Vance v. Arnold , 114 Utah 463 ( 1949 )

In detailing the facts of this controversy, we do not intend to convey the impression that all were uncontroverted. Very few are important to this decision and in those instances where they were disputed, we have adopted the findings of the trial judge. All of his findings are supported by substantial evidence.

On the 6th day of November, 1944, defendants entered into a contract with the United States of America for the construction of an automatic sprinkler system in certain warehouse buildings at the Utah Army Service Depot near Ogden, Utah. Defendants' contract price was arrived at, in part, by a compilation of bids submitted by subcontractors. Plaintiffs were electrical contractors doing business in Salt Lake City, Utah, and submitted a bid for the electrical installation. Prior to submitting their bid, plaintiffs had received copies of the plans and specifications for the installation and after computing the costs and expenses involved in the electrical work, they submitted a bid to defendants wherein they agreed to do the electrical work for the sum of $14,500.

Upon being awarded the job by the government, defendants discussed the electrical subcontract bid with plaintiffs and notified them that they, defendants, had received bids for considerably less than the $14,500 bid by plaintiffs. Based on this information, plaintiffs apparently reduced their bid to the sum of $10,000 and subsequently met with defendants to further discuss the details of the job. At the time the electrical subcontract was computed, plaintiffs were uncertain as to whether or not the low pressure alarm system was to be installed as part of the electrical work. This matter, however, was the subject of a later discussion with the defendants.

On or about the 15th day of November, 1944, plaintiff, Kimball Vance, and his estimator met with the defendants and discussed the extent of the electrical work included in plaintiffs' bid. When the defendants were informed of plaintiffs' uncertainty in connection with the installation of the low pressure alarm system and were further informed by the plaintiffs that the revised bid of $10,000 did not include this low pressure alarm system, defendants refused to award plaintiffs the subcontract for the electrical work. Plaintiff Kimball Vance then discussed the matter further with his estimator and notified the defendants he would accept the subcontract, including the installation of the low pressure alarm system if required by the government, for the increased sum of $10,700. After receiving this assurance, defendants then executed a purchase order for the subcontract in the following words and figures:

"We are awarding you the Sub-Contract for furnishing all material and labor required for the Electrical work under the plans and specifications of Contract 2-04-167-Eng-688 in amount of Ten Thousand Seven Hundred Dollars, (10,700.00). Parties to this agreement understand fully the following conditions:

"1. Viking-Eichholz are to furnish in place the Five Horse Power Motors to operate the Air Compressor units. Vance Electric Service are to furnish the labor and materials for all wiring and controls for the Air Compressors and Motors.

"2. All work and material is to be subject to the inspection and approval of the Engineer in Charge of Construction and (or) his representative.

"3. Final payment will be made after receipt of approval in writing from the Engineer in Charge of Construction.

"We extend for your use for execution of this Sub-Contract the following. The material has a value of $6895.00.

"Preference Rating AA-3

"Allotment No. or Symbol W-6

"The undersigned purchaser certifies, subject to the penalties of section 35(a) of the United States Criminal Code, to the seller and to the War Production Board, that, to the best of his knowledge and belief, the undersigned is authorized under applicable War Production Board regulations or orders to place this delivery order, to receive the item(s) ordered, for the purpose for which ordered and to use any preference rating or allotment number or symbol which the undersigned has placed.

"Viking-Eichholz "R.B. Bean "Signature of Authorized Official."

In order to obtain the necessary preference rating on the materials necessary for the electrical installation, defendants requested that plaintiffs furnish them with a break down of the materials to be used. On November 15, 1944, this information was furnished by plaintiffs and included in the list was certain of the materials necessary for installation of the low pressure electric alarm system. The total cost of the materials itemized by plaintiff was $6,895.00, and this is the figure shown in defendants' purchase order quoted above.

