A. Leo Nash Steel Corp. v. Southern New England Steel Erection Co., Inc.

• Decision Date: 18 March 1980
• Citation: 402 N.E.2d 71,9 Mass.App.Ct. 377
• Parties: A. LEO NASH STEEL CORPORATION v. SOUTHERN NEW ENGLAND STEEL ERECTION COMPANY, INC., et al.
• Court: Appeals Court of Massachusetts

Page 71

402 N.E.2d 71

9 Mass.App.Ct. 377

A. LEO NASH STEEL CORPORATION v. SOUTHERN NEW ENGLAND STEEL ERECTION COMPANY, INC., et al.

Appeals Court of Massachusetts, Berkshire.

Argued Jan. 23, 1980.

Decided March 18, 1980.

Daniel H. Kelleher, Boston, for Commercial Union Ins. Co. (Richard M. Canzano, Woburn, with him), for Southern New England Steel Erection Co.

David O. Burbank, Pittsfield, for plaintiff.

Before HALE, C. J., and GRANT and NOLAN, JJ.

NOLAN, Justice.

This is an action by A. Leo Nash Steel Corporation (Nash) against Southern New England Steel Erection Co., Inc. (Southern), for damages for breach of contract, and against Commercial Union Insurance Company (Commercial Union) on a performance bond in the amount of $43,150.00 which named Commercial Union as surety, Southern as principal, and Nash as obligee. The case was referred to a master by an order of reference pursuant to Mass.R.Civ.P. 53, 365 Mass. 817 (1974), as amended, 367 Mass. 917 (1975), and Rule 49 of the Superior Court (1976). The order provided that the master "may" file a transcript of the evidence and the proceedings with his report. The master found for Nash against Southern in the amount of $26,372.76 and against Nash on Southern's counterclaim in the amount of $7,228.57; damages were therefore assessed for Nash against Southern and Commercial Union in the amount of.$19,144.19. The master filed a copy of the transcript with his report.

Nash, Southern and Commercial Union filed various objections to the master's report, as well as requests for summaries of the evidence. In reply, the master filed summaries of the evidence relevant to the plaintiff's particularized objections but denied the summaries requested by Commercial Union. Those requests encompassed much of the two thousand pages of transcript accumulated during hearings lasting fifteen (nonconsecutive) days.

All pending objections were heard by a judge on October 20, 1978. The transcript of hearings before the master was offered by Commercial Union and admitted de bene. Subsequently, Commercial Union filed a request for a ruling that all the evidence, including the transcript of testimony, had been reported. On December 13, 1978, the judge denied that request, denied Commercial Union's various motions to modify or recommit the report, denied its requests for summaries of the evidence and reversed himself on the question whether he would consider the transcript. The judge allowed in part Nash's amended motion to modify, and adopted the report as so modified. On the same day judgment was entered for Nash against both defendants in the amount of $34,230.93. Commercial Union appeals.

Two principal issues are raised here: (1) whether the judge erred in determining that he need not, and would not, consider the transcript of the evidence before the master prior to ruling on Commercial Union's objections to the report; and (2) whether the judge erred in modifying the master's report in accordance with Nash's requests, thereby increasing the amount of the damages assessed against Southern and Commercial Union from.$19,144.19 to $34,230.93.

We draw our facts from the master's subsidiary findings, which are binding upon us unless they are clearly erroneous, mutually inconsistent, or vitiated in view of controlling law. Mass.R.Civ.P. 53(e)(2). O'Day v. Theran, --- Mass.App. ---, --- ^a, 389 N.E.2d 444 (1979).

Prior to 1974 the city of Everett determined to erect an addition to one of its school buildings. The general contractor for the job was Bond Brothers (Bond). On April 9, 1974, Bond awarded Nash a subcontract to supply and erect the structural steel for the project. On May 14, 1974, Southern, having examined the plans and specifications at Bond's office, contracted with Nash to perform the steel erection required.

The Nash-Southern contract contained a formula for determining the price to be paid to Southern which was based on various unit prices rather than on a fixed price. ¹ Southern provided Nash with performance and payment bonds issued by Commercial Union for $43,150.00 in accordance with the subcontract terms.

