City of Dallas v. Shortall , 87 S.W.2d 844 ( 1935 )

I am unable to agree with my associates on the questions decided in the majority opinion, and must give effect to the contract as made by the city of Dallas and the Central Contracting Company, from which the rights of appellee must be determined. There is no contention that there exists any further covenants or agreements.

Preliminary to the making of the contract, the city of Dallas surveyed the route and planned the tunnel at a place it thought best. It made superficial test holes, only a few inches deep, with a hand auger, to locate the upper outline of rock through a hill, and, on such survey and tests, formulated the plans and specifications. Bidders were requested to furnish two bids; one on the basis of concrete placed in the tunnel by the ordinary method of being poured behind forms set in place, and an alternative bid for "gunite" lining.

The plans and specifications and the call for bids provide: "The quantities given below, though estimated with as much accuracy as possible in advance, are to be considered as approximate only. Bidders must satisfy themselves from personal examination of the proposed work, and of the detail plans, or by such other means as they may prefer, as to the accuracy of the following estimate, and must not, after the proposals are submitted, dispute or complain of such estimate, nor assert there was any misunderstanding in regard to the nature or amount of the work to be done." The plans and specifications further provide: "All parties who shall bid on any portion of the work called for in these specifications or shown on the accompanying plans must familiarize themselves therewith, and they shall also personally examine the route of proposed sewer noting the conditions to be met with during construction." Before entering bids on the construction, a Mr. George Prendergast, agent of the Central Contracting Company, and Thomas H. Shortall, the appellee, went over the proposed route, examined the depth of the superficial test hole, and determined for themselves the upper outline of the rock formation. With this information, the Central Contracting Company submitted its bid; $45,014.82 on "gunite" construction, and $49,029.82 on heavier concrete. The bid of the Central Contracting Company for the gunite method was accepted, and, thereafter, on March 18, 1930, a contract was entered into in which the contractor undertook, covenanted, and agreed to furnish all labor and material, a completed structure, in accordance with the true purpose and design of the sewer, in accordance with the proposals of the said contractor.

The contract, as noted in the majority opinion, is quite lengthy. Only five of its provisions, I think, are pertinent to the questions involved on this appeal, which I deem it advisable to quote in full:

"Section 7 — The contractor shall not be entitled to any claim for damage from any hindrance or delay from any cause whatever in the progress of the work, or any portion thereof; but when such hindrance or delay results from any cause entirely beyond the control of the contractor, such hindrance or delay (excepting such as may from time to time result from ordinary and not unusual weather conditions for the season of the year when said contractor is at work), may entitle the said contractor to such an extension of time for completing the contract as may be determined by the City acting by and through its Board of Commissioners providing the contractor shall have given notice in writing to the Board of Commissioners of the cause of the delay."

"Section 12 — The City Engineer shall have the right to make alterations in the line, grade, plan, form or quantity of the work herein contemplated either before or at any time after the commencement of the work. If such alterations diminish the quantities of the work to be done they shall not constitute a claim for damages or for anticipated profits on the work dispensed with. If they increase the amount of work such increase shall be paid for according to the quantity actually done and according to the price or prices stipulated for such work or similar work in this contract."

"Section 14 — That the said contractor hereby agrees that it will not transfer, sublet or assign this contract by power of attorney or otherwise, or sublet any part of the work except for delivery of materials, to any other person, firm, or corporation or in any way abridge the terms of this contract and the specifications, without first obtaining the consent of the City of Dallas, expressed by a resolution of the Board of Commissioners, and upon such conditions as may be prescribed by the said Board of Commissioners; not shall the said contractor, assign, by power of attorney or otherwise, any of the moneys payable or arising under this contract without first obtaining the consent of the Board of Commissioners and under such terms and stipulations as the City shall make."

