Another English case goes so far as to hold that unfair conduct proved on the part of the architect will be sufficient cause for a court of equity to give relief and even to decree payment of the balance due the contractor, to declare the decisions of the architect not binding, and to release the contractor from penalties imposed. The declaration in this case alleged. that the architect exercised the powers conferred upon him in an arbitrary, capricious, and vexatious manner, so as to deprive him of completing the works according to his contract.' This case must be taken as out of sympathy with the other English cases cited, and more in line with the American decisions.

748. American and English Decisions Compared.-Throughout the American decisions one cannot help noticing the democratic spirit which prevails when compared with the stringent, drastic, conservative policy of the English courts. The American courts are more regardful of the interests and weaknesses of contractors. The circumstances under which a contractor enters into his contract and assumes the obligations of his contract, the arbitrary manner in which these stipulations are inserted, and the fact that the contractor usually has no voice whatever in the selection of the language of the contract, and no choice, if he will get the work, but to sign the contract as prepared for him, are deserving perhaps of some consideration, and are enough to recommend him to the merciful protection of the court. It may be even that the terms of the contract could not be changed if the contractor did urge it and the city were willing, as in the case of a contract form which has been made the basis of proposal for public works where the law requires that the contract shall be let to the lowest bidder.*

The education of contractors is usually limited, and it is a well-known fact that work is often taken by men who cannot understandingly read the contract to which they subscribe their marks or names. It is not strange, therefore, that our courts are more apprehensive of the hardships that a contractor is subject to, and more apt to entertain his cause than are the English courts. This tendency to clemency in the American jurisprudence may be found in the criminal court decisions, in cases of torts in general, and seems to pervade our whole system; it cannot be said to be from any overzealous desire to protect individual rights so much as from a desire to promote justice and relieve from hardships.

The English courts have always exercised the most zealous protection of individual rights, especially of property, while the democratic spirit of the American courts has sacrificed innumerable property rights to the convenience and comfort of the public. Easements of air and light, rights in streets and roads, and to the use of water from our streams, have in many

1 Pawley v. Turnbull, 3 Gifford 70 [1861].

*See Secs. 155-159, supra.

instances been sacrificed to the public without any compensation whatever. It is the practice of English courts to construe contracts strictly according to the evident intention of the parties as expressed in their agreement, and not to ascertain what is just and right. As one might expect, therefore, we find the halls of justice open to the contractor for causes that would not be listened to in an English court.

The American courts have not always followed the rigid lines laid down. in the English cases cited, but have sought somewhat to relieve the apparent hardships with which the rule must sometimes burden the contractor. As in so many other cases, we find the American cases tempered with charityJustice, as it were, with her eyes open to the misfortunes of the poor contractor. An early Ohio case [1844] held that whether or not there had been a proper exercise of the discretion conferred by the contract on the part of the company or its engineer, was a question for inquiry and proof for a court.' A later case held that the power to declare a forfeiture of a contract when the work shall not make such progress as shall insure completion within the time stipulated, or if the work shall be, wholly or in part, improperly constructed, is not an arbitrary one to be exercised capriciously, but can be exercised only in good faith and for a reasonable cause. In an action for damages by the contractor for wrongful act of the architect in taking possession of the works, the issue whether the contractor has fulfilled his contract and if the architect was justified in taking the work from him, was held one that he was entitled to have tried, and it was further held that the decision of the building inspector under a city ordinance was not conclusive as to the rights of the contractor upon the trial of such issue. It might be proper to say, however, that the clauses of the American contracts did not usually contain the stiff requirements of the English cases.

The proof of the contractor's declaration that the exercise of the engineer's power in annuling his contract was wrong, devolves upon the contractor who makes it.'

1 Easton v. Pa. & Ohio Canal Co., 13 Ohio 79 [1844].

2

City of Chicago v. Sexton, 115 Ill. 230

[1885]..

3 White v. Harrigan (Minn.), 43 N. W. Rep. 89 [1889].

The State v. McGuiley, 4 Ind. 7 [1852].

CHAPTER XXVII.

PAYMENT. PROGRESS AND FINAL PAYMENTS.

PAYMENTS.

PRELIMINARIES TO

PROOF THAT LABOR AND MATERIALS ARE PAID FOR AND NO LIENS HAVE BEEN FILED. RELEASE OF LIENS AND OF ALL CLAIMS REQUIRED BEFORE FINAL PAYMENT. MANNER OF MAKING PAYMENTS. CONTRACT SIGNED,

SEALED, WITNESSED, AND DELIVERED.

750. Provision that Contractor shall Furnish Proof that all Wages, Materials, and Supplies are Paid For.

Clause "In the event of the contractor failing or neglecting for two weeks to pay the wages of the men and teams employed on the works, whether on account of default, neglect, insolvency, or otherwise, the owner or board of public works, on the representation of the engineer, reserves to itself the right to pay all such wages ascertained to be due, and to deduct the amount of the same from any moneys due or coming due to the contractor, on this or any other contract; but it is distinctly understood and agreed that the owner or city assumes no obligation nor in any way undertakes to pay such wages out of any funds due or coming due to the contractor, or out of his [its] own funds."

