Robert Grace Contracting Co. v. Chesapeake & O.N. Ry. Co.
| Decision Date | 21 July 1922 |
| Docket Number | 3656. |
| Citation | 281 F. 904 |
| Parties | ROBERT GRACE CONTRACTING CO. v. CHESAPEAKE & O.N. RY. CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
William Watson Smith, of Pittsburgh, Pa., and Frank F. Dinsmore, of Cincinnati, Ohio (Dinsmore, Shohl & Sawyer and Shaffer & Williams, all of Cincinnati, Ohio, and Gordon & Smith, of Pittsburgh, Pa., on the brief), for plaintiff in error.
Henry Bannon, of Portsmouth, Ohio, and Fred C. Rector, of Columbus Ohio (Le Wright Browning, of Maysville, Ky., on the brief) for defendant in error.
Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.
Plaintiff in error, being engaged in the business of excavating and grading, entered into a construction contract with the defendant in error for the grading of about nine miles of new railroad. Eventually the work was finished and accepted, and the amount admitted to be due was paid. The contractor brought this action in the court below, seeking to recover the damages caused by three alleged breaches of the contract. The first was for failure to furnish the contractor with the place to do the work as agreed; the second, that the contractor was required to use unsuitable material in making fills; and the third, that the incidental diversion of a water course was required to be made upon such an unskillful plan as caused injury to the contractor. When the issues were complete by petition, amended petition, and demurrer, the trial court sustained the demurrer and dismissed the petition. The contractor now seeks to have this action reviewed and reversed.
For the purposes now involved, it has not been doubted that the petition states a good cause of action as to each of the three elements of damage, save for those provisions of the contract which gave the defendant's chief engineer large power of directing how the work should be done and certifying the amount earned, thus making him in many respects an arbitrator; and it is the validity and effect of these provisions which must control the disposition of the case. Sections 25 and 26 of the contract are given in the margin. [1]
We consider first section 26. It is admitted that, if this section may have literal effect, this action cannot be maintained. The attack upon the section is by reason of its universality, and the contractor appeals to the rule declaring invalid an arbitration contract, which, in advance of any dispute, provides for vesting an arbitrator with the exclusive right to decide all questions that may arise between the parties on the subject-matter, thereby ousting the courts from all power to hear and decide those questions. Insurance Co. v. Morse, 87 U.S. (20 Wall.) 445, 22 L.Ed. 365. On the other hand, it is thought, by deductions from our opinion in Memphis Co. v. Brown-Ketchum Co., 166 Fed. 398, 93 C.C.A. 162, that such rule does not invalidate a contract like section 26, when applied to construction work and to decisions by a technical expert.
We will not undertake to decide whether section 26 can be limited so as not to apply to fundamental questions of law or fact, not arising in the course of the execution of the contract, but which pertain to a refusal to perform initial obligations. However that may be, and without making here any review of the decisions, we have become satisfied that, unless it can be so limited, it is invalid, and that, if it is so restricted, it does not reach a cause of action for failure to provide the right of way upon which the work can be done. In either case it forms no bar to the prosecution of a suit at law for the damage resulting from the first alleged breach of contract.
More in detail, the case made by the declaration upon this subject is to the effect that the road to be graded was about 11 miles long; that by the contract 'the company shall provide lands upon which the work under this contract is to be done'; that the contractor was required to proceed with the utmost diligence; that, in order for the work to proceed as was required, it was necessary to have the right of way not only where cutting was to be done, but...
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...the jurisdiction of the courts are invalid see Home Insurance Co. v. Morse, 20 Wall. 445, 22 L. Ed. 365; Robert Grace Contracting Co. v. C. & O. N. R. Co., 281 F. 904, 905 (C. C. A. 6); Mitchell v. Dougherty, 90 F. 639 (C. C. A. 3); and see United States Asphalt Ref. Co. v. Trinidad Lake Pe......
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