General Casualty Company of America v. United States

• Decision Date: 11 January 1955
• Docket Number: No. 47331.,47331.
• Citation: 127 F. Supp. 805,130 Ct. Cl. 520
• Parties: GENERAL CASUALTY COMPANY OF AMERICA, Central Surety & Insurance Corporation, Wacker Corporation, and N. E. Daugherty, D/B/A N. E. Daugherty Construction Company v. The UNITED STATES.
• Court: U.S. Claims Court

127 F. Supp. 805

130 Ct. Cl. 520

GENERAL CASUALTY COMPANY OF AMERICA, Central Surety & Insurance Corporation, Wacker Corporation, and N. E. Daugherty, D/B/A N. E. Daugherty Construction Company v. The UNITED STATES.

No. 47331.

United States Court of Claims.

January 11, 1955.

Ernest Hubbell and Clifford B. Kimberly, Kansas City, Mo., for plaintiffs.

Carl Eardley, Washington, D. C., Warren E. Burger, Asst. Atty. Gen., for defendant.

Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and LARAMORE, Judges.

LARAMORE, Judge.

This suit arises out of a contract to construct an airport at Zanesville, Ohio, and the petition is stated in two counts. Count one of the petition, a Lucas Act, 41 U.S.C.A. § 106 note, claim, was dismissed by this court on January 8, 1952. Count two is a contract claim for equipment rental and expense, ditch rock excavation, gravel processing plant, overtime wages, delayed damages, unpaid balance of contract price, shale excavation and rock excavation.¹

Plaintiff Daugherty entered into a contract with defendant, acting by and through the Civil Aeronautics Administration, for the construction of an airport at Zanesville, Ohio. The contract price was estimated to be $1,047,328. The accepted bid price included a unit price of 25 cents per cubic yard for grading and $1.35 per cubic yard for rock excavation.

On May 18, 1943, plaintiff Daugherty executed and delivered to the defendant payment and performance bonds both executed by plaintiffs, General Casualty Company and Central Surety & Insurance Corporation, in the sum of $418,931.20 each.

Plaintiff Daugherty received notice to proceed effective June 10, 1943. The project was to be completed within 150 calendar days thereafter. Daugherty began operations on June 17, 1943. The facts are sufficiently set out in the opinion below.

The plaintiffs' first cause of action is based upon the allegation that the Government coerced plaintiffs into equipping the job for full scale operations, after the cosureties had taken over the work, before a resumption date was apparent or determined.

Plaintiffs say that after the cosureties had taken over the work and near the end of the winter shutdown under a stop order issued by defendant, the cosureties were required to equip the job with the large amount of heavy construction machinery which would be required for full scale operations, long before a possible resumption date was apparent or determined.

Plaintiffs further say that the cosureties upon demand of defendant furnished evidence that they would be ready to perform when work could be resumed and for the purpose had sufficient equipment on the job to begin full scale operations by April 1, 1944. But defendant required the cosureties to comply with its demands that equipment be placed on the job forthwith and threatened that if they did not comply large payments due plaintiffs for work done would be withheld and made the further threat to default the cosureties on the contract. The cosureties say that such action on the part of the defendant was coercion and that in the period when they were required to equip the job from April 1 to May 10, 1944, they performed no pay item work and by having furnished the equipment demanded incurred thereby an unnecessary expense of $13,283.97.

The contract specifications provided, as to equipment, in part as follows:

"2.1 General. The Contractor shall maintain on the job sufficient equipment of the types needed to complete all the work in accordance with the requirements of this specification within the contract time. He may use any type of earth-moving equipment capable of accomplishing the specified and required results. * * *"

Daugherty made strong but unsuccessful efforts to get sufficient equipment which was in working order. He fell behind in rental payments on some equipment which was then withdrawn from the job by the equipment owners. After numerous warnings, it was finally necessary to terminate the right of Daugherty to proceed effective as of November 24, 1943.

An examination of the evidence indicates that defendant made two demands: (1) that plaintiffs furnish information concerning equipment availability by March 10; (2) that plaintiffs bring their equipment to the site by April 15, or sooner, if weather conditions permitted.

Since the damage about which plaintiffs complain concerns the loss of rental on equipment brought to the site in April, it is apparent that the alleged breach of contract concerns demand number two.

