P. Olivier Son v. Board of Com'rs

This is an appeal on a judgment rendered against the plaintiff, P. Olivier & Son, Inc., involving a breach of contract. The trial judge has set forth in detail the facts involved in the ease, along with his reasons for judgment, which we annejp as an appendix hereto.

The plaintiff a general contractor, upon submission of a lump-sum bid in competition with others, was given a contract by the board of commissioners of Lake Charles harbor and terminal district, properly acting through its board, to build a wharf and sheds, known as Wharf Unit No. 3, for the price and at the sum of $444,000; it being stipulated in the *159 contract that subcontractors, as such, would not be recognized.

Plaintiff, immediately upon execution of the contract proceeded with the performance of its obligations thereunder and let out subcontracts for materials and labor.

One of these subcontracts was for the furnishing of all the creosoted piling and lumber to be used in the unit, and was let to the American Creosote Works, and' called for “treatment” according to the plans and specifications of the board.

These specifications provided the manner for treatment of the piling and lumber and set forth in detail, under the caption “Treating Operations,” the process to be followed in its treatment by what is known and designated as the “Full Cell” process; they also provided, under the general caption “Inspection,” in subcaption “Inspection of Piling,” that:

“Piling will -be inspected by an Inspection Laboratory or authorized inspector under the employ and paid by the Doclc Board. This inspection will be made before, during and after treatment at the creosoting plant."

The Robert W. Hunt Company of Chicago was awarded the contract of inspection and placed its most experienced men at the plants of the American Creosote Works to supervise the treatment of the materials of its employer, the dock board, all in accord with the plans and specifications of the board, and with specific instructions of said board, acting through its representative Elmer E. Shutts, engineer, to mail all reportsi on material and treatment directly to said Elmer E. Shutts, engineer.

The piling and lumber, immediately after treatment, was shipped to the job site and the piling driven into position under the direction of the board’s engineers.

After approximately 2,473 out of a possible 3,600 had already been driven, the operation of a dredge in a position nearby sucked some of the sand and silt from around the base of one of the piles, causing it to lean out of line.

It was not until then that, upon investigation by the engineers, the piling then driven were pulled in large quantities and the majority showed signs of brooming and disintegration, whereupon an investigation was made by the board’s engineers to discover the cause of the failure.

Pilfrdriving work was interrupted and plaintiff, feeling confident that the fault, if any, was caused by some error in the specifications itself and not in the manner in which said specifications were followed, so advised the board, at the same time asking for time allowance and requesting arbitration to fix the responsibility, of the failure, but without avail.

On September 24, 1931, the board notified plaintiff that by thorough examination and tests, it believed that a great majority of the piles driven by him were broken, crumbled, disintegrated, defective, and unsuitable, and must be and were rejected by the board until proved otherwise; and ordered him to make examinations and tests thereof by the pulling of all piles in every tenth bent for examination, with the understanding that all piles found to be defective should be removed and replaced at the expense of the contractor, *161 the pulling and redriving of all piles found to be sound and not defective to be at the expense of the district.

The plaintiff refused to do this, and on October 28th the board, through its engineer, rejected all creosoted piling, timber, and lumber which had been supplied by the contractor, declaring it unsound and unfit for use, and not in accordance with the contract, plans, and specifications; and ordering same removed from the site and replaced by sound and satisfactory materials.

Plaintiff took the position that it had complied fully with its contract and the plans and specifications; and requested the board to point out in what detail and particular the creosoted piling and lumber failed to comply with said contract, plans, and specifications ; but this the board failed to do.

Plaintiff then made demand for payment under its schedule, and on failure to receive same, stopped work, and was put in default by formal resolution of the board on November 12 (10), 1931; the board thereafter taking over the work itself and this suit thereupon following.

I.

The substantial issue involved is: Who is responsible for the failure of the piling?

The record discloses that all of the creosoted piling and lumber to be used on the dock board’s job was to be furnished by the American Creosote Works under a contract between plaintiff (contractor) and the American Creosote Works, which provided that the material was to comply with the contract, plans, and specifications of the board.

That under the contract, plans, and specifications, piling should be inspected by an inspection laboratory or authorized inspector under the employ and paid by the dock board; this inspection to be made before, during, and after treatment at the d'eosotimg plant; that creosoted timber and lumber were also to be inspected by the board’s inspector at the treating plant; and that all inspection and analysis of creosoted oils would be made at the plant. (Specifications, p. 55.)

