General Insurance Co. of Amer. v. Hercules Construction Co.
| Decision Date | 01 December 1967 |
| Docket Number | No. 18,496-97.,18 |
| Citation | 385 F.2d 13 |
| Parties | GENERAL INSURANCE COMPANY OF AMERICA, Appellant, v. HERCULES CONSTRUCTION COMPANY, a corporation, Appellee. HERCULES CONSTRUCTION COMPANY, a corporation, Appellant, v. GENERAL INSURANCE COMPANY OF AMERICA, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
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Tyree C. Derrick, St. Louis, Mo., for General Insurance Co.; Karl E. Holderle, Jr., St. Louis, Mo., was with Tyree C. Derrick, St. Louis, Mo., on the brief.
Mortimer A. Rosecan, St. Louis, Mo., and Merle L. Silverstein, Rosenblum & Goldenhersh, St. Louis, Mo., made argument for Hercules Construction Co. and filed brief.
Before VOGEL, Chief Judge, VAN OOSTERHOUT and GIBSON, Circuit Judges.
This is an appeal from the United States District Court for the Eastern District of Missouri on a judgment entered against General Insurance Company as surety on a subcontractor's performance bond, and a cross-appeal on the District Court's refusal to allow prejudgment interest. We will first consider the appeal of General Insurance Company.
Plaintiff-Appellee, Hercules Construction Company, entered into a general construction contract to erect a parking structure for The May Company, owner. Hercules subcontracted with Missouri Pres-Crete, Inc., to design, re-design, fabricate and deliver all necessary precast concrete components for the structure. Defendant-Appellant, General Insurance Company of America, guaranteed performance by Missouri Pres-Crete, Inc.
In the suit between Hercules and General, Missouri Pres-Crete was allowed to intervene. However, Hercules did not amend its complaint to include Missouri Pres-Crete as a party defendant. The issues were tried by a jury who returned a verdict in favor of Hercules against General for $117,500.00. No judgment was sought or given against the intervenor, Missouri Pres-Crete.
On November 29, 1961, Hercules contracted with The May Company to construct a parking structure adjacent to the Famous-Barr department store (owned by The May Company) on Pine Street between 6th and 7th Streets in St. Louis, Missouri. Hercules was required to give a performance bond to The May Company, which required completion of the parking structure by August 8, 1962. Hercules signed a subcontract with Pres-Crete on November 29, 1961, whereby Pres-Crete agreed to supply Hercules with custom precast concrete components, which were to comprise a substantial portion of the parking structure. Hercules required a performance bond from Pres-Crete, on which General was surety, to guarantee compliance by Pres-Crete with its subcontract.
Three essential features of the subcontract are relevant to this appeal. First, the subcontract expressly provided that time was of the essence. The subcontract specifically directed Pres-Crete's attention to the fact that the target date for completion of the entire project was August 1, 1962, and that completion of the project was contingent upon adherence to the program schedule for the phase of the work covered by the subcontract. Second, delivery of the precast components was to commence on approximately January 2, 1962, and was to be completed on approximately April 15, 1962, unless mutually agreed otherwise later. Third, delivery of the precast was to be in the sequence directed by Hercules' erection superintendent.
Hercules alleged that Pres-Crete breached the subcontract. Hercules' evidence showed that the first delivery of precast for erection purposes was not made until February 12, 1962, over one month after the date called for in the subcontract. The final delivery of precast by Pres-Crete was not made until September 1, 1962, about four and one-half months after the date called for by the subcontract. The precast components were not delivered in sequence, and until about May 6, 1962, approximately twenty-five percent of the major components1 delivered were miscast or defectively engineered. Hercules did not complete the parking structure until October 8, 1962, two months past the time for completion called for in the contract with The May Company.
