Herlihy Mid-Continent Co. v. Sanitary Dist. of Chicago

• Decision Date: 17 May 1945
• Docket Number: 28117.,Nos. 28116,s. 28116
• Citation: 390 Ill. 160,60 N.E.2d 882
• Parties: HERLIHY MID-CONTINENT CO. v. SANITARY DIST. OF CHICAGO.
• Court: Illinois Supreme Court

390 Ill. 160

60 N.E.2d 882

HERLIHY MID-CONTINENT CO.

v.SANITARY DIST. OF CHICAGO.

Nos. 28116, 28117.

Supreme Court of Illinois.

March 21, 1945.

Rehearing Denied May 17, 1945.

Appeals from Second Division, Appellate Court, First District, on Appeals from Circuit Court, Cook County; Ray D. Henson, Judge.

Action by Herlihy Mid-Continent Company against the Sanitary District of Chicago to recover damages allegedly sustained because of delay and for loss of profits plaintiff would have received but for defendant's revision order. From that part of a judgment of the Appellate Court, 322 Ill.App. 692, 54 N.E.2d 633, which denied plaintiff's claim damages for delay, plaintiff appeals, and from that part of such judgment as was unfavorable to defendant, defendant appeals.

Judgment, insofar as appealed from by plaintiff, affirmed, and, insofar as appealed from by defendant, reversed and rendered.

Sheehan & Crilly, of Chicago, for Herlihy Mid-Continent Co.

Ernst Buehler and John H. Bishop, both of Chicago, for Sanitary District.

MURPHY, Justice.

On September 10, 1931, Herlihy Mid-Continent Company, referred to herein as plaintiff, entered into a contract with the Sanitary District of Chicago, designated herein as defendant, under the terms of which plaintiff was to construct division D of the Calumet sewage works extension. The contract provided that defendant's chief engineer should furnish monthly estimates of the amount completed, and that 87 1/2 per cent of such estimates should be paid monthly, the balance to be retained by defendant until the project was completed. Defendant did not furnish such progress estimates and plaintiff discontinued work December 24, 1931, and did not resume until December 26, 1933. When the operations were renewed, defendant ordered certain revisions which eliminated work and materials that under the contract would have cost approximately $245,000. The structure was completed and accepted by defendant November 24, 1936. Final estimates of the amount due were made by defendant's chief engineer and the balance due thereunder was paid.

This suit was started to recover damages which plaintiff claimed it sustained by reason of the delay of approximately two years, and by reason of the loss of profits it would have received but for the defendant's revision orders. Other items, including overhead, certain fixed charges and indirect expenses were included. The cause was tried before the court without a jury and resulted in a judgment holding plaintiff entitled to recover damages in the sum of $720.84. On appeal the Appellate Court affirmed that part of the judgment which denied plaintiff's right to damages occasioned by the delay in the prosecution of the work. On the claim of damages for loss of profits, overhead and other items, the court found for plaintiff and entered judgment in its favor for $49,238.51.

Plaintiff filed a petition for leave to appeal from that part of the judgment denying its claim to delay damages. That is cause No. 28117. Defendant petitioned for leave to appeal from the judgment entered against it. This is cause No. 28116. The two causes were consolidated in this court and both petitions allowed.

The facts pertinent to the questions presented in No. 28117 are not in dispute. Plaintiff's bid, upon which the contract was awarded, was $2,182,796.65. Defendant planned to finance this project and others by bond issue. There of such issues had been authorized prior to the date of the contract, in amounts of $180,000, $950,000 and $20,300,000 respectively. Before the contract was awarded the proceeds from some of the bonds issued and sold had been used in payment of certain engineering work. Other proceeds remained in defendant's bond account, so that on October 31, 1931, said account showed a balance slightly in excess of $475,000. On said date, defendant used $475,000 of said account in buying its own tax anticipation warrants.

The evidence shows that when the work was suspended, December 24, 1931, there was due plaintiff, according to estimates, the sum of $107,646.42. This was not paid until December 29, 1932. Defendant's failure to furnish the progress estimates and make payments thereon caused plaintiff to suspend operations, which cessation continued to December 26, 1933. In the interim, defendant obtained a loan from the Federal government and work was resumed according to contracts and the revision orders referred to in the second part of this opinion.

