This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The contractor may, in some cases, excuse his failure to obtain the certificate of the architect. If he can show that the certificate was refused by the architect fraudulently, and in bad faith, he may recover without such certificate.1 There is some authority for saying that by the express provision of the contract, the certificate of the engineer or architect may be made conclusive as to his own good faith;2 but in view of the fact that a covenant which assumes to waive in advance a possible defense, such as fraud,3 is invalid except as far as a reasonable time for investigation is given, and such provision, accordingly, operates as a short period of limitations,4 the correctness of this view may be doubted.
8 See Sec. 2699 et seq.
1 United States. Martinsburg & P. R. Co. v. March, 114 U. S. 549, 29 L. ed. 255; Chicago, S. F. & C. R. Co. v. Price, 138 U. S. 185, 34 L. ed. 917; Marks v. Ry., 76 Fed. 941, 22, C. C. A. 630; Ship-pey v. United States, 49 Ct. Cl. 151.
Arkansas. Boston Store v. Schleuter, 88 Ark. 213, 114 S. W. 242.
California. Coplew v. Durand, 153 Cal. 278, 95 Pac. 38.
Idaho. Spaulding v. Navigation Co., 5 Ida. 528, 51 Pac. 408; Nelson Bennett Co. v. Twin Falls Land & Water Co., 14 Ida. 5, A3 Pac. 789 .
Illinois. Michaelis v. Wolf, 136 Ill. 68, 26 N. E. 384; Fitzgerald v. Benner, 219 Ill. 485, 76 N. E. 709.
Indiana. McCoy v. Able, 131 Ind. 417, 30 N. E. 528, 31 N. E. 453; Baltimore, O. & C. R. Co. v. Scholes, 14 Ind. App. 524, 56 Am. St. Rep. 307, 43 N. E. 156.
Kansas. Edwards v. Hartshorn, 72 Kan. 19, 1 L. R. A. (N.S.) 1050, 82 Pac. 520; Lantry Contracting Co. v. Atchison, T. & S. F. Ry. Co., 102 Kan. 799, 172 Pac. 527.
Kentucky. Illinois Central R. R. Co. v. Manion, 113 Ky. 7, 101 Am. St. Rep. 345, 67 S. W. 40.
Louisiana. Dugue v. Levy, 114 La. 21, 37 So. 995.
Massachusetts. Hebert v. Dewey, 191 Mass. 403, 77 N. E. 822; Marsch v. Southern New England R. Corp., 230 Mass. 483, 120 N. E. 120.
Missouri. Williams v. Ry., 112 Mo. 463, 34 Am. St. Rep. 403, 20 S. W. 631.
Nebraska. Howard County v. Pesha, - Neb. -, 172 N. W. 55.
Hew Jersey. Chism v. Schipper, 51 N. J. L. 1, 14 Am. St. Rep. 668, 2 L. R. A. 544, 16 Atl. 316; Bradner v. Roffsell, 57 N. J. L. 32, 29 Atl. 317.
New York. Smith v. Brady, 17 N. Y. 173, 72 Am. Dec. 442.
Oregon. Seaside v. Randies, - Or. -, 180 Pac. 319.
Pennsylvania. Thaler v. Wilhelm Greisser Construction Co., 229 Pa. St. 512, 33 L. R. A. (N.S.) 345, 79 Atl. 147.
Vermont. Fay v. Moore, 261 Pa. St. 437, 104 Atl. 686; Herrick v. Belknap, 27 Vt. 673.
Virginia. Norfolk & W. R. Co. v. Mills, 91 Va. 613, 22 S. E. 556.
Washington. Windham v. Independent Telephone Co., 35 Wash. 166, 76 Pac. 936.
West Virginia. Vaughan Const. Co. v. Virginian Ry. Co., 82 W. Va. 658, 97 S. E. 278.
Wisconsin. Halsey v. Waukesha Springs Sanitarium, 125 Wis. 311, 110 Am. St. Rep. 838, 104 N. W. 94.
If the contractor can show that the certificate is withheld fraudulently, it is not necessary to show that the owner was a party to the fraud.5 If the property owner is a party to the fraud, and if the certificate is withheld by collusion between the property owner and his architect or engineer, the right of the contractor to recover without the certificate is even more clear.6
On the other hand, if the owner can show that the architect gave the certificate when it should not have been given, and that he acted fraudulently and in bad faith, he is not bound by the issuing of such certificate.7
If the contractor can show that the architect withheld his certificate arbitrarily, without in fact passing upon the question in dispute in a fair and honest manner, he may recover, notwithstanding the absence of such certificate.8 If the certificate is withheld arbitrarily or capriciously, the contractor may recover without showing actual fraud.9 On the other hand, such conduct has been said to amount to fraud in law, although not actual fraud.10 Whatever explanation the courts may give for their result, they agree, however, that if the contractor shows that the certificate is withheld arbitrarily and unreasonably, he may recover without making any further showing of fraud or collusion.11 Whether the contractor may recover where he has performed his contract substantially,12 but not literally, and where the engineer or architect has refused to give a certificate because such performance fell short of the performance agreed upon by the contract, is a question upon which there is a conflict of authority. If there were no provision in the contract requiring the certificate of the architect or engineer as a condition precedent, the contractor in such cases could recover from the property owner; and the amount of his recovery would be the contract price less the cost of completing the contract.13 The architect can not withhold the certificate because the subcontractors and materialmen have not been paid where the chief contractor agrees that they may be paid out of the funds in the hands of the owner, which are ample for that purpose.14
2 Tullis v. Jacson , 3 Ch. 441.
3 See Sec. 727.
4 See Sec. 727.
5 Chism v. Schipper, 51 N. J. L. 1, 14 Am. St. Rep. 668, 2 L. R. A. 544, 16 Atl. 316.
6 Fay v. Moore, 261 Pa. St. 437, 104 Atl. 686.
7 Glacius v. Black, 50 N. Y. 145, 10 Am. Rep. 449; Tetz v. Butterfleld, 54 Wis. 242, 41 Am. Rep. 29, 11 N. W. 531.
8 United States. Crane Elevator Co. v. Clark, 80 Fed. 705; Utah Construction Co. v. St. Louis Construction & Equipment Co., 254 Fed. 321; Shippey v. United States, 49 Ct. Cl. 151.
California. Coplew v. Durand, 153 Cal. 278, 95 Pac. 38.
Idaho. Nelson Bennett Co. v. Twin Falls Land & Water Co., 14 Ida. 5, 93 Pac. 789.
Illinois. McDonald v. Patterson, 186 Ill. 381. 57 N. E. 1027.
Massachusetts. Hebert v. Dewey, 191 Mass. 403, 77 N. E. 822.