National City Bank of Evansville v. United States, 245-56.

• Decision Date: 16 July 1958
• Docket Number: No. 245-56.,245-56.
• Citation: 163 F. Supp. 846,143 Ct. Cl. 154
• Parties: The NATIONAL CITY BANK OF EVANSVILLE, a Corporation, v. UNITED STATES.
• Court: U.S. Claims Court

163 F. Supp. 846

143 Ct. Cl. 154

The NATIONAL CITY BANK OF EVANSVILLE, a Corporation, v. UNITED STATES.

No. 245-56.

United States Court of Claims.

July 16, 1958.

Edward L. Carey, Washington, D. C., for plaintiff.

Kathryn H. Baldwin, Washington, D. C., with whom was Asst. Atty. Gen. George Cochran Doub, for defendant.

LARAMORE, Judge.

This case comes before the court on cross-motions for summary judgment.

Plaintiff, as assignee on three defaulted contracts, sues for the alleged unpaid balance due at the time of termination for default, plaintiff's claim being that the defendant could not use any of such balances for completion of the work, since it would in effect be a benefit to the sureties, who had given plaintiff a subrogation agreement.

The facts are summarized as follows: On November 26, 1952, Regent Contracting Company, a co-partnership consisting of Raymond W. Ewell, Henry Tuller, Julie Tuller and Ralph I. Tuller, entered into Contract NOy-74886 with the United States Department of the Navy, Bureau of Yards and Docks, for the construction of an enlisted men's barracks and subsistence building at the United States Naval Air Station, Oceana, Virginia, at a contract price of $2,700,000, which was subsequently increased to $2,762,089.15. The contractor gave performance and payment bonds in the respective amounts of $2,700,000 and $1,080,000, on which Seaboard Surety Company, Employers Reinsurance Corporation, Manufacturers Casualty Insurance Company and Pacific National Fire Insurance Company were co-sureties.

Under the terms of the contract the contractor was to commence work on December 1, 1952, and complete the work on December 1, 1953, which latter date was modified to July 14, 1954; and provision was made for the assessment, in accordance with article 11 of the contract, of liquidated damages in the amount of $995 for each calendar day of delay.

Defendant received notice of assignment to plaintiff of all moneys due to become due under said contract, and receipt of said notice, together with an accompanying instrument as assignment, was acknowledged by defendant on December 15, 1952. Thereafter certain progress payments on said contract were made to plaintiff pursuant to said assignment.

On August 26, 1953, said Regent Contracting Company, a co-partnership, entered into Contract NOy-75695 with the United States Department of the Navy, Bureau of Yards and Docks, for the construction of a 10-bed infirmary at the United States Naval Air Station, Oceana, Virginia, at a contract price of $270,000, which was subsequently decreased to $269,853. The contractor gave performance and payment bonds in the respective amounts of $270,000 and $135,000, on which said Pacific National Fire Insurance Company was the surety.

Under the terms of the contracts the contractor was to commence work on September 1, 1953, and complete the work on May 9, 1954, and provision was made for the assessment, in accordance with article 11 of the contract, of liquidated damages in the amount of $100 per each calendar day of delay.

Defendant received notice of assignment to plaintiff of all moneys due or to become due under said contract, and receipt of said notice, together with an accompanying instrument of assignment, was acknowledged by the defendant on October 5, 1953. Thereafter certain progress payments on said contract were made to plaintiff pursuant to said assignment.

On January 15, 1954, Regent Contracting Company, Inc. entered into Contract NOy-74835 with the United States Department of the Navy, Bureau of Yards and Docks, for the construction of a steam generating plant at the United States Naval Air Station, Oceana, Virginia, at a contract price of $338,000, which was subsequently increased to $350,423. The contractor gave performance and payment bonds in the respective amounts of $338,000 and $169,000, on which American Fidelity Company and The New Hampshire Fire Insurance Company were co-sureties.

Defendant received notice of assignment to plaintiff of all moneys due or to become due under said contract, and receipt of said notice, together with an accompanying instrument of assignment, was acknowledged by defendant on February 17, 1954. Thereafter certain progress payments on said contract were made to plaintiff pursuant to said assignment.

