M. J. Daly & Sons, Inc. v. New Haven Hotel Co.

• Decision Date: 25 January 1917
• Citation: 99 A. 853,91 Conn. 280
• Court: Connecticut Supreme Court
• Parties: M. J. DALY & SONS, Inc., v. NEW HAVEN HOTEL CO. et al.

99 A. 853

91 Conn. 280

M. J. DALY & SONS, Inc.,

v. NEW HAVEN HOTEL CO. et al.

Supreme Court of Errors of Connecticut.

Jan. 25, 1917.

Appeal from Superior Court, New Haven County; Joel H. Reed, Judge.

Suit by M. J. Daly & Sons, Incorporated, to enforce a builders' lien against the New Haven Hotel Company and others. Judgment for plaintiff, and defendant company appeals. Error and new trial ordered.

May 20, 1911, the plaintiff entered into a written contract with the defendant hotel company, whereby it agreed to install in the Hotel Taft, then in process of erection, its high pressure steam connections and low pressure and hot blast heating and mechanical ventilation system for $70,500. In so far as the high pressure steam heating system was concerned the plaintiff completed its contract, and no question is presented relating thereto. It sublet to Rourke Bros. & Co., the metal duct work in the hot blast and ventilating system for $11,696. The form of contract executed by the plaintiff and the hotel company was that in general use by the American Institute of Architects. By article VI the work contracted for was to be completed by November 1, 1911, and liquidated damages at the rate of $75 a day were provided for subsequent delay. Article V was as follows:

"Should the contractor at any time refuse or neglect to supply a sufficiency of properly skilled workmen, or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence, or fail in the performance of any of the agreements herein contained, such refusal, neglect or failure being certified by the architects, the owner shall be at liberty after three days' written notice to the contractor, to provide any such labor or materials, and to deduct the cost thereof from any money then due or thereafter to become due to the contractor under this contract; and if the architects shall certify that such refusal, neglect or failure is sufficient ground for such action, the owner shall also be at liberty to terminate the employment of the contractor for said work, and to enter upon the premises and take possession for the purpose of completing the work included under this contract, of all materials, tools and appliances thereon, and to employ any other persons to finish the work, and to provide the material therefor; and in case of such discontinuance of the employment of the contractor, it shall not be entitled to receive any further payment under this contract until the said work shall be wholly finished, at which time, if the unpaid balance of the amount to be paid under this contract shall exceed the expense incurred by the owner in finishing the work, such excess shall be paid by the owner to the contractor, but if such expense shall exceed such unpaid balance, the contractor shall pay the difference to the owner. The expense incurred by the owner as herein provided, either for furnishing materials or for finishing the work, and any damage incurred through such default, shall be audited and certified by the architects, whose certificate thereof shall be conclusive upon the parties."

On or about May 1, 1912, the architects decided to install new duct work and make certain changes in the hot blast heating and ventilating system as originally designed and made detailed plans and drawings therefor. At this time the plaintiff had substantially completed all the work under its contract, and only a few minor details of it remained uncompleted. All the heating and ventilating ducts were installed and in operation, but certain parts of the hotel were not properly ventilated. May 11, 1912, the plaintiff, through the Rourkes, continued to be engaged in the completion of the work and in remedying such defects therein as then existed. The uncompleted work necessary to a full compliance with the contract could have been done at an expense of not more than $500. On that day the architects gave to the hotel company a certificate of default pursuant to article V upon which the plaintiff's employment was terminated. At no time prior to May 11, 1912, had the plaintiff failed in the performance of any of the agreements contained in its, contract except as to the time of completion of the work, and this the defendant had waived. The plaintiff was engaged in the work of completing its contract when, on May 11, 1912, the architects gave the defendant the certificate of default, and at this time the architects were deciding upon and preparing plans for a changed system. The architects knew when they decided upon these changes and issued the certificate of default that the plaintiff had substantially completed its contract, and that a small expenditure of money would suffice to correct the defects and supply the omissions in the work as required by the contract. Subsequently the architects authorized and approved an expenditure of $8,687.16 by the defendant in constructing the new work and the changes decided upon in replacing the old. The defendant was advised by the architects that these changes were cheaper than the reconstruction of the ducts according to the original plans, but this was not correct. Nearly all of this expenditure by the defendant was not required for the completion of the plaintiff's contract, but was occasioned by the new and changed system adopted in substitution for that called for in the contract Between August 12, 1911, and February 12, 1912, the defendant paid the plaintiff in eight payments the sum of $57,310. Of this sum $9,800 was paid on account of the Rourke Bros. & Co.'s contract. The architects did not act in good faith either in giving their certificate of default upon which the plaintiff's employment was terminated or in finding and certifying that the expenditure of $8,687.16 was properly chargeable against the plaintiff. The plaintiff performed extra work to the value of $4,957.14 as determined by arbitration under the terms of the contract. As to the propriety of the allowance of this item to the plaintiff no question is made. The unpaid balance of the contract price is $13,616.58.

