Western Maryland Ry. Co. v. Eastern Cement Gun Co.

DAYTON, District Judge. This controversy springs from a contract dated October 25, 1912, whereby the Cement Company contracted to perform certain cement or “gunite” work by use of a patented device known as the “Cement Gun” upon the stalls of the railway’s roundhouse then in course of construction at Hagerstown, Md. It is clearly shown and admitted that the contract was a “rush” one. The cement company undertook to start the work within 2 days and complete it within 55 working days, or the equivalent thereof in working time, “from the day that at least three stalls of steel or the equivalent thereof should be in place.” Further, to insure the prompt completion of the work, the contract provided that the Cement Company should “place at least four cement guns, with the necessary machinery [621] and labor to operate the same, on the work at once, and to maintain this outfit, or more, if necessary, to complete the work within the time limit of 55 working days.” Pratt, the railway’s chief engineer, was by the terms of this contract constituted the sole executive representative of the railway company, his decision was to be final and conclusive in any dispute arising, and he was empowered under broadest terms, if in his opinion the work was not efficiently prosecuted, either to take charge of it and with the Cement Company’s tools and machinery complete it, charging over to the Cement Company the_ cost of doing so, or to declare the contract, for any failure or omission, forfeited, in which latter event the Railway Company was to be exonerated from any and all liability for work done. Pie was also empowered, if deemed expedient or necessary, to stop the work, or any portion of it, or diminish the force engaged upon it without claim for damage by reason of so doing. A careful analysis of the evidence adduced on trial clearly demonstrates that the Cement Company was wholly unprepared to meet the requirements of such a contract as this. Instead of being able to start within two days and “to place at least four cement guns with the necessary machinery and labor to operate same on the work at once,” it is admitted that it took it from October 25th to November 18th, 24 days, to collect together its apparatus and get it upon the ground, and it was not until December 3d, 15 days thereafter, that it had all its scaffolding erected, had placed chicken wire over roof members, and had in its machinery and some sand, although three stalls of steel were in place on November 18th. The work dragged along until December 18th, when Pierce, the Cement Company’s manager in charge, “in the interest of his company,” shut it down, until spring should bring better weather conditions. He instructed his foreman to remove and pack all equipment and to lay off all men, and proceeded to look out for work elsewhere. At this time the Cement Company had material in the nature of wire, lumber, and piping, and one carload of sand on the ground. Up to then all the cement it had used had been borrowed from the Railway Company, and it had only cemented a portion of one beam covering a surface of a few square yards. This shut-down until spring, the Cement Company claims, was effected by Pierce after he had discussed the matter with McCausland, the railway’s engineer in charge, who expressed his thought that “it would be best for all concerned to do so.” McCausland denies this, but in our view of the case it becomes immaterial whether he did or not. The contract was too plain in its terms for any one to be misled. As we have said, Pratt, chief engineer, was the sole representative of the company with whom any modifications of it could be made or any such shut-down could be agreed upon. The court below very properly so ruled, and instructed the jury that McCausland had no authority to allow the stoppage of the work. Jordan, general manager, and Warner, president, of the Cement Company, however, as disclosed by the correspondence introduced in evidence, assumed the contrary, and on December 20th, two days after, Jordan wrote Pratt asking an advancement upon the contract price as a matter of favor, not of [622] right. On January 17th following he wrote a letter to McCausland, asking his assistance in securing this advance, and on the same day one to Pratt inclosing a photograph of cement gun work at the West Philadelphia station of the Pennsylvania Railroad as illustrating the character «and possibilities of “gunite” work, and suggesting: “If this weather continues to hold, it is very possible that we will go down to Hagerstown again and possibly start some sort of operation, provided it meets the approval of Mr. McCausland.” He further states he— “expects to go to Hagerstown some time in the near future for the purpose of taking over a new general superintendent of construction work, who is a thorough civil engineer with 10 or 12 years’ practical experience.” On January 20th, he both telegraphed and wrote McCausland that he “would like very much to proceed with.work, stall at a time,” that the weather was favorable, his operating men were idle, and a “cracker jack new superintendent” was available. In his letter he believes the weather conditions will continue favorable enough to enable him to make considerable showing on the work, and “if it would not interfere with the movements of locomotives in the roundhouse” he feels sure he could “finish several stalls before the real spring work opens and we put a number of guns to work.” It is to be borne in mind that during this period of 87 days since the contract (to be executed in 55 days) had been signed, this roundhouse had been so far completed as to be fit for use and was being used; that its use was claimed to be worth $18,000 a month to the railway company; that it was full of locomotives, and that such locomotives could not be housed in it while the cement work was being done, for the reason that its dust would get into the locomotive bearings and greatly injure them; that the sum total contract price for this cement work was only $12,700, and that cementing the steel stalls by this “gunite” process was largely an experiment, not at all necessary, other than as a