State Highway Dept. v. Hall Paving Co., Inc., s. 47462

• Decision Date: 31 October 1972
• Docket Number: Nos. 1,47463,Nos. 47462,3,2,s. 47462,s. 1
• Citation: 194 S.E.2d 493,127 Ga.App. 625
• Parties: STATE HIGHWAY DEPARTMENT v. HALL PAVING COMPANY, INC. HALL PAVING CO., INC. v. STATE HIGHWAY DEPARTMENT
• Court: Georgia Court of Appeals

Page 493

194 S.E.2d 493

127 Ga.App. 625

STATE HIGHWAY DEPARTMENT v. HALL PAVING COMPANY, INC.

HALL PAVING CO., INC. v. STATE HIGHWAY DEPARTMENT.

Nos. 47462, 47463.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

Oct. 31, 1972.

Rehearing Denied Nov. 28, 1972.

Arthur K. Bolton, Atty. Gen., Harold N. Hill, Jr., Executive Asst. Atty. Gen., Marion O. Gordon, William B. Brown, Larry Evans, Deputy Asst. Attys. Gen., Atlanta, for appellant.

Robert E. Andrews, Gainesville, for appellee.

Syllabus Opinion by the Court

HALL, Presiding Judge.

In an action by a road building contractor to recover money withheld from the contract price for liquidated damages, the State Highway Department appeals from the grant of summary judgment for the contractor (on one ground of the motion) and from the denial of its motion for summary judgment which the court certified for immediate review.

1. The contractor has also cross appealed from the unfavorable ruling on another ground of its motion. Since no certificate accompanied this denial, however, the cross appeal is not subject to review. Carroll v. Campbell, 226 Ga. 700, 177 S.E.2d 83.

2. The original summary judgment and order denying the Highway Department's motion for summary judgment was entered on May 8. On May 26 the court amended its May 8 judgment, nunc pro tunc. The Highway Department requested and received a rehearing on May 30, at which time the court issued an order denying the oral motions on reconsideration and reaffirming the order and judgment of May 8 as amended. The Highway Department's notice of appeal designates all these judgments and orders. The contractor's motion to dismiss (because the 'final judgment' of May 30 is not appealed from) is without merit. Wilson v. McQueen, 224 Ga. 420, 162 S.E.2d 313; Adamson v. Adamson, 226 Ga. 719, 177 S.E.2d 241; Housing Authority of the City of Douglas v. Marbut Co., 229 Ga. 403, 191 S.E.2d 785.

3. The parties, of course, had a lengthy written contract. It is the construction of certain provisions of that contract, as applied to the undisputed facts, which is the issue on this appeal. The pertinent provisions are as follows: 'FAILURE OR DELAY IN COMPLETING WORK ON TIME: Time is an essential element of the contract, and any delay in the prosecution of the work may inconvenience the public, obstruct traffic, or interfere with business. In addition to the aforementioned inconvenience, any delay in completion of the work will always increase the cost of engineering. For this reason it is important that the work be pressed vigorously to completion. Should the contractor, or in case of default, the surety fail to complete the work within the time stipulated in the contract or within such extra time that may be allowed, charges shall be assessed against any money due or that may become due the contractor in accordance with the following table: (the table provided $150 as the daily charge per calendar day for this particular contract). A. Liquidated Damages: The amount of such charges is hereby agreed upon as fixed liquidated damages due the department after the expiration of the time for completion specified in the contract. The contractor and his surety shall be liable for liquidated damages in excess of the amount due the contractor. Liquidated damages shall start in accordance with the above schedule upon notification to the contractor in writing that all the original contract time as stated in the proposal has been consumed . . . B. No Waiver of Department's Rights: Permitting the contractor to continue and finish the work or any part of it after the expiration of the time allowed for completion after any extension of time, shall not operate as a waiver of the rights of the department under the contract.'

It is undisputed: that time was being calculated on an 'available day' basis, i.e. ordinary weekdays in which five hours work is not prevented by causes beyond the contractor's control; that the 161 available days allotted to this project expired on July 1; that the contractor overran by 116 days, finishing the job some time in December; that the Highway Department began at the outset of the overrun to charge $150 per day as liquidated damages which was reflected in the next regular monthly statement sent by the Highway Department treasurer to the contractor; that the Highway Department's resident engineer on this project prepared weekly reports of progress and time charges, a copy of which he always mailed to the contractor; that this report for the week ending July 6 showed that 163 available days had already been used and charged and that in the opinion of the engineer, the contractor was operating in liquidated damages; that each succeeding weekly report showed days charged over the available days allowed and each succeeding monthly report showed charges against the contractor for liquidated damages; that the contractor had been notified by the resident engineer on May 6 that it would probably be unable to complete within the allotted time unless it placed additional men and equipment on the job; and that as of the date of the overrun, no additional forces had been placed. However, it is also undisputed that the Highway Department did not give written notice to the contractor which specifically stated that 'all the original contract time stated in the proposal has been consumed.'

The contractor's motion for summary judgment asserted three grounds: (1) that time was not of the essence of the contract so liquidated damages were improper; (2) that the Highway Department had not complied with the condition precedent to assessing liquidated damages (the written notice); and (3) that the Highway Department had waived by conduct any claim for damages.

The trial court held that time was of the essence and denied the motion as to ground number 1. It apparently made no ruling on ground number 3. However, it granted the motion on ground number 2 and held that sending copies of the Highway Department's 'weekly interdepartmental reports to plaintiff does not satisfy the clear requirement of the contract that plaintiff be notified in writing that its available days had expired and the Highway Department was claiming liquidated damages.'

We see the main issue here to be whether the reports sent by the Highway Department amounted to substantial compliance with the spirit of the notice requirement. By statute, effectual performance is that which is 'a substantial compliance with the spirit and not the letter only, of the contract. . . .' Code § 20-1101.

The purpose of the notice requirement is not difficult to fathom. Since the determination of which days were actually available working days was made by the Highway Department, the days charged as such would not be known to the contractor. It would therefore be critical to inform the contractor when the allowable time had expired so it could at least attempt to reduce the liquidated damages by using additional forces. The purpose of requiring the notice to be written is also clear. Not only is a writing better 'evidence' of notice having been given in case of a later dispute, but it has a high probability of giving actual notice to those in positions of responsibility. (Orally informing some casual laborer on the site would have a correspondingly low probability).

The contractor does not contend that it did not actually know the time had expired or, e.g., that it is the custom of the Highway Department never to assess liquidated damages without this literal form of notice. It merely reiterates that it did not receive notice in the language of the contract. The trial court apparently believed this was necessary also. The result of such an interpretation would be to authorize the assessment of liquidated damages, following months of silence, by a single letter which baldly stated that 'all the original contract time as stated in the proposal has been consumed.' This would be a patent example of compliance with the letter only of a contract.

The means adopted by the Highway Department to keep the contractor informed complied with the spirit. From the time work began it sent weekly reports which conveyed a great deal of information of utmost importance to the contractor, including total calendar and available days charged to date, days charged the previous week, a weather report for each day (which affected available day calculations), estimated percentage of completion, and reasons for the project being behind schedule. It defies imagination to believe the contractor's managers were not reading these reports and were not well aware that time had run out. If they had any doubt at all, it was settled when they received the July treasurer's report charging liquidated damages. This record shows that they did not object to or protest either the calculation of days or the assessment of damages. Some 18 months after the assessments began and a year after the final completion, the contractor filed this suit.

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