Opinion
No. 33439.
March 30, 1936. On Rehearing November 9, 1936. Second Rehearing Denied December 21, 1936.
Appeal from Civil District Court, Parish of Orleans; Walter L. Gleason, Judge.
Action by H.W. Bond Brother, a partnership, and others, against the City of New Orleans, wherein the defendant called the New Orleans Public Service, Incorporated, in warranty. From a judgment in favor of plaintiffs and from a judgment dismissing the call in warranty, the City of New Orleans appeals.
Judgments amended and, as so amended, affirmed.
E.M. Robbert, City Atty., and Francis P. Burns, Asst. City Atty., both of New Orleans, for appellant.
Lemle, Moreno Lemle, of New Orleans, for appellees.
Rosen, Kammer, Wolff Farrar, of New Orleans, for appellee New Orleans Public Service Co.
Lemle, Moreno Lemle, of New Orleans, amicus curiæ on rehearing.
Caldwell Bros. and H.W. Bond Bro., partnerships engaged in business as general contractors, brought this action against the City of New Orleans to recover the sum of $29,892.61, representing alleged extras consisting of brass strippings placed in the terrazzo pavement on the sidewalks and the neutral ground of Canal street, which were paved under a written contract between the parties.
The defense was twofold: (1) That under the agreement, the city engineer's decision would be final and binding on both parties and that this official had ruled that the brass strippings were not to be considered as extra in accordance with the plans and specifications under which the paving was installed. (2) That the brass strippings were provided for in the plans and specifications and therefore not extra.
The city also called the New Orleans Public Service, Inc., in warranty, alleging that under a contract with that corporation its pro rata would be $17,646.17, in the event the city would be held liable.
The New Orleans Public Service, Inc., filed an exception of no cause or right of action to the call in warranty on the grounds: (1) That the pleadings affirmatively showed that the city, without the consent or authorization of the New Orleans Public Service, Inc., had waived the provision of the contract which made the decision of the city engineer final in any dispute between the contractor and the city and had done so after the city engineer had ruled that the claim for the brass strippings was not extra. (2) That the city was without authority or right to waive the above provision of the contract.
The exception was overruled, and the New Orleans Public Service, Inc., answered, reiterating these defenses, and on the merits pleaded the same defense as the city.
There was judgment in favor of the plaintiff as prayed for, there being a stipulation entered into between the parties that there was no dispute as to the amount, and further judgment dismissing the call in warranty of the City of New Orleans.
The city appealed.
The officials of the City of New Orleans decided to pave the sidewalks and the neutral ground of Canal street with terrazzo pavement. Advertisement for bids was published during March, 1929, and the bids received in the early part of April, 1929. The lowest bid by H.W. Bond Bro. was published on April 15, 19, and 22, 1929, and formally accepted on July 16, 1929. Shortly thereafter, H.W. Bond Bro. assigned part of the contract to Caldwell Bros.
There was some discussion between H.W. Bond and the city engineer as to how the work was to be executed, since there was not to be any interference with the pedestrian traffic on Canal street during the laying of the pavement. The specifications provided that half of the pavement of each of the sidewalks would be laid at a time, in order to permit pedestrians to have ingress and egress to the stores and buildings on the street during the time that the work was being performed. In June, 1929, there appears to have been further discussion between these parties, but the tenor of the conversation is doubtful, except that it pertained to brass strippings. On August 1, 1929, the contractor definitely informed the city engineer that brass strippings in anything but construction joints were to be considered extra. The city engineer ruled against the contractor, who threatened to refuse to go forward with the agreement. After some negotiation between the city engineer, the city attorney, and the attorney for the contractor, the matter in controversy was placed before the Commission Council, resulting in an understanding that the contractor would proceed with the formal signing of the written contract and the work, under protest, with reservation of his right to litigate the matter. It appears that this action was taken by the Commission Council, in order to prevent a delay of the work and apparently because of the advantage of the low bid. The formal contract in authentic or notarial form was entered into on November 18, 1929.
The Commission Council on January 7, 1930, in accordance with the negotiations and understanding between the parties, adopted a resolution reading, in part, as follows:
"Therefore, be it resolved by the Commission Council of the City of New Orleans, that it takes cognizance of the controversy between H.W. Bond Brother, and Honorable Bryson Vallas, City Engineer, as evidenced by the communication aforesaid, and approves the action of the City Engineer, as to his authority and interpretation of the plans and specifications aforesaid; and further ratifies the action of Bertrand I. Cahn, City Attorney, to the extent that H.W. Bond Brothers be, and they are hereby permitted to reserve their rights to litigate their asserted claim under their interpretation of the contract aforesaid, and the Commission Council approves and ratifies the figure $.628 per square yard, for furnishing and installing brass joint strips, as aforesaid, as the basis for any extra compensation that may be due and payable to H.W. Bond Brother, if the Court determines their interpretation to be correct."
