Henderson Bridge Company v. McGrath

This was an action at law brought by the defendants in error against the plaintiff in error in the circuit court of Vanderburgh county, Ind., and removed into the circuit court of the United States for the district of Indiana.

The Henderson Bridge Company is a corporation of the state of Kentucky, organized for the purpose of building a bridge over the Ohio river from the city of Henderson, Ky., to the Indiana bank of the river, and a railroad thence to the city of Evansville, Ind., a distance of about nine miles. On the 8th of July, 1884, a contract was made between the company and the defendants in error for the grading, masonry, and trestling of the railroad for a distance of something over six miles, measuring from Evansville to the bridge, designated as sections 1 to 6, inclusive, and a part of section 7, each section being one mile long. No formal written contract was executed between the parties, but the agreement arrived at consisted of (1) specifications and profile of the work to be done on the part of the company; (2) proposals on the part of the contractor; and (3) acceptance of the proposals by the company. The specifications prepared by the chief engineer of the defendant classified the work as 'clearing and grubbing,' 'excaa tions,' 'embankments,' 'masonry,' and 'pile trestle.' Defendants in error completed the work about the 1st of March, 1885, and the company accepted it. On the final settlements a controversy arose as to the amount of the balance due the defendants in error, after crediting the partial payments made as the work progressed; and this suit was brought to recover the amount of $23,667, claimed by them to be due, which the company had refused to pay. The bills of exception taken below, however, and the errors assigned, narrow the controversy in this court to two items,-one being in respect to a drainage ditch, which was ordered to be made; the other, in regard to the value of certain extra pile-work. Our statement of the case will be confined to an examination of those points.

(1) The work contracted for lay, all except the two sections nearest to Evansville, through the bottoms of the Ohio River, which were subject to overflow. On that portion in the bottoms the profiles showed several stretches of trestling, which aggregated 1,486 feet. The specifications, however, provided that 'the quantities marked on profile are approximate, and not binding. The relative amounts of trestle and earth-work may be changed at option of the engineer, without prejudice.' While the work was in progress the company determined to modify the plan so as to omit the trestle, and make a continuous embankment with underlying drain-pipes. This modification necessitated a different system of surface drainage, and it was determined that the borrow-pits (that is to say, the excavations along the line of the railroad from which the earth was taken to form the embankment) should form a drainage ditch on the eastern side for about two-thirds of the way. Mr. Hurlburt, who was the company's third engineer in rank, and had immediate supervision of the work in the field, was directed to have these modifications carried out. In consequence of this change of the plan, Mr. Vaughan, the company's chief engineer, on the 16th of August, 1884, telegraphed O. F. Nichols, the resident engineer at Henderson, directing him to notify the defendants in error that 'all trestle on portion of line embraced in their contract will be dispensed with.' And on the 26th of August following Nichols wrote them as follows: 'As directed by the chief engineer, Mr. F. W. Vaughan, I hereby notify you that the trestle shown north of station three hundred and thirty-three (333) on profile of the Henderson Bridge Railroad will be omitted. The corresponding space will be filled by solid embankment. Arrangements have been completed for additional borrow-pits necessary to complete these embankments.' No objection was made to that change by the defendants in error. In regard to the ditch, however, it was different. Defendants in error maintain that no such ditch was called for either by the specifications or by the profile, and that, therefore, they were under no contract to make it. They claim further, and there is testimony in the record to the point, that, on the day after the receipt of Mr. Nichols' letter, hurlburt, the local engineer in charge, came to see them, and notified them that they would be required to make said ditch on the eastern side of the embankment from section 3 to section 7, inclusive, for the purposes of draining the borrowpits, such ditch to be two feet wide on bottom in section 3, three feet at bottom in section 4, four feet wide on bottom in section 7, and to run through the borrow-pits, and have a slope of one and a half feet, horizontal measurement, to one foot perpendicular. Defendants claim, further, that they objected, on the ground that they could not make the ditch without compensation, and that thereupon Hurlburt replied that they would be paid for it at the same price they had bid for excavation, and that it would be estimated from the top of the ground down. The company, on the other hand, denies both the fact of the making of such alleged supplementary contract, and the authority of the engineer, Hurlburt, to make it. It maintains that the evidence show only an expression of opinion made by Hurlburt. The annexed rude diagram of a cross-section of the work will illustrate the situation.

