St. Paul Dredging Co. v. State, 38011

• Decision Date: 10 February 1961
• Docket Number: No. 38011,38011
• Citation: 259 Minn. 398,107 N.W.2d 717
• Parties: ST. PAUL DREDGING COMPANY, Respondent, v. STATE of Minnesota, Appellant.
• Court: Minnesota Supreme Court

Page 717

107 N.W.2d 717

259 Minn. 398

ST. PAUL DREDGING COMPANY, Respondent, v. STATE of Minnesota, Appellant.

No. 38011.

Supreme Court of Minnesota.

Feb. 10, 1961.

Syllabus by the Court.

1--2. Contract between plaintiff and state for state highway improvement construed to place upon state responsibility for removal of utility poles which would interfere with plaintiff's performance of contract so that plaintiff would be provided with highway worksite free from obstructions as specified in contract.

3. Where state failed to furnish plaintiff highway worksite free from obstructions as required by contract, state became liable for damages sustained in performance of contract occasioned by such failure, notwithstanding it may have exerted reasonable effort to induce utility companies owning such poles to remove them so as not to interfere with performance of contract.

4. State was not absolved from liability for such damages by reason of fact that plaintiff had entered into subcontract with another under which latter was to furnish supervision of work, and to lease equipment necessary therefor, to be paid for by assignment of percentage of plaintiff's contract price. Held, under Rule 17.01 of Rules of Civil Procedure, plaintiff could sue on behalf of subcontractor and for its benefit, since under Minn.St. 1957, § 161.03, subd. 17, latter, not being in privity with state, could not sue in its own name for losses sustained in performance of contract occasioned by fault of state.

5. Rule of United States Court of Claims to effect that prime contractor may not sue United States for benefit of subcontractor for losses due to delay occasioned by United States where subcontract contains exculpatory clause absolving prime contractor from liability to subcontractor for such delay Held inapplicable here where subcontract contained no such exculpatory provision.

Walter F. Mondale, Atty. Gen., Paul L. Skjervold, Deputy Atty. Gen., D. P. Kane, Sp. Asst. Atty. Gen., for appellant.

William C. Blethen, Kelton Gage, Blethen, Ogle & Gage, Mankato, for respondent.

THOMAS GALLAGHER, Justice.

St. Paul Dredging Company, plaintiff, seeks damages against the State of Minnesota for breach of a contract, S.P. 6947--06, for widening and grading shoulder of state Highway No. 216 for a distance of 17 miles beginning east of Hibbing. Plaintiff's action is based upon its contention that contract specifications called for the defendant to furnish a highway worksite free from utility poles, that it failed to do so, and that in consequence plaintiff sustained damages.

The trial court construed the contract in accordance with plaintiff's contentions and charged the jury as a matter of law that defendant had failed in its obligation to plaintiff, submitting for determination only the issue of damages. The jury returned a verdict for plaintiff in the sum of $40,438.08. This is an appeal from an order denying defendant's subsequent alternative motion for judgment notwithstanding the verdict or for a new trial.

Defendant does not challenge the amount of the verdict as a measure of damages but contends that (1) the court erred in instructing the jury that a contractual duty rested upon it to provide plaintiff with a highway worksite free of utility poles; (2) if the language of the contract and specifications be regarded as ambiguous, the issue of what the parties intended should have been submitted to the jury; and (3) if the contract did not impose an absolute duty upon defendant to provide a construction site free of utility poles, whether the state had exercised a reasonable effort to comply with its contract obligation, and whether the delay in removal of utility poles was within the contemplation of the parties at the time the contract was executed, were fact questions for the jury. Defendant also contends that its motion to dismiss the action on the ground that plaintiff was not the real party in interest should have been granted.

The contract, dated May 5, 1955, provides that plaintiff shall complete the work within 75 working days or be subject to certain deductions for damages. It further specifies that upon receipt of written notice from the contractor of the existence of causes over which the contractor has no control which may delay the completion of the work the commissioner of highways may extend the date specified for completion.

