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Material Service Corp. v. School City of Hammond

November 4, 1940


Appeals from the District Court of the United States for the Northern District of Indiana, Hammond Division; Thomas W. Slick, Judge.

Author: Briggle

Before SPARKS and TREANOR, Circuit Judges, and BRIGGLE, District Judge.

BRIGGLE, District Judge.

In January, 1938, the E. W. Sproul Construction Company, an Illinois corporation, brought two suits in the District Court against the School City of Hammond, Indiana, and its Board of Trustees to recover balances claimed to be due under separate contracts for the erection of two school buildings, for damages and extras occasioned by delays. On October 1, 1938, the Material Service Corporation, an Illinois corporation, stepped into the shoes of Sproul by an assignment from Sproul to it of all its claims against defendant. The first case grew out of a contract for the construction of the Morton School and the second, a similar contract for the construction of the Edison School, both in the City of Hammond. Plaintiff recovered a judgment in the first case for $24,462.14, and in the second case for $25,155.32. From these judgments defendants appeal.

The two school houses were erected under separate contracts containing substantially identical provisions. The complaints and answers and special findings and conclusions of law in each case are substantially identical, and it is agreed by the parties that the cases are to be heard together and the decision in one will control the decision in the other. Sproul and its assignee will be referred to as the contractor or plaintiff, and, unless otherwise specifically indicated this opinion will refer to the Morton contract. Defendant in the trial below filed a counterclaim but the same has since been abandoned, and it is conceded that the recovery under conclusions of law 1, 2 and 5 of the District Court should stand. Conclusions of law, numbered 3 and 4, present the only questions for review. Conclusion 3 permits recovery of $11,854.86 for furnishing temporary heat during construction, for certain damages due to the failure of defendant to supply proper heat, and for damages occasioned by delay in completion of the permanent heating plant.Conclusion 4 permits recovery of $2,539.61, as damages for delay of the defendant in obtaining confirming orders from the Federal Emergency Administration of Public Works for the performance of certain optional work known as alternates "L" and "M".

The work contemplated was divided into six branches - the first was the general construction which included all work except electrical work, plumbing, heating, ventilating, and automatic temperature control. Sproul was the general contractor, and we are here concerned only with its contract and that of the heating contractor. Under its bid the general contractor submitted a figure for the building complete and also gave separate figures for certain alternate work. The alternate work was designated as alternates "A," "B," "F," "H," "L," and "M," but we shall have occasion to refer only to alternates "L" and "M," as they alone are the subject of controversy. The contractor's total bid was $414,680, which figure included the various alternates aggregating $44,065. The contract was let to Sproul for the net figure of $370,615, which covered all general construction excepting the alternates. Under the contract the board had the right within one hundred and twenty days from the day of its execution to require the contractor to construct the extra work provided by the alternates, by serving notice upon the contractor. The board did, in fact, exercise this option as to alternates "L" and "M" and notified the contractor to proceed with the construction of the work provided by alternate "L" at the bid of $15,868 and that provided for by alternate "M" at the bid of $6,495. It was the delay in gaining the approval of the Federal Emergency Administration in regard to these two alternates that brought about plaintiff's claim for damages represented by the District Court's conclusion of law 4.

Temporary Heat, Conclusion of Law No. 3.

The permanent heating system was to be installed by the heating contractor whose contract among other things provided as follows:

"Time. The contract shall be sufficiently completed that temporary heat can be used, if necessary during and after plastering. The entire contract shall be completed on or before the time of completion of the building structure."

"Temporary Connections. The Contractor shall erect and connect all direct radiators temporarily prior to the permanent setting, as a part of the contract, without extra compensation, when so ordered by the Architect. Temporary valves shall be furnished for such temporary connections, as the valves for permanent use may not be used for temporary setting."

"Heating During Construction. See general conditions."

The general specifications were for the guidance of all contractors and, so far as applicable, became part of the contract of each. Such general specifications contained the following in reference to temporary heat during construction:

"Temporary Heat. The permanent heating plant shall be used to furnish heating during construction, at such times as the Architect may require.

"If impractical, in the judgment of the Architect, to use the permanent heating plant, other satisfactory, approved equipment that will in no way cause damage to finished work, ...

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