CENTRAL NEBRASKA PUB. P. AND I. DIST. v. Tobin Quarries

• Decision Date: 11 October 1946
• Docket Number: No. 13360.,13360.
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: CENTRAL NEBRASKA PUBLIC POWER AND IRRIGATION DIST. v. TOBIN QUARRIES, Inc.

157 F.2d 482 (1946)

CENTRAL NEBRASKA PUBLIC POWER AND IRRIGATION DIST. v. TOBIN QUARRIES, Inc.

No. 13360.

Circuit Court of Appeals, Eighth Circuit.

October 11, 1946.

P. E. Boslaugh, of Hastings, Neb. (R. O. Canaday, of Hastings, Neb., on the brief), for appellant.

John M. Martin, of St. Louis, Mo., and W. C. Fraser, of Omaha, Neb. (Frank L. Martin, of St. Louis, Mo., on the brief), for appellee.

Before SANBORN, THOMAS, and JOHNSEN, Circuit Judges.

THOMAS, Circuit Judge.

This is a suit brought by the appellee as plaintiff for a declaratory judgment. The case involves the interpretation and application of a construction contract. The appellant, The Central Nebraska Public Power and Irrigation District, is a public corporation created by an act of the Nebraska legislature with its principal place of business at Hastings in that state. The appellee, Tobin Quarries, Inc., is a corporation organized under the laws of Missouri and qualified to transact business in Nebraska as a foreign corporation. The parties will be referred to herein as plaintiff and defendant.

The contract to be construed and applied is a Nebraska contract. Its interpretation and the disputes growing out of its performance are, therefore, governed by Nebraska law. Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 88 L.Ed. 1188, 114 A.L.R. 1487. In such a case upon all doubtful questions of local law this court will be disposed to accept the view of the trial court. Michigan Fire & Marine Ins. Co. v. National Surety Corporation, 8 Cir., 156 F.2d 329, 333, and cases cited.

On September 22, 1944, the defendant, owner of the Kingsley Dam situated in western Nebraska, entered into a contract with the plaintiff, by the terms of which the plaintiff agreed to furnish the tools, labor and material necessary to complete the construction of the riprap on the upstream slope of the dam according to plans and specifications identified as part of the contract.

The controversy is concerned with the gradation of gravel furnished and tendered by the plaintiff for use in the construction of a filter layer 15 inches thick over the upstream surface slope of the dam. Section 2.4 of the specifications relating to the gravel to be used in the construction of this filter layer reads:

"Gravel shall be clean, hard, durable pieces graded from ¼ inch to 2½ inches, of a quality equal to that generally specified for first class, Portland Cement Concrete. Not more than five per cent shall pass through a No. 4 screen."

After the plaintiff had entered upon the construction of the filter layer and had furnished gravel and proposed to continue to furnish gravel therefor, which it contends complied with the provisions of section 2.4 of the specifications, the engineer for the defendant on different days during the month of March, 1945, took 16 samples of the gravel after it had been graded for use at the plaintiff's processing plant, each sample consisting of approximately 1000 pounds, and separated the samples into several sizes. These tests showed that the following average percentages quantitively were retained on the following sized screens:

On a 2½ inch screen, 3%; on a 2 inch screen, 5.2%; on a 1½ inch screen, 10.2%; on a 1 inch screen, 23.6%; on a ¾ inch screen, 34.9%; on a ½ inch screen, 55.8%; on a No. 4 screen, 96.7%. Thus it appears that 3.3% of the gravel tested passed through a No. 4 screen.

Thereafter the defendant refused to permit the plaintiff to continue to furnish and to place in the structure the gravel tendered and gave notice in writing that the only gravel which would be accepted and approved by defendant's engineer must comply with the following percentages retained on the following sized screens:

On a 2½ inch screen, 0% to 5%; on a 2 inch screen, 5% to 40%; on a 1½ inch screen, 20% to 60%; on a 1 inch screen, 35% to 72%; on a ¾ inch screen, 44% to 80%; on a ½ inch screen, 54% to 86%; and on a No. 4 screen, 95% to 100%.

Compliance with defendant's demand would have substantially increased plaintiff's costs with the result that this suit was commenced to secure a judicial determination of the rights of the parties under the contract.

The plaintiff contended in the district court (a) that the gravel which it furnished and tendered meets its contract obligations; (b) that there exists no legal obligation on it to furnish gravel conforming to the gradation percentages required by defendant's engineer; and (c) that it is the duty of the defendant, if it insists on changing the gravel specifications, to issue a proper change order, fixing a new basis of compensation and time for completing the structure as provided in section 1.31 of the specifications. And a decree declaring accordingly was requested.

The defendant denied the plaintiff's contentions and asked the court to decree that the grading of the gravel involves a question of fact and that the dispute with reference thereto must be referred to the engineer for settlement and that his decision thereon shall be final.

The court found generally for the plaintiff and entered a decree declaring:

"That under the proper construction of the contract and its specifications, plaintiff is required only to furnish gravel of a quality equal to that generally specified for first class Portland Cement concrete, which shall be clean, hard, durable pieces, graded in sizes not smaller than ¼ inch and not larger than 2½ inches, (but without any obligation to provide specific quantities of the several intermediate sizes between said maximum and minimum prescriptions) of which gravel not more than 5 per cent shall pass through a No. 4 screen; that under the contract the engineer of the defendant has no authority to require the plaintiff to furnish, without adjustment of payment therefor, gravel conforming to specific intermediate gradations, by him prescribed after the execution of the contract, and that if the defendant persists in requiring specific gradations of gravel pursuant to such prescriptions of the engineer, the defendant is under the duty and obligation forthwith to issue to the plaintiff a change order signed and approved as provided for in Section 1.31 of the specifications, and to adjust the basis of plaintiff's compensation and the time for the construction of the filter layer in accordance with the change in specifications so resulting."

The opinion of the court...