Terminal Construction Corp. v. Bergen County Hackensack River Sanitary Sewer District Authority

William J.

Brennan, Jr., J. (dissenting, in part). I join in the conclusions except as to the reinstatement of such part of the judgment as covers the claim for earth embankment and the dewatering operations which together total $350,871.84.

I.

The contract plans or drawings showed the lines of the earth embankments plaintiff was to build, and plaintiff bid according^. They were compacted embankments in layers not exceeding 12 inches in thickness to be constructed by *343 approved means and to be rolled by tractors, bulldozers or by traffic, as approved by the engineer. But the specifications provided that as to any embankment “the quantity to be measured for payment under Item 3 shall be the volume of compacted embankment between the original surface and the payment lines shown on the drawings ordered.” The embankment which is the cause of the dispute was constructed of earth fill laid on the original surface of the ground. That ground was swampy, boggy and soft, a fact known to the parties and the engineer before the contract was entered into in August 1949. It appears from Exhibit P-24 that a cross-section map of the site as of October 1, 1949 was made by plaintiff and approved by the engineer with elevations noted thereon showing the original grade of the site. When the embankment was completed Exhibit D-56 was prepared by the engineer as of April 15, 1952 showing the original grade of the site according to P-24, the finished grade of the embankment and the side slopes shown on the contract drawings. The engineer approved payment for the cubic yards of compacted fill within the embankment so delineated.

However, before the embankment was completed the original surface gave wajr when the subsoil pushed out under the weight of the embankment. The plaintiff was therefore under the necessity of supplying fill to replace the compacted material which had dropped down with the original surface. It is the subsided cubic yardage of compacted embankment which was not approved for payment by the engineer which is the subject of the earth embankment claim.

The engineer’s decision was based upon his interpretation of the specifications. He interpreted them to provide that plaintiff was to be paid only for the volume of compacted embankment between the original grade of the site as established by the elevations shown on P-24 and the payment lines shown on the drawings. The specifications provide expressly that “no allowance will be made * * * for material which has settled” and “The contractor shall provide additional material to compensate for settlement of embankments.”

*344 It was the engineer’s duty under the contract to interpret the specifications for the parties. Article 29 provides that “The Engineer shall make all necessary explanations as to the meaning and intent of the specifications and drawings * * a provision familiar in contracts of this type. The parties usually bind themselves to accept the decisions of the engineer upon the numerous questions of interpretation and application inevitable in the construction of a large project. Such provisions have been found to be essential to the orderly progress of the work and to secure flexibility in adapting means to ends. Courts will pass upon an engineer’s decisions only within very narrow limits; so long as they are made within the framework of the contract the courts will not disturb them in the absence of a showing that they are arbitrary or capricious, or tainted by compulsion or moral fraud. As the majority opinion states, “Engineer control provisions in this field of construction contracts are regarded as dispositive of disputes between the parties in the absence of clear proof of fraud upon the part of the engineer.”

The narrow issue controlling the disposition of this claim is whether the engineer’s decision was arbitrary or capricious in interpreting “original surface” as he did rather than as original surface where it finally came to rest when carried down with the embankment. Unless there is evidence supporting an inference of arbitrary or capricious action in making the interpretation the parties, and the courts, are concluded by the engineer’s decision. The charge of plaintiff that the engineer acted deliberately and maliciously in bad faith finds no support in the record, as the Appellate Division and the majority also agree.

The Appellate Division considered that there was evidence sufficient to raise a jury question of arbitrary or capricious action in the testimony of plaintiff’s expert witness. That expert’s opinion was that the authority’s obligation to pay for “compacted embankment” included any such embankment sinking with the original surface, because the clauses excluding payment for “material which has settled” and for “settlement of embankments” meant, under accepted trade usage, *345 not the settlement of the subsoil carrying the compacted embankment with it, but settlement within the compacted embankment itself. But it is not made to appear in any wise how contraction, through trade usage, of the ordinary meaning of the words “settlement of embankments” operates to enlarge the ordinary and usual meaning of the words “original surface.” At all events, that opinion is plainly insufficient to evidence arbitrary or capricious action on the part of the engineer in relating original surface to the original grade of the site as established by the elevations taken from the 1949 cross-section map.