The terrazzo pavement was laid with the brass strippings, under the supervision of the city engineer, and the work was formally and finally accepted by the city. This suit then followed.
The argument of the City of New Orleans under its exceptions of no right or cause of action, that the city engineer's ruling under the contract, plans, and specifications was to be final in any dispute between the parties, is plainly without merit, because the resolution above quoted clearly shows that the parties agreed to submit the question to the court. The city, therefore, modified the contract to the extent of agreeing that the decision of the court would be final, instead of the decision of the city engineer. To place any other construction on the resolution would lead to the absurd conclusion that, although the city engineer had already ruled against the contractor, he agreed that after actually placing the brass strippings in the pavement, the contractor would again submit the question to the engineer for his decision. The city's exception of no right or cause of action was correctly overruled.
The decision on the merits resolves itself into a question of the correct interpretation of the plans and specifications under which the bids were made, the contract entered into, and the work performed.
In the general specifications and standard plans for street paving and temporary sub-surfacing, adopted by the Commission Council on September 7, 1927, by Ordinance 9986 C.C.S., we find subparagraph H, section 96, at page 59, reading, as follows:
"Artificial stone footwalks shall be divided into blocks of such dimensions as the City Engineer may designate by means of a jointer or groover in such manner as to completely separate the wearing or top course of adjacent blocks. Transverse expansion joints shall be made at intervals of about thirty (30) feet so as to separate the footwalk into slabs or sections. These expansion joints shall extend from the surface to the bottom of the sidewalk, be one-half (1/2) inch in width and filled with joint filler. The joint filler shall extend from the bottom of the sidewalk to approximately one-half (1/2) inch above the surface of it. All expansion joints shall be carefully made so as to be truly perpendicular to the surface of the footwalk and at right angles to the edge of same. The surface of the wearing top course adjacent to expansion joints shall be finished with a wood float, which is divided through the center and which will permit finishing on both sides of the joint at the same time. An expansion joint shall also be provided adjacent to solid walls of masonry, behind curbs at intersections and at footlaps. Where posts or poles fall within the limit of the sidewalk pavements an expansion joint not less than one-half (1/2) inch in width shall be placed around said posts or poles and filled with joint filler. In the case of expansion joints adjacent to masonry walls, at foot laps and around posts or poles, the joint filler shall not extend above the surface of the walk and any excess joint filler that so protrudes shall be cut off and made flush with the footwalk surface. Under each transverse expansion joint shall be placed a pecky cypress board measuring two (2) inches by twelve (12) inches and of the same length as the width of the footwalk." (Italics ours.)
The pertinent part of the special specifications reads as follows:
"Footwalks or banquette and neutral ground area shall be of such widths; marked in such manner and composed of a colored border as is shown on the special plans attached hereto. They shall be formed of a foundation course of high early strength Portland cement concrete four (4) inches in thickness on which, before the concrete has indurated, there shall be laid a special top course of high early strength cement and special aggregate (hereinafter described), one (1) inch in thickness.
"Except where the requirements of the special specifications may differ therefrom, the footwalks shall be mixed, placed and cured in the manner prescribed in Section 96 of the General Specifications. (See appendix.)
"The top course for the border shall be composed of one (1) part high early strength Portland cement to one (1) part of # 20 to # 10 Rose Pink Mica Rock to one (1) part # 10 to # 3 Rose Pink Mica Rock. In addition to this there shall be added to the cement, before it is mixed with the aggregate, not more then ten (10%) Iron-oxide so as to produce a red colored border stone.
"The top course for footwalks other than borders shall be composed of one (1) part high early strength Portland cement to (1) part Metro-nite to one-half (1/2) part # 4 Crown Point Spar to one-half (1/2) part # 3 1/2 Crown Point Spar.
"The materials to be used shall be submitted to and approved by the City Engineer not less than ten (10) days before the date of the receipt of bids.
"The dimensions and arrangement of the stones composing these footwalks are all indicated on the special plan of footwalks hereto attached.
"The top course shall be placed on the concrete foundation as provided in the General Specifications except that it shall not be trowled, but shall be thoroughly tamped, after screening, so as to bring the aggregate and the cement to an even and flush surface.
