Fontano v. Robbins , 18 App. D.C. 402 ( 1901 )

Mr. Iustice Shepard

delivered tbe opinion of tbe Court:

1. If the concluding clause of article 8 [of tbe contract] contained no reference to the action of any one but tbe arbitrators to be selected as provided in the last clause of article 3, for tbe ascertainment of tbe amount of loss and damage sustained by tbe plaintiff through tbe imposed delay, we could have no possible doubt of tbe plaintiff’s right to maintain tbe action without precedent demand for arbitration. Hamilton v. Home Ins. Co., 137 U. S. 370, 385. Tbe provision for arbitration in that case was substantially like tbe one in tbe contract upon which this action depends. Hnlike tbat in tbe prior ease of Hamilton v. Liverpool, etc., Ins. Co., 136 U. S. 242, it did not expressly declare tbat the award should be a condition precedent to tbe maintenance of an action upon tbe contract. It was, therefore, held, tbat the refusal of tbe plaintiff to submit tbe amount of bis loss to arbitration, though promptly demanded, was no defense to bis action. Tbe distinction between tbe two cases is thus stated by Mr. Justice Gray, who delivered tbe opinion in each:

“A provision, in a contract for the payment of money upon a contingency, that the amount to be paid shall be submitted to arbitrators, whose award shall be final as to that amount, but shall not determine the general question of liability, is undoubtedly valid. If the contract further provides that no action upon it shall be. maintained until after such an award, then, as was adjudged in Hamilton v. Liverpool, etc., Ins. Co., above cited (136 U. S. 242), and in many cases therein referred to, the award is a condition precedent to the right of action. But when no such condition is expressed in the contract, or necessarily to be implied from its terms, it is equally well settled that the agreement for submitting the amount to arbitration is collateral and independent; and that a breach of this agreement, while it will support a separate action, cannot be pleaded in bar to an action on the principal contract.” 13Y U. S. 385.

The language of article 8, however, is that the amount of loss or damage shall be fixed and determined “ by the architects or by arbitration as provided in article 3.” Turning; to article 3, quoted above, it will be observed that it relates to alterations that may be made by direction of the architects, and the ascertainment of allowances therefor by them. In case of dissent from their award, submission shall be had to arbitrators whose selection and powers are provided for.

It is a well-settled doctrine that, in contracts of this general character, the parties may specially provide for the final ascertainment of the quantity of work done, materials furnished and so forth, by reference to the engineer, architect or party having supervision of the performance of the contract; and that his estimates and reports when so made wilbind all concerned unless actual fraud can be shown, or the commission of gross mistakes from which bad faith might be inferred. Kihlberg v. United States, 97 U. S. 398; Chicago, etc., RR. Co. v. Price, 138 U. S. 185.

It is manifest that work and materials to be furnished in addition, or to be omitted, under the power given to the-architects, to make alterations from time to time, were, for special reasons, to be estimated by them. But instead of making their estimate final and binding, either party was at liberty, if not satisfied, to demand arbitration, and final settlement thereby.

It is contended on behalf of the appellee, that the provision of article 8 referring to this mode of ascertainment by the architects is a distinct and separate condition and binds the plaintiff, in accordance with the doctrine stated, without regard to the effect of the additional stipulation for arbitration in event of dissatisfaction; in other words, the architects are the sole primary judges of the amount to be paid, and the reference to arbitration is only by way of appeal from their judgment.

Whilst this contention is plausible and may be sound in application to demands arising under the alterations stipulated for in article 3, we are unable to agree with it.

The particular reasons for referring demands made by either party, growing out of alterations which the architects were empowered to direct, to what is called, in article 3, their award, do not exist in the case of demands made under article 8. The former demands accrue as part and parcel of the work to be done in the performance of the contract, in case of probable contingencies that might call for the correction of the plans and specifications in some minor particulars. The latter are by way of damages sustained through nonperformance of the entire contract within time. The recital of article 8, providing for determination by the architects or by arbitration, would seem to call, with certainty, for no more than a reference to the architects as arbitrators merely. So considered, the reference is no more a condition precedent to the right of action than is that to the other mode of ascertainment through arbitration. Special stipulations submitting the demands of a contractor to the adjudication of supervising architects and engineers, though enforceable as we have seen, are in derogation of common right and the ordinary freedom of action, and must clearly appear to be within the intention of the contract. Construction, in case of doubt, is in favor of one resisting 'enforcement.

The conclusion reached renders it unnecessary to consider whether, assuming the correctness of the contention, the defense thereunder would be waived by denial of all liability before the institution of suit, or loss by failure to plead it.

2. It appears from the evidence submitted that the defendant was not in fact the owner or builder of the church or the chapel attached thereto. The pastor of the church had contracted for its construction according to the plans and under the supervision of the architects, Heins & La Large.

The defendant, with knowledge of the situation and the approval of the church authorities, undertook to provide the interior construction of the chapel, and employed the same architects to plan and supervise the work for the execution of which she contracted with the plaintiff. The plaintiff’s action is founded on the provision of article 8, to this effect: “ The owner agrees to provide all labor and materials not included in this contract in such manner as not to delay the material progress of the work, and in the event of failure so to do, thereby causing loss to the contractor, agrees that he will reimburse the contractor for such loss.” This is reinforced by the following clause of the specifications referred to in the contract: “ The outside walls will be built, rough concrete floor finished, and the chapel will be roofed in when the contractor Commences to set the marble-work.” That the defendant was not the real owner of the exterior building •and as such obliged to construct the same and furnish all labor and materials not included in the plaintiff’s special undertaking, is a fact that has no material bearing upon the controversy. She is the person referred to as “ owner ” in the contract with plaintiff and as to him she assumed that relation for the special purposes of that contract. She took the place of the real owner, and, at least, became an absolute guarantor of the necessary construction prelimiüary to the commencement of plaintiff’s work. He was not bound to inquire into her relation to the general construction of the building, or her obligation to the contractors therefor. The argument that the plaintiff did not contemplate or understand this extent of responsibility on the part of the defendant, because he made no complaint to her in person of delay in the construction of the outer walls and roof, but complained, instead, to the architects who represented the real owner, is without substantial foundation. The architects of the building were also the architects, under the direction and to the satisfaction of whom, the plaintiff was to perform his part of the contract. They were to furnish the plans and specifications, interpret the same, supervise the work, direct changes, and certify to completion before final payment. They were the representatives of the defendant, and the correspondence between the plaintiff’s agent and them shows on its face that his complaints were to, and his demands against them as such.

3. From the views expressed the conclusion necessarily follows that there was error in the direction to the jury to return a verdict for the defendant.

As the case must be remanded for new trial before a jury, we are not to be understood as expressing any opinion, whatever, in respect of the merits of the several items of plaintiff’s claim of loss and damage.

All that we hold is, that under the interpretation given the contract between the parties, the evidence offered by the plaintiff was sufficient to require the submission of the issue to the jury.

The judgment will be reversed, with costs, and the cause remanded with direction to set aside the verdict, and award a new trial. It is so ordered. Reversed.