City of Minneapolis v. Republic Creosoting Company
| Decision Date | 05 December 1924 |
| Docket Number | 24,072 |
| Citation | 201 N.W. 414,161 Minn. 178 |
| Parties | CITY OF MINNEAPOLIS v. REPUBLIC CREOSOTING COMPANY AND ANOTHER |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county to recover $63,530 on a contractor's bond. The case was tried before Buffington, J., who directed a verdict in favor of plaintiff for $52,198.65. From an order denying their motion for judgment notwithstanding the verdict or for a new trial defendants appealed. Affirmed.
Construction of contract for purchase of paving blocks.
1. Defendant contracted to sell and deliver to plaintiff, during the first six months of 1920, all or any part of 42,000 square yards of paving blocks, at such times as ordered by the city engineer. Although in the nature of an option, the city by this contract purchased the right to compel the deliveries contracted for, even though such deliveries were to be called for and determined upon as to time and amount by the city engineer, who as an original matter would have had no right to bind the city by a contract of purchase.
Surety estopped from asserting contract was invalid.
2. So far as defendant surety is concerned, the case is within the rule of Bell v. Kirkland, 102 Minn. 213, for the bond sued upon recited the existence of the contract and therefore prevents the surety from asserting its invalidity on account of any defect in its execution.
Contractor estopped from asserting city engineer's lack of power.
3. Whether or not the principal contractor is estopped for the same reason, quaere, but it is held that the contractor, for a valuable and executed consideration moving to it, the benefit of which it retains, having contracted to deliver as ordered by the city engineer, cannot escape liability because of any lack of power in him to contract for the city. The contractor is estopped to make any such claim.
What controls when conflict between specifications and contract.
4. The specifications which were a part of this contract were those which had accompanied an older and similar agreement. They provided for daily deliveries of one per cent of the total contract to commence not later than 10 days after notice from the city engineer. The contract itself required deliveries at the rate of 1,500 square yards per day, no preliminary notice being provided for. Held that, in this conflict between contract and specifications, the former, being the later expression of contractual assent, must control. Therefore deliveries were properly required at the rate of 1,500 square yards per day. But there is no conflict between contract and specifications as to the 10 days' notice provision. Therefore the specifications control, and deliveries were properly required to begin upon 10 days' notice.
Performance not excused by car shortage.
5. There being nothing in the contract excusing defendant's performance for that reason, a general car shortage did not excuse performance by defendant.
Plaintiff entitled to damages for blocks bought elsewhere.
6. Upon defendant's default, plaintiff procured paving blocks from other sources, paying no more than the fair market value thereof. It is entitled to recover damages accordingly notwithstanding the fact that if it had waited some time it might have procured the blocks from defendant under the contract at the contract price. Plaintiff was not compelled to await defendant's convenience.
Shaw, Safford, Putnam & Shaw and John H. Ray, for appellants.
N. M. Cronin and R. S. Wiggin, for respondent.
Action on the contractor's bond, against both contractor and surety, for breach of contract for the sale and delivery by defendant, Republic Creosoting Company, to plaintiff of paving blocks. After a directed verdict for plaintiff for $52,198.56, defendants moved for judgment notwithstanding or a new trial and appeal from the denial of that motion.
The contract bears date of December 31, 1919, and recites as consideration the release of the Creosoting Company (hereinafter referred to as defendant), and its surety from all liability under a former and similar contract and bond (for 1919 deliveries), whereunder there had been default by defendant. We start then with the conceded fact that the controlling contract is based upon ample and executed consideration, moving from plaintiff to defendant.
The obligation of defendant, as expressed by the contract, was: "to sell, furnish and deliver to said second party (plaintiff) * * * during the first six months of the year 1920, in such quantities not exceeding 1,500 square yards per day and at such times as the said City Engineer may order and direct, forty-two thousand (42,000) square yards, or any part thereof at the option of said second party, of 3 1/2 inch yellow pine creosoted wood paving blocks, for the sum and price of $2.10 1/2 per square yard, street measurement, all in strict conformity with the specifications for said paving blocks referred to and included in the 1919 contract hereinbefore referred to"
The 1919 specifications referred to were made a part of the contract, and provided as to deliveries that:
"The blocks shall be furnished in such quantities and at such times as the City Engineer may direct, and if so directed, the contractor shall furnish one per cent of his total contract, computed in square yards, per day, delivery to commence not later than 10 days from notice by the City Engineer."
There was nothing in the contract excusing defendant from punctual performance because of strikes, lockouts, a car shortage or similar hazards beyond the control of defendant.
On April 28, 1920, the city engineer delivered to defendant, four "requisitions for delivery." Each was signed by plaintiff's purchasing agent and was for an authorized paving project. Together they directed delivery of the entire 42,000 square yards covered by the contract, and at the rate of 1,500 square yards per day, commencing May 10. Each requisition contained the necessary shipping directions, referred to the specified blocks as "applying on your (defendant's) contract," and carried this notation,
Upon receipt of these requisitions, defendant informed plaintiff's engineer and purchasing agent that deliveries as required were impossible, but that it was desirous of making them as rapidly as conditions permitted. The asserted impossibility of performance was referred exclusively to a country-wide car shortage. We assume that it did exist and did prevent defendant's compliance with the requisitions. We assume also defendant's willingness and ability to deliver as soon as a car supply enabled it to assemble the raw material, complete the processes of manufacture and get the finished product to Minneapolis. At best, in defendant's case that would have taken some months after May 10, 1920. No part of the blocks was delivered or tendered by defendant. It declined to make any effort to fill plaintiff's requisitions, professing for the reason stated inability to do so. Plaintiff disregarded its offer of deliveries later and, as soon as railroad service permitted, considered the contract irrevocably breached by defendant, procured the blocks elsewhere and at a higher price and commenced this suit for the damage arising from their increased cost.
1. Defendant's first position is that the contract was "merely a contract for an option" and that "unless and until exercised lawfully and in accordance with its terms imposed no obligation upon the Creosoting Company to deliver, or upon the city to take and pay for any blocks whatsoever." Admitting a contract, the argument is that it is not a contract of sale, binding one to deliver goods and another to take and pay for them; that the latter contract never came into existence because the act required to bring it into being, the contractual assent of the city of Minneapolis, was never, in any lawful fashion, expressed or notified to defendant. The contention depends upon the proposition, urged as controlling by defendant, that its engineer and purchasing agent have no power to bind plaintiff by a contract, such as this, for the purchase of construction materials in large quantities. That is true, for under the charter and ordinances of Minneapolis contracts for the purchase of materials in large quantities must be made or expressly authorized by the city council. In this case, the agreement of December 31, 1919, was so made or authorized, but the city council did not expressly authorize or take any particular action with respect to the requisitions for delivery, defendant's failure to comply with which resulted in this action.
It is clear, however, that four authorized paving projects were under way; that they were under the immediate official and administrative control of the city engineer, one of whose duties was to determine when and how much material was needed, and to direct deliveries accordingly; and finally, and most important, defendant was bound by contract -- call it "option" or anything else -- to honor orders, under the contract, from the city engineer. Likewise, plaintiff was contractually bound to abide any orders of its engineer for the delivery of blocks under the contract, whether or not it used them, and to pay for the blocks so ordered at the "option" price. There is nothing in statute, charter or ordinance, preventing plaintiff from contracting to accept and pay for, at fixed prices and during a specified reasonable period, such paving blocks as may be ordered, under the contract, by its city engineer.
The argument that contracts cannot be made for plaintiff by its engineer is refined too much by...
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