P. J. CARLIN CONST. CO. v. GUERINI STONE CO.

(Circuit Court of Appeals, First Circuit. April 2, 1917.)

No. 1256.

1. CONTRACTS 303(4)—PERFORMANCE-DISCHARGE BY OTHER PARTY'S BREACH, Where a building subcontract required the completion of the work within 300 days, but provided that, if the subcontractor was delayed by the default of the general contractors or others, the time should be extended for a period equivalent to the time lost, delays by the general contractors, interfering with the progress of the work by the subcontractor, did not justify it in declining to complete the work, though under another provision of the contract it was entitled to damages for such delay.

[Ed. Note. For other cases, see Contracts, Cent. Dig. §§ 1424-1433.] 2. DAMAGES 30-ELEMENTS-BREACH OF CONTRACT.

Where a building subcontractor, because of breaches of the contract by the general contractors, refused to complete the work and sued for damages, the conversion by the general contractors to their own use of materials, tools, and machinery of the subcontractor, left on the premises when it ceased work, was not an element of damages, and evidence thereof should not have been admitted.

[Ed. Note. For other cases, see Damages, Cent. Dig. § 222.]

3. CONTRACTS

261(3)—PERFORMANCE-DISCHARGE BY OTHER PARTY'S BREACH. Where a building subcontract, calling for the performance of labor and the furnishing of materials over a long period of time and involving large expenditures, in addition to stipulating for monthly payments in advance of 85 per cent. of the cost of the work actually erected, contained a provision that the general contractors thereby contracted to pay at the time, in the manner, and upon the conditions therein set forth, the stipulation as to the time of payment was material and of the essence of the contract, and its breach justified the contractor in declining to complete the work.

[Ed. Note. For other cases, see Contracts, Cent. Dig. § 1176.] 4. CONTRACTS 176(1)-CONSTRUCTION-QUESTIONS FOR COURT.

The ascertainment from the language of a building contract, its subject-matter, and the surrounding circumstances of the intention of the parties as to whether the time of payment is a material obligation, the breach of which will justify the contractor in declining to complete the work, involves the construction of a written contract, and is a question for the court, though it calls for the determination of a question of fact. [Ed. Note. For other cases, see Contracts, Cent. Dig. §§ 767, 1041; Trial, Cent. Dig. § 326.]

5. CONTRACTS 303(5)—PERFORMANCE-DISCHARGE BY OTHER PARTY'S BREACH. A building subcontract required the subcontractor to furnish and set in position, including the concrete backing, all imitation of sandstone, and to construct interior concrete walls, etc., and provided for payment therefor of $64,750, in monthly payments on account not exceeding 85 per cent. of the cost of the work actually erected, on requisitions on a form to be supplied by the general contractors. A subsequent paragraph required a subcontractor, at the option of the general contractors, to also set all granite walls, etc., for 40 cents a square foot surface. Held, that as the monthly payments to be made in advance were for the concrete work and to come out of the $64,750, and as there was no provision for monthly payment for setting the granite, the general contractors were not guilty of a breach of contract, justifying the subcontractor in refusing to complete the work, because they failed to honor requisitions For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 241 F.-35

which included advance payment for the granite work in the amount demanded.

[Ed. Note. For other cases, see Contracts, Cent. Dig. §§ 1434-14391⁄2.] 6. CONTRACTS 346(3)-ACTIONS FOR BREACH-EVIDENCE ADMISSIBLE UNDER PLEADINGS.

In a building subcontractor's action for breach of a contract requiring monthly payments of 85 per cent. of the actual cost of the work erected, the bill of complaint alleged that the subcontractor's requisitions for payments demanded payment in accordance with the terms of the contract of the sums due for work performed. Held that, without an amendment of the complaint to allege a modification of the contract, evidence should not have been admitted that the parties had agreed upon a unit basis of $1.07 per cubic foot as a basis for determining the amount to be paid, and that the requisitions were in accordance with that agreement. [Ed. Note.-For other cases, see Contracts, Cent. Dig. § 1719.] 7. CONTRACTS 274-ACTIONS FOR BREACH-NATURE OF REMEDY-“TERMINATE."

Where, because of general contractors' breach of the contract, a subcontractor notified them that it terminated the contract and would proceed no further with the work, but would hold the general contractors liable for damages for the breach, the word "terminate" simply meant that the subcontractor declined to go on and complete the work, and did not prevent the subcontractor from suing on the special contract on the theory that it had been rescinded.

[Ed. Note. For other cases, see Contracts, Cent. Dig. §§ 1202-1206. For other definitions, see Words and Phrases, First and Second Series, Terminate-Termination.]

