Case Name: ALEXANDER et al., Plaintiff v. STATE, Defendant
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1953-02-24
Citations: 74 S.D. 593
Docket Number: File No. 9215
Parties: ALEXANDER et al., Plaintiff v. STATE, Defendant
Judges: RUDOLPH and SMITH, JJ., concur.
Reporter: South Dakota Reports
Volume: 74
Pages: 593–607

Head Matter:
ALEXANDER et al., Plaintiff v. STATE, Defendant
(57 N. W.2d 121)
(File No. 9215.
Opinion filed February 24, 1953)
Smith, McLean & Peterson, Mankato, Minn., and Temmey & Luhy, Huron, for Plaintiffs.
Ralph A. Dunham, Atty. Gen., Benj. D. Mintener, Asst. Atty. Gen. and William J. Flittie, Asst. Atty. Gen., for Defendant.

Opinion:
ROBERTS, P. J.
Plaintiff partners doing business under the firm name of Alexander Construction Company entered into a written contract with the State of South Dakota to do all the work and furnish all the materials required for shaping and compacting the base and bituminous surfacing of 17.44 miles of Highway No. 34 in Sanborn County according to plans and specifications furnished by the State Highway Commission. Plaintiffs claim that they have not been fully paid and after presenting a verified claim for the additional amount of $14,953.82, and the same having been disallowed, commenced an original action in this court to recover the balance alleged to be due them. The written proposal of the plaintiffs contained nine items. The items numbered 14, 23 and 25 are here in controversy. Plaintiffs have received $304,181.94 for materials designated in these items. They allege that within the contemplation of the contract they furnished the following quantities of materials for which they have not been paid:
Item Quantity Unit Amount
No. Item Furnished Price Claimed
14 Base Course, Crushed Gravel Surfacing in Place 514.3 tons $2.24 $1152.03
23 Liq. Bitumen for Mat 29774 gals. .16 4763.84
25 Plant Mixed Mineral
. Aggregate 2031 tons 4.45 9037.95
The motion of the state to dismiss the complaint on the ground that the court was without jurisdiction to render judgment for damages resulting from breach of contract was denied. Alexander v. State, 74 S.D. 48, 48 N.W.2d 830. The state thereafter filed an answer asserting that it had paid all amounts due under the contract. This court referred the cause to the Hon. O. K. Whitney, Judge of the Sixth Judicial Circuit, for trial and the referee was instructed upon conclusion of the hearing to report his findings of fact and conclusions of law and to submit therewith a transcript of the proceedings before him. The findings and conclusions of the referee are to the effect that the requirements of the contract were'exceeded without authorization at least to the extent of the quantity of materials for which plaintiffs now are demanding payment.
Plaintiffs assert that the referee misconstrued the terms of the contract, that it is a unit price contract, and that plaintiffs are entitled to payments on the basis of the unit prices specified therein for all materials furnished under the direction of the engineer and inspectors in charge of the construction. It is admitted that the quantities of materials for which plaintiffs seek recovery were placed on the highway. The cause of action set forth in the complaint is not for the value of extra work which would under the terms of the contract require a written order to enable the plaintiffs to recover and we do not understand that they question the accuracy of the plans and specifications as relating to the quantities of materials. The plans and specifications prepared in advance and upon which plaintiffs based their bid and which became a part of the contract divide the project into seventeen segments and specify for each the quantities of materials required to provide a bituminous mat of a fixed width and "2-f" inches in thickness as shown in a cross-section diagram therein. Mr. McCready, who was employed on the project by plaintiffs and who had been employed in highway construction work for 15 years, testified that he was in charge of the finishing machine laying the bituminous material, that the thickness of a mat is regulated by a screed on the machine; that the plant mix is dumped from trucks on an apron at the front of the machine and is conveyed back and by means of augers is distributed on the highway; that a device known as a "stinger" consisting of an adjustable gauge on a rod was used to measure the depth of the mat; that state inspectors using this device measured the depth; and that he followed their instructions in adjusting the screed. Plaintiffs admitted that they during the construction made no computations upon the basis of tonnage and lineal distance. A member of plaintiff partnership testified that "about the twelfth mile it was discovered that too much material was going on the highway". Expert witnesses for the state testified that adjustment of the screed upon the basis of tonnage and lineal distance is the most accurate method of control and that following such method it is possible to maintain control within about one per cent. The amount of bitumen and plant mix for which plaintiffs ask judgment was sufficient in compliance with the requirements of the plans and specifications to build an additional mile of bituminous highway.
The proposal contained among others the following provisions: "On the basis of the plans, specifications, special provisions and form of contract proposed for use, the undersigned proposes to furnish all necessary machinery, tools, apparatus and other means of construction, to do all the work and furnish all the materials in the manner specified, to finish the entire project within Eighty (80) weather working days, and to accept as full compensation therefor the amount of the summation of the products of the actual quantities, as finally determined, multiplied by the unit prices bid. The undersigned understands that the quantities mentioned below are subject to increase or decrease, and hereby proposes to perform all quantities of work, as increased or decreased, in accordance with the provisions of the specifications, and at the unit prices bid." Plaintiffs on the form furnished by the State Highway Commission inserted the price bid for each item in the column- headed "Unit bid price" and also the total amount bid on each item in the column "Amount bid". The proposal further states that "The undersigned understands that the 'Total or Gross Sum Bid' as immediately herinbefore set forth is not the final sum which will be paid if this proposal is accepted and the work done, but that such sum is computed for the purpose of comparison of the bids submitted and the determination of the amount of the contract bond".