The contract is governed by specifications for highway construction issued by the Minnesota Department of Highways, the following of which are relevant here:

1802.1. 'All Right of Way for construction work will be furnished by the State. In case the State fails to effect the removal of structures and buildings from any section of the Right of Way, the right is reserved either to eliminate the work on that section from the Contract as provided in 1404, or to require the Contractor to construct the work as specified at a later date. In the latter case, the time for completion of the work will be extended for a period of time equivalent to any delay caused by such failure. If such failure by the State causes increased cost to the Contractor, fair and equitable compensation will be made therefor.'

1408. 'All obstructions to the construction of the Project and other encumbrances within the construction limits as indicated in the Plans, including fences, foundations and well curbs, But not including buildings and public utility properties, shall be removed by the Contractor.' (Italics supplied.)

1409. 'All properties of public utility companies or municipalities, such as pole lines, conduits, gas pipes, water pipes, sewers and tile lines, which run over, through or under any part of the Right of Way and which, in the opinion of the Engineer, will interfere with the completion of the Project, will, except as otherwise provided in the Contract, be moved by the owners to the locations and in accordance with the conditions set forth in the utility permit granted by the Commissioner and on file in his office.

'The Contractor shall preserve and protect all such properties which are above the ground surface, and also those below the ground surface whose approximate locations are shown in the Plans * * * he shall assume full responsibility for reimbursing the owners thereof for any damage or injury to such properties which may be caused by his operation. * * *

'If the Contractor is required to perform any special work * * * along or adjacent to any public utility property located below the ground surface * * * fair and equitable compensation will be made for the cost of such special work or construction methods.'

Defendant concedes that plaintiff had no right to remove the utility poles, such right being vested in defendant alone under Minn.St.1957, § 161.13, ^* which provided that utility poles constructed, placed, or maintained along any trunk highway:

'* * * may be so maintained or hereafter constructed only in accordance with such regulations as may be prescribed by the commissioner of highways, who shall have power to prescribe and enforce reasonable rules and regulations with reference to the placing and maintaing * * * of the utilities * * *.'

Order No. 13095 issued under § 161.13 by the commissioner contains the following regulations:

'11. Existing utility lines may be maintained in their present position until required to change because of the improvement of the trunk highway, * * *. In all cases the reconstruction of utility lines shall be under permit and in accordance with these regulations.

'12. If at any time the State of Minnesota, acting through its Commissioner of Highways, shall deem it necessary to make any improvements or changes on all or any part of the right of way of the trunk highway which affect the utility as located under a Department of Highways permit, then and in such event, the owner of the utility therein named will, within fifteen days after written notice from the Commissioner of Highways * * * proceed to alter, change, vacate or remove from the trunk highway right of way said public utility so as to conform to said changes, such work to be done without any cost whatsoever to the State of Minnesota and completed within the date specified in said written notice.'

Shortly after plaintiff entered into the contract, it also entered into an agreement with Seth Morse and Morse Brothers & Associates, Inc., of Rochester, hereinafter referred to as Morse, which provided that:

'This agreement covers the supervision, the furnishing of the required equipment, tools and other incidental items required to construct, according to the plans and specifications, the State Highway Project, identified as S.P. 6947--06 (S.H. 216).

'1. The St. Paul Dredging Company agrees to employ Mr. Seth Morse on this project as Superintendent of Construction. Both Seth Morse and Morse Brothers & Associates, Incorporated agree to such employment.

'2. * * * Morse Brothers & Associates, Incorporated agree to furnish all of the tools, equipment, labor and materials, job office, tool sheds, and all incidental items required for the complete construction of the project on the basis set forth in paragraphs (3) and (4).

'3. Morse Brothers & Associates, Incorporated agree to deposit $10,000 dollars in the 1st Natl Bank of Minneapolis, Minnesota. This deposit shall be made in the name of/ and the credit of St. Paul Dredging Company and shall hereinafter be referred to as the Operation Fund. * * *

'The original Operation Fund and all other deposits made to this fund cannot be used for any purpose other than to pay the labor, material and othr expenses incurred to properly complete the project covered by this agreement.

'All payrolls and all material bills of every description shall be approved by Seth Morse before the checks are issued.

'Payroll checks and all other checks shall be issued in the St. Paul Dredging Company office.

'4. The St. Paul Dredging Company agrees to deposit within three days after...