Opinion
Decided June 1, 1938.
If by a contract questions as to estimates, quality of materials, continuity of performance of work, extension of time of its performance or suspension of work without compensation for the delay, are referred to the decision of an architect or engineer, his judgment, if fairly and honestly exercised, is final in the absence of clear mistake on his part as to material facts. A contract contained a provision that "construction work may be suspended at any time . . . or for any . . . reason if deemed necessary or advisable by the engineer . . . without additional compensation to the contractor." The engineer was also constituted an adjudicator with power to decide all questions "relative to the intent and fulfillment" of the contract. The plaintiffs' work of laying pipe being suspended on the direction of the engineer in consequence of the failure of another contractor to complete a pumping station with which the plaintiffs were required to connect pipes, they were entitled to no damages for suspension of the work where the engineer did not act capriciously or in bad faith but acted reasonably in permitting the work on the pumping station to be continued by the same contractor after he had been delayed by adverse conditions of soil, materials and weather.
ACTION, to recover damages sustained by reason of the suspension of work under a contract between the J. H. Ferguson Company, a partnership, and the city of Keene. Trial by jury and verdict for the plaintiffs. Transferred by Young, J., on a bill of exceptions to the denial of the defendant's motion for a directed verdict.
In 1933 the defendant contemplated the construction of a sewage disposal system and employed the firm of Weston Sampson, sanitary engineers, to draw plans and oversee the work. The contract for the construction of the pumping station and disposal plant was awarded to the Central. Engineering Construction Company and the contract for laying the pipe line was awarded to the plaintiffs. George O. Sampson of the firm of Weston Sampson was the general engineer in charge of the operations.
The pumping station was to be erected near the intersection of the Ashuelot and Branch rivers at a point only six feet above the normal water level. The plaintiffs were required under their contract to connect the sewer pipes with the pumping station, and in order for this to be done it was necessary for the pumping station to be completed up to the ground level. On June 28, 1935, the plaintiffs were required by the engineer to suspend work because the operations of the Central company had not at that time reached the required level. On that date the plaintiffs had completed their contract except for the work of laying about 300 feet of pipe line and connecting it with the pumping station. The system under construction was a project of the Public Works Administration.
The contract between the plaintiffs and the defendant provided that the work should be performed "according to the requirements of the Engineer thereunder" and that the plaintiffs should accept the contract price "as full payment for the work including all loss or damage arising out of the nature of the work or from the action of the elements or from any unforeseen obstruction or difficulties which may be encountered in the prosecution of the work, and for all reasons of every description connected therewith, and for all losses or expenses incurred by or in consequence of the suspension or discontinuance of said work." The engineer was constituted an adjudicator. He was to decide all questions that might arise "relative to the intent and fulfillment" of the contract, and his estimates and decisions were to be final and conclusive. The contract contained the following express provision: "Construction work may be suspended at any time on account of the weather or for any other reason, if deemed necessary or advisable by the Engineer or the City, without additional compensation to the Contractor."
The contract between the defendant and the Central company provided that if, in the opinion of the engineer, the Central company was not employing a sufficient force to complete the contract within the time specified the engineer might require the Central company to employ such additional labor as he might consider necessary. The contract further provided that if at any time the engineer should be of the opinion and should so certify in writing to the city that the conditions specified as to the rate of progress were not being fulfilled, or that the work was unnecessarily or unreasonably delayed, the defendant might notify the Central company to discontinue work and might thereupon, by contract or otherwise complete the work and charge the expense to the Central company.
The plaintiffs were unsuccessful bidders on the contract for the construction of the pumping station with a bid of $80,000. The Central company's bid was $63,000, the work to be completed in twenty-six weeks.
The Central company began work on October 10, 1934. The contract provided for excavation to a depth of twenty-two feet. The first method employed was that of attempting to lower the ground water around the site of the pumping station by driving well-points. The Central company engaged the Moore Trench Company of New Jersey, a reputable concern, to do this work, but on November 21 that particular method was abandoned because of the character of the soil. Sheeting was twice installed, but it proved inadequate to withstand floods which occurred in November and January, and finally, on March 18, 1935, the sheeting "collapsed from the pressure of the earth around it."
The Central company then ordered long heavy sheeting from Alabama. The old sheeting was pulled up, and on June 4 the work of driving the new sheeting was commenced. There was some delay during the month of June in securing certain skilled labor required for the work, but the sheeting was finally installed and excavation started again on July 1. A third flood occurred on July 8. On August 11 a crack appeared at one side of the excavation, and the sheeting had to be driven deeper along that side. Then, when the excavation had practically reached the required depth, a spring or porous area was uncovered.
On discovering this situation the engineer decided that "it was not safe to found the building on natural ground" but that "it would be necessary to drive piles for the foundation of the whole building." The city appropriated funds for this additional work. Some 70 or 80 piles varying in length from 25 to 50 feet were then procured and driven down to bedrock. The concrete for the bottom of the pumping station was poured in October, and the brick work was completed on January 4, 1936. The plaintiffs could then have resumed work but on account of the frozen ground did not do so until the middle of April. Their contract was completed in June. Further facts are stated in the opinion.
Howard B. Lane (by brief and orally), for the plaintiffs.
Walker S. Kimball and John R. Goodnow (Mr. Goodnow orally), for the defendant.
The construction of the pumping station and the laying of the sewer pipes were parts of the same general project, supervised by the same engineer. The two contracts contain many identical provisions. Each embodies extensive Federal regulations. Each constitutes the engineer an adjudicator, whose decisions in relation to the fulfillment of the contract shall be final, and each provides that the "order or sequence of execution and the general conduct of the work" shall be subject to his approval and direction. The various clauses of the contract, read together and in the light of the surrounding circumstances, evidence an intent to make the engineer's decision conclusive as to all matters left to his determination.
