Mayor of Baltimore v. Poe

Constable, J., delivered the opinion of the Court. There are cross-appeals in this case; each party appealing from the judgment rendered iu favor of the receivers of The Hoel Construction Company. The case arose out of the contracts awarded to The Hoel Construction Company by the City of Baltimore through the Board of Awards for the construction of the Sewage P'ump1ing Station near East Falls in Baltimore City. It was proposed by the city to erect the station building by two separate contracts: one for the substructure or foundation, called Contract Ho. 3, and the other for the erection of the superstructure, called Contract Ho. 4, and invited bids for that work.

The specifications for Contract Ho. 3 provided that if that contract was awarded to one bidder, and the contract -for the superstructure was awarded to another’ bidder the number of working days from the date of the commencement of the work to its completion would he limited to two hundred days, but that if the contracts for both the substructure and the superstructure were awarded to the same bidder the number of working days from the date of commencement to completion would be limited to 420 days. The same provision as to limit of time for completing the substructure and the super ⁶⁴⁰ structure was made in the specifications for Contract Ho. 4; 220 working days if different bidders and 420 days if the same bidder was awarded both contracts. The Hoel Construction Company, being the lowest bidder for each of the two contracts, was awarded both. Provision is made for computing what shall be working days under the terms of the contracts as follows: “Every day except Sundays' and also except legal holidays on which no work is done, shall be considered a working day, provided that it is not unfitted either by wind, rain, snow or temperature for working out of doors. “The length of time (expressed in days and parts of days) during which the work has been delayed by any act or omission of the Sewerage Commission shall be allowed to the contractor and excluded from such computation.” Calvin W. Hendrick, Chief Engineer of the City, was in charge of Contract Ho. 3, or the substructure contract, and Henry Brauns, an architect, was in charge of Contract Ho. 4, or the superstructure contract.

Contract Ho. 3 contained this provision: “The engineer shall determine the number of working days that the contractor is in default in completing the work to be done under this contract, and shall certify the same to the Commission in writing. * * * His determination and certificate shall be final and conclusive.” Contract Ho. 4 contains the same provision except the architect is substituted for the engineer. Provision is also made in the contracts that for each and every working day that the engineer or architect shall certify that the contractor is in default in completing the work to be done under the specifications, the contractor shall pay to the city the sum of thirty-five dollars, and that for each day the Work may be completed before the time fixed in the contracts for such completion the contractor shall be allowed a premium of thirty-five dollars. Also the following provision: ⁶⁴¹ “53. The contractor shall do such extra work as may ho ordered in writing hy the architect or engineer with the authorization of the Commission.

Ho claims for extra work will he considered or allowed unless said work has been so ordered by the architect or engineer, nor unless the Commission shall approve such claim for extra work and certify in writing that in its opinion such extra work was necessary for the public interest, stating in the certificate its reasons.” And the further provision: “14. To prevent disputes and litigations, the architect or engineer shall in all cases determine the amount or quantity, quality, acceptability and value of the work and materials which are to be paid for under this contract; shall decide all disputes, questions and doubts relating to the work and the performance thereof, and shall in all casos decide every question which may arise relative to the contract or to the obligations of tbe contractor thereunder. “His determination and decision shall he final and conclusive upon the contractor and all whom he may employ to execute the various branches of the work, whether as sub-contractors or otherwise, and upon all parties from whom materials may be purchased, either by the contractor or by any sub-contractor. In case any question shall arise between the contractor and the city touching the contract, the estimate or certificate and decision of the architect or engineer shall he a condition precedent to the right of the contractor to receive any moneys under the contract.” Provision was also made that the contractor would be required to comply strictly with all the requirements of the building regulations and other ordinances of the City of Baltimore. And also the following provision was contained in both contracts: “48.

The Commission reserves the right to suspend the whole or any part of the work to be done hereunder, if it shall deem it for the interest of the ⁶⁴² City of Baltimore to do so, without • compensation to the contractor for such suspension, other than extending the time for completing the work as much as it may have been delayed by such suspension.” The purpose of this building was to receive by gravity all the sewage from South and West Baltimore, and after treating it there to force it by means of gigantic pumps to the disposal plant some miles away. It was necessary for carrying out this purpose to have the foundations unusually strong, and to insure that, the following provision was made in Contract No. 3: “68. It is expected that satisfactory material for the foundations will be found at El. 23, but the contractor shall carry the excavation to a greater depth wherever, in the opinion of the engineer, such greater depth is necessary to secure a suitable foundation. If, on the other hand, a satisfactory foundation is found at a less depth than El. 23, the excavation shall be discontinued at that depth, if directed by the engineer.” The contracts and specifications are contained in printed books covering over 180 pages, and as it would be impossible to reproduce them in full, we have confined ourselves to quoting those which we consider most applicable to this controversy.

The work on the substructure was begun on June 29, 1908, and the whole building completed August 24, 1911, and under1 date of August 25th and September 11, 1911, the architect and the engineer respectively certified to the Oommission that the number of days the contractor was in default under the contracts was 144% working, days, at thirty-five dollars per day, and therefore subject to damages of $5,-083.75. The amount of money certified to be due under the contracts less $5,083.75 was paid over to the contractor. Receivers were appointed for the Noel Construction Company and this action was commenced by them on the 6th ⁶⁴³ day of January, 1916, for the recovery of the amount retained as damages for failure to complete the work within the specified 420 working days, for extra work performed, damages incurred by the company through interference with the work and for the recovery of $853.20 charged against the contractor for insuring the building after it had been accepted by tbe Commission. Tbe last item is conceded by the city to have been charged in error against the contractor and should be allowed to tbe plaintiff.

