Schenectady Steel Co. v. Bruno Trimpoli General Construction Co.

Reynolds, J. This is an appeal, from a judgment of the Supreme Court in favor of respondent, entered April 30, 1973 in Schenectady County, upon a decision of the court at a Trial Term, without a jury. On May 8, 1968, respondent entered into a contract with the State of New York to build, by December 31,1969, a bridge over the Alplaus Creek in Schenectady County. Respondent, first orally on May 10, 1968 and later by writing, contracted with appellant to have appellant furnish the structural steel necessary for said bridge. The signed contract provided that ‘1 time is of the essence ’ ’ and that the ‘ ‘ work will be completed in 1968. ’ ’ Appellant originally had contemplated that it could obtain the 125-foot steel beams involved in one piece from its supplier, but this proved not to be the case and appellant was required to purchase smaller beams and then splice them together, not an unusual process but one which obviously created the additional problem that all welds would have to pass a radiographic test — 236 — before final acceptance. In August, 1968 appellant began its buttwelding but its completed welds could not pass the radio-graphic tests despite appellant’s conceded repeated efforts. Then weather conditions in December forced appellant to suspend its efforts until February, 1969, when it was able to rearrange its facilities to move the welding process indoors. During all of this period respondent was aware of appellant’s difficulties and by" January of 1969 began to attempt to bring pressure on appellant to complete its obligations. Finally, by letters dated January 29,1969 and February 11,1969, respondent insisted that appellant provide it a schedule as to how appellant would complete its obligation, threatening to contract elsewhere for the steel and charge appellant with the additional cost if appellant failed to do so. Appellant responded by letter dated February 12;' 1969 that it would proceed ‘ ‘ with all possible speed ” but that it could not yet provide án aéejarate completion date. On March 1, 1969 respondent’s president visited appellant’s shop and apparently was so dissatisfied ,at what appeared to be the progress, that as of March 5, 1969 respondent canceled the contract with appellant and contracted for the steel elsewhere. Appellant’s subsequent letter of March 11, 1969 proposing a definite completion date did not alter respondent’s decision. Appellant then brought the instant proceeding to recover the reasonable value of the services it had provided, and respondent counterclaimed asserting damages for appellant’s failure to perform. After a lengthy trial, the trial court dismissed appellant’s complaint and gave judgment for respondent, in the amount of $8,628.08 on its counterclaim. The instant appeal ensued. The first issue that must be resolved in this appeal is the correctness of the trial court’s assumption .that the Uniform Commercial Code applied to the instant contract. It was the trial court’s position that it did and that appellant’s failure to give adequate assurances following the February 11 letter requesting a completion schedule justified respondent’s cancellation of the contract. Of course, at common law no such duty to provide adequate assurances existed (2 Anderson, Uniform Commercial Code [2d ed.], § 2-609:3). In our opinion the Uniform Commercial Code was not applicable here. The code applies to transactions involving goods, but its provisions, as with its predecessor, the Uniform Sales Act, are not applicable to either ‘ ‘ service ” or “ construction ’ ’ contracts (1 Anderson, Uniform Commercial Code [2d ed.], — 237 — §§ 2-102:5, 2-105:10, 2-105:11; see 1955 Report of N. Y. Law. Rev, Comm., p. 361). If service predominates and the transfer of title to personal property is an incidental feature of the transaction, the contract does not fall within the ambit of the code, as it did not fall within the ambit of the Sales Act (Perlmutter v. Beth David Hosp., 308 N. Y. 100,104-105; Ben Constr. Corp. v. Ventre, 23 A D 2d 44). And the contract in the instant case was a contract for the rendition of services, a work, labor and materials contract, rather than a contract for the sale of goods, the steel beams involved. Upon an examination of the contractual terms, appellant was obligated to “ furnish and erect the structural steel ”, and the objective of the parties was, therefore, clearly to secure the erection, of the structural steel for the bridge. Respondent was not contracting simply for the steel beams but in essence for their erection and installation with the transfer of the title to the steel a mere incident of the over-all transaction, a mere accessory to the work and labor to be performed (see Perlmutter v. Beth David Hosp., supra; Ben Constr. Corp. v. Ventre, supra). At common law the pivotal issue is the timeliness of appellant’s performance. As previously noted, the contract required appellant to complete the work in 1968 and provided that “ time is of the essence ”. Thus, respondent could properly have canceled the contract on December 31, 1968 as appellant had not completed the work by that date (Taylor v. Goelet, 208 N. Y. 253, 259; Lawson v. Hogan, 93 N. Y. 39, 44). However, respondent did not so elect, and instead permitted the contract to continue. By this action respondent at that time waived its right to cancel for an untimely performance (Lawson v. Hogan, supra; see General Supply & Constr. Co. v. Goelet, 241 N. Y. 28; Clifton Park Affiliates v. Howard, 36 A D 2d 984; D’Onfro v. State of New York, 270 App. Div. 9), and effectively converted the contract into one under which performance within a reasonable time was all that was required (Lawson v. Hogan, supra; see Mawhinney v. Millbrook Woolen Mills, 234 N. Y. 244), although it retained its right to seek damages for the delay (General Supply & Constr. Co. v. Goelet, supra; Mawhinney v. Millbrook Woolen Mills, supra). However, even following this waiver respondent could reimpose time as essential element upon notice to appellant calling for performance within a reasonable time (Taylor v. Goelet, supra, p. 258; see General Supply & Constr. Co. v. Goelet, supra; Clifton Park Affiliates v. Howard, supra) and this we find to have occurred by respond — 238 — ent’s letters of January 29 and February 11. These letters restored timeliness and appellant’s failure to give more than assurances, after all the previous delays, that it would proceed “ with all possible speed ” as opposed to the requested definite schedule, plus the state of progress viewed by respondent’s president on his March 1 visit, justified respondent’s termination of the contract. Accordingly, we agree with the trial court’s dismissal of appellant’s complaint. We also agree essentially with the trial court’s award of damages to respondent except that since, respondent could not, under its contract with the State, have applied bituminous pavement to the bridge prior to May 15 in Schenectady County, the first of the two price increases in the cost of such payment cannot be said to have been the proximate cause of appellant’s delayed performance. Accordingly, the amount of respondent’s counterclaim should be reduced to $7,378.08, the increased cost of securing the steel work elsewhere plus the amount of the July 2 paving increase. The judgment should be modified, on the law and the facts, so as to reduce the judgment in favor of respondent to $7,378.08, and, as so modified, affirmed, without costs.