Nat'l Contracting Co. v. Hudson River Water Power Co.

• Citation: 192 N.Y. 209,84 N.E. 965
• Parties: NATIONAL CONTRACTING CO. v. HUDSON RIVER WATER POWER CO.
• Decision Date: 19 May 1908
• Court: New York Court of Appeals

192 N.Y. 209

84 N.E. 965

NATIONAL CONTRACTING CO.

v.HUDSON RIVER WATER POWER CO.

Court of Appeals of New York.

May 19, 1908.

Appeal from Supreme Court, Appellate Division, First Department.

Action by the National Contracting Company against the Hudson River Water Power Company. From a judgment of the Appellate Division (118 App. Div. 665,103 N. Y. Supp. 641), affirming a judgment for defendant entered on the report of a referee, plaintiff appeals. Reversed, and new trial ordered.

See 170 N. Y. 439, 63 N. E. 450.

Gray, J., dissenting.L. Laflin Kellogg and Charles F. Brown, for appellant.

Richard L. Hand, for respondent.

CULLEN, C. J.

On May 18, 1900, the plaintiff and defendant entered into a written contract whereby the plaintiff, in consideration of payments to be made by the defendant, agreed to construct a dam across the Hudson river at a point near Palmer's Falls, in the county of Saratoga. Prior to the execution of the contract the defendant had solicited proposals for the work from various contractors, submitting to such parties the specifications of the proposed structure, and a letter explanatory of its general design. The letter stated that the dam would consist ‘of an earth dam with a central masonry core, of a masonry overfall dam and of a masonry intake dam.’ The specifications contained this provision: ‘(2) General Description. The dam is to be built partly of masonry and partly of earth approximately on the lines shown; but if the character of the materials or circumstances arise which render it advisable to change the location of the dam or to change the plans of the dam, the Hudson River Water Power Company expressly reserves the right to do so without payment of damages to the contractor, but all work actually completed will be paid for as per prices bid for the whole work.’ The plaintiff bid on the work, and thereupon negotiations proceeded between the parties which finally culminated in the execution of the contract, the subject of this action. That contract and the specifications which were incorporated in it differed materially from those which had been originally prepared and furnished to the various contractors. In the general description already quoted there were erased the words ‘partly’ preceding the word ‘masonry,’ and the subsequent words ‘and partly of earth,’ by drawing lines in red ink through the printed form of contract, so that this clause read ‘the dam is to be built of masonry.’ At many other points in the specifications, by similar means, erasure was made of all matters or provisions referring or applicable to a masonry core dam. The contract provided for the payment by the defendant, not of a gross sum, but of unit prices for the different kind of work that might be performed in building the structure. Payments were to be made monthly for 85 per cent. of the value of the work done as estimated by the engineer, full payment to be made on the completion of the work. In the executed contract the provision for payment to the contractor was modified by a further clause, which authorized the defendant to make such payment, instead of in money, in the defendant's first mortgage 5 per cent. bonds at 90 per cent. and accrued interest. Shortly after the execution of the contract the plaintiff commenced the prosecution of the work, and continued the same until August, 1900. About that time excavations in the river had disclosed that the bed rock, on which the river section of the dam was to rest, lay at a much greater depth than had been anticipated, which would result in great increase in the cost of the structure. In view of this increased expense the defendant commenced the consideration of a modification of the character of the dam, so as to substitute for a dam of masonry a dam of earth, with a masonry core, and, at least for a time, it determined to make the substitution. The defendant's engineer furnished to the plaintiff such plans and detailed drawings as were necessary at the time on the new or altered character of the structure, and required the plaintiff to prosecute the work in accordance therewith. Against this alternation the plaintiff protested. The defendant replied, asserting its right under the terms of the contract to so modify the plans of the structure. The plaintiff retorted that the action of the defendant was a breach of the contract, and refused to accede to the defendant's demand. Each party insisted on the correctness of the position it had assumed. The details of the controversy it is unnecessary to relate. It is sufficient to say that on the 23d of November, 1900, the plaintiff, after having given previous notice to that effect, withdrew its workmen and plants and ceased the prosecution of the work. Thereafter it brought this action to recover the balance claimed to be due to it for work done under the contract, and for loss of profit as damages for the breach of the contract. The answer of the defendant denied any breach on its part, and counterclaimed for damages for the failure and refusal of the plaintiff to carry out the contract. The referee before whom the case was tried rendered judgment dismissing the complaint, and awarded the defendant a recovery on its counterclaim. This judgment was affirmed by the Appellate Division unanimously, so far as it dismissed the plaintiff's complaint, and by a divided court as to the defendant's counterclaim.

The learned referee, while he felt that the disposition of the case was controlled by the decisions of the Appellate Division and of this court (170 N. Y. 439, 63 N. E. 450), made on previous appeals in the cause, passed on all the facts in controversy, so that the rights of each party could be fully protected, and in our discussion we shall not go outside of those findings, passing, till a later time, the claim that we are concluded by our former decision on a demurrer to one of the defendant's defenses. It is clear that the important question in this case is the right of the defendant under the terms of the contract to change the structure from a masonry dam to an earth dam with masonry core. We think it had no such right. Under the contract the plaintiff did not become obligated to furnish labor and materials for the prosecution of any work or the construction of any structure the defendant might designate. It agreed to furnish such labor and materials as might be necessary for the construction of a particular thing, to wit, a dam. It could not, under the contract, have been required to build an aqueduct, a bridge, a courthouse, or a railroad. Its obligation was not only confined to the construction of a dam, but to the construction of a particular kind of dam, to wit, a masonry dam. The provision that the dam was to be of masonry was as essential an element of the identity of the structure as was the provision that it was to be a dam. The circumstances attendant the preparation and execution of the contract clearly established this. The original specifications, before erasure, contained elaborate provisions, applicable, appropriate, and necessary for an earth dam with masonry core. Every one of these provisions was erased in the contract executed by the parties. The contract, however, contained this provision: ‘(F) Alterations. It is further agreed that the engineer may make alterations in the line, grade, plans, form, position, dimensions, or material of the work herein contemplated, or of any part thereof, either before or after the commencement of construction. If such alterations diminish the quantity of work to be done, they shall not constitute a claim for damages, or for anticipated profits on the work that may be dispensed with; if they increase...