Nick Peay Construction Co. v. Miller

• Citation: 139 S.W. 1107,100 Ark. 284
• Parties: NICK PEAY CONSTRUCTION CO. v. MILLER
• Decision Date: 10 July 1911
• Court: Supreme Court of Arkansas

139 S.W. 1107

100 Ark. 284

NICK PEAY CONSTRUCTION CO. v. MILLER

Supreme Court of Arkansas

July 10, 1911

[Copyrighted Material Omitted]

Appeal from Lee Chancery Court; Edward D. Robertson, Chancellor modified and affirmed.

STATEMENT BY THE COURT.

This suit was brought by appellees, the commissioners of Sewer District No. 1, of the city of Marianna, against the appellants, Nick Peay Construction Company, and bondsmen, for damages for failure to construct and complete by January 1 1907, a system of sanitary sewers in said city, in accordance with the contract made with the commissioners of said district on July 14, 1906.

A copy of the contract, with specifications showing details of the work, were filed with the complaint as exhibits.

It was alleged that at the time of the making of the contract the construction company, John A. Plummer, R. A. Furth and L. W Cherry executed a bond to the plaintiffs in the sum of $ 42,000, conditioned that the said construction company should complete the work within the time according to said plans and specifications; the death of R. A. Furth and the appointment of Sam Blum as his executor; that under the contract the amount to be paid to the said construction company was $ 21,000, and that certain portions of it was to be paid monthly upon estimates made by engineers of plaintiff; that said construction company began work in the month of August, 1906, and continued with many intermissions and delays until about the 1st of January, 1907, when it entirely abandoned the contract and announced it would not complete the same; that at that time only a small portion of the work was completed; that they carried out their contract with said company, paid the estimates promptly, and always endeavored to assist in carrying out the contract, which it utterly failed and finally refused to do; that, after the abandonment of the work by said construction company, they advertised for bids for the completion of same, and afterwards made a contract with Hamilton Brothers Construction Company, which said company completed all of said contract except 2,814 feet of 8-inch pipe, 6 feet cut, 425 feet 8-inch pipe, 10 feet cut, and 400 feet 8-inch pipe 11 feet cut, and certain manholes; that they paid said construction company and Hamilton Brothers construction Company a certain sum, and additional expenses for engineering made necessary by reason of the abandonment of the contract, a total sum of $ 23,570.76, and that it will require a further sum of $ 2,000 to complete the contract, according to the plans and specifications; that the Nick Peay. Construction Company was paid on four different estimates for work a total amount of $ 7,843.69, and that said company and its sureties are indebted to the plaintiffs, by reason of the said contract, in the sum of $ 4,870.76, for which it prayed judgment.

It further alleged that, under the terms of the contract, the construction company agreed, if it did not complete the contract within the time agreed upon, that $ 5.00 per day for the first ten days, and the sum of $ 10 per day for every day thereafter until the same was completed, should be deducted from the moneys provided for under the contract, and prayed judgment for 468 days' delay in the sum of $ 4,730.00 as liquidated damages.

Copy of the bond was attached to the complaint.

The bond was in the sum of $ 42,000, conditioned for the faithful performance of the contract with the commissioners, reciting it, and further specified: "That the sureties shall be notified in writing of any act on the part of the principal, or his agents, or employees, which may involve a loss, for which said sureties are responsible hereunder, within five days after knowledge by the commissioners of such act, with a verified statement of the facts in the case. Second, That if the principal shall fail to comply with all of the conditions of said contract to such an extent that the same shall be forfeited, then the said sureties shall have the right and privilege to assume said contract, and to sublet or complete the same, whichever said sureties may elect to do, provided always it is done in accordance with the contract."

