Henry E. Fox, Appellant, v. Nathaniel B. Powers, Respondent

Henry E. Fox, Appellant, v. Nathaniel B. Powers, Respondent. An agreement “to waive the m'chitects certificate and submit all matters" to arbitration — a termination of the arbitration terminates the waiver — bill of particulars as to the waiver — the architect’s certificate, necessaj’y as to extra work — a defense that the architect was justified in refusing his certificate presents an issue — evidence that his refusal was unreasonable prrevents a dismissal of the complaint. Where a building contract provides that the work shall be done to the satisfaction of the architect, to be testified by the architect’s certificate, and also that . the obtaining of such certificate shall be a condition precedent to payment, and the parties agree “to waive the architect's certificate and submit all matters in difference to certain persons as arbitrators,” the contractor, by terminating the arbitration, ends the waiver of the architect’s certificate and relegates the parties to their original rights under the agreement. Where the contractor brings an action upon the contract against the other party thereto and serves a bill of particulars stating that “the time, place and manner” of the alleged waiver is as therein stated, his proof on the subject of waiver is limited to the “time, place and manner” set forth in the bill of particulars. The provisions of the contract relative to the architect’s certificate apply to extra work done under the contract, where the contract evidently contemplated the performance of extra work and provided that such extra work should be within the contract, and that the sum to be paid thereunder should be increased by the fair and reasonable value of such additional work. A provision in the contract that should a dispute arise respecting the value of the extra work, it should be submitted to arbitration, is not inconsistent with the requirement relative to the obtaining of the architect’s certificate, as the arbitrator’s duty is confined to the determination of the value of the extra work. Where the answer interposed in the action, in addition to a denial of the waiver alleged by the plaintiff, avers that the architect refused to give his certificate, and that he was justified in so doing, the latter allegation being new matter not directed to anything alleged in the complaint, will, under section 522 of the Code of Civil Procedure, be deemed to be traversed, although no reply is served; it presents an issue to be tried in the action, and if this issue is litigated on the trial of the action, and the plaintiff gives evidence tending to show that the refusal of the architect to furnish a certificate was unreasonable, it is error, although the plaintiff has failed to establish the waiver set forth in his complaint for the court to dismiss the complaint. Appeal by the plaintiff, Henry E. Fox, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Hew York on the 26tli day of April, 1900, upon the dismissal of the complaint by direction of the court after a trial at the Hew York Trial Term. This action was brought to recover an alleged balance due the plaintiff under a written contract for the rebuilding of the foundation of the defendant’s property and for extra work connected therewith. The complaint alleges that the plaintiff “proceeded with said work until the same was completed according to the terms of the said contract; * * * that the defendant duly waived the provisions in said agreement providing that the said work should be done to the satisfaction of the architect therein named, to be testified by a writing or certificate under the hand of the said architect, and also providing that the amount of said contract agreed to be paid to the plaintiff should be paid only provided that a certificate should be obtained and signed by the said architect.” On this subject of waiver the complaint was supplemented by a bill of particulars which contains the statement that “ the time, place and manner in which the defendant waived the provisions of the agreement referred to in the complaint, providing that the work should be done to the satisfaction of the architect therein named, was by the defendant agreeing personally with plaintiff on or about the first day of March, 1897, at the city of New York, to waive the architect’s certificate, and submit all matters in difference to certain persons as arbitrators.” In his answer the defendant, among other things, alleges, by paragraph third, “ that no certificate from the architect mentioned in said agreement, that the said work had been completed to his satisfaction, was obtained by the plaintiff before this action; and alleges, on information and belief, that the work done by the plaintiff was not done to the satisfaction of the architect, but, on the contrary, was so poorly, negligently and unskillfully done in many respects that said architect was dissatisfied with the same, and so stated to the plaintiff on several occasions; and on information and belief that said architect refused to certify to the same and that said architect was and is fully justified in refusing to be satisfied with the plaintiff’s work and refusing to give plaintiff a certificate which would entitle him to be paid for his work.” Upon the trial the plaintiff endeavored to support the complaint by evidence that the work was performed in a satisfactory manner and completed according to the terms of the contract; that certain extra work was done, and that the certificate of the architect was waived ; and upon the cross-examination of the plaintiff’s fitnesses the defendant endeavored to support the allegations of paragraph third of the answer by eliciting testimony tending to show not only that the certificate was not waived, but that the architect had refused to give the certificate and was fully justified in such refusal. At the close of the plaintiff’s case a motion was made to dismiss the complaint. The plaintiff thereupon asked to go to the