Oden Const. Co. v. Helton

• Decision Date: 08 June 1953
• Docket Number: No. 38791,38791
• Parties: ODEN CONST. CO. v. HELTON et al.
• Court: Mississippi Supreme Court

Page 442

65 So.2d 442

218 Miss. 41

ODEN CONST. CO. v. HELTON et al.

No. 38791.

Supreme Court of Mississippi.

June 8, 1953.

Dudley W. Conner, Hattiesburg, for appellant.

R. A. Gray, Jr., and C. W. Sullivan, Hattiesburg, for appellees.

ETHRIDGE, Justice.

This case involves the sufficiency of an architect's certificate to support a prime contractor's termination of contract with a subcontractor, and a question of waiver of the termination clause by the subcontractor voluntarily abandoning his work. The cause is on appeal from an order of the Circuit Court of Forrest County sustaining demurrers to the original and amended declarations. Hence for purposes of this decision we must assume as true the averments of the declaration.

The original declaration, filed by the appellant, Oden Construction Company, plaintiff below, charged that on February 9, 1950, the plaintiff contracted with the Catholic Diocese of Natchez for the construction of a school in the City of Hattiesburg, and that on February 21, 1950, plaintiff entered into a subcontract with defendant Otho Helton, appellee, in which Helton agreed to furnish the materials and labor for all plumbing, heating and ventilating work on the school, according to plans and specifications, for a subcontract price of $17,500. The declaration charged that the subcontractor Helton furnished plaintiff with a surety bond for performance in which Helton was the principal obligor and the defendant J. Ed. Turner, the other appellee, the surety; that Helton began work under said contract and that plaintiff had paid defendant on it $8,606.26; that as the work progressed, the defendant Helton breached his subcontract in that he persistently and repeatedly refused and failed to supply enough properly skilled workmen and materials, persistently disregarded the instructions of the architect, and otherwise neglected to prosecute the work.

Various exhibits were attached to the declaration, including plaintiff's contract with the owner, plaintiff's contract with Helton, the subcontractor, and Turner's surety bond. Part of the contracts of plaintiff with both the owner and Helton were certain general conditions for the construction of buildings, in a standard form approved by the American Institute of Architects. There were forty-four of these conditions in numbered articles. Article 22 provided as follows:

'Owner's Right to Terminate Contract.--If the Contractor should be adjudged a bankrupt, or if he should make a general assignment for the benefit of his creditors, or if a receiver should be appointed on account of his insolvency, if he should persistently or repeatedly refuse or should fail, except in cases for which extension of time is provided, to supply enough properly skilled workmen or proper materials, or if he should fail to make prompt payment to subcontractors or for material or labor, or persistently disregard laws, ordinances or the instructions of the Architect, or otherwise be guilty of a substantial violation of any provision of the contract, then the Owner, upon the certificate of the Architect that sufficient cause exists to justify such action, may, without prejudice to any other right or remedy and after giving the Contractor seven days' written notice, terminate the employment of the Contractor and take possession of the premises and of all materials, tools and appliances thereon and finish the work by whatever method he may deem expedient. In such case the Contractor shall not be entitled to receive any further payment until the work is finished. If the unpaid balance of the contract price shall exceed the expense of finishing the work including compensation for additional managerial and administrative services such excess shall be paid to the Contractor. If such expense shall exceed such unpaid balance, the Contractor shall pay the difference to the Owner. The expense incurred by the Owner as herein provided and the damage incurred through the Contractor's default, shall be certified by the Architect.'

The declaration charged that because of Helton's neglect and failure to comply with the subcontract, the architects repeatedly, together with plaintiff, requested and instructed Helton to supply adequate workmen and materials; that this condition existed for about ninety days, and the plaintiff requested of the architects a certificate under Article 22 which would warrant plaintiffs in terminating the subcontract. On November 15, 1950, the architects wrote plaintiff the following letter:

'We have repeatedly called to your attention the fact that the work in connection with the above captioned project seems to be lagging considerably. On several visits made by our Construction Engineer, Mr. Walker, it was found that there were no plumbers at work, which apparently seems to be the hold-up. Therefore, in view of this, we would insist that some definite action be taken, in order to move the progress of this construction.

