Opinion
No. 30240.
March 6, 1933.
1. DAMAGES. Evidence held to support finding that no deduction for delay was made from amount due general contractors, rendering materialman not liable to general contractors, under contract for materials, for stipulated damages for delay.
Materialman, under contract to furnish stone to general contractors on buildings for State University, agreed that, in case general contractors were delayed on any of the buildings "solely by our failure to deliver cast stone as needed, we agree to forfeit a sum not to exceed damages in so far as you are liable and in no case to exceed fifty dollars per day on each building."
2. DAMAGES. Materialman, under contract to supply stone to general contractors, held not liable to general contractors for expenses incurred in maintaining its organization during delay in furnishing stone under contract.
Contract between general contractors and materialman required stone to be delivered in order of use and as required, and provided further that for any delay, caused solely by materialman's failure to deliver stone as needed, the materialman would be liable for a sum not to exceed damages for which general contractors were liable, and in no case to exceed stipulated amount per day on each building. The original contract between the general contractors and the state building commission provided that the contractors should forfeit fifty dollars per day as liquidated damages for each day's delay beyond the time limit fixed in the contract for the completion of the buildings. The effect of the contract between the general contractors and the materialman was to require the latter to reimburse the former for all sums for which the former were liable to the state building commission on account of delay, provided such delay was caused solely by the failure of the materialman to deliver the stone as needed.
APPEAL from Chancery Court of Hinds County.
Butler Snow, of Jackson, for appellants.
The penalty had been imposed. It does not appear that Garber Dickson ever asked the commission to take off the five thousand dollars penalty. It does not appear that the commission at any time and place considered the elimination of this penalty; and we respectfully submit that under the undisputed facts in this record, the court was in error in holding that Garber Dickson had suffered no penalty or the payment of liquidated damages in their settlement with the state.
But if we are mistaken in the foregoing, it was fatal error in the court to exclude the testimony showing that the contractors had sustained damages in the maintenance of their organization and the retention of their equipment on the ground, awaiting delivery of the stone, at a cost of approximately four thousand seven hundred five dollars and seventy cents.
It will be noted that article 31 does not purport to limit the matter of arbitration to the amount of damages. By its terms the arbitration clause applies to all claims due to the wrongful act or neglect of the other party. Under this view, the effect of the clause would be to oust the jurisdiction of the court, and this the law does not permit. In such cases the courts ignore the arbitration clause, assume jurisdiction and determine the matters in dispute according to right and justice.
2 R.C.L. 360; 6 R.C.L. 752; 5 C.J. 20, 42, 47; 9 C.J. 759; 26 C.J. 416; Morse on Arbitration, 89 et seq.; Caldwell on Arbitration, 49 et seq.; Tobey v. County of Bristol, 3 Storey 800.
The authorities seem to be uniform to the effect that where there is a covenant to pay, and second, a covenant to refer to arbitration, the covenants are separate and distinct and collateral, and the plaintiff may sue on the covenant to pay without first submitting the matter to arbitration.
Dawson v. Fitzgerald, L.R. 1 Exch. Div. 257; Hamilton v. Home Ins. Co., 137 U.S. 370, 34 L.Ed. 708; Dickson Mfg. Co. v. American Locomotive Works, 119 Fed. 448.
If the arbitration clause is applicable and arbitration was a condition precedent to suit, then the complainant waived the requirement of arbitration.
The duty of procuring the decision of the referee rests primarily upon the party who will have claim for payment; i.e., upon the plaintiff in the suit to be brought after the right of action shall have accrued.
Morse on Arbitration, p. 94.
If there were no delays, there was nothing to arbitrate. Certainly, complainant cannot take the position that whether or not there were delays is a matter of arbitration, for clearly, that would tend to oust the court of its jurisdiction and would render the whole clause inoperative. It must take the position that merely the amount of damages was to be arbitrated and not the liability for damages.
A party who is entitled under the policy to an arbitration or appraisal may waive his right thereto by a failure to make a demand therefor or to take the necessary steps toward securing it. And where an arbitration is demanded by neither party, it is deemed waived by both.
26 C.J. 430; 26 C.J. 431; 26 C.J. 429; Insurance Company v. Gibson, 72 Miss. 57; Miss. Fire Ins. Co. v. Dickson, 133 Miss. 570.
