Opinion
Argued October 29, 1909
Decided November 9, 1909
James W. Treadwell and Joseph F. Keany for appellant. L. Laflin Kellogg and Alfred C. Petté for respondents.
The unanimous affirmance by the Appellate Division of the judgment recovered by the plaintiffs, limits our right of review to the rulings upon evidence made at the trial, and the legal conclusions adopted by the referee. Although the case as thus narrowed is extremely simple, it is characterized by a few remarkable features which serve to give it an air of complexity. The first thing worthy of notice is the evident lack of attention to detail in the formulation and execution of a contract having to do with a large and important subject. The defendant had undertaken to build a great bridge over the East river at Blackwell's Island. The work was commenced under conditions which rendered it practically certain that serious legal obstacles would be encountered which might, and as the sequel shows did, prove fatal to the enterprise. Despite these conditions, the only writing which evidences the contract between the parties is a letter written to the defendant's engineer by the plaintiffs' predecessor in title. The three most prominent features of this letter are: (1) That it was written in anticipation of a more formal contract which was later to be executed; (2) that the contract price of $10.50 per yard for the stone to be furnished was a low average price based upon the prospect of furnishing all the stone for the whole work, and (3) that the work was commenced with a view to its possible abandonment before completion, in which event the measure of the plaintiffs' compensation was to be the contract price for stone actually delivered, and the cost of quarrying and cutting stone not delivered.
As appears from the foregoing statement of facts, no formal written contract was entered into after the letter of December 7, 1894, was written; the work was abandoned before completion; the plaintiffs had quarried and cut a large quantity of stone which they were not permitted to deliver; and for the stone quarried and cut but not delivered they recovered a sum largely in excess of the contract price for that which was delivered. At first glance this appears to be an incongruous result, but a study of the case shows that if the contract was correctly construed by the learned referee and no improper evidence was admitted as to the measure of damages, that result is not only logical but necessary. The plaintiffs were in a peculiar position. They had agreed to furnish an initial five thousand yards of granite of unusual dimensions, which necessitated the opening of new quarries and the quarrying of a vast amount of stone, some of which would not be suitable for any of the work, and much of which could only be used after the large dimension blocks had been delivered and set in place. The contract price of the large blocks was much less than the cost of production, and the plaintiffs' only hope of a profit lay in the completion of the whole contract, in which event the contract price would have been a fair average one. But, underlying these considerations, there was the fundamental fact that the work might have to be abandoned at a time when the plaintiffs had quarried and cut a large quantity of stone which had not been delivered, and which, under the express terms of the contract, the defendant was under no obligation to accept. It is obvious that in such circumstances the contract price might not equal the cost of production, and that is what actually happened. The referee construed the contract to mean that, as to the stone quarried and cut but not delivered, the actual cost of production, and not the contract price, was the measure of damages which the plaintiffs were entitled to recover. As to that we think he was right. The clause of the contract "It is understood that if for any reason the piers should not be constructed, we are only paid for granite actually delivered, and cost of balance quarried and cut," is meaningless unless thus construed, and when read in the light of the attendant circumstances it clearly indicates the intention of the parties to provide for a contingency in which the contract price would be an wholly inadequate measure of damages. Counsel for appellant contends that "cost of balance quarried and cut" means the contract price less freight and profit. The answer to the contention is that all the parties understood that there could be no profit unless there should be a substantial completion of the whole contract. It is true that under the judgment the defendant is compelled to pay more for stone which it never received and to which it acquired no title, than it paid for stone actually delivered. That is not the fault of the law. It is due wholly to a peculiar but specific provision in the contract. Cost, not contract price, was the measure of damages adopted by the parties as to stone quarried and cut, but not delivered. In this connection we have still to consider, however, whether the proper method was employed in ascertaining the cost. Without going into the voluminous details of the evidence bearing upon this subject, it is enough to say that a separate account was kept of the expense of working the two new quarries which were necessarily opened for the production of the stone which the plaintiffs were to furnish. This showed the expense of quarrying and cutting to have been $16.80 per cubic yard. By multiplying that price by the number of yards quarried and cut for this work, but not delivered, the referee found the total of defendant's liability for that item. Although this may seem to be a harsh result, no other method is suggested by which a more just and logical result could be arrived at. The method employed seems to have been not merely the best, but the only one by which the plaintiffs' loss could have been ascertained. As to this branch of the case it is also urged by counsel for the appellant that incompetent testimony was admitted by the referee, which varied the terms of the written contract, and he cites Stowell v. Greenwich Ins. Co. ( 163 N.Y. 298) and other similar cases in support of his contention. The cases referred to clearly state the law of this jurisdiction, but we think they have no application to the case at bar. This is not a complete and unambiguous written agreement constituting the final respository of all the stipulations between the parties. It falls rather within the classification represented by Thomas v. Scutt ( 127 N.Y. 133), in which it was held that when a written instrument is obviously not a complete contract, parol evidence, not inconsistent with the writing, may be given to show what the whole contract is. That is precisely the case at bar, for the letter referred to so clearly speaks of a contract yet to be made, and of acts already done by the plaintiffs, as to leave no room for doubt that the parties had acted in anticipation of reducing their contract to writing when it should become more certain just what the instrument should embody. In these conditions it was, we think, entirely proper for the referee to receive evidence of the engineer's, Jacobs, visit to the quarries, and of what was said and done in his presence with reference to the opening of the quarries for the express purpose of enabling the plaintiffs to fulfill their contract with the defendant.
We think there was no accord and satisfaction as to the 200 yards of backing, which the plaintiffs attempted to deliver, and the defendant refused to receive, although it had been formally inspected and accepted by defendant's engineer. There is nothing in the findings to establish an accord and satisfaction as to this item. The finding to the effect that the defendant had paid "all moneys due under the contract for stone delivered by him (Beattie) to the defendant thereunder," relates to stone actually delivered and does not embrace this item, as to which there was an attempted delivery, but also a refusal to receive.
Many other questions are urged upon our attention by counsel for appellant, but none of them seem to require discussion except the one relating to defendant's asserted right of set-off. That question presents the only error of sufficient importance to justify our interference with the judgment as it stands. We do not agree with the defendant in so far as it claims the right to set off against the plaintiffs' damages the value of the stone quarried and cut but not delivered which still remains in the quarries. As to that there was no transmission of title and no proof of value. Hence there was no basis for the set-off. That is all that need be said about it. A different question arises as to the stone which was recut and sold for the Hartford bridge. It was the duty of the plaintiffs to exercise all reasonable means to reduce, or the least not unnecessarily to enhance, their damages. When they sold for use upon the Hartford bridge a portion of the stone left on their hands by the defendant, their damages were diminished to the extent of the profit which they made on the Hartford contract. If the defendant is not credited with this amount the plaintiffs will be receiving double payment for the same thing. This naked statement of that feature of the case is enough to show that the learned referee was in error in not allowing the defendant's offset to the extent of the plaintiffs' profit on the Hartford contract. Although this was error it does not require or justify a reversal of the judgment, for it can be remedied by a simple modification. The profit to the plaintiffs on the Hartford contract was $2,708.91.
As no interest was allowed by the referee upon the item in which the Hartford stone was included, the net profit referred to is the amount by which the judgment should be reduced, and, as thus reduced, affirmed, without costs to either party in this court.
CULLEN, Ch. J., GRAY, VANN, WILLARD BARTLETT, HISCOCK and CHASE, JJ., concur.
Judgment accordingly.