8. DAMAGES 124(1)-MEASURE OF DAMAGES-BREACH OF CONTRACT. Because of general contractors' alleged breach of a contract, a subcontractor refused to complete the work and sued for damages. A provision of the contract required the general contractors to reimburse the subcontractor for any loss caused by delay on the part of the general contractors, and there had been such delay. Held, that the subcontractor was entitled to recover, if at all, the reasonable expenditures incurred in the performance of the contract, less payments made and materials on hand, damages due to the delays not included in the expenditures and attributable to the general contractors, and the profits that would have been realized from performing the contract.

[Ed. Note. For other cases, see Damages, Cent. Dig. § 326-329, 336.]

9. DAMAGES 218-MEASURE OF DAMAGES-INSTRUCTIONS.

In such action, an instruction that the jury could consider the reasonable expenditures incurred by the subcontractor, the unavoidable losses incident to stoppage of the work, the amount of work actually performed, the amount the subcontractor was actually entitled to by reason of such work at the contract price, and the profits which it could have made; that the items to be taken into account were the outlays, less the material on hand, the amount of work actually performed, and the profits, if any, which were not speculative; and that the measure of profits was the contract price, less the expense of carrying out the contract-embodied a duplication of elements, and was misleading.

[Ed. Note. For other cases, see Damages, Cent. Dig. §§ 560–562.]

In Error to the District Court of the United States for the District of Porto Rico; P. J. Hamilton, Judge.

Action by the Guerini Stone Company against the P. J. Carlin Construction Company. Judgment for plaintiff, and defendant brings error. Reversed and remanded.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

John C. Wait, of New York City (Charles Hartzell, of San Juan, Porto Rico, and Howard G. Wilson, of New York City, on the brief), for plaintiff in error.

Edward S. Paine, of New York City (Eugene Congleton, of New York City, on the brief), for defendant in error.

Before DODGE and BINGHAM, Circuit Judges, and ALDRICH, District Judge.

BINGHAM, Circuit Judge. This is a writ of error from a judgment, in favor of the Guerini Stone Company against the P. J. Carlin Construction Company, entered in the United States District Court for Porto Rico, in an action brought by the former against the latter to recover damages for an alleged breach of contract. The case has been twice tried before a jury, and each time a verdict has been found in favor of the plaintiff. At the conclusion of the first trial the plaintiff, feeling aggrieved in the amount of the verdict, prosecuted a writ of error to the Supreme Court, and a new trial was granted. The opinion of the court is reported in 240 U. S. 264, 36 Sup. Ct. 300, 60 L. Ed. 636, where a general statement of the case will be found.

The grounds upon which the new trial was granted were: (1) That the obligations of the defendant under the eleventh paragraph of the contract were unduly limited and practically annulled by the rulings of the trial judge; that it was error to read into the subcontract, to which the plaintiff and defendant were parties, certain provisions contained in the general contract, between the defendant and the government, and relieve the defendant from liability for damages due to delays resulting from "the action of the representatives of the government in changing foundations" or "in suspending or stopping the work"; (2) that the ruling of the trial court-that "if there was delay in the furnishing of the granite, there could have been no liability under the subcontract for such delay in money, but such a condition was to be remedied by an extension of time for completion as therein provided" was error; that paragraph 11 of the subcontract bound the "defendant to reimburse plaintiff for any loss caused by delay resulting from defendant's failure to provide labor and material not included in the subcontract," and for loss caused by delay in providing granite and foundations; that the extension of time provided for in paragraph 7 was inserted for the purpose of relieving the subcontractor from "liability to liquidated damages imposed upon [him] by paragraph 6 for failure to complete his work within the time therein limited," and could not "properly be construed to deprive him of his right under paragraph 11 to reimbursement for losses attributable to delays assumed by the general contractor"; and (3) that the court erred in excluding an "estimate of the total cost to plaintiff of the doing of the work called for in the subcontract," to the effect that it could be done for $53,012 and at a profit of $9,700; that profits based on such testimony were not contingent and speculative, and that "no more definite or certain method of estimating profits could well be adopted than to deduct from the contract price the probable cost of furnishing the materials and doing the work." These were the grounds upon which the judgment was vacated.

** *

The court, however, passed upon alleged errors assigned to the refusal of the trial judge to instruct the jury in accordance with two requests for rulings, as to both of which it held there was no error. The first of these requests was held to have been properly refused, on the ground that the evidence failed to show that the requisitions, which the plaintiff was bound by the contract to submit before payments could be required, were based upon the cost of actual work erected, or that a unit price had been agreed upon that might be employed in making up the requisitions." And the other request was held to have been properly refused for the reason that its application had not been "confined to the case of the plaintiff being found entitled to recover upon the theory that the contract was rightfully terminated by the notice of May 22, 1912"; that other grounds of action were declared on to which the instruction would not be applicable.

