Peerless Cas. Co. v. Weymouth Gardens, 4831.

• Decision Date: 24 August 1954
• Docket Number: No. 4831.,4831.
• Citation: 215 F.2d 362
• Parties: PEERLESS CAS. CO. v. WEYMOUTH GARDENS, Inc.
• Court: U.S. Court of Appeals — First Circuit

215 F.2d 362 (1954)

PEERLESS CAS. CO. v. WEYMOUTH GARDENS, Inc.

No. 4831.

United States Court of Appeals First Circuit.

August 24, 1954.

John S. Whipple, Boston, Mass. (Douglas Danner and Peabody, Arnold, Batchelder & Luther, Boston, Mass., with him on brief), for appellant.

Marcien Jenckes, Boston, Mass. (John L. Hall, John B. Reigeluth and Choate, Hall & Stewart, Boston, Mass., with him on brief), for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

WOODBURY, Circuit Judge.

This is an appeal from a judgment for the plaintiff in an action brought for the penal sum of a bond conditioned on the faithful performance of a contract for the construction of a group of small dwelling houses. The case was referred to a master who after hearing filed a detailed report containing findings of fact and rulings of law on the basis of which he concluded that the defendant was liable to the plaintiff for the full amount of the bond ($75,000) with interest thereon from the date of demand. The District Court, after a hearing on the plaintiff's motion to confirm the master's report and the defendant's objections thereto, adopted the master's findings of fact, and, concluding that there was no error in the master's rulings of law, entered the judgment for the plaintiff from which the defendant has taken this appeal.

Federal jurisdiction under Title 28 U.S.C. § 1332(a) (1) based on diversity of citizenship and amount in controversy is alleged and clearly established.

No useful purpose would be served by stating the voluminous and complicated facts in full detail. It will suffice to summarize them briefly and then to proceed at once to a consideration of the contentions of the appellant which seem to us of sufficient moment to warrant discussion.

The bond in suit was given to secure the performance of a fixed cost contract for the construction of a group of small houses in Weymouth, Massachusetts entered into in May, 1950, between Weymouth Gardens, Inc., a Massachusetts corporation, as the owner, and Weymouth Construction Company, Inc., another Massachusetts corporation and the principal on the bond, as the builder. The latter apparently began construction at once but soon ran into difficulties, for with the advent of hostilities in Korea in June there sprang up a system of priorities with resultant shortages of materials and increases in prices. Furthermore, many building materials, temporarily at least, vanished from the market altogether. These factors severely interfered with construction. Furthermore in August the construction company began to feel the effects of lumbermen's and teamsters' strikes which further increased the cost of materials. In consequence the houses were not completed within ninety days as the contract required. Nevertheless the builder strove to maintain construction in spite of the financial pressures and other difficulties under which it labored. It became evident in February, 1951, however, that it would not be able to finish the houses and later that month it abandoned the job altogether.

The defendant bonding company through one of its vice-presidents knew of the delay in completing the houses, and the reasons therefor, as early as August, 1950, but took no action on that information. The plaintiff notified the defendant by ordinary letter on March 19, 1951, that the contract was in default, and on April 6 the plaintiff gave notice of that fact again, this time by registered letter in conformity with the notice provision of the bond. Promptly thereafter the defendant signified its election not to avail itself of its option to complete the contract, or to sub-let the completion...