness Moag so testified. Under these circumstances, payment by the defendant was not a ratification of the correctness of the bills, and upon final settlement the items of these bills were open for adjustment. The court should have so instructed the jury. There are other small items to which defendant objects on the ground that there was no evidence to sustain them. We think there was a conflict of evidence upon them, and that they were properly submitted to the jury. Judgment reversed, and new trial ordered, unless counsel can agree upon the amounts to be deducted from the verdict and judgment under this opinion, and have a judgment entered in this court, and thus end the controversy. The other Justices concurred.