Caldwell & Drake v. Schmulbach

• Decision Date: 23 December 1909
• Citation: 175 F. 429
• Parties: CALDWELL & DRAKE v. SCHMULBACH.
• Court: U.S. Court of Appeals — Fourth Circuit

175 F. 429

CALDWELL & DRAKE v. SCHMULBACH.

United States Circuit Court, N.D. West Virginia.

December 23, 1909

substantial performance of the contract precluding the owner from resisting payment of a balance of over $20,000 of the contract price under a provision requiring the work to be completed to the satisfaction of the architects and the owner before final payment.

This bill is filed to enforce a mechanic's lien. On February 9, 1905, the plaintiffs contracted to perform certain specified work toward the erection of a 12-story office building in Wheeling with the defendant for $231,698, payable upon estimates made every 30 days, with 10 per cent. reserved until 20 days 'after contract is completed and satisfactory to architects and owner,' when final payment was to be made. Further provisions of the contract relating to matters in controversy here were: That the work was to be done 'under direction and to the satisfaction of M. F Gierey and F. F. Faris, architects, acting for the purpose of the contract as agents of the owner. ' That 'no alterations shall be made in the work shown or described by the drawings and specifications, except upon a written order of the architects or owner and when so made the value of the work added or omitted shall be computed by the architects and the amount so ascertained shall be added to or deducted from the contract price. In the case of dissent from such award by either party hereto, the valuation of the work added or omitted shall be referred to three disinterested arbitrators, * * * the decision of any two of whom shall be final and binding. ' That 'the contractor shall provide sufficient, safe, and proper facilities at all times for the inspection of the work by the architects or their authorized representatives. He shall, within twenty-four hours after receiving written notice from the architects to that effect, proceed to remove from the grounds or buildings all materials condemned by them, whether worked or unworked and to take down all portions of the work which the architects shall by like written notice condemn as unsound or improper, or as in any way failing to conform to the drawings and specifications. Should the contractor at any time refuse or neglect to supply a sufficiency of properly skilled workmen, or materials of the proper quality, or fail in any such respect to prosecute the work with promptness and diligence or fail in the performance of any of the agreements herein contained, such refusal, neglect, or failure being certified by the architects, the owner shall be at liberty, after three days' written notice to the contractor, to provide any such labor or materials, and to deduct the cost thereof from any money due or thereafter to become due to the contractor under this contract; and, if the architects shall certify that such refusal, neglect, or failure is sufficient ground for such action, the owner shall also be at liberty to terminate the employment of the contractor for the said work, and to enter upon the premises and take possession, for the purpose of completing the work comprehended under this contract, of all materials, tools, and appliances thereon and to employ any other person or persons to finish the work, and to provide the materials therefor, and, in case of such discontinuance of the employment of the contractor, he shall not be entitled to receive any further payment under this contract until the said work shall be wholly finished, at which time, if the unpaid balance of the amount to be paid under this contract shall exceed the expense incurred by the owner in finishing the work, such excess shall be paid by the owner to the contractor, but, if such expense shall exceed such unpaid balance, the contractor shall pay the difference to the owner. The expense incurred by the owner as herein provided, either for furnishing materials or for finishing the work, and any damage incurred through such default, shall be audited and certified by the architects, whose certificate thereof shall be conclusive upon the parties. ' That 'the owner agrees to provide all labor and materials not included in this contract and in such manner as not to delay the material progress of the work. The contractor agrees and binds himself to have all the work contemplated by these articles finished and ready to turn over to the owner by December 31, 1905, and, in case of a failure in this particular, agrees to pay the owner the sum of fifty dollars ($50.00) per day as measured damages for each and every day beyond the said 31st day of December, 1905, that the said failure exists, provided, however, that said contractor shall have credit for such days as the architects and owner shall certify at the time as days when the weather forbids work; and credit for each and every day he is delayed by the owner or other contractors employed by the owner, if such delay is also certified to by the architects and owner at the time it occurs.'

