Ruch v. York

Opinion by

Mr. Justice Mestrezat,

This is an action of assumpsit brought to recover a balance alleged to be due on a contract to construct part of a sewerage system in the city of York, and damages arising out of the contract. The statement claims for work which is alleged to be extra and payable for as such and not regular work payable for at unit prices; for the cost of cleaning the sewers for inspection; for damages by reason of the city’s failure to.provide an outlet for the sewers laid by plaintiffs; and for the amount deducted by the city as liquidated damages for failure to complete the work within the time required by the contract. The defendant filed a demurrer to the statement and alleged as causes therefor that the statement disclosed the several items of the claim to be within the scope of the arbitration article of the contract and the decision by the arbitrator was final and conclusive, and that some of the items were lumped charges and not sufficiently specific. The demurrer was sustained by the court and judgment was entered for the defendant. The plaintiffs have appealed.

It is settled in this state that the parties to a building or construction contract may legally provide therein that disputes arising out of the contract shall be submitted for decision to the architect or engineer, and that his conclusion or judgment shall be a final adjudication of the questions submitted. Such submission may include the power to determine the right of the parties to liquidated damages under the terms of the contract: Clark & Sons Co. v. Pittsburg, 217 Pa. 46; Conneaut Lake Agricultural Association v. Surety Company, 225 Pa. 592. The right of trial by jury, however, is not to be taken away by implication, and in order to oust the jurisdiction of the courts it must clearly appear that the subject-matter of the controversy is within the prospective submission: Lauman v. Young, 31 Pa. 306. An agreement of submission is not to be extended by implication beyond its plain words, and a provision therein to submit questions that may arise as to the fulfillment of a contract does not give the right to pass on a claim for damages for nonfulfillment: Somerset Borough v. Ott, 207 Pa. 539.

Art. 3 of the contract between the parties to this litigation provides as follows: “All the work .... shall be done to the satisfaction of the engineer, who shall in all cases determine the amount, quality, • acceptability and fitness of the several amounts of work and materials and shall decide all questions which may arise as to the measurement of quantities and the fulfillment of this contract . . . ., and shall determine all questions respecting the true construction or meaning of the plans and specifications, and his determination and decision thereon shall be final and conclusive; and such determination and decision in case any question shall arise shall be a condition precedent to the right of the contractor to receive any money hereunder.” We think it clear that the items of the plaintiffs’ claim for work on the so-called “dotted line” and “no line” streets, for excavations for house connections at a greater depth than six feet, and for removing and relaying paving on streets over trenches dug by the plaintiffs are within the jurisdiction of the engineer under the arbitration article of the contract and that his adjudication was final. The parties submitted all the items of the claim, except the item for failure to provide an outlet for the sewers laid by the plaintiffs, and, after presenting their contentions pro and con, the arbitrator rendered a decision which disposed of every item of the claim with the one exception. Whether these items were extra work or were to be compensated for at unit prices was for the engineer to decide under the arbitration article of the agreement. It specifically provides that, ‘ ‘ the engineer shall decide all questions which may arise as to the measurement of quantities and the fulfillment of the contract, .... and shall determine all questions respecting the true construction or meaning of the plans and specifications.” It was the duty of the engineer to make the measurements for the original as well as for the extra work, and it necessarily required him to determine what was extra work and what was the regular work to be paid for at unit prices. This is one of the questions which he especially would be competent to determine and which arose as to the “measurement of quantities.” The location, extent and character of the work, the character and quantity of materials, etc., are shown by the plans and specifications, and hence whether additional sewers and removing and relaying paving on the streets in which they were laid, and the depth of excavations for house connections were “work not herein otherwise provided for” and to be paid for as extra work depended upon “the true construction or meaning of the plans and specifications,” and hence were questions for the arbitrator to determine.

There is no sufficient allegation in the statement that the decision of the engineer or his final estimate was made fraudulently or collusively, neither is there any corruption or misbehavior on the part of the engineer sufficiently averred. There is no allegation that the city used any fraudulent means to procure the decision or estimate of the engineer. His action as arbitrator, therefore, cannot be set aside or invalidated on the ground of fraud, collusion or misbehavior in the performance of the duties imposed by the contract. It is true the statement avers that “the engineer erroneously, wrongfully, contrary to the terms of said contract, and as the plaintiffs believe and expect to prove, at the direction of the board of public works, calculated the amount due the plaintiffs for said work in the manner provided in the said contract for work on sewers indicated on the said plans by solid lines.” But this is not sufficient to charge the arbitrator with fraud, collusion or misbehavior. There are no facts stated which would warrant the conclusion that the arbitrator acted othér than as his best judgment dictated. The decision may be erroneous and not in accord with the true intent of the contract but that does not invalidate it unless it is tainted with fraud or misconduct to which the city was a party. It may be assumed that the board of public works as well as the plaintiffs urged on the arbitrator as forcibly as they could their construction of the contract, but that would not justify setting aside his decision. Prior to making the decision, the engineer heard both parties orally and in writing, and gave “full deliberation to the arguments of counsel thereon.”

