Evans Electrical Const. Co. v. Wm. S. Lozier, Inc.

• Decision Date: 30 August 1946
• Docket Number: No. 3352.,3352.
• Citation: 68 F. Supp. 256
• Court: U.S. District Court — Western District of Missouri
• Parties: EVANS ELECTRICAL CONST. CO. et al. v. WM. S. LOZIER, Inc., et al.

68 F. Supp. 256

EVANS ELECTRICAL CONST. CO. et al. v. WM. S. LOZIER, Inc., et al.

No. 3352.

District Court, W. D. Missouri, W. D.

August 30, 1946.

Lancie Watts and Roy W. Rucker, both of Kansas City, Mo., for plaintiffs.

Thomas A. Costolow, Asst. U. S. Atty., of Kansas City, Mo., Isidor Lazarus, U. S. Dept. of Justice, of New York City, and Philip A. Dergance, of Kansas City, Mo., for defendants.

RIDGE, District Judge.

Plaintiffs in this action seek to recover the sum of $32,561.60 deducted from the payrolls submitted by plaintiffs to defendants under a fixed-fee subcontract entered into between said parties, relative to electrical construction work at the Sunflower Ordnance Works at Eudora, Kansas. The amount plaintiffs seek to recoup represents the salary paid by plaintiffs to one O. E. Carlisle, who acted as Project Manager for plaintiffs in performing the obligations undertaken by them in said subcontract. Plaintiffs' action is in three counts: In the first count plaintiffs seek a declaration of rights of the parties under the subcontract as written, and the recovery of the amount above stated, with interest at the rate of six per cent (6%) per annum on all sums deducted from plaintiffs' payrolls; in the second count plaintiffs seek a reformation of said subcontract if the Court, under Count 1, declares and determines by its judgment that plaintiffs cannot recover under the subcontract as written, and, under Count 3, plaintiffs seek to recover the amount of said salary, if the Court decrees reformation of the subcontract. Defendants have filed answer and counter-claim against plaintiffs, claiming damages in the sum of $75,000 for alleged breach, by plaintiffs, of one of the provisions of the subcontract in question.

Findings of Fact.

The Court has jurisdiction of this action under Title 28 U.S.C.A. § 41(1), the parties-plaintiff and defendants being citizens of different states and more than $3,000 is in controversy in this action. On March 25, 1942, the United States of America (hereinafter called "the Government"), acting through a duly-authorized Contracting Officer of the "War Department," entered into an Architect-Engineer-Construction Management Service Contract with W. S. Broderick and D. G. Gordon, partners d/b/a Broderick and Gordon, and Wm. S. Lozier, Inc., as joint venturers, for the construction of a "war plant" at Eudora, Kansas, known as "The Sunflower Ordnance Works." (Hereinafter the United States of America will be referred to as "the Government"; and Broderick and Gordon and Wm. S. Lozier, Inc., the joint adventurers, will be referred to as "General Contractor," "Prime Contractor," or "The A-E-M.") The contract so entered into by said parties was first evidenced by a "letter of intent" from the Government to the Prime Contractor. While operating under such "letter of intent" the Prime Contractor entered into a written agreement, dated May 1, 1942, with Evans Electrical Construction Company and Lord Electrical Company, d/b/a joint adventurers under the name of Evans-Lord Electrical Constructors (who, hereinafter, will be referred to as "Subcontractor") for the doing of the electrical construction work on the project in question. The agreement so entered into is entitled "Letter Subcontract" and marked Exhibit "21" herein.

Prior to the acceptance of said "Letter Subcontract" the plaintiffs, under date of May 1, 1942, entered into a joint-venture agreement (Exhibit "3") to perform the subcontract in question, under the name of Evans-Lord Electrical Constructors. Said joint-venture agreement provided for the creation of a committee or board "consisting of one of the officers of each of said parties" to said agreement. The committee or board so created was to "constitute the administrative body" of said joint-venture "with all the powers, duties and obligations deemed necessary by said committee to properly negotiate for" the subcontract above referred to and, "to manage, control, conduct and perform all of the covenants, promises and agreements set out in the" subcontract. Said joint-venture agreement also provided that the committee created thereunder should "function and operate only upon the unanimous approval of its two members," and that the two members constituting such committee "shall designate an alternate to represent him at committee meetings in the event it is impossible for the principal to attend." At appropriate Board of Directors' meetings of the plaintiff corporations J. N. St. Clair and J. J. Sullivan were designated as the "Administrative Committee," to represent said joint venture. At a meeting of said "Administrative Committee" on May 1, 1942, J. N. St. Clair was elected Chairman and J. J. Sullivan Secretary and Treasurer of said committee and each member of said committee "designated an alternate to represent him at committee meetings." H. C. Evans was designated alternate for J. N. St. Clair; O. E. Carlisle was designated as alternate for J. J. Sullivan.