Sam Blum, executor of the estate of R. A. Furth, filed a separate answer, admitting the making of the contract with the execution of the bond by R. A. Furth, the death of the said Furth and his appointment as executor; that the work was to be completed for the price specified, and was begun in the month of August, 1906; denied that plaintiffs carried out their contract with the construction company; that it made proper estimates for the work done in accordance with the contract and in any way endeavored to assist the company in carrying out this contract, and that the company failed and refused to carry out and perform its contract; alleged that they refused to pay the company the installments as they fell due; that they altered, changed, varied and added to the profile and specifications attached to such contract in many and various ways, causing greater expense to said company and taking more time to do the work, specifying the changes which it alleged caused an additional cost of $ 3,700 to said company; that they refused to allow it extra work for quicksand encountered in the construction of the sewer, causing an additional expense of $ 5,000, when by the terms of the contract it was agreed that no quicksand should be encountered; that the failure and refusal to allow for the extra cost on account of the quicksand was a fraud upon the rights of the company, and that the engineer wantonly and wilfully and with fraudulent intent refused to classify said earth as quicksand, and to make compensation therefor to the construction company; that said changes, conditions and alterations of said contract made by plaintiff were done without the knowledge and consent of the sureties on said bond and entailed upon the contractor an additional expense of over $ 9,000; that they wrongfully refused to permit the contractor to complete the work in accordance with the terms of the contract and wrongfully expelled him from it; that, by reason of their action in said respects, by reason of changes and alterations in the plans and specifications and in the contract, and fraudulent acts of the engineer in charge of the work, the sureties are not bound or responsible thereon, same not being the contract for which said sureties became responsible; alleged that plaintiff violated the contract in not paying the first estimate in accordance with its terms, that the engineer, who was made final arbiter and umpire, fraudulently and wrongfully refused to allow the company such amount as was justly due, and did not pay the amount allowed within the time, nor according to the terms of the contract, and that the succeeding estimates were not commensurate under the contract price for the work performed for the same reason; that they wholly failed, neglected and refused to notify said sureties of the default of the construction company within five days given them for that purpose by the terms of the bond, and that defendant was not notified, until the institution of this suit, of any act or default upon part of the company, which would involve him or the other sureties in a liability or loss; that they failed to serve proper notice of such a default, and refused to permit the sureties to complete the contract in accordance with the terms of their obligations, but took possession of the work and sewer, and relet it to the other contractors upon changed and altered profiles and specifications for a price unknown to defendant and greatly in excess of the amount agreed to be paid the construction company; that because of this breach of the contract the surety was not bound; denied the payment of the total amount alleged to have been paid for the construction of the sewer, that it would require $ 2,000 to complete it according to the contract, that they had paid the Nick Peay Construction Company the sum claimed, that said company or defendants were indebted in any sum whatever; denied that there was any contract for the payment of liquidated damages upon the failure to complete the work on time, and that the said Nick Peay Construction Company failed to complete the work as agreed by reason of any default on its part; that the sureties are indebted to the plaintiffs for a penalty for failure to complete the contract or at all; claimed a breach of the bond because of plaintiffs' failure to give the notice at the end of the time and in accordance with the terms required, and also because it failed to permit the sureties to take charge of and complete it in accordance with the contract.

The answer of defendant, L. W. Cherry made about the same allegations.

The Nick Peay Construction Company, composed of Nick Peay, filed an answer and cross complaint, denying specifically the allegations of the complaint, admitted that it made the contract to construct the sewer and claimed that its bid for the work was made and induced among other things by the guaranty in the contract, profile and estimates that no quicksand or rock should be encountered in the execution of the work; that in August, 1906, it entered upon the work, purchased the necessary materials and machinery to be used in its construction, with heavy expense to itself, delivered it at Marianna, and engaged the services of one hundred men for the construction of the system.

That plaintiff's engineer, Mr. Wilcox, was wholly incompetent and unfaithful to the trust reposed in him, to the annoyance and hindrance, and at great expense to cross complainant that, by his captious and arbitrary and unjust interferences with his superintendent and workmen, he retarded the work, at great expense to cross...