General Sprinkler Corp. v. Loris Industrial Developers, Inc.

• Decision Date: 01 August 1967
• Docket Number: Civ. A. No. 8671.
• Citation: 271 F. Supp. 551
• Parties: GENERAL SPRINKLER CORPORATION, Plaintiff, v. LORIS INDUSTRIAL DEVELOPERS, INC., Defendant.
• Court: U.S. District Court — District of South Carolina

271 F. Supp. 551

GENERAL SPRINKLER CORPORATION, Plaintiff, v. LORIS INDUSTRIAL DEVELOPERS, INC., Defendant.

Civ. A. No. 8671.

United States District Court D. South Carolina, Florence Division.

August 1, 1967.

COPYRIGHT MATERIAL OMITTED

Samuels S. Williams, Herbert, James & Williams, Charlotte, N. C., Arthur A. Holler, Holler & Holler, Myrtle Beach, S. C., for plaintiff.

John M. Scott, Wright, Scott, Blackwell & Powers, Florence, S. C., S. Watson Dawes, Dawes & Dawes, Loris, S. C., for defendant.

ORDER

SIMONS, District Judge.

This action was instituted by plaintiff against defendant by the filing of its complaint on April 24, 1965 seeking damages in the sum of $15,000 for an alleged breach of contract signed by the parties on September 13, 1963¹ at Loris, South Carolina. In its answer defendant pleaded a general denial and as a second defense alleged that plaintiff was unable to comply with the terms and conditions of the contract with particular reference to the issuance of an insurance policy covering defendant's building and contents by Associated Factory Mutual Fire Insurance Company, and that because of such failure on plaintiff's part defendant on or about November 21, 1963 notified plaintiff it was rescinding said contract. Defendant prays that plaintiff's complaint be dismissed with costs.

The cause came on for trial before the court without a jury at the April 1967 term of this court. In accordance with Rule 52(a) of Federal Rules of Civil Procedure the court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1) Plaintiff, a North Carolina corporation with its principal offices at Charlotte, North Carolina, is engaged in the business of installing automatic sprinkler systems and is duly authorized to do business in this state.

2) Defendant, a South Carolina corporation with its principal office at Loris, in Horry County, South Carolina, was organized by the people of its community for the purpose of attracting industries to locate there by constructing suitable facilities for interested industries.

3) Some time prior to April 1, 1963 defendant contracted for the construction of an industrial building at Loris, South Carolina, for Adams Engineering Company of Miami, Florida, with J. S. Singletary Company of Clarkton, North Carolina, as general contractor, for a total cost of approximately $460,000.00. Defendant signed a lease agreement with its prospective tenant, Adams Engineering Company, or one of its subsidiary corporations acting through its president Silvers, and a Small Business Administration loan with participation by Farmers Bank of Loris was obtained.

4) Defendant determined to install an automatic sprinkler system in the building which was in addition to the work required under the general contract. The general contractor accepted competitive bids for such installation and plaintiff's bid being the low one was referred by the general contractor to defendant. Thereafter plaintiff and defendant entered into a written contract at Loris, South Carolina on or about September 13, 1963 (see note 1 above), whereby plaintiff agreed to design, fabricate and install an automatic sprinkler system in defendant's building then under construction for a total contract price of $40,000. The contract was prepared by plaintiff and its original draft was amended in certain particulars at the suggestion of defendant. The following special clause or condition was inserted in the contract at defendant's request to meet one of its tenant's requirements:

"This entire contract is conditioned upon the inspection, acceptance, approval and the issuance of an insurance policy covering the building and contents by Associated Factory Mutual Fire Insurance Company."

The contract contained no time limit for performance by plaintiff; thus time was not of the essence of the agreement.

Prior to entering into the contract with defendant plaintiff's president and other representatives made several trips from Charlotte to Loris to confer with defendant's officials and to Clarkton, North Carolina to confer with defendant's general contractor. Plaintiff had also done a considerable amount of preliminary engineering work and had drafted preliminary plans.

5) After the execution of the contract, plaintiff completed its working drawings and plans for the installation of the sprinkler system and on September 23, 1963 obtained approval of same by the Engineering Division of Associated Factory Mutual Fire Insurance Companies as required by the contract. Plaintiff also endeavored to obtain a hazard insurance policy over defendant's building and contents from one of the affiliated Associated Factory Mutual Fire Insurance Companies, as required by the special condition of the contract above set forth.

