United States v. EJ Biggs Const. Co.

• Decision Date: 14 January 1941
• Docket Number: 7244.,No. 7243,7243
• Citation: 116 F.2d 768
• Parties: UNITED STATES, for Use of WADEFORD ELECTRIC CO., v. E. J. BIGGS CONST. CO., Inc., et al. (two cases).
• Court: U.S. Court of Appeals — Seventh Circuit

116 F.2d 768 (1940)

UNITED STATES, for Use of WADEFORD ELECTRIC CO., v. E. J. BIGGS CONST. CO., Inc., et al. (two cases).

Nos. 7243, 7244.

Circuit Court of Appeals, Seventh Circuit.

December 6, 1940.

Rehearing Denied January 14, 1941.

COPYRIGHT MATERIAL OMITTED

Philip R. Toomin, of Chicago, Ill., for appellants.

Edmund Burke and Chas. H. Jackson, both of Chicago, Ill., for appellee.

Before SPARKS, MAJOR, and KERNER, Circuit Judges.

MAJOR, Circuit Judge.

This action was brought by the United States of America for the use of Wadeford Electric Company, (hereinafter referred to as the "beneficial plaintiff") against E. J. Biggs Construction Company, (hereinafter referred to as the "defendant contractor") to recover the sum of $4,340 upon a contract entered into by and between the beneficial plaintiff and the defendant contractor. The United States Guarantee Company was joined as a party defendant by reason of the fact that it was surety for the defendant contractor. The matter was referred by the trial court to an auditor who heard the evidence and reported conclusions. A judgment order was entered October 16, 1939, in favor of the beneficial plaintiff for $2,817.97, from which both parties have appealed.

The contract relied upon was entered into October 14, 1933, wherein and whereby the beneficial plaintiff, as a subcontractor, agreed to furnish the material and labor to complete the electric work required by a certain contract dated September 15, 1933, which the defendant contractor had with the United States Government. There was excepted from the contract between the beneficial plaintiff and the defendant contractor certain designated items, not here material, which were to be furnished by the latter, but installed by the former.

The controversy revolves largely around the proposition asserted by the beneficial plaintiff — denied by the defendant contractor — that the former substantially performed its contract and was, therefore, entitled to recover as therein provided. The auditor found against the beneficial plaintiff in this respect, which finding was incorporated in the judgment entered by the court. If the question of substantial performance is one of fact, it is binding upon us if supported by substantial evidence. We are of the opinion, however, that inasmuch as it involves a construction of the contract, it is a question of law rather than of fact, or, at any rate, is a mixed question of law and fact. This view finds support in Errant v. Columbia Western Mills, 195 Ill.App. 14, 15, and Keeler v. Herr et al., 157 Ill. 57, 41 N.E. 750. The latter case was a suit upon a builder's contract tried to a jury. The trial court left to the jury the question as to whether there had been substantial performance as claimed by the plaintiff. On page 59, of 157 Ill., on page 750 of 41 N.E., the court said: "* * * We think the instructions are erroneous, both because they allow plaintiffs to recover the full contract price upon proof of a `substantial performance' of their contract, and because they submit to the jury the question of performance, without any construction of the contract by the court. * * *"

Since the question is one of law, we think we are obliged to construe the contract, unhampered by the finding of the auditor and the court below.

The argument of the defendant contractor that there was no substantial performance includes three contentions: (1) The beneficial plaintiff failed to start work in proper time, (2) failed to complete within the time prescribed, and (3) failed to perform in accordance with the terms and specifications of the contract.