The rule seems to be general that where the parties have not stipulated for liquidated damages in the breach of a contract that the injured party may recover actual damages sustained.
Sedgwick on Damages, 761, 824-5; Noyse v. Phillips, 60 N.Y. 408; Smith v. Newell (Fla.), 20 So. 249; Sherman v. Gray (Calif.), 104 P. 1004.
It would seem clear if the defendant is precluded from claiming credit for the three thousand nine hundred dollars because of the arbitration clause, that the complainant must be precluded from recovering the seven hundred eighty-three dollars and forty cents, or any part of it, because of the arbitration agreement.
Standard Construction Co. v. Brantley Construction Co., 90 Miss. 16; Wigner v. Greenstein, 114 Mich. 310.
Chambers Trenholm, of Jackson, for appellee.
We respectfully submit that there are but two questions, broadly speaking, for determination. The first is whether appellee was entitled to recover the five hundred twenty-three dollars and thirty-eight cents allowed it on account of extra cost of the hospital stone. The other is whether appellant was entitled to recover the three thousand nine hundred dollars, or any part thereof, alleged as damages for delay.
As to the item of five hundred twenty-three dollars and thirty-eight cents allowed appellee, we call attention to the fact that it was composed of three amounts, viz: three hundred sixty-eight dollars and thirty-eight cents for labor and material for models and molds, one hundred twenty dollars for detailing, and thirty-five dollars bond premium. As to two of these amounts we submit there was no question whatsoever, unless under the provisions of the general contract, hereinafter referred to. As to the other we submit that the evidence was conflicting, but the court, sitting as a jury in such case, found in favor of appellee. We submit that upon the evidence this court cannot say that the chancellor was manifestly wrong. If not, then he will not be reversed.
Estate of Isaacs, Dec. v. State (Miss.), 140 So. 338.
As to the three thousand nine hundred dollars alleged damages for delay: first, there is the matter of the construction of the language of the contract between appellee and Garber Dickson, as to whether it limits appellants to recovering only where they were penalized by the state. Then there is the question whether or not appellants were penalized by the state, and the question whether or not the terms of the general contract bound appellee, and if so, the effect thereof.
The only damages Garber Dickson were liable for was the fifty dollars per day per building penalty to the state, so far as delay was concerned. And these were only damages for delay which we are considering. The trial court held that the parties intended that Garber Dickson could not recover from appellee for delay caused by it unless they had been penalized therefor by the state, which is the construction we put upon it all the way through, and for which we still contend.
We cannot assume that the parties intended to say damages suffered, when they said damages "in so far as you are liable." The law supposes the parties to a contract put into their contract all that they wanted there to fully express what their minds consented to.
Bullard v. Brown, 93 Miss. 104, 46 So. 137; Wadlington v. Hill (Miss.), 10 S. M. 560; Hart v. Gardner, 74 Miss. 153, 20 So. 877; Hunt v. Gardner, 147 Miss. 574, 112 So. 7; Lumber Co. v. Netterville, 137 Miss. 310, 102 So. 178; Jones v. Miss. Farm Co., 116 Miss. 295, 76 So. 880.
The court found as a fact that no deduction for delay was made, and that the settlement covered material and labor furnished by the contractors, with an additional sum for anticipated profits and overhead. Again we invoke the rule, cited in the Isaacs Estate case, supra, that this court cannot say from the evidence that the chancellor was manifestly wrong, and that his finding must therefore be sustained.
Argued orally by George Butler, for appellant, and by E.L. Trenholm, for appellee.
This appeal is from a decree of the chancery court of Hinds county, awarding the appellee a recovery of four thousand six hundred fourteen dollars and fifty-three cents against I.C. Garber and A.L. Dickson, composing the firm of Garber Dickson, general contractors, and United States Fidelity Guaranty Company, as surety on a bond executed by said contractors to guarantee the performance of their contract with the building commission of the state of Mississippi for the construction of three public buildings on the campus of the University of Mississippi.
On the 6th day of June, 1929, the appellants, Garber Dickson, entered into a contract with the state building commission to furnish all materials and do all work necessary to construct, according to certain plans and specifications, three buildings at the said University, viz., the hospital building, graduate and classroom building, and demonstration high school building; and duly executed bond with United States Fidelity Guaranty Company, as surety, for the performance of the contract, and the payment of laborers and materialmen. Thereafter the following contract was entered into between appellants, Garber Dickson, and the appellee:
"Garber Dickson, Jackson, Miss.
