Judges: Wheeler, Maltbie, Haines, Hinman, Banks
Filed Date: 10/5/1927
Status: Precedential
Modified Date: 10/19/2024
This action comes before us upon a demurrer to the complaint. The first count of the complaint states the following facts: On August 23d 1915, the plaintiffs entered into a contract with the defendant for the construction of a large dam, the price therefor being fixed in the contract at certain named sums for the various items of work to be performed. The contract provided that the work was to be completed in thirty-three months and, unless this was done, the plaintiffs were to pay the defendant as liquidated damages $100 for each day thereafter required. Both parties understood when the contract was made that the plaintiffs had to move a great amount of earth and rock, necessitating the use, in large quantities, of high explosives, of coal for the operation of steam shovels and other apparatus, of lumber, cement, iron, and *Page 645 steel, and vitrified pipe, and of small tools and equipment; and that the plaintiffs had to employ a great number of skilled and unskilled laborers. The parties did not contemplate that this country was to become involved in the war then raging in Europe.
The complaint then proceeds to allege, in considerable detail, these further facts: Early in 1916, rumors became prevalent that this country might become embroiled in the war. Thereafter steps taken in this country in preparation for its becoming a participant therein, and in the conduct of it after war was declared, resulted in the practical impossibility of the plaintiffs procuring the laborers necessary to carry on the work under the contract, in embargoes upon the transportation of materials and supplies, in the diversion of materials and supplies for the use of the government, and in interference with the progress of the work. As a result of these conditions "the contract became impossible of performance according to its terms." Thereupon the plaintiffs and the defendant discussed the situation, and the plaintiffs notified the defendant that because of the conditions confronting them due to the war, "it would be impossible for the plaintiffs to continue performance of said work at the prices specified in said contract." The defendant then stated that it recognized the conditions, and that the dam under construction was for the purpose of forming a compensating reservoir from which to supply water it was under contract to furnish to various milling concerns then engaged in the production of war materials.
It is then alleged (par. 8): "Said defendant then and there agreed to and with the plaintiffs that if the plaintiffs would proceed with the work called for under said contract, it, the defendant, would waive the penalty provided for in said contract on account of *Page 646 its non-completion within the thirty-three months' period specified in said contract and that it would extend the time necessary for the completion of said work. The defendant informed the plaintiffs that under legislation as it then existed defendant was powerless to change the compensation provided for in said contract but defendant then and there promised and agreed to and with the plaintiffs, if legislation could be effected permitting defendant to change the compensation called for under said contract, defendant would do all in its power to so change the compensation called for under said contract as to prevent the plaintiffs from suffering any actual loss which might be occasioned through its performance. The plaintiffs, relying upon the promise and assurance of defendant to waive the penalty provided for in said contract and extend the time of its completion and relying upon the promise and assurances of defendant that, if legislation could be effected permitting it so to do, the defendant would do all in its power to alter the compensation called for under said contract so as to prevent the plaintiffs from suffering any actual loss in its completion, continued to perform the work and furnish the material and supplies called for under said contract and prosecuted said work expeditiously until the entire work called for under said contract had been completed. In view of the impossibility of performing the contract according to its terms, the new agreement mentioned in this paragraph was made between the plaintiffs and the defendant. (par. 9.) The said contract theretofore existing between the plaintiffs and defendant, was rescinded by waiving of the penalties already incurred, and also was rescinded in so far as the time limit under which the work was to be performed and the compensation to be paid therefor, were concerned by changing the effect of the last payment as a release as stated in *Page 647 Article XXVI of the contract, and a new contract entered into whereby the time limit was to be extended and the compensation to be paid the contractor was to be the actual cost of the work, labor and material to be furnished by the plaintiffs if legislation could be effected permitting defendant to alter the compensation so as to permit it to pay the actual cost."
The complaint then goes on to allege that the plaintiffs caused a bill to be presented in the General Assembly authorizing municipal corporations, boards and departments thereof, to change the terms of contracts, the cost of performance of which had been increased by war interference, so as to make the compensation therefor sufficient to prevent the contractor from suffering any actual loss due to performance of his contract, and that thereafter this bill was duly passed and approved by the Governor. The complaint then continues with an allegation that the plaintiffs have fully completed the contract and have presented to the defendant a bill for $159,000, representing the actual cost of the work above the amount paid to them under the terms of the contract, and that the defendant has refused to pay it.
