Ross Engineering Co. v. Pace

• Decision Date: 08 January 1946
• Docket Number: No. 5414-5416.,5414-5416.
• Citation: 153 F.2d 35
• Parties: ROSS ENGINEERING CO. et al. v. PACE et al. SAME v. PETER MITCHELL, Inc. et al. SAME v. PACE et al.
• Court: U.S. Court of Appeals — Fourth Circuit

153 F.2d 35 (1946)

ROSS ENGINEERING CO. et al. v. PACE et al. SAME v. PETER MITCHELL, Inc. et al. SAME v. PACE et al.

Nos. 5414-5416.

Circuit Court of Appeals, Fourth Circuit.

January 8, 1946.

COPYRIGHT MATERIAL OMITTED

Louis Rosenberg, of New York City (Bernard J. Gallagher, of Washington, D. C., and Lester S. Parsons, of Norfolk, Va., on the brief), for appellant Ross Engineering Co.

Robert B. Tunstall, of Norfolk, Va., for appellant Fidelity & Casualty Company of New York.

Andrew Eckel, of New York City, for appellants Peter Mitchell, Inc., Paul Bacco & Son, Inc., and D. T. Small Contractors, Inc.

W. R. Ashburn, of Norfolk, Va. (Maurice B. Shapero, of Norfolk, Va., on the brief), for Gordon B. Pace and others.

Before SOPER and DOBIE, Circuit Judges, and HARRY E. WATKINS, District Judge.

SOPER, Circuit Judge.

These cases, which were consolidated for trial in the District Court, relate to controversies between certain corporations which participated in the erection of the Armed Guard School at Camp Bradford, Virginia. Ross Engineering Company, hereinafter called Ross, was the general contractor under a construction contract with the Navy Department of the United States under date of May 14, 1943. Peter Mitchell, Inc., Paul Bacco & Son, Inc. and D. T. Small Contractors, Inc., hereinafter collectively called M.B.S., were associated as subcontractors in the performance of a certain part of the work under a written contract with Ross dated June 8, 1943; and Gordon B. Pace, Fred A. Haycox and Asphalt Roads and Materials Company, Inc., hereinafter collectively called A.R.M., entered into two written contracts under date of May 13, 1943 with M.B.S. and performed certain portions of the work which M. B.S. had contracted to do for Ross. The Fidelity and Casualty Company of New York was the surety upon the performance and payment bonds given by Ross for the protection of persons supplying labor and materials in the prosecution of the work in accordance with the provisions of the Miller Act, 40 U.S.C.A. § 270(a) (1) and (2).

Originally there were four cases, No. 5414, a personal action by A.R.M. against M.B.S.; No. 5416, a personal action by A.R.M. against Ross; No. 5415, a suit under the Miller Act by the United States suing for M.B.S. against Ross, the Surety and A.R.M; and a fourth suit under the Miller Act by the United States suing for Phil H. McGuire against the Surety. By appropriate pleadings and interventions and the order of the court consolidating the cases, they became suits under the Miller Act.

Case No. 5414.

This case originated as an action at law by A.R.M. against M.B.S. to recover the sum of $76,324.90 which represented the balance claimed to be due for services in the aggregate sum of $167,840.70, less $91,515.80 paid on account. Ross and the Surety Company intervened on the ground that they would be liable for any judgment which might be obtained in the suit against M.B.S.; and at their instance, the case was consolidated with cases Nos. 5415 and 5416 which will be hereafter considered; and thereupon the action became a suit under the Miller Act. The issues in case No. 5414, now under consideration, arose primarily between A.R.M. and M.B.S. and the liability of Ross and the Surety Company is dependent upon the liability of M. B.S.

The site of the work comprises 119.3 acres of land adjacent to Camp Bradford in Princess Anne County, Virginia. It was overgrown with trees and underbrush. The prime contract called for the performance of the following projects:

(1) The clearing and grubbing of the site by the removal of trees, stumps, roots and underbrush and the grading incident thereto.

(2) The installation of storm sewers and drainage to remove surface water and lower the water level in the soil.

(3) The construction of roads and streets at designated locations.

(4) The construction of buildings, including barracks, mess halls, assembly halls, store houses and fire stations.

(5) The installation of underground utilities, such as water lines, sanitary sewers, electric lines and conduits, and telephone and power poles to serve the buildings.

