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FEHLHABER CORPORATION ET AL. v. UNICON MANAGEMENT CORP. ET AL. (07/03/69)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT 1969.NY.42451 <http://www.versuslaw.com>; 302 N.Y.S.2d 98; 32 A.D.2d 367 July 3, 1969 FEHLHABER CORPORATION ET AL., RESPONDENTS,v.UNICON MANAGEMENT CORP. ET AL., APPELLANTS Appeal from a judgment of the Supreme Court in favor of plaintiff, entered May 2, 1968 in New York County upon a decision of the court at a Trial Term (Peter A. Quinn, J.) without a jury. Samuel Gottlieb of counsel (Harry Giesow with him on the brief; Gainsburg, Gottlieb, Levitan & Cole, attorneys), for appellants. Louis Cantor of counsel (Max E. Greenberg, attorney), for respondents. McNally, J. McGivern and Nunez, JJ., concur with McNally, J.; Tilzer, J., dissents in opinion in which Capozzoli, J. P., concurs. Author: Mcnally


Appeal from a judgment of the Supreme Court in favor of plaintiff, entered May 2, 1968 in New York County upon a decision of the court at a Trial Term (Peter A. Quinn, J.) without a jury.

McNally, J. McGivern and Nunez, JJ., concur with McNally, J.; Tilzer, J., dissents in opinion in which Capozzoli, J. P., concurs.

Author: Mcnally

 Defendants appeal from a judgment for $410,046.88 (non-jury), representing the amount due on a subcontract for pile driving incident to the construction of the Newtown Creek Pollution Control Project ("Project"). Said sum is made up of retained percentages of installment payments for work performed and the excess of the sum of $96,000 withheld by defendants from progress payments due plaintiffs for insurance premiums over the audited insurance premiums for which plaintiffs are liable under the subcontract.

Defendants entered into a contract with the City of New York for the construction of the Project entailing a cost of $42,000,000. Plaintiffs' subcontract dated February 11, 1963 involves about $7,000,000. It provides: "The Subcontractor hereby agrees to be bound by all the pertinent terms, conditions, and provisions of the Principal Agreement".

The principal agreement, under the caption of "Payment to Subcontractor", provides: "The agreement between the Contractor and his subcontractor shall contain the same terms and conditions as to method of payment for work labor and materials, and as to retained percentages as are contained in this contract." Following is a provision obligating the contractor, the defendants, to pay subcontractors in accordance with the terms of their respective subcontracts.

Paragraph 30 of the printed subcontract is, in part, as follows: "30. The Contractor shall pay to the Subcontractor for full performance of this subcontract [the sum of] see attached sheet in accordance with the mode of payment herein set forth, subject, however, to such additions, deductions or adjustments as are provided for herein and/or in the Principal Agreement. The Subcontractor hereby agrees to accept said sum in full consideration and satisfaction of any and all claims under this subcontract. In no event shall the Contractor be liable to the Subcontractor for any claims or damages or for work performed, except as provided for herein. Partial payments by the Contractor to the Subcontractor hereunder shall be made only at such time or times as payments made by the Owner to the Contractor shall include work completed by the Subcontractor, and then, only in the ratio that the work performed by the Subcontractor bears to all work to be done by him under this subcontract or to the extent that the Contractor has received payment for said work, whichever is the lesser. In any event, payment will not be made by the Contractor to the Subcontractor until the Owner has made payment to the Contractor for the work. [The Contractor hereby reserves the right to withhold TEN (10%) per cent of such payments as retainable until the Contractor receives final payment from the Owner upon completion of the entire job;]" The bracketed portion of the printed clause is deleted; the italicized portion is typed. The margin of the printed paragraph is initialed by the parties.

Attached to printed paragraph 30 is typewritten paragraph 30, which reads:

"30. The Contractor shall pay to the Subcontractor for full performance of this subcontract -- See Unit Prices Rider 'A'. Basis of payment will be as allowed under the specifications for contract items 2A, 2B and 3. "The Contractor will retain from each monthly partial payment 10% of such payment until 50% of the estimated subcontract price, mentioned in Rider 'A', has been reached. All subsequent monthly partial payments are then to be made with no retainage.

"The retainage of 5% of the estimated contract price is to be paid to the Subcontractor by the Contractor as follows:

"1 -- One-half of this retainage should be paid 90 days after the completion and acceptance of the Subcontractor's work.

"2 -- The then remaining balance, less the Lump Sum of $25,000.00 should be paid by the Contractor to the Subcontractor 180 days after the completion and acceptance of the Subcontractor's work.

"3 -- The Lump Sum of $25,000.00 still retained is to be paid by the Contractor to the Subcontractor upon receipt of the final payment by the Contractor from the City." Typewritten paragraph 30 is also initialed by the parties.

The fourth and fifth sentences of printed paragraph 30 relate to partial payments. As to partial payments it is provided: "In any event payment will not be made by the Contractor to the subcontractor until the Owner has made payment to the Contractor for the work." The sixth sentence, which is deleted, deals with the withholding of 10% of the partial payments.

Typewritten paragraph 30 deals with the retainer by the contractor, the defendants, of 10% of each monthly partial payment "until 50% of the estimated subcontract price, mentioned in Rider 'A', has been reached." Thereafter, it states, no retainage shall apply. It further provides the retainage "of 5% of the estimated contract price" is to be paid one half 90 days after "completion and acceptance of the Subcontractor's work" and the balance, except for $25,000, to be paid "by the Contractor to the Subcontractor 180 days after the completion and ...


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