School Dist. No. 37, Clark County, Wash. v. Isackson

• Decision Date: 29 October 1937
• Docket Number: No. 8417.,8417.
• Citation: 92 F.2d 768
• Parties: SCHOOL DIST. NO. 37, CLARK COUNTY, WASH., v. ISACKSON.
• Court: U.S. Court of Appeals — Ninth Circuit

92 F.2d 768 (1937)

SCHOOL DIST. NO. 37, CLARK COUNTY, WASH., v. ISACKSON.

No. 8417.

Circuit Court of Appeals, Ninth Circuit.

October 29, 1937.

Charles W. Hall, of Vancouver, Wash., for appellant.

Arthur H. Lewis, of Portland, Or., and Charles T. Peterson, of Tacoma, Wash., for appellee.

Before GARRECHT, MATHEWS, and HANEY, Circuit Judges.

HANEY, Circuit Judge.

Appellee brought an action to recover for labor performed and materials furnished, recovered a judgment against appellant; thereupon this appeal was taken.

In 1933, appellant entered into a grant agreement with the United States, as a result of an application filed by appellant for a grant of money for the construction of an addition to a high school building, and for the remodeling of the existing building. The United States thereby granted appellant an amount not to exceed 30 per centum of the cost of the labor and materials employed on the project, but in no event to exceed $35,000. The grant agreement contained certain terms and conditions upon which the grant was made.

The terms of the grant agreement required that the plans, drawings, specifications, and construction contracts be in form and substance as approved by the United States; that appellant, without the prior written consent of the United States, would not purchase any materials or equipment for the project subject to any chattel mortgage or conditional sales agreement; that all construction contracts and all subcontracts would be subject to the rules and regulations adopted by the United States to carry out the purposes of the National Industrial Recovery Act (48 Stat. 195). Another provision required appellee to terminate any contracts made, at the request of the United States, and upon violation of the provisions of any of the contracts. Other provisions required substantially all the provisions related hereinbelow with reference to the contract between appellant and appellee.

Appellee was not a party to the grant agreement.

On January 13, 1934, appellee entered into a contract with appellant for the construction of the project for the sum of $104,857.50. The contract provided that the work was to be done in accordance with drawings and specifications, which were made a part of the contract, and that it was to be completed by a certain date, and if completion was not had by that time, liquidated damages of $100 per day thereafter would be paid by appellee. The contract provided: "No contracts will be awarded until bids have been examined and passed upon by the State Engineer (P.W.A.) who will satisfy himself that the bidders are capable of carrying on the work bid upon and that the contract is awarded to the lowest responsible bidder."

Other general provisions of the contract were that appellee agreed to comply with the conditions prescribed in section 7 (a) (1) and (2) of title 1 of the National Industrial Recovery Act (15 U.S.C.A. § 707 (a) (1,2), and to cause all subcontractors to comply therewith; that appellant would permit the Federal Emergency Administration of Public Works, through its agents, to inspect the works, and records of appellee regarding pay rolls, personnel, invoices, and other data. It was provided that appellee would report, and cause the subcontractors to report, at a designated time, the number of employees, the amount of the pay rolls, man-hours work, wage scales paid to the various classes of labor, and expenditures for materials. Copies were to be furnished to the government engineer and to the United States Department of Labor, as well as the names and addresses of the subcontractors. It was also provided that the contract must be countersigned by the Clark County Welfare Board;¹ that appellee would not contract with any subcontractor who had not signed and complied with the applicable codes of fair competition approved under the National Industrial Recovery Act, or who had not signed and complied with the President's Re-employment Agreement. Finally it was provided that if appellee, or any subcontractor, violated any of the provisions herein described, appellant could terminate the contract by written notice.

With respect to labor, it was provided that convict labor would not be used; that with a few exceptions and in "so far as practicable and feasible in the judgment of the Government Engineer, no individual directly employed on the project" would "be permitted to work more than 30 hours in any one week"; that no work would be permitted on Sundays or legal holidays, except in cases of emergency; that appellee and the subcontractors would pay not less than the minimum hourly wage rates for skilled and unskilled labor prescribed by the Federal Emergency Administration of Public Works; that appellee would furnish the government engineer, on demand, a sworn statement of the hours worked by, and the wages paid to, each employee. It was further provided that the minimum rates would be subject to change by the Federal Emergency Administration of Public Works on recommendation of the Board of Labor Review, and that if different minimum wage rates were established, then the contract price would be adjusted accordingly; that the Board of Labor Review would hear all labor issues arising in the performance of the contract, and its decisions would be binding. It was also provided that certain labor preferences would be given, and that to "the fullest extent possible, labor required for the project and appropriate to be secured through employment services" would "be chosen from the lists of qualified workers submitted by local employment agencies designated by the United States Employment Service"; and that there would be no discrimination in the selection of labor for race, creed, or color.

With respect to the materials to be used on the project, it was provided that no materials manufactured by convict labor would be used on the project; that only materials produced under the codes of fair competition under Title 1 of the National Industrial Recovery Act (section 1 et seq., 15 U.S.C.A. § 701 et seq.) or under the President's Re-employment Agreement would be used on the project, except when the government engineer certified that such requirement was not in the public interest, or that the consequent cost was unreasonable. Finally, it was provided that so far as practicable appellee would give preference to the use of locally-produced materials, if such did not involve higher cost, inferior quality, or insufficient quantities, subject to the determination of the government engineer.

The grant was not mentioned or referred to in this contract.

Appellee began the work in January, 1934, and completed it in February, 1935. Progress payments had been made in the total sum of $91,735.58. During the construction, about 200 changes were made in the original plans, and the work was not completed until long after the scheduled time. A dispute arose as to how much, if any, was due appellee.

On December 24, 1935, appellee filed its complaint alleging a cause of action in quantum meruit, alleging the reasonable value of the work performed and the material furnished to be $133,862.14, alleging payments in the sum of $91,735.58, and demanding judgment in the sum of $42,126.56.

Appellant asserted three defenses: (1) A denial that the reasonable value of the work performed and the material furnished was the amount alleged in the complaint, and alleged that it was no more than $96,764.87; (2) the work was governed by a written contract; and (3) appellee was estopped to deny the written contract.

So far as is here material, the reply asserted: (1) That the contract referred to was void; (2) that it was rescinded by subsequent parol agreements; and (3) that it was waived by appellant.

At the conclusion of the evidence the court below ruled that the contract was void, saying in part: "I am not prepared to hold that the defendant did not have the right to adopt by reference regulations already made by some federal authority, but to step aside, or attempt to give by power of attorney to any federal authority power to decide matters arising in the future, or any voice in matters arising in the future under this contract, is an illegal delegation, or attempted delegation of authority, and as it enters into the contract, the written — attempted agreement rather, to the extent that it does, the Court cannot pull these fangs and leave a contract, and...