Amberg Granite Co. v. Marinette County

Action on contract commenced by Amberg Granite Company on May 7, 1943, against Marinette county and the First National Bank of Iron Mountain. Defendant county counterclaimed for damages for breach of said contract by plaintiff. Judgment was for dismissal of plaintiff's complaint and the granting of judgment on defendant's counterclaim in the sum of $9,475. Plaintiff appeals.

In 1940 Marinette county advertised for bids for the construction of a courthouse. The construction was under supervision of the Works Progress Administration and involved some thirty-nine separate contracts. It was first contemplated that Bedford stone be used as the surfacing material. The Amberg Granite Company suggested that it could furnish granite at a reasonable price if the state quarry located at Amberg, Wisconsin, could be used and WPA labor furnished by the county. Accordingly, it submitted a bid on August 15, 1940, proposing to furnish the granite at a sum of $17,950, completion date to be six and one-half months from the date the WPA labor was available. On September 26, 1940, a contract was entered into by the county and the Amberg Granite Company wherein the county agreed to furnish a minimum crew of laborers consisting of one assistant superintendent, one general shop foreman, sixteen cutters, four blacksmiths, five jackhammer operators, and twenty-five common laborers, and to furnish the state quarry. The contract makes the "Standard Form of the General Conditions of the Contract" issued by the American Institute of Architects a part of the contract. Article 22 of that document provides that on specified defaults of the contractor or on any material breach of the contract the owner may terminate the employment after seven days' written notice, take possession of the premises, and complete the work under the contract. "In such case the contractor shall not be entitled to receive any further payment until the work is finished. If the unpaid balance of the contract price shall exceed the expense of finishing the work including compensation for additional managerial and administrative services, such excess shall be paid to the contractor. If such expense shall exceed such unpaid balance, the contractor shall pay the difference to the owner." On October 23, 1940, the defendant furnished an incomplete crew of workers but the testimony shows that by December 11, 1940, a full crew of workers was available and the actual fabrication of stone had begun. It was from this date (December 11, 1940) that the county figured the six and one-half month completion period. The stonecutters which were furnished were hand-tool operators, classified and certified by the WPA. The work did not progress according to schedule and it became increasingly evident that the work could not be completed within the time allowed. The testimony shows that requests for additional laborers were made by the plaintiff from time to time. On February 25, 1941, the plaintiff by letter notified the defendant that it proposed to complete its contract, but required as additional compensation, $5,400 in cash and $6,250 in WPA, and additional time. On March 19, 1941, the architect recommended that the contract be terminated and thereafter on March 24, 1941, defendant notified plaintiff in writing that it claimed a material breach of the contract and would hold the Amberg Granite Company liable for all damages thereby incurred. The plaintiff, by letter on April 8, 1941, refused to yield in the matter of termination and stated that it was ready and willing to carry out its contract.

At the time of termination, plaintiff had provided only sufficient stone to reach the water table. Defendant did not use the granite in completing the contract but finished the building above the water table with Bedford stone. Plaintiff then filed its claim with the county board of supervisors to recover the contract price of $17,950, less the amount of $3,500 already received, and less what it alleged it would have cost to complete the contract. The claim was not allowed and the present action was commenced. Defendant counterclaimed for damages for breach of contract. The case was tried to a court and jury. By special verdict, the jury found, (1) that it was not the intention of plaintiff and defendant that the "stonecutters" to be furnished were to be competent in the use of pneumatic stonecutting tools; (2) that defendant Marinette county did not fail to furnish the required number of stonecutters who were competent to cut granite; (3) that plaintiff notified defendant that it would be unable to fully perform the contract according to its terms; (4) that it would have cost the defendant $50,000 to complete that part of plaintiff's contract remaining unperformed on March 24, 1941. In passing upon motions after verdict, the learned trial judge said:

"Much of the testimony that was received in evidence was not directed to the specific measure of damages involved in the case. However, in view of the fact that the plaintiff made the claim, in substance, that it would require $23,925 to complete the contract, the court is of the opinion that that amount is the lowest amount at which a fair-minded jury, properly instructed, would probably fix the amount that it would cost Marinette county to cause to be completed that part of the contract that remained unperformed on March 24, 1941. . . .

"In view of the fact that the county would have been obliged to pay the plaintiff the sum of $14,450, if it had completed the contract, judgment should be for the defendant county, on its counterclaim, in the sum of $9,475."

Thereupon, the court dismissed plaintiff's complaint and gave judgment on defendant's counterclaim for $9,475. The First National Bank's interest being contingent upon a recovery by plaintiff, no provision covering its claim was made. The plaintiff, December, 1940, assumed a burden by the terms of its contract with defendant which eventually proved to be beyond its ability to carry. Under the facts established, a finding that plaintiff was, on March 24, 1941, so circumstanced that it could not deliver according to the terms of the contract, is amply sustained. Although there is a claim by plaintiff of being capable of living up to its agreement, the evidence shows an inability which amounts to an absolute and unconditional disclosure of intention to default unless it could induce concessions of considerable consequence from defendant.