That in a written proposal for inspection of the piling and lumber to be used in the construction of the new docks submitted to the dock board by Robert W. Hunt Company, Consultants, Tests and Inspection Engineers, of Chicago, 111., they offered to use at each plant two inspectors so that an inspector would be on hand at all times during night and day treatments; also to have its manager give the work his careful attention and supervision; gave the names and experience of the inspectors to be used and vouched for their ability, honesty, and integrity. (Trans, vol. 3, p. 622.)

That this proposal was favorably acted upon by the board, and on June 23,1931, through Elmer E. Shutts, engineer of the said board (Trans, vol. 3, p. 628), notice of the award of the contract of inspection was sent to Robert W. Hunt Company at their New Orleans office. In this letter Shutts requested that their most experienced men be placed on this inspection and that they be kept continuously on duty while materials were being treated ; expressing confidence in their ability to inspect the material and the long-standing confidence entertained for the company it'self; requesting the making of all reports on *163 material and treatment to him (Shutts) personally ; instructing them to notify the board immediately should any irregularities in treatment occur or should its representatives have any difficulties, so that they might offer assistance, and telling them to keep in mind that they were 100 per cent, back of them on the inspection of the material. Pour sets of specifications and two sets of plans, complete in every detail, were inclosed with the following instructions: “We therefore think it important that you should have them and be familiar with them.”

The record further discloses that in the course of treatment at the plant, some difficulty was encountered in getting some of the charges sufficiently dry, in accord with the specifications, to satisfy the.board’s inspectors ; that the question of the' use of compressed air was brought up by the treating plant and fully discussed with the inspectors in an effort to bring about the desired results; that the compressed air was thereafter applied on some of the charges with the knowledge and consent of the board’s inspectors; that this air was applied, not on all charges, but only as best judgment might dictate; and that the charges, immediately upon being removed from the treating cylinders, were finally inspected and tested by the board’s inspectors and either rejected or allowed to be shipped to the building site.

That a separate record of the treating operations at the plant was kept by the plant superintendent; that the plant’s record showed the use of air, the amount thereof, and the time duration on each charge, while the record of the inspectors, in the form of personal notes (not included in the transcript), may or may not have showed this detail, nevertheless, this feature was not included in the inspector’s reports to Shutts, so that Shutts claimed he was ignorant of' the use of air until the trial of the suit

The record also discloses that in addition to the “Treating Reports,” “Certificates of Inspection” of the Robert W. Hunt Company, signed by their inspectors, were sent to Elmer E. Shutts, the engineer, certifying that every stick of creosoted piling and lumber described therein and consigned to the building site had been inspected according to instructions, and, based on their experience and judgment, were within the limits of the specifications of the Lalce Charles Harbor and terminal district, furnished by them.

There is little or no doubt that the application of air on the material, at a time when it was at its weakest and not physically able to stand the pressure, i. e., after being subjected to steaming for several hours, punished it severely and caused it to eventually fail under the usual pounding of the hammer while being driven át the site.

From these facts gleaned from the record, we cannot help but place the blame for failure on the defendant board. They surely were well protected under their contract against the trouble encountered and had every facility and opportunity to know exactly what they were getting. Their expert treating engineers were at the plants, and,, through the eyes and judgment of their inspectors, watched every detail of treatment— especially the use of air which they approved' —tested and inspected the finished charges, rejecting those which did not suit them and *165 accepting or approving those which did, allowing those which were approved to he shipped to the site and, without further inspection, driven into position.

It certainly was the duty of the inspection laboratory to know what was or was not permitted under the specifications, details of which they were familiar with, and it certainly was their province to determine whether the process of treatment was or was not in accord with those specifications, and to reject or accept the charges according to the dictates of their own judgment. But the truth of the- matter is that whilst the board looked for compliance with the specifications regarded in the light of Process Specifications, their inspectors required results, as though the treatment was under what is known as Result Specifications. The difference being that in Process Specifications, the different operations and their sequence are stated and little if any discretion left to the contractor, the owner accepting the responsibility for the results, whilst in Result Specifications what is wanted is stated, -but directions are not given as to how to obtain that result.

But be that as it may, this whole matter would not have arisen had the inspectors rejected the material at the plant and not allowed it to be shipped; for surely Shutts, who admits that he was not a treating expert and had no facilities for testing the material at the site, could not himself inspect it; and the record shows that he made no attempt to do so, but apparently relied upon Hunt’s certificate of approval and ordered the piles driven into place almost immediately after they arrived from the plant. And but for the accidental discovery of the defects he never would have known them to exist.

