Ford Motor Co. v. Pearson

• Decision Date: 05 May 1930
• Docket Number: No. 5882.,5882.
• Citation: 40 F.2d 858
• Parties: FORD MOTOR CO. v. PEARSON.
• Court: U.S. Court of Appeals — Ninth Circuit

40 F.2d 858 (1930)

FORD MOTOR CO. v. PEARSON.^*

No. 5882.

Circuit Court of Appeals, Ninth Circuit.

May 5, 1930.

Peters, Powell, Evans & McLaren, William A. Peters, John H. Powell, Robert H. Evans, and William G. McLaren, all of Seattle, Wash., for appellant.

Arthur C. Dresbach, Arthur E. Griffin, and J. Speed Smith, all of Seattle, Wash., for appellee.

Before DIETRICH and WILBUR, Circuit Judges, and LOUDERBACK, District Judge.

WILBUR, Circuit Judge.

On December 5, 1916, a building contract was entered into between Alexander Pearson, the appellee, who will hereinafter be referred to as the contractor, with the appellant, Ford Motor Company, who will hereinafter be referred to as the owner. This contract provided for the erection of a building upon land of the owner in Des Moines, Iowa. The building was to be completed in August, 1917, at the contract price of $397,000. In addition, the owner furnished certain material to the builder, so that the total estimated cost of the building was about $500,000. The builder proceeded with the construction of the building in accordance with the contract until about 96 per cent. complete, when, on April 23, 1918, he entered into an arrangement with the owner, the terms of which are in dispute, for the completion of the building. About six months after the completion of the building by the owner, the contractor brought this action against the owner, and recovered a judgment for $25,000, with 6 per cent. interest thereon, aggregating about $41,000. The complaint alleges the execution of the contract in question, the performance of a part of that contract by the contractor, completion of the building by the owner, and payment by the owner to the contractor of a portion of the contract price shown by the bill of particulars to be $384,450.38.

The contractor alleges that, at the time he was negotiating with the owner for the purpose of entering into such contract, the owner furnished him with maps and descriptions of purported borings of test holes in the soil of the site upon which the building was to be erected, purporting to show the foundation material. He alleges that the results of the borings furnished to him were to the effect that no sand would be encountered in the foundations for footings and piers. He alleges that said representations and maps were untrue, erroneous, and misleading, in that sand did exist in such footings, that the plaintiff acted upon such representations in entering into the contract, and that, when he undertook to erect the building and made the necessary excavation for the footings for the piers supporting the building, he found the conditions of the soil to be such that a large additional expenditure on his part was necessary. These maps and descriptions of the borings were a part of the plans. They were signed by the contractor and made a part of the contract. The conditions shown by the borings were indicated by a key on the plan. According to the key, "clay and quicksand" was indicated by cross-hatching at an angle of forty-five degrees, with the vertical extending from right side of the boring downward to left, with dots, while "light gray sand clay" was indicated by cross-hatching at an angle of forty-five degrees, with the vertical extending downward from left side of the boring to right, spaced about half as far apart as in the case of "quicksand and clay," also with dots. Sand was indicated by dots alone, and fine sand by dots more widely dispersed. Borings 8 and 9 on the plans introduced in evidence, according to the key, showed quicksand and clay. The architect, Louis Kahn, testified with relation thereto as follows:

"Thirty-two borings are shown. The borings show the general nature of the soil. The borings indicate a very poor soil generally. Generally gumbo towards the upper part, gumbo being a very unstable and slippery material. Below the gumbo in almost all cases is shown sand, varying in texture from fine to coarse, and in most cases sand in water, which would indicate the presence of quicksand in practically every boring. This information was furnished to the Pearson Construction Company prior to their bid. The specifications make particular reference to borings 8 and 9. This occurs in paragraph No. 101, page 114. of the specifications. The contractor was notified by this paragraph that unit prices covering changes in footings is to be based on the assumption that soil conditions as indicated in borings 8 and 9 would be encountered. We called attention to borings 8 and 9 as we wished to give the contractor notice that the soil he might expect was of a very poor nature. Borings 8 and 9 showed that quicksand would be encountered. The contractor was notified in advance to submit unit prices large enough to take care of doing work in quicksand."

