Nat'l Contracting Co. v. Hudson River Water Power Co.

• Citation: 170 N.Y. 439,63 N.E. 450
• Parties: NATIONAL CONTRACTING CO. v. HUDSON RIVER WATER POWER CO.
• Decision Date: 08 April 1902
• Court: New York Court of Appeals

170 N.Y. 439

63 N.E. 450

NATIONAL CONTRACTING CO.

v.HUDSON RIVER WATER POWER CO.

Court of Appeals of New York.

April 8, 1902.

Appeal from supreme court, appellate division, First department.

Action by the National Contracting Company against the Hudson River Water Power Company. From an order of the appellate division affirming an interlocutory judgment sustaining a demurrer to the third defense set up in the answer on the ground that it is insufficient in law on the face thereof, defendant appeals by permission. Reversed.

See 70 N. Y. Supp. 585; 71 N. Y. Supp. 225; and 73 N. Y. Supp. 1142.

The following is the question certified: ‘Is the third answer and defense set up in defendant's answer to the amended complaint herein insufficient in law upon the face thereof?’

Richard L. Hand and Augustus N. Hand, for appellant.

L. Laflin Kellogg and Alfred C. Petté, for respondent.

WERNER, J.

The action is brought by the plaintiff to recover damages for alleged breaches of a contract entered into between the plaintiff and the defendant for the building of a dam across the Hudson river in the townships of Moreau and Luzerne, in the counties of Saratoga and Warren, N. Y., at a point about five miles below Palmer's Falls. Plaintiff's right of action is predicated (1) upon the alleged failure of the defendant to make payments as provided for by the terms of the contract; (2) upon defendant's interference with and prevention of the plaintiff's right to build a dam of masonry, as required by the terms of the contract; and (3) upon insisting on the substitution of a dam of earth and masonry, instead of one composed of masonry alone, as provided in said contract. The answer sets up three affirmative defenses. The only one with which we are concerned upon this appeal is the third defense, contained in the third paragraph of the answer, which alleges that by the terms of said contract it was, among other things, expressly provided and agreed as follows: ‘To prevent all disputes and litigations, it is further agreed by and between the parties to this contract that the engineer, William Barclay Parsons, or H. de B. Parsons, or their successors, either or both of them, shall be referee in all cases to determine all questions that may in any way arise under this contract and the amount or the quantity of the work which is to be paid for under this contract, and to decide all questions which may arise relative to the fulfillment of this contract on the part of the contractor; and the findings, estimates, and decisions of said engineers, or either of them, shall be final and conclusive.’ Said defense further states ‘that the plaintiff has neither obtained nor requested any finding, estimate, or decision of the engineers aforesaid, or either of them; nor has it requested this defendant to obtain the same, or to submit any of the matters in question to them.’ This is the defense to which the plaintiff demurs on the ground of insufficiency. The question presented by this demurrer is whether the clause in the contract above referred to comes within the rule which nullifies contracts ousting the courts of thier jurisdiction, or within another and equally well-established rule that parties may covenant that no right of action shall accrue until a third person has performed specific acts or determined certain differences between them. The line of demarkation between the two classes of cases is clear and distinct. The difficulty, if any, lies in the application of particular facts to a clearly defined rule. In Seward v. City of Rochester, 109 N. Y. 168,16 N. E. 349, this rule was stated in the following language: ‘The distinction between executory agreements of arbitration, which oust a court of jurisdiction, and therefore are rejected as a bar, and those which are sustained as the sole remedy between the parties, is carefully drawn, and fully discussed in President, etc., of Delaware & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250.’ In one class it is said: ‘The parties undertake by an independent covenant or agreement to...