Leonard M. Daggett and Samuel H. Fisher, both of New Haven, for appellant. Terrence F. Carmody and Walter E. Monagan, both of Waterbury, for appellee.

PRENTICE, C. J. (after stating the facts as above). The complaint in this ease seeks a foreclosure of a mechanic's lien filed by the plaintiff against real estate, of the defendant hotel company, hereinafter, for convenience sake, referred to as the defendant, to secure the sum of $18,573.72, claimed to be due the plaintiff for labor performed and materials furnished in the construction of a building thereon under and by virtue of a contract with the owner. No objection was made below, or is made here, to the validity of the lien or the right of the plaintiff to have a foreclosure judgment except such as is addressed to the existence of an indebtedness for the labor performed and materials furnished upon the building. The plaintiff alleges that the sum named is due; the defendant, that nothing is due. If anything is shown by the evidence to be due, the lien is good for that amount, and may be foreclosed for that amount. Nichols v. Culver, 51 Conn. 178, 180; Marston v. Kenyon, 44 Conn. 349, 356. The fundamental question of the case, therefore, relates to the existence of such indebtedness and its amount. Its answer is to be determined by recourse to the ordinary rules of law.

As to the $4,957.14 alleged by the plaintiff to be due under an award of arbitrators made in conformity with a provision of the contract, no objection is made to the plaintiff's right to charge that sum against the defendant. Its right to charge any portion of the balance of the claimed indebtedness is stoutly denied, and many of the alleged errors of the trial court gather around its conclusion that the sum of $12,690 was properly chargeable as a balance due for labor and materials performed and furnished in the execution of the contract.

The trial court found that the plaintiff substantially performed its contract, that his defaults were not willful, and that an expenditure of $500 would have accomplished full performance. It accordingly held that there was due to the plaintiff, secured by the lien, the unpaid balance of the contract price, less $500, to wit, $12,690, and rendered its judgment of foreclosure for that sum. Assuming the facts to be as found, the court's action was that which, the counterclaim aside, the law sanctions. Pinches v. Swedish Evangelical Church, 55 Conn. 183, 187, 10 Atl. 264; Jones v. Marlborough, 70 Conn. 583. 589, 40 Atl. 460; Jones & Hotchkiss v. Davenport, 74 Conn. 418, 420, 50 Atl. 1028; Morehouse v. Bradley, 80 Conn. 611, 613, 69 Atl. 937; O'Loughlin v. Poll, 82 Conn. 428, 429, 74 Atl. 763.

The allegations of the complaint do not place limitations upon the plaintiff's right to a foreclosure of its lien for whatever sum is rightfully due to it on account of the construction of the building. They are sufficient to support a judgment of foreclosure upon whatever theory or basis the amount of that indebtedness is to be arrived at, whether it be that the plaintiff performed its contract, or substantially performed it, or was wrongfully prevented by the defendant from performing it. Doubtless counsel for the defendant are right in saying that the complaint gives evidence that the plaintiff was not looking to a recovery upon the basis of performance, since the averment that the work was done under a contract providing for payment after completion is unaccompanied by one of completion. But it does not follow from that fact that the amount for which foreclosure may be had is to be determined upon direct proof of the reasonable worth of the labor performed and materials furnished, and not with reference to the contract price as presumably embodying an element of profit. On the contrary, the well-established rule in this and other jurisdictions is that the reasonable...