Underground Const. Co. v. Sanitary Dist. of Chicago

• Decision Date: 09 December 1937
• Docket Number: Gen. No. 24199.
• Citation: 11 N.E.2d 361,367 Ill. 360
• Parties: UNDERGROUND CONST. CO. v. SANITARY DIST. OF CHICAGO.
• Court: Illinois Supreme Court

367 Ill. 360

11 N.E.2d 361

UNDERGROUND CONST. CO.

v.SANITARY DIST. OF CHICAGO.

Gen. No. 24199.

Supreme Court of Illinois.

Oct. 22, 1937.

Rehearing Denied Dec. 9, 1937.

Suit by the Underground Construction Company against the Sanitary District of Chicago. From a judgment of the Appellate Court affirming a judgment of the superior court for plaintiff, defendant appeals. On certificate of importance and appeal granted by the Appellate Court.

Judgments of the Appellate Court and of the superior court reversed, and cause remanded for new trial.Appeal from First Division, Appellate Court, First District, on Appeal from the Superior Court, Cook County; John P. McGoorty, Judge.

Ernst Buehler, Thomas F. Donovan, Lawrence J. Fenlon, and William C. Oehlsen, all of Chicago, for appellant.

John L. McInerney and Luella Bither, both of Chicago, for appellee.

STONE, Justice.

This cause comes on a certificate of importance and appeal granted by the Appellate Court for the First District to review a judgment of that court affirming a judgment of the superior court of Cook county against appellant for $60,866.58, and costs, on appellee's claim for special damages arising out of delay in completing its contract with defendant.

In April, 1928, appellee (herein referred to as plaintiff) entered into a contract with appellant (herein called defendant) by which plaintiff agreed to construct what is known in the record as ‘South Crawford Avenue Bridge Approaches Superstructure’ for a stated price payable in monthly installments, as the work progressed, in such amounts as were shown by estimates approved by the chief engineer of defendant, less 12 1/2 per cent. to be retained by defendant until the completion and acceptance of the work to be performed under the contract. Plaintiff entered upon the performance of its contract and, by January 23, 1929, had completed approximately 70 per cent. of the work. Plaintiff presented each month an estimate for work done and materials furnished during the preceding month, and, on certificate of the engineer, was so paid. This continued until December 1, 1928. During that month plaintiff became entitled to $18,952.50, and for January, up to January 23, $14,705.25. These sums, totaling $33,657.75, were not paid and appellee suspended work and refused to continue until the past due estimates were paid. Some months later it secured judgment against defendant for this sum, which judgment was paid during the following October. Defendant's failure to pay the December and January installments was due to lack of funds. These funds were later procured by the sale of bonds authorized by an act of the General Assembly, in force July 1, 1929 (Smith-Hurd Ill.Stats. c. 121, §§ 177-179). From this source sufficient funds to complete the work were also secured and a supplemental agreement, hereinafter considered, was entered into on November 21, 1929, whereupon plaintiff proceeded to complete the contract and was paid in full the amount specified in the original contract. Its claim in this case is for special damages to it arising out of the ten months' delay caused, as appears to be conceded, by defendant's lack of funds.

The contract provided that the chief engineer of appellant, to prevent disputes and litigation, should determine all questions in relation to the work and its proper execution under the contract, and his estimate and decision should be final and conclusive on both the parties and constitute a condition precedent to the right of the contractor to receive compensation for anything done or furnished under the contract. On February 9, 1929, plaintiff, by its attorney, notified defendant's chief engineer that it had suspended work and would continue such suspension until the overdue installments were paid, consenting to a delay to August 1, 1929, but not later, without mutual agreement. On May 10, 1929, judgment was entered on its suit to recover unpaid installments. The supplemental contract of November 21, 1929, provided that plaintiff should proceed to complete the construction of the work under the terms of the original contract. Defendant waived any penalties for delay in performance. It recited that plaintiff claimed special damages by reason of the delay and that defendant denied plaintiff's right to such damages. The supplemental contract provided that it should in no way preclude plaintiff from claiming or suing for the recovery of damages sustained by it by reason of the suspension of the work.

