Sebastian Bridge Dist. v. Hedrick

• Decision Date: 03 February 1925
• Docket Number: 6659,No. 6629,6660.,6629
• Parties: SEBASTIAN BRIDGE DIST. v. HEDRICK. ELKAN v. SEBASTIAN BRIDGE DIST. FIDELITY & DEPOSIT CO. OF MARYLAND v. SAME.
• Court: U.S. Court of Appeals — Eighth Circuit

4 F.2d 346 (1925)

SEBASTIAN BRIDGE DIST. v. HEDRICK.

ELKAN v. SEBASTIAN BRIDGE DIST. FIDELITY & DEPOSIT CO. OF MARYLAND v. SAME.^*

Nos. 6629, 6659, 6660.

Circuit Court of Appeals, Eighth Circuit.

February 3, 1925.

James B. McDonough, of Ft. Smith, Ark., for Sebastian Bridge Dist.

Henry L. Fitzhugh, of Ft. Smith, Ark. (John D. Arbuckle and Joseph M. Hill, both of Ft. Smith, Ark., on the brief), for Hedrick.

Vincent M. Miles, of Ft. Smith, Ark. (Thomas B. Pryor, of Ft. Smith, Ark., on the brief), for Elkan and Fidelity & Deposit Co. of Maryland.

Before KENYON, Circuit Judge, and TRIEBER and PHILLIPS, District Judges.

TRIEBER, District Judge.

The three appeals were heard together on one record. This is the second appeal of this cause. The opinion in the former appeal will be found in 291 Fed. 532, where the facts are set out, and need not be again stated in this opinion, except as to the proceedings after the mandate from this court on the former appeal.

The decree from which the first appeal was taken found the contractor M. M. Elkan liable for the cost of the construction of the bridge, as estimated at the time of the hearing, in excess of the contract price, and for liquidated damages for the benefit of the bridge district and for the use of its engineers, as provided in the contract. The decree was also against the Fidelity & Deposit Company, his surety, for the performance of his contract. This court affirmed the decree, except that it was held that the trial court "should have made allowance to the contractor, as extras, the expenses in reconstructing the cofferdam and for pumping expenses in connection with the last order made by the engineer concerning construction of pier No. 2." It was further held in the opinion that, "by the terms of the contract which was made when Elkan stopped work, the bridge was to have been completed in August, 1921. It has doubtless been completed by this time, so that, on a retrial on this demand, evidence will be forthcoming as to the actual, instead of the estimated, loss of the district."

On the hearing, after the remand, the trial court proceeded in conformity with the directions of the mandate and opinion, and rendered a decree in favor of the Sebastian bridge district against M. M. Elkan for $328,103.99, the difference found by the court between the contract price and the cost of the bridge, less a credit of $600 for extra work on pier No. 2, and as liquidated damages $21,600 for delay in the completion of said bridge, and the further sum of $14,400 for the use and benefit of Ira G. Hedrick, surviving partner of Hedrick & Hedrick, engineers, on account of the same delay, with interest at the rate of 6 per cent. from May 5, 1922. It also rendered a decree against the surety company for the penalty of its bond, $200,000, and interest from May 5, 1922, the date of the completion of the bridge and final payment therefor to the contractor to whom the contract was let after the construction had been abandoned by Mr. Elkan, the original contractor.

The decree further provided that the judgment is for the benefit of the bridge district and the said Ira G. Hedrick as surviving partner in the proportions of the recovery from the parties, and that the amount of the judgment against the Fidelity & Deposit Company, when paid, be credited on the judgment against M. M. Elkan.

No. 6629 is an appeal by the bridge district from that part of the decree requiring the district to prorate with Mr. Hedrick. Nos. 6659 and 6660 are appeals by Mr. M. M. Elkan and the Fidelity & Deposit Company.

No. 6629.

The only question necessary for a decision on this appeal is whether the appellee Hedrick is entitled under the contract of the bridge district with Mr. Elkan to share with it in proportion to the amount decreed in favor of the district against M. M. Elkan and the Fidelity & Deposit Company for the liquidated damages? For convenience the Sebastian bridge district will be referred to as the district, and the Fidelity & Deposit Company as the surety company.

