Psaty & Fuhrman Inc. v. Hous. Auth. Of City Of Providence. Hous. Auth. Of City Of Providence
| Decision Date | 16 August 1949 |
| Docket Number | Nos. 8797, 8798.,s. 8797, 8798. |
| Citation | 68 A.2d 32 |
| Parties | PSATY & FUHRMAN, Inc., v. HOUSING AUTHORITY OF CITY OF PROVIDENCE. HOUSING AUTHORITY OF CITY OF PROVIDENCE v. PSATY & FUHRMAN, Inc. |
| Court | Rhode Island Supreme Court |
OPINION TEXT STARTS HERE
Exceptions from Superior Court, Providence and Bristol Counties; Charles A. Walsh, Judge.
Cross-actions in assumpsit by Psaty & Fuhrman, Inc., against the Housing Authority of the City of Providence, Rhode Island, and by the Housing Authority of the City of Providence, Rhode Island, against Psaty & Fuhrman, Inc. From judgments for plaintiffs in both actions, Psaty & Fuhrman prosecutes bills of exceptions.
Each case remitted to Superior Court with directions to enter judgment on the decision in accordance with the opinion.
Hogan & Hogan, Laurence J. Hogan, all of Providence, for Psaty & Fuhrman, Inc.
Letts & Quinn, Andrew P. Quinn, Richard F. Canning, Frank Licht, Arthur Falcone, all of Providence, for Housing Authority of City of Providence.
These are cross actions in assumpsit which were tried together in the superior court without a jury. Hereinafter Psaty & Fuhrman, Inc., a New York corporation, will be referred to as the contractor, and The Housing Authority of the City of Providence, Rhode Island, a public body organized under the laws of this state, as the Authority. The trial justice rendered a decision for the plaintiff contractor in the sum of $88,921.21, which included $10,921.67 as interest from the date of its writ, and for the plaintiff Authority in the sum of $75,600. Only the contractor has duly prosecuted a bill of exceptions in each case, thus bringing before us its exceptions to the decision of the superior court sustaining the Authority's demurrer to counts 3, 4 and 5 of its declaration, to the above-mentioned decisions of the trial justice, and to numerous rulings on evidence during the trial.
The matters in dispute stem from a written contract for the construction of Roger Williams Homes in the city of Providence, an extensive low rent housing development carried out with federal aid. The project, which covered an area of about 22 acres, involved the demolition of some 190 existing buildings and the substitution therefor of 28 multiple dwellings with a total of 744 units, together with a power plant and an administration building.
The Authority advertised for bids and the contractor was the successful bidder. On June 23, 1941 the parties entered into a contract whereby the contractor undertook to carry out its terms for the sum of $2,620,000 in accordance with the specifications, drawings and addenda designated ‘Specification For Construction U.S.H.A.-Aided Development R.I. 1-2 Roger Williams Homes Providence, R. I.’
The following provisions of the contract are important. That section requires that the construction work be completed in 300 days from the date of said order, and that work on lawns and planting be completed in 200 additional days thereafter.
Article 4, entitled Liquidated Damages, provides: ‘As actual damages for delay in completion are impossible of determination, the Contractor and his sureties shall be liable for and shall pay to the Local Authority the sum stated in Section 15 of Instructions to Bidders, as fixed, agreed and liquidated damages for each calendar day of delay (not beyond the control of the Contractor) until the work is completed or accepted.’ Section 15 of the instructions fixes such damages at $250 a day as to the construction work and $25 a day as to the landscaping.
The following provision, hereinafter called the ‘no damage’ clause, appears in paragraph 12 of the general conditions: ‘No payment or compensation of any kind shall be made to the Contractor for damages because of hindrance or delay from any cause in the progress of the work, whether such delays be avoidable or unavoidable.’ The contractor could, however, obtain an extension of time upon certain conditions not necessary to mention here.