In the concluding paragraph of the opinion, the court said: "Exceptions were taken to the refusal of certain other instructions requested by plaintiff with the object of basing a recovery of damages, including profits, upon the ground of plaintiff having been prevented by defendant's acts from performing its contract within the time specified or a reasonable extension thereof, or on the ground that defendant's refusal to make payments and other breaches of contract were so unreasonable and inexcusable as to indicate an inability or unwillingness on its part to carry out the contract or to amount to a refusal to perform it in the future, such as to justify plaintiff in stopping work. But these exceptions have not been fully argued, and the requests are perhaps wanting in accuracy; hence we pass them without consideration."

It is apparent, therefore, that the Supreme Court did not pass upon the question whether the plaintiff was justified in declining to go on and complete the work under the contract, either because of the defendant's alleged failure to make payments as required by the contract, or because of the alleged prevention of performance of the contract by the plaintiff, within the time specified or a reasonable extension thereof, through delays attributable to the defendant.

The present writ of error is prosecuted by the defendant. Many errors are assigned, but the only available ones relate to the admission or exclusion of evidence and to instructions which were given to the jury or refused.

The evidence discloses that, on the 22d day of May, 1912, the plaintiff wrote the defendant, notifying it that it terminated the contract, would proceed no further with the work and should hold defendant liable for damages for its breach.

One of the grounds on which the action proceeded was that the plaintiff had been prevented from performing its contract within the time agreed upon or a reasonable extension thereof, through defendant's delay in providing the foundations of the building, in furnishing the granite to erect the basement walls, and in stopping plaintiff's work on the 9th of March, 1912, until the foundations were underpinned, and that, because of this, the plaintiff was justified in declining to go on and complete its work under the contract.

As bearing upon this view of the case, the defendant requested the court to charge the jury that the plaintiff was not justified in terminat

ing the contract because of delays. This request was refused and the defendant excepted. It is covered by assignment of error No. 41.

[1] Whether these delays constituted a breach which would entitle the plaintiff to maintain an action for damages under paragraph 11 of the contract, provided it went on, or held itself ready to go on, and complete the work, or whether they constituted a breach which would. justify the plaintiff in declining to go on and perform the balance of the work, are, in view of the terms of the contract, quite different propositions. It is plain, as held by the Supreme Court, that under paragraph 11 of the contract the defendant would be liable to respond in damages for delays in the material progress of plaintiff's work attributable to defendant's failure to provide labor and materials, and to its failure to provide foundations and granite, if plaintiff completed, or stood ready to complete, its contract. But, in view of the provisions of the contract, it does not follow that, if the plaintiff was delayed in completing its work within the 300 days specified in paragraph 6, it could decline to go on and complete the same, for it appears by paragraph 7 that the time for completion was not limited to 300 days from the date upon which the building was ready to receive its work and after it was notified to proceed, as delays of this character were not to be taken into consideration in making up the 300 days within which the plaintiff was required to perform the contract. In paragraph 7 it is provided:

"Should the subcontractor be obstructed or delayed in the prosecution or completion of the work by neglect, delay, or default of the owner, the architect, the general contractors, or of any other contractors employed by them upon the work, or by alterations which may be required in said work, or by any damage which may happen by fire, lightning, earthquake, or cyclone, or by the abandonment of the work by the employés through no fault of the subcontractor, then the time herein fixed for the completion of the work shall be extended for a period equivalent to the time lost by reason of any or all of the causes aforesaid," etc.

This provision makes it clear that delays occasioned the plaintiff by the owner, the general contractor, or by alterations which might be required in the work, were not to excuse the plaintiff from going on and completing the contract, but were to operate as an extension of the time, or were not to be considered in computing the time within which, by the terms of the contract, the plaintiff was required to perform its work. Although the defendant was to be responsible to the plaintiff in damages for such delays, provided they interfered with the material progress of its work, we are, nevertheless, of the opinion that the plaintiff was not justified, in view of the provisions of paragraph 7, in declining, on this account, to go on and complete the contract, and that the jury would not be warranted in finding from the evidence that the plaintiff was prevented from completing the contract within the time specified. The court erred in refusing this request.

The same question is raised by defendant's exceptions to specific portions of the charge, as noted in defendant's assignments of error, Nos. 19, 20, and 28.

[2] In assignments Nos. 79, 80, and 81, the defendant claims there was error in the admission of evidence tending to show that, at the time the plaintiff ceased work on the building, it had on hand and left