Before the execution of their contract the plaintiffs had become thoroughly familiar with the terms and conditions of that required of the Central company. They had examined the plans for the pumping station and had submitted a bid for its construction. They knew the nature of the underground work; they understood that the pumping station was to be situated at "the lowest point in the City of Keene," and realized that the place was likely to be flooded.
Having all this knowledge, they agreed to stand the loss occasioned by any interruption in the prosecution of their work and to suspend work whenever the engineer or the city deemed it necessary or advisable. How far the city, apart from the engineer, had power to suspend the work need not be considered. It was in fact suspended at the implied request of the engineer. In view of the latter's authority, independent action on the defendant's part was hardly to be expected.
The plaintiffs, according to their own evidence, had confidence in the engineer, and the inference is inescapable that they trusted to his ability and integrity to see that the pumping station was constructed with as little interruption to their own operations as possible. The object of the clauses relating to estimates, quality of materials, sequence of execution, and extension of time was to leave those matters to a person of expert knowledge who had the confidence of both parties. See Eaglesham v. McMaster, [1920] 2 K.B. 169, 175. No reason appears why the clause relating to suspension of work should not be included in the same category.
It is the general rule that where matters of this kind are left to the decision of an architect or engineer, his judgment is final if "fairly and honestly exercised." Berry v. Harris, 43 N.H. 376, 377, 378. See Wait, Engineering and Architectural Jurisprudence, s. 742, citing Snell v. Brown, 71 Ill. 133; Annotations, 54 A.L.R. 1255, 1262, and 110 A.L.R. 137, 141; Wenzel c. Co. v. District, 18 F. Supp. 616, 620.
Concerning the decision of an architect or engineer to grant or withhold a certificate, Professor Williston has said: "If the architect or engineer arrived at his conclusion under a clear mistake as to material facts, relief seems proper; but where his knowledge of the facts of the case is adequate, though his judgment may be unreasonable, it is a total change of the terms of the contract for the court to permit the judgment of a jury to be substituted for that of the architect or engineer for which the contract provided. To allow recovery on the contract wherever a jury finds the architect or engineer has been unreasonable is doing nothing less than this." 2 Williston, Con., s. 797. See, also, Mayer v. Company, 130 Ore. 341, where the foregoing passage is quoted with approval.
This, however, is not the theory on which the case was submitted to the jury. The trial court's instruction on the subject was as follows: "The defendant had the undoubted right to suspend work for any reason whatsoever for a reasonable time. It did not have the right to suspend it for an unreasonable time."
It is true that the defendant failed to except to this instruction, but it did not thereby waive its right to insist on the exception to the denial of its motion for a directed verdict. Howson v. Company, 87 N.H. 200, 205. The special grounds on which this motion is based amount to the assertion that the plaintiffs cannot recover because they agreed to accept the opinion of the engineer as to the necessity or advisability of the suspension of work (no question of reasonableness being involved), and because they agreed to assume all loss incurred in consequence of such suspension. The motion called the attention of the court with sufficient explicitness to the fundamental principle underlying the case. Burke v. Railroad, 82 N.H. 350, 362; Cozzi v. Hooksett, 84 N.H. 530, 537.
Since the suspension of the plaintiffs' work was due to the Central company's failure to lay the foundation for the pumping station on time, the essential inquiry relates to the engineer's conduct in respect to the work of that company.
The only witnesses who testified at the trial were Ralph E. Ferguson, a member of the plaintiff partnership, and George O. Sampson, the engineer. The former expressed the opinion that lack of men and proper equipment was the reason the Central company did not complete its contract sooner. The latter stated that while in his opinion there was a lack of adequate supervision on the part of the Central company, the most serious impediments to the work were the "conditions which they encountered in the excavation" and the "unusually severe winter weather." Because of the federal requirements a requisition for workmen had to be made upon the National Employment Agency "as far in advance as possible," and "skilled labor was difficult to secure."
The witness further testified that in the light of his knowledge at the time the various methods of excavation were adopted, each of these methods was a "reasonable means of getting this hole excavated"; that there was no way of telling definitely what the pressure of the earth against the sheeting would be; that the existence of a porous area could not have been determined by any borings; that the Central company worked "continuously on the job," faithfully and diligently, and "to the best of their ability," and that under the conditions that were found to exist, the order which he gave the plaintiffs to suspend work was, in his opinion, necessary and advisable.
He summarized the situation as follows: "The soil encountered was extremely difficult. The top was loam and river sand down to about ten feet, and a little below that they encountered blue clay. It was this blue clay which gave them the most trouble. It was an extremely difficult situation; the most difficult we ever encountered in our work." And again: "The conditions encountered were extremely difficult to excavate and the floods were unusual compared with any of the other jobs we have had."
As to the advisability of permitting the Central company to continue its contract, he stated that he thought "it was better they should" go on, that they "surely had had plenty of experience in that particular place and to take the work away" from them would, in his opinion, "delay the work longer than it would to have them continue."
While the question of what constitutes a reasonable time is ordinarily an issue for the jury, that question, as applied to the suspension of the plaintiffs' contract, was not involved in the present case except as it entered into the determination of what was necessary and advisable in the judgment of the engineer.
There is no evidence that the engineer acted arbitrarily or capriciously or in bad faith. His decision was based upon the material facts, which he fully understood, and no grounds for impeaching that decision have been shown. The motion for a directed verdict should have been granted.
Judgment for the defendant.
All concurred.