United States v. Henke Const. Co., 74.

• Decision Date: 19 October 1946
• Docket Number: No. 74.,74.
• Citation: 67 F. Supp. 123
• Parties: UNITED STATES, for Use and Benefit of LICHTER et al. v. HENKE CONST. CO. et al.
• Court: U.S. District Court — Western District of Missouri

67 F. Supp. 123

UNITED STATES, for Use and Benefit of LICHTER et al. v. HENKE CONST. CO. et al.

No. 74.

District Court, W. D. Missouri, S. D.

January 5, 1945.

On Motions With Respect to Findings of Fact and Conclusions of Law January 9, 1945.

Motion to Quash Execution Sustained October 19, 1946.

Mann & Mann, of Springfield, Mo., for plaintiffs.

Farrington & Curtis, of Springfield, Mo., for defendants.

Motion to Quash Execution Sustained October 19, 1946. See 68 F.Supp. 3.

REEVES, District Judge.

This is an action prosecuted by the plaintiffs as authorized by Section 270a(b), Title 40 U.S.C.A. Section 270a(a) (2) makes provision for a "payment bond" by contractors engaged in building or construction work for the government and the provisions for such payment bond operate for the "protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person."

On August 13, 1938, the defendant Henke Construction Company entered into a written contract with the government for the construction of specified additions to the United States Medical Center owned and operated by the United States at Springfield, Missouri. Pursuant to this formal contract and after full negotiations the plaintiffs contracted with the said defendant to take over and perform a substantial portion of said work. Such contract was evidenced by writing and bore date November 2, 1938. The plaintiffs agreed to:

"* * * furnish all Labor and Materials, including all necessary attachments, tools and equipment, transportation, scaffolding, permits, fees, taxes, insurance, deposits, and otherwise, to fully construct, perform, and in every respect complete all work and furnish all materials specified on the Rider Sheet, Page No. 5 of this contract. This sub-contract agreement is * * * for the construction of U. S. Hospital for Defective Delinquents, Constitutional Psychopaths Group and Three (3) Staff Houses, Springfield, Missouri for the Procurement Div., Treasury Dept., Washington, D. C. and subject to all provisions and terms of Contract No. T1PB 4081 * * * dated August 18(13) 1938; * * *."

It is claimed by the plaintiffs that they performed all the obligations of their contract but that, by reason of changes and substitutions in the work agreed to be done by them, additional labor and material were required and extras either furnished or performed, or both, and because thereof they were entitled to considerable additional compensation over the amount specified in their contract. Moreover, they assert that by omissions and commissions in the way of negligent acts of the defendant such extras were imposed upon them to their damage. Furthermore, they aver by an amendment to their complaint that they took over and assumed a contract or agreement with the Lusco Brick & Stone Company entered into by the defendant Construction Company and that the terms of such assumed agreement were violated by the said defendant to their damage. The plaintiffs, therefore, sue for such extras in the way of labor and material made necessary in the execution of their contract and for any balance remaining unpaid on the original contract, the consideration whereof being $51,000.

The defendants admit the truth of several averments of the complaint or amendments thereto. This includes admission that certain extras, alterations or substitutions were authorized in writing and that defendant construction company became liable therefor. The defendants deny liability, however, on the ground that failure of the plaintiffs to complete their contracts within the time specified caused damages to accrue to defendant construction company far in excess of any balance that might be due plaintiffs. Accordingly the defendants pray judgment against the plaintiffs.

The issues raised by both the pleadings and the evidence are largely, if not totally, factual. Few, if any, important legal questions have been injected into the case whether pertaining to substantive or adjective law.

1. At the outset it is important to determine what the precise contractual relations were between the parties.

The plaintiffs agreed to perform the work undertaken by them "subject to all provisions and terms of Contract" between defendant Henke Construction Company, a corporation and the Government, dated August 13, 1938. An inspection of this contract reveals that by written order "and without notice to the sureties," changes might be made in the drawings or specifications subject to certain limitations.

By Article 5 of such agreement, the subject of "Extras" is treated as follows:

"Except as otherwise herein provided, no charge for any extra work or material will be allowed unless the same has been ordered in writing by the contracting officer and the price stated in such order."