"Gentlemen: We propose to furnish cast stone and cast granite where stone and granite are shown on plans and called for in specifications of Frank P. Gates Company, Architects, Jackson, Miss., on Demonstration High School, Graduate School and Classroom Building, and General Hospital Building for the University of Mississippi, located at Oxford, Miss., with full freight allowed to Oxford, Miss., as follows:
Demonstration High School ........................ $ 4,738.00 General Hospital ................................. 7,834.00 Graduate School and Class Room Building .......... 20,678.00 __________ $33,250.00
"Delivery: Cast stone on Demonstration High School to be delivered first. All cast stone to be delivered in order of use and as required. In case you (the General Contractors) are delayed on any of the building, such delay being caused solely by our failure to deliver cast stone as needed, we agree to forfeit a sum not to exceed damages in so far as you are liable and in no case to exceed fifty dollars per day on each building.
"Terms: Eighty-Five per cent (85%) of the value of all stone delivered on the job will become due between the 1st and 10th of the month following delivery of same. Balance to be paid when all stone is set in the buildings and accepted by the Architect and Commission.
"Very truly yours, "Wright Cast Stone Co. Inc.
"NHW-W By Neldien H. Wright.
"Accepted: Garber Dickson "By: A.L. Dickson
"Dated: 6-19-29."
The bill of complaint filed herein set up the making of the contract between Garber Dickson and the state building commission, the execution of the performance bond, the making of the contract between Garber Dickson and the appellee, and alleged that the appellee delivered, in compliance with its contract, all the material for the graduate school and classroom building, and demonstration high school building, and also stone for the hospital building, aggregating seven hundred sixteen dollars and forty cents; and that it was at all times ready, willing, and able to deliver all the remainder of said material for the hospital building, but, through no fault of the appellee, the said Garber Dickson refused to take or receive the remainder of said material for said building.
It was further averred that the appellee furnished certain extra stone, amounting to three hundred twenty-eight dollars and thirty cents, and had incurred expense in making estimates, drawings, models, moulds, etc., for the manufacture of the stone for the hospital building amounting to seven hundred eighty-three dollars and thirty cents, and, at the request of said contractors, it had furnished certain labor and had incurred certain expenses in connection with the stone which went into the building, aggregating six hundred sixty-eight dollars and forty cents, for all of which it alleged liability on the part of said Garber Dickson. There were exhibits annexed to the bill of complaint showing the entire amount of stone and extras furnished to the contractors, an itemized statement of the extra cost of stone for the hospital building, on account of the failure to take the entire contract amount, aggregating seven hundred eighty-three dollars and forty cents, and other items claimed for labor on stone, etc., amounting to six hundred sixty-eight dollars and forty cents, together with a list of credits, the account showing a balance alleged to be due the appellee of five thousand two dollars and sixty-three cents, for which a decree was sought.
The answer admitted that appellee furnished the stone for the graduate school and classroom building, demonstration high school building, stone of the value of seven hundred sixteen dollars and forty-one cents for the hospital building, and extras amounting to three hundred twenty-eight dollars and thirty cents. As to the items aggregating seven hundred eighty-three dollars and forty cents, it denied that appellee had incurred expense in making estimates, drawings, models, and moulds for the manufacture of the other stone, and denied the correctness of each item going to make this aggregate sum, and averred that they were unnecessary, unreasonable, and excessive. The answer also denied the appellants' liability for the item of six hundred sixty-eight dollars and forty cents for labor furnished by the appellee in the construction of the buildings, and claimed additional credits amounting to one hundred twenty-two dollars and sixty cents, and also a credit of three thousand nine hundred dollars, as liquidated damages at fifty dollars per day for seventy-eight days' delay due to the failure of the complainant (appellee) to deliver stone according to contract.
