Cauldwell-Wingate Co. v. State

• Decision Date: 11 January 1938
• Citation: 12 N.E.2d 443,276 N.Y. 365
• Parties: CAULDWELL-WINGATE CO. et al. v. STATE.
• Court: New York Court of Appeals Court of Appeals

276 N.Y. 365

12 N.E.2d 443

CAULDWELL-WINGATE CO. et al.

v.STATE.

Court of Appeals of New York.

Jan. 11, 1938.

Appeal from Court of Claims.

Action by the Cauldwell-Wingate Company and others against the State of New York, brought under enabling statute for damages for breach of contract. From a judgment of the Court of Claims, 156 Misc. 901, 283 N.Y.S. 285, affirmed by the Appellate Division, 249 App.Div. 892, 292 N.Y.S. 625, claimants appeal, motion for leave to appeal and reargument having been denied in 250 App.Div. 812, 296 N.Y.S. 445.

Reversed and remitted.

LEHMAN, O'BRIEN, and FINCH, JJ., dissenting. Benjamin McClung and Charles B. Sullivan, both of Albany, and Herbert S. Greenberg, of New York City, for appellants.

John J. Bennett, Jr., Atty. Gen. (Henry Epstein, Leon M. Layden, and Joseph I. Butler, all of Albany, of counsel), for respondent.

CRANE, Chief Judge.

On or about March 1, 1928, Cauldwell-Wingate Company entered into a contract with the state of New York, through the state office site and building commission, for the construction of a superstructure, state office building, New York City, specification No. 5014, project No. 1936, and addenda 1, 2, and 3, which contract was completed and the construction accepted by the state of New York, on or about January 20, 1930. The completion date provided for in said contract was March 31, 1929.

The state had advertised for, and awarded, two separate contracts; one, for the excavation and foundation work; and the other, for the erection of the superstructure. The contract of J. L. McDonald for the foundations was approved by the state on March 10, 1928. The Cauldwell-Wingate contract for the superstructure was approved March 2, 1928.

The Cauldwell-Wingate Company could not begin the superstructure work until McDonald had finished the foundations; consequently, the contract contained the following provision:

‘(B) General Description, page 3, paragraph 3.

‘Work not included: The work of this contract is contingent upon the execution of the foregoing work by the Foundation Contractor and shall follow said work in orderly sequence. * * * The time of completion specified for the foundation work is July 1, 1928.’

What was meant by the ‘execution of the foregoing work by the Foundation Contractor?’ The plans and specifications for this work were submitted to these contractors before bidding, and for the purpose of procuring bids thereon. There were the representations made by the state as to the nature of the foundation, and the work which the foundation company was expected to do, in accordance with its bid thereon. At the time of the advertising for, and of the letting of, each of these two contracts, the site consisted of a city block, the area of which was graded over and entirely covered with a cinder fill, except a small portion, which was occupied by two small brick buildings. The foundation plans and specifications which were furnished Cauldwell-Wingate Company and other bidders on the superstructure ‘for information pertaining to work included in the foundation contract’ showed the elevation and the artificial structures to be removed and only represented thereon the aforesaid two small brick buildings. The superstructure was to be built on a finished foundation to be constructed by the state.

The judge, in his opinion in this case, has found: ‘The plans furnished McDonald by the State included a cross section and showed ‘the elevation and artificial structures to be removed and only represented thereon the aforesaid two buildings.’'

This provision (B), general description in the Cauldwell-Wingate contract, stating, ‘The work of this contract is contingent upon the execution of the foregoing work by the Foundation Contractor and shall follow said work in orderly sequence,’ has reference to this foundation work shown in these plans and specifications submitted to all of the contractors for the purpose of bidding. This point is to be noted as we go along, as it is decisive of the questions presented.