Defendants in error do not deny the fact of the coincidence, as stated, between the ditch and the borrow-pits, but they justify by saying that the basis of measurement adopted in their contract, while it is to a certain extent arbitrary, yet is not a cheating or improper basis, for the reason that it is a commutation, and was necessitated by the introduction of the continuous parallel ditch. The digging of such a ditch introduced, they claim, an entirely new element into the work; it peremptorilly demanded the careful maintenance of the ditch level throughout its whole extent, and required long hauls of dirt; and whereas, before the ditch was ordered, the excavation was made entirely with reference to the convenience of depositing the dirt in the embankment, afterwards it had to be made with reference to the ditch.

(2) The defendants in error were required to make certain trestle approaches on one side of the road for some of the road crossings and farm crossings, into which were put 2,800 lineal feet of piling. The profile did not indicate that these approaches were to be made of piling; and defendants in error claim that they were not, therefore, included in the bid, but were made under a new agreement that they should be paid for 'as was right.' The contract price for trestles was 30 cents per lineal foot, but the evidence of defendants in error tended to show that the construction of these trestles was worth from 60 cents to $1.50 per lineal foot. The engineer's estimate for February, 1885, contained this item: 'Secs. 3, 4, 5, 6, 7. Piles driven, 2,108 lineal feet, 30 cents per lineal foot, $630.90.' This was part of the piling in controversy, and on this estimate the defendants in error settled with the company for February, and receipted it. The company now claims that said settlement and receipt, and the original agreement as to value in the bid accepted, conclusively fixes the price at 30 cents per lineal foot for the whole 2,800 feet; while the defendants in error, on the other hand, claim that the receipt in February was merely for a payment for 2,108 lineal feet, and that they can, as to the other 700 feet, still prove value on a quantum meruit.

Under these forms of the controversy, not necessary to be further adverted to here, the case was tried below. On the trial the court instructed the jury as follows: 'The taking out of the trestles and the requirement of earth-work in their place created no basis for a claim for extra compensation; so that, for the purpose of the question we are now coming to, the case is the same as though the specifications and profile in the first instance had shown continuous embankment. The bridge company, having come to the conclusion to make this embankment, deemed it proper to make a change in the requirements in respect to ditches, but there is no reservation in the contract in regard to that. Of course, the general terms of the contract in respect to the right of the engineer to oversee the work may embrace the power to direct reason able changes in regard to ditches, but there is nothing authorizing the bridge company to substitute a continuous ditch for the ditches defined upon the original profile; so, when they determined to require this continuous ditch to be made, it necessarily put the parties into a position for negotiation on the subject, and Mr. Hurlburt, the engineer in charge, being authorized to have this ditch constructed, had incidental authority to agree upon the price or mode of measurement.' The defendant at the time excepted to so much of that instruction as is contained in the following words, viz: 'But there is nothing authorizing the bridge company to substitute a continuous ditch for the ditches defined upon the original profile; so, when they determined to require this continuous ditch to be made, it necessarily put the parties into a position for negotiation on the subjec, and Mr. Hurlburt, the engineer in charge, being authorized to have this ditch constructed, had incidental authority to agree upon the price or mode of measurement.'