The arbitrator was right in deciding that under the terms of the contract the plaintiffs were not entitled to pay for extra work embraced in the first three items of the plaintiffs’ claim. The first item is for work done on the so-called “dotted line” and “no line” streets. The basis of the claim is the alleged statements and representations made by the engineer at the time the plaintiffs inspected the plan of the streets and before they made their bid and entered into the contract. It is a sufficient answer to the claim that the parties must stand upon their contract, and that the engineer had no authority to change the terms of the agreement which the city made. “Notice to Contractors” conferred no such authority. The plans, specifications and form of contract were at the office of the engineer of the board of public works for inspection by any intending contractor, but no authority was given the engineer to alter or change them in any particular by any agreement, statement or representation, written or oral. It is clear, we think, that the contract itself gives no ground for the plaintiffs’ contention in this respect. The agreement for the work to be done under contract “ B ” was at unit prices, and did not provide for the laying of sewers on any certain or definite number of streets. It is true that the “solid line” streets upon the plans were supposed to represent sewers to be constructed at the time of the contract, and that “dotted line” streets represented the extension to be made in the future, but this part of the plans must be construed in the light of the provision of clause 6 of sec. A of the specifications which provides that the sewers to be constructed on the plans may be omitted from or added to the plans during the progress of the work within a limit of twenty per cent of the work originally contemplated. It was, therefore, anticipated that some of the sewers provided for in the contract and shown on the plans should be omitted and that others should be added to the plans during the progress of the work. The limit of departure from the amount of work stipulated in the agreement was twenty per cent of the work originally provided for, and it is not averred in the statement that the limit was exceeded. It is clear, therefore, that the construction of additional sewers was not extra work for which the contractor was entitled to pay as such, but was work for which the contractor was entitled to receive compensation at unit prices. Again, we think the extra work contemplated by the parties was such as was not specifically provided for in the agreement. Article 14 of the contract provides that “the contractor shall do any work not herein otherwise provided for when so ordered in writing by the engineer,” and clause 22 of the proposal provides compensation for such work as follows: “For extra work, if any, performed under art. 14, of annexed contract, the reasonable cost of the work, as determined by the engineer plus fifteen per cent of such cost.” The laying of the sewers was to be paid for at unit prices, and any additional work of that character was to be paid for at such prices and not as extra work as provided in clause 22 of the proposal. It is distinctly stipulated in the contract and specifications that the quantities of work shown on the plans were only approximate, clearly disclosing that, as provided in clause 6, of sec. A, of the specifications, the city had the right to require the contractor to lay additional sewers for which they should be compensated at unit prices.

The second item of the claim is for extra excavation for house lateral trenches of a greater depth than six feet. The arbitrator allowed the contractor for this work at unit prices which was clearly right. The depth of the house connections was not fixed by the contract and hence the excavations for making such connections were to be paid for under sec. 39 of his specifications, which provides that: “All work done on excavations as above specified or as may be required shall be included in the prices bid per running foot of sewer construction.” This claim, like the one just considered, is based on the alleged representations of the engineer, which, as we have seen, were not sufficient to modify or change the stipulations of the contract. The contractor was dealing with the municipality and the latter is bound by its contract and not by the unauthorized representations or declarations of its officers which would change the written stipulations of that agreement: Martin v. Berens, 67 Pa. 459; Phillips v. Meily, 106 Pa. 536.

The third item of the claim is for removing and replacing pavements on streets in which trenches were dug and additional sewers were laid by the plaintiffs. The arbitrator allowed compensation for this work at unit prices, and declined to allow for it at the rate at which extra work was to be paid for. This work comes within the provisions of sec. 22, providing for payment at the prices per running foot for resurfacing streets, and of sec. 64 of the specifications, and the arbitrator was right in holding that it was not extra work within contemplation of the contract which entitled the contractor to additional pay for the work. The engineer was authorized to require additional sewers to be laid at unit prices, and it follows that the additional repaving necessary to complete such work should be paid for at the prices fixed for original work of the same character.

We do not agree with the learned court below that the arbitration clause confers jurisdiction upon the engineer to determine the plaintiffs’ right to or the amount of damages alleged to be due by reason of the failure of the city to provide an outlet for the sewers constructed under contract “B,” or to determine the right of the plaintiffs to recover the liquidated damages withheld by the city for failure to complete the work within the time specified in the contract. Unless clearly conferred by the arbitration article, the arbitrator had no authority to pass upon these questions and thereby deprive the plaintiffs of their right to trial by jury. The burden is upon the defendant to point out the provision in art. 3 of the contract which empowers the arbitrator to pass upon these questions, and failing to do so the plaintiffs have the right to maintain this action and have their rights adjudicated by the court. Turning to the article in question, we see that it authorizes the engineer to determine the amount, quality, acceptability and fitness of the work and materials, to decide all questions which may arise as to the measurement of quantities and the fulfillment of the contract on the part of the contractor, and to determine all questions respecting the true construction or meaning of the plans and specifications. His decision on these questions is made final and conclusive.

