Kenny Const. Co. of Illinois v. Metropolitan Sanitary Dist. of Greater Chicago

• Decision Date: 20 March 1974
• Docket Number: No. 46043,46043
• Citation: 56 Ill.2d 516,309 N.E.2d 221
• Parties: KENNY CONSTRUCTION COMPANY OF ILLINOIS, Appellee, v. The METROPOLITAN SANITARY DISTRICT OF GREATER CHICAGO, Appellant.
• Court: Illinois Supreme Court

Page 221

309 N.E.2d 221

56 Ill.2d 516

KENNY CONSTRUCTION COMPANY OF ILLINOIS, Appellee, v. The METROPOLITAN SANITARY DISTRICT OF GREATER CHICAGO, Appellant.

No. 46043.

Supreme Court of Illinois.

March 20, 1974.

Allen S. Lavin, Chicago (Sidney B. Baker and James B. Murray, Chicago, of counsel), for appellant.

O'Brien & Trittipo, Ltd., and O'Keefe, Ashenden, O'Brien & Hanson, Chicago (Donald V. O'Brien and James H. O'Brien, Chicago, of counsel), for appellee.

UNDERWOOD, Chief Justice:

This cause, which involves a dispute between plaintiff, Kenny Construction Company, and the defendant, Metropolitan Sanitary District of Greater Chicago, over the amount due Kenny under a contract for construction of a sewer is before this court for the second time on appeal. In the original trial in the circuit court of Cook County, judgment was entered in favor of Kenny for $131,237.71. On appeal by the Sanitary District and cross-appeal by Kenny, the Appellate Court, First District, reversed the award on the grounds that the Sanitary District was not liable. (128 Ill.App.2d 104, 262 N.E.2d 842.) We allowed a petition for leave to appeal and reversed the judgment of the appellate court, remanding the cause to the circuit court for a redetermination of the amount due Kenny under the contract for additional work made necessary by changed conditions at the job site. (52 Ill.2d 187, 288 N.E.2d 1.) Following the hearing on remand, the circuit court found the amount due Kenny to be $344,809.95. That court found further that its original judgment of $131,237.71 was still in full force and effect, which left a balance due Kenny of $213,572.24, and an additional judgment for that amount was entered. The Sanitary District perfected an appeal to the Appellate Court, First District, and the cause has been transferred to this court pursuant to Supreme Court Rule 302(b).

The facts are set forth in detail in our first opinion and will be restated here only insofar as necessary for an understanding of the particular issues raised by this appeal. Kenny, which had submitted the low bid, entered into a contract on December 23, 1958, with the Sanitary District for construction of an 8,100-linear-foot sewer in Wheeling Township in Cook County. The controversy now before us arose from the construction of the south 1600 linear feet of sewer where plaintiff encountered unanticipated and unfavorable subsoil conditions. Kenny's attempts to solve the problem by tunneling free air and compressed air and performing an open cut using steel sheeting and air locks were unsuccessful, and work on that section was abandoned in mid-December, 1959. Following a series of communications between Kenny and the District between December, 1959, and April, 1960, concerning alternate methods of construction, Kenny was informed of the Sanitary District's decision to approve the use of steel liner plates and steel ribs in completing the affected section. Work was then started again using the liner-plate construction method, and the south 1600 linear feet was eventually completed and accepted by the Sanitary District. When its claim for additional compensation was denied, Kenny instituted suit against the District.

In the first trial the circuit court held that Kenny was entitled to extra compensation under the changed-conditions provisions of the contract providing for such compensation in the event the contractor encountered unanticipated subsurface conditions materially affecting the cost of work to be done. The court further found that Kenny had lost approximately $340,000 in completing the south end of the tunnel. In arriving at the net amount due Kenny, however, the court reduced the $340,000 figure by Kenny's profit on the other sections of the tunnel, leaving a net amount of $131,237.71 for which judgment was entered in Kenny's favor.

In reversing the circuit court, the appellate court held that the Sanitary District was not liable for payment of additional compensation. On the first appeal to this court (Kenny Construction Co. v. Metropolitan Sanitary Dist., 52 Ill.2d 187, 288 N.E.2d 1), we concluded otherwise and held that Kenny was entitled to such additional compensation under the changed-conditions provisions of the contract and that such compensation was to be determined under article 8 entitled 'Estimating Extra Work.' We further held that the circuit court erred when, after determining Kenny's loss in completing the south 1600 linear feet of sewer tunnel, it deducted from that amount the profits Kenny had realized from its work on the other sections of the tunnel and awarded judgment to Kenny for the balance. We concluded 'that Kenny was entitled to compensation for the additional work made necessary because of the changed or unanticipated conditions in the south section of the tunnel. Kenny performed the additional work under circumstances which amounted to an implied promise that it would be paid if it was subsequently determined that changed conditions had been encountered. * * * Considering the character of the changed-conditions provision, the cost of services rendered under the provision should be determined without reference to the contractor's profits or losses upon unaffected or unmodified portions of the contract. The cause must, therefore, be remanded to the circuit court for a determination of Kenny's costs of the liner-plate construction performed at the south...