Case Name: S. M. MILOVICH, Respondent, v. CITY OF LOS ANGELES (a Municipal Corporation) et al., Appellants
Court: District Court of Appeal of the State of California
Jurisdiction: California
Decision Date: 1941-01-09
Citations: 42 Cal. App. 2d 364
Docket Number: Civ. No. 12135
Parties: S. M. MILOVICH, Respondent, v. CITY OF LOS ANGELES (a Municipal Corporation) et al., Appellants.
Judges: 
Reporter: California Appellate Reports, Second Series
Volume: 42
Pages: 364–388

Head Matter:
[Civ. No. 12135.
Second Appellate District, Division One.
January 9, 1941.]
S. M. MILOVICH, Respondent, v. CITY OF LOS ANGELES (a Municipal Corporation) et al., Appellants.
Bay L. Chesebro, City Attorney, S. B. Robinson, Chief Assistant City Attorney, Francis H. Bindley, Assistant City Attorney, and Alfred H. Driscoll, Deputy City Attorney, for Appellants.
Charles R. Holton, Paul G. Mclver, and Burke, Hickson, Burke & Marshall for Respondent.

Opinion:
WHITE, J.
This is an appeal from a final judgment in favor of plaintiff and against the City of Los Angeles and the Department of Water and Power of said city, rendered after trial by the court without a jury in an action for damages for an alleged breach on the part of said department of a construction contract awarded to plaintiff by the Board of Water and Power Commissioners of the City of Los Angeles. Appellants also attempt to appeal from the order denying a motion for a new trial. There is no appeal from such an order in a civil action of this nature.
At the trial the parties stipulated to the following facts: That the contract in question was awarded respondent on February 25, 1937, and called for the construction of a project known as Sunland and Tu junga Water Supply Project; that by the terms thereof appellant department agreed to furnish respondent with certain materials necessary to said construction; that under the terms of the contract construction work was to be started within ten calendar days after mailing of written notice by appellant department to respondent to commence work and was to be completed within forty-five days from the date of mailing of such notice; that the department failed to deliver or furnish to respondent certain of the necessary materials until May 24, 1937; that the contract provided that respondent was not to sell, assign, hypothecate or remove equipment or materials necessary for the completion of the contract without the consent of the department; that a notice of respondent's claim for damages here sought was filed with the chief engineer and general manager of the Bureau of Water Works and Supply of respondent department on June 1, 1937, and that thereafter and on June 5, 1937, respondent received a letter from said chief engineer and general manager, as follows: "Tour 'Notice of Claim for Damage' dated May 28, 1937, and accompanied by ' Itemized Statement of Damage, ' was received by this Department on June 1, 1937. As we do not recognize that there is any basis for said claim or for the accompanying statement, we are compelled to reject the same, and each item thereof." The letter was signed by H. A. Van Norman, Chief Engineer and General Manager. The damages claimed by respondent were alleged to have been caused by appellant department's delay in delivering and furnishing the said materials.
The record reveals that the contract in question contained the following clause:
"30. CLAIMS FOR DAMAGES:
"It is agreed that if the Contractor shall claim compensation for any alleged damage by reason of the acts or omissions of the Board, or its agents, he shall, within ten (10) days after the sustaining of such damage, make a written statement to the chief engineer and general manager of the nature of the alleged damage. On or before the last day of the month succeeding that in which any such damage is claimed to have been sustained, the Contractor shall file with the chief engineer and general manager an itemized statement of the details and amount of such damage, and upon request of the chief engineer and general manager shall give him access to all books of account, receipts, vouchers, bills of lading and any other books or papers containing any evidence of the amount of such damages. Unless such statement shall be filed as thus required, his claim for compensation shall be forfeited and invalidated, and he shall not be entitled to payment on account of any such damage."
Appellants first contend that respondent's cause of action for damages must fail for the reason that respondent did not present his claim for alleged damages to the Board of Water and Power Commissioners, in accordance with sections 363 and 376 of the Charter of the City of Los Angeles.
