Hudson v. McCartney , 33 Wis. 331 ( 1873 )

Dixon, C. J.

The questions argued by counsel for'the defendant are all fairly presented by the exceptions taken to the order overruling the second motion for a nonsuit made at the close of the testimony, and to the order denying the motion for a new trial; and the same need not, therefore, be examined with reference to the charge of the court, or the exceptions taken, or supposed to have been, to the charge.

And the questions so presented are by no means intricate or doubtful. In view of the numerous adjudications which have been made upon them, and which are collected and referred to by counsel for the defendant, they may be said to be very plain and easy ones. Our views respecting them correspond very nearly, if not fully, with those expressed by the defendant’s counsel. It was clearly competent for the plaintiffs to stipulate that they should only demand or receive payment for the work as the same was executed to the full and complete satisfaction of McDonald, the superintendent of the erection of the dwelling, and upon his certificates as the work progressed; and such satisfaction of the superintendent, and the execution of the certificate by him, became and was a condition precedent to the right of the plaintiffs to demand or sue for the price agreed ■ to' be paid by the defendant Cor the work, unless the refusal to certify should be disregarded or annulled on the ground of fraud or bad faith, or clear evidence of mistake on the part of the superintendent. And should the certificate be fraudulently or corruptly withheld by the superintendent, it would still be the opinion of some most respectable courts that there could be no recovery against the defendant, unless the withholding was in collusion with him and by his procurement. It has been, held that the refusal to accept or certify must be shown to have been the wrongful or fraudulent act of the defendant or opposite party to the contract, as well as of the surveyor or architect. Clarke v. Watson, 18 C. B., N. S. (114 E. C. L.), 278; Batterbury v. Vyse, 2 Hurl. & Colt., 42.

And the case of Thomas v. Fleury, 26 N. Y., 26, cited and relied upon by counsel for the plaintiff, and some remarks in the opinion in which seem to be at variance with the uniform tenor of decision both in that state and elsewhere, clearly recognizes the precedent and qualifying nature of the condition requiring the certificate to be procured. Speaking of the earlier stages of the work, and before it had been completed and .possession taken of it by the defendant, the court say : “At these stages, if the architect was not satisfied, he could withhold the certificate, and withoutit the defendant could refuse to pay.”

But we are not called upon to ponder or decide the question as to when or under what circumstances bad faith or fraud in the superintendent will operate to relieve against his refusal to give the certificate, or to make the promise to pay obligatory upon the defendant without the certificate. There was no evidence that the superintendent acted either frahdulently or corruptly in his refusal to certify, or in the suspension of the further prosecution of the work by the plaintiffs. His conduct appears to have been fair and just, and in pursuit of what he conceived to be bis duty in the situation. There may have been a scintilla of evidence, but no more, tending to show some disagreement or rupture between the superintendent and one of the plaintiffs a considerable time before; but there was nothing to justify the conclusion that he was actuated by malice or ill will, or that he behaved dishonestly and partially in the premises.

Neither do we think the case was one where the jury should have been permitted to go into evidence of the manner in which the work was executed, for the purpose of impeaching the decision of the superintendent or arbiter. The case should no more have been submitted to the jury upon this as evidence to establish fraud in the superintendent, than upon the other evidence just spoken of and which was offered with the same design. If fraud in the arbiter can ever be established by proof that he refused to certify the execution of the work when the same had been duly and properly performed, it can only be in those cases where the refusal is shown to have been grossly and palpably perverse, oppressive and unjust, so much so that the inference of bad faith and dishonesty would at once arise when the facts are known. No such facts were presented by this case, and, as argued by counsel for the defendant and sustained by the adjudications, it is not upon every claim made by the mechanic or workman that he has complied with his contract, or upon every controversy arising between him and the arbiter, that the power of deciding is to be taken away from the latter, and the question carried into a court of law, there to be determined by a jury of twelve inexperienced men, or by the judge of the court alone. If this were otherwise, and if, upon every difference springing up between the superintendent and the party contracting to do the work, the former is deprived of a,11 authority to decide, then such covenants and stipulations en.tered into between parties become utterly nugatory and useless. But such is not the view which has uniformly been taken by the courts, by which such stipulations have been held valid and effectual to secure to the party in whose favor they are made the advantage of having the work inspected and its quality and character determined, with reference to the requirements of the contract, by a person of adequate skill and ability to form a correct judgment in such matters. “ Every man is the master of the contract he may choose to make; and it is of the highest importance that every contract should be construed according to the intention of the contracting parties. And it is important in a case of this description, that the person for whom the work has been done should not be called upon to pay for it until some competent person shall have certified that the work has been properly done according to the contract and specifications.” Per Erle, C. J., in Clarke v. Watson, supra. It is manifest that this important object will be defeated, and the protection of a skilled and experienced superintendent lost, if in every case of disagreement or dissent on the part of the contractor, the opinion of a jury is to be substituted. Having deliberately and of his own free will made choice of a person as fit and competent to decide, and by whose determination he has agreed to abide, it is but reasonable and proper that the contractor should be held to the performance of his agreement. The case here presented differs not, therefore, from those which have frequently arisen and been decided upon contracts of this description, and with respect to which the general rule of law is correctly stated in Baasen v. Baehr, 7 Wis., 521. That was the , case of an agreement to pay for extra work at the estimate of an architect agreed upon, and it was held that the contractor must abide by such estimate. This court said: “The parties saw fit to make the architect the umpire between them, and if he exercised his best judgment, in good faith, and with an honest intention of determining the real value of the extra work, his estimates are binding upon them. His decision ought not to be disturbed without some statement going to show that it was made under a mistake, or was not honest. Clauses in contracts analogous in principle to the one now under consideration, have frequently been construed by courts, and the general rule is to hold the parties to the stipulations of their contract, unless they show some good reason for disregarding the decision made by the umpire mutually chosen for that purpose.” If fraud or bad faith is relied upon, such good reason would be shown, according to the decisions of the English courts, when it appeared that the other party colluded with the architect or encouraged or procured the wrongful decision.