'It is further mutually agreed between the parties hereto that no certificate given or payment made under this contract except the final certificate or final payment shall be conclusive evidence of the performance of this contract, either wholly or in part, and that no payment shall be construed to be an acceptance of defective work or improper materials. The contractor shall be responsible for the labor and material furnished by him under this contract until same shall have been finally accepted by the owner, and replace same at his own expense in case it is damaged or destroyed, unless same be by fault of owner.'

On August 17, 1907, plaintiffs filed their notice, account, and declaration of mechanic's lien in which they claim a balance due on the contract of $24,009.58 and for a large number of specified extras, $26,122.97, less $406.80 for work omitted netting $49,725.75, and to enforce this lien this bill was filed at September rules following. The defendant has filed answer, not denying the contract nor assailing the regularity of the proceedings taken to secure and enforce the mechanic's lien, but denying the accuracy and verity of the account and demands upon which it is based. By this answer it is claimed that the true amount due upon the contract is $21,309.58; that the utmost amount the plaintiffs can justly claim for extras is $6,155.40, as against which sums defendant is entitled to set off $6,329.06 for omitted and defective work and $29,150 liquidated damages at the rate of $50 per day as fixed by the contract, for 583 days' delay in finishing the work, thereby extinguishing plaintiffs' just demands and leaving them, in fact, indebted to plaintiffs in the sum of $8,014.08.

To this answer replication has been made and proofs taken and the cause submitted.

James W. Ewing, John A. Howard, and John J. Coniff, for plaintiffs.

Samuel M. Noyes, Caldwell & Caldwell, and Nelson C. Hubbard, for defendant.

DAYTON, District Judge (after stating the facts as above).

Records like this, weighing over 100 pounds, consisting of over 3,200 typewritten pages of evidence (which counsel with commendable industry have sought to abstract within a limit of 800 pages), books of accounts, plans, specifications, drawings, correspondence, contracts, stipulations, and agreements, all of which must receive careful study and consideration, may possibly throw some light upon the vexed question of the law's delays and failure of the courts to expedite business. It seems clear to me, after having read this record, that a reference to a master will be absolutely necessary, no matter how much the delay is to be regretted, unless I take the time to state an account between these parties involving more than 200 items, on the one hand, ranging from 20 cents to over $6,000 for extras, and, on the other hand, for similar items of omitted and defective work. It does seem to me, however, that I should, in order to expedite this work before a master, indicate that sufficient evidence in my judgment has already been taken to fully enable him to state such account, and that, unless special reasons be shown to the contrary, he should be limited to the record as it now stands. Further, it seems to me that I may very well pass upon matters of principal dispute herein involving legal propositions, leaving him thus unembarrassed, to make the necessary calculations as to such items.

It becomes necessary, therefore, to consider first the claim of defendant for $29,150 damages for delay in the completion of the contract. It is claimed by defendant that this contract was a West Virginia one, and that the Supreme Court of Appeals of West Virginia in the recent case of the Charleston Lumber Co. v. Friedman, 64 W.Va. 151, 61 S.E. 815, has determined that a provision similar to the one here fixing a specific sum to be paid per day for delay in the execution of the contract is enforceable, not as a penalty, but as liquidated damages. And the cases of Wheeling Mold & Foundry Company v. Wheeling Steel & Iron Co., 58 W.Va. 62, 51 S.E. 129, and Sun Printing &amp Publishing Association v. Moore, 183 U.S. 642, 22 Sup.Ct. 240, 46 L.Ed. 366, are cited in support of this contention. There can be no question of the soundness of this position where delays in execution of such a contract are wholly occasioned by the default of the contractor, but this I perceive to be the full extent to which these decisions go. In the Lumber Co. v. Friedman Case the contractor undertook to erect complete a store building by a fixed date, and to pay $10 per day for each day thereafter that the building remained incomplete and unfinished. The enforcement of this clause was resisted on the ground that it was a penalty, and equity would not enforce it. Reversing the court below so holding, the Supreme Court of Appeals...