The May Company, however, accepted the completed parking structure from Hercules and did not penalize Hercules for late completion. Thus, Hercules did not claim damages resulting from a breach of the contract between Hercules and The May Company as a consequence of Pres-Crete's breaching the subcontract between Hercules and Pres-Crete. Hercules did claim damages as a result of Pres-Crete's breach with regard to five areas of extra costs incurred in an attempt to complete the parking structure as nearly as possible to the contracted completion date. The following additional costs were alleged to have been incurred by Hercules in an attempt to minimize its possible liability to The May Company:
1. Extra erection labor costs.................$ 10,370.00
2. Extra erection equipment costs............. 21,613.00
3. Paid out for premium time after May 1...... 66,685.12
4. Extra cost of constructing downramp........ 35,079.03
5. Extra costs of keeping the job open........ 23,775.20
___________
Total of extra costs paid out .............$157,522.35
Hercules' evidence showed that from the time Pres-Crete began delivering the precast until May 7, it had to incur extra labor and equipment costs as set forth in items 1 and 2 above. After May 7 the workmanship and sequence of delivery showed a marked improvement. Efficient precast erection depends upon receipt of components properly fabricated and engineered and delivered in the sequence that erection is planned. Otherwise, slow and inefficient construction results, with costly delays occurring while the project awaits the proper component to fit in the architectural scheme of construction. The extra labor and equipment costs were shouldered by Hercules in an attempt to speed up construction progress, as Hercules was bound to do under its contract with The May Company.2
Item 3 is the amount of premium time (overtime) paid out by Hercules after May 1, 1962, over and above the amount it expected to pay for that purpose, necessarily incurred because of Pres-Crete's alleged breach.
Item 4 relates to Hercules' claimed extra expense in constructing the downramp that provides egress from the parking structure. The plan of construction called for equipment and materials to be moved across each floor of the essentially precast concrete structure to the corresponding level of the downramp that was to be constructed. Due to the delay in completing the precast erection, the parking structure could not be utilized to construct the poured-in-place downramp. Equipment and materials had to be hoisted by crane and the concrete poured bucket by bucket instead of being hoisted to each garage floor and then buggied over to the downramp. Extra labor and equipment expenses raised the cost of constructing the downramp considerably over that anticipated by Hercules.
Item 5 concerns Hercules' claimed damages resulting from keeping the job open until October 8, 1962, about two months after the date called for completion by its contract with The May Company. Such expenses included an allocation of Hercules' fixed overhead expenses for the additional two months, in addition to actual job-site costs as general equipment, hauling, temporary power facilities and supervisory personnel that could have been utilized on other jobs.
Hercules claimed total damages against General Insurance as the result of Pres-Crete's breach of contract in the amount of $157,522.35. The jury returned a verdict in favor of Hercules in the amount of $117,500.00.
General first contends that because the liability of a surety is derivative and predicated on the liability of its principal, the verdict and judgment against it cannot stand because there has been no determination against its principal Pres-Crete. As Pres-Crete had intervened, General argues, the judgment had to be jointly against both principal and surety, rather than against the surety alone. We think not.
This diversity case is governed by Missouri law. The subcontract bond between General, as surety, and Pres-Crete as principal, provided that the surety and principal were jointly and severally liable. Where liability is joint and several, suit may be brought against both principal and surety or either separately. Board of Education of City of St. Louis v. United States Fidelity and Guaranty Co., 166 Mo.App. 410, 149 S.W. 46 (Mo. App.1912); see 72 C.J.S. Principal & Surety, § 264(b). In Bolivar Reorg. School Dist. v. American Surety Company of New York, 307 S.W.2d 405, 70 A.L.R.2d 1361 (Mo.1957), an action against the surety alone was entertained with no question raised as to the necessity of joining the principal.
Although Pres-Crete was allowed to intervene as a party defendant, Hercules did not amend its petition to seek damages against Pres-Crete, as this would pose a jurisdictional question on the diversity aspect of Hercules' complaint, but chose to press its claim for damages against the several liability of the surety only. An intervenor accepts the pleadings as he finds them. In re V-I-D, Inc., 177 F.2d 234 (7 Cir. 1949). Pres-Crete's intervention did not affect the acknowledged jurisdiction of the court, nor did it change Hercules' claim to an action against the surety and the intervening principal. General still has a right of action against its principal, Pres-Crete, and could have cross-claimed against Pres-Crete in the present suit under Rule 13(g), Federal Rules of Civil Procedure. This it did not see fit to do.
General next asserts that the trial court erred in not sustaining its Motion to Dismiss Hercules' case because the evidence showed substantial compliance by Pres-Crete with the terms of the subcontract. It contends that all...
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