My colleagues do not rely upon this expert’s opinion to raise the question. Their conclusion is rested upon the evidence that the parties and the engineer all knew when the contract was entered into that the ground was an “organic bog” presenting the danger of subsidence. This extrinsic evidence of the knowledge of the parties at the time they made the contract is held to illumine the parties’ meaning and, it is said, “calls for a determination by the courts that the subsidence of the original surface was contemplated by the contracting parties (due to the nature of the ground) and that the use of the word ‘original’ established the liability of the Authority to pay for fill required to compensate for such subsidence.” (Italics mine) I respectfully suggest that the only permissible consideration the court may give this evidence is as to the reasonableness of the significance attached to it by the engineer, that is, whether the engineer was arbitrary in inferring from the contractor’s knowledge of the condition that the contractor undertook the risk and made the contract well knowing the surface might subside and that if it did the contractor was obliged without compensation to provide “additional material as required to compensate for settlement of embankments.” What the court has done, I submit, is merely to substitute the court’s conclusion of the significance to be given the extrinsic facts for the engineer’s decision as to the significance to be attached to them, although certainly his conclusion is equally reasonable and plausible. We thus convict the engineer not of an ar *346 bitrary or capricious interpretation but of arriving at a construction contrary to that which we would reach if we were free to construe the specifications in the first instance. This, in nay view, is an excess of our judicial function in light of the parties’ own act in establishing, so to speak, their own court of last resort to decide such questions.

I would set aside the Appellate Division’s judgment remanding the issue for a new trial, and direct the entry of judgment in favor of the authority upon the claim.

II.

The dewatering operation claim relates to work done by plaintiff in pumping water after August 3, 1950 from the site of the pump and blower house which plaintiff constructed at a point some 200 feet from the west bank of the Hackensack River. The plaintiff’s president, Dinallo, testified that before he bid on the job he examined the site and saw that “the entire site was one mass of swamp.”

It was established by plaintiff’s own evidence that the pumping of some water was inevitably necessary under the best possible construction conditions; and plaintiff concedes the expense of doing such work was included in its bid price. The terrain was such that the cofferdam method of construction was the only practical method. This is a method employed when water conditions are encountered. A cofferdam is simply a steel-sheeted boxlike structure which serves to hold back water and earth from an excavation in which construction work is carried on. Originally plaintiff’s contract gave it the option of using the open cut or the cofferdam method. Early in the winter of 1950, before the development of the trouble giving rise to the claim, the engineer called for discussions of the option because of his opinion that the open cut method was impractical. The discussions resulted in a supplemental written agreement of April 14, 1950 under which plaintiff surrendered its option and agreed to proceed by the cofferdam method, employing a subcontractor for the purpose. It was not until June 10, however, that the name of the subcontractor was submitted for approval, and *347 not until June 27 that the work of sinking the cofferdam was started.

The pump and blower house included a screen chamber wet-wall section 38 feet below the surface. Plaintiff was to sink the cofferdam walls on the north, south and west sides of the area to be excavated for the chamber, and the north and south cofferdams were to be connected with a cofferdam forming the east wall. The last-mentioned cofferdam had been driven nine months earlier, in September 1949, by another contractor, Greenland & McCullough. That contractor had laid a 60-inch trunk sewer 35 feet under ground from the point where the east wall was to be located, the sewer running east of that point under the Hackensack River to a point beyond the river. The sewer was ultimately to connect with the east wall of the screen chamber. Between that wall and the river, a distance of 200 feet, the sewer pipe lay upon a stone gravel bed and the trench was filled in' on top with porous dirt fill.

