Hasbrouck v. City of Milwaukee , 17 Wis. 266 ( 1863 )

By the Court,

Cole, J.

In disposing of this canse we shall confine our attention mainly to a consideration of two questions which arise in various ways upon the record: First. What effect must be given to the estimates of the city engineer as to any work done or materials furnished by reason of the change or alteration in the plan of the harbor which materially increased the expense of constructing it? Second. Was there suficient evidence in the case to submit the question to the jury, whether, "after the adoption of the government plan, it was agreed and understood between the city authorities and the contractors that thereafter the work should proceed upon a cash basis, and be paid for in cash, or in bonds at their cash or market value instead of their nominal value?1

There are several clauses in the contract which have an important bearing in the solution of the first question. In the first place, the contractor agreed to furnish all materials and construct a harbor at the “straight cut” in the city of Milwaukee, “ in accordance with the plan and specifications made by the city engineer,” which were made a part of the agreement ; was to perform an amount of work on said contract each month equal to one twelfth part of the first three sections; “all of said work to be done in the most perfect and durable manner, and in accordance with said plan and specifications, subject to any alterations which the party of the first part may direct to be made, which shall not materially increase the expense of said work; and if any alterations in the plan of said work shall be made which shall materially increase the expense of constructing said work, if the person or persons appointed by said city to see the said work and direct in relation thereto, cannot agree with the party of the second part as to the value of such extra work, then the same shall be fixed by three disinterested persons, one of said persons to be selected by each party, and tbe two so selected to select tbe third, and tbe decision of tbe three, or any two of them, to be conclusive between tbe parties.”

Monthly estimates were to be made by tbe engineer, from time to time as tbe work progressed, of tbe work performed and materials furnished, and the contractor was entitled to receive ninety per cent, of tbe value of such estimates, or thereabouts. And in tbe event there should be an essential change in tbe plan of tbe improvement, as it was provided there might be in tbe above clause of the contract, and arbitrators should be chosen to determine the gross amount of the expense resulting from such change, then in that case, we suppose, it was intended the engineer should make monthly es-" ti mates for a like purpose, namely, to enable the contractor to recover a ratable share of the gross amount while prosecuting the work under the new plan. The contract likewise provided that “ said work shall be done under the survey and directions of the city engineer, acting under the direction and approval of the harbor committee; and if any material alterations are desired by the party of the first part in said work, the same shall be directed in writing, to be signed by the engineer and indorsed by the harbor committee appointed by the party of the first part, and the appraisal of the difference of expense by the appraisers above referred to, shall be made in writing and filed with the clerk of the city ; and if the stone or timber, as specified in said specification, shall fall short of completing said work agreeably to said plan, then the party of the second part is to have extra compensation for the same; and if the materials in said estimate and specifications shall exceed the amount required, the value thereof is to be deducted, the value of such excess or deficiency to be fixed by the city engineer, and to be conclusive between the parties ; and in case there shall be any misunderstanding between the parties in relation to the true construction and meaning of said plan and specifications, or either of them, the same shall be submitted to said city engineer for bis instruction and determination, and bis decision shall be conclusive between tbe parties.”

There was a still further clause, which provided that the estimates of said chief engineer shall be conclusive between the parties to this contract, and when the whole contract shall be fully performed by said party of the second part, and the estimates fully made by said engineer, the party of the first part will then pay the balance which shall remain due and unpaid to the party of the second part on the bonds as aforesaid; the above sum of forty-eight thousand and nine hundred dollars being the consideration for the construction of said sections one, two and three.”

After the work had progressed for a time, the city authorities resolved to change and alter the plan and mode of constructing the harbor, by abandoning the plan mentioned in the contract, and adopting in lieu thereof a plan proposed by the government of the United States. The change was a very material and substantial one, and greatly enhanced the cost and expense of constructing the harbor over the one first projected. But still, though the city plan was abandoned, yet the original contract was not wholly lost sight of, and the work progressed under it so far as its stipulations could be made applicable to the new plan. A great deal of additional work was done, and expensive materials were furnished, in consequence of the alteration of the plan, for which the city engineer made estimates. These estimates the circuit court held tobe conclusive between' the parties, and refused to permit the city to prove, on the trial, the actual value of the extra work and materials over and above what was called for by the original contract. And in support of this ruling it is contended, that the contract provides that such estimates shall be conclusive; and the principle is relied on, that when parties agree to rely upon the judgment and skill of an architect or engineer in determining the value of work and materials under contracts of this character, then they must abide by tbe estimate of the umpire cbosen, or impeach it upon sufficient legal grounds. There can be no doubt about the correctness of the principle of law invoked ; and the only question is, does the contract provide that the estimates of the city engineer shall be conclusive as to the gross value of the extra work and materials when the plan was so changed as to materially increase the expense of constructing the work ? It appears to us not. Of course, such a construction is to be placed upon this contract as will effectuate the intention of the parties, and give effect, if possible, to every part of it. It will be seen from the clause of the contract first above cited, that if any alteration in the plan of the work was made which should materially increase the expense of constructing it, then, in case of a disagreement between the persons appointed by the city to oversee the work and direct in relation thereto, and the contractor, arbitrators were to be selected to determine the value of the extra work. Now, although arbitrators in fact were never selected, yet indisputably there was a case of disagreement-in regard to the value of extra work done by reason of the material change in the plan. This was the precise case provided for by the contract, when the judgment of arbitrators, and not the estimates of the city engineer, was to determine the value of the work. Upon certain materials embraced within the contract, it was agreed that the estimates of the city engineer should be conclusive. If the harbor had been constructed according to the original plan and specifications, then all matters of dispute growing out of the execution of that plan and specifications were to be conclusively and finally settled by the decision of the city engineer. But where disputes should arise as to the value of extra work and materials furnished in executing some new plan by which the expense of the improvement should be essentially increased, then a different tribunal was to settle them. The estimates of the city engineer were not to decide those matters. There was no agreement to submit those differences to his decision, and although he might make estimates as to the gross value of such extra work, yet the estimates would conclude no one, because he was exceeding his powers. He had no right or authority to make them and bind the parties by his judgment. The contractor might prove that the extra work was worth more than he valued it in his estimates ; the city might prove it to be worth less. This is the plain, precise meaning of the contract, as we understand it. And we suppose the contractor is entitled to recover for the extra work and materials just what he can prove them to be worth. The estimates of the city engineer upon those matters conclude no one. And we therefore think the court erred in holding them conclusive upon those subjects.