"Joints, other than expansion joints, shall be made of metallic joint divider, one (1) inch in depth, of Del Turco brand brass or equivalent.
"After the sidewalk has been in place at least forty-eight (48) hours, it shall be polished with a carborundum stone or otherwise finished so as to remove the top coating of cement and leave the aggregate exposed on the surface. Extreme care is to be used in mixing and placing the footwalks so that the walks of different colors are not blended but present sharp straight lines; that the aggregate are well distributed and appear sufficiently in the surface; that the top course is dense and free from pit holes, etc. CARE shall also be used in placing the metal joint strips so that they are in correct alignment and grade and finished flush with the surface.
"In the construction of the banquettes the contractor will be called upon to place in the sidewalk and neutral ground areas sockets or pipes for holding poles, flags, etc. These sockets shall be furnished by the City and installed by the Contractor. No direct compensation shall be allowed for installing these sockets, the price bid in the proposal for various types of Artificial Stone shall include this cost.
"The footwalks shall be laid in sections of not more than one-half (1/2) the width of the banquette area at a time so as to permit the use of some portion of the banquette areas at all times. All necessary temporary entrances to and from stores or places of business and temporary landing platforms on the neutral ground shall be substantial and shall be placed and maintained by the contractor in good condition at all times without direct compensation.
"Samples of the footwalks desired and the material composing it are on file in this office and any information desired in this connection will be furnished by the City Engineer at the request of the bidder. The finished sidewalk shall in every respect be equal to the sample on file in the office of the City Engineer.
"All crushed stone used in the construction of those footwalks shall be obtained from the same deposits as the samples in this office and shall be equal to this sample in all respects. Should the bidder desire to obtain materials from producers other than those having samples on file in this office, he shall submit samples of the materials he wishes to use at least ten (10) days in advance of commencing work.
"The color scheme as shown in the special plan hereto attached shall govern at all locations except at poles, standards and street intersection. Around each pole or standard there shall be a circle of colored paving and at each street intersection the colored strip shall follow the curb around the radius and across the banquette at neutral ground area as directed. * * *" (Italics ours.)
There are separate plans covering the sidewalk pavement and the neutral ground pavement. Plan No. 1 bears this legend at the bottom: "Plan of Banquette of Canal Street showing Marking's of Art. Stone. Feb. 28, 1929. C.F.W." Starting at the property line, there is a heavy horizontal line labeled "Expansion joint." One foot and eleven inches therefrom towards the banquette curbing is another horizontal line running parallel to the property line. At intervals of two feet, one inch, there are perpendicular lines connecting with the horizontal lines, forming small rectangles which are shaded a rose color. Six inches from the banquette curbing there is a rose colored border, consisting of small rectangles, exactly like the one adjoining the property line. Through the center of the sidewalk there is also a heavy horizontal line parallel to the property line and the banquette curbing marked "Brass Metallic Construction Joint." At intervals of thirty feet there are heavy perpendicular lines running completely across the sidewalk at right angles to the property line and they are labeled "Expansion joints." Between the rose colored borders are a series of diagonal lines connecting with the vertical lines in the rose colored borders, so as to form small squares arranged to give a diamond shape effect to them.
Plan No. 2 bears the legend: "Plan of Neutral Ground of Canal Street Showing Marking of Art. Stone. Feb. 27, 1929, C.F.W." On both sides of the neutral ground appear horizontal lines which parallel each other and are marked "Face of Neutral Ground Curb." Adjacent to both curbings are rose colored borders, each measuring twelve and one-half inches in width, composed of small rectangles similar to those on the sidewalk plan. Adjacent to them are two four-foot lanes or walks composed of the diagonal lines like those on the sidewalk plan. Adjoining these walks are rose colored rectangles arranged like bricks are usually laid and are placed on both sides of the rails of the street car tracks of the New Orleans Public Service, Inc. In the center of the rails or between these colored portions is a series of small white ornamental squares. Going toward the center of the neutral ground and between the tracks are two paths, six feet in width, which are formed by diagonal lines crossing each other and forming squares, but are arranged to give a diamond shape effect. Going still further toward the middle of the neutral ground are two other sets of tracks arranged similar to the ones already described. There are heavy lines running perpendicular to the neutral ground curbing at intervals of thirty feet and are marked "Expansion Joints." There are also lines running parallel to the neutral ground curbing on the outer edges of the rectangles adjacent to the rails and are also marked "Expansion Joints."
