*2. The company having taken the forfeiture under the contract, the plaintiff filed his bill, insisting that the engineer had under-estimated the work £30,000, and that no forfeiture had been incurred by him, and praying that the company might elect to permit the plaintiff to complete the works, or that the contract might be considered at an end, and in either case an account between the parties might be taken.

3. The Lord Chancellor held, that the facts alleged do entitle the plaintiff to relief in equity. The plaintiff amended his bill, * and alleged that the most expensive masonry had been paid for only at the price of inferior work, and claimed large sums in that respect, and also alleged fraud against the company, in the contracts and in the certificates.

4. It was held, that the investigations as to the sufficiency of the payments made could only be made in a court of equity.

5. That the evidence in support of an allegation of fraud must be very clear, and that it is not enough to show that the statements of the company as to the nature of the work, gave imperfect information, but it must also be shown that the contractor could not with reasonable diligence have acquired all necessary information.

6. The fact of the engineer being a shareholder in the company is not enough to avoid his decision, as the contractor might have ascertained this fact. The character of an engineer is of more value to him than his interest as a shareholder.

7. That the decision of the engineer as to the quality of the work is conclusive, but not as to the quantity. The question of measurement and calculation will be entertained and decided by a court of equity.

furnish the rails and chairs, blocks, &c., to complete the same, by the day specified. The work was not finished for twenty-four days after the time specified, and the rails, chairs, blocks, &c., were not furnished to complete it sooner. The court held the covenants independent of each other, and the contractor bound to deduct the stipulated forfeiture, notwithstanding the default of the company. McIntosh v. Midland Counties Railw., 14 M. & W. 548; s. c. 3 Railw. C. 780. The rule of law that covenants, which are not the entire consideration for each other, will ordinarily be construed as independent, unless there is something in the transaction which shows the parties regarded them as dependent, is certainly carried further in this case than reason and justice would seem to justify. We think this case would not be followed in this country.

* 215, 216

8. That where the parties have entered into new contracts, it will be considered a condonation of old injuries, unless, at the time of making the new contract, the plaintiff insisted upon his adverse claims, the parties being at liberty to proceed at law.

9. After the works were completed by the company the court ordered an account taken, directing special inquiries as to the amount and kind of work done.

10. It was held that stipulations in regard to penalties in these contracts are binding upon the parties, and no relief against them will be afforded in equity unless fraud be shown. And that, where it had been agreed that a written contract should form part of an unwritten one, this will include stipulations as to forfeiture.1

11. In one case in Pennsylvania2 it was decided that the estimates and decisions of the engineer of a railway company are conclusive in disputes with contractors, only where such is the positive stipulation of the contract; that in every other case the correctness of such estimates are to be tested by evidence, and in an action against the company by a contractor to recover a balance claimed to be due for work, it is correct to instruct the jury to rely on the engineer's final estimates unless shown to be

erroneous.

12. In such a contract, where a supplemental contract was made by the company, assuming the work, and agreeing to pay the contractor for what work he had done, and reserving no claim for damages, either on account of the suspension of the work or its not being completed, it was held that the contractor was entitled to compensation according to the stipulations of the supplemental contract, without any deductions on account of suspension of or not completing the work, and that the work done and agreed to be compensated must be estimated at what it was worth, and the contractor's claim could not be restricted to what would be coming to him under the final estimates of the engineer; nor could the company claim any deductions on account of loss incurred in completing the work.2

13. And where the plaintiff stipulated to perform the work of shifting the track of a railway, under the direction and to the

2 Memphis Railw. Co. v. Wilcox, 48 Penn. St: 161.

satisfaction of the city surveyor, whose certificate that the work had been so performed was to entitle him to payment, it was held, that where the surveyor directed that the work should not be done beyond a certain point, that was a valid excuse for not obtaining his certificate of performance beyond that point.3

*SECTION XIV.

Frauds in Contracts for Construction.

1. Relievable in equity upon general princi- | 3. Where no definite contract closed, no relief ples. can be granted.

2. Statement of leading cases upon this subject.

§ 118. 1. It is well known that courts of equity will relieve against fraud practised by the agents of railways, in buildingcontracts, the same as in other cases of fraud. But the importance and peculiar nature of these contracts will justify a brief note of the cases decided upon the subject.

2. The most important case in the English books upon this subject, is that of Ranger v. The Great Western Railway, which we have just referred to upon another point.1 And the state

1

3 Devlin v. Second Avenue Railw. Co., 44 Barb. 81.

1 Railw. C. 1; s. c. 3 Railw. C. 298. On appeal in the House of Lords, 27 Eng. L. & Eq. 35, 41. In regard to fraud, on the part of railway companies, in building-contracts, the Lord Chancellor said: "The first ground on which the appellant rests his title to relief is, that he was induced to enter into the contract by the fraud of the company; that the sum at which he agreed to do the works was far below what he would have required had he known the real nature of the soil through which the tunnels were to be made; but on this point he had been misled by the fraudulent contrivance of the respondents. The case made by the bill on this head is, that there being on the line of the road to be made for the railway in the neighborhood of Bristol three kinds of stone, sandstone, Dunns or Dunn stone, and Pennant or Hanham stone, of which the first (that is, sandstone) is comparatively soft and easy to work, whereas the other two kinds (particularly the latter) are hard and difficult to work, the company acting through Mr. Brunel, their engineer, fraudulently contrived to make the appellant believe that the cuttings would be through the softer material (sandstone), and not through Dunns or Pennant stone, whereas the fact was, as they well knew, that the line was chiefly through the harder sorts of stone. The bill represents, that, for the purpose of enabling persons desirous of contracting to make the road along the line included in the contract described as 1 B, to tender for the same, it was