Section 363 of the charter reads as follows: 1 ' Every claim ' and demand against the city, except as provided in the preceding section, shall be first presented to and approved in writing by the board, officer or employee authorized by this charter to incur the expenditure or liability represented thereby. In all cases the date of such approval shall be given." Concededly, the claim of respondent does not come within the exception noted. Section 376, above referred to, provides that no suit shall be brought on any claim for money or damages against the City of Los Angeles, or any officer or board of the city, until a demand for' the same has been presented, as provided, and rejected in whole or in part, and that all claims for damages against the city must be presented within six months after the occurrence from which the damages arose.
Respondent contends that the filing of his claim with the chief engineer, as above set forth, was a sufficient compliance with the charter provisions.
The point was raised at the trial when appellants objected to the introduction of any evidence in behalf of the plaintiff on the ground that the complaint failed to state a cause of action, in that it did not appear therefrom that a claim had been filed in accordance with section 376 of the charter, and that it further appeared from said complaint that a claim was not filed in accordance with said section. The objection was overruled. At the close of plaintiff's case defendants made a motion for a nonsuit, one of the grounds thereof being that plaintiff had failed to prove that a claim had been filed in accordance with said section of the charter. The motion was denied.
It was alleged in the complaint that the claim was served upon the Department of Water and Power of the City of Los Angeles, and it appears from the above-mentioned stipulation and the evidence that said claim was in fact presented to H. A. Van Norman, who was at the time chief engineer and general manager of the Bureau of Water Works and Supply of the Department of Water and Power.
In determining whether such claim was filed with the Department of Water and Power or its Board of Water and Power Commissioners, let us first have recourse to the contract here under consideration, which commences with the following language: 1 ' This agreement, made and entered into this 25th day of February, 1937, by and between the Department of Water and Power of the City of Los Angeles, a municipal corporation, First Party, sometimes hereinafter called the Department, and S. M. Milovich, an individual, Second Party, sometimes hereinafter called the contractor." In this connection, it should be noted that in the foregoing preamble no reference whatever is made to the Board of Water and Power Commissioners as being one of the contracting parties, but the sole reference is to the "Department of Water and Power of the City of Los Angeles". Let us now turn to the phraseology embodied in the execution clause of the contract, where we find the following: "Department of Water and Power of the City of Los Angeles, by Board of Water and Power Commissioners of the City of Los Angeles, by John R. Haynes, President, and Jas. P. Vroman, Secretary. S. M. Milovich, by S. M. Milovich."
Thus we see that through the execution of the contract by the "Board" in the name of the "Department", the former recognized that the proper and legal name of the contracting party was the Department of Water and Power of the City of Los Angeles. That the terms "Board" and "Department" are synonymous for the purpose of filing a claim was recognized in Douglass v. City of Los Angeles, 5 Cal. (2d) 123, 134 [53 Pac. (2d) 353], where in the following language the words "Board" and "Department" are used interchangeably:
"The department of water and power is conducted by the city in its proprietary capacity. This department has control of its own revenues and disbursements and in the ordinary course of its management would not be dependent on the city council for an appropriation to meet a demand for damages for the negligence of its officers or employees. The liability of the city for such negligence, through the operations of such a department, was established long before the enactment of the statute of 1923. (Davoust v. City of Alameda, 149 Cal. 69 [84 Pac. 760, 9 Ann. Cas. 847, 5 L. R. A. (N. S.) 536].) And the necessity of presenting a claim to that board as a prerequisite to suit was properly declared in Continental Ins. Co. v. City of Los Angeles, 92 Cal. App. 585 [268 Pac. 920]." (Italics added.)
As heretofore pointed out, the contract here in question provided that in the event any claim for damages be asserted, the contractor shall "within ten (10) days after the sustaining of such damage, make a written statement to the Chief Engineer and General Manager of the nature of the alleged damage ' ', and " on or before the last day of the month succeeding that in which any such damage is claimed to have been sustained, the Contractor shall file with the Chief Engineer and General Manager an itemized statement of the details and amount of such damage". In that connection the court found:
"That it is true that on June 1, 1937, plaintiff filed with said defendant Department and the chief engineer and general manager thereof, a written, itemized statement of the details and amount of said damage and presented a claim and demand therefor in writing to said defendant Department and that a true and correct copy thereof is attached to the complaint herein and marked Plaintiff's Exhibit A and Plaintiff's Exhibit B.