It is the contention of the plaintiffs that the lines on both plans other than those which are designated as "Expansion Joints" or "Construction Joints" are mere "markings" and not "joints" and therefore under the general and special specifications, the contractor was not required to place brass strippings therein. The city contends that these lines represent joints and therefore the specifications required the contractor to install brass strippings.
In order to show the proper and correct interpretation of the plans and specifications, in accordance with the practice and custom in this locality, both plaintiffs and the city placed on the stand a number of experts, who were experienced, proficient, and prominent in their respective professions. Charles Stubner, a graduate engineer, Leon C. Weiss, a graduate and eminent engineer and licensed architect, William R. Burk, a licensed architect, Henry Boettner, a licensed architect, Elvyn M. Moore, an experienced specification writer, C. Glenn Cappel, a graduate engineer, John T. Eastwood, a graduate engineer, and H.W. Bond, one of the plaintiffs herein, a contractor of many years' experience, testified that in reading the specifications and plans in connection therewith covering the terrazzo paving on the neutral ground and sidewalks of Canal street that the contractor was not required to place brass strippings where the diagonal and other lines appeared on the plans, except those which were designated as "joints," because these lines represented mere "markings" and not "joints," and therefore the provision in the special specifications with reference to brass strippings was not applicable to these markings; that "joints" and "markings" are separate and distinct and that the words have different meanings, a "joint" being a complete separation between the blocks of pavement and a mark or "marking" being an indentation in the subsurface of the pavement for ornamental purposes; that terrazzo pavement could be laid without brass strippings and the "markings" in the surface made with a jointer or groover or other instrument in a satisfactory manner; and that they were fortified in their view by section 96 of the general specifications where it is expressly stated: "Artificial Stone foot walks shall be divided into blocks of such dimensions as the City Engineer may designate by means of a jointer or groover in such manner as to completely separate the wearing or top course of adjacent blocks."
Bryson Vallas, a graduate engineer and city engineer, Geo. L. Ducros, engaged in the tile business, Albert H. Guillot, employed in the engineering department of the New Orleans Public Service, Inc., and who supervised the laying of the pavement along that company's tracks in the neutral ground, Patrick H. Quinlan, a graduate engineer and principal assistant engineer to Mr. Vallas, city engineer, Michael J. Flynn, an experienced paving contractor, and John F. Coleman, a graduate and eminent engineer, as experts for the city, testified that under the plans and specifications, the contractor was required to put brass strippings in all of the places indicated by the lines, except in the expansion joints which the specifications expressly provided shall be closed with a tar filler; that the diagonal and other lines indicated joints in the pavement and therefore the "Special Specifications" expressly provided that these joints be made with brass strippings; that the terms "joints" and "marks" might be used interchangeably, although they did not mean exactly the same thing; that it was impractical to make the marks in the surface of the terrazzo pavement with a groover or jointer, because of the particles of stones which would cause an irregular or ragged edge; that since the specifications required rose colored borders, it would be impractical to install them without brass strippings, since the color would run and cause an irregular and unsightly line; and that brass strippings are generally used in terrazzo pavement.
From what we have stated, it is apparent that the testimony of the experts is hopelessly in conflict and irreconcilable. We are not lacking in advice by the experts, but perhaps have received too much of it, since it is confusing rather than helpful.
It is conceded that a contractor is not compelled to do any more than the plans and specifications require. There is nothing in the plans or specifications which designate the diagonal and the vertical lines on the sidewalk and neutral ground as "joints." The engineer who drew the plans, where he apparently wanted to designate a "joint," specifically named it "Expansion Joint" or "Construction Joint." If he intended the diagonal and vertical lines to represent surface joints, it would have been a simple thing for him to have so marked them. Having used the word "joint" in connection with the "expansion and construction joints," and leaving the diagonal and vertical lines undesignated, except for the legend of "Artificial Stone Markings," it appears to us entirely reasonable that one who read the plans, particularly since there was nothing in the specifications to the contrary, would conclude that the "markings" were something different from the "joints."
Webster's New International Dictionary, Second Edition, defines "joint" and "mark" or "marking" as follows:
"Joint: (Arch.) The space between the adjacent surfaces of two bodies, as bricks joined and held together, as by means of cement, mortar, etc.; as a thin joint."
"Mark: A visible sign, impression, or trace made or left on a thing, as a line, point, stamp, figure, stain, scar, etc."
"Marking: Act of one who marks; the mark or marks made."