"Section 26 — That it is further mutually understood between the parties that the said contractor, before filing his bid or proposal upon the said work herein contracted for as well as before signing this contract, has by careful examination satisfied himself as to the nature and location of the work, the conformation of the ground, the character, quality and quantity of materials to be encountered and to be used and the character of equipment and facilities needed preliminary to and during the work under this contract. The said contractor fully realizing all of said conditions agrees to deliver the entire work herein contracted for in accordance with the plans, profiles, drawings and specifications prepared by the Engineer and adopted by the Board of Commissioners, and according to the true purpose, intent and design of the same, and to do and perform all work necessary to accomplish the same."

"Section 28 — That it is further mutually understood that as shown by the bid of the contractor and the tabulation of the same as shown by the report of the said Engineer the said contractor agrees to perform the work herein contracted for according to the above schedule of prices and to do and perform the same for the sum of Forty Five Thousand and Fourteen and 82/100 ($45,014.82) which said sum shall represent the full compensation to be paid the contractor, provided, however, that should the quantities of the said work be diminished or increased or should the said contractor be required to perform any extra work the same shall be paid for, or in the case of diminished quantities the same shall be subtracted from said contract price according to the methods prescribed by the terms of this contract, provided, further, however, that no extra claim shall be allowed for any real or asserted work unless the same shall have been approved by the Engineer and the Committee in charge of the said work and duly certified to the Mayor and Board of Commissioners."

On March 22, 1930, four days after the date of the contract, the Central Contracting Company, in violation of section 14, above quoted, and without the knowledge or consent of the authorities of the city of Dallas, entered into an agreement with Thomas H. Shortall, whereby it assigned, sublet, and transferred the work contracted, and Shortall assumed all of the obligation of the contract; and, soon thereafter, moved his machinery to the site of the tunnel, placed drag lines and concrete mixers at the north and south portals in preparation for the commencement of the work. A delay was encountered at the south portal, due to the fact that the city of Dallas had not acquired right of way across property owned by Mr. Sam Leake, who obtained a temporary injunction against the city, on the ground that he had not been adequately compensated under a condemnation proceeding instituted against him by the city.

The Central Contracting Company, on April 18, 1930, was notified by the city authorities to commence work, and, on May 12, 1930, when the right of way was cleared and the injunction dissolved, the contracting company was again notified to begin work from the south portal of the tunnel, through the Leake property. Shortall then commenced active work of construction, under the active supervision of the Central Contracting Company; such supervision being exerted by George Prendergast and H. H. Meers, both employees and representatives of the Central Contracting Company.

The delay occasioned by the Leake injunction, from April 18, 1930, to May 12, 1930 (23 days), is the basis for the item of $2,677.36 damage, which the trial court and the majority opinion hold the city is liable to the appellee Shortall.

Soon after the commencement of construction, it was found that the north and south portals of the tunnel could not be located at the point first anticipated, due to the lack of hardness and consistency of the rock formation; so it became necessary to move the openings or portals further into the side of the hill, which required a greater amount of open cut. The city of Dallas agreed with the Central Contracting Company that the north and south openings to the tunnel might be moved, and, for the extra work necessary in moving, the city of Dallas paid the contracting company on monthly estimates, furnished by it, for the amount of the open excavation upon the unit of a cubic yard, as bid by the contracting company; and then a shaft was sunk from a higher point up the hill to the grade line of the tunnel. From this shaft, tunneling operations were carried outward to the portal or openings. The spoils, consisting of loose rock, were hoisted up the shaft, then trucked from the top of the shaft to a final point of disposition.

After the tunnel had been partially completed, it was determined by the city authorities that the gunite method of applying concrete would be unsuitable to the needs of the city of Dallas, and a change was made for re-enforce concrete, using the plan of construction called for under the bid of the Central Contracting Company for such work.