As to the item of three thousand nine hundred dollars damages for delay, the appellants averred that, under the contract between Garber Dickson and the appellee, the stone was to be worked to a special design, according to plans and specifications, and under paragraph C, section 2 of the original contract, the appellee became the subcontractor of Garber Dickson, and, under section 37 of the general specifications and conditions, became and was bound to the contractor by the terms of the agreement and conditions, drawings and specifications, and assumed toward the contractors all the obligations and responsibilities that the contractor by said documents assumed towards the owner; that under the subcontract the appellee agreed to deliver the stone called for thereby in the order of use and as required, and that, in case Garber Dickson were delayed on any building solely on account of the failure of appellee to deliver the stone as needed, it agreed to pay Garber Dickson a sum not to exceed the damages for which they were liable (meaning thereby, they averred, from information and belief, the damages sustained by them), and in no case to exceed fifty dollars per day.
The answer further averred that the appellee failed and refused to deliver the stone in the order of use, and as required, and by reason thereof delayed Garber Dickson in the completion of the demonstration high school building and the graduate school and classroom building, a total of seventy-eight days, and prevented them from building said buildings within the time specified in their contract with the commission, and, as a result thereof, the said Garber Dickson became liable to pay, and were required to pay, to the building commission, fifty dollars per day for the seventy-eight days' delay caused solely by appellee's failure to deliver the stone, amounting to three thousand nine hundred dollars, which sum they were entitled to deduct from any sums which they might otherwise be due appellee.
It was further averred that, by reason of the failure of appellee to furnish the stone in accordance with its contract, Garber Dickson suffered other damages, in that during the seventy-eight days they were prevented from the prosecution of the work and the performance of their contract, they were compelled to maintain their organization and retain their equipment on the job awaiting delivery of the stone, at a cost of approximately four thousand seven hundred five dollars and seventy cents, and were consequently damaged in addition to the three thousand nine hundred dollars paid to the building commission, in the further sum of four thousand seven hundred five dollars and seventy cents; and that, if for any reason it should be held that Garber Dickson had not been required to pay the building commission the sum of fifty dollars per day for the said delay, then, it was averred, under the terms of the contract, properly construed, the appellee became indebted to them for such additional cost not to exceed the sum of fifty dollars per day for the delay, amounting to three thousand nine hundred dollars, which they were entitled to have applied against any sum of money otherwise due appellee under the contract.
Voluminous testimony was offered bearing upon the items in controversy and the issues presented; and the court entered a decree disallowing appellee's item of six hundred sixty-eight dollars and forty cents, and two hundred sixty dollars and two cents of its item of seven hundred eighty-three dollars and forty cents, and allowing appellants' claim of one hundred twenty-two dollars and sixty cents, additional credits, but disallowing their claim of three thousand nine hundred dollars as damages for delay, and finally awarded the appellee a recovery against Garber Dickson and their surety of four thousand one hundred fifty-two dollars and sixty-one cents, with four hundred sixteen dollars and ninety-two cents interest, amounting in the aggregate to four thousand six hundred fourteen dollars and fifty-three cents.
The appellants, in their answer, and on appeal, contend that they were entitled to the credit of three thousand nine hundred dollars as damages for failure to furnish the stone in the order of use as required and needed, first, because by reason of such delay they became liable and were required to pay the building commission that sum. Upon the proof, including the records of the building commission which were in evidence, the chancellor found that the building commission made no deduction for delay, and we think this finding is supported by the evidence. The proof shows that, after the demonstration high school building and the graduate and classroom building were completed, and the construction of the hospital building had been finally abandoned, the supervising architect made a final estimate of the amount due Garber Dickson, which, after deducting an alleged overpayment on the demonstration high school building of one thousand eight hundred dollars and ninety-three cents, and without any deduction or penalty for delay, amounted to thirty-nine thousand eight hundred ninety-three dollars and forty-seven cents. From this amount the architect recommended a deduction of five thousand dollars for one hundred days' delay, which the building commission at first adopted, and thereupon offered Garber Dickson in final settlement thirty-four thousand eight hundred ninety-three dollars and forty-seven cents, which they refused to accept as a final settlement. Garber Dickson afterwards submitted to the building commission an audit showing that they had actually expended on the buildings four thousand three hundred twenty-five dollars more than they would receive under the offer of settlement; and thereupon the building commission made them an additional allowance of four thousand three hundred twenty-five dollars, and allowed them to retain the alleged overpayment of one thousand eight hundred dollars and ninety-three cents, all of which aggregated forty-one thousand nineteen dollars and forty cents, or one thousand one hundred twenty-five dollars and ninety-three cents in excess of the architect's final estimate of the amount due them under the contract. From these facts the court was amply warranted in finding that the contractors were not in fact penalized for delay by the building commission, and, consequently, the appellants were not entitled to this credit on the theory that they had been penalized, or required to pay as liquidated damages, that amount by the building commission.
