North Denver Bank v. United States

Decision Date16 October 1970
Docket NumberNo. 210-67.,210-67.
Citation193 Ct. Cl. 225,432 F.2d 466
PartiesNORTH DENVER BANK, Plaintiff, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Great American Insurance Company, and Scott H. Mabry, Ancillary Administrator for the Estates of William F. Van Winkle and Dorothy E. Van Winkle, formerly doing business as Van Winkle Construction Company, Third-Party Plaintiffs v. The UNITED STATES.
CourtU.S. Claims Court

William Hedges Robinson, Jr., Lakewood, Colo., attorney of record, for plaintiff; Randall B. Robinson and Robinson, Tilton & Robinson, Denver, Colo., of counsel.

Edward Gallagher, Washington, D. C., attorney of record, for third-party plaintiffs.

Mary J. Turner, Washington, D. C., with whom was Asst. Atty. Gen. William D. Ruckelshaus, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON and NICHOLS, Judges.

OPINION

PER CURIAM:

This case was referred to Trial Commissioner Mastin G. White with directions to make findings of fact and recommendation for conclusions of law under the order of reference, Rule 134(h) and the order entered herein on February 28, 1969. The commissioner has done so in an opinion and report filed on March 30, 1970. Exceptions and brief were filed by the third-party plaintiff, Great American Insurance Company, on April 29, 1970. Exceptions and brief were filed by the North Denver Bank on May 15, 1970 and a reply thereto was filed by defendant on May 28, 1970. On May 28, 1970 the court granted a motion for submission of the case to the court without oral argument and the case has been so submitted. Since the court agrees with the commissioner's opinion, findings and recommended conclusion of law, as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case without oral argument. Therefore, the court concludes as a matter of law that the third-party plaintiffs National Union Fire Insurance Company of Pittsburgh, Pennsylvania, and Great American Insurance Company are entitled to recover, and it is therefore adjudged and ordered that the third-party plaintiff National Union Fire Insurance Company of Pittsburgh, Pennsylvania, recover of and from the United States the sum of sixty-five thousand three hundred ninety-eight dollars and seventy cents ($65,398.70), and that the third-party plaintiff Great American Insurance Company recover of and from the United States the sum of thirty-four thousand eighty dollars and fifty cents ($34,080.50): Provided, however, That the recovery by Great American Insurance Company is conditioned upon the filing with the Clerk of the Court, within 30 days after the date on which judgment is entered, of receipts from all the claimants listed in finding 41, showing payment in full by Great American Insurance Company of their respective claims against Van Winkle Construction Company.

The court further concludes as a matter of law that the plaintiff North Denver Bank and the third-party plaintiff Scott H. Mabry, ancillary administrator for the estates of William F. Van Winkle and Dorothy E. Van Winkle, formerly doing business as Van Winkle Construction Company, are not entitled to recover, and their petitions are dismissed as of the date on which the conditional judgment in favor of Great American Insurance Company becomes final.

OPINION OF COMMISSIONER

WHITE, Commissioner:

In this case, the plaintiff and the third-party plaintiffs are engaged in a contest over the proceeds from two construction contracts which the defendant entered into in 1964 and 1965 with the late William F. Van Winkle and the late Dorothy E. Van Winkle ("the Van Winkles"), who were doing business as partners under the name of Van Winkle Construction Company ("the contractor").

The defendant concedes that it owes money to some person or persons under each of the two contracts.

Introductory Statement

The plaintiff is a bank which loaned money to the contractor; two of the third-party plaintiffs are surety companies which furnished performance and payment bonds to the defendant in connection with the respective contracts; and the other third-party plaintiff is an ancillary administrator of the Van Winkles' estates.

One of the contracts — which will usually be referred to in the opinion as "the Chama contract" — was entered into between the contractor and the defendant (represented by the Forest Service, Department of Agriculture) on October 20, 1964. It obligated the contractor to clear, grade, and drain approximately 7.766 miles of the Chama Road in the Rio Grande National Forest, Archuleta County, Colorado, and Rio Arriba County, New Mexico, for a contract price of $98,214.30.

