City of Reading v. Rae

• Decision Date: 06 November 1939
• Docket Number: No. 6891.,6891.
• Citation: 106 F.2d 458
• Parties: CITY OF READING v. RAE.
• Court: U.S. Court of Appeals — Third Circuit

106 F.2d 458 (1939)

CITY OF READING v. RAE.

No. 6891.

Circuit Court of Appeals, Third Circuit.

July 31, 1939.

Writ of Certiorari Denied November 6, 1939.

COPYRIGHT MATERIAL OMITTED

Robert T. McCracken and Samuel Fessenden, both of Philadelphia, Pa., and Darlington Hoopes, of Reading, Pa., for appellant.

John B. Stevens, of Reading, Pa., Roy G. Bostwick, Kenneth G. Jackson, and Thorp, Bostwick, Reed & Armstrong, all of Pittsburgh, Pa., for appellee.

Before BIGGS and CLARK, Circuit Judges, and DICKINSON, District Judge.

Writ of Certiorari Denied November 6, 1939. See 60 S.Ct. 145, 84 L.Ed. ___.

BIGGS, Circuit Judge.

The appellant, City of Reading, and the appellee, Rae, entered into a written contract upon April 5, 1934 whereby the appellee agreed to construct for the City a water-supply tunnel approximately twenty-eight hundred feet long. About one-sixth of the tunnel was to be constructed by the open cut method; the balance, by actual tunneling operations. The location and character of the work to be done was shown by plans, numbered one to six inclusive, prepared by the appellant and submitted by it to bidders. One of these plans, No. 3, showed a profile of the proposed construction and borings, indicating the diverse elevations at which solid limestone should be encountered. The borings drawing on Sheet 3 also purported to show the location of mud seams and the sub-surface conditions which would be encountered. This drawing indicated that solid limestone existed at the tunnel level. Sheet 3 also showed an assumed rock line, which we will refer to at a later point. The borings themselves in core boxes were available for the inspection of bidders. Sheet 2 showed the line of borings and the line of the tunnel. The borings line intersected the proposed line of the tunnel near its north end and was at a distance of about one hundred fifty-five feet at the extreme south end. We have attached Sheets 2 and 3 as an appendix to this opinion.

The representations made by the appellant to the appellee are summed up in the fourteenth paragraph of the appellee's statement of claim, which states that, "Said profile and borings as shown on Sheet No. 3 of said plans indicated and represented that solid rock would be encountered at approximately station 62 between elevation 303 and elevation 307; and that from said elevations down to and below elevation 240, and at approximately said station 62, solid limestone would be encountered the entire distance to and below the bottom of said tunnel, and that said water tunnel, if constructed according to said contract, specifications and plans (sic); and further, that said tunnel throughout the entire length thereof, except between stations 71 00 and 73 00, would be constructed in solid limestone. According to the custom and trade in the general contracting business, and more particularly in the business of tunnel and excavation contracting, the statements, markings and representations on said plans and drawings, including sheets numbers 2, 3 and 4 thereof, meant and were intended to mean, to all bidders and to anyone taking the contract for the work to be done under said plans and drawings, that solid limestone would be encountered and said tunnel would be constructed in solid limestone, as in this paragraph averred. And plaintiff avers that the engineer and agents for defendant knew, when they prepared or caused to be prepared said plans and drawings, that the physical conditions of the locality for said tunnel did not conform to the representations thereof on said plans and drawings, but were, on the contrary, false and fraudulent."

The appellee having entered into the contract, proceeded with the work. He sank a shaft about midway the line of the tunnel to the tunnel level and then proceeded to drive headings toward each end of the tunnel line. The shaft was located at a distance of about ninety feet opposite boring 9 at Station 62. The appellee testified that he decided upon this location for the shaft because the borings drawing on Sheet 3 showed solid limestone throughout the greater length of the boring and into the tunnel level. The appellee immediately met unexpected difficulties because the shaft passed through mud, boulders, clay and water within that area where solid limestone was to be expected. This made the work much more difficult, dangerous and expensive.

