Jefferson Hotel Co. v. Brumbaugh

• Decision Date: 12 March 1909
• Docket Number: 888.,852
• Parties: JEFFERSON HOTEL CO. v. BRUMBAUGH et al. ARENTS v. MEREDITH & COCKE et al.
• Court: U.S. Court of Appeals — Fourth Circuit

168 F. 867

JEFFERSON HOTEL CO. v. BRUMBAUGH et al.

ARENTS v. MEREDITH & COCKE et al.

Nos. 852, 888.

United States Court of Appeals, Fourth Circuit.

March 12, 1909

[Copyrighted Material Omitted]

Henry R. Miller, John Pickrell, and L. L. Lewis, for appellants.

Charles V. Meredith and Preston Cocke (James L. Harman, on the brief), for appellees.

Before GOFF and PRITCHARD, Circuit Judges, and DAYTON, District Judge.

DAYTON District Judge.

The matter in controversy here arises under a building contract between Brumbaugh and the Jefferson Hotel Company for a part of the rebuilding of the Jefferson Hotel in Richmond, Va which had been partially destroyed by fire. Jurisdiction in equity is acquired by reason of the bill setting up and seeking to enforce a mechanic's lien against the property by the contractor for labor done and materials furnished under the contract. To the bill a number of subcontractors who had filed mechanics' liens as such, are made parties defendants. The contractor claims in his bill for a balance of contract price and for extra work performed. The hotel company defends because (a) of contract being uncompleted, (b) of denial of contractor's claims for extras, and (c) of its own claim against the contractor for delays in completion of the contract within the time fixed by it. The contract was executed in duplicate in July, 1901-- the exact day is matter of dispute-- and provides that the contractor was to furnish all labor and material necessary for the reconstruction according to plans and specifications made by A. H. Elwood & Sons, architects, 'who will also superintend the work'; that the work was to be completed on or before the 1st day of October, 1901, 'excepting delays caused by the party of the second part'-- the hotel company-- and in default of completion within the time fixed the contractor was to pay a penalty of $150 for each day of delay thereafter, and, on the other hand, he was to be paid a bonus of $150 for each day the contract might be completed prior to said October 1st. The contract price of $48,700 was to be paid from time to time as the work progressed upon estimates made by architects, with reservations of 20 per centum until the work was completed. The conditions of the plans and specifications material to this controversy are:

'Inspection: Work and materials to be subject to inspection at all times by the superintendent. Should the contractors refuse or neglect to remove work or material declared by the superintendent to be faulty within three days after having been notified in writing by the superintendent to so remove it, then the owner shall have the right to have such faulty work or material removed, and proper work or material substituted therefor, at the contractors' expense. Should the contractors refuse or neglect at any time during the progress of the building to supply a sufficiency of materials or workmen, or cause any unreasonable delay of the work, or fail or refuse to comply with any of the articles of agreement, including these specifications, the owner shall have the right to enter upon and take possession of the premises and provide materials and workmen sufficient to finish said work, after three days' written notice, directed and mailed to the residence of or delivered personally to the contractors by the owner, or by the superintendent.

'The expense of finishing said work to be deducted from the contract price.

'Changes: The owner reserves the right to make any changes that he may decree expedient during the progress of the work, without invalidating any agreements or contracts; but previous to any change being made the price of such change shall not be considered an extra unless written orders have been given therefor, and the price thereof stipulated in such order.

'Payments: Payments will be made during the progress of the work upon the estimates of the superintendent; twenty per cent. of the value of all work done being always retained until the completion of the work and a final settlement has been made, after which a final estimate shall be made covering all balances due.

'Payments made during the progress of the work shall not be considered as an acceptance either of work or material, but the contractor shall be held to all the conditions of the contract until all the work is completed and accepted.

'Measurements: Scale measurements upon the drawings are never to be taken where figures for the same are given either in drawings or in specifications. Any discrepancy appearing between plans, details and specifications shall be referred to the architect for decision and in no case shall the work proceed in uncertainty, but the contractors shall apply to the architect who will supply all further details or explanations as may be necessary for the full understanding of the work and such further details and directions shall be received and executed as a part of this contract.'

