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Smart Summary

Factual and Procedural Background

The plaintiff, Patrick Gallagher, entered into a contract with the defendant, Jacob Hirsh, owner of premises at Nos. 3 and 5 West Eighteenth Street, New York City, to perform excavation, mason work, and construction of walls for a new building. Prior to commencing excavation, the defendant employed the plaintiff to remove bricks and materials from demolished buildings on the premises. The defendant represented and promised that the plaintiff could store these bricks on an adjacent vacant lot, guaranteeing undisturbed possession of that lot during construction. Relying on these representations, the plaintiff agreed to remove and store the bricks for $400, less than the fair value of the work. However, the defendant did not control the adjacent lot and could not guarantee the plaintiff’s use of it, forcing the plaintiff to remove some bricks and resulting in claimed damages of $900.

The complaint included three causes of action: (1) damages for the defendant’s failure to guarantee use of the storage lot; (2) a cause of action dismissed at trial opening; and (3) recovery of the last installment payment of $3,100 under the contract plus $631.33 for extra work.

The defendant denied making the guarantees alleged, admitted some representations were made in good faith, and denied the amount and nature of damages claimed. He also denied that the last installment payment was due and that extra work was properly valued. A counterclaim was filed by the defendant and replied to by the plaintiff.

At trial, the lower court ruled the plaintiff could recover damages for the loss of bricks based on admissions in the pleadings and instructed the jury accordingly. The court also ruled on the third cause of action regarding the last payment and extra work under the contract.

Legal Issues Presented

  1. Whether the plaintiff could recover damages based on the defendant’s alleged promise and guarantee to allow undisturbed use of an adjacent lot for storage of bricks removed from the defendant’s premises.
  2. The proper measure of damages for the plaintiff’s loss of use of the bricks stored on the adjacent lot.
  3. Whether the defendant had the right under the contract to take away part of the plaintiff’s work and award it to a third party without the plaintiff’s consent.
  4. The correct rule for calculating damages related to the plaintiff’s loss of work and payment under the contract when part of the work was performed by another contractor.

Arguments of the Parties

Appellant's Arguments (Defendant, Jacob Hirsh)

  • Denied promising or guaranteeing the undisturbed possession of the adjacent lot for brick storage.
  • Admitted representations were made believing them true but denied they induced the plaintiff to remove bricks at a price much less than fair value.
  • Denied that the plaintiff suffered $900 in damages, admitting only some damage due to having to remove bricks, with no knowledge of exact amounts.
  • Denied that the last installment payment was due and questioned the validity of extra work claims.
  • Claimed the plaintiff consented to having part of the work taken away and performed by a third party (Sooysmith Co.).
  • Argued that the reasonable value of the omitted work performed by Sooysmith Co. should be deducted from the amount due to the plaintiff.

Respondent's Arguments (Plaintiff, Patrick Gallagher)

  • Alleged the defendant promised the use of an adjacent lot for brick storage and guaranteed undisturbed possession, inducing the plaintiff to remove bricks at a reduced price.
  • Claimed damages of $900 for being hindered from using approximately 300,000 good bricks due to defendant’s failure to provide storage.
  • Denied consenting to the removal of part of the work from his contract and challenged the defendant’s right to award that work to another contractor.
  • Asserted entitlement to the full contract payment, including for extra work, regardless of the third party’s involvement.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analyzed the plaintiff’s first cause of action and concluded that even if the defendant’s alleged promises were true, the proper measure of damages was limited to the cost to the plaintiff of removing and storing the bricks elsewhere, not the full value of the lost bricks. The court emphasized that the defendant’s guarantee was only to provide a storage place, not to insure the bricks themselves. The plaintiff’s failure to remove bricks after a demand for possession of the lot would not make the defendant liable for their loss.

The court further held that the trial court erred by removing from the jury the question of the contract’s nature, including whether there was a guaranty by the defendant, and by instructing the jury only to assess damages without determining the underlying contractual obligations.

Regarding the third cause of action, the court interpreted the contract clause allowing alterations, deviations, additions, or omissions to mean changes to the scope of work, not the right to transfer portions of the plaintiff’s contract to another party without consent. The trial court’s instruction that the plaintiff was entitled to recover the full contract amount despite not performing certain work was erroneous. Instead, damages should be limited to the plaintiff’s lost profit due to the work being done by another contractor. The court found the trial court’s damages instruction legally incorrect and warranted a new trial.

