Terminal Const. Corp. v. Bergen County Hackensack River Sanitary Sewer Dist. Authority

• Decision Date: 25 April 1955
• Docket Number: No. A--104,A--104
• Parties: TERMINAL CONSTRUCTION CORPORATION, a corporation of New Jersey, Plaintiff-Appellant, v. BERGEN COUNTY HACKENSACK RIVER SANITARY SEWER DISTRICT AUTHORITY, a body corporate, now known as Bergen County Sewer Authority, a corporation, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 294

18 N.J. 294

113 A.2d 787

TERMINAL CONSTRUCTION CORPORATION, a corporation of New

Jersey, Plaintiff-Appellant, v. BERGEN COUNTY HACKENSACK RIVER SANITARY SEWER DISTRICT

AUTHORITY, a body corporate, now known as Bergen

County Sewer Authority, a corporation,

Defendant-Respondent.

No. A--104.

Supreme Court of New Jersey.

Argued Feb. 24, 1955.

Decided April 25, 1955.

Aaron Heller, Passaic, argued the cause for the plaintiff-appellant (Heller & Laiks, Passaic, Attorneys).

Walter H. Jones, Hackensack, argued the cause for the defendant-respondent (Irving C. Evers, Hackensack, on the brief).

The opinion of the court was delivered by

BURLING, J.

This civil action arose out of contract. The specific contract involved was entered into between Terminal Construction Corporation, a corporation of the State of New Jersey (hereinafter referred to as Terminal), and Young Foundation Corporation, a corporation of the State of New Jersey (hereinafter referred to as Young), on the one hand, and the Bergen County Hackensack River Sanitary Sewer District Authority, now the Bergen County Sewer Authority (hereinafter referred to as the authority). The contract, designated as Contract No. 1, was entered into by the parties thereto on August 12, 1949, as a result of competitive bidding. Young subsequently September 22, 1952) assigned all its rights therein to Terminal, in accordance with their independent agreement of July 5, 1949. Contract No. 1, ante, was part of an immense sewage disposal project, known as the Joint Sewage Works for the Overpeck Valley. In the information to bidders 14 contracts were described. Of these 14 contracts, 12 were for various trunk and interceptor sewers together with manholes, meter chambers and appurtenances, and one was for alteration and refitting of the Tenafly, New Jersey, pumping station. Contract No. 1, ante, which appears to have been the principal contract of the project, provided for all equipment, materials and work necessary for the construction of the authority's sewage treatment plant in Little Ferry, New Jersey, and its acceptance by the authority in complete operating condition. The structures to be built under Contract No. 1, ante, included pump and blower house, screen chamber, grit collector and ejector, primary settling tanks, aeration tanks, final settling tanks, chlorine contact tank, chlorine building and monorail system, 'Parshall Flume,' sludge digestion tanks, digester control house, primary sludge pumping station, return sludge pumping station, and pumping station in sludge lagoon, together with garage, underdrains, pipe galleries and piping, open channels, outfall sewer and headwall, landscaping, roadways and walks, outdoor lighting and fencing. It also included all structural steel, electrical, plumbing, and heating and ventilating work in the various structures above described. The bid on Contract No. 1, ante, was submitted under date of July 5, 1949, giving an 'approximate' total price of $4,246,775.46 (not a binding figure, but expressly described as being merely for the purposes of comparing the bids). The form of contract recited this total price as the 'estimated contract amount' and provided for the contractor to 'accept as payment in full the summation of products of the actual quantities as determined by the Engineer's estimate, by the unit prices and lump sums bid.'

The Overpeck Valley sanitary sewer system and sewage disposal plant were to provide sanitary sewerage disposal for a large area of Bergen County, one of the most populous counties of the State of New Jersey.

As is customary in a major enterprise such as this, detailed and meticulous specifications and terms form part of the contract. Such provisions are usually recommended and drafted by an experienced engineer at the instance of the owner, or sponsor, of the project.

The work to be performed is grounded in the principles of free enterprise and competition. The scope of such an undertaking requires those who accept the invitations to bid to be well versed, or advised, in contract law and forms together with comparable efficiency in accounting and engineering departments. Otherwise their financial doom is spelled. It is common knowledge that the owner, or sponsor, 'writes its own ticket' and the competing market of contractors is obliged to bid and perform in conformity thereto, or to avoid that field of endeavor.

