Sanitary District of Chicago v. McMahon & Montgomery Co.

Mr. Justice Stein

delivered the opinion of the court.

First. In contemplation of law Green’s Dredging Company was not a bidder, because its bid did not conform to the advertised requirements. The contract was let to the next lowest bidder, McMahon & Montgomery Company, at a price less than its bid, without any re-advertising, and it is now claimed that this avoided the contract. Ho authorities are cited to sustain the contention. If (so far as this point is concerned) it was lawful to let the company have the contract at the price (twenty-three cents) bid. by it—and this is not denied—then it was not contrary to the statute, or to public policy, or to the duty appellant owed to the public, for its trustees, by persuasion, to induce that company to consent to a reduction of the price from twenty-three to twenty-one cents. Mor was there anything unlawful in the permission given by the trustees to the successful bidder to associate with itself in the work other contractors and to let them sign the contract. In this way appellant only obtained additional security for its due execution, and for that purpose no further advertising or bidding was required.

Second. As appears from the foregoing statement, there was no advertising or bidding in respect of the work involved in the building of the collateral channel and the paragraph in the contract relating to it was omitted from the special count. It is therefore insisted that a fatal variance exists between the proof and the declaration, and that the instrument sued on is void as an entirety. As both these objections rest upon the same foundation, they will be considered together. Before doing so, it is proper to state that if the contract was not admissible under the special count, it was not admissible at all. It conld not be received under the common counts. It does not in express terms obligate appellant to furnish the right of way. If such obligation exists it arises by implication of law from the expressed terms. Hence it was for the pleader either to declare upon the instrument, according to its alleged legal effect, or to set it forth in Jiaec verba to enable the court to determine whether the obligation existed. The rule is that the common counts are sufficient when nothing remains to be done under the contract, i. e., when it is completely executed. Here, so far as the cause of action upon which a recovery was sought is concerned, the contract was and is wholly unexecuted. Appellees do not sue for the price of work done and materials furnished; that has all been paid. They sue for damages resulting from the non-performance of an implied covenant.

That an agreement, such as the one at bar, if entered into without the preliminary advertising and bidding prescribed by the statute, is void and affords no basis for a recovery, is the settled law of the state. (Dement v. Rokker, 126 Ill. 194; Littler v. Jayne, 124 Ill. 123; Sanitary District v. Lee, 79 Ill. App. 159.) The case of Johnson v. Sanitary District, 163 Ill. 285, cited by appellees, is not in conflict with these decisions, and lays down no contrary rule. There it was sought by a mandatorjr injunction to compel the awarding of a contract to one of several bidders. The application was denied on the ground that “ the discretion vested by the statute in a municipal board to let a contract for public work to the lowest responsible bidder, and to re ject any and all bids, is judicial in its nature, and will not be controlled by the courts.” The case does not hold and can not be construed as holding that if such a contract were sued on and it appeared that it had been made without advertising for bids, it would not be declared void.

It is urged, however, that the provisions relating to the collateral channel are severable from the rest of the instrument, and that in substance and effect it embodies two separate and independent contracts. By clause 7 of section B the price for excavating the collateral channel was fixed at 19.9 cents per cubic yard, whereas for doing the same work on the main channel appellees were to be paid twenty one cents for each cubic yard. As required by the contract, the engineer in preparing his progress certificates and final certificate, kept the number of; yards excavated in the one channel separate and apart from the number of yards excavated in the other, and separate vouchers were issued. All the provisions relating to either are easily separable from those relating to the other. Indeed, one would expect this to be the case when it is remembered that the building of the collateral channel was an afterthought, and not contemplated or referred to in the original advertisement and bids. The first mention of this channel appears in the proceedings of appellant’s board of trustees had on May 2,1894, the very day of the date of the instrument in suit. In Keeler v. Clifford, 165 Ill. 544, the court say:

“ Whether a contract is entire or severable, can not be determined by any precise rule, but must depend upon the intention of the parties, to be ascertained in each case from the language employed and the subject-matter of the contract.”

They then cite with approval from 2 Parsons on Contracts, marg. p. 517:

“ If the part to be performed by one party consists of several distinct and separate items, and the price to be paid by the other is apportioned to each item to be performed, or is left to be implied by law, such a contract will generally be held to be severable. And the same rule holds where the price to be paid is clearly and distinctly apportioned to different parts of what is to be performed, although the latter is in its nature single and entire.” .

