City of New Haven v. Nat'l Steam Economizer Co.

• Decision Date: 05 March 1907
• Citation: 79 Conn. 482,65 A. 959
• Parties: CITY OF NEW HAVEN v. NATIONAL STEAM ECONOMIZER CO. et al.
• Court: Connecticut Supreme Court

65 A. 959

79 Conn. 482

CITY OF NEW HAVEN

v. NATIONAL STEAM ECONOMIZER CO. et al.

Supreme Court of Errors of Connecticut.

March 5, 1907.

Appeal from Superior Court, New Haven County; Milton A. Shumway, Judge.

Action by the city of New Haven against the National Steam Economizer Company and another to recover on a bond executed by defendant, with defendant the American Surety Company as surety. From a judgment on the bond, plaintiff and defendant American Surety Company both appeal. Affirmed.

November 11, 1901, the defendant the National Steam Economizer Company, as contractor, entered into a written contract with the plaintiff as owner to install certain heating and ventilating apparatus in the latter's high-school building for the contract price of $22,708. Article 10 of the contract provided that this contract price, subject to such additions and deductions as were provided for, should be paid to the contractor in monthly payments, to be made on the 15th day of each month, to the amount of 85 per cent. of labor and materials actually in place, upon certificates from the architects delivered to the owners on or before the 5th day each month, stating that the work has been done in accordance with the terms of the contract, that the final payment should be made within 10 days after the contract should be performed and the building accepted, and that all payments should be made upon written certificates of the architects to the effect that they had become due. Two of the articles read as follows:

"Article 5. Should the contractor at any time refuse or neglect to supply a sufficiency of properly skilled workmen, or of materials of the proper quality, or fail in any 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 then 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 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 certificates shall be conclusive upon the parties.

"Article 6. The contractor shall complete the several portions and the whole of the work comprehended in this agreement by and at the time or times hereinafter stated, that is to say, the work shall be carried forward without delays, so that all of the trades may complete their respective works, and have the building entirely finished and completed on or before the 3d day of January, nineteen hundred and three, and in default thereof the contractor shall pay to the owner twenty-five dollars ($25) for every day thereafter that the said work shall remain unfinished, as and for liquidated damages."

Another article provided that all work to be done by the contractor should be seasonably done and as required by the specifications, and that the contractor was to have direction and superintendence of all work connected with the erection of its apparatus for the operation of which it was to be held responsible.

On November 15th said contractor, as principal, and the defendant the American Surety Company, as surety, entered into the bond in suit to the plaintiff in the penal sum of $15,000, conditioned that said contractor should faithfully and fully perform said contract. Prior to July 1, 1902, said contractor began work under said contract, and thereafter continued to prosecute it until December 27, 1902. At that date, the contractor not having prosecuted the work with diligence and being in default in the performance of its agreements, and the architects having given the required certificate, the plaintiff terminated the contractor's employment, entered upon the premises, took possession of the work and materials, and thereupon assumed charge of the work. Prior to this date the plaintiff had paid the contractor the sum of $14,516.76; the same having been paid in several installments, and all upon architects' certificates certifying that the several amounts paid were due. The following table shows the times and amounts of these payments and the dates of the architects' certificates pursuant to which each payment was made:

Dates of Certificates.

Date of Payment

Amount

July 1, 1902.

Sept. 11, 1902.

$1,892 70

Sept. 15, 1902.

Sept. 19, 1902.

2,190 30

Sept. 26, 1902.

Sept 27, 1902.

1,700 00

Oct 10, 1902.

Oct 15, 1902.

1,972 00

Nov. 5, 1902.

Nov. 7, 1902.

2,186 76

Nov. 28, 1902.

Nov. 28, 1902.

3,100 00

Dec. 20, 1902.

Dec 20, 1902.

1,475 00

Before the architects' certificates were issued, the contractor in each case submitted to the architects detailed statements or estimates of the work and labor claimed to have been furnished and to be in place, with the value thereof. These estimates were examined, and the actual cost to the contractor estimated as nearly as possible at current prices for the work and labor actually in place, and the certificates given were in each case for not more than 85 per cent. of such costs so determined. Some of the work required was electrical and mechanical apparatus, which could only be obtained from certain manufacturing companies dealing specially therein. The architects had no means of knowing or ascertaining, other than by inquiry of the contractor, or of said companies, at what price this apparatus could be or had been purchased, or what portion of the contract price was figured by the contractor therefor or for labor. It did not appear that such inquiry was made, save as already stated. In estimating, as stated, the probable cost of labor and materials actually in place, and in giving the certificates upon which payments were made, the architects acted in good faith and in the belief that the sums certified by them were no more than the contractor was entitled to receive under the terms of the contract, and said sums did not in fact exceed 85 per cent of the value of labor and materials actually in place at the time the several certificates were issued, at the probable actual cost to the contractor, as nearly as the same could then be ascertained by the architects in the manner aforesaid. On December 27th, when the contractor's employment was terminated, between one-third and one-half only in value of the total work required by the contract was completed. On January 16, 1903, the plaintiff employed another corporation to complete the work required by the contract, which was thus completed June 29, 1903. Under this employment the plaintiff paid $21,022.83 to the new company, of which about $600 was for the removal and replacement of defective work. On July 27, 1903, the architects audited said payments, and gave a certificate that the expense incurred by the plaintiff in the completion of the work was truly shown thereby.

Judgment was rendered for the excess of the total payments made by the plaintiff as aforesaid over and above the contract price of $22,798.

Leonard M. Daggett and James Kingsley Blake, for plaintiff. George D. Watrous and Henry P. Parmelee, for defendant the American Surety Company.

PRENTICE, J. (after stating the facts). Confessedly the defendant surety company, as the surety...