preservative of the steel work, which could otherwise be secured by acid paint. Jordan’s proposition to go down “and start some sort of operation” very naturally was turned down at this time and under these conditions. This led to a personal interview and further correspondence between Jordan and McCausland, and then Warner, president of the Cement Company, took it up with the only man, Pratt, authorized to settle the matter. In his first letter of February 10th he expresses his surprise that his company is to be “eliminated” from coating the roundhouse with an entirely inadequate allowance for preliminary expenses made in the fall and winter preceding “before we were ordered to shut down.” In his letter of March 20th he expresses it as a “mutual agreement to discontinue.” Pratt may have, regarded these expressions as somewhat disingenuous, in view of the fact that he had never been in any way consulted by any one about the shut-down and knew nothing of it until after its complete accomplishment by the Cement Company’s manager in charge. The upshot of the matter was that on April 13th he informed Warner that the work was not stopped on instructions from the Railway Company, but by his manager, Pierce, who was [623] handling matters in a very unsatisfactory manner, and therefore the company did not consider itself liable for any claim on account of the work. Thereupon this suit was instituted. As a matter of law, if upon the trial the defendant had asked for a peremptory instruction directing a verdict for itself, we are clearly of the opinion that it should have been given, because this evidence was wholly insufficient to warrant a verdict for the plaintiff. But no such instruction was asked. The plaintiff however did ask, and the court gave the jury, an instruction to the effect that if they found from the evidence that the plaintiff Cement Company “believed in good faith that it had the consent of the defendant to suspend work,” and “that the chief engineer of defendant knew that the plaintiff so believed,” and “did not notify the plaintiff promptly that it was in default under the contract and that it would treat the contract as forfeited,” and if they should further find “that the work required to be done by the plaintiff could iiave been completed by it within 55 working days from, the time when three stalls of steel, or the equivalent thereof, were in place on the work, had the plaintiff been so notified,” they should find for the plaintiff. This instruction is designated in the record as “plaintiff’s fourth prayer.” The court further refused defendant two instructions, designated as defendant’s first and second “prayers,” which under the evidence were unobjectionable and should have been given. This fourth instruction given for plaintiff was erroneous for at least these reasons: First, because it was not warranted by the evidence. It cannot be seriously contended that the stoppage of work on December 18th by the Cement Company was not a violation and abandonment of the contract, if it was done of its own will and without authority and consent of the Railway Company. It cannot be contended that the Cement Company could, under the terms of the contract, obtain this authority and consent from any one other than Pratt; that the statement of McCausland, if made, “that it would be best for all concerned to stop,” could and did give no such authority or consent on the part of Pratt; or that Pratt at the time of the stopj^age knew Or had any reason to know of any such expression of opinion by his subengineer. It is not contended for an instant that his subordinate’s judgment or opinion in this regard was submitted to Pratt for his approval. How, then, could the plaintiff in a legal sense “be-' lieve in good faith that it had the consent of the defendant to suspend work” ? If it had no such consent, and no ground to believe in good faith it had, how could Pratt know that it so believed? Suppose he might have conjectured that the plaintiff was blindly misinterpreting the terms of the contract, what reasonable ground had he for so doing? Was it reasonable for him to assume or conjecture that plaintiff’s officers were not competent to interpret the plain terms of the contract expressed in simple English language? If it was not reasonable for him to do so, how could the jury be permitted to conjecture that he did so conjecture and from such conjecture arrive at knowledge that it was so? In Midland Valley R. Co. v. Fulgham, 104 C. C. A. 151, 181 Fed. 91, it is very pertinently said: [624] “Conjecture .is an unsound and unjust foundation for a verdict. Juries may not legally guess the money or property of one litigant to another. Substantial evidence of the facts which constitute the cause of action * * * is indispensable to the maintenance of a verdict sustaining it.” But, second, the instruction is further erroneous in that it assumes in effect that if one executes a plain,, unambiguous contract to do work, abandons it upon the advice of one not a party tO' it, or in any way empowered to authorize such abandonment, he nevertheless can recover damages from the party whom he has injured by such act of his unless the other promptly notifies him that he is in default. In other words, the injured party to a broken contract is estopped from denying recovery of damages from him by the party breaking the contract unless he promptly notifies the latter of his wrongdoing. We can find no justification for this proposition under the law of estoppel. That law holds an innocent person, under various circumstances and conditions, protected from injury when he has been misled to his injury by another who was inert and silent when, morally and in good conscience, he should have been active and outspoken, or who was active and outspoken where he should have been inert and silent. This law is for the benefit of the innocent party deceived and misled. It cannot be invoked under any conditions by a wrongdoer to secure gain by way of damages, profits, or otherwise from the person he has wronged. It follows that the judgment must be reversed and the case remanded, with directions to the court below to set aside the verdict and award a new trial. Reversed.