J.F. Fitzgerald Const. Co. v. Southbridge Water Supply Co.

• Decision Date: 25 October 1939
• Citation: 23 N.E.2d 165,304 Mass. 130
• Parties: J. F. FITZGERALD CONST. CO., Inc. v. SOUTHBRIDGE WATER SUPPLY CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

304 Mass. 130

23 N.E.2d 165

J. F. FITZGERALD CONST. CO., Inc.

v.SOUTHBRIDGE WATER SUPPLY CO.

Supreme Judicial Court of Massachusetts, Suffolk.

Oct. 25, 1939.

Exceptions from Superior Court, Suffolk County; O'Connell, Judge.

Petition by the J. F. Fitzgerald Construction Company, Inc., against the Southbridge Water Supply Company to enforce an award of arbitrators. The award was accepted and confirmed and judgment was ordered to be entered for petitioner, and respondent excepted to the denial of its motion to set aside the award and to the refusal to grant certain requests for rulings.

Exceptions sustained.D. Greer and E. F. Dalton, both of Boston, for petitioner.

R. Wait and P. H. Rhinelander, both of Boston, for respondent.

RONAN, Justice.

By contract dated December 14, 1936, the petitioner agreed to construct an earth dam and a reservoir, and to lay a pipe line for the respondent as an addition to its plant and equipment in the conduct of its business as a water company. The compensation to be paid the petitioner was set forth in a schedule of prices which, in nearly every instance, was based upon a unit measurement of quantity and, in a few instances, upon a lump sum for doing a particular portion of the work. The quantities shown in this schedule of prices were expressly stated to be only approximate, and, as to the items for which a unit price was stated, the compensation was to be computed in accordance with the actual amount of work done at the rate fixed for the unit of measurement. One of the principal portions of the work to be performed was the erection of an earth embankment for the dam. The contract provided that the petitioner should secure the material from borrow pits upon the respondent's property. The estimated amount of material required was set forth in the contract as fifty-two thousand cubic yards and the compensation at the rate of 40 cents a cubic yard. The final estimate of the engineer showed that only forty-two thousand four hundred twenty cubic yards were used for this embankment; for this the petitioner was paid at the prescribed rate, which, according to the contract, was to be ‘full compensation for the preparation of the dam site, for spreading and compacting the earth, removal of stones and roots, for trimming and grading, for wetting and for all work and expense incidental thereto * * *.’ The petitioner's compensation for laying the pipe line was $18,218, which was full compensation for the removal of all surface material and obstructions, all excavation, including ledge and boulders * * *.' The parties make no contention that the contract has not been fully performed.

Upon the completion of the contract, the petitioner, under date of September 17, 1936, wrote the respondent that the appearance of the borrow pits indicated that the material to be excavated would be gravel, but that it had encountered a very heavy excavation consisting in large percentage of boulders and rock which had increased the cost of doing the work, and that ‘we maintain that such excess cost was caused by reason of the extreme divergence in the character of the material to be excavated from that which we were justifiably led to expect by reason of the data furnished and the appearance of the test pits indicated, together with the discrepancies in conditions along pipe line and in pay quantities.’ The letter also directed the respondent's attention to article 13 of the contract and requested that, in accordance with this article, an adjustment of prices be made, ‘in order that we may receive a fair and equitable reward for our labors.’ The respondent did not make any changes in the contract prices. The petitioner, on October 8, 1937, submitted a bill for ‘additional costs beyond our control as described’ in its letter of September 17, 1937. The bill set forth a claim in ten items amounting to $37,451.76. The first item was for ‘Additional cost constructing earth embankment due to conditions of borrow pits $18,564.22,’ and another item was for ‘Added cost laying water pipe-conditions not shown $9,943.24.’

The contract in article 3 provided that the engineer was in the first instance to be the interpreter of the contract, and that all work was to be done in such a manner as to satisfy him that the intent of the contract was observed. He was to decide all claims of either party and his decisions were to be final ‘except as to the element of time and as to financial considerations involved, which, if no agreement in regard thereto is reached, shall be subject to arbitration as provided under Article XVI * * *.’ This latter article provided that the decisions of the engineer that were not final under article 3 were to be subject to arbitration under the rules of a certain designated association upon the demand of either party. Article 13 provided that ‘If any change in the character, quality or quantity of the work shall, in the judgment of the Engineer, be so material as to warrant either an increase or decrease of the Contractor's compensation which can be equitably effected by an adjustment of any price or prices quoted in the Proposal, in the Schedule of prices therein, the Engineer shall have authority, subject to approval by the Owner, to make such adjustment of said price or prices as he may deem equitable, and the Contractor's compensation shall be computed accordingly.’ This article was not to apply to changes in the quantity of work unless it resulted in an increase or decrease of more than twenty-five per cent of the estimated quantity stated in the contract.

The engineer refused to make any adjustment and the petitioner, purporting to act under article 16, presented its claim to a board of arbitration, which made an award of $18,575. The arbitrators refused to specify the items that were included in this award, but it is apparent from the items submitted to the board that the award included compensation under both or either of the claims arising from building the embankment and laying the pipe line. Upon petition this award was accepted and confirmed in the Superior Court and judgment was ordered to be entered for the petitioner. The respondent excepted to the denial of its motion to set aside the award and to the refusal to grant certain requests for rulings. The respondent urged before the board, before the Superior Court and before this court that the items upon which the award was made were not arbitrable under the contract or under the statute, G.L. (Ter.Ed.) c. 251; that the board had no jurisdiction to make the award nor had the court to confirm it; and that proceedings for arbitration were begun after the time permitted by the contract.

If the parties of their own accord and outside of court saw fit to submit to arbitration, without restriction or condition, the whole matter in dispute, including all questions of law and of fact, then the decision of the arbitrators upon the subject matter, in the absence of fraud, is binding and conclusive upon the parties, even though the arbitrators may have committed an error of law in reaching their conclusion. Jones v. Boston Mill Corp., 6 Pick. 148;Smith v. Boston & Maine Railroad, 16 Gray 521;Rundell v. La Fleur, 6 Allen 480;Norcross v. Wyman, 187 Mass. 25, 72 N.E. 347;Phaneuf v. Corey, 190 Mass. 237, 76 N.E. 718;Darrow v. Braman, 201 Mass. 469, 88 N.E. 5.

The validity of the award is challenged not merely on the ground that the arbitrators have made an erroneous decision but upon the ground that they had no right to make any decision at all. In other words, the respondent's contention is that the board was not empowered to hear and determine the matter. That point is open. If authority was lacking, then the award is void. Mickles v. Thayer, 14 Allen 114, 121;Boyden v. Lamb, 152 Mass. 416, 25 N.E. 609;Republic of Colombia v. Cauca Co., 190 U.S. 524, 23 S.Ct. 704, 47 L.Ed. 1159; The Atlanten, 252 U.S. 313, 40 S.Ct. 332, 64 L.Ed. 586;Marchant v. Mead-Morrison Mfg. Co., 252 N.Y. 284, 169 N.E. 386. The authority of the arbitrators depends upon the terms of the agreement of submission. Towne v. Jaquith, 6 Mass. 46, 4 Am.Dec. 84;Phippen v. Stickney, 3 Metc. 384;Haven v. Winnisimmet Co., 11 Allen 377,87 Am.Dec. 723;Washburn v. White, 197 Mass. 540, 84 N.E. 106. The burden was upon the petitioner to show that the contract provided for the settlement of this particular claim by arbitration. Norcross v. Wyman, 187 Mass. 25, 72 N.E. 347;Morgan v. Murdough, 216 Mass. 502, 104 N.E. 455;Marchant v. Mead-Morrison Mfg. Co. 252 N.Y. 284, 169 N.E. 386;Lehman v. Ostrovsky, 264 N.Y. 130, 190 N.E. 208.

The petitioner sought compensation in excess of that fixed by the contract because of changes in the contract prices, which it requested should be effected under article 13. Upon the failure...