Humphreys v. J. B. Michael & Co.
| Decision Date | 16 December 1960 |
| Citation | 341 S.W.2d 229 |
| Court | United States State Supreme Court — District of Kentucky |
| Parties | Robert HUMPHREYS, Commissioner, Department of Highways of the Commonwealth of Kentucky, and the Department of Highways of the Commonwealth of Kentucky, Appellants, v. J. B. MICHAEL & CO., Inc., Appellee. |
Jo M. Ferguson, Atty. Gen., Astor Hogg, Chief Asst. Atty. Gen., Edward A. Marye, Jr., Asst. Atty. Gen., for appellant.
Joseph J. Leary, Smith, Reed & Leary, Frankfort, for appellee.
WADDILL, Commissioner.
The appeal is from a judgment establishing a balance of $225,880.78 due from the Commonwealth to J. B. Michael and Company, contractor under a road construction contract. The cross-appeal questions the correctness of that part of the judgment which dismissed the claim for recovery of interest allegedly due by reason of the failure of the Commonwealth to pay the amount owed under the semi-final estimate at the time prescribed by the contract.
J. B. Michael and Company, appellee and cross-appellant, hereinafter called plaintiff, filed this action against the appellants, Department of Highways of the Commonwealth of Kentucky and the Commissioner of Highways, referred to hereinafter as defendant, seeking a declaration of rights under a written contract executed by the parties involving the construction of a section of a highway located in Hardin and Bullitt Counties, designated as Kentucky-Turnpike Project Number 1. Plaintiff sought to recover: Damages for delay as a result of an alleged breach of the contract; compensation for additional expense incurred by reason of a suspension of work on the project allegedly brought about by defendant pursuant to a provision of the contract; unpaid claims for certain items of extras, such as, quantities of stone used for widening shoulders of the road and certain seeding and sodding of the shoulders of the highway; interest on $256,370.63 from November 7, 1956, the date when this amount was due plaintiff under the contract, to May 22, 1957, when plaintiff received payment of this principal sum.
The substance of the essential facts is that on October 29, 1954, the parties entered into a written contract by the terms and conditions of which plaintiff agreed to construct, for the price of $2,989,038.10, 12.3 miles of two 24' lanes of reinforced concrete pavement with improved shoulders, including seeding and sodding. Plaintiff's work under this contract was to be completed not later than November 23, 1955. This contract, including related documents, was designated contract No. 7, and was prepared by the defendant through its authorized representatives.
Contract No. 7 and its related documents contain certain provisions which are relied upon by plaintiff as having particular significance in the determination of this controversy. These provisions in pertinent part state:
'(a) It is mutually agreed by and between the parties that time is of the essence of this contract, * * *.
'(b) The Paving Contractor is here advised that the following contracts, within the limits of this Contract, have been let and construction is now in progress:
'Contract 1-A, 1-B, & 1-C (Grading and Drainage)
'Completion Date: July 1, 1955
Contractor: Taylor Bros., Inc.
Evansville, Indiana
'Contract 4 (Bridges)
Completion Date: September 9, 1955
Contractor: Ruby Construction Co., Inc
'In addition the Grading and Drainage Contractor has been directed to complete at least 50 percent of the total lineal length of grading and drainage construction within the outside shoulder lines on or before April 15, 1955.
'The Grading Contractor is also required to complete the grading in the concession area by November 1, 1954.
The representatives of the defendant were advised through progress reports that the grade and drain work on the section which was to be paved by plaintiff was not being completed according to schedule. The original schedule for the grade and drain work called for 50% of this work to be completed by April 15, 1955, and entirely completed by July 1, 1955. Actual progress charts however reflected that this work was only 26% completed on November 1, 1954, which was 35% behind schedule. Delays in constructing the grade and drain were attributable to various conditions, such as, unusual amount of inclement weather, some inefficiency of the grade contractor, extra work and overruns and failure of the defendant to promptly furnish necessary rights-of-way.
Notwithstanding the fact that defendant's representatives knew that it was improbable that the grade on the road would be 50% completed and ready for paving by April 15, 1955, the defendant issued an order on November 1, 1954 for plaintiff to commence work by November 10, 1954. In compliance with this order, plaintiff immediately began assembling materials, equipment, and crews at the job-site.
On April 15, 1955, the grade upon which the concrete was to be laid was not in condition to receive the pavement, nor were the shoulders of the road ready for the improvement. The equipment and personnel which plaintiff had brought to the job-site for the performance of its contract and in accordance with the directions of the defendant's engineers were idle and were held in a state of abeyance. Likewise, subcontractors, with which plaintiff had made contracts based upon the time limitations which were contained in its contract, were precluded from performing the work required by their subcontracts.
The delay in furnishing plaintiff with grade ready for paving was the subject of frequent conferences following April 15, 1955. At these conferences defendant's representatives would assure plaintiff that in a short time sufficient grade would be available for plaintiff to begin paving operations, but as a matter of fact the period of suspension of the paving operations was, at that time, indefinite. During May, 1955, it was apparent to the plaintiff that further delay could prevent the completion of the paving operations within the time limitations of the contract. On May 30, 1955, plaintiff advised the Commissioner of Highways of the situation which had arisen and continued to bring the matter to his attention through certain letters. The purpose of these communications was to give notice that plaintiff would expect additional compensation for any increase in costs incurred by reason of not having received the roadway for paving within the time specified in its contract.
The work which the grade contractor had contracted to perform on the project continued to remain in unacceptable condition for paving until July 25, 1955. On that date plaintiff received 7,700 lineal feet of roadway for paving, and 50% of the completed grade on September 9, 1955. Thereafter, grade ready for paving was made available to plaintiff in varying amounts until December 13, 1955, when plaintiff received all of the completed grade.
It was established that plaintiff completed its paving operations in 703 1/2 working hours. It was also shown that if the grade had been made available to plaintiff between April 15, 1955 and September 15, 1955, as originally scheduled by defendant, there would have been 750 working hours available when plaintiff could have completed the paving operations required by its contract without incurring any additional costs.
Since it was established that delay in furnishing plaintiff with completed grade impeded the commencement, progress, and completion of the work to be performed by plaintiff under its contract with defendant, plaintiff asserts it is entitled to recover damages for breach of contract on either of two theories: The failure of defendant to furnish plaintiff grade ready for paving at the time agreed upon; or, active interference by the authorized representatives of defendant in requiring plaintiff to maintain crews and equipment at the job-site in a state of readiness to proceed with its work despite the delay encountered in the completion of the grade and drain work.
Plaintiff also sought alternative relief for additional expenses incurred by reason of suspension of work as provided for by section 1.67 of the Standard Provisions. This Section provides:
'Suspension of Work'
'The work may be suspended for two general reasons:--(a) The decision by the Commissioner [of Highways] that it is advisable to do so in its own best interests, and (b) Unsuitable weather or other conditions considered unfavorable for suitable prosecution of the job or due to failure of the Contractor [Plaintiff] to carry out orders given or to comply with any or all of the provisions of the Contract.
* * *. * * *.
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