Greenland & McCullough commenced their work by digging a trench from the site of the east wall toward the river. They lined the trench with cofferdams. The work began just before or at about the time plaintiff received its contract in August 1949. Seeing that Greenland & McCullough were working from the site of the wall toward the river, plaintiff immediately complained to the engineer that the operation prevented plaintiff gaining access to the site and that unless Greenland & McCullough were ordered to work elsewhere, trouble might develop making it difficult for plaintiff to tie up with the east wall cofferdam. The engineer did not agree with plaintiff’s contention, but he had Greenland & McCullough take some steps to avoid difficulties. Plaintiff remained dissatisfied, and the engineer became apprehensive that something untoward might indeed happen if plaintiff did not promptly start work on the site to effect the earliest possible connection with the trunk sewer. He testified that he continually “from the early part of the job, requested and pleaded with Mr. Dinallo to commence his main cofferdam before anything happened.” The dispute was not resolved, *348 and plaintiff proceeded with other operations and, as stated, did not start the screen chamber work until June 27, 1950.

Plaintiff proceeded with other work adjacent to the power house site. As early as March Dinallo protested that water was coming on the site in huge quantities through the Greenland & McCullough fill on top of the trench, and on July 27 he protested that a 'Tig blow” of water had come from that place. But plaintiff undertook the necessary pumping operations to remove the water, and makes no claim for reimbursement of that expense.

The dispute arises from the happenings on and after August 3. The east wall cofferdam driven by Greenland & McCullough had shifted. There seems to be no disagreement that the engineer, Lincoln, accurately explained the reason for the mishap when he testified that it “stood all that time [nine months] in very treacherous ground.” The situation presented problems for both the plaintiff and the engineer. The problem for the plaintiff was whether the north and south walls of the cofferdam could be connected with the east wall in its shifted position. Plaintiff apparently decided that the connection could be made. But the engineer’s concern was more grave. He was fearful that, the wall having shifted, the 60-inch sewer 35 feet under the ground might have shifted also and created the necessity of re-doing some of the sewer work, or that plaintiff’s attempt to drive cofferdams tieing into the shifted cofferdam might result in breakage of the sewer pipe. He therefore concluded, after consultation with his superiors, to take the safe course and have the Greenland & McCullough cofferdam by-passed and such of the sheeting as was necessary for the purpose pulled out. He gave plaintiff a writing for that work, dated August 3, 1950 and reading as follows:

“FIELD MEMORANDUM TO : Terminal Construction Corporation Subject: Construction of Steel-sheeted cofferdam around the screen chamber-wet wall section of Pump & Blower House.

1. You are hereby directed to proceed with the construction of the steel-sheeted cofferdam denoted above pursuant to your written agreement with the Bergen County Sewer Authority.

*349 2. You are also directed to extend your cofferdam across the front of the existing cofferdam constructed under Contract No. 6 at the entrance of the 60" trunk sewer to the screen chamber without connecting to the existing sheeting, but removing such portions of said sheeting as may be required for clearance, and as approved by the undersigned. You will also place such temporary timber bulkheads, sheeting and bracing as may be required to retain the existing embankment and materials around the 60" trunk sewer, and as approved by the undersigned.

3. Work listed in paragraph No. 2 above, other than that required by your agreement with the Bergen County Sewer Authority for the construction of the steel-sheeted cofferdam, and consisting essentially of the removal of portions of the existing steel sheeting and bracing of fill, will be approved for payment by the undersigned as extra work; the amount of compensation to be pursuant to Article 36 (c) of the Contract and as approved by the Bergen County Sewer Authority.

ROBERT A. LINCOLN

Robert A. Lincoln

Resident Engineer

Bogert-Childs Engineering Associates.”

The plaintiff’s cofferdam, including the work called for by the memorandum of August 3, was completed on September 26, 1950. Lincoln, the engineer, computed the amount plaintiff was entitled to under the memorandum at $20,469.72, covering “labor, insurance on labor, rental of equipment, fuel, electricity, overhead and profit.” But plaintiff demands $216,535.39, claiming that the excess over the engineer’s allowance represents the cost of removing water from the excavation after August 3.