Holding and Implications

The court REVERSED the judgment and ORDERED A NEW TRIAL, with costs to the appellant to abide the event.

The decision directly affects the parties by requiring reconsideration of the nature of the contractual promises and the proper measure of damages for both the loss of brick storage and the partial subcontracting of work. No new legal precedent was established; rather, the court clarified the proper legal standards and procedural requirements for jury determination in contract and damage disputes.

PATRICK GALLAGHER, Respondent, v. JACOB HIRSH, Appellant.

VAN BRUNT, P.J.:

The complaint alleged three causes of action. For a first cause of action the plaintiff alleged that the defendant, being the owner of certain premises known as Nos. 3 and 5 West Eighteenth street, in the city of New York, entered into a contract with the plaintiff to do the excavation and mason work and to construct the walls of a new building to be erected thereon; that the plaintiff, being about to enter upon said work of excavation and construction, the defendant employed the plaintiff to remove a large quantity of bricks and materials then upon the said premises by reason of the demolition of certain old buildings thereon; that for the purpose of inducing the plaintiff to remove said brick, etc., for a price less than the fair and reasonable value of the work, the defendant represented to the plaintiff, and promised and agreed with the plaintiff, that such brick and other material could be stored and remain upon a vacant lot immediately westerly from and adjacent to the said premises during the period required for the construction of such new building by the defendant; and that the defendant guaranteed to the plaintiff the undisturbed possession of such adjacent lot for such purpose and during such period, and agreed that the plaintiff in the construction of the new building should be at liberty to use from such brick a large quantity of good and sound brick in the erection of the walls of the new building; that relying upon such representations of the defendant the plaintiff undertook to remove such brick and material from the premises of the defendant, to store the same upon such adjacent lot, to select and use therefrom such sound and suitable brick as could properly be used in the construction of such new building, and ultimately to remove from such premises all of such brick and other material for the sum of $400; that such sum of $400 was much less than the actual value of such proposed work of removal of said material; that the plaintiff, in consideration of said representations, promises and agreements of the defendant and of the benefits which would result to him, undertook such work of removal at a price far less than the actual value thereof; that, pursuant to such employment, the plaintiff removed said brick and stored them upon the said adjacent lot, but that the representations of the defendant were in fact untrue and he did not control the said lot used by the plaintiff as such place of storage, and was unable to assure to the plaintiff the free use or the undisturbed possession thereof; that the plaintiff was required to and did remove a quantity of brick and material from such lot, and was thereby hindered and prevented from using about 300,000 of good, sound and suitable brick so accumulated and stored by the plaintiff in and about said work of construction, all of which he could have so used if said representations had been true; and that the plaintiff thereby sustained damage in the sum of $900 and interest.

The second cause of action having been dismissed at the opening of the trial, it is not necessary to consider the same further.

The third cause of action was for the last installment of $3,100 due under the contract, and for $631.33 for extra work.