On April 24, 1930, the engineer of the city of Dallas received and, on August 6, 1930, forwarded the respective letters copied in the majority opinion. The one received was addressed to "Mr. John Young, City Engineer," and signed by "Central Contracting Company, by G. Edward Prendergast"; and the one forwarded was addressed to "Central Contracting Company, attention Mr. G. Edward Prendergast." It will be noted here that, in neither of these letters is mentioned appellee Shortall as having a claim against the latter, or was in any way interested in the construction of the tunnel as a subcontractor or assignee. The record reflects that all monthly estimates were signed by the Central Contracting Company, approved in its name, and all vouchers therefor were issued to the Central Contracting Company, indorsed and either cashed or deposited in a bank to the credit of the Central Contracting Company. It will be further noted that not a single voucher was ever issued to Shortall or cashed by him during the construction of the tunnel.

The city of Dallas, under the contract, paid the Central Contracting Company for the heavier type of concrete, re-enforcing and timbers, left in place, and for rock excavation and refilling same with concrete, in the sum of $66,165.36, on monthly estimates adjusted and accepted by the Central Contracting Company.

The sinking of the shaft 70 feet in depth to the grade line of the tunnel is the basis for the item of $2,236.79; the haul of the soil and spoil from the shaft to its final point of destination is the basis for the item $1,139.10, and the disposition of excavated material, because of the unanticipated formation encountered, is the basis for the item of $18,947.50. These three items, with the item of $2,677.36, above mentioned, for delay, and $4,803.21 interest thereon, aggregating the sum of $29,803.96, is the amount the trial court and the majority opinion holds the city is liable to the appellee Shortall. To the holding, I am unable to agree.

I am of the opinion that Shortall, being a stranger to the contract, was under no obligation to the city to perform its covenants, voluntarily assuming to do so under private arrangements with the Central Contracting Company, and could impose no liability upon the city by virtue of his voluntary undertaking; nor could he assume that the city had the right to construct the tunnel on the Leake property, which occasioned his alleged damage for delay. Clearly, the appellee Shortall had no right to assume and rely upon the fact that the city of Dallas had performed a duty to the Central Contracting Company of having secured the right of way before the work of construction would be directed to begin. The city made no contract with Shortall, and there is no evidence that, at the time Shortall moved the machinery and retained his skilled employees, for which he predicates his damage for the delay item of $2,677.36, the city knew the Central Contracting Company had assigned the work to him. The Central Contracting Company assembled no machinery, nor is there any claim that it had skilled employees to cause it damage. So, if Shortall, under private arrangements with the Cenaral Contracting Company, incurred that expense, it was of no concern of the city, and the liability of the city therefor would not attach. It is not contended that the city gave consent for the assignment or subletting of the contract, or that any employee knew at the time of the delay the contractor had done so. Then, how could the city be estopped, if, in fact, a municipality may be estopped in the circumstances ?

The governing authority of the city of Dallas exists in a board of commissioners; the board, acting within the scope of its authority, alone can bind the municipality in constructual contracts and the expenditures of public funds. The contract involved in this suit (section 14), in effect, allows the contractor the right to transfer, sublet, or assign the work, only by obtaining the consent of the city of Dallas, expressed by a resolution of the board of commissioners and upon such conditions as may be prescribed by the board. This provision is, without doubt, valid. Its saliency is evident in this controversy. It may well be presumed that the board knew the extent of the city's liability under the contract for any delay it might occasion to the Central Contracting Company, and, furthermore, it knew to whom liability would extend. The contractor's assignee, one or many, in the absence of a valid agreement authorizing the assignment, clearly has no cause of action against the city of Dallas for damages growing out of delay in getting the work started, for which it cannot be presumed that the city knew of such efforts on his part.

On the three items relating to unforeseen conditions, the contract clearly exempts the city of liability. I am in strict accord with the rule announced in the majority opinion, which the appellee, in argument before this court, admits is applicable to the facts of this case, and, to stress the point, I quote from the opinion: "If there had been no pre-survey made by appellant, showing the character of formation, and bids, at least impliedly requested to be made on such survey, then appellant's contention that the formation actually encountered would be matters entirely incident to the cost of construction, and such costs appellee would have to bear. Under such condition, if the Central Contracting Company based its bid on the belief that there was a solid rock formation, through which the tunnel could be constructed, it would be the contractor's mistake, uninfluenced by any representations of appellant as to the character of formation. The rule of law contended for by appellant, under the facts we have stated, is the necessary result of giving effect to the contract, as made. And again, if appellant had represented to bidders that the character of formation shown on its map must not be relied on as a true character of formation, but that each bidder must satisfy himself of the character of formation to be encountered, or some similar expression, then appellee would have no cause of action for either of these three items of damages."