"That it is true that on June 5, 1937, the defendant Department rejected said demand in whole and disallowed and refused to pay the same or any part thereof."
This finding was justified by evidence which included the terms of the contract hereinbefore narrated together with the admitted fact that a claim was filed with the chief engineer and general manager of the Bureau of Water Works and Supply of the Department of Water and Power, as well as the answer thereto, which is significant by reason of its contents. The reply letter reads as follows:
"H. A. VAN NORMAN Chief Engineer and General Manager of Water Works
DEPARTMENT
OF
WATER AND POWER
207 S'. Broadway LOS ANGELES Michigan. 4211
City of Los Angeles
BUREAU OF WATER WORKS AND SUPPLY
June 4, 1937.
RE : CLAIM FOR DAMAGE PWA Docket No. Calif. 1929-80-R Sunland-Tujunga Water Supply Proj.
"Mr. S. M. Milovieh
208 Cochrum Building Montebello, California.
Dear Sir:
Your 'Notice of Claim for Damage' dated May 28, 1937 and accompanied by 'Itemized Statement of Damage,' was received by this Department on June 1, 1937. As we do not recognize that there is any basis for said claim or for the accompanying statement, we are compelled to reject the same, and each item thereof.
Yours very truly,
(Signed) H. A. Van Norman
Chief Engineer and General Manager."
By the foregoing writing the claimant was advised that his claim was rejected, not by the chief engineer and general manager, but by "we", which certainly meant by the "Department" of Water and Power, upon whose letterhead the notice of rejection was written. Viewed from any standpoint of fairness, equity and justice, the respondent herein complied substantially with the provisions of section 363 of the Los Angeles City Charter. When we contemplate the terms of the contract which directed that the claim be transmitted by and through the chief engineer and general manager of the contracting "Department", coupled with compliance therewith by respondent, and the letter of rejection informing the claimant of adverse action upon his claim by such "Department", we are driven irresistibly to the inference and conclusion, as declared in the findings of the trial court, that the Board of Water and Power Commissioners, who signed the contract for and in behalf of the Department of Water and Power, acted upon and rejected respondent's claim.
As pointed out in Sandstoe v. Atchison, T. & S. F. Ry. Co., 28 Cal. App. (2d) 215 at page 223 [82 Pac. (2d) 216], the purpose of filing a claim, as provided in the charter, is to enable public officials to make proper investigation concerning the merits of the claim and, if in their opinion settlement of such claim be proper, to proceed to such disposition without the expense of a lawsuit. In the same case we find the following expressive language: "In the absence of an intention to mislead, a substantial compliance with the charter requirement is sufficient. In Uttley v. City af Santa Ana, 136 Cal. App. 23 [28 Pac. (2d) 377], the court quoted with approval from Wagner v. City of Seattle, 84 Wash. 275 [146 Pac. 621, Ann. Cas. 1916E, 720] : ' When, therefore, there is no evident intention to mislead, but a hona fide attempt to comply with the law, the notice is sufficient in the absence of any evidence that it did in fact mislead'. The court further stated: 'The general rule with respect to this sort of notice of claim is that a substantial compliance with the provisions of the statute is sufficient. (19 R. C. L. 1044.) ' ."
By reason of the foregoing, we are thoroughly impressed that respondent herein did absolutely in effect present his claim to the proper board when he filed it with the administrative officer of such board designated in the contract and received notice of its rejection in the manner and form aforesaid. There was certainly no manifestation of any intention or desire to mislead, nor is there any evidence that appellants were in fact misled; and there was, therefore, a substantial compliance with the charter requirements.