The contract read as a whole meant this: McDonald was to dig and construct the foundations according to the plans and specifications submitted. No superstructure work could be commenced until the foundation was complete. Cauldwell-Wingate Company made its contract to erect the superstructure upon the completion of the foundation, according to the plans and specifications submitted to it. These plans and specifications called for work which could be completed in about three weeks, and so it was stated in the specifications that the foundation work would be completed July 1, 1928. All the bidding, both by the foundation contractor and the superstructure contractor, was based upon the plans and specifications submitted by the state's engineers-the servants and employees of the state-and all of the conditions in the contracts of these two parties must be read, bearing this fact in mind.

What was the superstructure contractor to do immediately upon signing this contract? It was expected to assemble all of its material and working equipment, including the fabrication of the steel, so as to have everything in readiness to proceed on July 1, 1928. It was under severe penalties for delay. The contract allowed nine months to erect the entire superstructure, after the dates specified for completion of the foundations, and obligated it to the payment of liquidated damages and severe penalties for delay, or failure to complete within the specified time. The Cauldwell Company, by the contract provision above quoted, accepted the contingency of delay in the execution of the foundation contract, but only such delay as was occasioned in the performance of that contract, according to plans and specifications. The plans and specifications were its only guide, and the measure alike of its duty and its obligations. If the foundation contractor were delayed in doing its work, the Cauldwell Company assumed such risk. It did not, however, by any provisions of its contract, assume the risk and loss occasioned by the act of the state, in furnishing to both these contractors misleading, imperfect and defective plans and specifications, wherein and whereby the whole scheme of foundation building had to be revised, new plans and specifications adopted, and the work which was to take three weeks necessarily extended for almost a year. Instead of a surface such as represented, there appeared upon further investigation an underground swamp or pond and other obstacles.

The Court of Claims was under the impression that the contractor for the superstructure was bound to make borings to discover the nature of the subsoil, and should have been aware of these conditions. We can find no such onerous duty placed upon this contractor. The information to bidders, entitled, ‘Visit to Site,’ leads to no such conclusion. This reads: ‘Proposals will be held as having been made with full knowledge of conditions and requirements. The Contractor will be held to have visited the premises, prior to the time of submitting his proposal, and to have appraised the conditions under which the work of this contract is to be executed.’ Very unreasonable indeed would it be to hold that a contractor, whose only work commenced when the foundations were finished, was obliged to make soundings and borings to discover whether the plans and specifications of the state regarding such foundations were true or false. Whether this were McDonald's duty we need not now determine. Certainly it was no obligation resting upon the superstructure contractor. This apparently was the main argument for rejecting Cauldwell's claim for damages in this case. The Court of Claims made these findings: ‘That the subsurface of the contract site was found to consist of old foundations, piling and obstructions not shown upon the plans or specifications. That a portion of such old structures had been erected in former days over a pond which once had water to a depth of about fifty feet. That because of the subsurface conditions found on the site the foundation contractor worked nearly one year in excavating whereas had the site complied with surface conditions said excavation should have been performed in about three weeks' time.’ Consequently the work of the Cauldwell Company, which was to be completed March 31, 1929, was not finished until January 20, 1930-nine months later.

What effect did this have upon the Cauldwell Company? The Court of Claims has made these findings: ‘That all construction work was completed December 20th, 1929. That the wages of artisans, mechanics, laborers and other employees in the trades engaged in the construction of the building generally increased May 1st, 1929. That the cost of workmen's compensation insurance likewise increased. That the partial erection of the building in two sections ([as was required to be done]) increased the cost thereof. That some of the subcontractors had their products and materials ready for delivery before the site was ready to receive them and were obliged to store them. That the work of erecting steel, setting granite, constructing floor and roof arches, laying of concrete and setting of gypsum block is each more expensive to perform in winter than in warm weather.’ And ‘that the cost of bronze increased after January 1929.’

Now the point is, must the Cauldwell Company, superstructure contractor, suffer this loss when it was occasioned solely because the state submitted to these contractors, in order to induce them to make the contract, misleading and inaccurate plans and specifications? In other words, the state by its initial act misled the parties not only as to the foundation for the building, but the foundation for the contracts, and caused loss in consequence.

The Court of Claims in its opinion has told us: ‘When McDonald began work with his steam shovel ‘it was immediately disclosed upon excavation that beneath said two feet of cinders were foundation...