The court also gave the jury the following instructions, viz: 'But, when it was proposed to make a continuous ditch on the east side of the track at the same time the embankment was being made, that introduced a new element into the problem. If the parties were to make an embankment and ditch also, it became desirable to take the dirt for the embankment from such localities as would be most effective in producing the ditch, and it necessarily resulted from this state of things that a party making embankment would, or might at least, make embankment and ditch at the same time. He might be taking earth out for the purpose of making embankment which he could have taken from another place more economically, if he was not intending to make this ditch. It follows that earth taken from the same place may represent embankment, and also ditch. The excavation made might be borrow-pit, and it might be ditch, and consequently it became proper for the parties concerned to adopt some system by which they would compute the respective amounts to be credited to each phase of the work. The same work being effective, both towards making the embankment and making the ditch, to treat it as all embankment or as all ditch would be unjust. So it was for the parties, the bridge company, and plaintiffs to agree upon some plan upon which they could make a computation; and so I instruct you upon the facts as they appear without dispute that it was within the power of Mr. Hurlburt, the resident engineer, who was superintending the construction of the work, to make a contract with the plaintiffs, who were under contract to make the embankment for the making of this ditch, to agree that they should do this work, and how much of the excavation should be deemed to be for the purpose of embankment, and how much for the ditch.'

The defendant also excepted at the time to so much of that instruction as is in the words following, viz.: 'And so I instruct you upon the facts as they appear without dispute that it was within the power of Mr. Hurlburt, the resident engineer, who was superintending the construction of the work, to make a contract with the plaintiffs, who were under contract to make the embankment for the making of this ditch, to agree that they should do this work, and how much of the excavation should be deemed to be for the purpose of embankment, and how much for the ditch.'

The court also gave to the jury the following instructions, viz.: 'From the duty imposed upon him as resident engineer of the defendant arose Mr. Hurlburt's power to make an adjustment of the question. Plaintiffs claim he did make arrangements with them by which it was agreed that the portion of excavation to be regarded as such should be considered as starting from the lower level of the ditch along its whole length, and be measured at a certain slope to the surface of the earth as it was before work was commenced, and upon that they claim 37,256 cubic yards of excavation as ditch. Defendant claims that Hurlburt did not make any such agreement, and this is an issue of fact which the jury must determine upon the evidence. I will say, however, that under the circumstances Mr. Hurlburt did have power to make the agreement if he saw fit so to do. If you find that he did so and that the measurements he returned are correct, then the plaintiffs are entitled to compensation accordingly for 37,256 cubic yards, at 18 cents per cubic yard.' And to the giving of that instruction the defendant at the time excepted.

The court also gave to the jury the following instruction: 'If Mr. Hurlburt did not make such agreement with these parties, but simply told them what mode of measurement he thought would be adopted, but that it would have to be left to the chief engineer in the end, it would follow that the work was done without any special agreement, and you will be compelled to estimate i upon its fair and reasonable worth. You will, then, consider from the proof how much excavation was made for the ditch, and how much more to make the embankment than if the continuous ditch had not been required, and for the number of yards of earth excavated in consequence allow 18 cents per cubic yard. In this view the figures of Mr. Hurlburt, though relevant, would not be conclusive as evidence. If he made the agreement, as the plaintiffs claim he did, and his estimates were correct, that is an end of the question. If he did not make the agreement, and the question was left open, then you must determine the number of yards excavated for the ditch upon the proof, and allow accordingly the contract price of 18 cents a yard.' The defendant at the time excepted to so much of that instruction as is in the following words, viz.: If he made the agreement, as the plaintiffs claim he did, then that is an end of the question.'

The defendant requested the court, in writing, to give to the jury the following instruction, viz.: 'As to the ditch claimed by plaintiffs to have been made by them on the easterly side of the railroad of defendant, the plaintiffs are entitled to recover only for so much excavation as was actually done for the purpose of making such ditch, excluding any portion of the borrow-pits dug exclusively for the purpose of making the embankments, and that the jury can find for plaintiffs only the contract price of eighteen cents per cubic yard for the excavation, which they may find from the evidence was so made for the purpose of making such ditch.' But the court refused to give that instruction, whereupon the defendant at the time excepted.