The third-party plaintiff National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union"), furnished a performance bond and a payment bond to the defendant in connection with the Chama contract. Both bonds were dated October 20, 1964.

The North Denver Bank ("the plaintiff") made a loan to the contractor on March 30, 1965, in order to help finance the contractor's operations under the Chama contract. This loan was secured by an assignment from the contractor to the plaintiff of all sums that might be payable to the contractor under the Chama contract.

The other contract — which will usually be referred to hereafter as "the Dome contract" — was entered into between the contractor and the defendant (again represented by the Forest Service) on June 7, 1965. It obligated the contractor to clear, grade, drain, and surface approximately 2.1 miles of Dome Road No. 10289 in the Santa Fe National Forest, Sandoval County, New Mexico, for a contract price of $43,000.

The third-party plaintiff Great American Insurance Company ("Great American") furnished performance and payment bonds to the defendant in connection with the Dome contract. Both bonds were dated June 7, 1965.

The plaintiff on August 20, 1965, provided financing to the contractor in connection with the latter's operations under the Dome contract. This loan was secured by an assignment from the contractor to the plaintiff of all amounts that might become due under the Dome contract.

The Van Winkles died on November 20, 1965, as the result of an airplane crash. At that time, the work under the Dome contract had recently been completed, but only about 45 percent of the work under the Chama contract had been done. The Chama contract was subsequently completed by National Union pursuant to its obligation under the performance bond.

Amounts earned under the two contracts are being held by the defendant because of uncertainty as to the proper recipients.

The plaintiff's petition was filed on June 23, 1967; and the third-party plaintiffs filed their petitions on October 30, 1967. Thereafter, motions for summary judgment were filed by the third-party plaintiffs on November 18, 1968.

In disposing of the motions for summary judgment, the court on February 28, 1969, established the following order of priority among the third-party plaintiffs and the plaintiff with respect to the amounts due from the defendant under the two contracts that are involved in the case:

(1) the respective third-party sureties, but this top priority in the case of the Great American Insurance Company was granted subject to the condition that "the surety shall furnish proof that it has paid labor and materialmen now unpaid the entire amounts due them, without regard to the maximum penalty under its bond";

(2) the plaintiff bank; and

(3) the third-party ancillary administrator.

The case was remanded to the commissioner for a determination respecting the amounts due the several claimants under the court's order.

Subsequently, trial sessions were held in Denver, Colorado, and in Albuquerque, New Mexico, during the period July 8-14, 1969.

The Chama Contract

A controversy exists between the defendant and the other parties over the amount that is due from the defendant under the Chama contract. The defendant contends that the proper amount is $65,398.70, whereas the other parties argue that the proper amount is $70,573.70.

The difference of $5,175 between the two figures mentioned in the last sentence of the preceding paragraph represents a deduction for liquidated damages in the amount of $5,175 which the defendant says it is entitled to make because the work under the Chama contract was not completed within the time prescribed by the contract.

The Chama contract provided that the work was to be completed within 180 calendar days after the date of the receipt by the contractor of the notice to proceed with the work. The notice to proceed was received by the contractor on November 9, 1964. Thus, the 180-day period prescribed for the completion of the work began to run on November 10, 1964.

Paragraph 6.8 of the general requirements of the Chama contract provided that in the event of a failure to complete the work within the time prescribed by the contract, a daily charge for liquidated damages at the rate of $75 per day would be made for each calendar day of delay until the work was completed.

However, paragraph 5(d) of the general provisions of the Chama contract stated that damages should not be assessed against the contractor for delay attributable to "unforeseeable causes beyond the control and without the fault or negligence of the Contractor," provided the contractor gave the contracting officer a written notice within 10 days after encountering such an unforeseeable cause of delay.

Also, paragraph 6.7 of the general requirements of the Chama contract provided that the defendant's Forest Engineer (who was the contracting officer's representative at the job site) might, by written notice, order suspension of the work for any period that he might deem necessary because of unsuitable weather, and that no charge should be made against the contract time for any days elapsing during such a suspension.

Up to the time of the Van Winkles' death on ...

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