Bloomfield Reorganized School Dist. No. R-14, Stoddard County v. Stites

Decision Date09 May 1960
Docket NumberR-14,No. 2,STODDARD,No. 47666,47666,2
Citation336 S.W.2d 95
PartiesBLOOMFIELD REORGANIZED SCHOOL DISTRICT NO.COUNTY, Missouri, Plaintiff (Respondent), v. E. M. STITES, Defendant (Appellant)
CourtMissouri Supreme Court

James A. Finch, Jr., Finch, Finch & Knehans, Cape Girardeau, John Hall Dalton, Dalton & Treasure, Kennett, for appellant.

Briney & Welborn, Bloomfield, for respondent.

BARRETT, Commissioner.

In 1955 the appellant, E. M. Stites, and the respondent, Reorganized School District R-6 of Stoddard County, entered into a contract in which Stites agreed to construct a combination gymnasium-music building in Bloomfield for the price of $276,247. In June 1957 the school district terminated the contract and instituted this suit for possession of the building. In response to the suit the contractor denied that the district was then entitled to possession of the building and filed a counterclaim for the balance of $19,788.35 due on the contract price, $1,798.64 for extras, and $20,000 damages for extra costs allegedly due to delays caused by the district and the architect, Charles W. Lorenz. In a reply the school district asked for $25,000 damages for ten specific items of allegedly faulty work in violation of the terms of the contract. On November 22, 1957, the parties entered into a stipulation in which it was agreed that the district could 'enter and commence use' of the building and to 'minimize damages' it was agreed that a third party would 'repair and re-roof the main roof' at a cost of $4,334 to be paid from sums retained by the district under Article 4 of the contract. Thus, despite their mutual distrust, suspicion and obstinacy, these matters have been eliminated as appealable issues and will not be mentioned except as they materially bear upon other problems. And, to keep this opinion within reasonable bounds, the evidence and innumerable exhibits will not be set forth in detail and sifted for all the permissible inferences; these will be employed only so far as necessary to illustrate the essential and determinative issues.

In substance the trial court found that the district was entitled to the possession of the building as of July 24, 1957, that Stites had breached the contract in that he had failed to complete the building within the time provided in the contract and therefore the district was entitled to $7,000 liquidated damages. On the other hand, the court found that Stites was entitled to $1,798.68 for extra work and under the terms of the contract was 'entitled to 95% of the contract price,' subject to the amount of the liquidated damages and the price of the roof. Computing all these items, to the district the amount of the liquidated damages and the price of the roof, $11,344, and due Stites under the contract and for extras, $12,118.68, the court allowed Stites the difference of $774.68, and he has appealed from the judgment.

One issue with some bearing on several matters is the effective date of the contract. The contract provided that the building was to be 'substantially completed' in 395 calendar days; it is dated August 8, 1955, and so the district contends that the contract period elapsed and that liquidated damages accrued from and after September 6, 1956. The contract, however, was mailed to Stites by the architect on August 17, 1955, it was signed by Stites and then delivered by him to the school superintendent for execution by the board. The superintendent mailed the executed contracts to the architect in St. Louis September 14 and on September 21 the architect mailed an executed copy to Stites who received it on either September 22 or 23. The superintendent in transmitting the contracts admonished the architect, Lorenz, to not deliver the contracts until Stites delivered his 'performance bond,' and although Stites delayed sending his bond and certificate of insurance he wrote Lorenz on September 15 asking for a 'proceed order.' In sending a copy of the contract Lorenz wrote Stites two letters on the same day, the second one correcting his first statement that the 395 calendar days would run from September 21, 1955. On his part Stites ordered 9000 bags of cement for the Bloomfield school, August 15, 1955, but did not actually start the initial work of grading and hauling dirt until October 3, 1955. In these circumstances Stites argues that the contract was not 'operative' until September 22 or 23 when as he says 'the last act necessary for its completion was performed.' 1 Restatement, Contracts, Sec. 74.