The trial Court held that neither the certificate of the chief engineer nor the certificate of the architect was “teehieally a conclusive determination of the number of working days in which tbe 'Noel Construction Company Was in default in completing the work to be done under tbe respective contracts in evidence,” and under a prayer of its own left to the jury to determine whether the Foel Construction Company finished the contracts under or beyond the number of days limited by tbe contract. But also held that they were not entitled to recover for other claims other than the insurance, which was conceded. From the ruling of the Court, upon the prayers, in holding that the certificates of the engineer and architect as to the number of days in default wore not binding and conclusive upon the contractor, tbe city excepted and that question constitutes its appeal. At this date it can not he questioned what is the effect of a provision in a contract expressly leaving to a third party the determination of questions such as were left in these contracts to the determination of the engineer1 and the architect.

The rulings of this State and the courts of all other States in the Fnion, with the exception of Indiana, are uniform, as to the effect of such a. provision as in these contracts; that the decision of such person shall be final and conclusive upon parties to tbe contract, provided tbe decision concerns matters within the scope of the submission, and is not. subject to review bv the courts, if made by tbe third party in tbe absence of fraud or bad faith. M. & C. C. v. Ault, 126 Md. 423 ; ⁶⁴⁴ M. & C. C. v. Talbott, 120 Md. 363 ; Hughes v. Model Stoker Co., 124 Md. 289 ; Pope v. King, 108 Md. 37 ; Lynn v. B. & O. R. R. Co., 60 Md. 414 ; 6 Cyc. 40. Indeed the soundness of this principle of law is not questioned by either of the parties, but the plaintiffs contend that the determination of these questions bearing upon the number of actual working' days consumed in the work was not made by those authorized to make the decision, but was the result of influence of others. There is, however, no claim made that fraud or bad faith was exercised either by the engineer or the architect.

The work on the substructure started on June 29th, 1908, and was finished on March 21st, 1910, covering a period of 632 days. The engineer certified that of that number of days 188 were charged against the contractor as actual working days. From June 29th to November 2d, 1908, the work progressed satisfactorily, and ninety seven and a half days of the 188 were charged against the contractor during that period. At that time serious difficulty arose, growing out of interference, justly so made, by the Building Inspector of Baltimore City, who claimed that the excavation should go lower than it was planned to go.

The controversy between the engineer and the Building Inspector was referred by the Sewerage Oommission to an Arbitration Board. Many tests were made on behalf of the Arbitration Board and on behalf of the Building Inspector by driving piles, etc. Of course during all of this period great delay was caused the Noel Construction Company in carrying out the contract, and on April 27, 1909, the company wrote the engineer requesting an extension of time between November 6 th and April 23rd, in which he claimed of the 143 days included between those dates he should be allowed'an extension of 101 days, or, in other words, that he should only be charged with foidy-two actual working days. The engineer decided that from November 2, 1908, to April 22, 1909, the contractor should only be charged with forty working days. It was decided to carry the excavation a considerable distance below ⁶⁴⁵ elevation —23, in fact to carry it to elevation —31- in some instances j and because of this necessary extra work during tbe months of June, July, August, September and October the engineer charged them with only one and a half actual working days.

During the delay the engineer was called upon to decide many questions. Some of these questions he himself decided, ■ others he referred to committees or to the Sewerage Commission. On questions of time extensions, however, he decided all himself, with the exception that once, in his absence, when the ISToel Construction Company asked for a three day extension in August, 1908, because of a storm, the acting engineer referred the determination to the Sewerage Commission, which granted the extension. The engineer as of June 12, 1911, wrote to a special committee of the Sewerage Commission explaining how ho arrived at the 188 working days which he charged to the contract for the substructure as follows: “The foundations were completed and turned over to tbe architect for work on the superstructure on March 21, 1910, making a total of 632 days.

Of this total period there would he deducted 102 days for Sundays and holidays, and 41 days lost on account of had weather, making a total of 143 days to be deducted from the total time, leaving tbe possible number of working days 489. “On account of delay due to the action of the Building Inspector and the removing of certain undesirable material encountered below —23, called for in paragraph 68 of the specifications, there was to he a further deduction of 301 days, leaving 188 working days chargeable to the contractor of the substructure. The contractor, therefore, is entitled to an extension of 301 days due 10 the reasons set forth, and I would recommend that this extension he granted. The superstructure being entirely under the jurisdiction of the architect, I have nothing to do with that matter.” As to the certificate of the architect the plaintiffs claim that it was invalid as to its binding effect because it was made up at the dictation of the City Solicitor and others. ⁶⁴⁶ We find from the record, however, that while it is true he had a conference with the City Solicitor and members of the Sewerage Commission on October 26th, 1911, and that a certificate was prepared for his signature to be antedated as of August 25, 1911, that the architect practically re-wrote and forwiarded that as his certificate to the Chairman of the Sewerage Commission, yet, nevertheless, the examination of the architect shows that he had no doubt as to the number of working days the contractor consumed on the superstructure, but that the doubt in his mind was caused by whether or not he could certify as to the number of days consumed on the substructure, with which he had nothing to do. As supplementing his testimony on this point that he had no doubt as to the number of days consumed there was introduced a letter from him under date of July 1, 1913, long before he had filed any certificate, to the Chairman of the Sewerage Commission as follows: “Dear Sir: