James I. Barnes Const. Co. v. Washington Tp. of Starke County

• Decision Date: 04 September 1962
• Docket Number: No. 19721,No. 1,19721,1
• Citation: 134 Ind.App. 461,184 N.E.2d 763
• Parties: JAMES I. BARNES CONSTRUCTION COMPANY, a Co-Partnership, Appellant, v. WASHINGTON TOWNSHIP OF STARKE COUNTY, Indiana, and Washington School Township of Starke County, Indiana, Appellees. . Division
• Court: Indiana Appellate Court

Page 763

184 N.E.2d 763

134 Ind.App. 461

JAMES I. BARNES CONSTRUCTION COMPANY, a Co-Partnership, Appellant, v. WASHINGTON TOWNSHIP OF STARKE COUNTY, Indiana, and Washington School Township of Starke County, Indiana, Appellees.

No. 19721.

Appellate Court of Indiana. Division No. 1.

Sept. 4, 1962.

Rehearing Denied Oct. 19, 1962.

Nichols & Nichols, Knox, Stevens & Wampler, Plymouth, for appellant.

Paul Reed, Knox, for appellees.

MYERS, Judge.

This is an action commenced by appellant, James I. Barnes Construction Company, a partnership, to recover the last payment due under a construction contract for the erection of a grade school building in Washington Township, Starke County, Indiana. Appellees filed an answer and cross-complaint asking damages for defective construction work, and alleging that the engineer's certificate was not issued in the exercise of honest judgment and was issued through gross mistake of fact.

A trial by jury was had resulting in a verdict in favor of appellees and against appellant. Damages were assessed at $22,500. The court rendered judgment upon the verdict in favor of appellees for the full amount of the damages. Appellant duly filed its motion for new trial, which was overruled, and this appeal followed.

The evidence most favorable to appellees reveals the following:

On November 12, 1958, appellees, by the township trustee and the township advisory board, entered into a written agreement with appellant for the construction of a school house according to certain plans and specifications prepared by a firm of professional engineers registered in Indiana, known as William H. Kashner & Associates. It was provided that appellant was entitled to final and complete payment upon receipt of an engineer's certificate of substantial completion. The contract price was in the total sum of $143,878. Payment thereof was to be made by the township trustee.

Thereafter work on the building was commenced and continued throughout the winter, spring and summer of 1959. An employee of Kashner & Associates, by the name of Zechiel, supervised the job and was responsible for its completion. Some time about August 21, 1959, there was a meeting at the school consisting of Mr. Kashner, Zechiel, the township attorney, the advisory board members, and the township trustee. At that time they inspected the building and in particular discussed the floors. The trustee said he would not accept the floors because they were composed of poured concrete which was very uneven. Appellant's representatives said they would do their best to straighten them out, and suggested the use of an asphalt compound called Sonomend. Subsequently, work was done on the floors with the use of Sonomend in an attempt to level them.

On September 8, 1959, a final certificate of payment was issued to the trustee on behalf of Kashner & Associates, signed and delivered by Zechiel. It showed the value of work done and materials furnished as being in the sum of the contract price, which was $148,130. Previous payments were shown to be $131,359.50, leaving an amount due of $1,957.50 for the contractor as of september 8, 1959, and a balance due of $14,813 to be paid within sixty-one days.

The school was supposed to have been open to students on September 8, 1959, but because work continued to be done on the premises during the following week, the school was not officially opened until September 14, 1959. All other schools in the vicinity had commenced the week of September 8th.

After receiving the engineer's certificate, the trustee paid Kashner & Associates the balance due them, but refused to pay apopellant its balance due on the advice of the advisory board and his attorney.

Appellant argues that the verdict of the jury was not sustained by sufficient evidence. In support of this argument, appelland claims that the condition precedent to final payment was met when the engineer's certificate was issued on September 8, 1959; that, while this is not conclusive as to substantial performance on the part of the contractor, it must be regarded as prima facie correct, which can only be overcome by a showing of fraud or mistake; that this burden rested with appellees, and that they failed to show by competent evidence that there was such fraud or mistake.

It is a rule of law in Indiana that where a contract provides that work shall be done to the satisfaction, approval or acceptance of an architect or engineer, he is thereby constituted a sole arbitrator by the parties, who are bound by his decision in the absence of fraud or such gross mistake as to imply bad faith or a failure to exercise honest judgment. Lake Mich. Water Co. v. U. S. Fidelity, etc., Co. (1919), 70 Ind.App. 537, 541, 123 N.E. 703. His decision is not conclusive to the extent that it cannot be reviewed by a court. It is only prima facie correct, and the burden is upon the other parties to show fraud or mistake. McCoy v. Able et al. (1892), 131 Ind. 417, 423, 30 N.E. 528, 31 N.E. 453.

At the trial of the case, appellant introduced into evidence the contract and the engineer's certificate for final payment and rested. In so doing, appellant established a prima facie case.

In answer to this, appellees introduced into evidence as exhibits eighteen photographs purporting to be fair pictorial representations of the floors, foundation and walls of the school. Appellant calls attention to the fact that these pictures were taken only two days before the trial, which was approximately a year and a half after the engineer's certificate had been issued. However, appellant made no objection to the introduction of this evidence on that ground. In fact, most of the photographs were admitted without any objection. Thus, it became a matter for the jury to determine their weight and materiality as evidence.

Witnesses, consisting of the photographer, a contractor, superintendent of schools, two members of the advisory board, a farmer who lived near the school, and the township trustee...