Hines v. Farr

• Decision Date: 05 January 1960
• Docket Number: No. 17600,17600
• Citation: 112 S.E.2d 33,235 S.C. 436
• Court: South Carolina Supreme Court
• Parties: Paul K. HINES d/b/a Hines Bros. Construction Company, Respondent, v. Harry B. FARR, County Superintendent of Education for Union County, S. C., exofficio Chairman of Union County Board of Education, and the Union County Board of Education, Appellants.

Page 33

112 S.E.2d 33

235 S.C. 436

Paul K. HINES d/b/a Hines Bros. Construction Company, Respondent, v. Harry B. FARR, County Superintendent of Education for Union

County, S. C., exofficio Chairman of Union County

Board of Education, and the Union County

Board of Education, Appellants.

No. 17600.

Supreme Court of South Carolina.

Jan. 5, 1960.

L. H. Jennings, Jr., Long & Long, Union, for appellants.

Mike S. Jolly, David N. Wilburn, Jr., Bruce W. White, Union, for respondent.

MOSS, Justice.

This action was instituted by Paul K. Hines, doing business as Hines Bros. Construction Company, the respondent herein, against Harry B. Farr, Chairman and Superintendent of the Union County Board of Education, and the Union County Board of Education, the appellants herein, to recover the sum of $22,908.04, with interest thereon from February 24, 1955, at the rate of 6% per annum, being the sum alleged to be due by virtue of three separate contracts made by the respondent with the Board of Trustees of Union County School District No. 1, the predecessor in office to the appellants herein.

It appears from the record that in February, 1954, the respondent entered into three separate contracts with the Board of Trustees Union County School District No. 1, said contracts being designated as 'Drainage' contract, 'Sewerage' contract, and 'Grading, Clearing and Grubbing' contract, for a contract price in the amount of $12,000.00, $9,350.00, and $7,850.00, respectively. The work to be performed under these three contracts was in connection with the construction of a high school building and surrounding grounds at Lockhart, South Carolina, under plans and specifications prepared by Harold Woodward, architect. A review of the contracts in question shows that the architect, who was employed by the appellants, was to have general supervision of the work to be done by the respondent. Each of the contracts provided for payment to the respondent of a specified amount for the regular contract job, with the provision for extra compensation in the event that rock was encountered in the excavation, to pay to the respondent the additional sum of $12 per cubic yard for the removal of same.

The contract between the parties provided, with reference to acceptance and final payment, as follows:

'Upon receipt of written notice that the work is ready for final inspection and acceptance, the Architect shall promptly make such inspection, and when he finds the work acceptable under the Contract and the Contract fully performed he shall promptly issue a final certificate, over his own signature, stating that the work provided for in this Contract has been completed and is accepted by him under the terms and conditions thereof, and that the entire balance found to be due the Contractor, and noted in said final certificate, is due and payable.'

It was also provided in the contract that in the event that a dispute arose between the parties, that:

'It shall be the responsibility of the Architect to make written decisions in regard to all claims of the Owner or Contractor and to interpret the contract documents on all questions arising in connection with the execution of the work.'

It appears from the allegations of the complaint that the respondent fully and completely performed the contracts on his part, and the answer of the appellants admits that the respondent 'completed said contracts and submitted bills to defendants in or about the month of February, 1955.' It appears from the evidence that the respondent did, on February 24, 1955, file with J. Paul Beam, the then director of the Union County Schools, an itemized statement of the work done under the terms of the three contracts and the amount due him under and by virtue thereof. It was asserted by the claim so filed that there was due to the respondent a balance of $26,102.04. Included in the statement so filed was the claim for extra compensation by reason of rock excavation at the rate of $12 per cubic yard. The claim for the extra compensation for rock excavation was certified as being true by the respondent and the architect. It further appears that after the submission of the above statement, a partial payment in the amount of $3,194 was made, leaving a balance due under the contracts of $22,908.04. It appears from the record in this case that some dispute arose between the respondent and appellants as to whether or not the charges made by the respondent for rock excavation were correct. This is the basis of the controversy between the parties to this action.

