SALT LAKE CITY v. SMITH et al., 104 F. 457

SANBORN, Circuit Judge, after stating the case as above, delivered the opinion of the court. The purpose of a written contract is to evidence the terms on which the. minds of the parties to it met when they made it, and the ascertainment of those terms, and the sense in which the parties to the agreement used them when they agreed to them, is the great desideratum and the true end of all contractual

interpretation. The express terms of an agreement may not be abrogated, nullified, or modified by parol testimony; but, when their construction or extent is in question, the meaning of the terms upon which the minds of the parties met when they settled them and their intention in using them must be ascertained, and when ascertained they must prevail in the

interpretation of the agreement, however broad or narrow the words in which they are expressed. In the discovery of this meaning, the intention, the situation of the parties, the facts and circumstances which surrounded and necessarily influenced them when they made their contract, the reasonableness of the respective claims under it, and, above all, the subject-matter of the agreement and the purpose of its execution, are alwrays conducive to and often as essential and controlling in the true

interpretation of the contract as the mere words of its various stipulations. These are rules for the construction of contracts which commend themselves to the reason and are established by repeated decisions of the courts, and they must not be permitted to escape attention in the consideration of the contract which this case presents. Accumulator Co. v. Dubuque St. Ry. Co., 64 Fed. 70, 74, 12 C. C. A. 37, 41, 42, 27 U. S. App. 364, 372. The great question in this case is whether the work and materials for which the plaintiffs have brought this action fall within or without their contract with the city, and that must receive its answer from an

interpretation of the agreement itself. The court below (83 Fed. 784) held that, if the materials and labor in question were of the kind and of the value stated by the plaintiffs’ witnesses, they were not contemplated by the parties when they made their agreement, and were not within and governed by the contract, and that the defendant was bound to pay their reasonable value. The defendant complains of this ruling in various ways, by numerous specifications of error, which it is unnecessary to quote.

Its counsel insist that the contract specifies a price, or authorizes the city engineer to fix a price, for every item of materials and of labor contained in the plaintiffs’ claim, and that the price of every item thereof must therefore be determined and governed by the contract itself, and not by the measure of its reasonable value.

They contend that the contractors agreed to construct cut-stone masonry for §12.40 per cubic yard, and that although they did this in reliance upon the city engineer’s ax>proximate estimate that only 10 cubic yards, amounting in value to §124, would be required, yet the engineer had the right to ask them to construct 8(55.44 cubic yards of this masonry, which was reasonably worth $30 per cubic yard, or $25,963.20, at the contract price of $12.40 per yard, or for $10,-731.45. They argue that the parties gave the engineer this power under

section 15 of this agreement, which authorizes him to make any necessary or desirable alterations in the work before or after its commencement, and to pay the contractors for increased quantities at the contract rates, and under sections 7 and 22 of the contract, which require the contractors to do such extra work connected with that covered by the contract as the city engineer and the board of public works shall direct, and authorize the former to fix the price which the contractors shall receive for all work and material of a different nature from that specified in the agreement.

They say that under these provisions the city engineer was authorized to require the contractors to construct a dam to gather and hold the waters of Parley’s creek, the concrete and cut-stone masonry in which cost more than twice the contract price per yard, and that the city was permitted to pay them in full therefor at such price as the engineer fixed, although no mention of this dam was made in the contract, or in the maps, plans, or specifications upon which the contractors made their bid; that the engineer had the right to demand that the contractors should place 2,000 cubic yards of concrete masonry in tunnels through hills and on embankments over ravines, upon a line that was never marked out before the agreement was made, for the contract price of §5.97 per cubic, yard, although that was the price bid for placing such masonry in an open trench on comparatively level ground shown on the map and by the specifications, and the cosí and value of placing it in such tunnels and on such embankments was from $12 to $20 per cubic yard; and that this contract authorized the engineer to require the contractors to construct 154.07 cubic yards of rubble masonry and to lay 1,800 lineal feet of iron pipe at the prices named therein, although their hid and agreement were based on an approximate estimate of the engineer that only 10 cubic yards of such masonry and only 200 feet of such iron pipe would be required to construct the conduit.

Nor are these contentions without support in the terms of the contract. If, blind to reason, to the object of the agreement, to the situation and intention of the parties, and to the undertaking they contemplated, we read the dry words of the contract and the specifications, it must be conceded that they are broad and comprehensive enough to sustain these arguments . of the counsel for the city.