751. Provision that Contractor shall Furnish Proof that All Claims for Labor and Materials are Paid.

Clause: "And the said contractor further agrees that he will furnish to the owner or company or to his [its] engineer satisfactory proof that all labor and materials employed in or upon the works have been paid for in full, before he shall demand any estimates or payments due or unpaid under this contract, and in default of such satisfactory proof he further expressly agrees that the said owner or company may retain and reserve from the amount due by the terms of this contract, a sum sufficient to pay all such claims for labor and materials until they are paid and satisfactory proof of that fact has been furnished."

752. Provision that Contractor shall Indemnify City from All Claims for Labor and Materials.

Clause: "The said contractor further agrees that he will indemnify and save harmless said owner or city from all claims against said owner or city, under Chapter of the public statutes of the State of and any laws passed since the public stat

utes with reference to liens on buildings and lands, for labor done and materials furnished under this contract, and shall furnish the said owner or board with satisfactory evidence, when called for by him [it], that all persons who have done work or furnished materials under this contract, for which the said owner or city may become liable, and all claims from the various departments of the city government or private corporations, or individuals, for damage of any kind caused by the construction of said work, have been fully paid or satisfactorily secured; and, in case such evidence is not furnished, an amount necessary and sufficient to meet the claims of the persons aforesaid shall be retained from any moneys due, or that may become due, the said contractor under this contract, until the liabilities aforesaid shall be fully discharged or satisfactorily secured."

753. Provision that Owner may Retain Moneys Due Equal to Labor and Material Claims Unpaid.

Clause: "And it is further agreed by the part.. of the second part [the said contractor] that said part.. will furnish the said owner or commissioner with satisfactory evidence that all persons who have done work, or furnished materials under this agreement, and who may have given written notice to said owner or commissioner before or within ten days after the final completion and acceptance of the whole work under this contract, that any balance for such work or materials is due and unpaid, have been fully paid or satisfactorily secured. And in case such evidence is not furnished, as aforesaid, such amount as may be necessary and sufficient to meet the claims of the persons aforesaid may be retained from any moneys due said part.. of the second part [said contractor] under this agreement; until the liabilities aforesaid shall be fully discharged or such notice withdrawn."

754. Provision that Moneys may be Retained to Meet Unsatisfied Claims for Labor and Materials.

Clause: "The said contractor further agrees that the said owner or board may, if he [they] deem it expedient to do so, retain out of any amounts due to the said contractor, sums sufficient to cover any unpaid claims of mechanics or laborers for work or labor performed under this contract; provided, that notice in writing of such claims, signed by the claimants, shall have been previously filed in the office of the engineer or clerk of the works."

755. Sometimes Provisions for Payment of Labor and Materials are Required by Law in Contracts for Public Work.-These several stipulations have been regarded with so much favor in construction work that it has been made the subject of an ordinance in New York City, which requires it to be inserted in every contract for work done for the city, the clause postponing the payment of the last installment due until satisfactory evidence is furnished that all persons who have done work or furnished materials under the contract," to all who have given ten days' written notice that a balance is due them, or until they have been fully paid or secured. Under such an ordinance it was held that a materialman who had supplied materials for

the work under one contract, could not obtain a lien upon a balance due the same contractor under another contract.'

Where a school board fails to require the contractor to give the statutory bond for the payment of laborers and materialmen, neither notice nor demand is necessary to the cause of action against the members thereof thereby accruing to the laborer or materialman for labor or material furnished in the construction of the building.' In this case the members of the school board became personally liable to the contractor's creditors.

A provision that, at completion of the work, the balance due shall be paid the contractor on his receipting for the same in full, and rendering clear receipts from all subcontractors, employees, and materialmen from all liability to them, was held to exempt the company from liability to the contractor for damages recoverable against him by a subcontractor for breach of the subcontract, consisting in the delay of the company to have the road surveyed.'

When the contractor has covenanted that he will promptly pay, or cause to be paid, all claims for materials used by him under the contract, and for all labor performed in the construction and completion of a structure, a failure on his part to promptly pay such claims, or cause them to be paid, is a breach of the covenant."

A bond furnished by a contractor for the erection of works and which recites that he "shall file with the board of public works the receipts and claims from all parties furnishing them with materials and labor," is a promise by the contractor to pay for all labor and materials, and a petition of a materialman averring that the contractor owes him for lumber used in the structure, is a sufficient averment of a breach of his promise. An agreement to settle with all holders of claims does not require the contractor to show that he paid all claims incurred in the construction of the works." A failure to pay all claims entitles the owner to nominal damages only, unless it be shown that he is liable for the payment of the bill.'

When the contract provides as a condition precedent to the final payment that there shall be no legal claims against the contractor for work or materials furnished, a surety on the bond of the contractor cannot enforce a lien for work or materials.

8

756. Validity of Clause in Public Contracts.-If the agreement to pay for the work and materials has been made subject to the conditions recited

Quinlan v. Russell, 94 N. Y. 350 [1884].

2 Staffon v. Lyon (Mich.), 68 N.W. Rep. 151.

O'Connor v. Smith (Tex. Sup.), 19 S. W. Rep. 168.

4 Thompson v. Coffman, 15 Oreg. 631 [1888].

5 Lyman v. City of Lincoln (Neb.) 57 N. W. Rep. 531.

6 Bradford v. Whitcomb (Tex.), 32 S. W. Rep 571.

Karr v. Peter, 60 Ill. App. 209.

8 Gannon's Ex'is v. Cent. Presb. Ch (Pa. Sup.), 33 Atl. Rep. 1043.