The defendant demurred to this count of the complaint upon five grounds, which may be briefly summarized as follows: (1) It does not appear that the contract originally made by the parties has ever been rescinded or modified in so far as the compensation to be paid the plaintiffs is concerned; (2) it does not appear that there was any consideration for any alleged agreement to increase the compensation provided by the original contract, and it does appear that the plaintiffs performed no services or furnished no material except those required under that contract; (3) it appears that when the contract was made war was already being waged in Europe and the possibility of *Page 648 this country becoming involved then existed, that the contract had no provision for such a contingency, and that it was not impossible of performance; (4) the defendant as an agent of the city of Hartford could not lawfully, under the 24th Amendment of the Constitution of this State, increase the compensation agreed to be paid the plaintiffs beyond that specified in the contract; (5) the Act of the General Assembly referred to in the complaint did not permit the defendant to change the compensation of the plaintiffs provided in that contract.
With reference to the first ground of demurrer, while the allegations of the complaint are somewhat equivocal, still the plaintiffs might clearly offer evidence under them which would establish an agreement between the parties for a modification of the contract. In the eighth paragraph it is alleged that the defendant promised and agreed to and with the plaintiffs, that "if legislation could be effected permitting defendant to change the compensation called for under said contract, defendant would do all in its power to so change the compensation called for under said contract as to prevent the plaintiffs from suffering any actual loss which might be occasioned by its performance," and that, relying on this promise and assurance, the plaintiffs continued in the performance of the contract until the work was completed. Inasmuch as it is not claimed that there was any want of power in the defendant to change the contract save lack of enabling legislation, its agreement was in effect one to pay the additional compensation should such legislation become effective. Moreover, the next paragraph of the complaint expressly alleges that a new contract was actually entered into by the parties, by which "the time limit was to be extended and the compensation to be paid the contractor was to be the actual cost *Page 649
of the work, labor and material to be furnished by the plaintiffs, if legislation could be effected permitting the defendant to alter the compensation so as to permit it to pay the actual cost." While this allegation is capable of construction as a mere conclusion from the allegations of the eighth paragraph, that is not necessarily so; the preceding allegations may be regarded as mere matters of inducement; Hull v. Thoms,
The second and third grounds of demurrer may be considered together. They raise the question which has been much discussed by legal scholars, whether a promise to pay additional compensation for the continued performance of work which the promisee is already obligated to the promisor to do by the terms of an existing contract, is supported by a sufficient consideration. Three of our own decisions bear directly *Page 650
upon the issue. In Connelly v. Devoe,
The basis of the rule is generally made to rest upon the proposition that in such a situation he who promises the additional compensation receives nothing more than that to which he is already entitled and he to whom the promise is made gives nothing that he was not already under legal obligation to give. 1 Willison on Contracts, § 130. Where the promisee has abandoned or is about to abandon his undertaking, there is often in such a situation a substantial benefit in fact conferred upon the promisor in securing the continued performance of the contract, and an actual detriment to the promisee in proceeding with an undertaking which he has resolved to be too onerous. Corbin, 17 Yale Law Journal, 472. This fact we noted in Connelly v. Devoe,
If the contractor has no right to elect to pay damages, it is not because the law will attempt to hold him to performance, but because it is not right, that is, morally justifiable that, lacking legal excuse, he should fail to keep his contract. "The reason why the doing what a man is already bound to do is no consideration, is, not only because such a consideration is in judgment of law of no value, but because a man can hardly be allowed to say that the prior legal obligation was not his determining motive." Byles, J., in Shadwell v.Shadwell, 9 C. B. (N.S.) 159, 178, 30 L. J., C. P., 145. But if the contractor cannot be allowed to say that *Page 654
the prior legal obligation was not his determining motive, by the same token of honesty and good faith, how can the promisor of the additional compensation, who by the offered inducement of that compensation has caused the contractor to do to his detriment that which he had resolved not to do, be heard to say that he will not keep his promise. Judged from the standpoint of ordinary business morality, the situation of the promisor may well be less defensible than that of the contractor. See Corbin, 17 Yale Law Journal, 472. This aspect of the situation we noted in Connelly v. Devoe,supra: "And besides, the defendant suffered the plaintiff to go on with the work after the agreement was made, under the expectation of being allowed the extended time for the completion of the work." Of a somewhat similar situation, the Supreme Court of Washington said, in Brown v. Kern,