They require the work done and the -materials furnished to- be paid for at the price specified in the agreement; they require the work to be done on such lines and levels and in accordance with such verbal instructions as the city engineer shall present; they authorize the engineer to make any necessary or desirable alterations in the work; they require the contractors to perform any extra work in connection with that specified in the contract that the engineer shall require them to do; they provide that increased quantities of work and materials furnished under these provisions, of the same nature as those specified in the contract, shall bé paid for at the agreed price, and that those of a different nature shall be paid for at a price fixed by the engineer; and they make him the interpreter of the specifications, and the arbiter of all controversies which arise in reference to the contract and the work done under it.

The engineer admits in his testimony that under these provisions of the agreement he required these contractors to furnish more than 53 times the estimated quantity of the most expensive work and materials specified in the contract, — the cut-stone masonry; and the witnesses of the plaintiffs testify that he required more than 86 times the estimated amount, and that the masonry thus called for was of such a character that it cost and was reasonably worth more than twice as much per cubic yard as that described in the contract, or, in the aggregate, more than 182 times the cost and value of the amount which the engineer estimated would be necessary for the undertaking before the bid was made.

If he could lawfully so multiply the quantity, change the character, and increase the cost of the most expensive work named in the contract, it is difficult to perceive why he might not, under the same authority, increase the cost and quantity of every other item named in the agreement to the same extent, and in this way require the construction of a conduit from 53 to 182 times as costly as that contemplated by the parties when the agreement was made.

It is conceded that the literal terms of the contract, when divorced from reason, from the object contemplated by the parties,, from their situation, and from their intention, are so general and unlimited as to permit this to be done. But it is as clear as the sun at noon in a cloudless sky that the minds of these parties never met upon such a proposition, and that they never contemplated or intended to make any such contract.

When they settled upon the terms of this agreement, they were considering a conduit laid in an open trench 6 or 8 feet deep, “at such depth below the surface as will insure it against the effects of frost,” as the instructions to bidders read, over a comparatively level surface, requiring materials and work of about the quantities estimated by the engineer, and of a character necessary for the construction of such a work.

This was the conduit described in the plans and specifications upon which the bid of the contractors and the contract itself were based, and this, was the contract which the parties con-templa led, and upon which their minds met when they made their agreement. This plain fact limits every stipulation of the agreement, and in its light and in the light of reason every provision of this contract must be interpreted.

The stipulation that the contractor shall do such extra work in connection with that described in the agreement as the city engineer and the board of public works may direct is as effectually limited by this fact to such extra work of proportionally small amounts as was necessary to the construction of the contemplated conduit as it would have been if this restriction had been written in the agreement in so many words.

A concrete and cut-stone dam to gather and hold the waters of Farley’s creek, and wells or cisterns along the course of the conduit, were no more contemplated or covered by this provision of the contract than pipes and hydrants to distribute the water in the city. The stipulation that “the city shall have the right to make any alterations that may hereafter be determined upon as necessary or desirable,” and that the contractors shall be paid for increased quantities at the contract prices, is subject to a like limitation.

That provision, not unusual in agreements with cities and other corporations, is limited in its meaning and,effect, by reason, and by the object of the contract, to such modifications of the contemplated work as do not radically change its nature and its cost.

Little if any testimony is required to convince the thoughtfúl mind that the cut-stone masonry required to construct a small culvert over a ditch or a creek on a level prairie may be of a character and cost radically different from that necessary to build a stone arch upon sloping banks over a mountain stream, or a stone bridge over a great river like the Mississippi, or a stone building of large dimensions and great height.

There was ample testimony in this case to warrant the jury in finding that the masonry required for the dam and the culverts which the plaintiffs constructed was not of the same nature or value as that-contemplated by the parties when they made the contract.

Nor was the evidence much less persuasive, nor is it more incredible, that the 2,000 cubic yards of concrete masonry which was placed in tunnels of small diameter, into which it was borne on wheelbarrows, and where it was placed by artificial light, was of a very different nature and cost from that placed in open trenches, only deep enough to escape the frost, as contemplated in the bids and the agreement.

The testimony of the plaintiff's’ witnesses was that the value of this work was from $12 to $20 per cubic yard, while the contract price for that contemplated by the parties when they made the agreement was only $5.97 per cubic yard. No such work as this was in the minds of the parties when they made this contract, nor could they have intended to authorize so radical an alteration of the nature of the work as to require it.

Since they did not contemplate or intend to contract concerning it when they made their agreement, it was new and different work from that covered by their contract, and the plaintiff's were entitled-to recover its reasonable value.

Upon this question the court below held upon the trial, and finally charged the jury, in effect, that the city had no right to require the contractors to perform large quantities of work, radically different in its character, nature, and cost from that originally contemplated by the parties when they made their contract, and that, if it had required such work, the plaintiffs were entitled to recover its reasonable value. This was the theory upon which the case was tried, and it was the true theory. It is just to the city, fair to the contractors, and it accords with reason and established law.