As a further ground for reversal of the judgment herein, appellants urge that respondent failed to file the claim for damages provided for in paragraph 30 of the agreement until June 1st, and is thereby precluded from recovering any damages accruing prior to a ten-day period immediately preceding June 1st. The first intimation that appellants re lied upon nonconformance by respondent with the said provisions of paragraph 30 in order to defeat the latter's cause of action came at the commencement of the trial, when objection was made to the introduction of any evidence pertaining to any damages occurring prior to May 20th, on the ground that no claim as provided for in paragraph 30 of the agreement had been filed until June 1st. Objection also was made to the introduction of the filed notice as constituting any evidence of a notice filed pertaining to items of damage which accrued prior to a ten-day period immediately preceding the filing of such claim. It is argued by appellants that since the evidence showed that a breach occurred April 1st when there was a failure by the department to deliver steel pipe, that thereafter and on each succeeding day, until May 24th, successive breaches occurred, because delivery was not made by the department until the last-named date. Therefore, urge appellants, it was necessary for respondent to file a statement within ten days after each daily breach occurred and to file an itemized statement of the details and amount of such damages on or before the last day of the month succeeding that in which such damage is claimed to have been sustained. Paragraph 30 of the agreement provides that for noncomplianee with the requirement to file a claim as aforesaid, such "claim for compensation shall be forfeited and invalidated, and he shall not be entitled to payment on account of any such damage".
Appellants not having filed either a general or special demurrer, and not having set up as an affirmative defense the alleged failure of the respondent to comply with paragraph 30 of the agreement in connection with the filing of claims, we are compelled to construe respondent's pleading liberally and to indulge in every reasonable intendment in its favor. (Gallagher v. California Pacific T. & T. Co., 13 Cal. App. (2d) 482, 484 [57 Pac. (2d) 195].) Further, paragraph 30 of the agreement, providing as it does for a forfeiture of any damages for noncompliance, must be strictly construed against appellants, for whose benefit such clause was inserted in the contract. (Civ. Code, sec. 1442; Taylor v. Hamilton, 194 Cal. 768 [230 Pac. 656] ; Skookum Oil Co. v. Thomas, 162 Cal. 539, 547 [123 Pac. 363].) Neither law nor equity looks with favor upon forfeitures, and neither will enforce them unless the right thereto is clear and certain. Unless no other interpretation is reasonably possible, a contract should not be construed so as to effect or provide for a forfeiture. (Laffoon v. Collins, 212 Cal. 750 [300 Pac. 808] ; Hansen v. D'Artenay, 121 Cal. App. 746 [9 Pac. (2d) 889].) Let us therefore examine the facts of this case in connection with the presentation of respondent's claim to ascertain therefrom whether thereunder a forfeiture was the unmistakable intention of the agreement. If we can reasonably interpret the agreement so as to avoid a forfeiture in view of respondent's conduct, it is our duty so to do. (Quatman v. McCray, 128 Cal. 285 [60 Pac. 855].)
Briefly, the pertinent language of section 30 of the contract provides that the contractor shall within ten days after sustaining damage make a written statement to the chief engineer and general manager of the nature of the alleged damage, and further, that on or before the last- day of the month succeeding that in which any such damage is claimed to have been sustained, the contractor shall file with the chief engineer and general manager an itemized statement of the details and amount of such damages. Then follows this language: "Unless such statement shall be filed as thus required, his claim for compensation shall be forfeited and invalidated, and he shall not be entitled to payment on account of any such damage.'' The language decreeing a forfeiture is in the singular and does not say that unless both statements are filed a forfeiture will occur, but plainly limits the penalty to a failure to file the itemized statement on or before the last day of the month succeeding that in which any damage is claimed to have been sustained. The trial court found upon competent evidence that by reason of the failure of appellant department to deliver the steel pipe and the steel pipe bends, respondent was prevented from performing work upon that portion of the contract dealing therewith from April 1, 1937, to May 24, 1937, and it was further found that on June 1, 1937, respondent filed with the chief engineer and general manager a written, itemized statement of the details and amount of said damage and presented a claim and demand therefor in writing to appellant department. In view of our holding that forfeiture and invalidation of the claim for damages is predicated upon paragraph 30 of the agreement only on the failure to file the itemized statement, we turn now to a determination of whether such itemized statement was filed on or before the last day of the month succeeding the month in which the damage is claimed to have been sustained. Needless to say, so far as the damages sustained during the month of May are concerned, it is clear that respondent complied with section 30, since he filed his itemized statement on June 1st. With reference to the claim for damages sustained during the month of April, and in connection with which it was required that such itemized statement be filed on or before the last day of the succeeding month, viz., the month of May, if respondent was to avoid a forfeiture and invalidation of his claim for April