Fred C. McClean Heating Supplies, Inc. v. Jefferson Const. Co.

• Decision Date: 08 June 1959
• Parties: FRED C. McCLEAN HEATING SUPPLIES, INC. v. JEFFERSON CONSTRUCTION CO., Maryland Casualty, and the Commonwealth.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 95

159 N.E.2d 95

339 Mass. 356

FRED C. McCLEAN HEATING SUPPLIES, INC. v. JEFFERSON CONSTRUCTION CO., Maryland Casualty, and the Commonwealth.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 8, 1958.

Decided June 8, 1959.

Edward C. Park, Boston (Morris Sokolove, Boston, with him) for Jefferson Construction Co.

Charles V. Ryan, Springfield, for plaintiff.

Before WILKINS, C. J., and WILLIAMS, COUNIHAN, WHITTEMORE and CUTTER, JJ.

CUTTER, Justice.

This is a bill in equity brought by a subcontractor to establish a lien (see G.L. c. 30, § 39, as amended through St.1935, c. 472, § 1 ¹) for amounts not paid under its subcontract (a) upon money retained by the Commonwealth from amounts owing to the prime contractor, Jefferson Construction Co. (hereinafter called Jefferson), for construction at a teachers college, and (b) against a bond, executed by Jefferson and a surety company, to secure payments for work and materials. The case was referred to a master. Two exceptions (later mentioned) to the master's report were sustained and, as thus modified, the report was confirmed by interlocutory decree. A final decree was entered adjudging Jefferson to be indebted to the subcontractor in the sum of $17,513.45 with interest and costs and directing that this sum, if not paid by Jefferson, be paid out of funds retained by the Commonwealth from the contract price or, in the alternative, by the surety on the bond. A counterclaim by Jefferson (for amounts alleged to have been spent by Jefferson for the account of the subcontractor) was dismissed. Jefferson has appealed from the interlocutory decree and the final decree. The facts are stated on the basis of the master's report.

On September 10, 1954, Jefferson made a written proposal for construction for the Commonwealth at the State Teachers' College at Westfield. In this proposal the subcontractor was named as subbidder for heating and ventilating under § 24. The subcontractor had previously submitted a bid 'to furnish all labor and materials for the completion of all work under the subheading 'Heating and Ventilating' Item H-V, pages 24-1 to 39 inclusive, in accordance with the plans and specifications prepared by Abbott Associates, Inc.' Jefferson was successful bidder for the building construction and the subcontractor's bid for the heating and ventilating was approved.

On September 24, 1954, Jefferson executed a prime contract with the Commonwealth for the building construction and, shortly thereafter, the subcontractor entered into a subcontract on a standard form (American Institute of Architects) 'to furnish labor, materials, tools, equipment, staging and do all heating and ventilating work as called for under, but not limited to [s]ection 24, [p]ages 24-1 thru 24-39 of the contract specifications.' Pertinent provisions of these and other specifications not later quoted in full in this opinion are set out in the margin. ² From this subcontract, after it was signed by the subcontractor, Jefferson struck out the words 'That there will be no temporary heat included' and returned to the subcontractor the contract signed, but thus altered. The subcontractor accepted the subcontract with the deletion.

Early in November, 1955, Jefferson notified the subcontractor that it was necessary that the permanent heating system be made available. Such heat was available, at the latest, by November 17, 1955. The subcontractor, however, apparently did not make arrangements to operate the heating system after 4:30 P.M. on that day. Jefferson notified the subcontractor that it was 'putting engineers on this heating system as of 4:30 P.M., November 17, and all costs in connection therewith will be charged against your contract due to your refusal to man the heating system.' Jefferson on November 17 also wrote to the subcontractor's attorney that Jefferson agreed 'that the cost of fuel is to be borne by the general contractor' but later attempted to withdraw this statement, as in effect an offer of compromise, by a letter of January 15, 1957.

From November 17, 1955, through May 4, 1956, to provide essential heat, Jefferson retained firemen to operate the permanent heating system and furnished the necessary oil. Although the subcontract provided that Jefferson would 'perform no work chargeable to the [s]ubcontractor without a written order from the' latter, the master found that a request for such an order would have been useless in view of the subcontractor's contention that it was not obligated to provide labor and oil for operating the permanent heating system.