The appellee had given a contract for drilling the tunnel to subcontractors who specialized in this kind of work. These subcontractors commenced their operations early in July, 1934. Three weeks later they quit the job, stating that the sub-surface conditions were not as had been represented and that the tunnel they were attempting to drill was not of the kind that they had bid upon. Most of the difficulties encountered by the appellee in sinking the shaft were met by the subcontractors in their attempts to drill the tunnel. When his subcontractors quit, the appellee hired workmen and endeavored to proceed with the drilling operations himself. Upon August 28, 1934, however, the appellee gave written notice to the appellant that he was terminating the contract. On March 12, 1935 he brought suit in the court below, claiming rescission of the contract because of the fraud of the appellant in misrepresenting the working conditions and because the appellant refused to make a "progress" payment to him for work done. The appellee claimed as damages the fair value and cost of the work, labor and materials furnished by him to the appellant in performance of the contract. The case was tried to a jury which returned a verdict for the appellee in the sum of $61,859.41. Judgment being entered upon this verdict, the City of Reading has appealed to this court.

Did the Appellee Have the Right to Rescind the Contract for Fraud?

The appellant contends that no fraud was practiced upon the appellee. Directing our attention to Sheet 2, the appellant points out that it appears that the line of the borings does not follow the proposed line of the tunnel, and that it appears from Sheet 3 that the borings contain a number of mud seams, one of which is ten feet high. The appellant also states that every engineer knows that when a boring is sunk through limestone boulders, such a boring will contain limestone. It was not reasonable therefore, the appellant alleges, for the appellee to assume that solid limestone stretched from a point twenty-two feet beneath the earth's surface down the line of the shaft, paralleling boring 9, clear to the tunnel level. The appellee, however, did not abandon the work because of the difficulties encountered by him in sinking the shaft. What is of importance is the fact that the borings drawing on Sheet 3 shows the borings ending in "solid lime-stone". We think that this is a material and vital fact. The appellant used the phrase to describe the sub-surface conditions which the appellee would encounter. Having used it, the appellant is bound by it.

It appears also that the appellant's engineers made use of the phrase "solid limestone" upon the borings drawing of Sheet 3, despite the fact that the record of diamond drill borings, Exhibit D-1, used the word "limestone" without any qualifying adjective. There is also evidence that the borings in the core boxes had been misnumbered and there was no way in which the boring data shown upon Sheet 3 could be checked by the appellee. It appears also that the appellant's chief engineer, O'Reilly, was aware that the sub-surface conditions were not as represented to the appellee by Sheets 1-6, but that he did not inform the appellee of this fact.

The drawings of a typical section of tunnel lining as shown upon Sheet 4 displayed the conventional engineering sign for rock, viz., straight line hatchings. The appellant points out that the specifications relating to "Support of Excavation" provide for bracing the excavation and state, "In portions of the tunnel which are in solid, unshattered rock supports may be omitted, if the approval of the Engineer is obtained." The specifications also require steel reinforcement where such is necessary, but all of this relates to the lining of the tunnel. The symbol for solid rock shown upon the cross section drawing of Sheet 4 possesses evidentiary value in that this tends to confirm the representation of the existence of "solid limestone" shown by the appellant upon Sheet 3.

The appellee also testified that the "Assumed Rock Line" shown upon Sheet 3 was not as represented and stated that a contractor should be able to "* * * assume that this is the rock line as plotted by the engineer from intelligent investigation." Whether the appellant misrepresented the whereabouts of the rock line was a question for the jury properly left to the consideration of that body by the trial judge.

We must determine whether or not the appellant's misrepresentations as to sub-surface conditions could have been discovered by the appellee by the exercise of reasonable diligence upon his part. We are of the opinion that this was a...