By Article 15 the subject of "Disputes" is discussed. The matter of factual questions in dispute "shall be decided by the contracting officer subject to written appeal by the contractor within 30 days to the head of the department concerned or his duly authorized representative, whose decision shall be final and conclusive upon the parties thereto."

By the "Seventh" paragraph of the contract between plaintiffs and the defendant Henke Construction Company the subject of extras was treated as follows:

"No extra work or changes under this contract will be recognized or paid for, unless agreed to in writing before the work is done or the changes made; in which event the change shall be specified in detail as to extra work or changes desired, the price to be paid or the amount to be deducted should said change decrease the amount to be paid hereunder."

The foregoing pertinently defines the rights of the parties as affected by the controversy here. It should be noted that the original contract was "brought into the subcontract" conformable to the suggestion made in Guerini Stone Co. v. Carlin, 240 U.S. 264, loc. cit. 277, and the same case in 248 U.S. 334, loc. cit. 341, and plaintiffs are bound by the terms of the contract. Ruemmeli-Dawley Mfg. Co. v. May Department Stores Co., 231 S.W. 1031.

2. It is unnecessary to discuss Item 1 of plaintiff's bill of particulars in the sum of $48.60 for the reason that the amount thereof is acknowledged by the defendant Henke Construction Company to be due plaintiffs.

Item 2 requires but brief discussion. The government required changes from salt glazed tile as specified in the original contract to ceramic glazed tile. This was more expensive tile and Henke Construction Company agreed to pay the difference in the cost thereof. The net increase in the cost as appears from the evidence and admitted by the plaintiffs was $4,399.40. This was $7.01 in excess of the amount agreed to by said Construction Company. Such a net difference in costs should not be augmented by the 10% overhead and 10% profit insisted on by the plaintiffs. Quite clearly the agreement did not contemplate these additional charges, and Fuhler v. Goham & Levine Const. Co., 142 S.W.2d 482 would not apply.

In like manner Item 3 of the bill of particulars is not the subject of much dispute on important facts. The defendant Henke Construction Company seeks to limit its liability to $50. The proof would justify an allowance of $101.14.

3. Item 4 of plaintiffs' bill of particulars covers the matter of extra expenses and labor because the concrete walls over which the plaintiffs contracted to build a brick veneer were out of plumb. There was a small space on Unit A that was accounted for because of the slipping of a form for the concrete. The evidence showed that plaintiffs probably experienced an extra cost for material and labor in the sum of $144.88.

The question naturally arises whether because of this condition, in the light of the contract, plaintiffs would be entitled to press a claim for extras. As heretofore pointed out, the contract specifically provided that neither extra work nor changes would be recognized or paid for "unless agreed to in writing before the work is done or the changes made." This was the voluntary agreement between the parties and it seems reasonable that when this defect, if it were such, was encountered by the plaintiffs, the attention of the defendant Henke Construction Company should have been called to the matter and an adjustment then and there made. It is the contention of the defendant. Henke Construction Company that the defect was not extreme and was such as is liable to confront every builder and contractor in doing similar work — that there are conditions in every similar job which call for tolerance and that such may be anticipated and provided for in the original contract. In the light of the contract it does not seem reasonable to permit the plaintiffs to exact a charge so completely at variance with their written undertaking.

4. Item 5 of plaintiffs' bill of particulars involves an extensive controversy with respect to the installation of brick, whether facing brick or otherwise. Plaintiffs seek a total of $19,158.07. This figure was some-what reduced by the proof. In the light of the facts and the conclusion reached it is unnecessary to undertake to reconcile the difference between the amount claimed and the proof.

The plaintiffs by an amendment to the complaint said that they assumed a contract made by the defendant Henke Construction Company to purchase its brick from Lusco Brick & Stone Company. The brick had been approved by the Government. The size of the brick was specified in the contract taken over by plaintiffs. Each brick was to run, with a certain permissible tolerance, 2¼ inches in thickness, 3¾ inches in width, and 8 inches in length. At the same time the plaintiffs assumed a contract made by the defendant Henke Construction Company with said Lusco Brick & Stone Company for salt glazed tile.

Substantially, it is the contention of the plaintiffs that the brick furnished under the above...