Corpus Juris, vol. 33, at page 836, defines the noun "joint" as:
"The place or part where two things are joined or united. In mechanical art, the place where the ends of two rails meet or nearly touch; the permanent meeting surface of two bodies as stones or bricks, held together by weight, cement or otherwise; * * *"
And in the footnotes, at No. 40, we find the following:
"Standard D. * * * (This definition indicates that the `joint' in paving blocks is the space between the side faces of the blocks brought together or nearly in touch)."
Corpus Juris, vol. 38, at page 1258, defines the noun "mark" as:
"A line, point, stamp, figure, or the like, drawn or impressed so as to attract attention and carry some information or intimation; a token; a trace; a visible sign made or left upon anything." (Italics ours.)
Mr. Vallas, city engineer, appreciated the difference in the meaning of the two words, for we find the following in his cross-examination:
"Q. Mr. Vallas, I understand from your testimony that a mark and a joint are practically synonyms?
"A. Well, they could be so taken.
"Q. Now, could you use the words interchangeably?
"A. They could be used interchangeably, but I wouldn't do it.
"Q. Well, from your definition of a mark and your definition of a joint, don't you think that the terms could be used interchangeably?
"A. Not necessarily.
"Q. Well, I am not asking you would they `necessarily' have to be used, because you might use other terms, but I am asking you if they could logically or linguistically be used that way?
"A. A joint could be called a marking or mark. A joint does make a physical mark in the surface of the pavement.
"Q. And does a mark make a joint?
"A. It could, yes, sir.
"Q. So, therefore, if I used the word `mark', you might understand either that I meant a joint, or I meant the word `joint' as generally understood, or that I meant a scratching of the surface; is that right?
"A. No, I said I wouldn't use it in that sense.
"Q. Suppose you used the word `mark', would I be justified in believing that what you meant was a joint?
"A. No, I don't think so."
(Italics ours.)
In refutation of the defendants experts' testimony that a groover or jointer could not make satisfactory markings in terrazzo pavement, the plaintiffs' experts stated that it was practical where the particles of rock or marble in the aggregate were not too large and they pointed out instances where it had been done. They stated that until five or six years ago terrazzo pavement was usually laid without brass strippings, but the more modern view is to use brass strippings, since it makes a more attractive design and more practical job in that the brass strippings act as additional expansion joints.
These experts also say that the different colored terrazzo pavement can be laid without the colors running together without brass strippings by using some other means of separating the wet surfacing materials or aggregate. They also pointed out instances where this had been accomplished.
Mr. Bond testified that in making his bid "he never dreamed" that brass strippings were called for under the plans and specifications by the diagonal and vertical lines, because he considered them "markings" for ornamental purposes and not joints.
Mr. Weiss and some of the experts for the plaintiff pointed out that the specifications required the surfacing materials to be poured on the concrete foundation not later than 45 minutes after the concrete or foundation materials were laid, and therefore to place the brass stripping on that soft base or foundation would cause the brass to sink into the soft concrete foundation, particularly since the surfacing or aggregate or terrazzo material had to be rolled.
Our study and analysis of the record leads us to the conclusion that there is ample evidence to support the findings of the trial judge, who apparently concluded that the preponderance of the evidence was with the plaintiff. It is certainly plain that we cannot say that he is in error.
It is clear that there is uncertainty and ambiguity in the plans and specifications over which reasonable and conscientious persons might differ. The city engineer drafted the plans and specifications and therefore under the authorities the plans and specifications and the contract must be construed against the city. State ex rel. City of New Orleans v. New Orleans, City Lake Railroad Company, 42 La. Ann. 550, 7 So. 606; Jurgens v. Warmoth, 160 La. 475, 476, 107 So. 311; Lyons Milling Co. v. Cusimano, 161 La. 198, 108 So. 414; Articles 1957 and 1958, R.C.C.
It is our opinion that the judgment of the lower court holding the city liable is correct.
Has the city the right to call the New Orleans Public Service, Inc., in warranty?
The city engineer and the executive vice president of the New Orleans Public Service, Inc., both testified that the paving on the neutral ground was laid under an agreement between the city and the corporation, whereby the total costs of the improvement on the neutral ground was to be paid by the corporation, the work being done under the supervision of the city engineer's office. They state that the city official did not notify the New Orleans Public Service, Inc., of the waiver of the provision in the specifications and contract which made the decision of the city engineer final in any dispute between the city and the contractor.
It is conceded by all parties that the city engineer ruled against the contractor in holding that the brass strippings could not be changed as extras and that if the clause in the plans and specifications with reference to the finality of the engineer's decision had not been waived, the New Orleans Public Service, Inc., could not have been held liable. The agreement to litigate the issue between the city and the contractor having been entered into without the knowledge, consent, or authority of the New Orleans Public Service, Inc., it was not bound thereby.