The contention of counsel for the district is that under the contract of the engineer with the bridge district he is only entitled to 5 per centum of the cost of the construction of the bridge, and, having been paid the 5 per centum, he is not entitled to any part of the liquidated damages awarded against Elkan or the surety company. The contract by the district and Mr. Elkan, the contractor for the construction of the bridge, contained the following provision:

"The contractor further agrees to start work as soon as is practicable after the execution of this contract and to prosecute the work at such a rate as to complete the structure within fifteen (15) months from the date of this contract, and should the work not be completed within the time specified the district shall have the right to deduct from the contractor's total compensation the sum of thirty dollars for each day the work is so delayed, and in addition to the above sum the contractor also agrees to pay to the engineers of the district the sum of twenty dollars per day for each day the completion of the work is delayed beyond the said term of fifteen months: Provided, however, that the contractor may present claims to the district for delays for causes beyond his control as set forth in clause F, page 25, of the accompanying specifications."

The surety's bond provided: "The conditions of this obligation are that, if and when the said M. M. Elkan shall fully perform all of his obligations as set forth in his contract with the Sebastian bridge district under date February 5, 1919, then this obligation shall cease and become null and void; otherwise, it shall be and remain in full force and effect."

The liquidated damages for the benefit of the engineers were clearly intended as additional compensation for being required to render their services for a longer period than was provided by the contract for the completion of the bridge by the contractor. But, even were this provision doubtful, the district would be estopped. The original answer and counterclaim of the district did not seek to recover the $20 a day for the benefit of the engineer, but on November 29, 1920, before the first hearing of the cause, it amended its counterclaim, by leave of the court, as follows:

"This defendant alleges that in the specifications, which are a part of the contract between plaintiff and defendant, and under the head of liquidated damages and on page 25 of the contract appears a provision giving and allowing damages for the benefit of the engineer the sum of $20 per day, for engineering expenses from and after the date of the completion of the contract. The defendant alleges that said sum of $20 per day is a part of the liquidated damages which the defendant herein is entitled to recover from the plaintiff herein and the surety on his bond. The said defendant therefore prays for judgment in addition to the other prayers of the complaint for said sum of $20 per day."

When the district in its counterclaim asked for these liquidated damages, and the claim is for liquidated damages (Robinson v. United States, 261 U. S. 486, 43 S. Ct. 420, 67 L. Ed. 760), it made itself a trustee for the engineer, and, having recovered judgment for the claim, it is clearly bound in equity and good conscience to pay the amount, as and when collected, to its cestui que trust, even if there had been no affirmance of that part of the original decree in the former appeal. It was, beyond question, estopped by its own pleadings. Davis v. Wakeley, 156 U. S. 680, 689, 15 S. Ct. 555, 39 L. Ed. 578; Iron Gate Bank v. Brady, 184 U. S. 665, 22 S. Ct. 529, 46 L. Ed. 739; Great Falls National Bank v. McClure, 176 F. 208, 99 C. C. A. 562; Jefferson Standard Life Insurance Company v. Wilson, 260 F. 593, 596, 171 C. C. A. 357; Nichels v. Pullman Co. (D. C.) 268 F. 610, 619; Quarles v. City of Appleton (C. C. A.) 299 F. 508, 516 (7th C. C. A.).

Besides, the decision of this court on the former appeal, affirming that part of the decree, is now the law of the case. By what right can the district claim this compensation provided by the contract for the benefit of the engineer? The decree in favor of Mr. Hedrick is right, and is affirmed, except as modified later in this opinion.

In Nos. 6659 and 6660, the appeals of Mr. Elkan and the surety company, we are of the opinion that the court erred in some of the items. The court allowed him a credit of only $600 for the extra work on pier No. 2 performed by direction of the engineers of the district. It adopted the estimates of the work on the testimony of the engineer only, disregarding that of Mr. Elkan, the contractor, and of John Smith, his superintendent in charge of the construction of that work. His estimate of this work...