In this branch of the case, plaintiff seeks to recover damages sustained by the suspension of work. The parties stipulated that if plaintiff was entitled to recover in any sum the amount would be $228,339.99. Included in this total is additional office overhead, equipment rental, increased cost of material and other items. Parties are in accord that plaintiff's right to recovery is dependent upon the meaning and effect of article 30 of the contract. It is as follows:

'Unavoidable Delays.

‘Art. 30. Should the Contractor be obstructed or delayed in the commencement, prosecution or completion of the work hereunder by any act or delay of the Sanitary District or public utility company whose services are required in the prosecution of work under this contract, or by unavoidable acts or delays on the part of transportation companies in transporting, switching or delivering material for such work, or by acts of public authorities, or by riot, insurrection, war, pestilence, fire, lightning, earthquake, cyclone or through any delays or defaults of other parties under contract with said Sanitary District or due to unavoidable delays in obtaining the specified materials or equipment for said work, or due to strikes, or to delays which result in performing work under abnormal weather conditions beyond such as usually occur during the times specified herein, or to other causes, which causes or delays mentioned in this article (Article 30) hereof, the Engineer shall determine to be entirely beyond the control of the Contractor, then the times herein fixed for the completion of said work to the extent specified shall be extended for a period equivalent to the time lost by reason of any of the aforesaid causes mentioned in this article (Article 30). No such allowance of time shall be made, however, unless notice in writing of a claim therefor is presented to the Engineer before the thirtieth of each succeeding month of all delays occurring within the preceding month, and the Contractor shall satisfy the Engineer that the delays so claimed are unavoidable and substantial, and could not be reasonably anticipated or adequately guarded against.

‘It is further expressly understood and agreed that the Contractor shall not be entitled to any damages or compensation from the Sanitary District on account of any delay or delays resulting from any of the causes aforesaid in this article (Article 30), except compensation for extra premiums paid by the Contractor on his bond and for wages and salaries of employees and other extra expense of the Contractor that is necessary only for the proper maintenance of the work and of the plant and equipment of the Contractor during or on account only of a delay or delays caused by the Sanitary District or other contractors for said Sanitary District, or by public authorities as aforesaid. The Engineer shall determine the number of days, if any, that the Contractor has been so delayed, and the amount of such extra costs to the Contractor due to said delay or delays and the amount of extra compensation to be paid to the Contractor therefor, and his decision shall be final and binding upon both parties to this contract.’

This section, except as to one matter hereinafter referred to, is the same as article 32 in the contract considered in Underground Construction Co. v. Sanitary District, 367 Ill. 360, 11 N.E.2d 361, 115 A.L.R. 57. In that case the plaintiff contractor had agreed with the defendant herein to do certain construction work. The contractor proceeded with the performance of the work until it was about 70 per cent completed. The defendant discontinued issuing its engineer's progress certificates and making monthly payments, whereupon the contractor suspended operations under the contract. Later the amounts due on the engineer's estimates at the time of suspension were merged in a judgment and defendant paid the same. Plaintiff brought a separate action to recover damages caused by the delay. It was found that the cause of such delay was defendant's failure to issue the progress estimates and make the monthly payments. It was also found that defendant's failure to perform was due to lack of available funds. It was held that a contractor engaged to do construction work under such a contract had a right to recover damages sustained by a delay which had been brought about by the contractee's default. But it was found that by article 32 of the contract the contractor had agreed to waive all such damages. The Underground case is conclusive on the right of a contractor to recover from a contractee damages which are caused by a delay brought about by the contractee's default. The parties are in accord on this general proposition of law. For an annotation on this point, see 115 A.L.R. 65.

In support of plaintiff's contention that it is entitled to delay damages, it urges that article 30 should be construed as referring solely to unavoidable delays. Such a construction would limit recovery of delay damages to those cases where the delay could have been avoided. The word ‘unavoidable’ in article 30, did not appear in article 32 of the contract discussed in the Underground case. This difference in language is used by plaintiff to distinguish the two cases. Attention is called to the title of article 30, which is ‘Unavoidable Delays,’ and to the provisions in the contract where it refers to ‘unavoidable acts or delays on the part of transportation company,’ etc. and ‘unavoidable delays in...