The chief difficulty with his position is that all these matters are outside the contract terms; this contract does not contain a provision for a 'work order,' and its date was not left bland to be filled in upon signing. When signed by the parties this contract unambiguously said, 'This Agreement made the eighth day of August in the year Nineteen Hundred and fifty-five' (the italicized words being typed into the contract) and there was then no objection to the date or suggestion that it be changed. Furthermore, in Article 2 it was provided that the work to be performed under the contract 'shall be commenced immediately' and 'shall be substantially completed in three hundred and ninety-five calendar days.' In these circumstances, the parties having elected that their mutual rights and obligations are to be determined according to the letter of the contract, its effective date was August 8, 1955. 'It is of first importance that a contract shall have definitely ascertainable dates of commencement and termination. To that end, those dates should be determinable from the recitations in the contract itself; there should be no room for conjecture or speculation. If, however, the intent of the parties becomes material, it should be gathered from the language of the contract and resort to extraneous facts is justified only if the contract itself creates a patent ambiguity, * * * Obedient to that rule, the courts have generally construed contracts to run from the date they bear and not from the date of delivery.' Greer v. Stanolind Oil & Gas Co., 10 Cir., 200 F.2d 920, 922.

One of the substantial, controverted issues upon this appeal is 'liquidated damages.' Article 2, after providing that the work was to be commenced immediately and substantially completed in 395 days, that the date of beginning, rate of progress and time for completion were 'essential conditions' also contained this provision which was also typed into the printed form: 'If the said Contractor shall neglect, fail or refuse to complete the work within the time herein specified, then the said Contractor does hereby agree, as a part consideration of the awarding of this contract, to pay to the Owner the sum of $50.00, not as a penalty but as liquidated damages for such breach of contract as hereinafter set forth for each and every calendar day that the Contractor shall be in default after the time stipulated in the Contract for completing the work, not including Sundays.' As indicated, the effective date of the contract was August 8, 1955, and its completion date September 8, 1956. 685 days later, June 24, 1957, 290 days beyond the promised completion date, 'the work,' admittedly, was not 'complete.' Pursuant to the quoted provision of the contract and beginning with the contractor's estimates submitted after September 8, 1956, the school board deducted $50 a day from its payments to Stites, withholding as liquidated damages, according to the court, the sum of $10,300. In this connection the court found, without explanation, that the contractor was liable to the district for liquidated damages in the sum of $7000 although the contract according to these figures was 290 days in default. But the district has not appealed and unless for some reason the contractor is entitled to a reduction in that item or unless the contract provision is invalid the sum found due by the court has finally determined the matter.

The contractor contends that the contract provision is not one for liquidated damages as the contract recites but instead is a penalty provision and therefore invalid. If the provision is valid the contractor contends that the school district finally elected to terminate the contract and therefore could not also pursue the remedy of collecting liquidated damages. It is his position, furthermore, that any delays in completion of the work were 'excusable' delays under the contract or were delays caused and brought about by the district or its architect, Lorenz, and therefore he is entitled to credit on the liquidated damages claim for the excusable delays, which, according to him, is the entire period.

Again, it is not proposed and it is not necessary to a determination of this appeal to consider each of these claims in detail and illustrate from the record or to carefully examine the rationale of the applicable rules. And upon this particular issue, wrongful termination of the contract is put aside for the time being. Moore v. Board of Regents, 215 Mo. 705, 115 S.W. 6; Austin-Griffith, Inc. v. Goldberg, 224 S.C. 372, 79 S.E.2d 447, 42 A.L.R.2d 1123. And while there has been thoughtful criticism of the doctrine that liquidated damages may not be 'apportioned' (Gillioz v. State Highway Commission, 348 Mo. 211, 224, 153 S.W.2d 18, 25-26; United States v. Kanter, 8 Cir., 137 F.2d 828), it is not necessary to a disposition of this appeal to examine and consider that problem. But see annotation 152 A.L.R. 1349, 1376-1378; 17 C.J.S. Contracts Secs. 502, 504, pp. 1051, 1069; 9 Am.Jur., Secs. 49-50, p. 37. These two matters aside, in this particular contract between these particular parties and in the circumstances of this case, the liquidated damage provision is valid and enforceable and the amount provided is not unreasonably disproportionate to the 'actual injury suffered.' Thompson v. St. Charles County, 227 Mo. 220, ...

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