The answer of the defendant denied that for the purpose of inducing the plaintiff to remove the brick and other material referrred to in the 1st paragraph of the complaint, for a price less than the fair and reasonable value of the work, he promised and agreed with the plaintiff that such brick and other material could be stored and remain upon a vacant lot immediately westerly from and adjacent to the premises mentioned in the complaint, and denied that he promised or represented that he would guarantee to the plaintiff the undisturbed possession of said lot for such purpose and during such period. The defendant admitted that he did represent to the plaintiff that such brick and other material could be stored and remain upon said vacant lot, and that he made such representations believing them to be true, and he admitted that in consequence of such representations the plaintiff agreed to remove such brick and material for a price less than he would have been entitled to if it had not been for such representation. The defendant denied that the plaintiff, relying upon the representations, promises and agreements of the defendant set forth in the complaint, did undertake to remove such brick and to store the same upon said adjacent lot; but admitted that the plaintiff did rely upon defendant's representations as thereinbefore admitted, and that in consequence thereof he did undertake to remove such brick and material from defendant's premises and to store the same upon said adjacent lot, and to use the same as alleged in the complaint. The answer denied that the sum of $400 was much less than the actual value of said proposed work of removal, and denied that the plaintiff in consideration of the representations of the defendant undertook such work of removal at a price far less than the actual value thereof, although the defendant admitted that the plaintiff, in consideration of defendant's representations thereinbefore admitted, did undertake such work of removal at a price somewhat less than the actual value thereof, provided the plaintiff had had the use of such adjacent lot for the purposes alleged in the complaint. The answer further denied that the representations made by defendant were untrue and that the plaintiff was hindered from using 300,000 or any such number of brick so stored by the plaintiff, but admitted that by reason of the fact that he was deprived of the use of such lot the plaintiff was obliged to remove said brick from said lot, and alleged that he had no knowledge or information sufficient to form a belief as to the amount of brick and material so removed, and alleged upon information and belief that the plaintiff used or sold all the brick and material so removed by him in and about the construction of other buildings in the city of New York. The defendant further denied that the plaintiff had suffered damage in the sum of $900 or any such sum, but admitted that the deprivation of the use of said lot by the plaintiff for the purposes alleged, cost the plaintiff some damage in that the plaintiff was obliged to remove said brick, but that the defendant had no knowledge or information sufficient to form a belief as to the amount of such damage, and that the defendant had at all times been and then was ready and willing to pay such damage when ascertained.

For answer as to the third cause of action the defendant denied that the last payment specified in said contract had matured and that the same was due and owing to the plaintiff, and denied that the architects had unjustly and unreasonably refused to furnish a certificate to the plaintiff as to such last payment. The answer denied that the said sum of $3,100, or any part thereof, was justly due and owing to the plaintiff; and also denied the allegations in respect to extra work (except a portion thereof), the reasonable value of which as alleged is denied.

The defendant set up a counterclaim to which the plaintiff duly replied.

In this condition of the pleadings, upon the case coming on for trial, the learned court below held that the plaintiff upon the admissions in the pleadings, could recover damages for the loss of brick claimed in the first cause of action, and left it for the jury to fix the value thereof, and charged the jury that for this sum the plaintiff was entitled to recover.

In this we think the learned court erred. No matter if the agreement between these parties was as alleged upon the part of the plaintiff, the rule of damage was not the value of the brick which the plaintiff had placed upon these premises. It seems to us that at most the recovery of the plaintiff must have been limited to what it would have cost him to remove and store these brick for the purpose of holding them until the time when the building should be ready for their use in its construction. If the plaintiff after a demand for the possession of the lot upon the part of the owner had allowed the brick to become lost because of his failure to remove them, that does not make the defendant in any way liable for the loss of the brick. Even under the allegations of the complaint, all that the defendant guaranteed to do was to furnish a place for the storage of the brick. If he did not furnish that place, and the plaintiff was compelled to procure another place, the measure of damage at the most must certainly be limited to what it would cost to remove the brick and obtain a new place of storage.

The court, also, seems to have erred in refusing to submit to the jury the question as to the nature of the contract between these parties. The contract as alleged by the complaint was denied by the answer, and an understanding or agreement of a different nature was alleged therein; and it was a question for the jury to determine as to whether there had been any such guaranty as would entitle the plaintiff to recover. The offer in the answer that the defendant was willing to pay whatever damage the plaintiff had sustained by reason of the representations made by him, in no way affected the necessity of proof as to the nature of the contract in order that the damages might properly be arrived at. It would seem, unless there was an absolute undertaking upon the part of the defendant, that without proof of the falsity of the representations made by him, no recovery could be had. All the questions in regard to the nature of the contract were by the court taken from the jury, and they were only allowed to assess the damage. In this, we think, the court erred.

In view of the conclusion at which we have arrived, it does not seem to be necessary to consider the question as to the errors in the admission of evidence in respect to the number of brick.