The dry words and broad stipulations of contracts must be read and interpreted in the light of reason and of the subject contemplated by the parties.

The stipulation common to many corporation contracts, that contractors may be required to perform extra work at the price named in the agreement or fixed .by an engineer, is limited by the subject-matter of the contract to such proportionally small amounts of extra work as may become necessary to tie completion of the undertaking contemplated by the parties when the contract was made; and work which does not fall within this limitation is new and different from that covered by the agreement, and the contractor may recover the reasonable value thereof notwithstanding the contract.

The customary provisions in such contracts that the corporation or its engineer may make any necessary or desirable alterations in the work, and that the contractors shall receive the contract price or a price fixed by the engineer for the work or materials required by the alteration, is limited in the same way, by the intention of the parties when the contract was made, to such modifications of the work described, in the contract as do not radically change its nature or its cost.

Material quantities of work required by such alteration, that are substantially variant in character and cost from that contemplated by the parties when they made their agreement, constitute new and different work, not governed by the agreement, for which the contractors may recover its reasonable value. Cook Co. v. Harms, 108 Ill. 151, 158, 159; Bridge Co. v. McGrath, 134 U. S. 260, 10 Sup. Ct. 730, 33 L. Ed. 934; City of Elgin v. Joslyn (Ill. Sup.) 26 N. E. 1090, 1092; Sexton v. City of Chicago, 107 Ill. 323, 330; Kirk v. Manufacturing Co., 118 Ill. 567, 8 N. E. 815; Railway Co. v.

Vosburgh, 45 Ill. 311, 314; Railroad Co. v. Smith, 75 Ill. 496, 507.

The stipulation in such contracts that all questions, differences, or controversies which may arise between the corporation and the contractor under or in reference to the agreement and the specifications, or the performance or nonperformance of the work to which they relate, shall be referred to the engineer, and his decision thereof shall be final and conclusive upon both parties, does not give the engineer jurisdiction to determine that work which is not done under the contract or specifications, and which is not governed by them, was performed under the agreement and is controlled by it, and his decision to that effect is not conclusive upon the parties.

Neither an engineer nor a judge who has no jurisdiction of a question can confer jurisdiction of it upon himself by erroneously deciding that he has it. It is assigned as error that the court below refused to instruct the jury that, if there was no change of the line of the conduit over the mile in controversy after the bid was made, there could be no recovery in litis action. The argument in support of this specification is that The only cause of action pleaded in the complaint is based upon this change of line, and that, consequently, if there was no change of line established, there could be no recovery.

It is true that the plaintiffs alleged in their complaint that the line which had been surveyed and staked by the city for this conduit before the contractors made their bid was changed by the city after they made their contract, and that, if this change1 had not been made, the work and the materials for which they sued it would newer have been required. Nevertheless the gist of the cause of action pleaded in the complaint was not the change of the line, but the requiring and furnishing of the work and materials in suit.

This is plain from the fact that if the line had been changed there could have .been no recovery unless the work and materials, furnished had been radically different from those covered by the contract, while the new and difiereni: work and materials would have warranted a recovery although there had been no change of the line. Nor will a careful analysis and consideration of all the averments of the complaint show any variance between the cause of action for the reasonable value of (his new and different work and materials and the cause set forth in the pleadings.

Those aver-ments dearly state the character and value of this work and of these materials, that they were required of the contractors by the city, that they were radically different from any specified in the agreement, and that the contractors and their assignees supplied them. These allegations were ample to warrant a recovery here, whether there was a change from the lint1 slaked by this city for this conduit, as the plaintiffs allege, or there never was any line marked out for it until after the contract was made, as the city claimed. There was only one cause of action stated in the complaint.

That was for the work and materials not covered by the agreement, and it was for that cause that the verdict and the judgment were rendered. There was no error in the refusal of the court to charge that there could tie no recovery in this action unless the line had been changed.

Where the ultimate facts which warrant a judgment for the plaintiff have been clearly alleged in the complaint, and the issue thus tendered has been fairly tried upon the merits, a variance between the evidential facts set forth in the pleading and those established by the proof, which has not misled or surprised the defendant, is not fatal to the verdict or judgment. Burt v. Gotzian (C. C. A.) 102 Fed. 937.

There are other assignments of error relative to the rulings and charge of the court concerning the line of the conduit over the mile in controversy, but it is unnecessary to consider them here, because, if there was any error in these rulings, it: was probably immaterial, and it is not likely to creep into any subsequent trial. The crucial question in this case is not whether the line was staked before and changed after the contract was made, or was not located at all until after the execution of the agreement, although this issue may be of some importance in its bearing upon the main question to be determined.