damages, it is significant that the 30th day of May, 1937, was Decoration Day, a holiday within the meaning of our law. (Civ. Code, sec. 7; Pol. Code, sec. 10.) Further, the 30th day of May, 1937, fell upon a Sunday, and therefore the Monday following, or May 31st, was a holiday. (Civ. Code, sec. 7; Pol. Code, secs. 10 and 11.) Since, under section 11 of the Civil Code, "whenever any act of a secular nature, other than a work of necessity or mercy, is appointed by law or contract to be performed upon a particular day, which day falls upon a holiday, it may be performed upon the next business day, with the same effect as if it had been performed upon the day appointed", it follows that the filing of the itemized statement here under consideration for damages accruing during the month of April, which was required to be filed upon May 31, 1937, could be filed upon the next business day, or June 1st, with the same effect as if it had been filed May 31st. Since the only condition by which respondent could have forfeited and invalidated his claim would be by his failure to file the itemized statement of the details of such damage on or before the last day of the month succeeding the occurrence of such damage, and since he did file such statement on June 1st and such filing was tantamount to a filing upon the last day of May, it follows that such filing was timely. As no forfeiture or invalidation of respondent's claim was worked by his failure to make a written statement of the nature of the alleged damage within ten days of such damage, the court was justified in concluding that respondent complied with the requirements of paragraph 30 of the agreement when he filed his itemized statement on June 1, 1937.
We come now to a consideration of appellants' contention that extensions of time for completion of the contract is the sole remedy of respondent, and that by reason of the extensions of time granted by the department to the contractor within which to complete the contract, the latter is not entitled to recover damages for any delay in carrying out the contract when such delay was occasioned by the acts of negligence of the appellants. In this connection the trial court found "that it is not true that defendant department granted an extension of time to plaintiff to complete said contract, nor is it true that plaintiff accepted any such extension of time from defendants". We find ourselves in accord with appellants' contention that the foregoing finding is not supported by the evidence. The testimony not only conclusively shows that such extensions were granted, but that on June 28, 1937, respondent himself requested in writing a thirty-day extension. Respondent's claim that such extensions could only be granted and were granted by the Public Works Administration of the Federal Government, is without merit. The fact that appellant department received from the Federal PWA certain portions of the cost of the project covered by the contract between the parties hereto in no way affects the relationship between respondent and appellant department. Whether appellant department received the approval of the Federal agency in granting extensions was of no concern to respondent. He was entitled under the terms of his contract to the extensions from the department, and any detriment suffered by the latter in the way of refusal of the Federal PWA to furnish additional money if extensions were granted, could not affect respondent. His contract was with the appellant department, and as to him in his contractual relation with the other parties to the contract, the PWA was a total stranger.
Nevertheless, we are of the opinion that a reversal of the judgment is not required or warranted because of the failure of the evidence to support the challenged finding. This because whether extensions were requested or granted is not determinative of respondent's right to recover damages, if any were sustained by reason of appellant department's acts or neglect. If our view in this regard be sound, then a finding by the court that the extensions were requested and granted would not aid appellants. We are not impressed by the latter's argument that when delays occurred in said work through the acts and neglect of appellant department, respondent was restricted to the sole remedy of securing an extension of time within which to complete the project. Paragraph 8 of the contract here under consideration provides: "If the Second Party should neglect to prosecute the work properly or fail to perform any provisions of this contract, the First Party, after three days' written notice to the Second Party, may, without prejudice to any other remedy he may have, make good such deficiencies and may deduct the cost thereof from the payment then or thereafter due the Second Party." Thus we see that should the contractor "fail to perform any provisions of this contract", which, we take it, includes a failure to complete the work within the specified time, the department was authorized to take over the contract and deduct the cost of making "good such deficiencies" from the contract price. It seems to us that it was in connection with such prerogatives given to appellant department that paragraph 11 was inserted in the agreement, reading as follows:
"The time during which said Second Party is delayed in said work by the acts or neglect of said First Party, or its employees or those under it by contract or otherwise, or by changes ordered in the work, or by strikes, lockouts, fire, unusual delay in transportation, unavoidable casualties or any causes beyond the Second Party's control, or by delay authorized by the First Party, or by any cause which the Chief Engineer and General Manager shall decide to justify the delay, then the time of completion shall be extended for such reasonable time as the Chief Engineer and General Manager may decide.
