Burke Construction Co. v. Board of Improvement of Paving District No. 20

• Decision Date: 12 November 1923
• Docket Number: 242
• Citation: 256 S.W. 850,161 Ark. 433
• Parties: BURKE CONSTRUCTION COMPANY v. BOARD OF IMPROVEMENT OF PAVING DISTRICT NO. 20
• Court: Arkansas Supreme Court

256 S.W. 850

161 Ark. 433

BURKE CONSTRUCTION COMPANY v. BOARD OF IMPROVEMENT OF PAVING DISTRICT NO. 20

No. 242

Supreme Court of Arkansas

November 12, 1923

Appeal from Miller Chancery Court; C. E. Johnson, Chancellor affirmed, with modification.

Decree modified and affirmed.

James B. McDonough, Paul Jones, Webber & Webber and James B. Head for appellants.

1. The action is one to recover a money judgment for unliquidated damages for an alleged breach of contract. The contract was undisputed, there were no complicated accounts between the parties, and the amount of payments was undisputed. The mere difficulty of proving their case afforded no ground for equitable relief. The case should have been transferred to the law court. 57 L. R. A. 417; 165 N.W. 342; 200 U.S. 450; 119 U.S. 347; 138 U.S. 146; 140 U.S. 106; 101 F. 511; Simpkins, Federal Suits in Equity, 2d ed., 27-28; I Pomeroy Equity Jur. § 237; 1 Ark. 31; 7 Ark. 520; 127 Ark. 318; 56 Ark. 391; 109 Ark. 537; Id. 171.

2. The action was premature. Section 16 of the contract provides a valuable and drastic remedy, one which was not only for the benefit of the district but also for the benefit of surety of the construction company, and this remedy is, by many courts held as exclusive. 105 F. 741; 36 F. 481; 158 F. 850; 14 N.Y.S. 548. Whether in this case the remedy be held to be the sole remedy or merely optional, it is clear that the ordinary remedy under the law and that provided by the contract are inconsistent, and the district must have, at least, elected on the breach, if any, which remedy it would pursue. 20 C. J. 6; Id. 14; 41 So. 332; 78 S.W. 801; 98 S.W. 236. The district, as is conclusively shown by the evidence, made its election, and is bound by it. 126 N.Y.S. 256; 39 A. 885; 30 A. 21; 219 F. 387; 60 N.E. 419; 92 N.E. 666; 129 Ark. 275; 134 Ark. 117; 147 Ark. 581; 154 Ark. 561; Perdue & Hill v. Road Imp. Dist. No. 1, 159 Ark. 117.

3. There was no justification for the engineer's action in arbitrarily making material changes in the character of the work and in quantities of materials, without any authorization on the part of the board. 104 F. 457; 88 N.E. 330; 82 N.E. 523; 92 F. 299; 99 F. 237; 186 U.S. 309; 274 F. 659.

4. It is unconscionable for the district to ask, and would be inequitable for the court to grant, any damages on account of the items of paving which were not constructed the first year, which, as shown by the testimony, resulted solely because the engineer and the district failed to designate where this work should be done. 248 U.S. 334, 340; Elliott on Contracts, § 3713; 2 Hudson on Building Contracts, 4th ed., 122; 102 N.Y. 205; 43 Barb. 33; 93 N.E. 81. The extension agreement did not operate as a waiver of the claim for damages arising from the failure to designate such paving in the first year, but only to substitute a new time for performance. It did not operate as a waiver of damages to the contractor for breaches of the contract. 9 C. J. 790; 274 F. 659.

5. The district breached the contract by withholding payment of the November estimate; and by its permitting the work to continue beyond the first of November, under the supervision and direction of its engineer, it waived any breach of the contract as to completion of the work by that date. 4 Elliott on Contracts, § 3714; 6 R. C. L., Contracts, 984, § 353; L. R. A. 272, note 5; 4 A. 566; 9 C. J., Building & Construction Contracts, 728, § 64; 9 C. J., 789, § 30; 11 S.W. 18; 24 N.E. 315; 27 N.E. 631; 9 C. J., 812, § 151; 76 N.W. 1093; 51 S.E. 638. Where, after the expiration of the time limit for performance of a contract, the owner insists upon or demands performance by the other party, he thereby confirms the existence of the contract and waives the delay of the contractor. 104 S.W. 975; 1 Otto 646, 656, 23 L. ed. 341; 54 N.W. 743; 66 N.E. 1010. See also 42 N.Y.S. 176; 6 Ir. 577; 24 Ga. 478; 70 S.E. 201; 9 Cyc. 608; 70 S.E. 970; 102 Ark. 79; 98 Ark. 328; 91 Ark. 133. One who is himself in default may not insist on performance by the other. 88 Ark. 491; Id. 422; 93 Ark. 472; 158 Ark. 91; 64 Ark. 228; 67 Ark. 156; 148 Ark. 181; 35 P. 146.

