Armour and Company v. Nard, 71-1433

• Decision Date: 07 June 1972
• Docket Number: No. 71-1433,71-1444.,71-1433
• Citation: 463 F.2d 8
• Parties: ARMOUR AND COMPANY, Appellee, v. John A. NARD, Appellant. ARMOUR AND COMPANY, Appellant, v. John A. NARD, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

463 F.2d 8 (1972)

ARMOUR AND COMPANY, Appellee, v. John A. NARD, Appellant.

ARMOUR AND COMPANY, Appellant, v. John A. NARD, Appellee.

Nos. 71-1433, 71-1444.

United States Court of Appeals, Eighth Circuit.

Submitted February 15, 1972.

Decided June 7, 1972.

Charles R. Wolle, Gerald M. Kraai, D.C. Shull, of Shull, Marshall, Marks & Vizintos, Sioux City, Iowa, for Armour & Co.

Thomas M. Thompson, David B. Buerger, of Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, Pa., for John A. Nard.

Before BREITENSTEIN, Senior Circuit Judge^*, and HEANEY and STEPHENSON, Circuit Judges.

STEPHENSON, Circuit Judge.

Plaintiff, Armour and Company (Armour) originally brought this action against defendant contractor, John A. Nard (Nard) for delay damages caused by Nard's alleged breach in the performance of a written cost-plus (15%) building construction contract entered into by the parties on September 6, 1968 for the construction of an Armour hog-cut facility in Sioux City, Iowa. Nard denied there was any breach on his part and counterclaimed for delay damages and 15% commission due on the project. Armour's claim for delay damages was submitted to the jury which returned a verdict in its favor in the sum of $60,000 against Nard. The jury failed to find for the defendant Nard on his counterclaim against Armour for delay damages, but did render a verdict for Nard on his counterclaim in the sum of $20,842.16 for commissions on costs incurred by Nard prior to termination of the contract.¹ Additional facts will be set out in discussing the various issues raised in this appeal.

Claims by Armour

Armour claims that the trial court erred in refusing to grant its motion for judgment notwithstanding the verdict on Nard's claim that he was entitled to 15% commissions on two invoices: Central Ice Machine Co. (refrigeration equipment) $116,209.75 and ALCOA (aluminum panels) $22,737.95. On November 21, 1968 Armour terminated its contract with Nard under the provisions of Article 3-A of the contract authorizing termination upon written notice with the obligation upon Armour to pay Nard, the contractor, all costs incurred to date of termination, plus 15% of such costs. The trial court instructed the jury that if it found that Nard became liable or obligated to pay either or both of the foregoing items prior to or on the date the contract was terminated (November 21, 1968) then Nard was entitled to recover 15% of whatever amount the jury determined Nard became liable or obligated to pay. The evidence showed that Nard ordered the goods covered by the invoices in question prior to termination of the contract, but that said goods were invoices in question prior to termination of the contract, and later the invoices were paid by Armour. Armour contends that Nard was not, could not, and never did become liable for, or obligated to pay the disputed costs, and the trial court should have entered a verdict for Armour as a matter of law. However, the record shows that upon termination of the contract, Armour cancelled the orders in question and then reinstated the same orders. Nard's purchasing skills had been used in placing the orders. Washington Construction Co. v. Spinella, 8 N.J. 212, 84 A.2d 617, 28 A.L.R.2d 863 (1951). There was no indication that Armour attempted to exercise its option under the termination provisions of the contract of having the contractor terminate and settle the orders in question. It seems to us that the issue is whether Nard would have been liable had Armour not terminated the orders and then reinstated them. We agree with the trial court that the record is sufficient to support a jury finding that the costs in question had been incurred by Nard at the time of termination.

Finally Armour contends the Court erred in ruling that "In light of the nature and complexity of this litigation and the verdict of the jury, each party should bear its own costs." Rule 54(d) of the Federal Rules of Civil Procedure provides as follows:

Costs. Except when express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs; but costs against the United States, its officers, and agencies shall be imposed only to the extent permitted by law. Costs may be taxed by the clerk on one day\'s notice. On motion served within 5 days thereafter, the action of the clerk may be reviewed by the court.

We are satisfied that the Court properly exercised its discretion in directing that each party bear its own costs.

Claims by Nard

Nard urges that Armour was not entitled to damages for delay when it terminated Nard under Article 3A of the contract which provided for termination without cause.² In essence Nard claims that since Armour chose to terminate under the "without cause" provisions Armour elected to pursue that exclusive remedy and thereby waived any other remedy it may have had, including damages for delay.

It is undisputed that Armour terminated the contract under the "without cause" provision (Article 3A). The contract also provided in Article 2 that failure of the contractor to adhere substantially to the schedule of construction " * * * shall, without waiver of any other right accruing by reason of such failure, be deemed a cause for cancellation * * *." Nard's contention that Armour made a without cause election and thereby waived other remedies fails to take into account another provision of the contract which is as follows:

Article 12. Waiver

Delay or failure by Armour to exercise any right under the Contract Documents shall not constitute a waiver of that or any other right or subsequent right hereunder.

In addition, the Iowa law, which the parties treated as applicable,³ fails to support Nard's election theory. In Maytag Company v. Alward, 253 Iowa 455, 112 N.W.2d 654, 657 (1962) the Iowa Supreme Court stated: "Even where a contract specifies a remedy which will lie for a breach thereof it is generally held that other legally recognized remedies are not thereby excluded. (Citations omitted)." The Court went on to observe that "* * A contract which excludes some remedy given by law should be so definite and positive in its terms as to show the clear intention of the parties so to do." We also note, as did the trial court, that generally, the exercise of a power of termination will have prospective operation only; discharging both parties from their contractual duty to perform promises that are still wholly executory, but not discharging liability for breaches that have already occurred. 6 Corbin on Contracts, § 1266, p. 66; Iowa Code § 554.2106(3). Upon full review of the contract in question we are satisfied that the parties did not intend to eliminate damages for delay in the event the contract was terminated under the "without cause" provision.⁴

Finally, Nard claims that the trial court erred in excluding evidence of Armour's breach of its oral contract with Nard. The record indicates Nard...