Opinion
10-19-1899
SISTERS OF CHARITY OF ST. ELIZABETH v. SMITH et al.
John L. Keller and John W. Heck, for complainants. Edmund W. Wakelee, Joseph Coult, Thomas H. Moore, Addison Ely, and Luther Shafer, for defendants.
Bill of interpleader by the Sisters of Charity of St. Elizabeth against William J. Smith and others. Bill allowed.
At the close of the complainants' proofs showing the amount of money in their hands the defendants set up that complainants were not entitled to credit for two of the payments proven by them, because they were made before they were due, and were subject to the operation of the statute concerning advance payments.
John L. Keller and John W. Heck, for complainants. Edmund W. Wakelee, Joseph Coult, Thomas H. Moore, Addison Ely, and Luther Shafer, for defendants.
PITNEY, V. C. (orally).On the question of advance payments: I may as well dispose of this part of the case now. The bill is filed by the Sisters of Charity of St. Elizabeth, the owners of the building, to be relieved from a contest as to money in their hands due to the contractors who undertook in writing to erect a hospital building for the complainants in the city of Passaic, and claimed by creditors of the contractors on stop notices. The bill sets out a written contract made with the firm of Smith Bros, (defendants) for the sum of $39,987, according to certain specifications. The original contract, with the specifications annexed, is produced here from the Passaic county clerk's office, and it consists of an ordinary printed contract, with some additions—fillings and additions— In manuscript, with long specifications annexed. The bill sets out an abstract of the contract, without the specifications; alleges that the payments were to be nine in number, and that seven of them were paid. I will read the allegations of the bill in that respect: "That shortly after the execution and filing of said contract the said Smith Bros, commenced the erection of the said building, and proceeded therewith until they had received the first seven payments according to said contract, amounting in the aggregate to the sum of twenty-seven thousand dollars." That amounts to an allegation that the work had been proceeded with, and that Smith Bros, had become entitled to the first seven payments, and had. been paid them; because the contract provides that those payments are to be made upon the architect's certificate, and that the building was to be built under the supervision of Messrs. Schickel & Ditmars, architects. The sixth printed clause in the contract provides: "Should any dispute arise respecting the true construction or meaning of the drawings or specifications, the same shall be decided by the said architects, and their decision shall be final and conclusive; but, should any dispute arise respecting the true value of the extra work, or of the works omitted, the same shall be valued by two competent persons." etc. In this case there were no extra works and no omissions, and the contract provides, as all these do, that the architects are to be the arbitrators to decide upon matters of detail in the performance of the contract. That means the technical construction of the plans and specifications—what the meaning of the technical language used therein is when interpreted by experts. Not that they shall assume the jurisdiction of a court, and determine the general construction of the contract and specifications, but the construction of the technical language used therein; those matters in which the court would ask the opinion of an expert; the use of technical terms, and all that sort of thing. In these contracts a great many abbreviations and expressions are used that an ordinary person does not know the meaning of. That I understand to be the sense and strength and force of that sixth section,—which is found in all these contracts. Now, the allegation in the bill just read, while very briefly stated, and not with any precision, means, I think, when fairly construed, that the work had progressed so far that the contractors had become entitled to, and had received in due course of business, under the architect's certificates, seven payments out of the nine provided for. Then it alleges a default, and that the owner was obliged to take the work away from the contractors, and employ another person to finish the work; that that person did finish the work, and that the owner paid that person, who is Mr. Palen, therefor; and that, after paying him, and crediting the contractor with the whole contract price, and charging him with what they had so paid him and Palen, there remainedin the hands of the complainants the sum of $4,549. Then the bill, after setting out all these stop notices and orders that had been presented, indicating that Smith Bros, were in arrears, and stating that the $4,549 is the amount due in their hands, very properly says: "Your orator hereby offers to state an account under the direction of this honorable court with said Smith Bros, and said claimants of the cost and expense incurred by your orator in completing said building." In effect, after stating that the complainants have paid $8,438 to Mr. Palen for finishing the building, the complainants say, "We offer to come to an accounting on that payment," which means that the complainants offer to have the reasonableness of the amount of that payment submitted to the scrutiny of the court and parties. It means that, and nothing more, in my Judgment. Then it says: "And your orator further offers to pay into this honorable court the said sum of $4,549 [that is, the sum previously stated to be due from the complainants to the contractors Smith Bros.], or any other sum which, upon taking said account [that is, the account of the cost of finishing the building], may be found owing by your orator on said contract, or otherwise, to said Smith Bros., or others, to the end that the same may be paid or distributed to such person or persons as may be legally and equitably entitled to receive the same." Now, the allegation is that the sixth and seventh payments provided for in the contract were certified to by the architect, and paid before they were due according to the terms of that contract. Now, these provisions for the payments must be construed, you may say, strictly; but in construing them you must not lose the basis of common sense, nor must we forget what is the real object of dividing