Plaintiffs commenced work pursuant to the terms of the purchase order and completed all of the specified work except the installation of the low pressure alarm system. On November 21, 1945, defendants, by written communication, notified plaintiffs that because of their refusal to install the low pressure alarm system, this portion of the job would be awarded to another bidder and the costs of this installation charged against the amount due the plaintiffs.

The importance of this system is unquestioned. Its purpose is to sound a warning when the air pressure in the system is reduced to such a point that any further reduction might permit the water to start flowing through the sprinklers with resultant water damage to all stored property.

On November 24, 1945, the plaintiffs answered defendants' communication of November 21, 1945, by the following letter:

"This will acknowledge receipt of your letter of November 21st with reference to the above captioned matter.

"Please be advised that we consider our sub-contract agreement with you as fully performed and executed on our part. The provision of the contract to which you refer does not require any electric alarm devices or circuits whatsoever, and in view of provision 1-A-02(c) electric alarm circuits were no part of our work. This subdivision is a part of the special provisions of the specifications which provide that they shall govern over the drawings and all specifications covering the work.

"It is our position and always has been our position that under the plans and specifications the alarm devices, bells and circuits were no part of our work, and we can, therefore, assume no responsibility for such work. However, in order to avoid any delay or misunderstanding, and to permit each party to preserve and protect his own rights with particular reference to the interpretation of the specifications, we are willing to proceed with the installation of these alarm devices under the following conditions, to wit:

"We expressly reserve the right to claim additional compensation for labor and materials furnished and services performed in connection with the installation of the alarm devices including the right to institute legal proceedings to recover therefor. In the event that our interpretation of the specifications is upheld as a result of legal proceedings, you will then pay us the cost of labor and materials plus 10% profit and 5% overhead for the installation of the alarm devices, plus interest computed at the rate of 6% per annum of said sum from the date of completion of said work. However, in the event that our interpretation of the specifications is rejected as a result of legal proceedings, these devices will be installed at no additional cost to you.

"If you desire us to proceed on this basis kindly advise us in writing of your acceptance of our proposition."

On November 26, 1945, defendants acknowledged receipt of plaintiffs' letter, accepted the proposition submitted therein, and requested the plaintiffs to proceed forthwith.

The trial of the action came on for hearing before the District Court of the Third Judicial District, in and for Salt Lake County, and after hearing the evidence of the parties, the trial judge made findings of fact and conclusions of law favorable to the defendants and entered judgment in favor of the plaintiffs for the sum of $424.41, admittedly due to the plaintiffs for certain extra work not directly involved in this litigation. As a conclusion of law, the trial court found that the plans and specifications of the contract required the installation of the low pressure electric alarm circuits by the defendants and that plaintiffs were obligated to install this system without additional remuneration.

Plaintiffs appeal from the judgment as entered and while they assign 19 specifications of errors, these can be grouped under two principal contentions. First, that the trial court erred when it permitted introduction of incompetent parol evidence concerning the acts, conduct and statements of the parties preceding and co-existent with the execution of the written contract; and, second, that the trial court should have found as a conclusion of law that the low pressure alarm system was not part of plaintiff's work because of not being included in the plans and specifications.

While the trial court found that plaintiffs had orally agreed to install the low pressure electric alarm system, regardless of the interpretation of the plans and specifications, we need not consider the assignment of error on this ground in view of our holding that installation of the system was included within the terms and conditions of the plans and specifications. Neither need we concern ourselves with those specific assignments of error dealing with parol evidence for the reason that the reception of this evidence was immaterial if the plans and specifications required plaintiffs to install this system.

