Litchfield Const. Co. v. City of New York

Citation155 N.E. 116,244 N.Y. 251
Decision Date31 December 1926
CourtNew York Court of Appeals


Action by the Litchfield Construction Company and another against the City of New York. Judgment of plaintiffs, on a verdict directed in part and dismissing counterclaim, was reversed in part by the Appellate Division, First Department (216 App. Div. 517, 215 N. Y. S. 450), and plaintiffs appeal.

Modified and affirmed.

See, also, 215 App. Div. 806, 213 N. Y. S. 845; 216 App. Div. 719, 214 N. Y. S. 872; 219 App. Div. 708, 219 N. Y. S. 854.Appeal from Supreme Court, Appellate Division, First Department.

Edward M. Grout and Dean Potter, both of New York City, for appellants.

George P. Nicholson, Corp. Counsel, of New York City (John F. O'Brien, Willard S. Allen, and William E. C. Mayer, all of New York City, of counsel), for respondent.


The Litchfield Construction Company entered into a contract in May, 1915, for the construction of certain sections of a subway or underground railroad, part of a route adopted by Rapid Transit Railway Commissioners for the city of New York in the year 1905. The contract called for the completion of the work sufficient to permit railroad operation by March 26, 1917, and the entire completion of the work by July 26, 1917. In fact, the work was ready for railroad operation only in March, 1919, and was entirely completed only in May, 1919. After completion of the work the plaintiffs brought this action to recover moneys which they claim are due to the Litchfield Construction Company from the city of New York under the provisions of the contract, and also to recover damages which they allege have been caused by breach of contract on the part of the city.

[1] The plaintiffs' claims embrace numerous separate items. The trial judge directed a verdict in their favor as to some of the items where there was no dispute as to the facts. Where claim rested upon disputed facts, the jury found in favor of the plaintiffs. Upon appeal to the Appellate Division the judgment was reversed as to some of the plaintiffs' claims and affirmed as to others. Since the defendant has not appealed from the judgment we may review only the claims of the plaintiffs for which redress has been denied. The plaintiffs claim that delay in completing the railroad was due solely to the failure of the engineer of the Public Service Commission to perform at stipulated times the duties imposed upon him under the terms of the contract. For consequent damages they seek to impose liability upon the city. The city denies such liability, and has retained, and refused to pay to the contractor a percentage of moneys earned under the contract, upon the claim that an amount far exceeding the sum retained is due from the contractor under a clause of the contract that it shall pay stipulated damages of $600 for each and every day the contractor shall be in default in completing the work necessary to put the railroad in condition for operation after expiration of the time fixed by the contract. For the excess of such stipulated damage the city has interposed a counterclaim.

The jury has resolved the dispute in favor of the plaintiffs. It has found that the delay in the work was caused solely by the failure of the engineer to carry out promptly, and in strict accordance with the terms of the contract, the duties which the contracting parties have agreed he should perform, and that this failure has increased the cost of the work and caused damage to the contractor in the sum of $813,000. As a result, the counterclaim of the city of New York was dismissed by the trial court, and the judgment in favor of the plaintiffs, entered thereafter, includes the damages so found, and also the sum of $71,090.15 payable under the terms of the contract with interest from December 31, 1919.

The contract purports to be made ‘between the city of New York, hereinafter called the city, acting by the Public Service Commission for the First District, hereinafter called the commission, party of the first part, and Litchfield Construction Company, a corporation organized and existing under the laws of the state of New York, hereinafter called the contractor, party of the second part.’ The Public Service Commission was given authority, subject to certain limitations, to make such a contract ‘for and in behalf of the city of New York.’ Rapid Transit Act, § 26; Laws 1891, c. 4, as amended. The commission has made this contract pursuant to the powers so given. The contractor under the terms of the contract agreed ‘to construct the part hereinafter described of a Rapid Transit Railroad with its appurtenances.’ The city agreed to pay the contractor stipulated sums of money in the manner and upon the terms and conditions set forth in the contract. The contractor was required to complete the railroad at a fixed date, or pay stipulated damages of $600 for each day's delay beyond such fixed date unless the time for completion was extended. The contract provided for continuous control of the work and supervision of the details of the work by the Public Service Commission or its engineer. The engineer was at various stages of the work required to give directions to the contractor as to the manner in which the work should be done. Without directions from the engineer or approval of plan of work or drawings prepared by the contractor the work could not proceed. Indeed, no work might be begun until the commission should issue to the contractor a permit authorizing him to proceed, and the contract provided that ‘no permits for excavations will be issued until the contractor has given satisfactory assurance to the engineer that the structural steel and other material needed for construction will be available.’ Specifications, § 18. The contract is too long for detailed analysis in this opinion. It is sufficient now to point out that throughout the contract are provisions which render impossible prompt performance of the work without the constant co-operation of the engineer. Though permit for excavation will not be granted without assurance to the engineer that structural steel will be available, it appears that such steel could not be fabricated until ‘working drawings to amplify the contract’ were furnished by the engineer to the contractor. From these working drawings the contractor was required to make shop drawings, which in turn required the approval of the engineer. The evidence shows that the speed with which the work could be carried on by a willing and efficient contractor was in large part dependent upon the promptness of the engineer, first, in furnishing the working drawings, and then in approving the shop drawings sent to him, and in giving other directions necessary for steady progress of the work.

[2] Concededly, the work could not be finished within the required time unless promptly begun and steadily and efficiently prosecuted. Even where the contract is silent as to the time within which the engineer must act, duty may be implied under such circumstances that he should act with due promptness, and not by delay or other act of commission or omission unreasonably hinder progress. In regard to the furnishing of working drawings by the engineer and approval by him of shop drawings submitted by the contractor, the contract expressly fixes the time during which he must act. ‘The first of these working drawings will be given to the contractor within thirty (30) days after this contract is delivered and the remainder from time to time as may be reasonably and necessarily required by the contractor, and the contractor shall promptly upon the delivery of this contract furnish a written statement to the engineer showing the order in which he desires the working drawings to facilitate the prosecution of his work, and this order will be followed so far as reasonably practicable and necessary.’ Specifications, § 4. Again, the contract provides that ‘no work called for by said working or shop drawings shall be done until the approval of the engineer be obtained, which must be given or refused within twenty (20) working days after delivery to him at his office of such drawings in duplicate.’ The plaintiffs claim that the engineer gave the contractor the first of the working drawings more than 30 days after the contract was delivered, and failed to give the contractor the remainder of the drawings from time to time as they were reasonably and necessarily required, and also failed to approve within reasonable time the shop or detailed drawings for the doing of the work.

There is at least some evidence that the engineer did not at all times act with the promptness stipulated in the contract. Indeed, the evidence shows without dispute that the first working drawings were not furnished within 30 days. Economical method of doing the work required that the structural steel should be erected as the excavation progressed. Because such steel was not at that time available the contractor used a slower and more expensive method. War was declared against Germany in April, 1917, as approximately the date set by the contract for substantial completion of the work. War conditions greatly increased construction costs thereafter. The jury has found that delay on the part of the engineer prevented delivery of structural steel at the time when excavation was being made and prevented completion of the contract before the declaration of war. Consequent damages it fixed at $813,000.

The Appellate Division has not held that there was no evidence to sustain the findings. It has decided as a matter of law that no liability rests upon the city for damages caused to the contractor by any delay of the engineer in carrying out his duties. It bases its conclusion in favor of the city upon the view that the engineer of the Public Service Commission acts in the performance of his duties as an officer of the state and not as an agent of the city. The...

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