John Cowan, Inc. v. Meyer

Thomas, J., delivered the opinion of the Court. This suit is on the common counts, and a special count which alleges “that on or about the 19th day of August, 1912, the plaintiff contracted with the defendant to perform ⁴⁵⁶ all the work in excavating, at the Baltimore Fidelity Warehouse, corner of Iiillen and High streets, in the City of Baltimore, according to drawings and specifications prepared by Emory & Hussear, Architects, including all trenches and footing foundations, at and for the price for excavating and hauling of $1.35 per yard. Said work to be done within forty working days from the date of said contract,” and that “The plaintiff has performed all of said work, and done all of the hauling provided for in said contract in accordance with the terms of said contract, and has fulfilled and done all things required to be done by him thereunder, together With extra work ordered by the defendant, but the defendant has not paid in full amount of $9,981.45, which it agreed to pay, and there remains overdue and unpaid the sum of $2,181.45.” There was filed with the declaration an account in which the defendant is charged with the cost of digging 7,350 cubic yards of dirt at $1.35, amounting to $9,922.50, and a number of small items bringing the total charges to $9,981.45, against which there is a credit of “By cash, $7,-800.00,” leaving a balance of $2,181.45. The defendant pleaded that it “never promised” and that “it was never indebted as alleg'ed,” and, for a third plea, that the plaintiff was indebted to the defendant in an amount greater than the plaintiff’s claim, etc. The seventh count of the plea of set-off charges “that on or about the 19th of August, 1912, the plaintiff contracted with the defendant to do certain excavating at the corner of Hillen and High streets, in the City of Baltimore, in accordance with certain plans and specifications, 'and all hauling at and for the sum of $1.35 per cubic yard; part of said work to be done in the manner following: ‘Beginning at the north end of the building and working toward the front to a distance of one hundred and twenty-five feet (125’) to a depth required, including all trenches and footing foundations, same to be completed in twenty working days from the said 19th day of August, 1912.’ And the said plaintiff further agreed, to com ⁴⁵⁷ píete the whole work in forty working days.

And the said plaintiff further agreed with this defendant to pay to it the sum of ninety-five dollars ($95.00) per day as liquidated damages for each and every day thereafter exceeding either the twenty days or forty days time limit,” and “that the plaintiff did not complete that portion of the work which under the terms of the said agreement was to have been completed in twenty working days, but on the contrary exceeded the time limit by twenty-nine working days. And the defendant claims $2,755.00, which amount the defendant is willing to set off against the plaintiff’s claim, and prays judgment for the excess.” The plaintiff joined issue on the first and second pleas and replied to the third plea that he never promised, etc., as alleged. It appears from the evidence that a number of contractors, including the defendant, bid for the work of erecting, for the Baltimore Fidelity Warehouse Company, a large warehouse on the comer of Ilillen and High streets according to drawings (blue prints) and specifications prepared by Emory- & Nussear, architects, and that the plaintiff, a sub-contractor, submitted to the contractors bids for the work of excavating for the building in accordance with those drawings and specifications. The contract was awarded by the Warehouse Company to the defendant on the 17th of August, 1912.

The building was to be two hundred and fifty feet long, and the contract between the defendant and the Warehouse Company provided that it should be completed within six months from the 17th day of August, and that the defendant should pay to the Warehouse Company a fixed sum per day for each and every day the completion of the building was delayed beyond that time, as liquidated damages, etc. It does not appear from the record what sum per day the defendant agreed to pay, but it is stated in the briefs' of counsel for the appellant and appellee that the amount was $95.00. The record contains the following extracts from the specifications, which ⁴⁵⁸ are said to be the only provisions relating to tbe necessary excavations: “Excavation—Excavate for all foundation walls, piers, cappings to piles, etc., as may be shown or required. The earth taken from such excavations shall be used for leveling and filling in up to basement floor slab, and shall be filled in and well wetted and rammed in place around all walls, piers, etc., as the work progresses. Where necessary this contractor shall furnish and ram in place additional fill of good and substantial quality, and shall remove from the premises all superfluous earth, rubbish, debris, etc. “Bailing—Bail and pump out all soil and water that may collect in the excavations from drains, springs, rain, or otherwise, and see that the excavations are well drained before any mason work is done in them. ' “Note—Bidders shall visit site before submitting estimate on this work, and shall acquaint themselves with existing conditions.

