Schmelig Const. Co., Inc. v. Missouri State Highway Commission

• Decision Date: 30 August 1976
• Docket Number: No. KCD,KCD
• Citation: 543 S.W.2d 265
• Parties: SCHMELIG CONSTRUCTION CO., INC., a corporation, Appellant, v. MISSOURI STATE HIGHWAY COMMISSION, Respondent. 27146.
• Court: Missouri Court of Appeals

Page 265

543 S.W.2d 265

SCHMELIG CONSTRUCTION CO., INC., a corporation, Appellant, v. MISSOURI STATE HIGHWAY COMMISSION, Respondent.

No. KCD 27146.

Missouri Court of Appeals, Kansas City District.

Aug. 30, 1976.

Motion for Rehearing and/or Transfer to Supreme Court Denied

Oct. 12, 1976.

Application to Transfer Denied Dec. 13, 1976.

Speer, Herzog & Ponfil, Theodore D. Ponfil, St. Louis, for appellant.

Bruce A. Ring, Alfred K. Morlan, Jefferson City, for respondent.

Before TURNAGE, P.J., and WELBORN and HIGGINS, Special Judges.

ROBERT R. WELBORN, Special Judge.

Schmelig Construction Co., Inc., brought suit against the Missouri State Highway Commission, seeking $124,191.10 damages for breach of warranty of plans and specifications on a highway project contract and for breach of contract. On a jury waived trial, the court found for defendant. This appeal followed.

In 1968, the Missouri State Highway Commission sought bids on a highway project on Route 16 in the town of Canton. The project involved roadway paving and included the installation of storm sewers. The plans and specifications estimated that 6357 cubic yards of 'Class 3 Excavation for Structures' would be involved in the work.

Schmelig Construction Co., Inc., a general contracting company, had previously done subcontracting work on highway department contracts and had only recently qualified with the State Highway Commission to receive contracts as a prime contractor. Schmelig received a description of the project and requested the plans and specifications from the State Highway Department. On the basis of the plans and specifications and following personal inspection of the job site by its representatives, Schmelig submitted a bid for the project. One other bid was submitted. Schmelig was the low bidder with a total bid of $335,231.15. Its itemized proposal included removal of the 6357 yards of 'Class 3 Excavation for Structures' at $4.50 per yard. (By Section 50.6.4, Missouri Standard Specifications (1961), 'Payment for removal of rock * * * will be made at the contract unit price for excavation for structures.') Schmelig's bid was accepted and on October 11, 1968, it entered into a written contract with the respondent for performance of the work.

The contract called for the work to be performed in 110 working days. Work began in December, 1968, but shut down shortly because of adverse weather conditions. When the work resumed in the spring, the contractor, in making the excavation for the storm sewers, encountered a considerable amount of limestone. The highway department had performed drilling tests in the project area in 1966 which showed the presence of the limestone, but no reference to that condition was made in any of the plans or specifications. The on-site inspection by Schmelig's representatives had given them no reason to expect that rock would be encountered and their bid was based upon not encountering rock. According to Schmelig's president, if he had seen the report of the Highway Department District Geologist which showed the presence of rock, Schmelig would not have bid the job because the removal of rock would have been too hazardous, the project being located in an inhabited area, and could not have been completed in 110 days.

Schmelig suggested a change in plans which would have avoided the necessity for removal of the rock, but the Highway Department rejected the proposal and required excavation as called for in the plans and specifications. As a result, Schmelig removed approximately 772 yards of rock by blasting at a cost to it of $90 per yard and 200 yards of rock by hand at a cost of $125 per yard.

The delay caused by removal of the rock contributed to Schmelig's failure to complete the work in the 110 working days fixed by the contract. Liquidated damages of $100 per day for the 72 days additional time for completion were assessed against Schmelig.

The job cost Schmelig in excess of $440,000. On January 8, 1971, it filed a claim against respondent for $124,191.10 to cover the additional cost of removing the rock. The claim was denied and this litigation followed.

