Pittsburgh Const Co. v. West Side Belt R. Co.

• Decision Date: 13 February 1907
• Docket Number: 30.
• Citation: 151 F. 125
• Parties: PITTSBURGH CONST. CO. v. WEST SIDE BELT R. CO. et al.
• Court: U.S. District Court — Western District of Pennsylvania

151 F. 125

PITTSBURGH CONST. CO. v. WEST SIDE BELT R. CO. et al.

No. 30.

United States Circuit Court, W.D. Pennsylvania.

February 13, 1907

Reed Smith, Shaw & Beal, for plaintiff.

Willis McCook and Lee & Mackey, for defendant.

BUFFINGTON Circuit Judge.

This is an action of assumpsit brought by the Pittsburgh Construction Company, a corporation of the state of West Virginia, against the West Side Belt Railroad Company, a corporation of Pennsylvania, designated in this opinion as the 'Belt Road,' and John S. Scully and Theodore N. Barnsdall citizens of said state.

The Belt Road on April 17, 1901, entered into a written contract with A. S. Petrie to construct its proposed line of railway. On April 25, 1901, it authorized Petrie to sublet this contract to the plaintiff company, which company was chartered in West Virginia May 14, 1901. On May 24, 1901 Petrie made a new contract with the plaintiff (which was substantially a duplicate of his contract), a copy of which first contract is embodied in the statement of claim as Exhibit A. Contemporaneously with the execution thereof defendants, by indorsement thereon, stipulated:

'For value received, the West Side Belt Railroad Company and John S. Scully and Theodore N. Barnsdall do hereby guarantee and become surety for the payment of the money mentioned in the within contract as the same becomes due and payable. In witness whereof the said West Side Belt Railroad Company has hereunto set its common corporate seal, by the hand of its president, attested by its secretary, and the said John S. Scully and T. N. Barnsdall have hereunto set their hands and seals this 24th day of May, A.D. 1901.' Thereafter the plaintiff proceeded under said contract, and about June, 1903, turned over the road to the Belt Road in pursuance of the notice following:

'In reply to your letter of June 11th, will say that we will accept the work as completed. We do not intend to make any reduction for imperfect ditching. We do not, however, mean by this acceptance of the work to waive any claim we may have for damage resulting from any violation of the contract with you. We therefore ask you to remove at once all of your engines, plant, and equipment from the railroad tracks, as they greatly interfere with the operation of the road. And we further notify you that any movement of your trains or engines on our tracks from this date must be with the consent and under the direction of our superintendent, Mr. C. V. wood. Otherwise, we will hold you liable to any damages resulting from collision or interruption or delay of our traffic.'

Petrie, who made the original contract, was not a contractor. It was never intended he should build the road, or was the contract given to him for that purpose. He was an officer of the Belt Road, who resigned to qualify him to take the contract, and become the conduit through whom the contract could be sublet to the plaintiff company, and through whom a portion of the proposed price of construction was, through the agency of Barnsdall and Scully, to be returned to all the stockholders of the Belt Road. The contract of Petrie with the plaintiff seems, therefore, to have been treated as between plaintiff and the Belt Road.

After the construction of the Belt Road its chief engineer sent the following notice to the plaintiff:

'I have about completed the final estimate for your work under your contract with the West Side Belt Railroad Company, and as chief engineer mentioned in the contract, to whom has been committed the final decision of all disputes between the parties, before finally submitting the estimate to you, I wish to notify you that the railroad company claims of me a deduction or credit on the final estimate of the damages sustained by the railroad company owing to the delay in the completion of the contract. If you wish to be heard on this question, I will meet your representatives and the representatives of the railroad company at my office in the Farmers' Bank Building on Monday, September 21st, at 10 o'clock a.m.; or, if this may be inconvenient to you, upon your suggestion I will try and fix a date and place that will suit your convenience. Please let me know what your wishes are in the matter.'

Under this notice a large amount of testimony was taken; the Belt Road and plaintiff being each represented by counsel. Later notice was given to Scully and Barnsdall by the following notice:

'To A. S. Petrie, Pittsburgh Construction Company, West Side Belt Railroad Company, John S. Scully, T. N. Barnsdall, J. C. Bower, McCleave & Wendt and Reed, Smith, Shaw & Beal: You are hereby notified that upon Monday, January 16, 1905, at 10 o'clock a.m., at my office, Room 2107, Farmers' Bank Building, Pittsburgh, Pa., I will hold a final meeting under the provisions of the clause of the article of agreement dated the 24th day of May, 1901, between the Pittsburgh Construction Company of the first part and A. S. Petrie of the second part, which clause reads as follows, viz.: 'And it is mutually agreed and distinctly understood that the decision of the chief engineer shall be final and conclusive in any dispute which may arise between the parties to this agreement relating to or touching the same, and each and every of said parties do hereby waive any right of action, suit or suits, or other remedy in law, or otherwise, by virtue of said covenants, so that the decision of the said chief engineer, James H. McRoberts, shall in the nature of an award be final and conclusive on the rights and claims of said parties.' You are requested to be present at this meeting if you see fit.' There is a dispute as to whether Scully and Barnsdall took any part in the proceedings. There is no question, however, they had notice, and that counsel for them requested an opportunity to examine the testimony, and thereafter made no request for further hearing and made no protest. On October 24, 1905, McRoberts made a report or award in which 'he finds the bills and claims of the Pittsburgh Construction Company, subcontractor, to amount to $972,112.25, itemized as follows: Final estimate $610,321.65; force and extra work $361,790.60-- $972.112.25. Of this account, as rendered, your arbiter has rejected $98,623.64 as excessive, irrelevant, and unjust, leaving $873,488.61 in favor of the subcontractor. Of this amount your arbiter finds $540,737.63 as having been paid by the West Side Belt Railroad Company, on account, as surety for Petrie, the contractor, leaving as against Petrie $332,750.98, which will become due and payable as of this date.'

This suit is brought against Petrie's guarantors to recover said sum of $332,750.98, and a verdict for such amount, with interest, was taken for the plaintiff. Thereupon defendants move for judgment in their favor non obstante veredicto. The grounds of this motion are, first, that this suit cannot be maintained because the plaintiff, a foreign corporation, did not register, as required by Pennsylvania statute, before making the contract on which this suit is based; and, secondly, that the alleged award is invalid because the arbiter failed to pass and report on the claim of the railroad for $96,970.86 for delay in completing the work; and, lastly, the arbiter having found that 'almost every provision of the agreements between the parties had been disregarded, neglected or violated, by both parties, and, in consequence, waived,' the sureties are released.

Taking up the first question, it is proper to defendants to say that, while they deny liability under the contract by reason of plaintiff's nonregistration, they do not deny that in a proper proceeding the railroad company, which is financially responsible, is answerable for just compensation to the plaintiff. In that regard their brief says: 'Where work is done under such a contract, recovery can be had on the quantum meruit, and not on the contract.'

Turning first to the statutes, we have the act of 1874 which provides:

'From and after the passage of this act, no foreign corporation shall do any business in this commonwealth until...