The work of this contract shall be so conducted and executed that it will not interfere in any way with the business of the Owner in and about the premises, and no street shall be blocked or so obstructed as to impede traffic. “Piling—This Oontraetor shall furnish and properly place in position all piles necessary to properly support the building so that no settlement shall occur, all as shown and called for on drawings and in these specifications. Piles shall be of concrete, etc.” The plaintiff having submitted a bid to the defendant for the work of excavating for the building, the defendant, on the day it entered into the contract with the Warehouse Company, sent for the plaintiff, and the plaintiff and defendant entered into the following contract, in the form of an offer by the former and an acceptance by the latter : “Baltimore, August 19, 1912. Mess. John Cowan, Inc. Gentlemen:— I hereby propose to do all the excavating at the Bal ⁴⁵⁹ timore Fidelity Warehouse, corner Hillen and High Sts., according to drawings and specifications prepared by Emory & Mussear, Architects, as follows: Beginning at the north end of the building and working toward the front to a distance of 125 feet and to the depth required, including all trenches and footing foundations, same to be completed in twenty working-days from above date.

I also further propose to complete the entire excavation necessary for the building-within forty working days from above date. The price for excavating and hauling away same-to be One Dollar and Thirty-jive Gents ($1.35) per yard. I also further agree that if at any time you should see fit to put a steam shovel on the works I will haul the dirt away after being loaded on my wagons by the-steam shovel for the sum of One Dollar ($1.00) per yard and will agree to take from this shovel 300 yards, per day. I further agree to pay to you the sum of $95.00 per day as liquidated damages for each and every day thereafter exceeding either the twenty or forty day time limits.

Terms: eighty per cent, of the value of the work completed each week, balance within thirty days after-completion. Yours respectfully, Accepted: (Signed) Wm. Meyer. (Signed) John Cowan, Inc., (Seal) By Wm.

B. Morris.” Plaintiff states that he began excavating for the building-on the 19th of August, 1912, and completed the work on the 25th of the following October. During that time there were nine Sundays and twelve days on which he could not work on account of rain, making in all twenty-one days which were not working days. He says that he “was to complete-the first half of the contract in twenty days, and twenty days ⁴⁶⁰ additional for the second half”; and that he completed the excavations in forty-six days, which, “according to his calculation, was six days over the forty days’ period in the contract” ; that he could not tell when he completed the first half of the work because he “didn’t keep any dates at all for the first half,” and does not deny that it was not completed until the fifteenth of October. Referring to a conversation between the plaintiff and Mr. Tase, the vice-president of the defendant,, on the day the plaintiff entered into the contract, and immediately preceding its execution; plaintiff was asked by his counsel the following question: “What, if anything, was said by Mr. Tase and you at that time about the character of the soil or the character of the digging that was to be done by you?” The question was objected to by the defendant, but the Court below overruled the objection, which ruling is the subject of the first exception, and the plaintiff replied: “Mr. Tase said to me, Meyer, you know that this job must go on in a hurry, and I said, I am the man that can do it in a hurry.