Schmelig's petition was in three counts. Count I was based upon misrepresentation and concealment. This count was dismissed by the trial court on motion of defendant and no issue is here raised on that action. Count II was based upon breach of warranty as to the sufficiency of the plans and specifications furnished by defendant to plaintiff. Count III was based upon arbitrary action of defendant in refusing to extend the time for completion of the project.

The trial court found against plaintiff on Counts II and III, finding that there had been no express warranty as to the subsoil condition present within the limits of 'Class 3 Excavation for Structures' and that the disclaimer provisions of the contract and the duty imposed upon the contractor precluded the existence of an implied warranty on the subject. The court further held that there was no abuse of discretion in failing to grant an extension of time for completion of the project.

On this appeal, appellant contends that the failure of respondent to disclose the existence of the rock, known to it, constitutes a breach of warranty of the plans and specifications and a breach of contract.

This is not a case involving an affirmative representation by respondent as to the subsoil conditions on the job. Appellant points to no provision of the plans or specifications as constituting such representation. In the case of Denton Construction Company v. Missouri State Highway Commission, 454 S.W.2d 44 (Mo.1970), the court concluded that the plans and specifications there involved in effect represented that the previously prepared roadbed upon which Denton contracted to lay a concrete pavement had been constructed in accordance with such plans and specifications and that the contractor was entitled to recover for breach of warranty as to such condition, the breach consisting of a deficiency in the condition of the roadbed which required the contractor to supply a considerable quantity of material in order to bring the roadbed into condition for paving. See also Rock Hill Asphalt & Construction Company v. State Highway Commission, 452 S.W.2d 810 (Mo. banc 1970), concurring opinion of Finch, J., at page 814: 'In my view, if the Commission affirmatively represents or warrants matters on which the contractor is entitled to rely, and then breaches that representation, it is liable for such breach.' (Emphasis supplied)

Nor is this a case in which the contractor sought the information possessed by the commission and the information was not furnished. Appellant does state that a preconstruction conference was held, attended by representatives of the contractor and of the commission. Appellant asserts that the purpose of the meeting was to discuss possible problems which might be encountered on the job. However, no problem of rock arose in the course of the discussion. Respondent's representatives testified that, if appellant's representatives had asked about rock, they would have told them what they knew, but since the question was not asked, they did not consider it was their 'duty to inform them of that.' The absence of a request for information distinguishes this case from the case of Walla Walla Port District v. Palmberg, 280 F.2d 237 (9th Cir., 1960), cited and relied upon by appellant.

If there was a warranty upon which appellant might have relied, it would have to have been, in effect, an implied warranty by respondent that the plans and specifications contained the necessary information as to subsoil conditions, known to the respondent, to permit appellant to gauge the nature and extent of the work and to bid accordingly. The admitted fact of knowledge on the part of the commission distinguishes this case from Webb-Boone Paving Co. v. State Highway Commission, 351 Mo. 922, 173 S.W.2d 580 (1943), where the subsoil condition requiring additional work was known to neither the contractor nor the commission.

Neither party has cited a case in the state in which the issue here presented was passed upon by an appellate court. Respondent points to language in Webb-Boone, supra, in which the court disagreed with a contention that the commission was under the duty to 'disclose all known conditions or conditions that could have been known by making a reasonable preliminary investigation.' 173 S.W.2d at 584. The court dismissed the contention, stating: 'This is not the law.' Since that case did not involve a condition known to the commission, what was said about that situation is dictum.

Support for the theory of recovery advanced by appellant is to be found principally in decisions of the Michigan Supreme Court. In the three cases of Hershey Gravel Co. v. State Highway Department, 305 Mich. 333, 9 N.W.2d 567 (1943), W. H. Knapp Co. v. State, 311 Mich. 186, 18 N.W.2d 421 (1945), and Valentini v. City of Adrian, 347 Mich. 530, 79 N.W.2d 885 (1956), the court found liability on the part of the contracting body, based largely upon the failure of such body to reveal facts known to it pertaining to subsoil conditions and unknown to the other contracting party, the conditions encountered having substantially increased the cost of the work. In each of those cases, the plans or specifications in one way or another purported to describe the soil situation but for one reason or another such description did not...