Northern Pac. Ry. Co. v. Twohy Bros. Co.
| Decision Date | 01 March 1938 |
| Docket Number | No. 8594.,8594. |
| Parties | NORTHERN PAC. RY. CO. v. TWOHY BROS. CO. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Charles A. Hart, of Portland, Or. (L. B. daPonte, of St. Paul, Minn., and Carey, Hart, Spencer & McCulloch, of Portland, Or., of counsel), for Northern Pac. Ry. Co.
DeLancey C. Smith, of San Francisco, Cal., and W. Lair Thompson and McCamant, Thompson, King & Wood, all of Portland, Or., for Twohy Bros. Co.
Before DENMAN, STEPHENS, and HEALY, Circuit Judges.
Appellant railway company appeals from a judgment in favor of appellee, railway building contractor, awarding damages for two breaches by the railway of a contract under which the contractor was to do the work of construction and during construction the commercial haulage upon a branch line railway. The branch, some forty-one miles long, extended from Orofino, Idaho, to a destination called Headquarters in a pineforested area, which the road was to penetrate, and whose logs were to be its principal freight.
Appellee contractor brings a cross-appeal, later considered.
A. One of the items of damage awarded the contractor was based upon a claimed right of the contractor to haul in its work trains, during the period of the construction of the branch line, commercial freight, i. e., logs and other goods not used in construction.
The railway contended that under a stopping work clause of the contract the work of commercial haulage could be, and was, stopped without liability other than for the work of haulage already done. It gave such notice on July 8, 1927, when twenty-nine miles of the road were graded, railed, and sufficiently ballasted for the hauling of logs, and thereafter hauled the commercial freight in its railway log trains.
The railway further contended that, even if the contractor had been improperly deprived of the haulage, the court's award was based on a wrong theory of fixing the damage.
The contract gave to the contractor the right to, and required him to, perform two classes of work: (1) To construct the entire branch line; and (2) do nonconstruction work, such as hauling the commercial freight for third parties in its work trains. There is no merit to the railway's contention that both were construction. The contract terms "construction" of the railway and the operation of "commercial haulage" themselves seem mutually exclusive in function. The contract so treats them. In its paragraph entitled "Work" it describes the contractor's agreement to "construct" with the various incident of construction such as "clearing, grubbing culverts, bridging tunnels, track laying, ballasting" and then provides for "other work for which prices are hereafter named." Later, in the body of the contract, the "prices" for "other work" referred to in the "Work" clause and descriptions of the haulage operations appear under the title "Prices for Work," as follows:
"(72) Handling, prior to date line
is turned over to Operating Department
of the Company, all
commercial business, material
and empty cars of the Company
used in commercial service and
in the service of other contractors
to include all necessary
switching and spotting and apply
to empty car movement from
point of origin of the empty car
to the loading site and loaded car
return to the operated lines of the
Company, per mile ............ $1.00"
(Italics supplied.)
The commercial business is something for the "Operating Department" after construction. It is none the less operating as distinguished from construction if done during construction.
All this work of both classes was agreed to be completed by September 1, 1927. The contractor was to do all of both classes of work, unless, so far as concerns this item of the appeal, the carrier could at any time stop work on any portion of the line's construction or the work of commercial haulage and continue it with carrier's employees to the exclusion of the contractor and without responsibility to it under the following clause:
The question on the legal construction of the contract is whether the "work" which the railway could stop under this "Stopping work" paragraph was the contractor's work, which it was engaged to perform, or the work itself of building the railway and carrying the commercial freight, by whomsoever performed. Was it still "work" within the meaning of that term in the contract, though performed by the railway after the contractor had been stopped? If the latter, the work itself could not be continued and performed by some one else without a breach of the agreement that the contractor was to perform it.
The clue to the construction of the term "work" is contained in the succeeding paragraph dealing with the construction of the railway if the contractor was not progressing with the "work as fast as necessary or with sufficient force" and permitting a termination of the contract by the railway. The clause treats the word "work" as something continuing after the railway declared the contract to be terminated. It is as follows:
We do not find any ambiguity here warranting evidence to explain the term "work." The company had the right to stop the building of the road or commercial hauling by any one, but, in the absence of some failure on the part of the contractor, it could not continue such building or hauling by itself or a different contractor without violating its agreement that the contractor should do all the work of building and hauling.
However, were the term "work" still ambiguous as to its interpretation, we are required to interpret it against the railway, since it prepared the contract headed "Form 109-A General Contract" which the contractor signed. Sartoris v. Utah Construction Co., 9 Cir., 21 F.2d 1, 2.
The railway argues in support of the contrary construction that it created no hardship to the contractor to require it to stop work, since the work, including haulage, was to be paid for at unit prices and not by a lump sum for the line and haulage as a whole. Were such a consideration pertinent, it may well be that the haulage, though at the same rate per car mile in the earlier, as the later, stages of the contract, becomes much easier for the contractor to earn by his work trains as the railway construction becomes progressively more suitable for train traffic. However, the gain to the one party or the other is not a factor in construing the contract. If the railway had the right under the contract to stop the contractor's work, its motive, whether gain or mere petulance of its officers, would not affect its right. Security-First Nat. Bank v. Rindge Land & Nav. Co., 9 Cir., 85 F.2d 557, 561, 107 A.L.R. 1240. The question here is determined within the four corners of the railway's form contract, and that determination entitles the contractor to damages for the haulage which the railway took away from the contractor and itself performed.
We are able to find but one case dealing with a clause having like effect. There it was held to give the carrier the right to stop the entire work. The question of continuing the work by the carrier or another contractor was not involved, but, in holding the clause valid where the construction was stopped, the Eighth Circuit Court of Appeals said: "Such stipulations are sometimes found in contracts for the construction of railroads, and for the doing of other work of a like character, where unforeseen events may occur to render a temporary or permanent suspension of the work both desirable and necessary." (Italics added.) Warren-Scharf Asphalt Paving Co. v. Laclede Const. Co., 1901, 8 Cir., 111 F. 695, 696.
In Wortman v. Montana Cent. Ry. Co., 1899, 22 Mont. 266, 56 P. 316, the court upheld the right of the owner to stop the contractor's work on a tunnel under a somewhat similar stop work provision, but there the court found that nothing was done after the stop work order except protection work performed by the contractor.
In the following cases where have been considered the right of the owner to take from the contractor part of the work as "omissions," it was held that this meant omissions in the structure itself and not omissions of a portion of the contract, which could be given to another without incurring liability to the contractor. Shaver v. Murdock, 1868, 36 Cal....
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