The real questions are: Was any of the work or material for which the plaintiffs have brought this suit radically different in its cost and character from that contemplated by the parties when they made their agreement? If so, how much, and what was its reasonable value? These are questions of fact to be determined by the jury, under proper instructions from the court, if the case is again tried before a jury, and by the court or a referee if it is tried without a jury.

The facts relative to these questions as they were presented at the last trial, and the law applicable to them, have been considered for the purpose of facilitating, if possible, a fair trial and a speedy and conclusive determination of this issue. Our views have undoubtedly been sufficiently expressed to accomplish that purpose, and we turn to another phase of this record. This case had been twice tried before it came to the trial under consideration, and the testimony of the witnesses.in each of these earlier trials had been preserved and filed with the court.

The order granting the third trial contained this provision: “All testimony heretofore taken and filed in this cause shall be available to the parties, respectively, on such trial, subject to objection.” When the plaintiffs commenced to read from the transcript of the testimony given at one of the former trials the evidence of their first witness, the defendant objected to it on the ground that this was a trial at law, and the witnesses, being within the jurisdiction of the court, should be introduced and sworn, and should testify orally before the jury, as though their testimony had not before been taken.

The court overruled this objection, and held that the former testimony of the witnesses could be read as a deposition, and the defendant excepted. After the plaintiffs had read the former testimony of their witnesses and had rested their case in chief, and after the defendant had read the former testimony of A. F. Doremus and that of some other witnesses, and had introduced and examined several witnesses orally, it introduced Mr.

Doremus as a witness, asked that he be sworn, and offered to prove by him the quantity, quality, and reasonable value of the materials and work that entered into the construction of the conduit on that portion of the line in controversy. The court refused to permit this witness to be sworn or to be examined, because his former evidence had been read, notwithstanding the fact that his former testimony did not relate to the points on which the city sought to examine him orally. These rulings are challenged as error. The acts of congress dispose of one question which these specifications present. They provide in

chapter 17, Rev. St.: “Sec. 861. The mode of proof, in the trial of actions at common law, shall he hy oral testimony and examination of witnesses in open court, except as hereinafter provided.” “Sec. 863.

The testimony of any witness may he taken in any civil cause depending in a district or circuit court, by deposition de hene esse, when the witness lives at a greater distance from the place of trial than one hundred miles, or is hound on a voyage to Sea, or is about to go out of the United States, or out of the district in which the case is to he tried, and to a greater distance than one hundred miles from the place of trial, before the time of trial, or when he is ancient or infirm.” The remainder of (Ms

section and sections 864 and 865 are directory as to the officer before •whom the deposition may be taken, the notice to the opposite party, and the manner of taking, testifying’, and returning the deposition to the court. “See. 806. In any case where it is necessary, in order to prevent a failure or delay of justice, any of the courts of the United States may grant a dedi-nras potestutem to take depositions according to common usage; and any circuit court, upon application to it as a court of equity, may, according to the usages of chancery, direct depositions to he taken in perpeiuam rei memo-ria, m, if 1hey relate to any matters that may be cognizable in any court of the United States.”

Section 867 authorizes the courts of the United States, in their discretion, and according to the practice in the state courts, to admit evidence so taken; and sections 868, 869, and 870 prescribe the manner of taking such depositions, and of the use of the subpoena duces tecum, and how it may be obtained. These various sections of the acts of congress provide a complete system for the practice of the courts of the United States in the procurement and admission of the testimony of witnesses. In

section 861 (hey establish a general rule, and in the subsequent sections to which reference has been made they specify every exception to it. Every case must, therefore, fall under the rule or under one of the exceptions. A glance at the sections which specify the exceptions, discloses the fact that the testimony of a witness at a former trial is not among the exceptions, and this case therefore necessarily falls under the express declaration of congress that the mode of proof in actions at common la,w shall be by oral testimony, and examination of witnesses in open court.

There was no proof or offer to prove that the plaintiffs’ witnesses who testified at the former trial were dead, insane, without the jurisdiction of the court, or that for any reason their presence and oral examination were either impossible or impracticable. The legal presumption, therefore, was that their attendance could be obtained by the customary issue and service of a subpoena. It is not claimed that the; acts of congress from which these provisions of tlie Revised Htatutes are extracted were unconstitutional or ineffective.