Ross undertook these projects for the lump sum price of $2,837,237 and agreed to complete the entire work in one hundred days under a penalty of $800 per day for delay. In order to facilitate the performance of the contract Ross promptly sublet Items 1, 2, 3 and 5 above named to M.B.S. for the lump sum of $395,000. M.B.S. in turn entered into two contracts with A.R.M., one for Item 1, the clearing and grubbing work at the unit price of $300 per acre for 60 acres, and the other for part of Item 3, namely, the laying of the stone base course of the roadways at $1.55 per square yard.¹

The transactions under the contract between A.R.M. and M.B.S. gave rise to three claims on the part of A.R.M. which constitute the basis of the case now under consideration, as follows: (a) A claim that after A.R.M. had cleared and grubbed 60 acres of land, the acreage named in the contract, A.R.M. and M.B.S. entered into an oral contract for the clearing and grubbing of 32 additional acres on the basis of cost plus ten per cent; and that A.R.M. cleared and grubbed the additional acreage at the approximate cost of $850 per acre, aggregating $27,200; (b) a claim that in laying the stone base for the roadways A.R.M. encountered unsuitable material below the sub-grade, as shown on the plans of the roads, for which contingency the contract provided that M.B.S. would compensate A.R.M. at a price to be agreed upon or at cost plus ten per cent; that A.R.M. was obliged to make a fill of 12,388 cubic yards of sand-clay, and since no agreement between the parties as to the price was reached, A.R.M. became entitled to the sum of $21,173.48; (c) a claim that during the course of the work A.R.M. allowed M.B.S. to use certain of its equipment and performed other services incidental to the work for which M.B.S. agreed to pay the sum of $8,467.22.

These three items, plus the undisputed items of $18,000 for clearing and grubbing 60 acres of land, and $93,000 for laying 60,000 square yards of stone-base, aggregated a total of $167,840.70, upon which it was acknowledged that $91,515.80 had been paid, leaving a balance of $76,324.90. M.B.S. claimed an offset in the sum of $38,593.23 for back charges incurred by A.R.M. in the course of the performance of its contract. The case was tried before a court and jury and resulted in a verdict for A.R.M. in the sum of $46,024.90.

The attack of the appellants is centered upon the item of $27,200 for clearing and grubbing 32 additional acres and $21,173.48 for laying the sand-clay sub-base, and it is pointed out that the aggregate of these items, namely, $48,373.48, exceeds the amount of the verdict, so that if there was no liability for any part of these items, the entire verdict of the jury should be wiped out and the judgment of the court should be reversed. Appropriate motions for a directed verdict in favor of the defendants M.B.S. in respect to these claims were made in the District Court and the denial of the motions is the basis of the appeal.

Claim of $27,200 for Clearing and Grubbing 32 Additional Acres.

Haste in the execution of the prime contract was imperative and accordingly negotiations between the interested parties took place. Some of the work was done before any of the contracts were actually signed. The contracts between A.R.M. and M.B.S. were dated May 13, 1943 but were not executed until a week or so later. On May 12, 1943 M.B.S. was authorized by letter from Ross to proceed with the work pending the execution of the formal contract between them; and M.B.S. in turn authorized A.R.M. to proceed with the clearing and paving work before the contracts between them were executed; and A.R.M. commenced the clearing and grubbing about May 15. The parties to this contract believed that the area to be cleared comprised approximately 60 acres. The written contract between them so described it and provided that A.R.M. "clear and grub the land * * * in accordance with the plans and specifications as set forth in the Government contract with the contractor * * *" at the rate of $300 per acre.

The evidence on behalf of A.R.M. as to the subsequent events which led to its claim for compensation for clearing additional acreage may be summarized as follows: A.R.M. proceeded with the work and gathered the debris in large piles to be burned, believing that it could be disposed of in this way; but the specifications annexed to the prime contract provided that the debris had to be removed and disposed of outside the limits of the site. While the specifications were available to A.R.M. it did not examine them and based its bid on the estimated cost of burning the material on the site so that it need not be hauled away. When it was ascertained that this could not be done under the Government contract, both M.B.S. and A.R.M. endeavored unsuccessfully to secure a modification of the specifications. At this time between 5 and 10 acres had been cleared. A.R.M. proceeded with the work in the manner required by the specifications and cleared 60 acres and charged for them at the contract rate of $300 per acre. The cost of the work greatly exceeded this sum; and when it was found that additional acreage had to be cleared, A.R.M. refused to do the work. Thereupon A.R.M. and M.B.S. entered into a supplemental oral agreement which provided that A.R.M. should clear the additional acreage, which proved to be 32 acres, at cost plus ten per cent. The cost of clearing the entire 92 acres was $77,863.08 or $846.34 per acre. For the additional 32 acres A.R.M. confined its charge to $850 per acre or, $27,200.

The execution of the oral agreement was not supported by any writing but was provided by the testimony of officials of A.R.M. They said that it was made in the middle of June, 1943 when the original 60 acres had been cleared. Testimony of opposing...