But the contract in this case contained a further provision, found in the plans and specifications which were expressly declared to be a part of the contract, and which provision was as follows: “ In all disputes arising as to the proper interpretation of the plans and specifications, or as to the fitness of the workmanship or materials, the decision of the superintendent shall be final.” The dispute in this case arose upon the interpretation of the plans and specifications — tl^e superintendent holding to one interpretation, and the plaintiffs contending for • another. The plaintiffs refusing to yield to the decision of the superintendent, and persisting in the execution of the work according to their interpretation, the superintendent declared his dissatisfaction and refusal to accept or to certify, and thereupon gave notice of a suspension of the work, and further performance of the contract was ended.

• It is said by counsel for the defendant, that this last clause was a prospective submission to arbitration, which having taken place, and the decision been made, the same is final and conclusive between 'the parties, unless impeached for fraud or mistake. This is the assertion of an undoubtedly correct legal proposition according to the view taken by counsel. But we are inclined to look upon the clause as something different from a mere prospective submission to arbitration before an arbitrator or arbitrators named or to be named, and rather as the express delegation of a power, which, if no such clause had been inserted, would have existed as an incident to, or been implied from, the general authority already conferred upon the superintendent. It was necessarily incident to the authority previously given to the architect to grant or withhold his certificate according as he should or should not be satisfied that the work was being executed in accordance with the “true spirit, meaning and intent” of the contract, that he should have the power of interpreting and determining the proper construction and meaning of the contract, plans and specifications, and that such determination should be final and conclusive. In the performance of his function as arbiter of the character of the work and quality of the materials, and of their correspondence with the requirements of the contract, the first question arising and to be decided would have been upon the terms of the contract itself, and what was meant and intended by it, both as to' the kind of materials to be furnished and the style of work to be performed. The clause in question must therefore, we think, be regarded as the express mention of an incidental power, which was inserted from motives of extreme caution, and so as to avoid the possibility of doubt It was foreseen to be extremely necessary in the progress of the work, and when delay was impossible, that the architect, in the discharge of his duties, should possess this power; and out of a superabundance of caution, it was expressly delegated.

A late case in the court of appeals, Pres’t, etc., Canal Co. v. Pa. Coal Co., 50 N. Y., 250, to which our attention has been directed since the argument of this cause, fully sustains the views above expressed as to the general principles of law governing contracts of this nature. The opinion of the court by AlleN, J., is valuable for the discussion it contains and the authorities it collects and reviews, and particularly so for the clear and accurate distinctions which it draws between those covenants for submission and conditions which are precedent in their nature and oust the courts of jurisdiction or bar the action of the plaintiff, and those which are not so, and as to which he may have his remedy for the recovery of damages. See also Pappa v. Rose (L. R., 7 C. P., 32), and Kimberley v. Dick (L. R., 13 E. C., 1), reported in 1 Eng. E. (Moak), 87 and 511, and cases there cited in notes.

There is another point made by counsel for the defendant in which we also agree. We agree that evidence to show fraud or mistake in the superintendent was inadmissible, because no such averments of fact were contained in the complaint. To justify the admission of such evidence, the facts should have been alleged, as will appear from the authorities above cited, if in truth the same were not sufficiently apparent without. The defendant is entitled to know the ground of recovery relied upon, in order that he may be able to meet and offer proof against it. The complaint in this case, to have been good according to the nature of the proofs offered and relied upon at the trial, should have averred that the condition precedent had been complied with, namely, that the work had been done to the satisfaction of the superintending architect, and that he had granted his certificate, or otherwise it should have averred facts excusing such compliance. Fox v. The Railroad, 3 Wallace, Jr., 243. The complaint did neither, nor was either made out by proofs on the trial; and no evidence whatever was offered to show the wrongful and forcible expulsion of the plaintiffs from the work by the defendant, as alleged in the complaint. The attempt to prove fraud or mistake in the architect was a failure, the evidence rather preponderating in favor of his decision upon the proper interpretation of the plans and specifications, than being against it. But whether the evidence so preponderated or not, that was a question for the architect to decide, and not, under the circumstances of this case, to be submitted to a jury. The court should have granted the motion for a nonsuit made when the testimony closed, as also that first made; and failing in those, the motion for a new trial should have been granted.

By the Court. —The order of this court is, that the judgment of the court below be reversed, and the cause remanded with direction that a new trial be granted according to law.