Summary
In MacDougald Const. Co. v. State Hwy. Dept., 125 Ga. App. 591, 593 (188 S.E.2d 405) (1965), the court recognized "the time honored rule that where a decision is left to the discretion of a designated entity, the question is not whether it was in fact erroneous, but whether it was in bad faith, arbitrary or capricious so as to amount to an abuse of that discretion."
Summary of this case from Automatic Sprinkler Corp. v. AndersonOpinion
46892.
ARGUED FEBRUARY 7, 1972.
DECIDED FEBRUARY 25, 1972.
Action on contract. Fulton Superior Court. Before Judge Etheridge.
Robert E. Andrews, for appellant.
Arthur K. Bolton, Attorney General, Harold N. Hill, Jr., Executive Assistant Attorney General, Marion O. Gordon, F. Edwin Hallman, Jr., Assistant Attorneys General, John R. Strother, Jr., Deputy Assistant Attorney General, for appellee.
1. Where a highway contractor was required to produce a mature sod on the right of way prior to final payment, the amount of water to be used in so doing being left to its judgment and discretion, and it appeared that the contractor used between 25 and 30 times the amount of water stipulated in the contract payable on a quantity basis and also that grass not watered at all grew as well as that which was watered, a jury question was presented under this and other evidence as to whether the contractor acted in good faith and in the exercise of an honest judgment.
2. A statement that a litigant objects to certain requests to charge made by the opposite party, designating them by number only and stating no grounds for their disallowance, is not a compliance with the requirement of Code Ann. § 70-207 (a).
ARGUED FEBRUARY 7, 1972 — DECIDED FEBRUARY 25, 1972.
The appellant construction company was the successful bidder on 9.32 miles of new interstate highway at a total price of $8,309,596.75. The contract included production of mature sod along the banks of the right of way at a stated price of $5,100 for water at $3.00 per thousand gallons; this, however, not being a bid amount but one set by the highway department to indicate rate of payment. The contract contained the following: "711.14 Water: This specification requires the contractor to produce a mature sod before final acceptance of the work. For this reason the use of water will be left to the judgment and decision of the contractor ... Water used after sprigs have been placed will be paid for at the contract unit price established for water."
Samples Contracting Company, a subcontractor owning several water transportation trucks, sprayed from the trucks which were loaded from an available stream almost continuously from the time the ground was sprigged and seeded, running the water day and night and also on weekends. Whether this was an advisable procedure was in hot dispute, and there was testimony that dumping of excess water in fact caused erosion and hindered root growth, as well as testimony that a small part of the area, which had no water at all because it could not be reached with the hose, produced a mature sod equal to that produced in the irrigated areas. Several witnesses stated opinions that good agricultural practices had not been used.
During the course of operations Hudson, a highway engineer, informed an employee of Samples to stop using water; Samples was given the message but, relying on the discretion clause in the contract, refused to stop or cut down on water requirements. During the course of operations the firm placed 41,467,500 gallons of water for which it charged $124,402.50 figured at the contract rate. The highway department eventually paid for 34,467,500 gallons and this suit is for the water disallowed as excess. The jury returned a verdict for the defendant and the plaintiff appeals.
1. The appellee would have us read out the "judgment and discretion of the contractor" clause from the contract and place the whole question on a quantum merit basis, whereas the appellant insists that under this covenant it had an unbridled discretion as to how much water it cared to use on the grass. The trial judge, we think correctly, steered a middle course as shown by his instructions to the jury that "if you find from the evidence that all of the 7,281,500 gallons of water for which plaintiff seeks compensation in this case was in excess of the amount of water which the plaintiff in the exercise of a good faith judgment should have placed on the project, then your verdict should be for the defendant." This follows the time honored rule that where a decision is left to the discretion of a designated entity, the question is not whether it was in fact erroneous, but whether it was in bad faith, arbitrary or capricious so as to amount to an abuse of that discretion. "Where the manner of performance is left more or less to the discretion of one of the parties to the contract, he is bound to the exercise of good faith." 17A CJS 707, Contracts, § 494 (1). Such is the rule where acceptance of the work is conditioned upon the satisfaction of the opposite party. Commercial Mortgage c. Corp. v. Greenwich Savings Bank, 112 Ga. App. 388 ( 145 S.E.2d 249) pointing out that the satisfaction must be in the exercise of an honest judgment. The rule is the same even though the contract specifies that the decision of a designated engineer is to be final. State Hwy. Dept. v. Hewitt Contr. Co., 115 Ga. App. 606 ( 155 S.E.2d 422). Comparison may also be made to Foote Davies Co. v. Houchin Mfg. Co., 2 Ga. App. 195 ( 58 S.E. 368), where A wanted an experimental machine constructed the practical success of which was in doubt, and therefore agreed to pay all expenses of building the machine whether or not it ultimately approved it. Such a contract will not free B, in building the machine, from an implied covenant to perform the work in a reasonably skillful manner and in good faith. What the intent of the parties was in making the contract must control; it is possible to so draw a contract as to leave decisions absolutely to the uncontrolled discretion of one of the parties and in such a case the issue of good faith is irrelevant. See VTR, Inc. v. Goodyear Tire Rubber Co., 303 F. Supp. 773. Where a choice of materials or workmanship is left generally to the discretion of one of the parties, although there is a conflict of authority, it would appear that the reasonableness or unreasonableness of the decision made is to be considered in determining whether an honest judgment was exercised rather than whether the conclusion was in fact free from error. This is especially true where, as here, the contractor had a bona fide financial interest in quickly producing a mature sod as a condition precedent to final payment, but might also have had an interest in making a profit out of a grossly excessive use of water. The question of good faith being for the jury, the trial court properly denied the plaintiff's motion for directed verdict.
2. From what has been said it is evident that the court's instruction to the jury above quoted was substantially correct. This instruction also forms a basis of the fourth enumeration of error. There was no substantial error in the charge, harmful as a matter of law ( Code Ann. § 70-207 (c). The mere objection to the giving of a numbered request to charge without stating any grounds therefor is not a compliance with this section, for which reason the instruction will not be subjected to more detailed analysis. Louisville N. R. Co. v. Moreland, 122 Ga. App. 850, 855 ( 178 S.E.2d 904). The same thing is true of enumeration of error 5, which moreover, affects only the amount of damages and would not constitute reversible error where the jury verdict for the defendant is otherwise sustainable.
Judgment affirmed. Jordan, P. J., and Clark, J., concur.