Applying these rules, we have here two distinct contracts, as to one of which the requirements of the statute in the matter of advertising and receiving bids were complied with, and as to the other they were not. No recovery is sought in respect of the latter. If the parties, instead of putting both in the same paper, had executed and signed two, one relating to the main channel and the other to the collateral, and had complied with the statute as to the main channel and not as to the collateral, no one would contend that the failure in respect of the latter would taint or in anywise affect the validity of the former. In legal effect the situation is the same.

Third. The work contemplated by the contract could not be done without the right of way being procured by somebody. From the very first the attitude of appellant was that this duty rested upon it, and such seems to be the opinion of its counsel; for they argued with much force that paragraph 7c and the last sentence of paragraph 7 in section D of the contract were put into it for the express purpose of allowing appellant the necessary time for procuring the right of way. In its instructions tendered to but refused by the court, notably numbers 19 and 20, appellant conceded its obligation to procure the right of,way. That this construction of the contract by appellant, whose interest lay in precisely the other direction, is correct, admits of no doubt. The contract (section F) provides that appellees shall do the work in strict conformity to the requirements of the law under which the Sanitary District of Chicago is organized, entitled “An act to create Sanitary Districts, etc., approved May 29,1899, in force July 1, 1899.” Paragraph 8 of this public law, thus specifically—although unnecessarily—made a part of the contract, empowers appellant to “ acquire by purchase, condemnation or otherwise, any and all real and personal property, right of way and privilege that may be required for its corporate purposes.” What was in the minds of the parties and what their intentions were in this regard appears further from paragraph 7 of section D, where it is stipulated that “ the work on said collateral channel shall be begun as soon as said Sanitary District shall have secured the necessary right of way therefor and shall have so notified” appellees. It will be noticed that the parties here assume and regard it as a matter of course that appellant shall secure the right of way; they do not think it necessary so to stipulate. Appellees could not excavate the canal without a right of way. They did not possess the power to condemn, but appellant did. They were to be paid and compensated, not for purchasing the right of way, but at the rate of twenty-one cents for each cubic yard of excavation; and this was to be “ full compensation for said work, including the furnishing of all necessary materials, tools, labor, machinery and appliances ” (section H of contract). Bangor Furnace Co. v. Magill, 108 Ill. 656; Minneapolis Mill Co. v. Goodnow, 40 Minn. 497; Genovese v. Third Ave. R. R. Co., 43 N. Y. Supp. (App. Div.) 8; King, etc., Co. v. St. Louis, 43 Fed. Rep. 768; Kelly v. U. S., 31 Ct. Cl. 361; Weeks v. Rector, 67 N. Y. Supp. 671 (Supr. Ct. App. Div.); Chicago, etc., Co. v. Yawger, 56 N. E. Rep. 50; Allamon v. Mayor, etc., 43 Barb. 33.