The rule which holds that a promise of additional compensation is without consideration if the promisee does or promises to do only that which he is already under a contract obligation to do, cannot be satisfactorily rested upon the ground that the promisee has suffered no detriment and the promisor received no benefit, nor upon the ground that the promisee has no right to take any other course than to perform. In fact, no satisfactory solution of the problem can be *Page 655
reached upon the basis of denying that there can be under any circumstances consideration for a promise of additional compensation in such a case, but the circumstances of the particular case, or at least of the class of cases, under consideration must be considered. Ballantine, 11 Michigan Law Review, 433; Corbin, 17 Yale Law Journal, 472. It may well be that there is in fact no appreciable detriment to the promisee or benefit to the promisor in many cases where a promise is made to induce the performance of that which the promisee is already under a contract obligation to do; such would be the ordinary case of a promise to pay a debt which is already owing and immediately due; 1 Williston on Contracts, § 120; or a mere agreement to accept a part of a debt in satisfaction of the whole.State ex rel. McClure v. Northrop,
Of the test to be applied in such a situation the Supreme Court of Minnesota said in King v. Duluth, Missabe Northern Ry. Co., supra (p. 488): "What unforeseen difficulties and burdens will make a party's refusal to go forward with his contract equitable, so as to take the case out of the general rule and bring it within the exception, must depend upon the facts of each particular case. They must be substantial, unforeseen, and not within the contemplation of the parties when the contract was made. They need not be such as would legally justify the party in his refusal to perform his contract, unless promised extra pay, or to justify a court of equity in relieving him from the contract; for they are sufficient if they are of such a character as to render the party's demand for extra pay manifestly fair, so as to rebut all inference that he is seeking to be relieved from an unsatisfactory contract, or to take advantage of the necessities of the opposite party to coerce from him a promise for further compensation. Inadequacy of the contract price which is the result of an error of judgment, and not of some excusable mistake of fact, is not sufficient."
Under the allegations of the complaint the plaintiffs may be able to prove such a situation as would bring them within the scope of this principle. There is, however, a narrower ground upon which the facts which they may be able to prove under that complaint may justify the court in holding the promise for additional compensation to be upon a sufficient consideration. It will be noticed that while in the eighth paragraph the promise of the defendant there recited is that it would *Page 658 do all in its power to change the compensation so as to prevent the plaintiffs from suffering actual loss through performance of the contract, in the ninth paragraph the allegation is that a new contract was entered into whereby the compensation to be paid the plaintiffs was to be the actual cost of the work, labor and material to be furnished by them. Any difficulties due to the somewhat contradictory nature of these allegations are not before us upon this demurrer, and all we have to ask is, under them could the plaintiffs prove such a situation as would entitle them to recover? If they succeed in proving a new contract such as they allege in the ninth paragraph of the complaint, we would have a situation where there could be no doubt of its validity, for as there alleged, the plaintiffs clearly surrendered any rights they might have to recover the contract price and agreed to accept the actual cost of the work, labor and material to be furnished. Of course they were abundantly satisfied that that cost would exceed the contract price, but if, through some unforeseen circumstances, the actual cost had fallen below the contract price, under this allegation of their complaint they would have been bound to accept the lesser sum. There would, in such a situation, be a clear surrender of rights on the part of the plaintiffs which would amply meet the requirements of a good consideration. Monroe v. Perkins, 26 Mass. (9 Pick.) 298; Beale, 17 Harvard Law Review, 79.
The fourth ground of demurrer to the first count is that the agreement for additional compensation contravenes the 24th Amendment of the Constitution of this State which, so far as it is applicable here, provides that neither the General Assembly nor any county, city, borough, town, or school district, shall increase the pay or compensation of any public contractor above the amount specified in the contract. We have never *Page 659
had occasion to apply this constitutional provision in a case where the State, or one of its municipal agencies, has agreed to pay compensation in addition to that provided in a contract for public work, but we have indicated its meaning and effect as applied to such a situation in clear terms. "The purpose of the provision, applicable alike to all, is to make it legally impossible for any one of them to receive a greater sum, either by payment or gift, for performing the duties pertaining to his office, or for fulfilling the terms of his contract for furnishing materials, or for personal service, than it would have been legally possible for him to obtain by the judgment of a court upon the terms of his contract as originally made." Garvie v.Hartford,
