Western Transmission Corp. v. Colorado Mainline, Inc., 8718.

• Decision Date: 18 April 1967
• Docket Number: No. 8718.,8718.
• Citation: 376 F.2d 470
• Parties: WESTERN TRANSMISSION CORPORATION, a Corporation, Appellant, v. COLORADO MAINLINE, INC., a Corporation, A. J. Curtis & Co., a Corporation, and Seaboard Surety Company, a Corporation, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

376 F.2d 470 (1967)

WESTERN TRANSMISSION CORPORATION, a Corporation, Appellant, v. COLORADO MAINLINE, INC., a Corporation, A. J. Curtis & Co., a Corporation, and Seaboard Surety Company, a Corporation, Appellees.

No. 8718.

United States Court of Appeals Tenth Circuit.

April 18, 1967.

A. G. McClintock, Cheyenne, Wyo. (Vinson, Elkins, Weems & Searls, B. Jeff Crane, Jr., and Raybourne Thompson, Jr., Houston, Tex., on the brief), for appellant.

William H. Brown, Casper, Wyo. (Morris R. Massey, of Brown, Drew, Apostolos, Barton & Massey, Casper, Wyo., on the brief), for appellees.

Before MURRAH, Chief Judge, and HILL and SETH, Circuit Judges.

HILL, Circuit Judge.

The appeal is from a judgment rendered upon a jury verdict in an action arising from a contract providing for the construction of a pipeline in the State of Wyoming. Appellant was the owner of the project and was defendant in the trial court. Appellees were joint venturers in the construction of the project and were plaintiffs below. Summarizing, appellant urges error in the following respects: (1) Failure of the trial court to sustain its motion for a directed verdict and subsequent motion for judgment notwithstanding the verdict; (2) refusal by the trial court to give two requested instructions; and (3) admission of certain oral testimony and three exhibits, all offered by appellees in the trial.

Appellant Western Transmission Corporation, hereafter referred to as Western, entered into a contract with appellee, A. J. Curtis & Co., hereafter called Curtis, providing for the construction of 25.5 miles of pipeline to be constructed of 12-inch steel pipe of a wall thickness of .203, grade X-46" or X-52" and in 52-foot lengths. Western agreed to furnish the pipe as specified. Gulf Interstate Engineering Company, which we will refer to as Gulf, was employed by Western to do the engineering work on the project and to act as its agent in the supervision and inspection of the work done by Curtis under the contract. Curtis later, with the approval of Western, subcontracted the work to appellee Colorado Mainline, Inc., hereafter called Mainline, with Curtis remaining responsible for the work and participating in the supervision.

The project was commenced after considerable delay, necessitated by Western being required to procure construction authority from the Federal Power Commission and to thereafter sell stock to raise the construction money. On October 12, 1964, the first rail cars of line pipe arrived at the job site and Curtis first learned that .219 wall seamless pipe had been substituted for the .203 wall electric resistance weld pipe called for in the contract. This pipe also did not meet the contract terms as to length and uniformity of thickness. These deficiencies undisputedly would lead to more work and unexpected problems in connection with welding the pipe joints. About this same time, Curtis and Mainline learned that a discharged former employee of Curtis, one Duncan, had been hired by Gulf as the welding inspector on the job. Before the welding was commenced, Landes, general superintendent for Curtis, and Carey, superintendent for Mainline, discussed the welding problems with Ford, who was Gulf's chief inspector. During this same period, A. J. Curtis, the company's president, went to the job site and talked with Coffin, Gulf's chief engineer, about the deficiencies in the pipe. On about October 20, Landes and Coffin agreed on an upward adjustment of five cents a foot in the contract price for handling and welding the pipe. Curtis and Mainline had requested that Duncan be taken off the job by Gulf because of the past unpleasant experience Curtis had with him. There is evidence to support a finding that Gulf assured Curtis and Mainline that Duncan would perform his inspection duties without regard to his bad feeling toward Curtis. From the evidence, it may also well be concluded that these agreements did not settle all of the existing items of dispute between the parties and certainly did not purport to settle any differences subsequently to arise. Appellant's chief concern at this point appeared to be to get the pipe laid at all cost. Appellees contended at the trial that they proceeded with the construction contract, after the October supplemental agreement, only with the understanding that the remaining items of dispute between the parties would be settled after the work was completed and there is ample evidence in the record to support this contention and the apparent finding by the jury upon the issue.

In spite of continuing controversies between the parties appellees remained on the job until December 16. However, during this time work was stopped for short intervals on several occasions. By December 16, when appellees took their men off the job, the construction was about 80 per cent completed, all of the welding had been done by December 3 and the contractors had expended considerably more than the contract price. On December 21, appellees met in Houston, Texas, with representatives of appellant and Gulf in an effort to finally work out the then existing matters in controversy between the parties. This effort failed, appellees then left the job completely and appellant hired another contractor to finish the project.

Appellant's main thrust in this appeal centers around its asserted defense of waiver and estoppel. At the outset we do not reject the numerous legal authorities cited in appellant's brief in this area of the law. We simply say they are not applicable to the factual issues of this case because they do not pertain to the right of an innocent contracting party to proceed with performance upon condition after the breach.

It is elementary that an innocent party may waive a breach of a contract and continue performance on his part. If such performance is continued with no conditions attached, the innocent party has made an election and waived the breach.¹ But the innocent party may continue performance on condition that his right to subsequently assert the breach is preserved. In that event the right must not only be asserted but must be assented to by the other party.² Also, even after an innocent party has elected to proceed under the contract, despite the breach by the other party, he may thereafter change his position and assert the breach if the other party has not relied upon the election and changed his position because of such reliance.³

The trial judge, in his instructions to the jury, accurately and in plain, understandable language, applied these principles of law to the evidence adduced at the trial. He advised the jury in substance that it was a question of fact whether there was a substantial breach by Western and whether Curtis and Mainline thereafter continued to receive benefits and assert rights under the contract; that if they continued to go on with the contract unconditionally after knowledge of the breach, then such breach cannot be an excuse for their nonperformance; but if Curtis and Mainline thereafter continued performance in reliance upon an assurance from Western that their right to question the various acts of Western constituting the breach would be preserved until all facts with respect to the performance of the contract were definitely ascertained, then Curtis and Mainline did not waive their right to assert claims for additional compensation. The court also instructed the jury that to sustain Western's position of waiver, it must find that Western materially and to its prejudice changed its position in reliance upon promises of Curtis and Mainline to continue performance regardless of the breach.

Appellant vigorously contends that on the basis of its defense of waiver and estoppel and under the evidence adduced, as a matter of law, Curtis and Mainline could not recover and its motion for a directed verdict should have been sustained. In considering such a motion the court must view the evidence in a light most favorable to the party against whom the motion is directed and if the evidence and the inferences drawn therefrom would cause reasonable and fair-minded persons to form different conclusions of the facts in issue the motion should not be granted.⁴ Appellant's whole argument on this point assumes that the evidence and the inferences flowing therefrom were undisputed on the issue of waiver and estoppel. The authorities on this point cited in appellant's brief are applicable only when no factual issues exist. We have read and carefully considered all of the evidence and cannot agree with appellant's point. The trial judge correctly denied the motion and submitted the case because sharp factual issues existed and it would have been clear error to have taken the case away from the jury. Although this record is voluminous and the trial was lengthy, we do not view the case...