Grand Trunk Western R. Co. v. HW Nelson Co.

• Decision Date: 13 March 1941
• Docket Number: No. 8552.,8552.
• Citation: 116 F.2d 823
• Parties: GRAND TRUNK WESTERN R. CO. v. H. W. NELSON CO., Inc.
• Court: U.S. Court of Appeals — Sixth Circuit

116 F.2d 823 (1941)

GRAND TRUNK WESTERN R. CO. v. H. W. NELSON CO., Inc.

No. 8552.

Circuit Court of Appeals, Sixth Circuit.

January 9, 1941.

Rehearing Denied March 13, 1941.

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Cornelius W. Wickersham, of New York City (Cornelius W. Wickersham, of New York City, John J. Gafill and Frederick V. Slocum, both of Detroit, Mich., and Cornelius W. Wickersham, Jr., and Cadwalader, Wickersham & Taft, all of New York City, on the brief), for appellant.

Wilber M. Brucker, of Detroit, Mich. (Joseph H. Clark, Wilber M. Brucker, Harold J. Waples, and Clark, Klein, Brucker & Waples, all of Detroit, Mich., on the brief), for appellee.

Before HICKS, ALLEN, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

This is an appeal from a judgment of $871,000 in favor of appellee, pursuant to a jury verdict in an action to recover damages growing out of the construction of a railroad. Appellee declared in three counts: breach of the written contract, breach of a supplemental oral agreement, and fraud.

Originally appellant's motion to dismiss on all counts was sustained and on appeal this court reversed as to counts 2 and 3 and affirmed as to count 1. 6 Cir., 80 F.2d 986. At the trial, the court overruled appellant's motion for a directed verdict on the remaining two counts and the jury found for appellee; hence this appeal.

Appellant relies on 131 points. We treat all those that are not briefed as abandoned. (This court, Revised Rules January 1, 1940, Rule 21); Kahn v. United States, 6 Cir., 20 F.2d 782.

Appellee was a general contractor and, pursuant to the request of appellant, was the successful bidder for the grading and construction of a double track railroad on appellant's line extending from a point in Royal Oak, Michigan, near M. P. 13, northerly to M. P. 22.1, north of Birmingham, Michigan.

A conventional construction contract was prepared between May 29 and June 21, 1928, and executed by the parties June 22, 1928, according to which appellant was to provide the right-of-way free from any liens, claims or adverse interests. About June 1, 1928, appellant notified appellee it had procured substantially all the right-of-way and ordered it to place its equipment, organize its construction crew and commence work at Maple Avenue, Birmingham, Michigan, where an underpass was to be constructed. Appellee placed its equipment and assembled its crew at this point and began work, after which on June 12, 1928, it was notified by appellant it would have to discontinue construction there, because the land was burdened with certain reciprocal negative easements or restrictions, requiring it to be used exclusively for residential purposes and that some of the owners of these easements were threatening injunction proceedings prohibiting the construction of the railroad. Appellant directed appellee to move its equipment from this point and begin construction 2½ miles south at Charing Cross Road, which appellee did, when on July 3, 1928, owners of negative easements at that point instituted injunction proceedings again interfering with the work, which prevented construction until July 27, 1928, at which time the injunction was dissolved.

On August 3, 1928, other owners procured a like injunction completely stopping construction until July 12, 1929. Thereafter, under extensions granted by appellant, appellee completed the entire contract by August, 1931, according to its terms, and was paid the amount agreed thereunder.

Appellee, in its second count, alleged that appellant, through its chief engineer, entered into an oral contract with it that in consideration of appellee keeping its machinery and equipment on the premises and its construction crew organized ready for work immediately on the dissolution of the injunctions it would pay to appellee all losses it might sustain on account of the incident delay.

In the third count, appellee alleges that appellant committed a fraud in that on or about June 1, 1928, it represented that it had secured substantially all of the right-of-way when in fact it well knew this to be false and while it was in physical possession of the property, it was burdened with reciprocal negative easements or restrictions requiring its use exclusively for residential purposes and that appellee had no knowledge of these burdens and in entering into the contract relied exclusively on the representations of appellant that it had acquired the right-of-way. It alleges that due to these misrepresentations, it was delayed in the construction of the work to its loss and damage. It will thus be seen that the two counts are correlative to the extent that appellee seeks to recover under each, loss due to delayed completion of the contract.

