Ilse v. Aetna Indemnity Co.

104 P. 787, 55 Wash. 487, 1909 Wash. LEXIS 787
CourtWashington Supreme Court
DecidedNovember 4, 1909
DocketNo. 7352
StatusPublished
Cited by6 cases

This text of 104 P. 787 (Ilse v. Aetna Indemnity Co.) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ilse v. Aetna Indemnity Co., 104 P. 787, 55 Wash. 487, 1909 Wash. LEXIS 787 (Wash. 1909).

Opinion

Per, Curiam.

This case presents an appeal and cross-appeal. We will refer to the parties as plaintiff and defendant. On July 30, 1905, plaintiff entered into a contract with Shoshone county, Idaho, to construct a court house and jail under the supervision of Stritesky & Sweatt, a partnership, as architects. Thereafter plaintiff, by written contract, sublet to the International Fireproof Construction Company a portion of the work to be done. The consideration of the subcontract was $30,400, and the construction company was required to, and did, give a' bond for $15,000, with this defendant as surety thereon. The contract contained the following clause:

“The expense incurred by the (plaintiff) as herein provided either for furnishing materials or finishing the work, and any damage incurred through such default, shall be audited and certified by the architects whose certificate thereof shall be conclusive upon the parties.”

The construction company did a portion of the work and then, becoming insolvent, failed to proceed. The defendant was called upon to complete the contract, but declined so to do. Plaintiff then completed the work called for by the subcontract. Thereafter he obtained a certificate that he had necessarily expended the sum of $15,361.46 in excess of $11,550, which was the balance that would have been due to the construction company had it completed the work. This certificate was signed “Stritesky & Sweatt, architects, by L. It. Stritesky.” On February 13, 1907, plaintiff commenced this action, alleging substantially the matters hereinbefore stated. The defendant answered, denying certain of plaintiff’s allegations, and affirmatively alleging that the architects’ certificate was not given in good faith, but as a result of fraud and misrepresentation on the part of the [489]*489plaintiff and recklessly and without personal examination by said architects. The trial court, among others, made the following findings:

“That the said Stritesky thereafter made and delivered to the said Ilse such certificate, but said certificate was obtained through fraud and misrepresentation on the part of said August Ilse, and without the exercise by the said Architect Stritesky of his personal judgment with respect to matters certified about, and without any intent on his part that the same should be used as a final or permanent certificate.
“That the statement exhibited by the said Ilse to the said Architect Stritesky, and upon which his certificate was based, contained many overcharges and errors in favor of the said Ilse.
“That the certificate of the architect relied upon by the plaintiff in this cause as the basis of his suit, is wholly invalid and not binding upon the defendant by reason of the fraud and deception of the plaintiff through which it was obtained, and the plaintiff is not entitled to recover against the defendant.”

After a trial on the merits, the action was dismissed by the trial court upon the ground that it had been prematurely brought, and the dismissal was made without prejudice to the bringing of another suit. Plaintiff appeals from the dismissal, and the defendant appeals from that portion of the judgment which makes the dismissal without prejudice.

It is urged by the plaintiff that the certificate of the architect must be deemed to be conclusive of the amount due the plaintiff, inasmuch as the contract expressly states that the certificate of the architects shall be conclusive between the parties. It is the general rule of law that parties to building contracts may agree that the certificate of an architect or an award by an arbitrator shall be a condition precedent to the right of action or conclusive as to the amount due on the contract. This rule is not without its exceptions. It has accordingly been held that the certificate or award must be made upon such knowledge of the subject-matter as to warrant an opinion binding upon the parties. This prin[490]*490ciple finds expression in the cases of Van Hook v. Burns, 10 Wash. 22, 38 Pac. 763; McDonald v. Lewis, 18 Wash. 300, 51 Pac. 387, and Long v. Pierce County, 22 Wash. 330, 61 Pac. 142. This is consistent with the rule that a certificate may be impeached for fraud or for such gross mistake or error as would imply bad faith. To make a certificate without a proper knowledge of the fact, which upon investigation is found to be untrue, is equivalent in law to the making of a certificate known to be false. The result is the same. The one is an open fraud, the other the product of such bad faith as to operate as a fraud in law. In Marks v. Northern Pac. R. Co., 76 Fed. 941, the court said:

“The constituting, by agreement of parties, of the engineer of the defendant company the umpire to ascertain and determine the amounts that should be due the contractors under the contract, . . . was accompanied by the presumption of law that the engineer should at all times, and in respect to every matter submitted to his determination, exercise an honest judgment, and commit no such mistakes as, under all the circumstances, would imply bad faith.”

There has been much loose expression on the part of courts upon this subject, and many of them have seemingly held that the certificate once given cannot be questioned. There may be contracts so drawn, or the circumstances of the particular case may be such that this doctrine would apply, as for instance in the case of Martinsburg etc. R. Co. v. March, 114 U. S. 549, 5 Sup. Ct. 1035, 29 L. Ed. 255, where the contracting company had expressly bound the other party to accept as conclusive the estimates of its own engineer, and then sought to impeach his certificate. But here we have no such condition. Both parties were entitled to an honest award, and to hold defendant to answer in a sum clearly shown to be erroneous would deprive it of its legal rights. We do not think it was ever intended, in the absence of facts equivalent to an estoppel, to hold the certificate of an architect was anything more than a condition precedent to an action, or to afford an opportunity for settlement out of [491]*491court. For it is the policy of the law to favor contracts that will avoid litigation.

“When, therefore, a contract discloses nothing more than an agreement generally to refer any and all disputes to arbitration, it does not prevent the contractor from maintaining an action in court. It should not refer any and every matter to arbitration, but provide that the contractor shall not sue nor the company be liable until the engineer has determined the amount to be paid. To some tins distinction may not be so apparent, and it has not been established without criticism. As Judge Martin once said in a case setting forth such a decision: ‘If parties may arrange [agree] that before any action is brought an arbitrator [engineer] shall ascertain the sum to be paid, that seems to be only a circuitous mode of saying that no action shall be brought.’ Yet the decision has been followed and is now well established that the parties to a contract may not oust the courts of their jurisdiction over the subject-matter of their contracts.” Wait, Engineering and Architectural Jurisprudence, § 345.

In this case the certificate of the architect fixed an amount in excess of the amount actually due. This fact cannot be questioned.

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Cite This Page — Counsel Stack

Bluebook (online)
104 P. 787, 55 Wash. 487, 1909 Wash. LEXIS 787, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ilse-v-aetna-indemnity-co-wash-1909.