A brief reference to the pleadings in the two cases is necessary. The declaration in the contractor's case originally consisted of eight special counts. Counts 1, 2, 6, 7 and 8 are framed on the theory that the Authority in bad faith hindered or delayed the contractor in its work and ultimately refused to pay the balance of the contract price. Counts 3, 4 and 5 allege in substance that the Authority unreasonably hindered or delayed the contractor in its performance of the contract. The Authority demurred to the three counts last mentioned on the ground that it was not liable for mere delay. Resting his decision squarely on the no damage clause of the contract, the trial justice sustained the demurrer holding that the contractor was not entitled to recover for any delay or hindrance caused by the Authority ‘except those caused by fraud, in bad faith, or with malicious intent to cause damage.’ Thereafter the contractor amended count 5 by alleging that the Authority acted with fraudulent intent. The contractor's case finally went to trial on the Authority's plea of the general issue to counts 1, 2, 5, 6, 7 and 8 as above summarized.
The declaration in the case of the Authority is in three counts. Count 1 alleges nonperformance of the contract; count 2 alleges omitted, unfinished or defective work and makes specific claim for liquidated damages for delay; and count 3 contains the common counts. The contractor pleaded the general issue to all three counts and also filed special pleas to counts 1 and 2, which pleas in effect admitted the delays but excused them on the ground that they were due to the actions of the Authority or to governmental interference, or to causes beyond its control. This case went to trial on the issues thus drawn.
The contractor's first exception is to the decision of the trial justice sustaining the demurrer to counts 3, 4 and 5 of its declaration. Under this exception it contends that it was entitled to recover damages for delay caused by the arbitrary or unreasonable conduct of the Authority. In other words, its contention is that the no damages clause of the contract did not mean that it could recover only for such delays and hindrances that were due to fraud, bad faith or malicious intent on the part of the Authority, as the trial justice ruled in sustaining the demurrer.
The contractor apparently realizes that the no damage clause is of serious import and therefore seeks to minimize its force and effect by giving it practically no meaning. Although it refers to that clause, it argues its contention in connection therewith as if it were nonexistent. No useful purpose will be served by the contractor's reliance in the circumstances on general propositions of law which, conceding their soundness in the ordinary case, do not control the fundamental question at issue here. There is no doubt that ordinarily if one exacts a promise from another to perform an act the law implies a counter promise against arbitrary or unreasonable conduct on the part of the promisee. The following cases, among others, upon which the contractor relies plainly and properly support such view: Marcaccio, Inc. v. Santurri, 51 R.I. 440, 155 A. 571; Danforth & Armstrong v. Tennessee & Coosa R. Co., 93 Ala. 614, 11 So. 60; People ex rel. v. Craig, 232 N.Y. 125, 133 N.E. 419; Rogers v. United States, 99 Ct.Cl. 393. But these cases are clearly distinguishable in their facts from the instant cases.
The no damage clause in this contract expressly states that the contractor shall not recover damages because of hindrance or delay from any cause in the progress of the work ‘whether such delays be avoidable or unavoidable.’ The language of this provision, though broad in scope, is not ambiguous. As the contract provides for an extension of time if requested by the contractor, it is obvious that the object of the clause was to protect the Authority in an undertaking of such magnitude against the vexatious question, in perhaps innumerable instances, whether any particular delay could have been reasonably avoided by the Authority. Had there been no such provision in the contract, the Authority would have been liable on the principle of an implied covenant if unreasonable delay were proven, that is, delay that might reasonably have been avoided in carrying out its part of the contract. Most of the cases upon which the contractor relies to support its contention that the superior court erred in sustaining the demurrer to counts 3, 4 and 5 of the declaration proceed on this principle. Illustrative of those cases are the following: United States v. Peck, 102 U.S. 64, 26 L.Ed. 46; Danforth & Armstrong v. Tennessee & Coosa R. R., supra; McFarland v. Welch, 48 Mont. 196, 136 P. 394; Patterson v. Meyerhofer, 204 N.Y. 96, 97 N.E. 472.
The contractor in effect argues that the clause under consideration means that the Authority is excusable for reasonable delay only. This construction of the no damage clause would subject the Authority to the inquiry in all instances of delay whether a reasonable person would have acted differently, thus raising the very question that the clause intended to avoid. In the absence of any claim of concealment, misrepresentation, or fraud, the contractor by such construction of the no damage clause cannot render meaningless an express condition of the contract which it knowingly and freely accepted. As was observed by the supreme court in Wells Bros. Co. v. United States, 254 U.S. 83, at page 87, 41 S.Ct. 34, at page 35, 65 L.Ed. 148: ‘Men who take million-dollar contracts for government buildings are neither unsophisticated nor careless.’
The parties to a contract are free to agree upon any terms that are not illegal. No...
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