jury upon the question of waiver; upon the question of whether the refusal of the architect to give the certificate was not, under the circumstances proved in the case, an unwarrantable and unreasonable refusal; and also upon the question of the liability of the defendant for the extra work. Those motions of the plaintiff were denied and the defendant’s motion to dismiss the complaint was granted, and it is upon the exceptions taken to these rulings that this appeal is based. Edmund L. Mooney, for the appellant. Wallace MacFarlcme, for the respondent. [MAJORITY — O’Brien, J.:] O’Brien, J.: Were there no other issue upon the trial than that of waiver which was tendered by the complaint as limited by the bill of particulars, we should be in favor of the affirmance of this judgment because we think the ruling that the plaintiff’s proof under the complaint and bill of particulars was limited to “ the time, place and manner ” therein specified, was right. It is true that the bill of particulars, after giving the time and place, stated that the agreement was, “ to waive the architect’s certificate, a,nd submit all matters in difference to certain persons as arbitrators.” The argument based on this language, however, that two things were thus included, namely, an agreement to waive and an agreement to submit to arbitration, is forced and unsound; for reading the clause as a whole, the necessary construction to be given, and what was evidently the idea intended to be expressed by the pleader, was that it had been agreed to have an arbitration instead of insisting upon the architect’s certificate. When the arbitration was ended, therefore, by the plaintiff, he necessarily ended the waiver and the parties were relegated to their original rights under the agreement. So, too, with regard to the extra work, we think that the architect’s certificate was required under the contract as a condition precedent to the plaintiff’s recovery for such extra work. The parties by their contract evidently contemplated that extra work might be required, and agreed that it should be within the contract, and that the sum to be paid thereunder should be increased by the fair and reasonable value of such additional work. There is, as the appellant points out, a clause providing that should a dispute arise respecting the true value of the extra work, that was to be submitted to arbitration; but this is not inconsistent with the other provisions that with respect both to the principal work as well as the extra work, the architect’s certificate of complete and satisfactory performance should be obtained. It certainly was not intended by the clause providing for the arbitration that the arbitrators had the right to determine whether the defendant had ordered the work or whether it was satisfactorily completed. The arbitrators’ duty was confined to settlement of dispute, should any arise, respecting the true value of the extra work. Upon the questions relating to waiver and extra work, therefore, we think the learned trial judge was right in the rulings made; but there was another issue presented upon the trial, in the disposition of which we think he fell into error. Although the complaint was based upon the theory of a waiver of the certificate, it will be noticed by paragraph third of the answer that in addition to a denial of waiver the defendant alleged that the architect refused to give his certificate, and that he was fully justified in such refusal by the unsatisfactory way in which the work was done. Thus the issue of the refusal of the certificate and the reasonableness of such refusal was presented for trial, because this being new matter not directed to anything alleged in the complaint, was traversed without a reply and raised an issue to be tried in the action. On this subject section 522 of the Code of Civil Procedure provides : “ An allegation of new matter in the answer to which a reply is not required * * * is to be deemed controverted by the adverse party, by traverse or avoidance as the case requires.” And Dambman v. Schulting (4 Hun, 50), after quoting this provision, says : “ It is so broad that it secures to the plaintiff the benefit of every possible answer to the defense made by way of new matter not constituting a counterclaim as fully as though it were alleged in the most complete and artistic form. He may avoid it by any evidence properly attended with that result • under the principles of either law or equity.” And in Johnson v. White (6 Hun, 589) it was said : “ The answer in this case does not set up a counterclaim, hence no reply was necessary. * * * Ho reply being necessary to the answer of defendant it was to be deemed denied for all purposes, of the action. Under such a denial what evidence may the plaintiff give in reply to the new matter of the answer % * * * He was entitled to give any evidence that avoided the new matter in the answer.” And a very interesting case is that of Reck v. Phœnix Ins. Co. (3 Civ. Proc. Rep. 380), where it was said in the opinion : “ At the close of the plaintiff’s case the defendant renewed the motion to dismiss upon the ground that on the face of the complaint it is not shown or alleged that the vessel could complete the voyage within the life of the policy, or that she was lost during the life of the policy by any peril insured against, and on this ground the court dismissed the complaint and ordered judgment for the defendant. If there had been anything substantial or meritorious in the motion it is apparent that the error or defect in the pleadings was not one which affected the substantial rights of the adverse party. The complaint had been treated * * * as sufficient in its averments, and the defendant in the answer has distinctly taken issue upon the question whether the vessel was lost during the continuance of the policy by denying the same.” Many authorities are reviewed in the opinion, and the rule laid down in Slack v. Lyon (9 Pick. 62) is approved as “just and sensible,” that “when