It is conclusive from the claim filed by the respondent and certified by the architect, that the respondent had removed the number of cubic yards of rock stated in the claim. This was a decision of the architect as to the disputed yardage of rock excavation. The contract further provided that in the event there was a disagreement with the decision made by the architect, that such should be submitted to arbitration by the parties in accordance with the provisions of the current Standard Form of Arbitration Procedure of the American Institute of Architects, and that all findings of fact by the arbitrator should be conclusive and binding on both parties. It was further provided that demand for such arbitration, in connection with any dispute, should be filed with the architect and with the other party to the contract within thirty days after the dispute has arisen. The complaint alleges that the appellants, who disputed the decision of their own architect and agent, have not demanded arbitration, but that the respondent in an attempt to conclude this matter and to enforce payment by the appellants, did institute proceedings demanding arbitration of the dispute. It is further alleged that the appellants refused to submit the claim to arbitration.

This action was tried before the Honorable Steve C. Griffith, Presiding Judge, and a jury. At the conclusion of all the testimony, both the respondent and the appellants moved the Court for a directed verdict. The motion as made by the appellants was on the ground that the respondent did not demand arbitration in writing within thirty days after the dispute arose. The respondent moved for a directed verdict on the ground that the testimony conclusively showed that he had performed the contract on his part and that the certificate of the architect duly certified such fact, and since the appellant had not alleged bad faith, gross negligence or fraud on the part of the architect, such certificate was final and conclusive between the parties and could not be attacked by the appellants. The trial Judge directed a verdict for the respondent for the amount claimed in the complaint. The case is before the Court upon a number of exceptions challenging the ruling of the trial Judge.

One of the questions for determination is whether the respondent was barred from any recovery when he failed to demand arbitration within the period provided for in the contracts. The appellants assert that such a demand for arbitration was a prerequisite to any Court action. In the case of Jones v. Enoree Power Co., 92 S.C. 263, 75 S.E. 452, 454, this Court held, with reference to arbitration agreements, that:

'As to the validity of such contracts, the authorities with entire unanimity, now lay down this rule. An agreement to submit to arbitration all questions of law and fact that may arise under a contract is contrary to the public policy and void, as an attempt to oust the courts of their jurisdiction and establish in their place a contract tribunal. But an agreement that any particular issues of fact that may arise, such as quality of goods or amount of loss or damage, or the like, shall be submitted to arbitration, leaves the question of ultimate liability open for the decision of the courts and is valid; and if the contract expressly or by necessary implication makes the ascertainment of such fact by arbitrators a condition precedent to a right of action, it is a good defense to a suit on the contract that the plaintiff has, without such good excuse, failed to arbitrate. Freedom to contract for arbitration to this extent imports no invasion of the province of the courts, and there is no ground upon which a right so essential to the convenient transaction of modern business affairs can be denied.' See also in this connection Harwell v. Home Mutual Fire Ins. Co., 228 S.C. 594, 91 S.E.2d 273.

We do not think the foregoing rule is applicable here. It appears that in an action between the same parties, who are now before the Court in this case, that the respondent did, on March 22, 1957, based on a verified petition, have the Circuit Court of Union County, South Carolina, to issue a rule to show cause as to why the appellants herein should not be required to submit to arbitration the differences between the parties arising under the terms of the contracts here involved. The Circuit Judge held that the alleged right to arbitrate was factually in dispute and referred, after allowing the appellants here to answer, the issues to the Master of Union County for the purpose of taking the testimony and making a report of his findings of law and fact. Upon appeal to this court, this action of the Circuit Judge was affirmed. Hines v. Farr, 231 S.C. 513, 99 S.E.2d 48, 49. A hearing was held before the Master for Union County, who, after the taking of testimony, held that the respondent was not entitled to arbitration but must pursue his claim in the usual manner before a competent court of law. The findings and conclusions of the Master were confirmed by an order of the Honorable Bruce Littlejohn, Resident Judge of the Seventh Circuit. There was no appeal from this order. This holding of the Circuit Court is res adjudicata here because there was an identity of the parties and subject matter, together with an adjudication in the above action of the precise question sought to be raised in this case. Hence, the defense...