It is not within the province; or the power of the judicial department of the government to repeal or to abrogate the provisions of these constitutional statutes, and it was error for the court below to admit in evidencie the testimony of the witnesses for the plaintiffs taken at former trials. Ex parte Fisk, 113 U. S. 713, 722, 725, 5 Sup. Ct. 724, 28 L. Ed. 1117; Whitford v. Clark Co., 119 U. S. 522, 525, 7 Sup. Ct. 306, 10 L. Ed. 500; Beardsley v. Littell, Fed. Cas. No. 1,185. Counsel for the plaintiffs attempt to escape from the effect of this proposition in numerous ways.

They insist that the; counsel for the defendant waived their objection to the formen* testimony of the witnesses because they did not urge it when the order granting the third trial was made, nor until the testimony was offered in evidence. But a parly does not waive his right to a trial of his action according to the'express provisions of the acts of congress and the settled rules of evidence by failing to object to an order for a trial in violation of them until his opponent attempts to take advantage of that order.

He Ras a right to presume that the latter will proceed in accordance with the statutes and the law, and not in pursuance of an order which it was beyond the power of the court to make or to enforce. The city did not waive its right to a fair and lawful trial of its case by its failure to object to hearsay evidence until it was offered.

Another contention is that counsel for the city waived their objection, because, after it was offered, and after they had taken their exception, they permitted the testimony of other witnesses to be read without objection, and because in the proof of their defense they availed themselves of the same class of testimony. But the single objection which they made; and the single exception which they took, presented the entire question of the introduction of this hearsay testimony, and elicited a ruling of the court upon it which was conclusive and controlling at that trial of this case.

There was no reason or call for further objections to evidence of this character, and their only effect would have been to annoy the court and to delay the trial. When a question has once been fairly presented to the trial court, argued, and decided, and an exception to the ruling has been recorded, it is neither desirable nor seemly for counsel to continually repeat their objections to the same class of testimony, and their exceptions to the same ruling which the court has advisedly made as a guide for the conduct of the trial.

Counsel for the city lost nothing by their failure to annoy the court by repeating an objection which it had carefully considered and overruled. Hor did they waive this objection and exception by introducing in defense of the suit evidence of the same character as that to which they had objected, and which they had insisted was incompetent. They had presented their view of this question. They had objected to hearsay testimony, and had excepted to the ruling which admitted it. They had not invited the error of that ruling, but had protested against it. This was all that they could do.

The plaintiffs had induced the court to commit the error, and were thereby prohibited from availing themselves of it in any court of review. Under this error they established their case by hearsay. Were counsel for the city required to refrain from meeting this proof by evidence of like character, under a penalty of a loss of their objection and exception? By no means. They had presented to the court and argued what they deemed to be the law. The court had held that they were mistaken.

However firm they were in their conviction of the soundness of their position, the presumption was that they were in error; and it was the part of prudence and their duty to their client and the court to produce all the evidence which they could furnish in support of their demands, under the rule which the court announced, firmly but respectfully preserving their right to reverse the judgment if they failed to win their suit under the erroneous rule which the court had established.

If they succeeded and obtained a verdict, the plaintiffs could not complain of the error which they had themselves invited, and the defendant’s case would be won. If they failed, they would in this way preserve, as they had a right to do-, the right of their client to the trial of its case according to the statute and the established rules of evidence, of which the erroneous ruling had deprived them.

One who objects and excepts to an erroneous ruling which permits his opponent to present improper evidence does not waive or lose his objection or exception, or his right to a new trial on account of it, by his subsequent introduction of the same class of evidence in support of his case. Russ v. Railway Co., 112 Mo. 45, 50, 20 S. W. 472, 18 L. R. A. 823; Gardner v. Railway Co., 135 Mo. 90, 98, 36 S. W. 214. Finally, the defendant had the right, in the first instance, to produce the witness Doremus, to have him sworn, and to examine him orally in support of its defense.

It is said that it is generally discretionary with the court to refuse to permit the recall of a witness who has once testified, and that the introduction of Doremus was in reality his recall, because his testimony at the former trial had been read. The truth is, however, that he had never been called at this trial. All that had been done was to rend his incompetent testimony at the former trials under the erroneous ruling of the court.

Even if it were conceded that the reading of this testimony might have made it discretionary with the trial court to refuse to hear his oral testimony on subjects concerning which he had testified at the former trials, it certainly could not have deprived the city of its right to Ms evidence on the material questions of the quantity, quality, and reasonable value of the work and materials for which the plaintiffs sued, and concerning which he had not testified, at the earlier hearings.

There was nothing in the order granting the third trial, nor in the prior rulings of the court, putting the city to its election between the former testimony of this witness and his oral examination, and the refusal to hear his testimony was a fatal error in the trial of this case. The judgment below is reversed, and the case is remanded to the court below, with directions to grant a new trial.