the defendant chooses to understand the plaintiff’s count to contain all the facts essential to his liability and in his plea sets out and answers those which have been omitted in the count, so that the parties go to trial upon a full knowledge of the charge, and the record contains enough to show the court that all the material facts were in issue, the defendant shall not tread back and trip up the heels of the plaintiff on a defect which he would seem thus purposely to have omitted to notice in the outset of the controversy.” (See, also, Miller v. White, 4 Hun, 62; Haddow v. Lundy, 59 N. Y. 328.) In the present case, not only was this issue of the reasonable refusal of the architect to give the certifícate presented by the pleadings taken together, but in the cross-examination of the plaintiff’s witnesses the counsel for the defendant endeavored to establish it. As a result, when the plaintiff rested and the motion to dismiss was made, there was some evidence given by plaintiff tending to show that the work was substantially performed, and that the defendant had directed the architect not to give a certificate. In view of these circumstances, we think it may, with considerable show of reason, be said that the conduct of the parties on the trial was to be deemed a consent to try the question of the reasonableness of the architect’s refusal. Thus it was said in Knapp v. Simon (96 N. Y. 291): “ It is true that the complaint in the case does not in terms set forth all of the facts necessary to support the second cause of action above referred to, but on the trial the evidence supporting it was admitted without objection and no question was at any time raised as to the sufficiency of the complaint to sustain the 'cause of action proved.” And in Frear v. Sweet (118 N. Y. 458) the court says : “ While parties have the right to try the issues made by the pleadings, yet they are not bound to, but may try any other issue by mutual consent. * * * The court in reviewing such cases is only called upon to determine whether the parties have consented to try the substituted issues and whether the decisions of the court upon the new issue are according to law. In the absence of amended pleading or of stipulation, the court of review must infer the consent to try issues from the evidence offered upon the one side, and the absence of objections or the character of the objections, if any are made, upon the other side.” Our conclusion, therefore, is, that upon the record as it stood when the opposing motions were made by the parties, although there was a justification for the dismissal of the complaint upon the ground that the plaintiff had failed to prove a waiver, there still remained this issue as to the refusal of the architect to give the certificate, upon which the plaintiff was entitled to go to the jury. We think that the refusal to grant such motion was error, for which this judgment must be reversed and a new trial ordered, with costs to the appellant to abide the event. Van Brunt, P. J., and McLaughlin, J., concurred. [CONCURRENCE — Hatch, J.:] Hatch, J.: I concur on the last ground stated in the opinion. [CONCURRENCE — Ingraham, J. :] Ingraham, J. : I concur in the conclusion reached by Mr. Justice O’Brien, but upon a different ground than that suggested by him in his opinion. I think that as limited by the bill of particulars the plaintiff had to prove an agreement made on the 1st of March, 1897, by which the defendant agreed to waive the provision of the contract requiring a certificate of the architect, but I do not understand that the waiver relied upon was solely the execution of the agreement to arbitrate. I think that under this allegation it was competent for the plaintiff to prove that on that day there was an express agreement entirely independent of the agreement to arbitrate by which the defendant waived the production of the certificate. I agree that the arbitration agreement in itself could not be deemed a waiver of this requirement of the contract, as the plaintiff terminated the arbitration, and thus the parties were relegated to their rights under the contract as though no arbitration agreement had been made. The question would then be presented as to whether the provision of the contract requiring the architect’s certificate had been waived by an independent agreement which survived the revocation of the agreement to arbitrate; and I think any competent evidence of such an agreement should have been admitted to establish such a waiver. The plaintiff was asked this question : “ Did you have any conversation with Mr. Powers on the subject of the payment of your claim in connection with the subject of any architect’s certificate ? ” That was objected to by the defendant upon the ground that the bill of particulars says definitely that the waiver was agreed to on or about the 1st of March, 1897, and submits all matters in difference to arbitration, and that evidence of any independent agreement was not within this provision of the bill of particulars. This objection was sustained and the plaintiff excepted, and I think that ruling was error. It is true the form of the question was subject to criticism, but I "think that the ruling of the court in sustaining the objection was in substance a ruling that no agreement with the defendant to waive the certificate could be proved as the plaintiff was limited by the form of the bill of particulars to proof of the arbitration agreement and he has based his contention of a waiver upon that agreement only. This objection having been sustained upon that ground, I think the exception fairly raises the question as to the correctness of the ruling, and that the plaintiff was not bound to put further questions to show that the conversation that took place on the first of March was in effect a waiver of the certificate irrespective of the agreement to arbitrate. For this error I think the judgment should be reversed. Judgment reversed, new trial ordered, costs tv appellant to abide event.