As to the claim of the defendants in error for a price extra to the original contract for the trestles built by them, the court gave to the jury the following instructions: 'The next item is the piles in the bridges. The contract price for piles is thirty cents per lineal foot. The profile and specifications, as originally drawn, or as they now stand, show considerable trestle-work, and show generally highway crossings across the track at different places, but there is no statement in the specifications or in the profile with respect to what kind of crossing it shall be, whether of earth or of timber. There is a dispute between the parties arising out of this fact upon the question whether these bridges, made for the purpose of carrying highways over the embankment, are within the contract. The contract in that respect is ambiguous. The court, looking at the contract, cannot say what kind of crossing was intended. There is no proof of custom in this case sufficient to settle this point. We are therefore left to the construction which the contractors themselves have adopted, as shown by their conduct under the contract. When parties have made an ambiguous contract, and have acted under it, and their joint actions show their understanding of it, courts and juries will follow the construction thus indicated. In this case the evidence shows that in respect to 2,100 feet, in round numbers, the plaintiffs themselves treated the piles as coming within the terms of the contract in respect to price by receipting for that price upon the estimates. There has been evidence before the jury-I cannot rehearse it-as to what was said between the engineer of defendant and plaintiffs at the time this work was done. Perhaps the plaintiffs made some protest against doing this work at the price stated, but, nevertheless, they went on and did the work under that price, and receipted for it, and I think the jury should accept that as conclusive upon that point. A subordinate engineer, working in behalf of a corporation, as Mr. Hurlburt was, has no right to waive the effect of receiving pay upon monthly estimates under a contract like this. Such a contract would have but little force or value if a subordinate agent has the power to waive the terms, and this contract declares the estimates made by the engineer, and furnished to the parties, to be final, except for fraud or mistake. If the defn dant had been an individual instead of a corporation, he could have been there in person, and waived the contract, by saying, 'We will leave that open; we will not make that conclusive;' but I instruct you that this subordinate agent, Mr. Hurlburt, working for the bridge company, a corporation whose affairs must have been conducted by agents appointed to act for it,-Mr. Hurlburt acting in this capacity,-could not waive this stipulation in the contract, that the monthly and final estimates should be conclusive. Therefore, in respect to the piling included in the estimate, about 2,100 lineal feet, plaintiffs have precluded themselves from claiming extra pay. In respect to the work on the embankment, the act of accepting pay at the contract price raises a presumption that that was the proper price for the whole amount, and, in the absence of proof to the contrary, the contract price should govern; but the presumption is not conclusive as to the 700 feet of piling not in the estimates, and if you find upon the proof that there was an agreement between plaintiffs and Mr. Hurlburt that these piles should be paid for at what they were reasonably worth, and not by the contract price, you may allow the reasonable value as shown by the proof on the subject.'

The defendant at the time excepted to so much of that instruction as is contained in the following words, viz.: 'But the presumption is not conclusive as to the 700 feet of piling not in the estimates, and if you find upon the proof that there was an agreement between plaintiffs and Mr. Hurl burt that these piles should be paid for at what they were reasonably worth, and not by the contract price, you may allow the reasonable value, as shown by the proof on the subject.'

The defendant in writing requested the court to give the jury the following instruction, viz.: 'Where any of the work done by plaintiffs, and sued for in their complaint, has been included in any of the monthly estimates of such work read to them, and such work is therein valued at the contract price, such fact is conclusive evidence that such work was done under the contract, and the prices fixed there final and conclusive.' But the court refused to give that instruction, to which ruling of the court the defendant at the time excepted.

It is claimed that, by reason of those instructions, the jury were authorized to find, and did find, for the defendants in error, for the alleged ditch, $5,636.55, and for the piling, $850, in excess of any rightful claim they had; and to that extent the plaintiff in error which was the defendant below, avers the verdict to be erroneous. The verdict of the jury upon which the judgment was rendered was for $13,470 in favor of the defendants in error. The assignments of error are (1) that the court erred in refusing to charge the jury in behalf of the defendant below, as stated; and (2) that the court erred in those parts of the charge given, which were objected to by the defendant below, as stated.

S. B. Vance and J. M. Shackelford, for plaintiff in error.

Alex Gilchrist and C. A. De Bruler, for defendants in error.

Mr. Justice LAMAR, after stating the facts as above, delivered the opinion of the court.