It is suggested upon the brief of the counsel for the respondent, that this clause in the contract refers to a disagreement between the 6ity engineer and the contractor, in which case there was to be a reference'to arbitrators. But this construction is clearly inadmissible, for the most obvious reasons. Upon all matters arising under the contract which the engineer had power to decide, there could be no disagreement. His decision upon those subjects was absolutely final and conclu- ’ sive upon the parties. The contract so declared and provided. But all disputes as to the gross value of extra work performed or materials furnished by reason of the change in the plan of the harbor, the parties refused to submit to his judgment, but required them to be decided by arbitrators. And as no arbitrators have been chosen, they must now be settled by the verdict of a jury in the ordinary way.

Second. The court, in various instructions, in substance submitted to the jury the question, whether, after the work was commenced by Barton under the written contract between him and the city, it was understood between the parties thatthe plan should be changed to the government plan, and that thereafter the work should proceed upon a cash basis, and be paid for in cash, or in bonds at their cash value and not their par value; and whether, after the contract was assigned to Has-brouclc and he began work under it, it was always understood that the estimates of the work should be at cash prices, and be paid for in cash or in bonds at their cash value. If the jury-found from the evidence that such an understanding existed between the parties, they were directed to credit the city with the bonds paid on the contract at their cash value only. The written contract provided that the payment for constructing the harbor should be made in the bonds of the city “ at their par value or face.”

It was unquestionably competent for the parties to change the mode of payment and provide that the bonds should be taken at only their cash value, as it was competent for them to vary or abrogate any other stipulation of the written contract. But what is the evidence that they did so ? McCormick, who was a member of the common council from 1854 to 1858, and the last two years of his office was on the harbor committee, thinks there was an agreement made some time in one of those years, that Hasbrouck was to take the bonds at cash prices. The other members of this committee, Taylor, Hadley, Mallory, Haertel, G-reulich, Kuehn, swear pointedly and distinctly that no agreement or understanding was ever made or had between the harbor committee and Hasbrouck, as to a change to a cash basis of payment or payment in bonds at cash prices, or anything of the sort. They do say, or some of them at least, that after Barton protested against receiving the bonds at their par value, the city engineer was instructed to make his estimates on a cash basis, and let the contractor stand upon his legal rights. And we think Hadley very satisfactorily accounts for and explains the mistake of McCormick upon this point We hardly think there was any evidence in the case from which a jury would have been authorized in finding that the mode of payment had been changed, and that the bonds were to be received at their cash value only. It is true, Barton, in September, 1855, insisted upon the estimates being made upon a casb basis, and protested against being charged with bonds at par. But this circumstance is clearly insufficient to show a change in the contract in this respect. Indeed, the evidence, we think, most ■ clearly and eonclusively shows that no understanding or agreement of the , kind was ever made or had between the parties.

It is claimed, however, as a matter of law, that when the parties mutually agreed to change the plan, so as to enhance the value of the work and increase the amount of labor and materials necessary for its construction, this operated as a change in the mode of payment. Conceding that this result would follow under ordinary circumstances, it appears to us it cannot in this case, for this reason. In the original contract the city reserved to itself the privilege of changing the plan of the improvement, even when such change might materially enhance the expense of constructing the work. Exercising this right of changing the plan could not, therefore, be attended with any such legal consequences as above suggested.

These observations, it is believed, dispose of the most material and important questions presented upon the record. The other points are of minor importance, and we do not deem it necessary now to dwell upon them.

The question as to the ratification of the contract by the city authorities, by procuring the passage of the law of 1857, and many other acts performed by its agents, was fairly left to the jury. But for the reasons above given there must be a new trial. '

The j udgment of the circuit court is reversed, and a venire de novo awarded.