Whilst the learned trial judge points out, in his opinion, the fact that the contract provides for inspection when and where the engineer desires and for inspections and rejections even after materials are in place, we find that he fell into serious error on this point, since on page 55 of the Specifications, we read:

“Piling will be inspected by an Inspection Laboratory or authorized inspector under the employ and paid by the Dock Board. This inspection mil be made before, during and after treatment at the ereosoting plant. Oreosoted timber and lumber mil also be inspected by the Board’s inspector at the treating plant. * * * ”

And since it is a well-settled and well-established principle of law; that special provisions in a contract must prevail over those of a general nature, it follows that under the provisions above quoted, inspection of creosoted piling and lumber was to be made at the ereosoting plant and not elsewhere.

II.

We have therefore come to the conclusion that the defendant is wholly responsible for the conditions brought about by the failure of its own inspectors to require that the specifications be followed as written regardless of results, if indeed, under the circumstances, not following the specifications did in fact result in the material received being inferior to that which they would have received had the specifications been followed to the letter. For it is clear that there is some room for doubt on that point, since the board’s inspectors, who were admittedly experts in the *167 treatment of creosoted timber, as well as tbe experts who were doing tbe work for the creosote works, were of opinion that the literal following of the specifications as written was not bringing about the results which the board and its engineer expected, and all testify that the treatment under the specifications as prepared, even if standard and faultless, was not drying the green wood sufficiently to enable it to take the required amount of preservative.

Moreover, apart from that, we think the defendant is estopped in the premises. It pro-Tided in the contract that it should do its own inspecting through its own inspectors, and it proceeded to do just that. There is no question that the board would have rejected any material that its inspectors had rejected, and it would have ‘been a mere idle gesture for plaintiff to have put other inspectors at the plant or elsewhere. Ear had plaintiff accepted materials which the board’s inspectors had rejected, the 'board would not have allowed it to go into the work.

On the other hand, had plaintiff rejected materials which the board’s inspectors had accepted, the result would have been that pláintiff would have had to pay for such materials anyhow because the creosoting works, who were furnishing the materials, might justly say that plaintiff had no right to reject materials which the board was willing to put into the work; that plaintiff’s rejection of materials, accepted by the board’s inspectors, was purely arbitrary and wholly unreasonable.

Again, the contract provided that plaintiff should receive no money from the board unless it had first paid for the materials which it purposed to use in the work or had made satisfactory arrangements for such payments, wherefore the plaintiff was obliged to pay or secure the creosote works and deliver the materials to the job before it could get its own pay from the board; and manifestly the creosote works would not have delivered materials to the job unless said materials had first been accepted by the board’s inspectors. All of which makes it clear that despite all the verbiage of the contract and specifications, the only inspection ever contemplated by either party was the inspection which the board undertook to make and did in fact make for itself at the plant; that under such inspection, if favorable, plaintiff would incur an inescapable liability towards the creosote works; and that defendant could not thereafter repudiate the work of its inspectors to the prejudice of the plaintiff, and is estopped.

III.

As a basis to work on, we have taken the figures of the three experts, formed into a committee to investigate the claims of plaintiff, and we set out below the damages properly due plaintiff, as follows, to wit:

Contract price ............................. $444,000.00

Extra work ordered........................ 68.04

Total contract price and extras....... $444,068.04

Costs to complete contract from date oí notice of default (C. R. Soiled. 3, pg. 31)............$205,769.43

Less reductions of costs (Soiled. 3-H, pg. 41).................... 4,561.18 201,198.25

Total earned by contractor on contract .................................. $242,869.79

Less payments by board:

On engineer’s certificates....... $ 56,310.63

To plaintiff’s creditors on subcontracts ...................... 42,323.31

Total payments by board.................. $ 99,133.94

Balance due plaintiff on work............. $143,735.85

Extra expenses of plaintiff from cessation of work to Noy. 12, 1931............. 9,864.61

Amount for wbicb defendant is liable $153,600.46

*169 Decree.

For the reasons assigned, the judgment of the lower court is set aside and reversed, and it is now order that there be judgment in favor of the plaintiff and against the defendant for the full sum of $153,600.46, with legal interest from November 12, 1931, until paid and all costs.

It is further ordered that the defendant be and it is hereby enjoined and restrained from paying out of the proceeds of the authorized bond issue any part thereof to the prejudice of this judgment.