In determining the question of substantial performance, it is necessary to consider the contract between the beneficial plaintiff and the contracting defendant, as well as the contract between the latter and the Government. Here must be found the obligations imposed upon the plaintiff as to the time when performance was to be commenced and completed, as well as its manner. The only provision in the contract between the beneficial plaintiff and the defendant contractor directly relating to either the time of starting or completing the contract is that contained in Article 4: "The entire work to be completed on or before December 31, 1933." In the same article, the defendant contractor agrees to install the machinery in the buildings and have them ready for the electrical work by December 15, 1933, otherwise the time of completion by the beneficial plaintiff was to be "extended accordingly." This contract also provides, in effect, that the beneficial plaintiff will relieve the defendant contractor of all responsibility assumed by it in the latter's contract with the Government, and that "the terms of payments, forfeiture for noncompletion of contract on time, and all rights of the United States Government, owners, on said work, especially as to proper material, workmanship, and progress of work, shall be as stated in the contract between the owner and the contractor." There is no claim on the part of the defendant contractor that there is any obligation imposed by its contract with the beneficial plaintiff as to the time when performance was to be commenced, but it is asserted that the beneficial plaintiff was bound by the former's contract with the Government. We think this argument is sound and we, therefore, turn to the Government contract with a view of ascertaining what, if any, obligation is imposed upon the beneficial plaintiff as to the time it is to commence performance, as well as the progress to be made relative to that made by the defendant contractor in the performance of its contract with the Government.

Articles 1 and 9 of the Government contract contain the only references as to time of commencement and progress of the work. Article 1 provides: "* * * The work shall be commenced within ten (10) calendar days after date of receipt of notice to proceed * * * and shall be completed within one hundred twenty (120) calendar days after date of receipt of notice to proceed." Article 9 provides: "If the contractor refuses or fails to prosecute the work, or any separable part thereof, with such diligence as will insure its completion within the time specified in Article 1, or any extension thereof, or fails to complete said work within such time, the Government may, by written notice to the contractor, terminate his right to proceed with the work or such part of the work as to which there has been delay. * * *" Defendant contractor also calls our attention to Article 16 which, in substance, requires the contractor to employ an ample force of men to complete the contract within the specified contract period. It appears plain from these provisions that the defendant contractor was obligated to commence work within ten days after notice to proceed, and that in case of failure to prosecute the contract, or any part thereof, with diligence within the specified time, that the Government had the right by written notice to terminate the contract. It is not claimed, and there is no evidence, so far as we can ascertain, that the beneficial plaintiff at any time had any notice, written or otherwise, as to when it was to commence the performance of its contract or the progress required.

The defendant contractor, under its contract with the Government, was not obligated to commence performance until ten days after receipt of notice from the Government, and it was only by written notice that the Government had a right to terminate the contract for failure to perform with diligence. It is difficult to think that any greater obligation could be, or was, imposed upon the beneficial plaintiff than that imposed upon the defendant contractor. It may be that either the Government or the defendant contractor had the right under this contract, by written notice, to determine the time when the beneficial plaintiff was to commence performance, and also the progress required, but in the absence of such notice, there was, in our opinion, no obligation upon the beneficial plaintiff to commence work at any certain time, or that the work progress in any certain manner except that the contract be completed by December 31, 1933, or within such extended time as might be granted.

It appears that a considerable portion of the work to be done by the beneficial plaintiff was outside of the boiler houses in extending lines to carry the electricity from dams to the boiler houses. It is argued by the defendant contractor that this work could have been done at an early date, and that the beneficial plaintiff would then have been in a position to do the work required in the boiler houses within a few days after their completion by the defendant contractor. This appears to be a logical assertion, and perhaps if the beneficial plaintiff had performed its work in this manner, it would have been of advantage to the defendant contractor. It does not follow, however, that the beneficial plaintiff was obligated by its contract to commence at a certain time or to progress in a certain manner. To hold otherwise is to read into the contract that which was not inserted by the parties.

We have not overlooked the contention made by the defendant contractor that it warned the beneficial plaintiff on November 18, and December 6, 1933, that it was in arrears in the performance of its contract. Such warnings, even if material, are not borne out by the record. The alleged warning of November 18, is contained in a letter from the defendant contractor to the beneficial plaintiff. There is nothing in this letter which even suggests a complaint on the part of the former. It merely suggests that on account of unseasonable weather "we will all have to push the work in order to come out on time." Certainly, at that time the defendant contractor had no thought that the beneficial plaintiff had not commenced performance in time, or that its progress was out of proportion to that being made by the...