The prohibition of the Constitution is aimed at the giving of gratuities, the making of payments to public officers or contractors beyond that to which they are entitled by law or the provisions of a valid contract. Where a contract has been completely performed it may well be that it would not be within the power of the State or any of the municipalities described in the Amendment to vote to the contractor further compensation than that fixed in his contract. But the Amendment cannot be construed as intended to prohibit valid and proper alterations, upon good and substantial consideration, of the terms of existing contracts during their performance whether those alterations are in the work to be performed or the compensation to be paid. In United States v. Cook,
We recognize fully the force of what was said by Cardozo, J., in McGovern v. New York,
The final ground of demurrer to the first count is that the Act of 1919 did not authorize the change in the agreement alleged in the complaint. The only *Page 663
contention of the defendant in support of this ground is that the Act is unconstitutional as contravening the 24th Amendment to the Constitution. This Act, Chapter 187 of the Public Acts of 1919, provides that, for the purpose of preventing, settling and adjusting claims by contractors on such contracts as are described in it, due to the emergency conditions created by the World War, and for the prevention of litigation concerning such claims and contracts, and to procure the expeditious completion of the same, the various municipal agencies specified in the Act, in such terms as to include the defendant, which, prior to April 6th, 1917, had contracted in the name of the municipality or agency for the construction of any public work, might alter or modify the terms of such contract to the extent of providing relief to the contractor for any loss in the performance thereof due to conditions created by the World War, provided any portion of the work was to be performed subsequent to April 6th, 1917; and further provided that such alterations and modifications should be only for the purpose of relieving the contractor from penalties for delay and of recompensing him for any loss sustained by reason of war conditions, but should not permit him to realize any profit on the contract. While the terms of this Act are sufficiently broad so that, taken by themselves, they might include agreements to pay extra compensation which would be obnoxious to the provisions of the 24th Amendment, we are to presume that the General Assembly intended a valid and not an invalid enactment, and to effectuate that intent we may and should read the Act in connection with the provision of the Constitution we have been discussing. State v. McKee,
A second count is inserted in the complaint. This recites the declaration of war by this country; various steps taken by this State to assist in furthering its conduct; several resolutions adopted by the city of Hartford, of which the defendant is a branch, to the same end; action on its part encouraging and assisting in procuring enlistments, in carrying on the selective draft, and enforcing embargoes; and increases in the pay of its own employees. It then states as its conclusion that "by reason of all the facts set forth, the defendant knowingly and willfully impeded, hindered, delayed and obstructed the plaintiffs in the performance of their contract with the defendant, and knowingly and wilfully increased the cost of performance of said contract by the plaintiffs," thereby causing the cost of completing the work to exceed the amount paid under the contract by the sum of $159,000, the recovery of which is demanded. The defendant demurs to this count because it does not appear that the acts set forth in certain paragraphs were sufficient to sustain this conclusion. While the demurrer would have been better drawn had it included all the paragraphs in the complaint preceding the one stating the conclusion, the omitted paragraphs contain nothing of consequence to support it and may be disregarded. There is nothing in the facts recited in this count to show any such conduct on the part of the defendant as bore so directly or immediately upon the performance of their *Page 665
contract by the plaintiffs as to justify in any way the claim made. The acts alleged were clearly inspired by the most laudable purpose of assisting the government in its time of need and were not intended in any way to affect the plaintiffs' contract. Any effect they might have upon its performance would be too remote a consequence to be cognizable in law. Fiarenzo v. Richards Co.,
The demurrer to the first count should have been overruled. The demurrer to the second count was properly sustained.
There is error, the judgment is set aside and the cause remanded to be proceeded with according to law.
In this opinion the other judges concurred.
United States v. Cook ( 1922 )
State Ex Rel. Marsh v. Lum ( 1920 )
Town of West Hartford v. Coleman ( 1914 )
State Ex Rel. McClure v. Northrop ( 1919 )
Sasso v. K. G. & G. Realty & Construction Co. ( 1923 )
Fiarenzo v. Richards & Co. ( 1919 )
Connecticut Light & Power Co. v. Town of Southbury ( 1920 )
Fgb Realty Advisors v. Seven Winds Realty, No. Cv 94 ... ( 1995 )
Fgb Realty Advisors, Inc. v. Seven Winds, No. Cv 94 0066260 ... ( 1995 )
Stackpole Moore Tryon Co. v. Career Path, No. 354111 (Jul. ... ( 1990 )
Dahl v. Edwin Moss & Son, Inc. ( 1949 )
Riverside Coal Co. v. American Coal Co. ( 1927 )
Willamette Management Associates, Inc. v. Palczynski ( 2012 )
Holden v. Crown Chemical Corporation ( 1954 )
fifty/unionoreo v. Russell Sirianni Asso., No. Cv94 ... ( 1995 )
Brian Construction & Development Co. v. Brighenti ( 1978 )
Sage-Allen Co., Inc. v. Wheeler ( 1935 )
Devine Pieszak v. Matthews, No. 010439 (Aug. 8, 1991) ( 1991 )
Pittsburgh Testing Laboratory, a Corporation v. Farnsworth &... ( 1958 )
De Puy v. Lone Star Dredging Co. ( 1942 )
Rossignol v. Danbury School of Aeronautics, Inc. ( 1967 )
Sheketoff v. Prevedine ( 1947 )
Hartford-Connecticut Trust Co. v. Riverside Trust Co. ( 1938 )