We conclude that the judgment of the lower court, dismissing the call in warranty is correct.
For the reasons assigned, the judgment appealed from is affirmed.
O'NIELL, C.J., absent.
On Rehearing.
The rehearing granted in this case was restricted to a review of our original decree, only in so far as we affirmed the judgment of the lower court, dismissing the "call in warranty" of the City of New Orleans, making the New Orleans Public Service, Inc., a party to this suit as a codefendant.
In our original opinion, we held that, having waived the provisions of the general specifications relative to the finality of the decisions of the city engineer, without the consent or the knowledge of the New Orleans Public Service, Inc., the City of New Orleans, by such waiver, had released the New Orleans Public Service, Inc., from its obligations "of warranty."
Although able counsel for Public Service, Inc., have so contended, yet the city has not tried this case on the theory that the Public Service, Inc., was bound to it by virtue of a "contract of warranty," such as is defined in article 379 of the Code of Practice: "Personal warranty is that which takes place in personal actions; it arises from the obligations which one has contracted to pay the whole or a part of a debt due by another to a third person."
Had the city made such contention, it is a familiar doctrine that the warrantor in the codal contract of warranty is released, if the principal obligation is changed, and our original opinion holding that "the City of New Orleans, by such waiver, had released the New Orleans Public Service from its obligations of warranty," would have been correct and fully sustained by article 379 of the Code of Practice.
But the city's "call in warranty" is not based upon article 379 of the Code of Practice, but is predicated, as specifically stated in the call, upon the express provisions of section 62 of the Charter of the City of New Orleans, Act No. 159 of 1912, amended, Dart's La. General Statutes, § 6237, which read as follows: "Whenever any action is brought against the city on a claim on which the city would have a right of action over against another person or corporation, either upon a contract, bond or other obligation of whatever nature, the city may in its answer to such action require such person or corporation to be made codefendant therein; and if such right of action on the part of the city over against such person or corporation is upon a bond or contract with sureties, the city may also require the sureties on such bond to be made codefendants, in which case it shall attach a copy of such bond or contract to its answer, and thereupon such codefendants may make any defense to such claim that the city may make, and shall be liable to pay the judgment, if any, rendered against the city and said codefendants, or any of them, and shall be primarily liable on such judgment; but if the city shall at any time pay the whole or any part of such judgment, it shall thereupon, to the extent of such payment, have and be subrogated to all the rights and remedies against such codefendants upon such judgment as the plaintiffs have." (Italics ours.)
It is clear, therefore, that the city's call in warranty in this case is not based upon any "contract of warranty" under article 379 of the Code of Practice, but is purely statutory, being based upon the express provisions of section 62 of the Charter of the City of New Orleans, as amended.
Nor does the primary franchise obligation of Public Service, Inc., for paving the neutral ground area in this case arise from contract at all, but it also is purely statutory, as clearly shown by the provisions of section 45 (k) of the Charter of the City of New Orleans, section 45 (k) of Act No. 159 of 1912, as amended, Dart's La. General Statutes, § 6220 (k). This section reads as follows:
"(k) Obligations of franchise grantee. In the event that an obligation has been heretofore, or may hereafter be imposed upon the grantee of any privilege, right or franchise, under any ordinance of or contract with the city of New Orleans, to pave, repave, resurface, maintain or repair any part or portion (herein called `right of way') of any street in said city, or to pay all or any part of the city's cost of paving, repaving, resurfacing, maintaining or repairing such right of way under preexisting laws and ordinances then, whenever the residue of the roadway shall be ordered paved, repaved, resurfaced, maintained, or repaired, the commission council may order the grantee to pave, repave, resurface, maintain or repair its said right of way and may fix the time within which said paving, repaving, resurfacing, maintenance or repair shall be completed, and the materials of which it shall be composed and the specifications under which it shall be laid or done, and such grantee shall comply with the requirements of the commission council within the time specified, and if the grantee fails to comply with his obligation and the requirements of the commission council within the time specified, the city may proceed to do the work, by contract or otherwise, and collect the cost thereof from the grantee, with ten per cent per annum interest." (Italics ours.)
