General Supply & Construction Co. v. Goelet

• Decision Date: 15 July 1925
• Citation: 241 N.Y. 28
• Court: New York Court of Appeals Court of Appeals
• Parties: THE GENERAL SUPPLY AND CONSTRUCTION COMPANY, Appellant, v. ROBERT GOELET, Respondent, and THE UNIT CONCRETE STEEL FRAME COMPANY, Appellant, Impleaded with Others.

241 N.Y. 28

148 N.E. 778

GENERAL SUPPLY & CONSTRUCTION CO.

v.GOELET et al.

Court of Appeals of New York.

July 15, 1925.

Action by the General Supply & Construction Company against Robert Goelet, impleaded with the Unit Concrete Steel Frame Company, George H. Storm, and the Bouker Contracting Company.From a judgment of the Appellate Division(207 App. Div. 646, 202 N. Y. S. 721), modifying, and, as modified, affirming, judgment entered on report of referee, plaintiff and the last three named defendants appeal.

Judgment modified and, as modified, affirmed.

Appeal from Supreme Court, Appellate Division, First department.

Franklin Nevius, Alfred C. Pette, Benjamin G. Paskus and Asa B. Kellogg, all of New York City, for appellants.

Frederick Hulse and Harry N. French, both of New York City, for respondent.

LEHMAN, J.

On or about the 22d day of August, 1906, the plaintiff entered into a written contract with the defendant Goelet, whereby the plaintiff obligated itself to provide all the material and perform all the work for the erection of the ‘mason work, structural iron and steel work, and carpenter work’ in connection with a building on premises owned by Goelet.The contract provided that:

‘The entire building is to be completely finished and shall be ready for occupancy on or before the 1st day of July, 1907, and in default thereof the contractor shall pay to the owner the sum of two hundred dollars as liquidated damages for each and every day that the said building shall remain uncompleted and unfinished, and not ready for occupancy, after the date above mentioned.’

[1] The work was not completed on July 1, 1907, and the plaintiff was permitted by the owner to continue performance of the work.The owner thereby waived time as an essential element of the contract (Taylor v. Goelet, 208 N. Y. 253, 101 N. E. 867, Ann. Cas. 1914D, 284); but none the less the failure to complete at the time fixed in the contract constitutes a breach and gives rise to a cause of action for damages caused by the delay (Deeves & Son v. Manhattan Life Ins. Co., 195 N. Y. 324, 88 N. E. 395).The work was still far from finished on March 23, 1908, and on that date the owner, against the plaintiff's protest and resistance, ejected the plaintiff from the premises and prevented it from proceeding with the work under the contract.The Appellate Division has made a finding that at that time the defendant Goelet was justified in concluding that the plaintiff would not, within any reasonable time, finish the work of erecting the building.

[2] The continued delays of the contractor in the past might perhaps reasonably give rise to the inference that it would not proceed with reasonable speed in the future.We may assume that, at the time the owner put the contractor off the work, he had, with reason, ceased to hope or expect that the contractor would mend his ways; yet the owner had no right to terminate the contract in the manner he did.He had provided in the contract protection for himself against unreasonable delays on the part of the contractor, first, by stipulating that the work must be completed by a definite date; second, by provision for stipulated damages for each day's delay in the completion of the work after that date; third, by provision that the owner might terminate the contract at any time upon certificate of the architect that the work was being unreasonably delayed, and that such delay was sufficient ground for termination of the contract.He terminated the contract and ejected the contractor, not for failure to complete the work in the contract time, but for unreasonable delay thereafter, and he failed to comply with the provision of the contract which made the architect's certificate a condition precedent to the right to take such action.

Though he may have been justified, as the Appellate Division has held, in his belief that the contractor would not thereafter mend his ways and finish the work within a reasonable time, yet, where such delay did not amount to abandonment, he could not rescind the contract for that reason, except according to its terms.Brady v. Oliver, 125 Tenn. 595, 147 S. W. 1135,41 L. R. A. (N. S.) 60, Ann. Cas. 1913C, 376;McTague v. Sea Isle City Lot & Building Ass'n, 57 N. J. Law, 427, 31 A. 727;Taylor v. Goelet, 208 N. Y. 253, 101 N. E. 867, Ann. Cas. 1914D, 284.He was not left entirely at the mercy of a dilatory contractor, even if the architect did not find and refused to certify that the contractor's delays were sufficient ground for termination.Though time was waived as an essential element of the contract, it could be restored by notice to complete within a reasonable time, stated in said notice.Taylor v. Goelet, supra.Having indicated purpose to keep the contract alive in spite of delays on the part of the contractor, the owner could not suddenly abandon the purpose and treat as essential an element in the contract which he had previously waived, as ground for termination.Brede v. Rosedale Terrace Co., 216 N. Y. 246, 110 N. E. 430.The termination of the contract in this case, without the required previous notice, and without a certificate from the architect in accordance with the terms of the contract, was wrongful.

After the attempted termination of the contract, the plaintiff brought this action to foreclose his lien for the reasonable value of the work done and the materials furnished.The courts below have found that the plaintiff is entitled to recover such value.The defendant owner does not seriously dispute his obligation, or claim that under the circumstances even a right to terminate the contract in the manner attempted would justify a refusal to pay for work performed or material furnished while the contractor was allowed to continue performance of the work.The substantial dispute between the parties upon this appeal concerns the question of whether the owner, in spite of his refusal, which we must hold was wrongful, is entitled to offset or counterclaim for damages suffered by the plaintiff's failure to complete the work at the time fixed in the contract.

The Appellate Division has held that, even if the attempted rescission was wrongful, the plaintiff acquiesced in such rescission by bringing this action to foreclose a lien for the value of labor and materials furnished, and thereby waived the owner's breach.It seems to us that the form of action which the plaintiff has chosen for the vindication of the rights which he had after he was put off the work may not be given such effect.While the right to...