It is further contended, however, that, if it is held that the contractors, Garber Dickson, were not required to pay to the building commission the sum of fifty dollars per day for delay in completing the buildings, still the appellee was liable to the contractors to the extent of fifty dollars per day for expenses incurred in maintaining their organization and retaining their equipment on the job for seventy-eight days that they were delayed in completing the buildings by the failure of appellee to furnish stone in accordance with the requirements of the contract.
The contract between Garber Dickson and the appellee required the stone to be delivered in order of use and as required, and provided that for any delay on any of the buildings, caused solely by appellee's failure to deliver the stone as needed, the appellee would be liable for, and would forfeit to said contractors, a sum not to exceed damages for which they were liable, in no case to exceed fifty dollars per day on each building. The original contract between the contractors and the building commission provided that the contractors should forfeit to the building commission the sum of fifty dollars per day as liquidated damages for each day's delay beyond the time limit fixed in said contract for the completion of the buildings; and the effect of the contract between Garber Dickson and the appellee was to require the appellee to reimburse the said contractors for all sums for which they were liable to such building commission on account of delay, provided such delay was caused solely by the failure of the appellee to deliver the stone as needed. From the context it is manifest that the provision that the appellee would forfeit a sum not to exceed damages for which the contractors were liable means, and should be construed as requiring, that the appellee should reimburse the contractors only for such sums as they were required to forfeit or pay to the building commission as liquidated damages for the delay, not to exceed fifty dollars per day, if such delay was caused solely by the fault of appellee. Liability of the contractors under the original contract, for which the appellee assumed an obligation to reimburse them, was liability for delay only, and the measure and extent of that liability that was assumed by the appellee was fixed at a sum not to exceed fifty dollars per day for each day's delay caused by appellee's fault or failure under its contract. The contract recognized the possibility of delay and fixed the measure of damages therefor at fifty dollars per day, and further limited the damages recoverable from appellee to such damages as the contractors were liable for, that is, such as they were required to pay to the owner; and, the contract having definitely fixed the damages recoverable from the appellee for delay as being such damages only as the contractors were required to pay the owner, the appellee's general liability for other damages, if any, resulting from delay in completing the buildings, was excluded, and the contractors were thereby limited to a right to recover from the appellee only such damages as resulted from the failure of appellee, and which they were required to pay to the owner.
It is conceded throughout that the right of Garber Dickson to recover from the appellee damages for delay is limited to fifty dollars per day; and, if the right to recover any damages for delay is not limited to such damages as the contractors were required to pay the owner, it is not clear to us why the limitation of fifty dollars per day would apply to a claim for other damages resulting from delay. It appears to us that the contract between the appellants, Garber Dickson, and the appellee limited the damages recoverable from the appellee for delay to such damages as the said contractors incurred and were required to pay to the owner for any delay caused by the appellee, and thereby excluded any right of the contractors to recover other damages for such delay; and that the court below committed no error in excluding the evidence offered for the purpose of proving such damages.
Of the claim of seven hundred eighty-three dollars and forty cents for extra cost or damages sustained by the appellee, by reason of the contractors' failure to take all the stone for the hospital building, the court below allowed recovery for the items of three hundred sixty-eight dollars and thirty-eight cents for moulds and models, one hundred twenty dollars for detailing, and thirty-five dollars for bond premium, aggregating five hundred twenty-three dollars and thirty-eight cents. As to the items of three hundred sixty-eight dollars and thirty-eight cents for moulds and models, and one hundred twenty dollars for detailing, we think the testimony is too indefinite and uncertain to sustain the decree of the chancellor, and that these items should have been disallowed. The proof supports the allowance of thirty-five dollars for bond premium paid on account of the proposed construction of the hospital building.
The decree of the court below will therefore be reversed, and a decree will be entered here for the appellee for all items allowed by the court below, except the said items for moulds and models and for detailing.
Reversed, and decree here for appellee.