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Scully v. Corporation.

December 7, 1949

SCULLY ET AL.
v.
FOSTER-WHEELER CORPORATION.



Author: Finnegan

Before MAJOR, Chief Judge, and FINNEGAN and LINDLEY, Circuit Judges.

FINNEGAN, Circuit Judge.

George T. Scully and James V. DiMayo, Jr., co-partners doing business as the Acme Construction Company, citizens of Illinois, brought suit in the United States District Court for the Northern District of Illinois, against Foster-Wheeler Corporation, a New York Corporation, to recover damages for alleged breach of contract. The case was tried by the Court without the intervention of a jury and judgment was entered against the defendant for $6,897.09 and costs.

The defendant seeks reversal on three grounds: (1) that the lower court erred in the construction it placed upon the contract between the parties; (2) that the court's findings of fact were erroneous; and (3) that errors were made in rulings on the admissibility of evidence.

In 1946 the defendant, Foster-Wheeler Corporation, which does a world-wide business in designing and erecting oil refinery equipment, had a contract to erect, on cost plus basis, for the Great Lakes Carbon Company a carbon reactivating or oil treating plant in Chicago, Illinois. It appears that Foster-Wheeler, since it was a non-resident and was not registered with the district council and with local labor organizations, was not a qualified contractor in the Chicago area. Hence it became necessary for them to employ a local masonry contractor.

On July 22, 1946, the Acme Construction Company directed to the defendant a proposal in writing. The letter stated: "In further reference to conversation of even date, we propose to furnish all labor including masons, carpenters, concrete finishers, iron workers and labors to complete all the work as proposed by you at 2701 East 114th St., in the City of Chicago, under your supervision. And to furnish any and all materials or equipment necessary for the completion of this work on the following basis."

Subsequently and on the fifth of August, 1946, the parties entered into a written contract. This agreement which designated Acme Construction Company, as Sub-Contractor, and Foster-Wheeler Corporation as General Contractor, provided in part as follows:

"1. The Sub-Contractor shall in accordance with the terms of the agreement, and the General Conditions hereinafter described, furnish from time to time as requested by the General Contractor, labor, materials and equipment for the construction of a carbon reactivating and sulphur recovery plant being constructed by the General Contractor, situated at 2701 E. 114th St., in the City of Chicago, County of Cook and State of Illinois.

"The purpose of this contract is to provide for such labor, supervision, skilled craftsmen and such material and construction equipment as may be requested from time to time by the General Contractor for use in connection with the masonry work necessary for the construction of the plant referred to hereinabove.

"2. This contract shall run from the date of these presents until the completion of the construction of the plant referred to hereinabove.

"3. It is agreed that the General Contractor shall have the right to cancel this contract if the work is stopped upon orders of its customer, Great Lakes Carbon Corporation.

"4. The General Contractor shall pay to the Sub-contractor as the costs of the services: etc." (Since the parts of the contract relating to price are not questioned in this appeal there is no necessity to set out or consider the other matter included in Part 4 of the Contract.)

This agreement, together with the general conditions, form the contract.

General Conditions.

"1. The Sub-contractor shall furnish duly qualified and experienced artisans, workmen, foremen and supervisors to carry out the work to be performed by it under the Contract. The Sub-contractor shall at all times enforce strict discipline and maintain good order among the workmen engaged in such work, and shall cause such workmen to observe all reasonable fire prevention and safety rules and regulations in force at the site of the work, and it shall not employ any unfit person or anyone not skilled in the work assigned to him."

At the time this agreement was executed on August 5, 1946, Foster-Wheeler sent to Acme Construction Company a field purchase order which directed: "Please enter our order No. H.R. 296 F66 covering the materials and/or labor covered by your quotation to us of July 22, 1946 and subject to the agreement and General Conditions attached hereto. This agreement and General Conditions are to be considered a part of this order, and we would appreciate your returning to us duly executed copy of this agreement before proceeding with the order."

Shortly after entering into the agreement of August 5, 1946, Acme Construction Company entered upon the performance thereof and undertook to furnish all labor, including masons, carpenters, concrete finishers and iron workers, and all material and equipment necessary. Foster-Wheeler then furnished blue prints and plans indicating the manner in which said improvements were to be erected.On November 25, 1946, the defendant wrote plaintiff as follows:

"Confirming our conversation with your Mr. DiMayo we wish to advise that we consider the work covered by your agreement complete when you have completed the foundation for the steel tower for dearetor as shown on our drawings HR 296-22 F. 50A."

"You will therefore remove your equipment from the job site at the Calumet plant of the Great Lakes Carbon Corporation as soon as convenient."

"Also please cancel our purchase order No. H.R. 296 F66 dated August 5, 1946 * * *"

When the November 25th letter was written the defendant owed the plaintiff $9,996. Plaintiffs protested the attempted repudiation of their contract and notified defendant that they were ready, willing and able to proceed to completion under its terms.

However, defendant persisted in its attitude and engaged another sub-contractor who furnished labor and material such as plaintiff had provided up to November 25.

As a result the suit now at bar was instituted. Plaintiff claimed not only the $9,996 actually due on November 25, with interest thereon, but also damages in the sum of $90,000 for loss of profits by reason of defendant's failure to proceed under the agreement of August 5, 1946.

The defendant filed a motion to strike the complaint on the ground that the contract of August 5 was terminable at will because, it was said, its stated purpose was merely to provide for such labor, supervision, skilled craftsmen and such material and construction equipment as might be requested from time to time by the general contractor. After ...


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