Now, then, I said, Mr. Tase, how many yards of dirt have you there? I don’t understand blue prints; tell me how many yards of dirt you have there, and T will tell you how long it will take me to dig it out. He said about 6,000 yards, and I said, If you have 6,000 yards of dirt there I will move it in 40 days, and he said, Couldn’t you give me half of the cellar in twenty days and the balance in 40 days?, and I said, Well, I don’t think there would be any trouble to do that, but we can start from one end and go” out at the other end. I said, I guess the digging will be very good there, because they have a test-hole over there at the comer and they are going to drive piles and the digging is going to be fine, and he said, The digging is going to be lovely, because a test-hole has been dug and there is going to be good digging, and I said, If that is the case I can get the job out in 40 days.” Plaintiff further testified that before making any bids for the work he examined the test-hole, which had been dug by the Warehouse Company or the Rail ⁴⁶¹ road Company, and the blue prints and specifications, which provided for piles to be driven, etc., and that the statement of Mr. Tase, the conditions shown by the test-hole and the provision in the specifications in regard to piles led him to believe that the earth would be “soft” and that “the digging would be good”; that after he and his employees had worked about sixteen days, and “had the cellar at grade” and “were digging the footings where the piles were to go” they “struck nothing but a bed of solid rock” ; that he had to go to the City Hall to get a permit to “blast out the rock” ; that the rule of the Engineer’s Department prohibited blasting “where teams are passing,” except after six o’clock in the evening and early in the morning; that he “took out” 456 cubic yards of rock and 7,350 cubic yards of dirt-, and that the delay in completing the work within the time specified in the contract was due to the rock and the fact that he could not do any blasting except at the hours named; that the defendant did not pay him “for all the dirt- he dug and hauled away”; “that there was still due him the sum of $2,181.46, figured out on the basis of $1.35 per cubic yard for the dirt taken out,” and that he had demanded the $2,181.45 from the defendant, but that it had declined to pay it on account of the delay in completing the work.

According to the evidence produced by the defendant, nothing was said by Mr. Tase to the plaintiff about the character of “the digging” to be done, and the plaintiff never intimated that the contract did not include blasting and moving rock until he testified in this case. The provisions of the contract between the defendant and the Warehouse Company in respect to the time allowed for the erection of the building and the obligation of the defendant in the event of its failure to comply with that requirement were made known to the plaintiff, and the clause in the contract we are now considering requiring the plaintiff to complete the first-half of the excavations within twenty working days was inserted for the purpose of enabling the defendant to com ⁴⁶² menee the erection of the foundation and walls of the northern half of the building while the plaintiff was excavating for the other half. Mr. Tase states that excluding Sundays and holidays, and counting only “the days on which the work could be done,” twenty working days from the 19th of August extended to the afternoon of the 11th of September, 1912; that the first half of the excavations was not completed until the 15th of October, and that there were “thirty-four days overtime on the first half of the contract” for which the defendant was entitled to claim $95.00 per day; that he “has had a great deal of experience in excavating work of that character * * * and in his opinion there was no reason why the excavating” for “the first half of the building could not have been done in twenty working days;” that the defendant had made up the “time lost” through plaintiff’s “delay;” but that it had cost the defendant a great deal of money to do it. On cross-examination he further stated that the building was not completed within six months, and that the Warehouse Company had deducted about $2,000.00 from the contract price for that reason.

There is no charge made in the account for blasting and moving the rock referred to, and the items of the account are not disputed. ETor is there any serious conflict of evidence in regard to the number of days the plaintiff was engaged in the work beyond the twenty days limit, which, according to the defendant’s evidence was from twenty-six to thirty-four days. The record contains about eighty pages of testimony, most of which was offered for the purpose of showing the cause of the delay and that the defendant was not damaged by reason thereof, and there are thirteen exceptions to the rulings of the Court in respect thereto, but the brief reference we have made to the evidence is sufficient to show that the important questions to be determined are, first, whether the $95.00 per day mentioned in the agreement is to be treated as a penalty, or, in the language of the contract, as liquidated damages, and the effect of that provision upon the rights of the parties, and, second, whether the ⁴⁶³ plaintiff can, under the circumstances and in this case, rely upon the fact that he encountered rock as an excuse for his failure to complete the first half of the excavations within the time specified. The rules hy which we are to he guided in the solution of the first question with which we are here confronted are clearly stated in the very recent case of The Baltimore Bridge Company v. United Railways and Electric Company, Ante, page 208, where the previous decisions of this Court and of other courts are referred to and fully discussed in the opinion prepared hy Judge Pattisox.

It is there said: “Erom the authorities given above, it may be stated as a settled rule of law, that where the parties, at or before the time of the execution of the contract, agree upon and name a sum therein to be paid as liquidated damages in lieu of anticipated damages which are in their nature uncertain and incapable of exact ascertainment, that the amount so named in the agreement will be regarded as liquidated damages and not as a penalty, unless the amount so agreed upon and inserted in the agreement be grossly excessive and out of all proportion to