However, this does not mean that a contractor is not entitled to enjoy just treatment within the terms of the contract. If it were otherwise the construction of vital public and municipal projects would suffer by the failure of qualified bidders to enter the field for fear of risks beyond those which are foreseeable. It is grave enough to meet calculated risks in good business practice. The public authority which chooses the contract terms is not exempt from the operation of the basic principle of construction of contracts, that where ambiguities exist they are to be taken most strongly against the draftsman. Jennings v. Pinto, 5 N.J. 562, 569, 76 A.2d 669 (1950); Moses v. Edward H. Ellis, Inc., 4 N.J. 315, 323, 72 A.2d 856 (1950).

With this in mind we approach the present controversy. The principal disputes herein arise out of the functioning of the site engineer (I.e., the on-site representative of the engineering firm which was the contract designated engineer), and a meticulous study of the engineer's status, duties and jurisdiction is of infinite importance here.

Contract No. 1, ante, including the invitations to bid, clearly contemplated co-operation between contractors engaged on various contract segments of the project. Mutual responsibilities required timing of different phases of the overall operations to mesh the completion of the several elements of the construction most economically and efficiently in the Authority's interests. To keep the work rolling is the objective of the project engineer.

Good and fair engineering practice required definition and classification of the work upon the order for action without waiting until 'settlement day.' To define or classify the various items of work arbitrarily or grossly negligently to the detriment of a cooperative contractor who desired to expedite and synchronize the performance of his scope of the work with that of other contractors would result in unjust enrichment of the sponsor.

In the last amended complaint filed, and in the answer thereto, it was claimed and admitted that the contract in question was entered into on August 12, 1949. On September 28, 1949, Terminal was ordered by the authority to commence work within ten days as required by Article 34 of the contract (namely 'at such point or points as the Engineer may designate'). The work progressed. There was dispute in the pleadings as to the date or dates of completion. It appears that much of the work was completed by September 1951; but Terminal in February 1952 was still proceeding with the work. The authority's answer to the last amended complaint filed alleged that Terminal 'had by the 11th day of June, 1952, substantially performed most of the physical work specified' in the contract and that on August 1, 1952 the engineer 'issued to plaintiff a certificate of substantial completion which was revised August 6, 1952.'

Terminal filed its initial complaint herein in the Superior Court, Law Division, on September 10, 1951, but subsequently filed amended complaints. The authority's answer to the last amended complaint was filed September 22, 1952. The Superior Court, Law Division, entered a pretrial order on September 29, 1952. Trial began October 15, 1952. The trial proceedings occupied 19 days, terminating on November 20, 1952, with the verdict of the jury, rendered in favor of Terminal in the aggregate sum of $454,444.32. Judgment was entered on the verdict in November 24, 1952. During the trial, however, the trial court had granted the authority's motion to dismiss two counts of the complaint. Judgment of dismissal of these counts was entered on November 22, 1952. The authority appealed, and Terminal cross-appealed, to the Superior Court, Appellate Division, which reversed the judgment in favor of Terminal and affirmed the judgment of dismissal of two counts of the complaint. Terminal petitioned for certification and the authority joined in the petition for certification, on independent grounds (having the effect of a cross-petition). We allowed certification. Terminal Construction Corporation v. Bergen County Hackensack River Sanitary Sewer District Authority, 16 N.J. 194, 107 A.2d 835 (1954).

Introduction.

In the present case a synopsis of the pleadings and disposition made of the claims in issue by the trial court and the Appellate Division is essential to an understanding of the questions involved.

The last amended complaint filed was in five counts, and in each count separate claims were made (none being repeated in any other count).

The First Count.

The first count alleged completion by Terminal of its work under the contract 'on or about November 1, 1951' and claimed that Terminal was entitled to receive 'the full amount due less 2%' which the authority was authorized to hold for a period of one year. This was alleged to be a 'total of $4,634,660.43 for specific items of work, labor and material as contracted for on unit prices and bulk bid,' with the authority being entitled to credit, for payments on account, $4,247,053.84, and for retained percentage, $92,693.21, a total of $4,339,747.05, leaving a balance of $294,913.38 allegedly due Terminal, and Terminal claimed interest on this balance from December 30, 1951. Terminal alleged the authority 'and the engineer as referred to in the contract, willfully, illegally, fraudulently and contrary to the contract, refused to approve payments, all to the damage of plaintiff.' The authority denied these allegations; asserted failure of performance by Terminal but admitted substantial...