On May 31, 1956, Jefferson sent the subcontractor a bill for $11,772.29 for labor of firemen on the heating system and, on November 21, 1956, many months after temporary heating had ended, a bill for $7,942.55 for oil. These charges the master found to be fair and reasonable. The subcontractor, however, prior to receipt of the later bill had no knowledge that Jefferson intended to hold it liable for oil.

The prime contract (art. III) between Jefferson and the Commonwealth contained a provision that the architect 'shall decide all questions which may arise as to the quantity, quality, acceptability, fitness and rate of progress of the several kinds of work and materials to be performed and furnished under this contract, and shall decide all questions * * * as to the interpretation of the plans and specifications and as to the fulfillment of this contract on the part of the Contractor, ³ and his * * * decision shall be final * * * except as may be otherwise determined by the Division; and such * * * decision, in case any question shall arise, shall be a condition precedent to the right of the Contractor to receive any money hereunder' (Emphasis supplied.)

On January 11, 1957, the architect wrote to Jefferson purporting to give 'our interpretation of the specifications * * * namely, that (1) temporary heat, not using the permanent heating system is to be provided and cared for in its entirety by the General Contractor, and (2) temporary heat which uses the permanent heating system must be provided and cared for in its entirety by the heating subcontractor.' The master admitted this letter in evidence over the subcontractor's objection. He also admitted, subject to objection, a letter of February 14, 1957, to Jefferson from the Commonwealth's director of building construction expressing the 'opinion of this [d]ivision that the architects [sic] interpretation of the specifications * * * is correct.' Between the dates of these letters representatives of the interested parties and the architect were given a hearing before the division of building construction. The subcontractor's exceptions to the master's report, based upon the objections to the admission of these two letters, were the two exceptions, already mentioned, which were sustained by the trial judge.

On January 15, 1957, Jefferson notified the subcontractor of four obviously trivial 'discrepancies' in the subcontractor's work. These were corrected by January 25. The Commonwealth had 'formally accepted the * * * [p]roject * * * on November 15, 1956, as of November 14, 1956.' The master apparently relying on the correction of the alleged 'discrepancies,' found that on 'January 25, 1957, the * * * [subcontractor] ceased to perform labor and to furnish materials, appliances and equipment on said job and, on February 15, 1957, it filed a sworn statement of its claim with the [d]ivision * * * showing a balance due it of $17,513.45.' This amount the master found to be correct if the subcontractor 'was not required to operate the permanent heating system for furnishing temporary heat * * * from November 17, 1955, to May 4, 1956.' The master found further (a) that if the subcontractor was obligated to operate the heating system during that period, and also to supply the oil, then Jefferson was entitled to recover on its counterclaim for the cost of heating, labor and fuel $2,201.39 (net above the subcontractor's claim for $17,513.45), and (b) that, if the subcontractor was required to operate the system but not to furnish the oil, then the excess of the amount of the balance claimed by the subcontractor over Jefferson's labor cost of operating the heating system was $5,741.16. The question of the extent of the subcontractor's obligation with respect to supplying temporary heat the master left 'as a question of law for the court * * * under the contract entered into by said parties and on the facts found.'

The master found 'that the [a]rchitect acted in good faith [in] making said determination * * * of January 11, 1957.' The trial judge overruled the subcontractor's third exception to the report to the effect that it was not open to the master to make this finding.

Jefferson now contends (a) that the subcontractor was bound by the subcontract to provide the temporary heat to be supplied by the heating system and (b) that the trial judge should also have overruled the exceptions to the report based upon the admission of the two letters (of January 11, and February 14, 1957) relating to the architect's decision. This decision, Jefferson contends, was binding upon the subcontractor. The subcontractor argues that art. III of the prime contract, stating the scope and effect of the architect's power of decision, was never binding upon the subcontractor, and that, if art. III ever was binding upon the subcontractor, the architect's power under it had long since expired.

1. Under § 5(a) of the subcontract the subcontractor agreed to be bound to Jefferson by the terms of the prime contract, general conditions, drawings, and specifications, and to assume toward it all the obligations and responsibilities that Jefferson by those documents assumes toward the Commonwealth. The language of the subcontract defining the scope of the work varied slightly from that of the bid, but the price named in the subcontract was that named in the bid. This...