If appellees were unjustifiably delayed by appellant in the performance of the work and suffered damages thereby, they would be entitled to compensation for the damage unless there be something in the contract which deprives them of the right. Appellant contends that paragraph 7c of section D was intended by the parties so to operate. Unquestionably, the paragraph was inserted with a view to the contemplated difficulties in obtaining the right of way; but it relates to only a very small portion of the entire route, and simply provides tha,t “ no work shall be done * * * until such time as the said chief engineer shall, in writing, order the contractor to proceed upon the portions exempted as above.” The contract not only fixed the time within which the work was to be completed, but fixed also the minimum rate of progress. The work was to be commenced within fifteen days from the date of the contract and to be completed on or before May 31, 1896. There was to be done each month not less than such proportion of the whole work as one month bears to the whole number of months agreed upon for the completion of the work. The numerous provisions giving appellant’s chief engineer power to direct and superintend the execution of the contract did not give him a general -power to change its terms, or extend the time beyond that fixed by the contract for completing the work. He might give directions ivithin the limits of the contract, but no ’further. If he could change its terms in one particular, he could do so in all. (Adlard v. Muldoon, 45 Ill. 193; McVerry v. Kidwell, 63 Cal. 246; Bond v. Mayor, 19 N. J. Eq. 376.) Moreover, the contract fairly bristles Avith provisions intended for the benefit of appellant and to safeguard its rights. The engineer “ shall have full poAver to reject or condemn;” he “ shall decide every question relative to the execution hereof, and his decision shall be final and binding;” appellant “ reserves the right to change said grade (of the channel) by raising or loAvering it, or by increasing or decreasing the slope, but such change shall in no wise affect the terms of this contract as to price, or entitle the contractor to any compensation additional to the rate hereby fixed, or render the Sanitary District liable for any damages Avhatsoever, direct or indirect;” “if it should prove necessary or desirable to unwater the channel for purposes of inspection” appellees “shall do the same without additional cost;” appellant “ reserves the right to permit one contractor to pass over or across the contract section of another for the purpose of transporting material or machinery to his own section;” it “ reserves the right to enter upon the main channel and right of way, at any time or place for the purpose of erecting or preparing,” etc.; “ all claims for extra labor or material furnished by the contractors, or for damages from any cause Avhatever, must be reported to the chief engineer at the time such labor or material are furnished or such damages occur, and they must also be presented to him in writing at the end of the month;” nothing shall be paid for as extra work that can be classified under any of the heads upon which the price is fixed by this contract;” “whenever work is to be clone not contemplated or covered by the prices herein given, the chief engineer shall fix such prices therefor as he shall consider just and equitable, and the contractors shall abide by such prices,” etc.; and finally there is an entire section (E) devoted exclusively to the subject of “damages” for which appellees shall be liable, and appellant not.

In view of these provisions, and many others similar in object but not here quoted, the conclusion is irresistible that if the parties had intended to release appellant from damages for failing to furnish the right of way they would have said so.

Fourth. The court excluded all proof tending to show knowledge by appellees before and at the time of the making of the contract of the existence of obstacles to the obtaining of the right of way by appellant, and of the likelihood of delays in that regard. At the trial the offer was made “ for the purpose of showing that the plaintiffs, when they entered into the contract, had full knowledge of the situation, knew that the right to cross these streets and railroads had not been secured, and that they discussed and considered that fact and contemplated these very delays.”

It was not then nor is it now claimed that there is any doubtful,ambiguous or equivocal phrase or expression in the contract; and it is only under such circumstances that a court may receive evidence aliunde the instrument, explaining the subject-matter, the relations of the parties and the inducing causes which led to the making of the agreement, so that the court may be placed in the situation of the parties as nearly as possible, and be the better enabled to interpret-their language as they then understood it. (21 A. & E. Enc. of Law, 2d Ed., 1108; Rector v. Deposit Co., 190 Ill. 380, 384; Lumber Co. v. Coal Co., 160 Ill. 85, 92; Barrett v. Stow, 15 Ill. 423; Wood v. Clark, 121 Ill. 362; Irwin v. Powell, 188 Ill. 107.)

Counsel now claim that the evidence was offered “to rebut the implication of law ” by which, as the trial court held, appellant was liable for “ damages resulting from a suspension of the work.” Assuming (what we do. not decide but are strongly inclined to doubt) that the evidence was competent for this purpose, it is sufficient to say that at the trial no such purpose was announced. It was-limited to the one above stated.

Fifth. The jury were instructed that the measure of the plaintiffs’ damages is the market rental value of dredges, tugs, and scows during the time that they were deprived of them. The evidence tended to show that by reason of the delays in the furnishing of the right of way, appellees had for months been unable to make any use of their dredging plant. It is urged that the instruction was wrong, and that the true measure of damage was the interest on the capital invested by appellees in their plant and the" amount expended by them in taking care of it. We think the court adopted the correct rule. (Green v. Mann, 11 Ill. 613; Consumers Ice Co. v. Jenkins, 58 Ill. App. 519; Galbraith v. Iron Works, 50 Ill. App. 247, 253; Wood v. State, 66 Md. 61; Western Co. v. Cox, 39 Ind. 260; Griffin v. Colver, 16 N. Y. 489.) Sedgwick in his “ Measure of Damages ” (6th Ed. 81, marg. p. 76, note 1,) calls the last case “ the leading American case ” on the subject.