In inviting bids for this installation, the United States Government furnished each bidder with copies of the plans and specifications. It is admitted that both plaintiffs and defendants had the use of these. In view of the claimed discrepancy, it is necessary to interpret the provisions of the plans and the specifications dealing with the low pressure alarm system. The specifications are contained in one volume and can appropriately be divided into general specifications, special provisions and letters of modification. There are three sheets of plans which are material insofar as this action is concerned. On sheet No. one, we find three separate references to the low pressure electric alarm system. These are as follows: (1) A note, "low pressure alarm system, set at 25 p.s.i. shall be installed for each dry pipe valve;" (2) a note, "see drawing U.G. 75-3 for electrical hook-up;" and (3) a detail of valve chamber installation showing location and identification of low pressure alarm. On sheet two, which is the schematic layout of the valve house, there appears the following note:

"Contractor to install water gongs and low pressure alarm system."

On sheet three of the plans, which is the electrical layout, there appears a diagram showing the electrical circuits, the location of the pressure switch, and the notation "Low pressure alarm bell inside building (set for 25 lb. air pressure)," with an arrow running from the notation to the bell.

There is no doubt that if the plans were considered to be controlling, the plaintiffs were required to install the low pressure alarm system. Plaintiff, Kimball Vance, conceded that at the trial and does not contend to the contrary in this court.

Passing to the general specifications, we are required to interpret three subparagraphs, two of which might appear to be inconsistent. Paragraph 24-01 of these specifications is as follows:

"24-01. General. The contractor shall furnish all labor, materials, and equipment and perform all operations necessary for the installation of automatic sprinkler systems in certain buildings and enclosed walkways designated in the SPECIAL PROVISIONS, in accordance with the drawings and these specifications."

This general provision places on the defendants the responsibility of completely installing the automatic sprinkler system, in accordance with the drawings previously referred to and the specifications hereinafter quoted.

Section 24-03 b (6) of the general provisions is as follows:

"(6) Alarm Valves. Alarm valves shall be of the latest design of any manufacturer listed by the Underwriters' Laboratories, Inc., or other nationally recognized testing laboratories, and shall be suited for the purpose intended. Valves shall be of the same size as the riser and shall be of a variable pressure type, designed to prevent false alarms due to water hammer or other pressure surges. Electric alarm circuitswitches shall be provided. Water motor alarms are not required. Alarm valves shall be equipped with standard fittings and accessories, such as gages and retarding chambers."

Prior to the time plaintiffs computed their bid, the government, by a letter addendum, deleted from this subparagraph the two italicized sentences, so that this paragraph, as amended, makes no mention of electric alarm circuit switches. It is one of plaintiffs' contentions that by deleting these two sentences the general specifications do not require the installation of the low pressure alarm system. Defendants, in opposition to this, contend that this subparagraph has to do with the wet system, whereas the installation is concededly a dry pipe system. While we lean towards defendants' contention, it is not necessary for us to decide this point. The deletion of these two sentences may make some difference in the requirements imposed by this paragraph, but it does not change or alter the provisions of the next quoted paragraph. The most that can be contended for the deletion is that subparagraph 24-03 b (6) no longer deals with the necessity of installing the electric alarm circuit switches.

Paragraph 24-03 b (7) provides as follows:

"(7) Dry Pipe Valves. Dry pipe valves shall be of the latest design of any manufacturer listed by the Underwriters' Laboratories, Inc., or any other nationally recognized testing laboratories. Dry pipe valves shall be equipped to give a signal on operation of the system. A low air pressure alarm shall beprovided to operate a local bell at a pressure of five (5) poundsper square inch in excess of the static water pressure on the wetside of the valve. Where dry pipe valves supply three hundred (300) or more heads, the valves shall be equipped with quick opening devices. The dry pipe valves shall be equipped with standard trimmings, such as gages and priming chambers." (Italics ours.)

This paragraph specifically provides for the installation of the low pressure alarm system and with subparagraph 24-03 b (6) silent as to this requirement, it cannot be said that there is any inconsistency between the two. Neither is subparagraph (7) hostile to any other provision of the general specifications. On the contrary, it is entirely consistent with all other general specifications and with the plans hereinbefore referred to and the notations contained therein.