'We trust that the 4" revents have been installed to replace the 2" revents that were called to your attention sometime ago, as the 2" revents are not acceptable to the City Ordinance, and therefore, the 2" revent can not be approved by this office. Kindly give this matter your immediate attention, as we are very anxious to get this project completed as early as possible.'

On the same date, November 15, 1950, plaintiff wrote the subcontractor Helton, pointing out that plaintiff had been receiving notices of unpaid bills for materials and that Helton had failed to prosecute the work. Hence the letter stated that plaintiff gave Helton seven days' notice under Article 22 that, unless he complied with the contract within the time provided in Article 22, plaintiff would terminate the contract, take possession of the premises, and finish the work. Also on November 15, 1950, plaintiff wrote the surety Turner stating similar facts, and saying that unless Helton or the surety complied with the contract within seven days, plaintiff would terminate Helton's contract as provided by Article 22, take possession of the premises, and finish the work.

Plaintiff further charged that the purpose of the architect's letter to plaintiff of November 15, 1950, was to authorize plaintiff to invoke the power to terminate the subcontract; and that on November 21, 1951, over a year later, the architects executed another certificate nunc pro tunc. This letter of November 21, 1951, was also attached as an exhibit. In it the architects wrote plaintiff that prior to November 15, 1950, Helton had wholly failed to comply with his subcontract, and that on that date sufficient cause then existed for plaintiff to invoke the termination power under the contract; that on November 15, 1950, they verbally advised plaintiff of this fact; and that by the above quoted letter of that date it was their intent and purpose to so certify, and that they did now so certify.

The declaration charged that notwithstanding the written notices given to Helton and Turner, Helton failed to proceed with the contract, failed to comply with the architect's instructions and to supply labor and materials, so that in conformity with Article 22 plaintiff on November 27, 1950, terminated the subcontract and completed the work under it; that because of the defendant's breach of his subcontract, plaintiff expended over and above the subcontract price the sum of $5,023.91, and that for that reason plaintiff has a cause of action against both the subcontractor and his surety.

Defendants demurred to the original declaration, mainly on the ground that an architect's certificate is a condition precedent to invoking the termination power under Article 22; and that the letters of November 15, 1950 and November 21, 1951 from the architect, do not constitute as a matter of law a compliance with that requirement of Article 22. The trial court properly sustained that demurrer for that reason.

Whether the termination power in Article 22 constitutes a forfeiture or not, it is well-established that this clause should be strictly construed and pursued. Valente v. Weinberg, 80 Conn. 134, 67 A. 369, 13 L.R.A.,N.S., 448; American-Hawaiian Engineering & Construction Co. v. Butler, 165 Cal. 497, 133 P. 280; White v. Mitchell, 30 Ind.App. 342, 65 N.E. 1061; Champlain Construction Co. v. O'Brien, C.C., 104 F. 930.

Applying this principle to the facts, it is noted that Article 22 requires that the architect must certify 'that sufficient cause exists to justify' termination of the employment, the sufficient cause being defined under these facts as 'if he (the subcontractor) should persistently or repeatedly refuse or should fail * * * to supply enough properly skilled workmen or proper materials, or if he should fail to make prompt payment to subcontractors or for material or labor, * * * or otherwise be guilty of a substantial violation of any provision of the contract * * *'. The letter of November 15th from the architects to plaintiff appears primarily to be one written in the usual course of an architect's supervision of a construction contract. No reference is made to a certification by the architects that Helton had done any specific thing which would be sufficient cause to terminate his contract. The architects stated that the work seemed to be lagging considerably, and that there were no plumbers at work on the last visit of their engineer, 'which apparently seems to be the hold-up.' Following this, they insisted that some definite action be taken, and requested the plaintiff's immediate attention. We do not think that this language constitutes an architect's certificate in compliance with the terms of Article 22 which would warrant termination....