ment *of that case, in the House of Lords, by the Lord Chancellor Cranworth, is a better commentary than elsewhere exists, necessary that in different parts of that portion of the intended line pits should be sunk, called 'trial pits,' in order that the nature of the strata might be previously known; and accordingly that the respondents did sink ten such pits, but that eight of them were only sunk to the depth of a few feet, and were, therefore, of little or no use in showing what would be the nature of the soil at the level of the line of the railway, which was at a very considerable depth below the surface; and the other two were sunk respectively to depths of 78 and 55 feet only, at points where the intended line of road was in one case 112 feet and in the other 97 feet below the surface, so that these two pits did not reach the level of the railway, in one case by 34 feet, and in the other by 42 feet. The bill further alleges that the soil dug out of all of the said pits was laid on the surface near the mouth, and showed apparently a substratum of sandstone, the workmen employed to sink the pits having by directions from the company ceased to dig when they reached the hard stone, except that out of the bottom of one of the deep pits some Dunn stone was taken, but which had crumbled away when exposed to the air.

"The bill then goes on to charge, in substance, that the company, with knowledge that the cuttings would have to be made through the harder sorts of stone, caused notice to be given by advertisement, that they were ready to receive tenders according to certain printed forms circulated for the purpose, and the nature of the works to be done was to be ascertained from a specification deposited in their office at Bristol. The specification described the works for which the tender was to be made. The printed form of tender contained an undertaking by the party tendering, not only that he would do the contract works at a specified sum, but also that he would do any extra works, and make any alterations in or additions to the original works which might be deemed expedient in the course of their progress, on being paid for the same according to certain rates set out in a schedule of prices annexed to the tender. The different heads under which charges were to be made by the contractor, in respect of such extra or altered works were all printed as part of the form of tender, and the party tendering was to write against each such head the price at which he would agree to be bound to do the same works of the nature there referred to. Amongst the works so to be done was the excavating clay, shell, and sandstone, but there was no mention in the schedule of any other stone. Neither Dunn stone nor Pennant are referred to by name; and the suggestion of the bill is, that the omission of any mention of Dunn or Pennant stone was a contrivance, or part of a contrivance, for the purpose of leading the persons tendering, to suppose that they might make their calculations on the footing of there being no hard stone to be cut through, supposition which would be confirmed by the trial pits, out of which no hard stone had been dug, except the small portion of Dunn stone from one of the pits, which, as I have already stated, crumbled away when exposed to the air.

a

“The appellant was resident in London, and in order to enable him to make his tender, he sent down to Bristol an agent, Thomas Lloyd, whom he represents as a competent judge in such matters, to examine the line of the proposed works,

upon this *subject. The general subject of fraud in railway companies, in *regard to building contracts, is somewhat considered in a late case in the Supreme Court of Vermont.2

so as to enable him to form a correct judgment as to what would be a fair amount to be tendered. The bill states that Lloyd accordingly proceeded to Bristol in the month of March, 1836, surveyed the line and inspected the trial pits, and that, reasonably supposing the two principal pits to have been sunk to the level, and not finding amongst the excavated material accumulated on the surface any thing but soft or loose stone no Pennant or Hanham stone he concluded that there would be no cutting through hard stone; and the sum tendered was calculated on that basis. It was, according to the bill, impossible for Lloyd to get down to or near the bottom of the two principal trial pits, in consequence of their being nearly filled up with rubbish and water before he examined them. The appellant, therefore, contends that he was imposed upon as to the nature of the work he had to perform, and so agreed to do it on terms to which, but for the deception practised upon him, he would not have consented. The question on this part of the case is one of fact. Is it established that any imposition was practised on the appellant to induce him to enter into the contract? For if there was, he was clearly entitled to relief, whether precisely that which he asks for is another question. Strictly speaking, a corporation cannot of itself be guilty of fraud; but where a corporation is formed for the purpose of carrying on a trading or other speculation for profit, such as forming a railway, these objects can only be accomplished through the agency of individuals; and there can be no doubt that if the agents employed conduct themselves fraudulently, so that, if they had been acting for private employers, the persons for whom they were acting would have been affected by their fraud, the same principles must prevail where the principal under whom the agent acts is a corporation. The question, therefore, on this part of the case is, whether the directors, or the engineers, or agents, whom they employed, were guilty of the fraudulent misrepresentations alleged by the bill. I am clearly of opinion that no such case is made out. [His lordship here stated the nature of the evidence on this point, and continued]:

“Two engineers, Mr. Frere and Mr. Babbage, both say that the appellant had ample opportunity, by means of the trial pits and cuttings, of ascertaining the nature of the soil and strata; and the circumstances of the case satisfy me that this must be true. The work to be done was of a laborious, difficult, and expensive character. The notices calling for tenders had been circulated for many weeks, and even months, and would naturally excite the attention of contractors of eminence, who would be drawn to the spot. I cannot attribute to the company the fraudulent intention imputed to them an intention as absurd as it would have been fraudulent of meaning to mislead those who should apply to make tenders for the work, when they must have felt that the success of such a fraud must entirely depend on the very improbable chance, that those who should be attracted by the notices would omit to make inquiry into the nature of the soil

2 Herrick v. The Vermont Central Railw., 27 Vt. R. 673.
* 219.220