The obligation of the Public Service, Inc., to pave, resurface, etc., its right of way, as the grantee of a franchise to operate its street railway in the streets of the City of New Orleans, is a compulsory, and not a mere voluntary or conventional, obligation. By section K of the city charter, all matters as to time, material, and specifications are left primarily and entirely in the hands of the City of New Orleans, as principal, and clearly the right to make and enforce its contract with the Public Service, Inc., as to the paving to be done by it, is the exercise by the City of New Orleans of governmental power and function.
As the City of New Orleans is the only authority under section K of its charter which can make such specifications, necessarily it is the only authority that can change or modify them, and the consent or knowledge of the franchise grantee is, therefore, not necessary. We are dealing here with a public contract affecting public streets and public neutral ground area in the City of New Orleans, and not with private conventional agreements between private parties, dependent upon their consent as to any change or modification in their terms that may be made. If a franchise grantee could object to the specifications made by the City of New Orleans, or could demand modifications in them, at will, or could claim release from its obligation because the city had modified them, without its consent, it is manifest that a municipal corporation would be powerless to enforce the primary franchise obligations of the grantee, for the protection of the city and the public. It is not only provided, under section K of its charter, that these primary franchise obligations shall be enforced; but it is reiterated and also provided that the codefendant made a party under section 62 of the city charter, as the Public Service, Inc., is in this case, shall be primarily bound to pay the judgment rendered against the city.
It is elementary that the City of New Orleans, by no act or course of conduct upon its part, can release, or be permitted to release, the primary obligation of a franchise grantee, as such act or conduct would be clearly contrary to public policy, ultra vires, illegal, and null.
2. In its answer to the call in warranty of the city, the New Orleans Public Service, Inc., judicially admits that it "agreed with the City that it would pay for its share of all of the work performed on the neutral ground of Canal Street, by making direct payment to the contractor," and, if the city is entitled to any judgment against it, it further judicially admits as due the sum of $17,464.17 with interest. Tr., p. 23. (Italics ours.)
The obligations of the Public Service, Inc., to the city were liquidated and fixed by these judicial admissions, irrespective of whether its franchise obligations were greater or less.
In the face of such admissions, the Public Service, Inc., could not have sought in the lower court to prove that its franchise obligations were less, nor could it do so, if the case were remanded, as insisted upon by its able counsel.
3. The contention that plaintiffs cannot recover against codefendant, Public Service, Inc., because there is no privity of contract between plaintiffs and Public Service, Inc., as it did not sign the city's contract with plaintiffs, is without merit, since the primary liability of codefendant is fixed by section 62 of the Charter of the City of New Orleans, and is therefore statutory.
There is no primary judgment in favor of the city in this case, to be controlled by the city as to its execution. If codefendant, Public Service, Inc., is cast in this suit, the judgment will be in favor of the plaintiffs and against the city and codefendant, Public Service, Inc., and codefendant is made, under section 62 of the charter of the city, "primarily liable on such judgment."
The right of the city, under this section of its charter, is that of subrogation against codefendant "to all the rights and remedies upon such judgments as plaintiffs have," and to be relieved, pro tanto, if the city shall at any time pay the whole or any part of such judgment.
The plaintiffs are the sole owners of the judgment in this case. Codefendant, Public Service, Inc., is primarily liable on such judgment, and has judicially admitted, in its answer to the city's call in warranty, that if cast in this suit, codefendant, Public Service, Inc., had agreed with the city "to make payment direct to the contractor," in the sum of $17,464.17, as the amount due by codefendant to the city for all work performed on the neutral ground area in Canal street. Tr., p. 23.
Plaintiffs are therefore entitled to judgment directly against codefendant, Public Service, Inc.; the City of New Orleans is entitled to its right of subrogation; and to have the judgment of plaintiffs against the city relieved, pro tanto, upon payment by codefendant, Public Service, Inc., of the judgment in favor of plaintiffs against the codefendant.
It would not have been possible in this case for the city to have held the Public Service, Inc., for its share of the paving, had not the Public Service, Inc., been bound by its franchise obligations to pay for same; and it is clear that the "arrangement" of the Public Service, Inc., with the city, whereby the city would include the neutral ground in the general contract and the Public Service, Inc., would pay the cost thereof, was induced by its franchise obligations. The city at the very inception of the case has taken this position, and it is not by any means a new matter or issue raised for the first time on rehearing. See City's Supplemental Brief on Rehearing, pp. 6 and 7.
For these reasons, our conclusion is that the call in warranty of the City of New Orleans must be maintained, and our original decree must be amended.