6. The district, when it gave notice to the Burke Construction Company that it must perform its contract, the district was itself unable to perform its part of the contract. 94 So. 5.

Frank S. Quinn, James D. Shaver and Arnold & Arnold, for appellee.

1. Chancery has jurisdiction. Its jurisdiction is tested by the allegations of the complaint. 61 Ark. 564; 140 Ark. 480; 152 Ark. 50. When these show a necessity for an accounting, they are sufficient to give equity jurisdiction. 31 Ark. 345; 82 Ark. 547; 48 Ark. 426; 102 Ark. 343; 119 Ark. 276; 129 Ark. 197. In matters of accounting, chancery and the law courts have concurrent jurisdiction, but chancery is the more suitable forum. Appellant had no absolute right of trial by jury. 102 Ark. 276. The plaintiff's board of commissioners, as trustees of the funds and property of the district, had the right to apply to a court of equity for aid and direction. 52 Ark. 546; 123 Ark. 258; 101 Ark. 455; 121 Ark. 85; 150 Ark. 63; 4 Ark. 302; 97 Ark. 588; 110 Ark. 475. Moreover, after so much delay, litigation and expense, it is too late to insist on a motion to transfer which was never pressed. It should be treated as waived. 134 Ark. 254.

2. The suit was not premature. 133 Ark. 286; Id. 302; C. & M. Dig. § 5737; 137 Ark. 386; 119 Ark. 506; 247 S.W. 393. The Federal court suit instituted by Burke gave the board an immediate right of action for breach of the contract. 236 U.S. 512; 245 S.W. 802.

3. The various items claimed by appellants on account of alleged breaches of the contract prior to the renewal or extension agreements were all waived by reason of such extension agreements, and appellants are estopped from claiming the same. 105 Ark. 421-432; Id. 233; 102 Ark. 79; 94 Ark. 9; 111 Ark. 362; 118 Ark. 465; 124 Ark. 141; 126 Ark. 14.

4. Where there is a continuance of operations under the contract, it constitutes a waiver of past forfeiture. 250 S.W. 1; 153 Ark. 606.

SMITH J. HUMPHREYS, J., dissents.

OPINION

SMITH, J.

The appellant construction company, hereinafter referred to as the company, made a contract with Paving District No. 20 of Texarkana, hereinafter referred to as the district, to construct the paving, curbing and guttering in the district. The contract is dated November 29, 1916, but appears to have been signed December 22, 1916, and there was attached to it a bond in the sum of $ 300,000, with the United States Fidelity & Guaranty Company and the two principal stockholders of the construction company as sureties, conditioned that the company should perform the work in accordance with the contract. The work was not completed within the year allowed by the original contract, and, by mutual agreement, the term was extended to November 1, 1918, and, not having then been completed, a second extension was made by consent of all parties to November 1, 1919.

On this last-mentioned date the work was unfinished, and the parties had thoroughly disagreed, and each charged the other with having breached the contract. The company quit work, and the district demanded that the work proceed. The district proposed a third extension, which the company agreed to sign provided E. F. Petersen, the engineer of the district, was discharged and another engineer was selected in his place. The company's letter containing this proposition was dated December 12, and, in a letter dated December 16, the district answered that the facts did not warrant the discharge of the engineer, and declined to do so. This letter inclosed extension agreements, and urged the contractor to sign them and to proceed with the work.

On December 26 the company replied in a letter containing a recital of grievances against the engineer, whose acts were alleged to have been so arbitrary as to constitute breaches of the contract. The district was reminded that payment of the November estimate was being withheld, and demand for payment was made, and the letter closed with the statement that the company would postpone a decision of the course to pursue until an answer had been received to that letter from the board.

On January 5, 1920, the board replied, advising that it could not take the company's view about the engineer, and denied any breach of the contract by it, and declined to pay the November estimate without deducting the penalty of $ 30 per day for delay provided for by the contract. This letter stated the deduction would not be made if an extension agreement was signed on the basis of the one which had just expired. This letter also stated that the contract provided that the board might withhold estimates when, in its opinion, the work was not progressing satisfactorily, and then stated: "In the face of your letter, which seems to indicate that you are considering abandonment of the work, the board would now, more than ever, be unjustified in allowing the November estimate." The letter closed with a request for a conference to be held on January 12.

On January 11 the company replied that the board's letter had been turned over to its attorney for reply; and on January 14 the attorney wrote the board that he would advise the company to execute the extension agreement, with one change in it, to the effect that "the company waived no right to assert, in the event of litigation, a claim for damages resulting from any breach," and requesting the insertion of this clause in the extension agreement, and attention was called to the fact that, if the board had not breached the contract, this amendment could not hurt.

On January 19, 1920, the attorney for the board wrote the attorney for the company that the board could not accept...