On January 28, 1944, the contracting officer advised plaintiffs that 52 calendar days remained for the completion of the work; that to complete in the contract time plaintiffs "must have sufficient equipment on the job by April 15, 1944, or sooner, if weather conditions permit, to operate on a full scale basis."

Normal grading operations commence in the Zanesville area about March 15, but due to unseasonable weather plaintiffs were not able to commence work until May 1 and notice to proceed was not issued until May 10. In January the reasonable expectation was that grading operations would commence about March 15. At that time, January, such a demand could not be called unreasonable. Thus, if the demand was not a breach of contract in January, it was not a breach of contract in April, for the plaintiffs' loss resulted not from compliance with the order but from the unseasonable weather which prevented the issuance of the notice to proceed at the expected time. It has been held that the Government is not responsible for the vagaries of the weather. Warren Brothers Roads Co. v. United States, 123 Ct.Cl. 48, 79, 105 F.Supp. 826.

Inasmuch as grading operations would normally commence about March 15, any prudent contractor would have been prepared to proceed shortly thereafter. Hence plaintiffs' movement of equipment to the site in April was a normal action and one which would have taken place regardless of any demand by the defendant.

Therefore, it must be concluded that plaintiffs brought the grading equipment to the site in April not because of threats, but because it was what any prudent contractor would have done. It was not a breach of the contract by the Government and the plaintiffs could not recover on this claim.

The plaintiffs' second claim is for recovery of the alleged cost of ditch rock excavation. Plaintiff Daugherty subcontracted the drainage work to the Weikel Construction Company.

The profile drawings of the drainage structures showed them to be located in an area and in a strata of soil classified on the boring log as "Horizon C" material defined as "hard, impervious, silty clay" which was "relatively hard and impervious."

In digging the trenches rock was encountered which had to be blasted and the subcontractor was paid therefor at the rate of $5 per cubic yard.

The fact that plaintiff Daugherty anticipated rock is evidenced by the terms of the subcontract. The uncontested evidence is that the subcontract carried a provision, the purport of which was to protect the subcontractor against rock should it be encountered. It also appears from the evidence that rock was anticipated below grade on this part of the job. The evidence further shows that blasting is ordinarily necessary because of the confined nature of this type of excavation.

Thus plaintiffs' contention that they are entitled to recover an additional amount because of an alleged changed condition is without foundation. Furthermore, there is nothing in the evidence to disclose that plaintiffs ever called the attention of the contracting officer to an alleged changed condition in connection with this portion of the work.

Either failure to show a changed condition or failure to give notice of a changed condition would prevent recovery of plaintiffs on this claim. Having failed to show a changed condition, this item of plaintiffs' claim is denied.

The third claim of plaintiffs is for the unpaid balance of contract price withheld from plaintiffs' cosureties and applied to payment of taxes owed by plaintiff Daugherty.

At the time Daugherty's contract was terminated defendant was indebted to him in the amount of $56,783.56 for work performed.

Defendant accepted the offer of the cosureties to complete the contract but stated that claim to all sums due under the contract at time of termination could not then be allowed since there was at the time of termination a valid assignment of money due under the contract in favor of the LaSalle Industrial Finance Corporation. This was satisfactory to the cosureties who then did go ahead with the work without a supplemental contract. On January 3, 1944, the Comptroller General certified as due the LaSalle Corporation, as assignee of Daugherty, the sum of $56,783.56. Before a check was issued, a tax levy was filed against the contractor in the amount of $45,366, in connection with the Zanesville contract and $12,863.10 assessed in connection with other work. The defendant thereupon refused the demand of the cosureties for payment of the amount earned by Daugherty prior to the termination of his right to proceed and by appropriate bookkeeping entries defendant set off the sum due Daugherty against his tax indebtedness.

Plaintiffs contend the surety companies had a prior lien to the amount in dispute and are entitled in this claim to recover said amount. The law is to the contrary. It has been settled that the Government which has funds in its possession may apply said funds against amounts owed to the Government by a prime contractor. United States v. Munsey Trust Company, 332 U.S. 234, 67 S.Ct. 1599, 91 L.Ed. 2022; Standard Accident Insurance Company v. United States, 119 Ct.Cl. 749, 97 F.Supp. 829.

The contractor could not, by assignment, transfer greater rights than he had himself and as a matter of law the Government had the right to set off the sums due under the contract against the amount of taxes due and owing by plaintiff Daugherty. Thus, plain...