It will be observed that the article does not confer upon the engineer generally the power to construe the contract, and thereby deprive the plaintiffs of the right to submit that question to the court. The extent of the authority of the engineer in that respect is his power to determine the “true construction or meaning of the plans and specifications.” As suggested above, he may determine what is extra work within the meaning of the plans and specifications. The contract was let at unit prices, but provision was made for extra work to be paid for at the prices therein specified. The plans and specifications provide what is regular work and what is extra work, and in case of dispute it is the duty of the engineer to interpret the plans and specifications and determine the character of the work. Having done so, he then ascertains the amount, quality and acceptability of the work.

The question presented in the claim for damages for failure to provide an outlet for the sewers requires the construction of the whole contract; and not simply of the plans and specifications. It is a question which must be determined by the construction of the several parts of the agreement which is made up of the notice to bidders, the contract proper, the plans and specifications and all other matter relating thereto. It cannot be seriously contended that the engineer, as arbitrator, would have jurisdiction to determine whether the parties had entered into a contract for the construction of the sewers, or what damages the plaintiffs had sustained if the defendant had refused to permit the plaintiffs to furnish the materials and do the work, or to determine what damages the city had sustained if the plaintiffs had declined to furnish the materials and construct the sewers. With equal reason, it seems to us, that the arbitrator is without jurisdiction to determine whether the contract, as contained in the several parts thereof, contemplated that the city should, by the construction of a sewer under contract “ C” or by other means, furnish an outlet for the sewers constructed by the plaintiffs under contract “ B,” and if such an outlet was contemplated by the parties and provided for in the contract, what damages the plaintiffs sustained by the failure of the defendant to keep its covenant. Keeping in view the settled rule that the court is not to be deprived of its jurisdiction without clear and plain terms in the arbitration clause, we think this is the proper interpretation of the article in contract “3,” conferring arbitral powers on the engineer. There is no express provision in any part of the agreement requiring the plaintiffs to cleanse the sewers, and the question does not depend simply upon the construction of the plans and specifications, but upon an interpretation of the whole agreement. The statement avers that the plaintiffs were not obliged under the contract to clean the sewers, and that if the city had provided an outlet, as required by the agreement, the expense of' such cleaning would have been trivial. This claim, we think, should go to a court and jury.

By art. 17 of the agreement the contractor was required to complete the work by January 1, 1906, and the city was authorized to deduct out of moneys due the contractor $50.00 per day as liquidated damages for every day the work was not completed beyond the time specified. The arbitrator decided that the city had the right to retain a certain amount under this provision of the agreement. How the arbitrator arrived at the amount for which he allowed a credit does not appear, nor is it material, as we do not think he had the authority to adjudicate the question. It is argued by the defendant that the plaintiffs could only be relieved from their default under this article of the contract by an application to the engineer for an extension of time under art. 16 and, failing to make such application, the city had the right to retain the per diem sum as liquidated damages for any time the contract was not completed beyond January 1, 1906. It is not averred in the statement that the plaintiffs made an application and were refused an extension of time in which to complete the work, but it is averred that the failure to complete the contract “was not due to any fault or neglect on their part but wás the result of the acts, omissions and requirements of the engineers, the board of public works and the defendant as hereinbefore set forth.” These “acts, omissions and requirements” did not consist in obstructing or delaying the contractor “in doing the work or furnishing the materials to be done and furnished by the city” which prevented the contractor from claiming damages, and hence the plaintiffs were relieved from making an application for an extension of time as required by art. 16 of the contract. That article of the agreement provides that if the contractor is obstructed or delayed in the prosecution or completion of the work by any delay on the part of the city in doing the work or furnishing the materials he can have no claim for damages for such delay, but is required to make an application to the engineer for an extension of time. The averment in the statement, therefore, takes it out of the provision of this part of the agreement, and alleges that the failure to complete the work was the “acts, omissions and requirements” of the defendant, of a character other than those named in art. 16 of the contract. If the failure to complete the work as required in the agreement consisted in such neglect or default of the city as is not relieved against in the contract, the responsibility must rest with the city and not with the plaintiffs, and it would deprive the defendant of the right to retain for such delay any sum as liquidated damages under clause 17 of the contract. There is no provision in the arbitral clause conferring jurisdiction upon the engineer to determine this question. We have distinctly ruled that a provision in a building contract to submit questions that may arise as to the fulfillment of a contract does not give the right to pass on a claim for damages for nonfulfillment: Somerset Borough v. Ott, 207 Pa. 359. It is equally apparent that such authority is not given by the clause which confers power upon the arbitrator “respecting the true construction or meaning of the plans and specifications.” This is the only part of the clause under which it can be pretended that the arbitrator has jurisdiction to determine the right of the defendant to retain liquidated damages, and as this right is conferred by the contract proper and not by the plans or specifications it is manifest that the clause does not confer authority to determine the question.

We do not think the omission to itemize the claim for damages for failure to construct an outlet or the claim for liquidated damages retained by the defendant defeats the plaintiffs’ right of action for either of these items. If the defendant city desires a more detailed statement of either item of the claim, and such can be given, it may be obtained by an application for a bill of particulars.

For the reasons stated, the judgment of the court below sustaining the demurrer is reversed with a procedendo.