All of the Contracts NOy-74886, NOy-75695, and NOy-74835 contained the following provisions:

"Article 6.—Payment and Release

"(a) The Contractor shall be entitled to partial payments hereunder as the work progresses upon the basis of estimates made by the Contracting Officer of the degree of completion. * * *

"(b) The Contractor may submit monthly, or at more frequent intervals, as approved by the Contracting Officer, to the Officer in Charge an itemized request for partial or final payment as the case may be. The Officer in Charge will recommend for the approval of the Contracting Officer an amount which he believes the Contractor is entitled to be paid. Payment shall be made of the amount approved by the Contracting Officer subject to reduction for overpayments or increase for underpayments on preceding payments to the Contractor. The Contracting Officer may in his discretion reserve or withhold a percentage (not exceeding 10 percent) of each payment hereunder until the completion of the work and acceptance thereof by the Government or until such earlier time as he may determine.

* * * * * *

"(d) The obligation of the Government to make any of the payments required under any of the provisions of this contract (including those of Articles 25 and 26) shall, in the discretion of the Contracting Officer, be subject to (1) any unsettled claims against the Contractor for labor or materials, (2) reasonable deductions on account of defects in material or workmanship, and (3) any claims which the Government may have against the Contractor under or in connection with this contract. Any overpayments to the Contractor shall, unless otherwise adjusted, be repaid to the Government upon demand."

"Article 11.—Liquidated Damages

"(a) If the Contractor fails to complete the work or any part thereof within the time specified in Article 1, or applicable extension thereof, it will be difficult or impossible to ascertain the actual damages for the delay and in lieu thereof the Contractor shall pay to the Government as fixed, agreed, and liquidated damages for each calendar day until the delayed work is completed or accepted, the amount as set forth in the specifications or in Article 1. If, after the expiration of the time specified in Article 1, or applicable extension thereof, the Government terminates the right of the Contractor to proceed and does not elect to complete the work, liquidated damages shall be paid as above provided for each calendar day after the time specified in Article 1, or applicable extension thereof, until the effective date of the termination of the Contractor's right to proceed. If the Government terminates the right of the Contractor to proceed and elects to complete the work as provided in Article 25, liquidated damages shall, if the Government exercises due diligence in completing the work, be paid as above provided for each day after the time specified in Article 1, or applicable extension thereof, until the delayed work is completed or accepted. The Contractor and his sureties shall be liable for all such liquidated damages accruing as hereinabove provided. * * * The Contracting Officer shall ascertain the facts and the extent of the delay and extend the time for completing the work or any part thereof when in his judgment the findings of fact justify such an extension. The determination of the Contracting Officer shall be final, subject only to appeal under the provisions of Article 16."

"Article 16.—Disputes

"Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. Within 30 days from the date of receipt of such copy, the Contractor may appeal by mailing or otherwise furnishing to the Contracting Officer a written appeal addressed to the Secretary, and the decision of the Secretary or his duly authorized representative for the hearing of such appeals shall be final and conclusive; Provided That if no such appeal is taken, the decision of the Contracting Officer shall be final and conclusive. * * *"

"Article 25.—Termination for Default

"(a) The performance of work under this contract may, subject to the provisions of paragraph (a) of Article 26, be terminated by the Government in accordance with this article in whole, or from time to time in part, whenever the Contractor shall default in performance, or shall so fail to make progress in the prosecution of the work hereunder as, in the opinion of the Contracting Officer, to endanger performance of this contract in accordance with its terms. Termination of work hereunder shall be effected by delivery to the Contractor of a Default Notice of Termination specifying that termination is for default or failure, the extent to which performance of work under this contract shall be terminated, and the date upon which such termination shall become effective.

* * * * * *

"(c) In addition to its other remedies, the Government may, with respect to work terminated as provided in this article, complete such work or any part thereof in such manner and by such means and with such changes therein as it may deem advisable. If the Government elects to complete less than all of such work, or to make changes therein, the contract price (adjusted as of the effective date of termination pursuant to other

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