What are the facts? (1) The plans and specifications and notice for his bids, as quoted in this opinion, specifically provide that the quantities shown on the plans were estimated and to be considered as approximate only; that bidders were required to satisfy themselves from personal examination of the proposed work of the detailed plans and the accuracy thereof, and familiarize themselves therewith; and "must not, after the proposals are submitted, dispute or complain of such estimate, nor assert there was any misunderstanding in regard to the nature or amount of work to be done, and shall also personally examine the route of the proposed tunnel, noting the conditions to be met with during construction"; (2) Mr. Prendergast, representative of the Central Contracting Company, and Mr. Shortall, the appellee, went over the route of the proposed tunnel, inserted a rod in the hole depth made by the city, and thereafter, the Central Contracting Company submitted its bid, which was accepted, and the contract for the construction of the canal was entered into. The contract, as noted above, in effect recites: (a) The contractor to furnish all labor and material; (b) to deliver a complete structure, in accordance with the intent and design of the structure; (c) that it had inspected the site, and was thoroughly familiar with local conditions, and that it would not complain of them; and (d) to bear all loss arising from action of elements and "from any unforeseen obstruction of the work."

The troubles encountered by the contractor in the excavation of the tunnel, the sinking of the shaft and the removal of the spoils arose from a local condition, and unforeseen circumstances in the prosecution of the work. These burdens and hazards were expressly assumed by the contractor, and to guard against such unforeseen conditions, the city of Dallas protected herself under the related provisions of the contract.

In the case of Hill v. City of Beaumont (Tex. Civ. App.) 5 S.W.2d 590, involving a situation very similar to the one here, a written contract for the construction on the city's wharves provided that bidders should inspect the site and inform themselves of local conditions, and that all losses arising from unforeseen circumstances, or unusual obstructions or difficulties, should be borne by the contractor. The court held that the contractor was not entitled to recover against the city, because of encountering large number of logs imbedded, notwithstanding the city's blueprints and plans did not disclose obstructions, the city had contracted to forestall any liability for such unforeseen obstructions. It is without controversy that the Central Contracting Company agreed with the city of Dallas to furnish all of the material, tools, and labor necessary to construct a complete sewer through the hill "in accordance with the true purpose and design of the said profiles, plans, drawings and specifications." Assuming, without deciding, that the appellee Shorthall stands in the shoes of the contractor, he therefore took over the obligations with reference to construction, and can stand in no better position than his assignor. Shortall then undertook to perform the obligation of the contractor, but, after entering upon the work, finds the obligations more onerous than was expected, due to the fact that the formation through which tunneling operations were expected to be carried were not as anticipated, he should not be heard to say that he was disappointed with conditions actually facing him in carrying out the contract, or that the plans and specifications were faulty. Lonergan v. San Antonio Loan Trust Co.,101 Tex. 63, 104 S.W. 1061, 106 S.W. 876, 22 L. R. A. (N.S.) 364, 130 Am. St. Rep. 803; Dearing Sons v. Texas Construction Co., (Tex.Com.App.) 1 S.W.2d 265. If the plans and specifications of the city were insufficient, yet the contractor, having agreed to deliver a completed tunnel to the city, that it would not complain of local conditions, and would bear all loss arising "from any unforeseen obstruction of the work," cannot be heard to complain. To relieve the contractor or its assignee of the responsibilty which they voluntarily assumed would require the courts to make a new contract for the parties. To my mind, the contract should stand with its benefits and burdens, as the parties themselves have made it, therefore, respectfully indicate my dissent; the judgment should be reversed and here rendered for the appellant.