6) Associated Factory Mutual Insurance Companies has seven affiliated members, one of which is Blackstone Mutual Insurance Company of Providence, Rhode Island. Obtaining the requisite insurance in any one of the seven affiliated companies of the Associated Factory Mutual group would satisfy the special condition of the contract.

7) Construction of defendant's building had been commenced by the general contractor in April 1963 and was nearing completion the latter part of September or early October. During construction defendant was covered by a builders' risk policy issued by the Insurance Company of North America, defendant's exhibit "E". Defendant's tenant started moving its equipment into the building in late September and paid its first rental payment in October 1963. In order for the builders' risk policy to remain in effect after the building was completed and occupied the insurance company required the payment of additional premium and its approval of the tenant. The evidence indicates that the builders' risk insurance company wanted to get off of the risk because it was not satisfied with defendant's tenant.

8) During this time plaintiff's president Walden attempted to obtain fire insurance for the building and contents with Associated Factory Mutual Fire Insurance Company as required by the special contract condition. Because of a previous experience in Florida with defendant's tenant who allegedly was thought to have intentionally burned a building there, this Company refused to write the coverage. Walden continued in his efforts to obtain acceptable insurance. Thereupon about the first of November 1963 plaintiff's president telephoned defendant's president Prince advising of his failure to obtain the required coverage with the Associated Factory Mutual. He advised Mr. Prince of his continued efforts to get insurance, that he had been to Charleston, South Carolina, to contact a representative of the Improved Risk Mutual Insurance Company which was writing much of the fire insurance coverage over buildings owned by the State of South Carolina; that this Company had approved his plans and he was advised that it was willing to write the coverage for defendant. He requested Mr. Prince to have his local insurance agent contact the company's Charleston representative about the coverage. Mr. Prince agreed to contact his local insurance agent and have him pursue the matter with Improved Risk Mutual Insurance Company.

Following his conversation with Walden, Prince then contacted his local agent, T. W. Stanley, about obtaining the insurance coverage with Improved Risk Mutual. Stanley's insurance agency was not licensed with that company and they concluded that it was not worth pursuing any further, but Walden was not so advised. At no time did Prince advise Walden of his failure to follow through with his Improved Risk Mutual suggestion. Neither did Prince give Walden a deadline in which to obtain the insurance with one of the other six affiliated Associated Factory Mutual Companies.

9) Defendant's president Prince was not aware of the fact that Associated Factory Mutual Companies was an affiliation of seven different fire insurance companies and he apparently erroneously concluded that plaintiff would not be able to meet the conditions of its contract since Walden had advised him that "We can't get Factory Mutual Insurance because your tenant is a bad risk and because of this fire loss." Walden was aware of the other six companies in the Associated Factory Mutual Group.

10) Plaintiff's president Walden testified that his company was prepared to commence fabricating the parts and to commence installation of the automatic sprinkler system in defendant's building at any time, and could have completed the installation within a 30 day period; that there was apparently no rush to install the system since it could not operate until the Town of Loris completed its new water tank. He was endeavoring to obtain the required insurance coverage in one of the other affiliated Associated Factory Mutual Companies when his office received a long distance telephone call from Mr. Prince late in the afternoon on Friday, November 22, 1963, advising that defendant was rescinding its contract with plaintiff and was entering into a contract with another sprinkler company. This was the first notice to plaintiff that defendant proposed to take such action.

11) Mr. Prince testified that a representative of Moore Pipe and Sprinkler Company came to Loris to see him during the first or second week of November in reference to installing the sprinkler system in defendant's building and made a proposal to do the work for a total price of $37,000.00, which was $3,000.00 less than its contract with plaintiff. During this period of time and prior to defendant's attempted cancellation of its contract with plaintiff on November 22, 1963, Mr. Prince had been in conversation with the district representatives of the Blackstone Mutual Insurance Company (a member of the Associated Factory Mutual Group) located in Charlotte, North Carolina. On November 21, 1963 the district representative of Blackstone Mutual wrote Mr. Prince...