"This article does not exclude the recovery of damages for delay by either party under other provisions in the contract documents."
It would outrage every semblance of justice, fairness and equity to assume that under the foregoing paragraph 11 respondent should be foreclosed from recovering damage sustained by him when through the failure of appellant department to furnish pipe from April 1st to May 24th respondent was compelled to keep his machinery on the ground in idleness. The court found upon competent and substantial evidence that during the last-named period respondent had his machinery on the ground; that such machinery was necessary to perform the contract; that appellant department knew at all times that such machinery was upon the ground and was necessary to be used in laying pipe which appellant department neglected to deliver. It was further found by the court that it was not practicable for respondent to remove any of this equipment from said project during the period from April 1st to May 24th, because it was required of respondent contractor that he have such machinery ready and available on the ground in order to be prepared to commence the performance of that portion of his contract which was delayed by reason of appellant department's neglect to provide pipe in accordance with its agreement. To uphold appellants' contention in this regard would be to give to the language of the contract a construction at variance with equitable principles and to clothe the appellant, department with an unconscionable advantage over the contractor, by permitting the former to make amends for its contractual derelictions, delays and neglect by simply extending the time within which the contract could be completed regardless of the financial loss accruing to the contractor. This we cannot do in the absence of a plain, unequivocal intention on the part of the contracting parties, as evidenced by the language of the contract, to restrict the remedy of the contractor to that of obtaining an extension of time. We have given careful consideration to the case of Hansen v. Covell, 218 Cal. 622 [24 Pac. (2d) 772, 89 A. L. R. 670], and other cases cited by appellants, but in none of these cases was the contractor required to maintain machinery and apparatus in idleness upon the ground awaiting performance of the agreement by the other party to the contract,. such as was required by the department in the instant case.
Finally, appellants urge that they were entitled to have the sum of $1200 deducted from the damages, by reason of a benefit in that amount allegedly received by respondent because of appellant department's delay and neglect in the matter of delivery of pipe. In this connection appellants assert that under the contract all work was to be completed within 45 days, and that if the steel pipe had been delivered by appellant department on April 1st as provided in the agreement, the contractor would have had to lay the steel pipe and construct the infiltration gallery at the same time, whereas, due to appellant department's delay in furnishing the steel pipe, the contractor was able to complete the construction of the infiltration gallery before he began the laying oí the steel pipe about June 1st. From the foregoing appellants reason that the evidence establishes the fact that if the two parts of the work were to be completed concurrently, the respondent would have to rent another crane, which would have cost $20 per day, or a total of $1200 for a period of sixty days. Not having to rent such other crane because of appellant department's delay, it is claimed that the saving of the $1200 rental should enure to the benefit of appellants. In this contention appellants cannot be sustained, for the reason that the record is barren of any evidence to show that $20 per day or any other sum would be the reasonable value of a crane which respondent would have had to rent if the gallery infiltration and pipe laying actually had been done contemporaneously. True, there is contained in the record a stipulation as to the reasonable rental value of a crane, but that was the crane used by the contractor, and no reference is made to any other crane which he might have been required, under different circumstances, to utilize. Neither does the record contain a basis upon which to compute, as appellants do, that such crane, if used, would be in service for sixty days. This contention should have been urged and established by proof in the trial court and not left to the caprice and vagaries of speculation in the briefs on appeal.
The action of the trial court in denying the motion for a new trial having been considered in a review of the appeal from the judgment, the attempted appeal from the order denying the motion for a new trial is dismissed.
We find no prejudicial error in the record, and accordingly, for the reasons herein stated, the judgment is affirmed.
York, P. J., concurred.