up payments in that way. There are stages in the progress of all buildings, recognized by everybody; certain things are done to such an extent, and certain other things are done to such an extent. Here these different stages are pointed out in this contract. Stage No. 1: "First payment, when all walls and piers of cellar and basement are built, and the beams of first-story floor, laid throughout, $4,500." But a building may be built which would be substantially at that stage when a little more was done in one direction and a little less in another direction; the object of cutting up the whole contract price, and paying it in installments, being to pay it when the building arrives substantially at a certain stage which represents a certain proportion of the whole cost of the building. That is the object. Now, when the building has arrived at about that stage there would be $4,500 due, after taking out 15, or 20, or 25 per cent. from the amount actually put into it,—keeping back 15, 20, or 25 per cent., whatever the percentage was. In this case I think the architect said it was 20 or 25 per cent. that he intended to keep back. Then the provision for the second payment is this: "When all walls of first story are up, and second-floor beams laid, $4,000." Well, that marks another stage, but there is no charm in its being exactly done. Suppose the walls were exactly to the floor, and all the beams were on. Suppose, instead of that, the contractor had run the wall up on one side two or three feet higher, but half a dozen beams were not yet laid on. The building would have advanced in one case substantially as far as in the other, because a little more had been done in one part and a little less in another; but, substantially, that was the stage of the building when the contractor was entitled to $4,000.
Mr. COULT: May I ask your honor a question? Would you hold that a man was entitled to recover his money under those circumstances?
THE COURT: No, I do not say that. 1 am simply showing the principle upon which these payments are divided, in order to show the mode in which the provisions should be construed by a court which is trying to do justice; that is all. Now, the third payment: "When all walls of second story are up, and third-floor beams laid, $4,000." Now, the same remark applies. Fourth payment: "When all walls of third story are up, and fourth floor beams laid, $4,000." Well, now, the same remark applies. It is fixed according to the general advance of the building, and to the general proportion which the work that is done at that time bears to the whole. Fifth payment: "When the roofs are set up and planked, all walls and chimneys topped out, and the structural iron work of piazza set, $4,000." The same remark applies. Sixth payment: "When all roofing and metal work is completed, leaders run down, and the inside all furred ready for plastering and deafening, and under floors laid, $3,500." Seventh payment: "When the brown coat of mortar is on throughout, and the iron and wooden stairs are set, except slate steps, $3,000." Now, I confess I don't know what that means,—"when the wooden stairs are set" Does that mean when the wooden stairs are finished? I should have to ask an architect that. What is the meaning of the setting of stairs? "Except slate steps." Now, some of the stairs were to have wooden and some slate steps. Now, the same remark is made as to those payments. We must construe them with regard to the general purpose of the fixing of stages in the progress of the building, when certain payments shall be made.
I come now to the facts. This building was built by the Sisters of Charity, who are women. They employed a Catholic priest-Father Sheppard—to supervise it for them. He had had experience in this kind of thing, and he bad a pastoral charge near by. He took a power of attorney from the Sisters, and hesaid he substantially lived in that building during its erection. He was there every day. It was, of course, under the supervision of the architect. Now, the architect says that he had a man—a subordinate—who went there two or three times a week to look after the details; but when it came to certifying to the payments he himself made the inspection, and went through the building from end to end, to see whether it had arrived at that stage when he should give the certificate under the contract. Now, so far as any interest goes, the architect is generally supposed to favor his employer. He is generally supposed to favor the owner. And these contractors sometimes complain bitterly of being obliged to submit their rights in any degree to the decision of an architect who is the servant and employe of the other side, who lacks the judicial position, to say nothing of the judicial qualifications. But in this case Father Sheppard tells us that he watched this building, and watched it very carefully, because this money came largely—not altogether, I presume, but largely—from a mortgage which was put on in the first place, the proceeds of which were to be advanced and go into the building in the usual way; and Mr. Heck, the solicitor of the complainant here, was the counsel for the money lender; and they were watching the affair with great care, to see that those contractors did not get ahead of them,—did not get their money before they were entitled to it, so that they would be left in the lurch. The architect says he was unusually careful in this case, and that he in no case issued a certificate until the building had arrived at the point where the contractor was entitled to it. Father Sheppard, who had a copy of the contract, says that he supervised the architect,— as a watch dog set to watch another watch dog,—and in all instances he was familiar with the progress of the work, and in no instance was the certificate given and the money paid until the building had arrived at that stage. There is no dispute that the architect, as well as Father Sheppard, acted in perfect good faith. He is not charged with unduly favoring these contractors. He is not charged with willfully and knowingly giving a certificate that they were not entitled to. It is impossible to believe, from his evidence, that he had that in mind. I put the question to him squarely myself, and I am entirely satisfied from the manner of the gentleman and from his evidence that he actually believed that these certificates were given at the proper times.