Ever since the decision in Hadley v. Baxendale, 26 Eng. L. & Eq., 398, the rule has been that a party, for a breach of contract, is entitled to such damage as may be fairly and reasonably considered to arise naturally, that is, in the usual course of things, from such breach itself, or as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it. Appellant knew that appellees possessed and used their plant for certain purposes and knew or should have known that it had a certain rental value. The rule contended for by appellant is a hard and fast one, which may be proper enough in some cases, as, e. g., in Green v. Williams, 45 Ill. 206, where the plaintiff through the fault of the defendant was prevented from carrying on her business on certain premises, and she Avas held entitled to “ interest during such suspension on the amount of capital invested in her business.” The business, consisting of a stock of goods, had no rental value. The only use the plaintiff had for her goods in the usual course of things, her only object in having them, was to sell them. Both branches of the rule in Hadley v. Baxendale are, we think, applicable to the case at bar.

Sixth. The court refused to let appellant shoiv fully how old appellees’ plant Avas, and how long it had been in use. Appellees’ witnesses had testified that the value and cost of the plant entered into the question of its rental value. But the court excluded an offer to show such cost and value. In these rulings there was error. Manifestly, when appellees’ witnesses had testified to the rental value of the dredges, tugs and scows, appellant should, on cross-examination, have been permitted the widest latitude in examining as to anything that had any hearing upon such value, or was at all calculated to assist the jury in determining the same.

Seventh. By plaintiffs’ instructions 6 and 7 the jury Avere, in substance, informed that notwithstanding paragraphs D 7c and D 11 of the contract (reciting them) the defendant was liable for the damages resulting from all delays by Avhich the plaintiffs Avere prevented from doing the work, or any part of it which, by the contract, they had undertaken to do within the time within which they Avere to do it. The court refused defendant’s instructions 19 and 20, to the effect that if, in the light of said paragraphs (again reciting them), the evidence showed that the defendant endeavored in good faith and with reasonable diligence to secure the right of way across the avenue, the boulevard and the railway tracks, and the other obstacles to plaintiffs’ progress, and that delays occurred by reason of time necessarily employed in securing said right of way, then as to delay due solely to the time reasonably occupied in such endeavor, the plaintiffs could not recoATer. By giving plaintiffs’ instructions and refusing defendant’s, the court virtually cut out of the contract said paragraphs D 7c and D 11, and treated them as if they did not exist.

Ho rule pertaining to the construction of a written instrument is better settled or entitled to greater consideration than that wherever it can be done, due weight and effect shall be given to all its provisions, and none disregarded. It is to be presumed that they are all inserted deliberately and for a purpose. The purpose for which the parties inserted the provisions in question is quite plain. The existence of the obstacles to the obtaining of the right of way for Section O of the canal was well known to appellant at least, as appears from the report of its joint committee on engineering and finance, by which its board of trustees was informed of the obstacles before the execution of the contract. While there is no direct proof, it is altogether likely that appellees possessed the same knowledge. But however this may be, the language of paragraphs D 7c and D 11 shows that these apprehended obstacles were in the minds of the parties, and were what they stipulated about:

“Ho work shall be done upon any portion of the line covered by this contract which, in the judgment of the chief engineer, should be kept free and unincumbered pending the adjustment of any questions affecting the relations of this district with the city of Chicago, the board of park commissioners, or any railway company, or corporation, growing out of the re-adjustment of streets, highwa)Ts, boulevards or railway tracks, until such time as the chief engineer shall order the contractors to proceed upon the portions exempted as above.”

All public roads or streets crossing or lying adjacent to the main channel were to be kept open and unobstructed :

“ Ho interference will be allowed with any railway until such time as other and proper provision for the operation of such railway has been made under the direction of the chief engineer.”

This language unmistakably contemplates that delays would occur, and under it appellant can only be held for such, delays as it could not, in the exercise of good faith and reasonable diligence, prevent. Appellees themselves took this view of the matter in their letter of complaint to the board, dated July 20, 1895, in which they say:

“We therefore notify your board that we shall at the proper time present our claim for unnecessary and unreasonable delay.”

We do not lose sight of the fact that appellees were obligated by the contract to perform the work by a certain time, and that possibly they might have been prevented from doing so by necessary and reasonable delays. That was a risk they took in signing the contract. They were not obliged to sign it, and no doubt did so in the belief that, notwithstanding any delays that might properly occur, they would be- able to finish the job within contract time. This interpretation of the contract gives due effect to all its provisions and carries out the evident intent of the parties. The court erred in giving plaintiffs’ instructions 6 and 7, and refusing defendant’s instruction 19.