The specification referred to is as follows:

"In all cases excavate sufficiently so that no work rests on poor soil. Where necessary to go down lower than shown on the plans, an additional allowance will be made the contractor in accordance with unit prices agreed upon.

"The unit prices will be held to govern conditions found similar to that shown by borings 8 and 9, where extending to greater depth than the schedule footings depths. Should a condition as shown by the above mentioned boring be found in excavating above the indicated footing depths, all work necessary to properly care for such conditions shall be performed as a part of the work under this specification."

The contractor, on cross-examination, testified that borings 8 and 9 "do not show quicksand, but fine sand, that is all," but he also testified, "It is marked so close between clay and `clay and quicksand,' `blue clay and light gray sand,' that it is awfully hard to distinguish." It is true that on a cursory examination of the plans one might overlook the difference in the markings, but the plans are plainly marked, and attention is especially called thereto by the specifications.

The contractor has been paid $21,000 under estimates for additional work on footings due under the terms of the contract and specifications because of soil conditions at the footings. He claims in this action, in addition thereto, a large amount as damages for the delay engendered by such soil conditions, which made the work more expensive by reason of the fact that the ground thawed out, and that later on the work on the building was subjected to war conditions.

The contractor alleged that he was subjected to additional expense and delay by reason of the fact that the owner did not furnish him the lines of the lot upon which the building was to be erected, as required by the contract, and that because of this delay he was subjected to additional expense. He alleges that he was subjected to additional expense and delay in the erection of the building because of the failure of the owner to cause the city of Des Moines to repair the storm sewer crossing the site. He alleges that he was further delayed by the failure of the owner to furnish an architect at Des Moines for supervision of the construction, and by reason of the fact that the architect who did supervise the work was in Detroit. He alleges that he would have made a profit of $48,000 if the defendant had performed the contract on its part, "but that by the defendant breaching the said contract as hereinbefore specified plaintiff was prevented and delayed from performing it." He alleges that he paid out $89,457.63 in excess of payments made to him, "and in excess of credits to which the defendant is entitled." He alleges that he had obligated himself to pay $90,298.02 more, and alleges "that the defendant took over, under the terms of the contract, and general conditions made a part thereof," tools and equipment worth $19,785, and has refused to redeliver the same. He further alleges and prays for judgment as follows:

"* * * That by defendant breaching the contract as hereinbefore specified, plaintiff has been damaged by the loss of the profits he would have made and earned in the said sum of $48,000.00 and by the amount he has necessarily paid out for labor and material entering into and for the construction of said building over and above all credits in the said sum of $89,457.63; that by said amount this plaintiff has obligated himself to pay for labor and materials which entered into said building in said sum of $90,208.02, and by the taking and appropriating to its own use of plaintiff's tools, appliances and equipment in the sum of $19,785.00, amounting in all to the sum of $247,540.65, together with interest thereon from and including the first day of May, 1918.

"Wherefore, plaintiff demands judgment against defendant for said sum of $247,540.65, together with interest," etc.

It will thus be seen that the contractor relies upon certain alleged breaches of the contract by the owner and upon damages resulting to him from misstatements in the plans concerning the character of the subsoil conditions, and upon damages due to a conversion of certain personal property which the owner used in completion of the building and refused to return.

The owner pleads settlement and release effected on the 23d of April, 1918, as evidenced by a written agreement, in the form of a letter, signed by the contractor at that time, and accepted by a letter in reply. The agreement is set out in hŠc verba in the answer. To this answer the contractor files a reply to the effect that this release was obtained by "gross fraud," although the facts constituting the fraud are not distinctly or clearly alleged. The reply does not specify or allege fraud by trick or device concerning the execution of the agreement or in inserting a release clause therein. The nearest approach to such an allegation is the following:

"That plaintiff has not received an education in the English language and did not understand the said agreement except as represented to him, and did not agree to waive his claim for...