My colleagues conclude that Article 55 of the contract governing work done by the contractor “in an emergency” supports plaintiff’s claim. I understand other bases upon which the claim is asserted are found to be without merit under the contract, and with that conclusion I am in agreement. But I see no support in the emergency clause for the claim.

If plaintiff is to recover on the theory that the additional water plaintiff pumped out was an emergent condition, its burden of proof necessarily required a showing that the water condition was “an unforeseen occurrence; a sudden and urgent occasion for action,” The American College Dictionary (1948); “an unforeseen combination of circumstances which *350 calls for immediate action,” Webster’s New International Dictionary (2d ed.). But plaintiff’s president, Dinallo, testified that he had predicted at the very outset of the job, when he protested allowing Greenland & McCullough to proceed first, that what occurred would happen. And Dinallo also dated the trouble from March 1950 when he first wrote the authority about it. Thus it was neither “unforeseen” nor “sudden,” but anticipated and existing for almost five months before August 3. If the engineer erred in not stopping Greenland & McCullough when plaintiff protested and that error of judgment led to the condition (I cannot find that either fact is supported in the evidence), nevertheless plaintiff does not seek to hold the authority to account by reason of that error of judgment but upon the premise of an “unforeseen” and “sudden” event, which the proofs irrefutably show was not at all the case. And it must be noted that nothing in Article 55 gives the engineer power to declare an emergency. Where an emergency in fact is encountered, the contractor, on his own or upon instruction and authority of the engineer, may do the work necessary to meet it. Where the authority denies, however, that there was an emergency, the contractor must prove that one existed, whether the work he did was done upon his own decision or upon the direction or authority of the engineer.

And, at all events, the claim is that the dewatering was done as part of the work ordered by the, memorandum of August 3. There is not the barest suggestion in that memorandum of any dewatering work. In words that import no ambiguity whatever the memorandum directs plaintiff “to extend your cofferdam across the front of the existing cofferdam * * * without connecting to the existing sheeting, but removing such portions of the sheeting as may be required for clearance * * *. You will also place such temporary bulkheads, sheeting and bracing as may be required to retain the existing embankment and materials around the 60" trunk sewer * * And it makes crystal clear that this is the only additional work to be paid for, defining the work to be approved for payment as that “consisting essentially of the *351 removal of portions of the existing steel sheeting and bracing of fill * * That is the precise work which the engineer computed entitled plaintiff to compensation of $20,-469.72, and plaintiff does not question the reasonableness of the allowance in that regard.

Finally, the extension of the north and south walls of plaintiff’s cofferdam across the front of the Greenland & McCullough cofferdam, and the incidental removal of sheeting from that cofferdam, did not let in the flood of water of which plaintiff complains. That condition, to Dinallo’s knowledge, began at least in March, several months before. The source of the water was finally and definitely established in the spring of 1951; it came from the river because of faulty construction of the trunk sewer by Greenland & McCullough which permitted the water to run from the river through the gravel bed on which the pipe lay and the porous fill on top of the pipe. The contract, in Article 39, expressly bars any action against the authority in such cases but leaves the contractor to his remedy against the other contractor. The article provides that no action may be brought against the authority for damages suffered from an “act or omission” of another contractor and that “This contractor shall have no claim against the Authority for such damages but shall have a right to recover such damage from the other Contractor.” Plaintiff early suspected that faulty work on the part of Greenland & McCullough caused the trouble, and served notice on them of intent to hold them responsible in damages. But Greenland & McCullough failed financially, and so the claim was not pressed against them but is now asserted against the authority.

I would reverse the judgment of the Appellate Division remanding the issue for a new trial, and direct the entry of a judgment for plaintiff in the amount of $20,469.72 on this count.

For modification — Chief Justice Vanderbilt, and Justices Heher, Burling and Jacobs — 4.

Dissenting in part — Justices Wachenfeld and Brennan-2.