Now, granting for the moment that there was some little work not done,—and at most, as I shall show directly, it was of the most trifling character,—that the building had not arrived quite at that stage, what is the effect? The certificate is given. It is presented to the owners. They are bound to pay. They are bound to pay the money. By the contract the architect is made the arbitrator of those little things,—matters of technicality, technical meaning of words, and the technical construction of this contract,—to the extent which I have previously stated. I don't go beyond that. I have not overlooked the language of the sixth section of the contract proper, which provides that the architect's judicial power to construe is confined to the drawings and specifications; but that does not prevent his judicial action in the matter of the maturity of the payments, for the reason that not only is he specially intrusted with the duty of certifying on that subject, but the manuscript language which I have quoted defining the state of progress of the building necessary for the maturity of each payment is substantially unintelligible without reference to the specifications and drawings. And especially is this true of the sixth and seventh payments here drawn in question. in fact, in order to determine whether a payment is due, recourse must be had to the drawings and specifications whose construction is especially delegated to the architect. Well, then, when the contractor came with the architect's certificate for the sixth and seventh payments, what was the owner to do? To refuse payment, until they can send another man down there and make another inspection? Their own agent, Father Sheppard, was there, and he swears that he overlooked the work, and he believed the same thing, viz. that the payment was due. Are they to get some other architect, or half a dozen, one after the other, and send them down to examine the stage of the work? "Now," says the counsel for the defendants, very frankly, "this is a cutthroat law [he does not use these words, but that is the effect: "This is a cutthroat law"]; and, when people wish to build in New Jersey, they must build according to the laws of New Jersey, and they must hew exactly to the line in the matter of payments. They must not hew a shaving over the line. And if, under all these circumstances, they step a hair's breadth over, they lose the whole payment for the benefit of these other parties, in case there should not be enough to pay all." The argument is that the owner assumes the whole risk of an honest mistake on the part of the architect in the matter of payment, however slight and Innocuous that mistake may be. But, in my judgment, there is another side to that. All these people that did work upon and furnished materials for the building saw, or might have seen, this contract. A fairer contract never was made. There is not the least suspicion of any trickery about it. It is entirely free of any idea of imposition on the material men, or laborers, or subcontractors. They could go and see the contract. They could examine the specifications. They were all there. They could judge whether there was money enough to pay them or not. They could inquire, and protect themselves, and find out whether the contractors were paying their bills as theywent along, or whether they were taking money from this contract and paying old debts or not. They could judge just as well as the owners whether the contract price was a fair one. They all knew that it was the province of the architect to certify to the payments. They knew his liability to make trifling mistakes. They are just as much bound to look out for themselves as the owners were. They could do as complainants did,—require security from the contractors for their claims. And it is not a case where the law is to be strained against the owner and in favor of these people who furnished materials, because it does not appear that, if Smith Bros, had attended to their business properly, and used proper diligence,—and, if they did not. it makes no difference—there was not plenty of money to pay them all. The laborers and material men are just as much bound under that contract to take the risk of the architect making what may be called a mistake, an honest mistake, in certifying sooner than he ought to have done, as the owner. I see no reason why in the case put, of an honest mistake, a trifling mistake, because it could not be honest if it was not trifling— Grant that the architect in this case and Father Sheppard were mistaken, it was to a mere trifling extent, not more than one or two hundred dollars, or something like that. Now, grant that; still the certificate was made in perfectly good faith. It was approved, if you may say so, by Father Sheppard in perfectly good faith. They both believed that the money was due, and the certificate was given and the money paid in perfectly good faith. Now, ought not these people who furnished materials, etc., to be bound by that certificate, and by that result, just as much as the owner? I cannot see any difference. I cannot see why the owners should lose three or four thousand dollars in case of an honest mistake by the architect, any more than these material men and others should. It must be borne in mind that the defendants in the contest now in hand are, in effect, claiming the benefit of the provisions of this contract. They are claiming that the complainants paid certain moneys sooner than, by the terms of the contract, they were bound to pay them; and that the statute gives them a right to require the complainants to enforce against the contractor a strict compliance with the terms of the contract. That position, it seems to me, puts the defendants in the situation of claiming under the contract if so, they must take it with its burdens, and one of those burdens is the liability of the architect and owner to make an honest mistake. It would be unfair and inequitable, it seems to me, to cast the risk of such mistake entirely upon the owner for the benefit of the subcontractor, material man, and laborer.
