Sprague v. Boyles Bros. Drilling Co.

• Decision Date: 29 February 1956
• Docket Number: No. 8351,8351
• Citation: 294 P.2d 689,4 Utah 2d 344
• Court: Utah Supreme Court
• Parties: d 344 Walter W. SPRAGUE and U. S. Fidelity & Guaranty Co., Plaintiffs and Respondents, v. BOYLES BROS. DRILLING CO., Defendant and Appellant.

Page 689

294 P.2d 689

4 Utah 2d 344

Walter W. SPRAGUE and U. S. Fidelity & Guaranty Co. Plaintiffs and Respondents, v. BOYLES BROS. DRILLING CO., Defendant and Appellant.

No. 8351.

Supreme Court of Utah.

Feb. 29, 1956.

Van Cott, Bagley, Cornwall & McCarthy, Grant Macfarlane, Jr., Salt Lake City, for appellant.

Elliott W. Evans, Salt Lake City, for respondents.

CROCKETT, Justice.

Appeal from a judgment awarding Sprague and his surety damages for breach of contract in which Boyles Bros. agreed to break rock into proper size for use by Sprague in constructing a levee on the banks of the Snake River near Rigby, Idaho.

Sprague, the general contractor, let a subcontract to Boyles by which the latter undertook to break into sizes of 50 to 350 pounds a minimum of 12,200 tons of native rock located in Olsen Quarry, to be done concurrent in time with Sprague's carrying out his contract with the Federal Government. Boyles also agreed to furnish any additional rock necessary to complete the contract and any subsequent modifications, provided timely notice was given. Compensation was set at 48 cents for each ton of rock broken to size. Modifications in the prime contract resulted in a requirement to supply 15,400 tons of rock, which Boyles admittedly did not complete.

Sprague sued Boyles for damages resulting from the latter's failure to perform their contract and his consequent inability to perform his prime contract on time. Boyles set up the defense that they were justified in failure to fully perform because of certain claimed breaches by Sprague, and U. S. Fidelity & Guaranty Co., who later undertook to perform as bondsman for Sprague. (Their interests being the same, we will refer to them as Sprague.) Boyles also counterclaimed for damages for such breaches and for money allegedly due them for rock they had broken. The trial court found in favor of Sprague, awarding judgment for the failure to perform plus reasonable attorney's fees as provided in the contract; and also rejected Boyles' counterclaim.

Boyles' first attack on the judgment is that the present action should have been abated because another suit based on the same facts was pending before the district court. On September 22, 1952, plaintiffs' counsel commenced a civil action in the Third Judicial District Court on behalf of Sprague and U. S. F. & G., as joint plaintiffs against Boyles. That complaint was framed on the mistaken belief that the U. S. F. & G. had bonded Boyles; that Boyles had defaulted; that after Boyles' default U. S. F. & G. had performed and thus suffered a loss which it was entitled to recover from Boyles. Defendant's answer admitted that U. S. F. & G. had bonded Boyles, although this was in error. Plaintiffs' counsel later discovered that U. S. F. & G. had bonded Sprague, not Boyles; had performed the contract for Sprague and was subrogated to Sprague's rights to recover against Boyles. He moved to amend the complaint to state a cause of action on this theory. The trial judge refused to allow the amendment or to grant defendant's motion to dismiss with prejudice. Neither party appealed that action, nor was anything further done in that case.

Defendant now urges that the present suit should be abated because the former action is still pending and insists that the order refusing to allow the filing of an amended complaint in the case is a bar to the present action. To sustain this position, defendant cites State v. California Packing Corp., etc. ¹ There the District Court sustained a demurrer to plaintiffs' amended complaint; plaintiff refused to plead further and the case was dismissed with prejudice. Upon appeal this court affirmed. Thereafter the State instituted new proceedings and defendant pleaded the dismissal of the first action as a bar to the second one. Justice Wade, for the Court, held that even though plaintiff's original action was dismissed with prejudice, the State was not barred from maintaining another action based on the same general set of circumstances, because the new complaint supplied additional facts and stated a new cause of action; the dismissal with prejudice was determinative only to the extent it determined that the complaint attacked by the demurrer did not state a cause of action. ²

Here there was no dismissal. But even if there had been, plaintiffs would not be foreclosed under our holdings from instituting this action. The issue pleaded in the second suit--whether Boyles were directly liable to Sprague (and by subrogation to U. S. F. & G.)--was not litigated, nor was the same issue pleaded in the first suit. The complaint now supplies new and additional facts which were not before the Court originally; consequently the rule laid down in the California Packing case actually favors plaintiffs here.

