Citizens National Bank of Orlando v. Vitt

• Decision Date: 06 December 1966
• Docket Number: No. 21510.,21510.
• Citation: 367 F.2d 541
• Parties: CITIZENS NATIONAL BANK OF ORLANDO and West Construction Company, Appellants, v. K. H. VITT et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

367 F.2d 541 (1966)

CITIZENS NATIONAL BANK OF ORLANDO and West Construction Company, Appellants, v. K. H. VITT et al., Appellees.

No. 21510.

United States Court of Appeals Fifth Circuit.

October 5, 1966.

Rehearing Denied December 6, 1966.

COPYRIGHT MATERIAL OMITTED

Charles E. Davis, Fishback, Davis, Dominick & Troutman, Orlando, Fla., for appellants.

Wayne P. Sturdivant, Simpson, Adkins, Fullingim & Hankins, Amarillo, Tex., for appellees.

Before JONES, WISDOM and GEWIN, Circuit Judges.

JONES, Circuit Judge:

The United States Air Force contracted with K. H. Vitt, V. O. Stringfellow and Burl Johnson, partners or joint venturers doing business as Stringfellow Amarillo Associates, herein called Stringfellow, for the construction of a housing project at the Amarillo, Texas, Air Force Base under the Capehart Act, 42 U.S.C.A. § 1594 et seq. American Casualty Company of Reading, Pennsylvania, and General Reinsurance Corporation of New York, became sureties on Stringfellow's performance and payment bonds.

Stringfellow and West Construction Company, a Florida corporation, entered into three subcontracts on September 17, 1958, under which West undertook to perform (1) the excavation, area grading and landscaping, (2) the construction of paved streets and (3) the construction of curbs, drives and walks. West arranged with Citizens National Bank of Orlando, Florida, to finance its part of the work, and assign to the bank all moneys to become payable to it under its subcontracts. The assignment directed that the bank be a payee in all checks. Stringfellow agreed to the assignment with a reservation of the right to make payments to suppliers, subcontractors and government agencies. Stringfellow made a number of payments to West, without including Citizens bank as a payee of the checks.

After the work had been in progress for some months difficulties were encountered by West. It discovered that more soil was to be moved than had been originally contemplated. West's labors were increased by the delays of Stringfellow in removing spoil for which it had responsibility and by other conduct of Stringfellow. West was required to place a six-inch sandlayer on the house pads which had not been contemplated by either Stringfellow or West. Other difficulties were encountered and differences arose between Stringfellow and West. They undertook to resolve these differences by an agreement dated May 15, 1959.

On August 11, 1959, Stringfellow issued and delivered to West a check drawn on the Amarillo National Bank for $25,000 payable to West and Citizens bank, postdated to September 11, 1959. West indorsed the check to Citizens bank and the bank advanced West $22,000 against the check. On September 11, 1959, the check was presented for payment at the Amarillo bank. Payment was refused and the check returned on account of insufficient funds. On September 17, 1959, the Amarillo bank informed the Citizens bank that a deposit had been made which "should take care of the item." The check was not paid. The district court found that Stringfellow stopped payment on the check on August 21, 1959. This finding is not challenged by West. The failure of Stringfellow to honor its $25,000 check effectively prevented West from obtaining further financing and, after a brief effort to go forward on the job, it was required to suspend operations. Stringfellow made no further payments to West or to West and Citizens bank. It did make some payments to suppliers of West which, in one or more instances, included items for which West had denied liability because the Government had refused to approve the suppliers' work.

Citizens bank brought a suit against West, Stringfellow and others, asserting that West was required by Stringfellow to perform work in addition to that required by the subcontracts and the May 15, 1959, agreement, that West terminated performance by reason of breaches of contract by Stringfellow, that Stringfellow is indebted to West, that the Citizens bank had advanced to West $234,178.50, and Stringfellow and the other defendants owe this amount to the bank pursuant to the assignment. West admitted the bank's allegations and cross-claimed against Stringfellow and the other defendants. Stringfellow denied any indebtness to the Citizens bank or to West and cross-claimed against West for sums alleged to be owing to it for the completion of the West subcontracts after West left the job. The testimony taken and the exhibits filed were voluminous.

The district court made no express finding as to whether Stringfellow had breached any duty to West, and made no conclusion as to whether a breach by Stringfellow would have justified West in the abandonment of the job with a right to recover on a quantum meruit for the work performed. The court did find that West was entitled to credit for the work performed by it at the contract prices and that Stringfellow was entitled to recover the amounts which it would be required to pay to complete the work of the subcontracts. For example, West was credited with 45-cents per cubic yard for moving dirt. For the amount remaining to be done, Stringfellow was entitled to $1.15 per cubic yard which the court found to be a reasonable price for such work. A like situation existed and like findings were made with respect to the concrete work to be done as to sidewalks and driveways. The district court held that Stringfellow had a legal right to stop payment on the $25,000 check as between Stringfellow and West, but no right to stop payment as to the Citizens bank. The court entered judgment in favor of Citizens bank against Stringfellow and West for $22,000, in favor of Citizens bank against West for $106,655.91, in favor of Stringfellow against West for $5,937.13. West was denied recovery against Stringfellow and the sureties upon its construction bonds without prejudice to require Stringfellow to prosecute a claim against the United States for the so-called house pad work. Citizens bank and West have appealed.

The initial contention of Citizens bank and West is that Stringfellow breached its agreement with West, that because of the breaches by Stringfellow of its contractual obligations to West it was justified in terminating its contract, and that having properly, and with cause, terminated the contract it is entitled to recover on a quantum meruit for its work performed. The law is well settled that "in every contract between a contractor and a subcontractor, an implied promise exists on the part of the contractor that he will do nothing to prevent, interfere or hinder the subcontractor in his performance or increase the cost thereof." Lichter v. Mellon-Stuart Co., W.D.Pa. 1961, 193 F.Supp. 216, mo. for new trial den. 196 F.Supp. 149, aff. 3 Cir., 305 F.2d 216, quoted with approval, 6 Williston on Contracts 433, § 887. See Guerini Stone Co. v. P. J. Carlin Construction Co., 248 U.S. 334, 39 S.Ct. 102, 63 L.Ed. 275; Owens v. William H. Banks Warehouses, 5th Cir. 1953, 202 F.2d 689, cert. den. 346 U.S. 813, 74 S.Ct. 22, 98 L.Ed. 341; Vanadium Corporation of America v. Fidelity & Deposit Company, 2d Cir. 1947, 159 F.2d 105; Great Lakes Construction Co. v. Republic Creosoting Co., 8th Cir. 1943, 139 F.2d 456; State of California v. United States, N.D.Calif. 1957, 151 F.Supp. 570; 8 McBride & Wachtel, Government Contracts 49-194 § 49.1504. Wherever the cooperation of a promisee is necessary for the performance of a contract, there is an implied condition of the contract that the cooperation will be given. Vanadium Corporation of America v. Fidelity & Deposit Company, supra.

The district court, in its findings, determined that "Stringfellow as prime contractor, fell far short of a properly coordinated operation and that...