U.S. Supreme Court
Chicago, S.F. & C. R. Co. v. Price, 138 U.S. 185 (1891)
Chicago, Santa Fe and California Railroad Company v. Price
Submitted January 8, 1891
Decided January 26, 1891
138 U.S. 185
Where a contract with a railway company for construction work provided for monthly payments to the contractor "on the certificate of the engineer," and that the determination of the chief engineer should be conclusive on the parties as to quantities and amounts, and where, in executing the contract, each monthly account as made up by the division engineer was sent to the chief engineer, and the monthly payments were made on the certificate of the latter officer, his action in making such certificate was held to be a "determination" under the contract conclusive upon the parties in an action at law in the absence of fraud or of such gross error as to imply bad faith. chanroblesvirtualawlibrary
This action was brought by Price, McGavock & Co., for the use of Jones, Forrest & Bodkin, to recover from the Chicago, Santa Fe and California Railroad Company the balance alleged to be due them under a written contract made March 21, 1887, for the clearing, grubbing, and masonry necessary to complete the roadbed of that company from a point on the Mississippi River to Galesburg, Illinois, a distance of about fifty miles. The parties in writing waived a jury and tried the case before the court, which made a special finding of facts, * There was a judgment against the railroad company. 38 F.3d 4. chanroblesvirtualawlibrary
The contract contained, among other provisions, the following: chanroblesvirtualawlibrary
"The aforesaid party of the first part [Price, McGavock & Co.], in consideration of the prices hereinafter agreed to be
paid to them by the party of the second part [the railroad company], hereby agree and bind themselves to construct and in every respect to complete the grubbing and clearing, grading and masonry, including the furnishing of materials and all other things requisite and necessary to complete the roadbed and prepare the same ready for receiving the superstructure, upon that portion of the railroad of the party of the second part known and designated as section __, number __, the first fifty (50) miles eastward from station thirty (30), east bank of Mississippi River, of the Chicago, Santa Fe and California Railway, in such a manner as will conform in every respect to the annexed specifications and to the following conditions, viz.:
"1st. That the work shall be commenced within ten (10) days after the execution of these presents, or as soon after as the railway company shall have acquired a title to the lands, and shall be completed on or before the first day of August, one thousand eight hundred and eighty-seven."
"2d. The work shall be executed under the direction and supervision of the chief engineer of said railway company and his assistants, by whose measurements and calculations the quantities and amounts of the several kinds of work performed under this contract shall be determined and whose determination shall be conclusive upon the parties, and who shall have full power to reject or condemn all work or materials which in his or their opinion do not fully conform to the spirit of
this agreement, and said chief engineer shall decide every question which can or may arise between the parties relative to the execution thereof, and his decision shall be binding and final upon both parties, and whereas the classification of excavation provided for in the annexed specifications is of a character that makes it necessary that special attention should be called to it, it is expressly agreed by the parties to this contract that the determination, by the measurements and calculations of the said engineer, of the respective quantities of such excavation shall be final and conclusive."
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"5th. If any damage shall be done by the party of the first part (or persons in their employ) to the owners or occupants of lands or other property adjoining or in the vicinity of the work herein contracted to be done, the engineer of said company shall have the right to estimate the amount of said damage, and to pay the same to said owner or occupant, and the amount so paid for such damage shall be deducted from the value of work done under this contract."
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"The aforesaid party of the second part hereby agrees that whenever this contract shall be completely performed on the part of the said party of the first part, and the engineer has certified the same in writing, the said party of the second part shall, within ten days thereafter, pay to said party of the first part any remaining sums due for said work, according to this contract, as follows, to-wit [here follow the prices agreed upon for different kinds of work to be done]."
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"It is further agreed between the parties that monthly payments shall be made by the party of the second part, on the certificate of the engineer, for work done, deducting ten percent from the value of work done, as agreed compensation for damages, to be forever retained by the party of the second part in case the whole amount of work herein named shall not be done in accordance with this agreement."
"For the purpose of avoiding all causes of difference or dispute between the parties to this contract relative to its true
intent or meaning, and for the purpose of adjusting in an amicable manner any difference that may or can arise relative thereto, it is hereby mutually understood and agreed by the parties as follows, to-wit:"
"1. No extra charges will be claimed or allowed on account of changes, either in the line or grade of the road, the prices herein mentioned being considered as full compensation for the various kinds of work herein agreed to be performed."
"2. Whenever work is required to be done which is not now contemplated or covered by the prices herein mentioned, the engineer shall fix such prices for the work as he shall consider just and equitable, and the said parties shall abide by such prices, provided the party of the first part enter upon and commence such work with full knowledge of the prices so fixed by the engineer; but if the party of the first part decline executing said work at the price fixed by the engineer, then the party of the second part may enter into contract with any person or persons for its execution the same as if this contract had never existed, and if extra work, or work not provided for in this contract is peon or persons for its execution the same as if this contract had never existed, and if extra work, or work not provided for in this contract is peon or persons for its execution the same as if this contract had never existed, and if extra work, or work not provided for in this contract is performed by the contractors, without protest or notice in writing to the engineer and to the party of the second part before prices shall have been fixed to such work, then the engineer shall estimate the same at such prices as he shall deem just and reasonable, and his decision shall be final, and the party of the first part shall accept of said prices in full satisfaction of all demands against the party of the second part for said extra work; but nothing shall be deemed extra work that can be measured or estimated under the provisions of this contract."
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"5. It is expressly agreed by the party of the first part that the party of the second part may at any time pay so much of the money due the party of the first part on the running or final estimates above mentioned to the laborers employed by the party of the first part as may be due said laborers, and charge the same to the party of the first part."
"6. In case any or all work embraced in this contract shall be permanently suspended by and on account of the party of
the second part, which it is hereby agreed the party of the second part may do, for other causes than heretofore provided in this contract, then, in that case, all further operations under this contract shall be suspended within three days after receiving written notice from the party of the second part requiring the further progress of the work to be suspended, and the party of the first part shall have their choice either to consider such suspension temporary and resume work on the same within ten days after receiving notice to resume work, or may consider the same at an end, and shall receive full pay for all work by them performed under this contract, and at the prices herein stipulated, upon the estimate of the engineer, which shall be final and conclusive between the parties to this contract; which estimates shall not include any anticipated profits that might have accrued from the completion of the said work, it being understood that no claim for damages shall be made by the party of the first part on account of any profits that might accrue from the completion of the same."