The next contention made by plaintiffs involves the interpretation of certain special provisions. Those provisions, having a bearing on the question involved, are as follows:

"Section 1a — Special Provisions "These special provisions describe and cover the particular work set forth herein. In case of discrepancy the SpecialProvisions shall govern over the drawings and all specificationscovering this work.

"1A-02. Work to be done consists of furnishing all necessary plant, labor, equipment and materials (except materials and equipment specified to be furnished by the Government) and constructing therewith Automatic Sprinkler Systems for Warehouses 8D, 9A to 16A, inclusive, and Buildings No. 256 and No. 266, inaccordance with the drawings listed in Paragraph 1A-03 hereof andwith these specifications.

"(b) Type of Systems. The automatic sprinkler systems shall be the dry pipe type, as specified in the Section on AUTOMATIC SPRINKLER SYSTEMS.

"(c) Electrical Alarm Circuits are not a part of this work. The contractor shall provide plugged tees for installation of supervisory control switches, which will be installed by others.

"1A-03. Drawings.

"(a) The work shall conform to the following drawings, which form a part of these specifications, and are filed in the U.S. Engineer Office, Wright Building, 1209 Eighth Street, Sacramento, California. In case of conflict between the specifications and the detailed drawings, the specifications will govern.

"List of Drawings
    File No.             Sheet No.                    Designation
    UG 75-3            So. 1, Sht. 2,             Automatic Sprinkler
Sht. 3, Sht. 4,               Systems.
UG 75-4            So. 1, Sht. 2,             Automatic Sprinkler
Sht. 3                        Systems."

If there is any conflict in the special provisions, it arises by virtue of the fact that the provisions of subsection 1A-02(c) appear to eliminate certain circuits which are required by the provisions of sections 1A-02 and 1A-03. Subsection (c) might be interpreted in one of two ways. If the first sentence is torn from its context and interpreted to apply to all electric alarm circuits, then it would be inconsistent with the plans, with the general specifications previously referred to, and with other quoted special provisions. In addition, it might destroy the successiful operation of the sprinkling system and eliminate from the contract one of the most important parts of the warning system. If the paragraph is considered as a whole, then it deals only with the installation of what is referred to as the A.D.T. circuits and any inconsistency and ambiguity between the plans, specifications and provisions is removed.

We conceive it our duty in interpreting the plans, specifications and provisions which form part of this contract to reconcile the provisions, if reasonably possible, so as to give effect to all, and to construe the complete contract to carry out its dominant purpose. If two interpretations 1 are possible, one which would lead to confusion, uncertainty or elimination of one of the essential parts of the contract, and one which would harmonize all provisions of the writings and make the contract complete, fair and usual, the latter interpretation should be preferred.

It is obvious that if we take the first sentence, "electrical alarm circuits are not a part of this work" out of the paragraph and hold that it applies to the low pressure alarm system, we eliminate from the contract a very vital part of the warning system. One of the most important alarm signals 2 is not required, and the safety feature to protect the supplies and equipment from water damage is not considered part of the installation. It is conceivable that some other contractor might later make this installation, but we have grave doubts that it was intended by the parties to eliminate a very vital part of the warning system with an expectation that it might or could be later installed. Reasonably prudent men would not likely plan the construction of a very expensive installation and eliminate an integral part of its workings, intending to have another subcontractor install the missing system at a later date and at additional cost.

If we do not separately consider each sentence but treat the paragraph as a whole, we find the second sentence of the paragraph dealing with an electrical alarm system, one not shown on the plans and one that was to be installed by others. This second sentence of the paragraph provides that the contractor shall provide plugged tees for installation of supervisory control switches, which will be installed by others. This sentence refers to what is designated as the A.D.T. system. This was an electrical alarm system that was to be later installed by a company that was specialized in that particular type of installation. The purpose of that system was to inform the control station personnel the location of the unit that was in operation. Our understanding of the system is that a plugged tee is installed on the dry side of the line. When the wires are run to complete the system, a supervisory switch can be placed at the position of the tee. If the water system is called into operation and the valve opens and permits the water to flow through the dry side, the flow or pressure of the water operates the supervisory control switch. A code system is used to indicate the location of the various valves installed in the system, and as the circuit is activated, the identifying code is relayed to the control fire station.

