Wenzel & Henoch Const. Co. v. Metropolitan Water Dist.

115 F.2d 25, 1940 U.S. App. LEXIS 2782
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 15, 1940
DocketNo. 9091
StatusPublished
Cited by6 cases

This text of 115 F.2d 25 (Wenzel & Henoch Const. Co. v. Metropolitan Water Dist.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wenzel & Henoch Const. Co. v. Metropolitan Water Dist., 115 F.2d 25, 1940 U.S. App. LEXIS 2782 (9th Cir. 1940).

Opinion

DENMAN, Circuit Judge.

Wenzel & Henoch Construction Company,' hereinafter called Company, appeal from a judgment of the District Court in favor of the Metropolitan Water District of Southern California, hereinafter called District, in a suit arising out of appellant’s work in constructing the San Jacinto Tunnel.

As a part of the Colorado River Aqueduct project it was necessary for appellee, the District, to have a tunnel constructed through San Jacinto Mountain in Southern California. Before issuing specifications and calling for bids for the construction of this tunnel, the District had made a geological study and report. Core drilling was done and an exploratory drift was made at the West portal. The information thus gained was used as the basis for a report as to what the probable conditions of work would be. Both the information and the report were made available to bidders with a provision of the contract later considered protecting the District from a claim that the report is its representation of the existing conditions.

The specifications, as advertised, and as later embodied in the contract, called Public Works Contract, contained a clause, § 7, providing that if at any time the Chief Engineer of the District should be of the opinion that the performance of the contract was unnecessarily or unreasonably delayed, the Chief Engineer, acting on behalf of the District, might by written notice instruct the contractor to discontinue all work under the contract or any part thereof. In any such case the District might take charge of the work and complete it by a new contractor or by force account. In so doing, the District was empowered to take possession of and use any of the materials, plant, tools, -equipment, supplies and property of every kind provided by the contractor for the purposes of his work. It was further provided that when any particular part of the work was being carried on by the District, under the provisions of this clause, the contractor should continue the remainder of the work in conformity with the terms of his contract, and in such manner as in nowise to hinder or interfere with the persons or workmen employed by the District to do any part of the work.1

[27]*27Under the circumstances outlined, the Company bid upon the work and was found to be low bidder. Thereupon, for the purpose of establishing the financial responsibility of the Company, a contract referred to as the Supplemental Agreement was negotiated and subscribed by the parties concurrently with the execution of the “Public Works Contract.”

By the terms of this Supplemental Agreement the Company was required to establish and maintain a construction fund of $250,000 to which should be added all progress payments made by the District to the Company. Against this fund could be charged money expended in the purchase of materials and supplies and in the payment of labor costs for the work to be done under the “Public Works Contract.” Any difference of opinion as to the propriety of charging a given item against the fund was to be finally determined by the Chief Engineer of the District. The Company covenanted to restore to the fund upon request any money improperly charged against the fund and the District was authorized to withhold sufficient money falling due under the public works contract in an amount equal to any depletion in the event of the Company’s refusal to make the demanded restoration.

The Company commenced construction but from the beginning delays occurred in the progress of the work because the conditions under which the work was performed were much more difficult than had been anticipated when the time for completion had been agreed. There was also evidence that the Company’s methods of meeting the unexpected difficulties were not of the needed and practicable engineering requirements. On December 3, 1934, the District’s engineer notified the Company that the work was unnecessarily and unreasonably delayed and that unless progress improved by January 15, 1935, the District would take over the work.

On January 9, 1935, the District, by letter, notified the Company that, according to information available to the District, the construction fund had been depleted in an amount exceeding the progress payment next due, and advised that it was the intention of the District to withhold payment of the December progress payment pending receipt of the full information called for by the notice.2

Finally, on January 15, 1935, the District’s engineer issued his opinion that the work was unnecessarily and unreasonably delayed and instructing the Company to discontinue all work under the contract. De[28]*28mand was made for the possession of all property being worked and all materials and equipment used in such work.3 Upon the Company’s refusal, a suit was brought by the District to secure possession of the tunnel. The Company was successful in resisting the District’s application for an injunction pendente lite; the District thereupon took possession of the tunnel and appellant’s plant and equipment on February 12, 1935.

The Company brought a suit for specific performance of the contract to require possession to be restored to it. That suit was dismissed upon motion of the District on March 11, 1935.

This suit was brought against the District on January 8, 1937, on three counts: (A) Damages for breach of express contract; (B) In quantum meruit for value of materials furnished and work done independent of express contract; and (C) Money had and received.

Pursuant to stipulation, the trial court ordered the issue of liability of the District to be tried first, the issue of damages to be tried in the event that liability should be established. The court found against the Company on all three counts and ordered judgment accordingly.

A. The Company Not Entitled to Recover for Breach of an Express Contract.

The Company’s theory of recovery under the first count is that both the service upon it of the notice of suspension of work of January 15, 1935, and the subsequent ejectment of the Company on February 12, 1935, from the works were unauthorized acts of actual prevention of performance, either of which constituted a final breach of the contract warranting a recovery on the basis of a prevented full performance.

The opinion of the District’s Chief Engineer that the work on the tunnel was unnecessarily and unreasonably delayed was final and conclusive upon the Company in the absence of fraud. American-Hawaiian Engineering & Construction Co. v. Butler, 165 Cal. 497, 504, 513, 133 P. 280, Ann.Cas.l916C, 44; Connel v. Higgins, 170 Cal. 541, 150 P. 769; Gray v. Cotton, 166 Cal. 130, 136, 134 P. 1145; Martinsburg & Potomac R. R. Co. v. March, 114 U.S. 549, 551, 552, 5 S.Ct. 1035, 29 L.Ed. 255; United States v. Gleason, 175 U.S. 588, 607, 20 S.Ct. 228, 44 L.Ed. 284. The finding of the District Court that the opinion was not fraudulent is amply supported by the evidence.

[29]*29The Company contends that the District did not have the right to suspend the work because:

(1) The District by its own acts was estopped to assert that the Company had unreasonably and unnecessarily delayed the work of construction of the San Jacinto Tunnel.

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Cite This Page — Counsel Stack

Bluebook (online)
115 F.2d 25, 1940 U.S. App. LEXIS 2782, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wenzel-henoch-const-co-v-metropolitan-water-dist-ca9-1940.