In this suit, started during 1931, plaintiff filed the common counts, and a special count alleging an express promise by the chief engineer of defendant to pay the damages which accrued to plaintiff by reason of the suspension of the work. Thereafter, two special counts for damages arising from the breach of the contract by defendant were filed. As the Appellate Court found, as a fact, that the engineer for defendant did not promise to pay special damages, that issue of fact is not before us and the special count based on such claim is also out of the case. The cause was tried three times. On the second trial plaintiff recovered a judgment for $17,191.57, which the Appellate Court reversed, remanding the cause for a new trial. On a retrial before the court, without a jury, plaintiff recovered a judgment for $60,866.58, which the Appellate Court affirmed and, as hereinbefore stated, granted this appeal on certificate of importance.

Defendant's numerous assignments of error raise the following principal questions: (1) Was the judgment recovered for the two unpaid installments res judicata as to plaintiff's claims in this suit? (2) Was plaintiff, as argued by defendant, given only one of three remedies when the district breached its promise to pay the installments due, i. e., (a) to treat the contract as rescinded and recover for part performed, or (b) to continue the work and sue on installments as they came due, or (c) to complete the work and sue for the unpaid balance of the entire contract price, or was plaintiff entitled, as argued by it, to suspend the work until those installments were paid, and later sue for special damages arising out of the delay? As plaintiff agrees that it had a right to any one of the three optional remedies mentioned, the question on this branch of the case is whether it also had a right to suspend the work until the installments were paid and recover special damages for the delay. This question involves the further question whether plaintiff's suspension of work amounted to a rescission and abandonment of the contract by it, as argued by defendant. The third question of importance is whether it was within the contemplation of the parties, as shown by the original contract, that damages for delay caused by the district, might be recovered by the contractor.

We are not impressed with the argument of defendant that the judgment secured for the unpaid installments is res judicata as to plaintiff's claim here. At the time of that suit plaintiff could not have proved its claim to special damages arising out of delay since, on May 29, 1929, the date of that judgment, but four of the ten months' delay had passed and no one could tell how long the delay would continue. Since the claim is for damages arising out of the delay, to have sued for those accruing during the four months that had elapsed would have been analogous to bringing repeated suits for a single demand. This practice is condemned in Nickerson v. Rockwell, 90 Ill. 460. Plaintiff was not required so to do. In order that recovery for installments amount to res judicata of plaintiff's claim here, this latter claim must have been then due. Nickerson v. Rockwell, supra. Cases cited by defendant on this point do not announce a contrary doctrine. This contention cannot be sustained.

Was plaintiff confined to a choice of the three remedies hereinbefore mentioned, or was it entitled to suspend the work until the overdue installments were paid? Generally, payment in installments is not considered payment for so much work done, though the amount of the installment is generally so measured, but is, in contemplation of the parties, a part payment of the whole sum to be paid under the contract. Professoi Williston in his work on contracts expresses the opinion that the contractor, on nonpayment of an installment of the contract price, might refuse to perform further until such payment was made, and, if delayed for a long and unreasonable time, might refuse to go on with the work altogether, though a day's delay in payment would not justify permanent cessation of the work. 2 Williston on Contracts, p. 1626. In his work on sales he adheres to this view and presents it with more detailed illustration. 2 Williston on Sales (2d Ed.) § 467-E. This view is also supported in the reasoning of the opinion in Guerini Stone Co. v. Carlin Construction Co., 248 U.S. 334, 39 S.Ct. 102, 63 L.Ed. 275. This court recognized the justice of such a principle in City of Chicago v. Duffy, 218 Ill. 242, 75 N.E. 912, wherein it was held that failure on the part of the city to pay installments when due, prevented it from claiming damages from resulting delay in the completion of the contract.

Tobey v. Price, 75 Ill. 645, was a suit by the contractor for delay on the part of the defendant in furnishing material. The proof showed the defendant delayed, for some months, the delivery of iron work and cut stone which the contract required him to deliver. Plaintiffs claimed they were damaged by this delay of the defendant and damages were allowed on that account. In this court the defendant argued that, if he failed to perform his part of the contract, the plaintiffs could have abandoned the...