Prior to the time O. E. Carlisle was designated as an alternate of the "Administrative Committee" of said joint venture he had been employed by the Lord Electrical Company as Electrical Superintendent in the construction of the Denver Ordnance Plant. The instant Prime Contractor had the A-E-M contract for the construction of the Denver Ordnance Plant also. The officers of the Prime Contractors being acquainted with the fact that Mr. O. E. Carlisle had been in charge of the electrical work at the Denver Ordnance Plant, and that he had performed outstandingly in the construction of said work, wanted him to be placed in charge of the electrical construction work on the Sunflower Ordnance Project. Negotiations were carried on by the Prime Contractor with several electrical construction firms at which the Prime Contractor sought to induce said firms to place Mr. Carlisle in charge of the electrical work to be done on said project, if a subcontract was negotiated with them. Eventually a subcontract was negotiated with the Evans-Lord Electrical Constructors, as above stated, with the understanding of the parties that Mr. O. E. Carlisle would be designated "Project Manager" and placed in charge of the work to be performed under said subcontract, and that his salary as "Project Manager" would be a reimbursable item of cost under said contract. The Contracting Officer of the United States Army Engineers granted authority to the Prime Contractor to negotiate a fixed-fee subcontract with the Evans-Lord Electrical Constructors on said basis. The proposed negotiations for said subcontract were subject to the approval of such Contracting Officer.

In the course of negotiating said subcontract plaintiffs delivered to defendants a document entitled "Written Negotiations for Services of Contractor" on a United States Engineers' Office "Contract Board Form No. 4," dated May 1, 1942. Said form called for general information concerning the ability of the contractor, executing it, to carry out the contract negotiated for. Item No. 10 contained in said form sought information as to the executive officers, partners, or responsible representative of the Subcontractor who would devote his or their "whole time" to the project in question on a non-reimbursable basis. No answer was made by plaintiffs to such query. Item No. 11, similar in nature, sought information as to which of the officers, partners or responsible representatives of the Subcontractor who would devote "part time" to the project on a non-reimbursable basis. In answer to that query plaintiffs inserted the names of J. N. St. Clair, J. J. Sullivan and H. C. Evans. Item No. 12 called for "Roster of officials, not including executive officers, partners, or principal contractor, who will devote whole time to the project on reimbursable basis." In answer thereto plaintiffs inserted the following information, among others: O. E. Carlisle; Title, Electrical Project Manager; Age 46; present salary $8,500 yr; proposed salary, $9,000 yr. Item 74, contained in said forms, reads as follows: "Who will be appointed and designated by Contractor as General Manager of this project for all contact between this Contractor and the Contracting Officer?" In answer thereto plaintiffs inserted the name "O. E. Carlisle." Immediately preceding the signatures on said form there is found the following paragraph:

"O. E. Carlisle of the firm of Evans-Lord Electrical Constructors has been appointed and designated by the Contractor as General Manager of this project for all contact between said Contractor and the Contracting Officer of the Corps of Engineers, who shall also be directly responsible to the Government for the effective coordination of all Associated Contractors on said project."

Also attached to said document was a salary schedule of personnel to be employed by the Subcontractor, showing the classification of each employee and salary range for such classification. "Project Manager" is one of the job classifications listed as a part of the construction personnel in said schedule, with a salary range from $500-$750 per month. The Area Engineer and Contracting Officer for the Government, for the project in question, approved such negotiations and the salary schedules thereto attached and authorized and approved the execution of a subcontract for doing the electrical work in question.

On May 2, 1942, the day after the above-referred-to "Letter Subcontract" was executed and accepted, Mr. Carlisle filled out a formal application for employment by the Subcontractor. Immediately upon being employed the approval of the Prime Contractor and the Contracting Officer, representing the Government, of his classification as "Project Manager (Electrical)" with a salary rate of $173.07 per week, was secured. After such approval of classification was given, Mr. Carlisle began assembling a working organization to perform the obligations of said subcontract. At the request of the Prime Contractor and...