The judgment of the civil district court for the parish of Orleans, affirmed by our original decree, reads as follows:
"It is ordered, adjudged and decreed that there be judgment in favor of H.W. Bond Brother and Caldwell Bros., and against the City of New Orleans, in the full sum of Twenty Nine Thousand Eight Hundred and ninety-two and 61/100 Dollars, together with interest at 5% per annum on $18,739.32 from April 23, 1930 until paid, and on $11,153.29 from November 14, 1930 until paid.
"It is further ordered, adjudged and decreed that there be judgment herein in favor of the New Orleans Public Service, Inc., and against the City of New Orleans on its call in warranty, dismissing the suit on the call in warranty of the said City of New Orleans against the New Orleans Public Service, Inc."
It is now ordered, adjudged, and decreed that our original decree affirming the judgment appealed from be so amended as to read as follows:
It is further ordered, adjudged, and decreed that there be judgment against the New Orleans Public Service, Inc., as codefendant, and in favor of H.W. Bond Brother and Caldwell Brothers in the sum of $17,464.17, with 5 per cent. per annum interest from judicial demand until paid; with the provision that the payment of such judgment by the said New Orleans Public Service, Inc., to the said H.W. Bond Brother and Caldwell Brothers shall pro tanto relieve the City of New Orleans, to the extent of said payment, upon the judgment heretofore rendered against the City of New Orleans and in favor of H.W. Bond Brother and Caldwell Brothers in these proceedings; and with the further proviso that, should the City of New Orleans pay that proportion due H.W. Bond Brother and Caldwell Brothers by the New Orleans Public Service, Inc., as set out in this decree, then and in that event the City of New Orleans shall be subrogated to all the rights of H.W. Bond Brother and Caldwell Brothers in and to the judgment rendered herein in their favor against the New Orleans Public Service, Inc.
It is further ordered, adjudged, and decreed that our original decree, as amended, be made the final judgment of this court, and that the costs of court be paid by the City of New Orleans and the New Orleans Public Service, Inc., in the proportions of the respective judgments as set out in this decree.
Right to apply for rehearing is reserved to Public Service, Inc.
ROGERS, J., concurs in the decree.
ODOM, J., dissents, being of the opinion that the original decree should be reinstated.
O'NIELL, C.J., is of the opinion that the decree rendered originally by this court, affirming the judgment appealed from, on the question of warranty, is correct.
The City of New Orleans impleaded the New Orleans Public Service, Inc., as its principal and not as its warrantor. No objection was made by the Public Service, Inc., to the city's demand that it be made a codefendant, and it joined the city in defending the suit.
In entering into the contract with H.W. Bond Brother for the repaving of Canal street, the city acted in a dual capacity. It acted for its own account so far as the pavement of the sidewalks was concerned, and it acted for account of the Public Service, Inc., so far as the paving of the neutral ground was concerned.
Under its agreement with the city, the Public Service, Inc., as a franchise grantee, recognized its obligation to repave the neutral ground. Hence it is not important to determine whether that obligation arose under a legislative act or under a municipal ordinance.
In the discharge of its obligation, the Public Service, Inc., authorized the city to contract for its share of the paving and agreed to pay its share of the cost. No restrictions were imposed upon the city by the mandate. The Public Service, Inc., in designating the city as its agent for procuring the repaving of the neutral ground conferred upon the city the power to do everything necessary for the reasonable carrying out of the agency thus created. It did not prescribe that the city engineer should be the final arbiter of any dispute that might arise over the plans and specifications, but left to the city the discretionary right to make any reasonable agreement required for the discharge of its obligation.
The Public Service, Inc., knew that in the execution of the paving project the brass strips would be required and would have to be paid for. When the city agreed to pay the contractors for these strips if the courts should decide its obligation to pay for the paving included payment for the strips, it bound the Public Service, Inc., to do likewise.
The Public Service, Inc., admits that the amount charged by the contractors for furnishing and installing the brass strips is reasonable. And it does not dispute that it received the benefit of the contractors' materials and work. In these circumstances it would be wholly inequitable to relieve it of the obligation to pay therefor. I therefore concur in the decree.
Due to the fact that the City of New Orleans and the New Orleans Public Service, Inc., stressed the same defense on the merits, predicated on a voluminous amount of expert testimony, with such confidence that the defense was well taken and would be sustained, emphasis was not placed upon the nature of the call in warranty. It was only on the application for rehearing that our attention was pointedly called to the distinction between the statutory obligation of the New Orleans Public Service, Inc., and the contractual one. On rehearing, the subject was fully argued and briefed. Now, since that has been done, the court has a clear vision of the issue. I, therefore, concur in the opinion on rehearing.