We discuss first the issue of fraud.

Appellant's relocated right-of-way was at the behest of the State of Michigan, and the present contract expressly stated in paragraph 7 that the State of Michigan was acquiring the right-of-way, and it was provided that the appellee agreed "any statement or provision herein contained or contained in the provisions hereto annexed (whether express or implied) to the contrary notwithstanding to enter in on any part of the line where the right-of-way has been acquired and proceed to construction on that part without at any time making any claim against the company or the State of Michigan for any delay it may encounter through the failure or inability of the State to acquire any part, or all, of the necessary right-of-way."

In our former opinion, we held that this provision of the contract was not a barrier to appellee's recovery for delay due to the fraudulent concealment of appellant. 6 Cir., 80 F.2d 986.

Appellant raises no issue as to this court's prior adjudication, but insists there is no substantial evidence supporting the allegations of fraud and if there is any the substantial evidence shows appellee waived it. Disregarding conflicting testimony and viewing the evidence and inferences therefrom most favorably to the appellee, the following facts substantially appear:

On May 29, 1928, appellant accepted by indorsement thereon, appellee's bid dated May 11, 1928, and its certified check for $10,000 as a guarantee, under the terms of which appellee was required to begin work within ten days thereafter and to complete the project on or before December 31, 1928. The formal contract was signed by appellee June 15, 1928, and delivered to appellant on June 22, 1928.

On May 31, 1928, appellee's superintendent conferred with appellant's chief engineer and was advised that appellant had all the right-of-way except two small parcels near Royal Oak, which would be acquired before needed. They discussed the plan of work and agreed it should begin with the grade separation at Maple Avenue, whereupon appellee's superintendent telegraphed to its yard in Ohio to have the organization and equipment sent there. Appellee's president came to Detroit on June 6, 1928, and was assured by appellant's Property and Tax Commissioner that it had all of the right-of-way except some small parcels near Royal Oak, and was also advised the same fact by appellant's chief engineer and that he should get his men and equipment on the job for a fast start. Acting on this assurance, appellee had its men start clearing and grubbing on the morning of June 3, 1928, in preparation for the shovel. Some of the equipment arrived June 8, and by June 14, twenty-eight carloads of it had been either shipped or received and seventy-two men were on the job; ties and rails were laid south of Maple Avenue and a hauling track built. The 50-B Diesel shovel had arrived at Birmingham Station, been unloaded, and set up ready to move to the Maple Avenue grade separation, a mile distant. On June 12, appellee's foreman was advised by one of appellant's officials that he could not work at Maple Avenue, but should go to Charing Cross, although he did not inform him the reason for the change. Appellee's president saw appellant's chief engineer on June 14 and was informed by him that the delay was caused by a threatened injunction, which he minimized and which he said would be immediately cleared up.

The necessary equipment was then moved to Charing Cross and the work started there June 15 with the Diesel shovel and was finished June 26. Appellee then began excavating at the cut at Station No. 383. Work was also started at Trowbridge Cut for the standard gauge hauling operation. By the end of June, 156 men were at work and a 100-B Diesel shovel was put on the job to expedite it and to make up for the earlier delay. Camps were constructed in zones 1, 2 and 3 Barrow at Maple Avenue, and all was in condition to push the work rapidly, when on July 3, 1928, suit was brought by some of the property owners restraining operations in zone 1, to which appellee was made a party defendant. Appellee was advised by appellant's agents that the injunction was improvidently issued and would be lifted promptly. Between July 3 and July 27, 1928, at which time the injunction was lifted, appellee worked where and as it could. After the injunction was dissolved, it was told to go ahead full speed and by July 29 had 198 men at work. On August 3, 1928, three additional injunctions were sued out by property owners, claiming reciprocal negative easements restraining all work in zones 1 and 2, except on a small strip on the north side of Trowbridge Farms. These injunctions were dissolved July 12, 1929, and thereafter the work completed.

The special circumstances under which the contract in question was made have a bearing, not only on its interpretation, but upon the rights of the parties under it. It is quite obvious that its provisions in respect to time were of its essence and regarded by the parties as of primary importance.

On May 18, 1928, appellee executed...