On April 18, 1975, the erection began with an eight-week anticipated completion time. The work progressed very slowly, falling behind the proposed schedule, and Southern made several promises to complete the work, each of which was broken. Approximately June 12, 1975, the project coordinator for Bond, one Shaughnessey, notified Nash by letter that Southern was not following the erection schedule, that Southern was holding up progress on the project, and that Nash would be held responsible for any loss to Bond. Between that time and late July, 1975, representatives of Nash and Southern communicated frequently, Nash requesting Southern to hire more workers and proceed on schedule and Southern representing that it would comply. When Southern failed to perform as promised, representatives of Nash, Southern and Bond met at the construction site on July 24, 1975. Southern told Nash that it needed more money to continue the job; Nash refused to pay any more until the steel erection work should be completed; Bond wanted Southern removed from the project. Nash said that it was reluctant to remove Southern because its people knew the job. At this time, a revised construction schedule was hammered out, reduced to writing, and initialled at the job site. In accordance with the terms of the document, $22,000.00 was placed in escrow and was indexed to the revised construction schedule. ²

Subsequent to July 24, 1975, Southern performed further erection work on the project and submitted invoices to Nash totalling $17,562.74. Nash approved invoices totalling $11,120.17, and escrow agents paid this amount to Southern. According to the master, the remaining $10,879.83 belongs to Nash.

On August 28, 1975, nineteen weeks after the job was commenced, Southern left the project in an incomplete state and refused to return. Nash demanded that Commercial Union complete the job. Commercial Union, which had been kept advised by Nash of its problems with Southern, refused. ³ On the same day Nash employed another steel erection firm (Winford) to complete the work. The job was completed October 22, 1975. ⁴

We conclude that the judge did not err in refusing to consider the transcript of the evidence before the master. However, he did err in rejecting the master's subsidiary findings regarding the underlying contractual relationship between Nash and Southern and in modifying the master's computation of Nash's damages.

1. The judge did not err in refusing to consider the transcript of the evidence before the master.

The order of reference did not require the master to file a transcript of the hearings with his report. ⁵ Consequently, it was within the judge's discretion whether to review the transcript in ruling on Commercial Union's objections. See Mass.R.Civ.P. 53(e)(1). Shelburne Shirt Co. v. Singer, 322 Mass. 262, 265, 76 N.E.2d 762 (1948). Peters v. Wallach, 366 Mass. 622, 626, 321 N.E.2d 806 (1975). Michelson v. Aronson, 4 Mass.App. 182, 184-186, 344 N.E.2d 423 (1976). To accommodate the defendants in their oral arguments, the judge admitted the transcript de bene. But upon further consideration, he declined to review the voluminous transcript and vacated his previous ruling. No abuse of discretion has been demonstrated. See Minot v. Minot, 319 Mass. 253, 258, 66 N.E.2d 5 (1946).

Commercial Union filed objections to virtually all the findings in the master's carefully drafted report that were unfavorable to it, primarily on the ground that "the evidence in law is not sufficient to support the findings" (see O'Brien v. Dwight, 363 Mass. 256, 281, 294 N.E.2d 363 (1973)), and requested that the master report summaries of the evidence. The master declined to do so, ⁶ and we are unable to say that the court abused its discretion in refusing to recommit for summaries. "A party cannot convert a question of fact into one of law by merely asserting that certain conclusions are required by the law, and thus cause practically all the evidence in the case to be summarized and reported." Minot v. Minot, 319 Mass. at 260, 66 N.E.2d at 11. H. Piken & Co. v. Planet Construction Corp., 3 Mass.App. 246, 248, 326 N.E.2d 725 (1975), and cases cited.

2. The judge erred in modifying the master's award of damages to Nash.

The judge erred in rejecting the master's subsidiary findings that the original Nash-Southern contract had been modified by the agreement adopted by the parties at the construction site on July 24, 1975.

In reviewing cases such as this, we must take the master's subsidiary findings, together with the inferences that ought to be drawn from them, and reach our own general and ultimate conclusion. John F. Miller Co. v. Georgia Fichera Const. Corp., --- Mass.App. ---, --- ^b, 388 N.E.2d 1201 (1979).

The master found subsidiary facts which required the conclusion that Nash elected and agreed with Southern to enlarge the cost and production terms of the original contract, thereby modifying it. This was properly a factual determination for the master. See Taxi Service Co. v. Gulf Refining Co., 252 Mass. 314, 319-320, 147 N.E. 863 (1925); L. W. Severance & Sons v. Angley, 332 Mass. 432, 438, 125 N.E.2d 415 (1955). There was consideration for the modification. Parrot v. Mexican Central Railway, 207 Mass. 184, 194-195, 93 N.E. 590 (1911). Swartz v. Lieberman, 323 Mass. 109, 112-113, 80 N.E.2d 5 (1948). The judge, however, ruled that "(t)here is no indication in this modification agreement that the contract formula originally accepted by both parties was intended to be altered" (emphasis supplied). This is a misstatement of the law. An agreement to modify a contract need not be express. Rather, it may be inferred from the attendant circumstances and conduct of the parties. 15 Williston, Contracts § 1826, at 482-483 (3d ed. 1972). Rogers v. Rogers & Brother, 139 Mass. 440,...