In addition to this contract, the hotel company awarded some 11 other independent contracts for elevator work, kitchen apparatus, cold storage, electric work, heating, plumbing, ventilation, machinery, tile and marble work, art and skylight glass, and for wrecking and removal of old walls.

The cause was referred to a special master, who was directed to ascertain and report (1) what amount, if any, was due to the plaintiff by the defendant under the contract; (2) what amounts, if any, were due subcontractors under mechanics' liens filed by them; (3) all liens against the hotel company's real estate; and (4) any other pertinent matter deemed necessary by himself or required by the parties to be stated. The special master took a large amount of testimony, and returned an elaborate report, to which exceptions were taken by both plaintiff and defendant hotel company. The plaintiff, however, withdrew his objections and now abides by the report, failing to perfect a cross-appeal taken by him. The defendant hotel company insisted upon its exceptions, but they were overruled by the court below, the master's report in all respects was confirmed, and a decree entered holding the hotel company liable for a balance of $14,209.37 of contract price and for $13,884.13 for extra work done. From this decree the hotel company has appealed.

Meanwhile, on the same day this decree was entered, Meredith & Cocke and James L. Harman, attorneys, filed their petition in the cause, alleging, in substance, that they were employed by Brumbaugh, the contractor, to enforce his mechanic's lien against the hotel company, for the benefit of his subcontractors, to the extent of some $28,000; that, as to such subcontractors, Brumbaugh virtually acted in the capacity of trustee; that the sums found due by the master's report were not sufficient by about 2 per cent. to pay the claims of such subcontractors; that Brumbaugh was bankrupt and nonresident of the state; that they were entitled to reasonable fees as such attorneys, had a lien therefor upon the fund, that a large majority of the subcontractors had voluntarily admitted the existence of such lien, and had offered to pay them 15 per cent. of their claim in satisfaction thereof, which they were willing to accept, although insufficient, in friendly adjustment, inasmuch as such subcontractors had their own counsel, who had to be paid; that several of said subcontractors, however, declined to consent to such payment, wherefore they ask that the court decree them 15 per cent. of the claims of such subcontractors declining to pay. Upon this petition no process issued, but, by the decree complained of entered the same day this petition was filed, its prayer was granted, and 15 per cent. of the fund was awarded and decreed to them. Among the subcontractors whose claims were so decreed was one in favor of George Arents, assignee of the Richmond Woodworking Company.

This company had not only filed its mechanic's lien, but had also given the notices required by statute to the hotel company, whereby the hotel company, by reason of having made payments to its contractor subsequent to such notice, had become personally liable for the debt, and it was entitled to be paid in full prior to all other subcontractors' claims-- except one other in the same condition-- out of the fund found due from the company to Brumbaugh, the contractor. This claim was assigned by the woodworking company to George Arents, who substantially owned all the stock of the hotel company. Arents had employed the same counsel to represent him in this claim as represented the hotel company and no contractual relation existed between him and the petitioning attorneys, nor did he in any way consent to the 15 per cent. allowance agreed by other subcontractors. The court, however, allowed 15 per cent. of his claim to these attorneys, to which action he has taken the appeal named second in the caption, and heard by us conjointly with the original cause.

The very able and exhaustive arguments made by counsel have been largely devoted to discussion of the voluminous quantity of evidence produced before the master, and, independent of a few legal principles involved, the controversy turns almost wholly upon questions of fact, the evidence as to which in most instances is conflicting.

It is important at the threshold to determine the legal effect of the master's report and the decree of the court below confirming it. It is insisted by counsel for the contractor that the allegations of defendant company's answer constituted a consent on its part to refer the cause to a special master to determine, practically as an arbiter, all the matters in controversy, and that therefore it was bound by his report, and could only impeach it by apt allegations in pleading, and by satisfactory evidence,...