The next point to be considered relates to the questions arising under the third cause of action, which was brought to recover for the last installment of $3,100 under the mason work contract, and for certain extra work. Before the plaintiff had fully completed his work of excavation preliminary to laying the foundation, it was discovered that the soil was in such a condition that it was not safe to erect the proposed building thereon; and that it would be necessary to make additional excavations before the plaintiff could carry out his contract for the erection of the buildings upon the premises. Borings were made to enable the defendant to ascertain what it would cost to do the extra work, and by order of the architect the work was stopped until the defendant should decide what to do. After the borings were made the plaintiff was sent for and sketches were given to him to estimate the cost of putting down the foundation to rock. The work was actually stopped on the 20th of June, 1895. On the third of July the plaintiff went to the architects' office to submit his estimate for the additional work, and he was told that they were waiting for an estimate from another party for the same work. In about fifteen minutes a letter was brought, and after a short conference between the architects and a person who was interested in the building with the defendant, they told the plaintiff that they had received an estimate from Sooysmith Co. for doing this work and had awarded the contract to them. The plaintiff then resumed his work and started to do the excavating called for by his contract. He had resumed but a few days when one of the architects told him he would have to stop until Sooysmith had finished the work for which they had been given the contract. Sooysmith Co. thereupon went on and performed the additional work of excavation and laid the foundations up to the point from which the plan originally contemplated that the plaintiff should commence his work of construction. In doing this additional work of excavation, etc., Sooysmith Co. necessarily performed part of the work originally included under the plaintiff's contract, viz., a part of the plaintiff's excavations and a part of the shoring and underpinning of Chickering Hall which was next to the lot in question. It is claimed upon the part of the defendant that the reasonable value of this omitted work should be deducted from the amount due to the plaintiff; and the plaintiff claimed that there should be no deduction, because the defendant had not pleaded any omission, and second, because the defendant had no right to take the contract away from the plaintiff and give it to Sooysmith Co. The clause of the contract under which the defendant bases his claim that that portion of the work which was originally undertaken to be done by the plaintiff and which was done by Sooysmith Co., in making the additional excavations and laying the additional foundations, should be deducted from the last payment, reads as follows: " Third. Should the owner at any time during the progress of the said building request any alteration, deviation, additions or omissions from the said contract he shall be at liberty to do so, and the same shall in no way affect or make void the contract, but will be added or deducted from the amount of the contract, as the case may be, by a fair and reasonable valuation."

Upon the trial it was claimed upon the part of the defendant that the plaintiff had consented to the taking away of this work and to its being done by Sooysmith Co. This, however, the plaintiff denied and the court charged the jury that the defendant had no right to take away any part of the plaintiff's contract and give it to another without the plaintiff's consent. This, we think, was a correct interpretation of the clause in question. It is evident that under the word "omissions" were intended to be included these things which were abandoned and left out of the plaintiff's contract and not such as were taken out of the plaintiff's contract and given to another to be performed. The word "omission" did not mean omitted from the plaintiff's contract, but omitted from the work; and clearly could not be construed to have allowed the defendant to take two-thirds of the work from the plaintiff and then compel him to perform the rest. The words are "additions or omissions from the said contract," evidently meaning additions to or omissions from the work to be done under said contract, which clearly negatives the idea that they were intended to mean that the defendant should have the right to omit the work from the plaintiff's contract, in order to give the contract to another to do the same thing.

We think, however, that the court erred in its instruction to the jury as to the rule of damage under these circumstances. If the plaintiff was not required to do the work or did not do the work, he certainly was not entitled to recover that which the defendant under the contract had agreed to pay for such work, because that would not be the amount in which he was damaged; but he would be entitled to recover the profit he would have made in doing the work at the price mentioned in the contract. The court, however, charged in substance that the plaintiff, after the contract was taken away without his consent, was entitled to recover the amount called for by the contract upon the completion of the work, notwithstanding that he had not done certain parts of it, because it was done by others at the instance of the defendant. This rule of damage was clearly erroneous as it was giving to the plaintiff the benefit of expenditures in the doing of the work which he had not made. That this was the intention of the court is emphasized by the last instruction given to the jury, in which the court says: "Under the facts proved in this case the jury can, if they find for the plaintiff under the third cause of action for that portion claimed under the contract, only find the sum of $3,100 and interest, and no greater or less sum." As already suggested, this rule of damage was erroneous. We think, therefore, that for the errors committed there should be a new trial.

The judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.

BARRETT, RUMSEY, INGRAHAM and McLAUGHLIN, JJ., concurred.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.

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GALLAGHER v. HIRSH
(Dec 1, 1899)