Ho objection is perceived to instruction 11 given for plaintiffs. It has met with the approval of the Supreme Court in personal injury cases and seems to be applicable and proper in an action of this kind.

To plaintiffs’ instruction 12 (for this and Ho. 11 see statement preceding this opinion) it is objected that there is no proof showing any offer of settlement. If there was no such proof (and none has been pointed out) the instruction should not have been given. Hor should the court have said “ in such case such offer (by the plaintiffs) should not be regarded as an admission that no more than that sum was due.” This is more in the nature of argument than laying down a rule of law, and may have been taken by the jury as an opinion or intimation by the court that plaintiffs were entitled to a substantial recovery.

Appellant’s refused instruction that the jury should not allow damages for delays occurring after May 31,1896, the time fixed in the contract for the completion of the work, was, if otherwise proper, objectionable as not conditioned on a finding that the delays before that time were reasonable or necessary.

Appellant’s refused instructions 2 and 7 sought to announce the rule that it was the duty of appellees ,by reasonable exertions on their part to reduce their loss as much as possible. While the general principiéis correct, yet the court did not err in refusing the instructions. It is not the law, as stated in the first part of No. 2, that “ plaintiffs can not recover for any damages which they had it in their power to avoid.” This imposed upon them the highest degree of diligence; and that the law does not require. They were bound to exercise reasonable diligence, but no more. The second part of the instruction assumes as a fact that the evidence shows plaintiffs to have failed in the duty of seeking to protect themselves from loss. Instruction No. 7 assumes that plaintiffs employed “ an excess of necessary equipment,’’ after leaving it to the jury to find whether the work could not have been done “ with two dredges, two tugs and four scows.” We have been unable to find such proof, and none has been pointed out. The same is true of appellant’s refused instruction No. 8, which submitted the question whether plaintiffs used “ an excessive or unnecessary amount of machinery.”

Eighth. There are several reasons why the fact that appellees did not obtain from the chief engineer of appellant a decision under the clause that “ he shall decide every question which may arise between the parties relative to the execution hereof, and his decision shall be final and binding upon both parties,” is not a bar to the present action.

a, The clause is not made a condition precedent to the maintenance of the action. Birmingham Ins. Co. v. Pulver, 126 Ill. 329, 338.

b. Whether appellant was charged with the duty of providing appellees with the right of way is a question of law, and an agreement made in advance of the arising of the controversy to submit such a question to a private party for his decision is invalid as an atttempt to renounce one’s right of appeal to the courts for the redress of wrongs. Myers v. Jenkins (Ohio), 57 N. E. 1089, 1093: B. & O. R. R. Co. v. Stankard, 56 Ohio St. 224;. Niagara Ins. Co. v. Bishop, 154 Ill. 9, 16; Frink v. Ryan, 3 Scam. 322, 324; Supreme Council v. Forsinger (Ind.), 25 N. E. Rep. 129; Collins v. U. S., 34 Ct. Cl. 294, 332.

In Harlev v. Sanitary District of Chicago, 107 Ill. App. 546. where, with reference to the present question the form of contract was the same as here, it appeared that the decision of the chief engineer under the above clause in regard to the rate of progress of the work had been adverse to the contractor, and appellant (appellee in that case) claimed the decision to be final and conclusive. The court held (pp. 564, 565) that on account of other conflicting and contradictory provisions of the contract “ no decision as to rate of progress or of any other matter relating to the contract which the chief engineer might make, would have been binding upon appellee, and consequently would not have been binding upon appellant. It is fundamental that a contract of this kind, to be valid, must be binding upon both parties.”

d. Even if the clause requiring the submission were' valid, its wording would not include the present cause of action, which involves a question not <e relative to the execution ” of the contract. Whether appellant is liable for the delays sued for, has nothing to do with the execution of the contract. Such “ execution ” relates “ only to the character and amount of work and materials with reference to whether the same were done and furnished in accordance with the contract, looking to its final completion and to payment therefor.” Harlev v. Sanitary District, supra, p. 564.

The views above expressed render it unnecessary to pass explicitly upon instructions 8 and 9 given for appellees.

For the errors pointed out the judgment of the Circuit Court is reversed and the cause remanded.