International Erectors v. Wilhoit Steel Erectors & R. Serv.

• Decision Date: 18 October 1968
• Docket Number: No. 24867.,24867.
• Parties: INTERNATIONAL ERECTORS, INC., Appellant, v. WILHOIT STEEL ERECTORS & RENTAL SERVICE, et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

400 F.2d 465 (1968)

INTERNATIONAL ERECTORS, INC., Appellant, v. WILHOIT STEEL ERECTORS & RENTAL SERVICE, et al., Appellees.

No. 24867.

United States Court of Appeals Fifth Circuit.

September 4, 1968.

Rehearing Denied October 18, 1968.

Richard E. Reckson, Eugene C. Heiman, of Heiman & Crary, Miami, Fla., for appellant.

Melvin T. Boyd, James E. Tribble, Miami, Fla., Blackwell, Walker & Gray, Miami, Fla., for appellee, Wilhoit Steel Erectors & Rental Service.

John H. Moore, II, Edward J. Marko, Fort Lauderdale, Fla., Mendez, Shaw & Moore, Fort Lauderdale, Fla., for appellee, Southern Engineering Co.

Before TUTTLE and GOLDBERG, Circuit Judges, and HOOPER, District Judge.

GOLDBERG, Circuit Judge.

This is a case of frustration arising out of unilateral and unarticulated contract expectations. The two questions presented here are (1) whether the contract between International Erectors, Inc., and Wilhoit Steel Erectors & Rental Service which subcontracted the work to International imposed any duty upon Wilhoit to supply materials according to certain specifications and in a particular sequence, and (2) whether International, a sub-sub-sub-contractor may recover upon a third party beneficiary theory against Southern Engineering which had a contract with the general contractor, not a party to this suit, to fabricate and erect the steel.

I. Facts

This diversity action¹ for breach of contract was brought by International against Wilhoit. The respective disputes arise out of contracts dealing with the construction of a plant for Sunbeam Electronics Company in Fort Lauderdale, Florida. The responsibility for construction of the plant was given to a general contractor who subcontracted to Southern the work of fabricating and erecting the structural steel portion of the job. Southern, while retaining the responsibility as to the general contractor for providing the steel for the construction job, sub-sub-contracted the erection of the steel to Wilhoit. Wilhoit sub-sub-sub-contracted the job of erecting the steel to International, but retained a duty to Southern to supervise and assist the erection.

The loss which International seeks to recoup by this suit occurred when the steel to be erected by International was not delivered in the proper condition and time sequence. International alleges that it had the necessary men and equipment present on the job site, but that the misfeasance of the steel supplier prevented the erection from proceeding as scheduled. This delay allegedly caused $36,559.09 damages in the form of additional costs of labor and equipment, additional overhead, and loss of profit.

International can recover from these defendants only if one or both had a contractual obligation to furnish the steel to International.² The district court, sitting without a jury, held that Wilhoit was under no contractual obligation to supply steel to International. As to Southern the court, after four amended complaints, dismissed the suit with prejudice, holding that International had failed to allege any breach of duty. From these determinations International appeals.

II. International v. Wilhoit

Since this is a diversity action, we interpret this contract according to the substantive law of Florida. Erie R. R. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188; Starling v. Gulf Life Ins. Co., 5 Cir. 1967, 382 F.2d 701, 705. We have not, however, found any Florida case directly in point under the facts presented here. We therefore must decide this case as we believe the Florida courts would decide if confronted with these facts. Stevens Industries, Inc. v. Maryland Casualty Co., 5 Cir. 1968, 391 F.2d 411, 413, and cases therein cited. Certain general principles of Florida contract law are clarion and we construe the contract between Wilhoit and International in the light of those principles.

The Florida Supreme Court has taken the position that crystalline and unambiguous language in a written contract is controlling as to the intention of the parties and thus to the legal effect of the contract provisions. In Durham Tropical Land Corp. v. Sun Garden Sales Co., 1931, 106 Fla. 429, 138 So. 21, reh den., 1932, 106 Fla. 429, 143 So. 758, affirmed 106 Fla. 429, 151 So. 327, the rule was stated as follows:

"The intention of the parties to a contract is to be deducted from language employed, and such intention, when expressed, is controlling, regardless of intention existing in the minds of parties. Stokes v. Victory Land Co., 99 Fla. 795, 128 So. 408, and cases there cited." 138 So. 21 at p. 23.

