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03/18/87 Monmouth Public Schools, v. D. H. Rouse Company

March 18, 1987





506 N.E.2d 315, 153 Ill. App. 3d 901, 106 Ill. Dec. 608 1987.IL.330

Appeal from the Circuit Court of Warren County; the Hon. Richard Ripple, Judge, presiding.


Justice Green delivered the opinion of the court. Spitz, P.J., concurs. Justice McCullough, Dissenting.


On July 10, 1980, plaintiff, Monmouth Public Schools, District 38, brought suit in the circuit court of Warren County against defendants, D. H. Rouse Company (Rouse) and Hartford Accident and Indemnity Company (Hartford). Plaintiff sought damages for an alleged breach of a contract by which Rouse agreed to replace the roof on the Monmouth High School gymnasium. Hartford was alleged to be the surety upon Rouse's performance bond. Later an amended complaint was filed. Defendants filed answers thereto denying most of the allegations and pleading affirmative defenses of estoppel, laches, illegality, and waiver. Plaintiff denied these allegations. By agreement, the amended complaint was dismissed as to Hartford and the case was heard, on the merits, at bench. On May 31, 1984, the circuit court entered an order finding defendant was not liable. A timely post-trial motion was denied on February 19, 1986. Plaintiff has appealed. We reverse and remand for a determination of plaintiff's damages.

Plaintiff let bids for the roof work on the gymnasium and awarded the contract to Rouse, which was the lower of two bidders. Rouse agreed to do the work for $24,900. A contract was signed on August 17, 1979, which required Rouse to begin the work on that date and to complete the project by November 14, 1979. Section 8(e) of the supplement to general conditions of the contract provided that time was of the essence of the contract. Evidence presented indicated that plaintiff needed to have the roofing work completed because leaks in the roof had substantially impaired the use of the gymnasium for basketball. The evidence was undisputed that the completion date of November 14, 1979, passed without Rouse's so much as starting any work on the roof although the project architect had given him various warnings. Rouse contends that the architect had granted it an extension of time to perform the work. The evidence on this question was disputed, but the trial court found that no extension had been given. Such a finding was supported by the evidence, and we give deference to that finding.

The substantial issue in the case arises from sections G and H of article III to the supplement to the general conditions of the contract. Section G states:

"If the contractor fails to correct defective work or persistently fails to supply materials or equipment in accordance with the contract documents, the owner may order the contractor to stop the work, or any portion thereof, until the cause for such order has been eliminated."

Section H then provides:

"If the contractor defaults or neglects to carry out the work in accordance with the contract documents or fails to perform any provision of the contract, the owner may, after seven days' written notice to the contractor and without prejudice to any other remedy he may have, make good such deficiencies. In such case an appropriate change order shall be issued deducting from the payments then or thereafter due the contractor the cost of correcting such deficiencies, including the cost of the architect's additional services made necessary by such default, neglect or failure. The architect must approve both such action and the amount charged to the contractor. If the payments then or thereafter due the contractor are not sufficient to cover such amount, the contractor shall pay the difference to the owner." (Emphasis added.)

Robert Huff, of the firm designated under the contract as the architect, testified that on November 15, a decision was made to terminate Rouse's contract. The firm then so informed Rouse by telephone, telegram, and letter. The telegram stated that Rouse should consider the telegram to be notification to stop all work under the contract and that an explanation would follow. A letter which was then sent to Rouse contained these words:

"As stated in your contract the above project was to be completed by November 14, 1979. We have asked you numerous times to supply men and material and have had no positive results.

As stated in Article III, Paragraphs G and H, we are notifying you to halt all work in the project. The owner is exercising his right to finish the project. We are contacting your bonding company and expect you ...

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