Now, I have gone on the basis that there was a slight mistake made; that what was called "metal work" was not finished when the sixth payment was made. But the architect declares that the metal ceiling for the rooms in the interior provided for in the specifications is not properly included in the words "metal work" used in stating the progress of the work necessary for the maturity of the sixth payment, and that this metal work took the place of plastering held on by wooden or iron lath. And if we look at the language contained in the provision for the seventh payment we find that the language is, "When the brown coat of mortar is on throughout," etc. Now, it would seem that, if the metal ceiling was in the nature of wall plastering, it would naturally be placed in the same category as the brown coat of mortar, and come in as a preliminary to the seventh payment. In my judgment, that was one of the matters that was properly, under the sixth clause of the contract, to be determined by the architect; and his determination, made in good faith, must, in my judgment, for present purposes, be held conclusive. But, besides the metal ceiling, it is alleged that some little metal work on the roof was unfinished; that the tin or galvanized leaders were not all put in place, and that some little change was made after that in the cross on the peak of the roof. Evidence was given to that effect. But the architect says that he did not consider the leaders as metal work, and that he was very careful about giving the certificate, and believed that the work was all finished. His attention was particularly called to the matter while on the stand, and he was recalled and re-examined on the subject. He says the metal work was finished, and the contractor had done all that he was bound to do in that respect as a preliminary to the sixth payment. But let us look again at the contract itself. The sixth payment was to be made, as we have seen, "when all roofing and metal work is completed." Now, by "metal work" could not have been meant all the metal work that went into the building, as is perfectly plain when we consider the provision for the seventh payment: "When the brown coat of mortar is on throughout, and the iron and wooden stairs are set." There were, in fact, two kinds of stairs; one of iron, with slate steps, and one of wood. Now, here it is plain that by the metal work in the provision for the sixth payment was not included the iron work of the stairs, which was an important, and probably somewhat expensive, part of the building. Now, let us see about the stairs. It is alleged that they were not finished as a preliminary to the seventh payment. The language is, "When the iron and wooden stairs are set" It appears that there was some work yet to do on them. But the language is, "when the stairs are set." What is the meaning of the word "set" in that connection? The architect says that they were finished. I cannot say that his judgment was wrong, as a matter of fact I cannot see ow his decision as an architect here on thatcan be overturned by the opinion of builders and others that they were not finished. It does not say "finished"; it says "set." Then the trifling amount of the lacking parts, as shown by defendants' witnesses, it seems to me must be considered by the court Suppose there had been a few nails left out somewhere,—and if you are going into trifles, why, you have got to come down to trifles; suppose there was some little thing that would take half an hour's work to do. Would the overlooking of that by this architect subject the complainants to a double payment of three or four thousand dollars? I do not think so. It is a question whether the contractor was substantially entitled to it, whether the work was substantially completed up to that point, and whether the architect really believed it and thought so, and came to that conclusion upon a careful inspection. The undisputed fact is that the payments were made in good faith, upon the architect's certificate, made in like good faith, and approved by a competent, disinterested, and watchful supervising agent, acting also in good faith, without the least reason on the part of the complainants to suspect that the payments were not due, and without the least intention to make them before they were due. Counsel asks whether, in case of a slight lacking in the finishing of some part of the work, the contractors could have sued the complainants for one of these payments. My answer is, probably yes, if the contractor produced the architect's certificate. But the question here, in my judgment is not whether the contractor could have sued for the payment, but whether the payment was in any proper and just sense an advance payment when voluntarily made. Upon these grounds I think the complainants have succeeded on the question of the sufficiency of the deposit, and I shall advise a decree that they be discharged, with the usual injunction, with their costs out of the fund, and a reasonable counsel fee, as is usual in such cases.