The A.D.T. or supervisory electric alarm system was not to be considered part of the contract, except to the extent that plugged tees were to be installed by the electrical sub-contractor. The installation of the tees was necessary so that when the A.D.T. system was subsequently put in, the outlets or openings would be available. It seems to logically follow that because part of the work was called for in the plans and specifications, to remove any doubt as to the balance of the work, installation of the rest of the system was excluded by the first sentence of the paragraph. There was a reason for mentioning the fact that this circuit would not be considered part of the work, even though the plans made no reference to this alarm circuit. Provisions were in the specifications requiring work to be done in preparation for its later installation, and so to avoid confusion it was consistent to provide that that circuit need not be considered part of the work.

Appellants contend that to restrict the paragraph to the A.D.T. system would render the provision useless, as the supervisory system is not shown on the plans. However, the explanatory notes on the plans and the provisions in the specifications mention the installation of the supervisory control system, and specifically provide that the installation shall be by others. Having mentioned the system and having required the installation of plugged tees, it is not inconsistent to provide that the electrical circuits necessary to operate the supervisory control system are not to be considered part of the work.

In this instance we have a half-million dollar installation where successful operation depends on the installation of three alarm systems. The plans and specifications indicate that one, the supervisory control system, is to be installed by some one other than the parties to this litigation. The other two systems referred to in the plans and specifications are valuable to the successful operation of the sprinkling system, and there is not the slightest suggestion that either of these two systems is to be the subject of a separate contract.

If we were to adopt appellant's construction, we would give little consideration to ordinary business judgment for the reason that the following effects would result: A relatively cheap but very important part of an expensive installation is eliminated; the work and effort necessary to prepare detailed plans and specifications is done for naught; plans which are carefully and painstakingly drawn are of no value because of a single sentence which is prepared at the same time the plans are drafted; and the warning system is impaired to the extent that all property stored by the government is subject to possible damage by water. It is hardly an answer to say that some one else could do it. Good judgment, common sense, and economy dictate that the sprinkler system together with warning devices, should be installed as a complete system within the 90-day period provided by the contract. There was a reason for permitting the A.D.T. to install its own system just as the telephone installation is separately provided for. However, we are unable to find any good reason for eliminating the low pressure alarm system from the other electrical work.

To construe the paragraph, as we believe the parties intended, would be to hold that both sentences in the paragraph were dealing with the same system, and that when the special provisions refer to electric alarm circuits in the same breath with knockout tees and supervisory control switches, that all referred to supervisory control circuits. To so hold appears to be more reasonable than to sustain appellants' contention which in effect makes a contract which is so unusual that reasonable men would not likely enter into any such agreement. In transactions such as this, the sanity of end and aim should at least be considered, and an interpretation which makes a rational and probable agreement ought to be preferred. Two sentences of the same paragraph should not be torn from context and one sentence applied to one system and the other enlarged to include two systems. If the last sentence is dealing only with the supervisory control system, then the first sentence would be limited to the same system. So construed, the requirements in the plans and specifications involving low pressure alarm circuits would be given force and effect.

We conclude that when the plans, specifications and special provisions are considered in their entirety, they require the installation of the low pressure electric alarm system.

Plaintiffs allege two causes of action. We have dealt only with the second cause and have not concerned ourselves with discussing the other for the reason that all items included in the first cause, except the credit for $180.32 claimed by defendants, are disposed of by stipulation of counsel and our holding on the second cause. As to the $180.32 credit, there is substantial evidence to sustain the trial court's finding of fact and we, therefore, do not disturb that finding.

The judgment is affirmed. Costs to respondents.

WOLFE and McDONOUGH, JJ., concur.