Boyles sought to justify their failure to supply the rock specified by the contract because of several claimed breaches of its terms by Sprague, his failure (1) to make the progress payment at the time stipulated, (2) to keep the quarry cleared of rock processed by Boyles, and (3) to supply compressed air as required by the contract.

It is to be borne in mind that in reviewing the Court's findings adverse to the defendant, the plaintiffs are entitled to have us consider all of the evidence and every fair inference fairly to be derived therefrom in the light most favorable to plaintiffs, ³ and this is true in an action on contract, as well as in tort. ⁴

With reference to the alleged breach number (1) above referred to: it appears that on April 20, 1950, Boyles had broken up 12,200 tons of rock and by the contract terms were entitled to receive 75% of the contract price of 48 cents per ton, or 36 cents per ton therefor. It is undisputed that the payment was not made at that time, and that Boyles withdrew their equipment from the quarry on May 1st. There is evidence that the parties were in disagreement as to whether Boyles had broken the rock into proper size, which might well have justified the failure to make prompt payment; and further, that in July the payment was made to Boyles, and shortly thereafter they returned their men and equipment to the quarry and resumed work on the contract. Under such circumstances, it was not unreasonable for the trial court to assume that Boyles waived any right to rely on this delay in payment as excusing further performance.

The alleged breach number (2) listed above relating to the failure to keep the quarry clear of processed rock in accordance with the requirement in the contract that Sprague would remove the rock to 'coincide with hauling operations so as not to cause delay,' is also answered by Sprague's evidence that the rock was improperly sized and too large to handle, and hence, not in the condition requisite to removal.

Claimed breach number (3), that Sprague did not provide sufficient compressed air to operate the drills efficiently according to contract terms, is the one on which Boyles place the greatest emphasis. As against Boyles' evidence concerning that failure, there was testimony that a substantial portion of the longest period of deficiency complained of, that is, between December 20, 1949, and February 3, 1950, occurred before the contract was formally executed by the parties late in January. This indicates that this so-called failure was not of any grave concern to the Boyles. They having signed the contract thereafter, the trial court could reasonably believe that they had waived any such failure and were in no position to complain of it. There was also the statement of one of Boyles' own witnesses that there was sufficient air pressure to operate the drills; and other evidence that lack of compression, which admittedly occurred at times, was temporary, and such as should reasonably be expected to occur on such a job.

Concerning the matter of supplying compressed air, defendant, Boyles, also impute error to the trial court in failing to find specifically whether Sprague supplied 'sufficient air to operate the drills efficiently' as the contract required. In his memorandum decision, the judge set forth that Sprague's duties included the obligation to furnish 'sufficient air to efficiently operate Boyles' drills,' and his findings do recite that Sprague performed his part of the contract, and further state:

'While there were times when Boyles were temporarily hampered by lack of air, they were such as would be reasonably expected to occur on the job, and not sufficient in time or effect to constitute a rescission or cancellation of the contract.'

Considering the memorandum decision and the findings together, as may properly be done, ⁵ manifests that the court found that Sprague had met his obligation to furnish compressed air.

The next assignment of error to be considered arises out of the finding above quoted. Boyles insist that the use of the term 'rescission' shows that the trial court applied the wrong theory of law in the case in that he was under the impression that any breach by Sprague must have been sufficient to amount to rescission, whereas, any substantial breach by him would have justified Boyles' refusing to further perform. Boyles urges that because this apparently erroneous concept of law underlies the judgment, it should be set aside. It is not to be disputed that, as Boyles contends, different considerations are involved in rescission than in a case which will justify one party in refusing to perform because of breach by the other. ⁶ But as the eminent authority, Mr. Williston, points out, the term 'rescission' is often loosely used 'when in truth one party to the contract has merely exercised his right to refuse to perform because of the wrongful conduct of the other party.' ⁷ We recognize the distinction between the two situations: where a contract has been completely abandoned or otherwise completely rescinded, it has been nullified. But where the contract has merely been breached, in other words, where...