Defendant, prior and up to March 24, 1941, had carried out its part of the agreement. On February 25, 1941, plaintiff wrote a letter to the building committee, in effect, demanding an increase in its compensation of $11,650. The chairman of the county board testified that the reason Marinette county terminated the contract was that there were approximately thirty-nine contracts to be fitted into the making of the building, and that the county was very much concerned over each contractor coming in and doing his specific work. "It was absolutely necessary to have the facing of this building and the roof, and such, taken care of immediately, and it had to be a part of the scheme of making a completed building. With the request for additional money and with the request for additional hours of man labor and WPA we viewed it as a repudiation of their former contract, and for that reason ordered the termination — ordered them to cease work."

The contention that the circuit court erred in dismissing plaintiff's complaint because the defendant wrongfully prevented completion is not well-founded. In this connection, plaintiff set up a failure of defendant to furnish sixteen skilled pneumatic stonecutters. But the jury found that both parties to the contract understood that pneumatic cutters were not within the contract. And this is amply sustained by the evidence. It appears that the secretary of the plaintiff was familiar with the type of stonecutters available in that district, and that all of such cutters were hand-tool operators. All of the WPA cutting operations at the Amberg quarry had been by hand-tool operators. It is a reasonable inference to be drawn from the facts and circumstances surrounding the transaction, that hand-tool operators were to be provided under the contract. The evidence in the case establishes that the defendant furnished the number of laborers required of it, and in all things performed faithfully its contractual obligations.

Since defendant was not in default at the time of termination, we become concerned as to whether there was a breach or default by plaintiff justifying the defendant in ending the contract and asking for damages. From an examination of the testimony as to the conduct of the plaintiff prior to notice of termination, it appears that the amount of work necessary to be done, together with the letter of February 25th, evidences an effective breach by plaintiff, justifying rescission by the defendant. Although it has been held that the right to rescind for an anticipatory breach is exceptional and can be permitted only where future breach is conclusively established, Smoot'sCase (1872), 15 Wall. (U.S.) 36, 21 L. Ed. 107; Dingleyv. Oler (1886), 117 U.S. 490, 6 Sup. Ct. 850, 29 L. Ed. 984, nevertheless where a party disables himself from performing the other party may treat the contract as rescinded and sue at once. 9 Am. Jur. p. 54, sec. 81. Although a mere anticipation that a contractor will not be able to perform may not be sufficient to justify treating the delay as a total default, still where the contractor who is months behind a schedule agreed upon demands more time and the circumstances of the case show that time is material and is of the essence of the contract, a termination of the contract is justified. As to the rule, seeBrady v. Oliver (1911), 125 Tenn. 595, 618, 147 S.W. 1135, where it is said: "It must clearly appear, not only that defendant could not do the work within the time, but that his failure in respect of this matter would be so material as to make his performance essentially different from his promise." See also Midtown Contracting Co. v. Goldsticker (1914),165 A.D. 264, 150 N.Y. Supp. 809. The materiality of time is here apparent. There were thirty-nine separate contracts involved with this contract, and in some measure, each was dependent on the other. Failure to perform on time would result in a disruption of the entire schedule of construction.

The plaintiff indicated in its letter of February 25th, that it would be unable to go on unless it received more compensation, and even then would have to have an extension of time. The jury so found, and there is no reason to upset that finding. An extension of time asked by the contractor who was already behind would have had the result indicated, of preventing other contractors completing their contracts timely.

Plaintiff also asserts that the termination was wrongful and of no effect since the seven days' notice provided for in the contract was not given. However, the notice stated that the termination is made "pursuant to the provisions of said contract." It follows, there fore, that the notice contemplated a lapse of seven days before it became effective. And in any event, there could be no resulting prejudice to plaintiff for it had available for its purposes the seven days. Plaintiff was warned and although it might have resisted any attempt to remove it from the job during the seven days, it cannot complain that the notice was not effective.

The defendant, of course, was entitled to have the work and material plaintiff had engaged to deliver for the contract price of $17,950 at or about the time which the parties had agreed upon. And it is entitled to be placed in the position in which it would have stood had plaintiff carried out its agreement. The method adopted and material used by defendant in protecting its rights was less profitable to it, and less burdensome to plaintiff than completing the contract with granite. It is also consistent with the rule of damages in case of default agreed upon by the parties.

The jury found that the cost of the completion of the contract (using granite) would have been $50,000. The evidence shows that with the material used, the cost was upwards of $12,000 above the contract price. The court, however, held that under figures most favorable to plaintiff, and referred to in the statement of facts, the judgment should be for the defendant on its counterclaim in the sum of $9,475. The plaintiff is not injured by the trial court's ruling. And since there is no motion to review by defendant, there will be an affirmance of the judgment.

By the Court. — Judgment affirmed.