DENISON CONST. CO.
MANNESCHMIDT et al.
[113 N.Y.S. 1072] Bruce R. Duncan (Addison S. Sanborn, on the brief), for appellant.
Robert H. Roy, for respondent the Denison Const. Co.
John H. Durack (Herman A. Brand, on the brief), for other respondents.
Argued before WOODWARD, HOOKER, GAYNOR, RICH, and MILLER, JJ.
The contract contained the following clause:
" Should the contractors at any time refuse or neglect to supply a sufficiency of properly skilled workmen, or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence, or fail in the performance of any of the agreements herein contained, such refusal, neglect or failure being certified by the architects, the owner shall be at liberty, after three days' written notice to the contractors, to provide any such labor or materials, and to deduct the cost thereof from any money then due or thereafter to become due the contractor under this contract; and if the architect shall certify that such refusal, neglect or failure is sufficient ground for such action, the owner shall also be at liberty to terminate the employment of the contractors for the said work and to enter upon the premises and take possession, for the purpose of completing the work included under this contract, of all materials, tools and appliances thereon, and to employ any other person or persons to finish the work, and to provide the materials therefor; and in case of such discontinuance of the employment of the contractors they shall not be entitled to receive any further payment under this contract until the said work shall be wholly finished at which time, if the unpaid balance of the amount to be paid under this contract shall exceed the expense incurred by the owner in finishing the work, such excess shall be paid by the owner to the contractors; but if such expense shall exceed such unpaid balance, the contractors shall pay the difference to the owner. The expense incurred by the owner as herein provided, either for furnishing materials or for finishing the work, and any damage incurred through such default shall be audited and certified by the architect, whose certificate thereof shall be conclusive upon the parties."
The owner refusing to pay the contractor the fourth installment under the contract when it was demanded, the contractor quit and abandoned the work altogether. Thereupon it filed a lien for the balance it claimed was due under the contract for work and material it had furnished up to that time, and brought this suit to foreclose such lien. The complaint is for the said balance, viz., that the plaintiff had performed work and furnished material under the contract to the amount of $10,413.93, on which $5,700 had been paid, leaving a balance of $4,713.93 due to the plaintiff, to which are added some items of alleged extra work and material.
The learned trial judge having found that the owner refused to pay the fourth installment on the ground that the contractor had not performed the contract up to that stage of payment, and that the contractor thereupon " stopped work under the contract and thereupon refused to continue with the performance of the contract," found also that at that time the contractor " had not performed its contract up to the period of performance which would entitle it to the fourth payment thereunder, and the work already done by it and materials already furnished were inferior and different from those called for by the said contract."
Now, it is trite to say that this finding required that the complaint should be dismissed (except, it may be, for the items of extra work found), for performance--or, as is sometimes tautologically said, " substantial performance," which is " performance" --was a condition precedent to a right to recover anything under the contract. Rowe v. Gerry, 112 A.D. 358, 98 N.Y.Supp. 380; Van Orden v. MacRae, 121 A.D. 143, 105 N.Y.Supp. 600.But instead judgment was given for the plaintiff; not on the cause of action set out in the complaint, however, but for the excess of the sum remaining unpaid on the contract when the plaintiff abandoned it, over the amount it cost the owner to complete the building after such abandonment. This was done on a finding that the owner completed the contract for the plaintiff's account, i. e., as its agent or trustee; which, if true, required her to account to the contractor at the end, and pay it any part of the [113 N.Y.S. 1073] contract price that might remain unexpended, or, on the other hand, to enable her to exact of it any amount expended in excess of the contract price. It would suffice to say that there was no such cause of action before the court; but to go further, there was no evidence whatever to support the said finding. It was made on the contract itself, viz., on the theory that it contained a provision that if the contractor should at any time break the contract and abandon the work the owner would be obliged to go on and finish the building according to the plans and specifications for the plaintiff's account, i. e., as his agent, or else that if she did finish it, it would be for the contractor's account, whichever the claim is, for that is left in doubt. That would be a most extraordinary contract for owners to make with contractors. And when the contract in this case is looked at, it is of course found to contain no such thing, but quite the reverse. Instead of applying to the case of the contractor breaking the contract and abandoning the work, the clause of the contract on which the said finding is based, is the usual one found in such contracts, which applies only to the case of the owner terminating the work of the contractor while the latter is going on with it, and entering upon the premises and superseding him and completing the work. In such a case the owner completes for the account of the contractor. Owners would be in evil case indeed if this clause applied when the contractor, after breaking the contract by substituting inferior work and material for that contracted for, or altogether omitting work and material contracted for, abandons the work altogether, as is the case here; for they could not leave their property in its unfinished condition, and yet if they completed it they would have to do it as the agent of their contractor who had thus grievously wronged them. The idea that a contractor may by abandoning the work put the owner in the position of being obliged to complete as his agent or trustee, if he completes at all, and to account to him at the end, only needs to be stated to expose its absurdity. It could not have been intended by the court to decide such a thing in Van Clief v. Van Vechten, 130 N.Y. 571, 29 N.E. 1017, as is claimed. There the owner pleaded that he completed for the account of the contractor, which made an entirely different case to the present one.
Where the contractor breaks the contract and abandons the work, he is left without any cause of action whatever, for his right to recover depends on his performance of the contract; unless, of course, the owner has contracted with him that if he breaks the contract and abandons the work, the owner will complete for his account--if we can conceive of any sane owner making such a contract. There is no such contract here. It is that if the architect certifies that the contractor fails to supply a sufficient number of workmen, or sufficient materials, or to prosecute the work with promptness and diligence, or fails in the performance of any agreement of the contract, the owner may, after giving the contractor three days' written notice, " provide any such labor or materials," and deduct the cost thereof " from any money then due or thereafter to become due the contractor under the contract," or (and this is the part applicable to the present case), if the architect shall certify that the foregoing " refusal, neglect or failure [113 N.Y.S. 1074] is sufficient ground for such action, the owner shall also be at liberty to terminate the employment of the contractors for the said work, and enter upon the premises and take possession" and complete, the contractor to be liable to the owner at the end for any excess the owner has paid over the contract price, and the owner to be liable to the contractor for the balance of the contract price if it be not all expended. In the present case the owner never elected to " terminate" the contract and take possession and complete. It was already terminated by the contractor.
The fact that there are lienors under the contract does not enter into the question. Their case may be hard, but courts have to heed the adage, often verified, that hard cases make bad law.
The judgment should be modified by reducing the amount found to be due to the sum of $284.10 found to be due for extra work and material.
The defendant, owner, proved, and the court found, that, after the plaintiff abandoned the contract, the owner completed the building according to the plans and specifications, and that the cost of completion plus the payments theretofore made, deducted from the contract price, left a balance of $2,163.95. The defendants, McKenna and Wood, furnished material of the ...