Duval County v. Charleston Engineering & Contracting Co.

• Decision Date: 28 April 1931
• Citation: 101 Fla. 341,134 So. 509
• Parties: DUVAL COUNTY v. CHARLESTON ENGINEERING & CONTRACTING CO.
• Court: Florida Supreme Court

134 So. 509

101 Fla. 341

DUVAL COUNTY v. CHARLESTON ENGINEERING & CONTRACTING CO.

Florida Supreme Court, Division B.

April 28, 1931

Suit by the Charleston Engineering & Contracting Company against Duval County. From the decree rendered, defendant appeals.

Reversed in part and affirmed in part, and cause remanded. Appeal from Circuit Court, Duval County; George Couper Gibbs, judge.

COUNSEL

John E Mathews, of Jacksonville, for appellant.

Baker Baker & Rutherford, of Jacksonville, for appellee.

OPINION

DAVIS J.

As stated in the brief of the appellant, there is involved in this case the law relating to public contracts, arbitration, and award, the binding force and effect of the final certificate or award of an engineer, and what state of facts will authorize a chancellor to set aside an award, and whether or not a chancellor can substitute his judgment upon the facts for the judgment of the engineer or arbitrator.

Duval county, the appellant, advertised for bids for the construction of approaches to McGirts Creek bridge in Duval county. In due course bids were received, an award made, and a contract entered into with the appellee, Charleston Engineering & Contracting Company. Certain plans and specifications were made a part of the contract.

Provisions of the contract most pertinent to the decision of this case are as follows:

'25. Engineer as Referee: To prevent disputes and litigations, it is agreed by the parties hereto, that the Bridge Engineer shall decide all questions, difficulties, and disputes of whatever nature, which may arise relative to the interpretation of the plans, construction, prosecution and fulfillment of this contract, and as to the character, quality, amount, and value of any work done and materials furnished under or by reason of this contract, and his decisions upon all claims, questions, and disputes shall be final and conclusive upon the parties thereto.

'34. Measurements of Quantities: All work completed under this contract shall be measured by the Engineer according to United States Standard Measures. All measurements shall be taken horizontal or vertical, except for paving surfaces, which will be taken along the actual surface of the pavement. No allowance shall be made for surfaces laid over a greater area than shown on the plans, except where such work is done upon written instructions of the Engineer.

'37. Final Payment: Whenever the improvement provement provided for under this contract shall have been completely performed on the part of the contractor, and all parts of the work have been approved by the Engineer, according to the contract, a final estimate showing the value of the work will be prepared by the Engineer as soon as the necessary measurements and computations can be made, all prior certificates or estimates upon which payments have been made being approximate only and subject to correction in the final payment. The amount of this estimate, less any sums that may have been deducted or retained under the provisions of this contract, will be paid to the contractor within thirty (30) days after the final estimate has been approved by the Engineer, provided that the contractor has properly maintained the project as hereinafter specified, and provided he has furnished to the County a sworn affidavit to the effect that all bills are paid and no suits are pending in connection with the work done under this contract.'

The contractor completed the work and a dispute arose between the county and the contractor as to whether or not approximately $18,000 should be withheld from the contractor by reason of damage to certain piers caused by the operations of the dredging contractor. Another dispute grew out of claims made in that connection by another contractor who had the contract for the construction of the bridge proper. There were still other disputes between the county and the contractor as to the amount of earth which had been placed in the fill on the Jacksonville end, the amount of concrete piling, and also as to the liquidated damages due to delay in completion of the work, as provided for in the contract.

The county contended that the figures claimed by the contractor were too high, and that the figures should be approximately those set forth as estimates of the work to be done as set forth in the notice to bidders.

A final estimate under paragraph 37 of the contract (which has been heretofore quoted) was prepared and filed by the engineer who allowed the contractor a balance of $1,063.96 on the two contracts. The contractor refused to accept the final estimate and returned to the county authorities a draft which had been tendered in payment.

Thereupon the contractor brought its Bill in Chancery for an accounting of the amounts actually due the contractor and to have the 'Final Estimate' set aside on the ground that it was not a true and correct estimate of the work done in certain particulars therein specified, and on the ground that the final estimate was, in the particulars mentioned, so grossly erroneous and contained such glaring mistakes, as to imply bad faith on the part of the county bridge engineer or at least a failure on his part to exercise an honest judgment, and, if allowed to stand, would amount to a fraud on the complainant.

An answer was filed by the county, in which answer was incorporated a demurrer to the bill on the grounds, principally, that the bill of complaint showed a certificate or final estimate of the engineer which under the contract was binding upon the parties and could not, under the law governing such matters, be impeached or set aside under the facts alleged in the bill of complaint.

The answer also denied all materal allegations of the bill of complaint, but admitted that the engineer had not made his measurements of the total yardage excavated for the earth embankments as required by the contract, but alleged, as an excuse for this failure to do so, the loss of certain of his notes or memoranda which had been made with reference to the Jacksonville approach, and asserted that the contractor was responsible for such loss. The answer also attempted to justify the deduction of the alleged cost of the repair of the bridge piers solely on the ground that the bridge and its piers were properly in the 'line of work' and were damaged during dredging operations, which, under the contract, would be a liability of the contractor who had agreed to be responsible for the preservation from danger of all property along the 'line of work.'

Voluminous testimony was taken on the merits, and upon final hearing the chancellor overruled the demurrer to the bill and found for the contractor on all points, except as to the allowance of payment for additional piling, claim for which was waived by the contractor before signing of the final decree.

This final decree found that 'because of the gross errors as aforesaid appearing in the final estimate of the Engineer it should be vacated and set aside and held of no binding force upon either of the parties thereto.' Accordingly the court proceeded to examine the accounts of the parties and entered its own judgment and determination that the balance due by the county to the contractor was $44,708.71, instead of $1,063.96, which had been tendered by the county. Included in the total of $44,708.71 was an item of $8,062.22 interest from January 1, 1927, to date of decree, which item of interest was based on the principal sum of $36,646.49 found by the court to have been the amount which the county should have paid the contractor.

Upon appeal from the final decree the appellant urges primarily three points: (1) That the court committed error in holding, finding, or decreeing that it could set aside the final estimate of the engineer, and substitute its own judgment and opinion for that of the engineer because of alleged gross mistake or gross error, unless such gross mistake or gross error was made to appear to the satisfaction of the engineer himself; (2) that the court erred in its finding on the evidence submitted, assuming that the first point is not well taken; and (3) that in any event it was unlawful, under the facts of this case and the law applicable thereto, to allow the recovery of interest on the amount found to be due under the accounting.

As to the first proposition, it is necessary to consider the effect of an agreement by the parties to a construction contract by which agreement the parties contract for the settlement of disputes by a mutual agent, such as an engineer or architect, such as is provided for by the contract involved here.

At the outset it may be well also to call attention to the difference which exists between a provision in a contract by which the parties agree for the engineer to act as a referee for the settlement of disputes, and a provision in such a contract for the payment for work done to be paid on the final settlement of accounts, on the basis of an engineer's certificate such as is commonly called an 'estimate' or 'final estimate.'

Most construction contracts provide, as do the contracts here considered, that final payment of the amounts due under the contract are to be made only on a 'final estimate' supplied by an engineer who, under the terms of the contract, is appointed for the purpose of keeping an account of the work done and of the contingencies accruing, which may affect the right to compensation, so that the contractor will only be paid in strict accord with the measure of his performance.

But provisions for a 'final estimate' as a basis for payment, and provisions for settling disputes which may arise in the event the contractor refuses to accept as correct the 'final estimate,' are not to be confused. The latter provision...