See also Gendzier v. Bielecki, Fla.1957, 97 So.2d 604; Hamilton Const. Co. v. Board of Public Instruction, Fla.1953, 65 So.2d 729, 731; Lyng v. Bugbee Distributing Co., 1938, 133 Fla. 419, 182 So. 801, 802; Hurley v. Werley, Fla.Dist.Ct. App.1957, 203 So.2d 530, 537-538; Azalea Park Utilities v. Knox-Florida Develop. Corp., Fla.Dist.Ct.App.1961, 127 So.2d 121, 122-123. In construing such contractual language courts should attempt to give words and phrases the natural meaning or the meaning most commonly understood when considered in reference to the subject matter and the circumstances. Rupp Hotel Operating Co. v. Donn, 1947, 158 Fla. 541, 29 So.2d 441, 445; Florida Boca Ratan Housing Assoc. v. Marqusee Assoc., Fla.Dist.Ct. App.1965, 177 So.2d 370, 373; Miami National Bank v. Fink, Fla.Dist.Ct.App. 1965, 174 So.2d 38, 40.

The contract between Wilhoit and International Erectors provided that International Erectors was to "furnish all necessary labor, supervisions, equipment, supplies to unload from rail cars, haul, erect and touch-up paint approximately 225 tons of structural steel and 100 tons facia plates" in accordance with certain plans and specifications. This contract, which designated Wilhoit as "contractor" and International Erectors as "subcontractor" and Southern as "owner," provides in part as follows:

"Subcontractor International agrees to furnish and supply at Subcontractor\'s expense, unless hereinafter specified to the contrary, all labor, transportation, materials, apparatus, fuel, energy, light, water, scaffolding, tools, and other facilities necessary for the execution of the work specified in Paragraph First above.

"Contractor Wilhoit agrees to furnish and supply, at its expense, the following labor, materials, etc., for the doing and performing of the work specified in Paragraph First above, to-wit:

"NONE." (Emphasis added.)

We agree with the district court that this language expresses pellucidly and without ambiguity that at the time the contract was executed the parties did not contemplate that Wilhoit was to be responsible for the delivery of the steel. The use of the word "NONE" in the blank reserved for a description of the materials to be supplied by Wilhoit is an absolute and unequivocal statement that Wilhoit was not to be responsible for the delivery of any materials. "None" cannot mean "some," and without an obligation that some steel be delivered there can be no contractual responsibility for a failure to properly deliver steel.

Notwithstanding the preceding unmistakable disclaimer of all responsibility for providing materials, International argues: "By the contract of June 5, 1964, WILHOIT assumes the obligation regarding delivery of the steel in a clear and unambiguous manner." In support of this apparently serious contention International cites the following provision of its contract with Wilhoit, which by reference incorporates some of the terms of Wilhoit's contract with Southern:

"Contractor Wilhoit agrees to be bound to the Subcontractor International, except as herein modified and changed, by all the obligations that Owner Southern assumes to the Contractor Wilhoit under said Principal Contract and Included Agreements the contract between Southern and Wilhoit and by all the provisions thereof affording remedies and redress to the Contractor Wilhoit from said Owner Southern." (Emphasis added.)

International argues that under the terms of the agreement between Southern and Wilhoit, Southern was obligated to fabricate and deliver the steel to the jobsite as required by the plans, specifications, and delivery schedules. Therefore, the argument proceeds, this provision obligated Wilhoit to provide the steel because the provision in effect imposed the duties of Southern upon Wilhoit.

The view we take of this contention does not require us to determine whether Southern promised Wilhoit that it would supply the steel as required in the plans, specifications, and delivery schedules.³ We find that the phrase "except as herein modified and changed," which appears in the above quoted contract provisions, refers to the clause which says that Wilhoit undertakes to provide "NONE" materials, and that the "NONE" materials clause unequivocally negates any obligation to supply steel which might otherwise have been incorporated by reference.

The words "except as herein modified and changed" must be presumed to have been used for a specific purpose. They can neither be struck from the contract nor ignored. Their apparent purpose was to limit the otherwise broad provisions of the incorporation-by-reference clause by excluding from its scope certain express provisions of this contract, including the "NONE" materials clause. See Hardin Bag & Burlap Co. v. Fidelity & Guaranty Fire Corp., 1943, 203 La. 778, 14 So.2d 634, 635; cf. Gatliff Coal Co. v. Cox, 6 Cir. 1944, 142 F.2d 876, 882 ("herein"); Saulsberry v. Maddix, 6 Cir. 1944, 125 F.2d 430, 433 ("herein"); 39 C.J.S. Herein p. 892 (1944).

International's alternative contention is that the contract when read as a whole is ambiguous because the incorporation-by-reference clause conflicts with the "NONE" materials clause, and therefore that we must go outside the written contract to determine the intent of the parties. International is correct in its statement that the contract must be read as a whole. Triple E. Development Corp. v....