The pertinent provisions of the contract read: "The said Contractor has agreed and by these presents does agree to furnish all the materials, and labor of every kind and to construct in the most substantial and workmanlike manner and in accordance with the plans and specifications therefor, the various items of work awarded the said contractor. The said work shall be performed in accordance with the true intent and meaning of the plans and specifications therefor, including the special provisions, which plans and specifications, including the special provisions, are hereby referred to and made an essential part of this contract as fully and to the same effect as if the same had been set forth and shown at length in the body of this contract. In consideration of the faithful performance of the work embraced under this contract, according to the terms hereof and to the satisfaction of the party of the first part, said party of the first part agrees to pay the contractor, such unit or lump sum prices for the work actually done as are set forth in the proposal accompanying this contract, and and in the manner and subject to the conditions as set forth in the said specifications."
The specifications deal with the reserved right in the state to increase or decrease the quantities shown in the plans or proposal or to omit any of them as it deems necessary and authorize payments on the basis of actual quantity furnished whenever the quantity of any item has been increased or decreased. They also contain provisions regarding control and supervision of the work. Some of these provisions are as follows: "An Inspector may be stationed on the construction to report to the Engineer as to the progress of the work, the manner in which it is being performed, to report whenever it appears that the materials furnished and the work performed by the Contractor fail to fulfill the requirements of the specifications and contract, and to call to the attention of the Contractor any such failure or other infringement. Such inspection, however, shall not relieve the Contractor of any obligation to perform all of the work strictly in accordance with the requirements of the specifications. In case of any dispute arising between the Contractor and the Inspector as to materials furnished, or the manner of performing the work, the Inspector shall have the authority to reject materials or suspend work until the question at issue can be referred to and decided by the Engineer. Work performed by the Contractor, after written order by the Inspector to suspend operations, will not be accepted, or paid for, by the Commission. The Inspector is not authorized to revoke, alter, enlarge, or release any requirements of these specifications, nor to approve or accept any portion of the work, nor to issue instructions contrary to the plans and specifications. The Inspector shall in no case act as foreman or perform! other duties for the Contractor, nor interfere with the management of the work by the latter. Any advice which the Inspector may give the Contractor shall in nowise be construed as binding the Engineer or the Commission in any way, nor releasing the Contractor from fulfillment of the terms of the contract." The specifications under the heading "Measurement and Payment" provide: "After the work is completed and before final payment is made therefor, the Engineer will make final measurements to determine the quantities of various items of work performed as the basis for final settlement. The Contractor in all cases will be paid for the actual amount of work performed in accordance with these specifications as shown by the final measurements, with waste deductions made for any and all unauthorized work."
The theory of the plaintiffs can be best stated in the language of their learned counsel: "The proposal and contract each recite that this is not a fixed sum contract, but is a unit price contract; that it is understood that the quantities are not final but subpect to increase or decrease, and that settlement will be made on the basis of the actual quantities furnished. The plans require the construction of a pavement of fixed width and not less than 2 inches in thickness, with the variation, if any, to be plus, i. e., in excess of 2 inches. The plans show the mat to be installed 2 inches plus. It is true that the plans contain an estimated yield, or estimated quantity required per mile to produce the specified pavement, but nowhere do the plans or specifications limit the quantity to the estimated yield or require the contractor to build the road for a fixed sum. Nowhere, it appears, does the contractor guarantee the yield. He agrees to build the road under the detailed directions and instruction of the State for a consideration based upon the quantity of units furnished."
If the materials in question were not required in the performance of the contract and outside of its terms plaintiffs cannot recover as materials furnished by direction of state agents although they may have been employed to superintend the execution of the contract. See Kansas City Bridge Co. v. State, 61 S. D. 580, 250 N.W. 343; Griffis v. State, 69 S. D. 439, 11 N.W.2d 138. If the agents of the state made demands not justified by the contract plaintiffs had the right to refuse to comply, but plaintiffs cannot recover if authority was not exercised in accordance with its terms. The authority of the State Highway Engineer and his subordinates to bind the state must be found in the contract.
As we understand the contention of counsel for plaintiffs, it is that the quantities recited in the specifications are simply estimates and subject to increase or decrease without written authorization and that settlement must be made on the basis of quantities of materials actually furnished at the agreed unit prices. This position is not sustained by cases like Dance v. Board of Education, 296 Ky. 67, 176 S.W.2d 90, 92, cited by plaintiffs, wherein there was recovery for additional quantities of material supplied by the contractor without written order from the architect. That case was one where the work was not independent of the contract but was caused by miscalculation of the architect in specifying the number of bricks required for the improvement and necessary to its completion. In so holding, the court recognized a distinction between "extra work" and "additional work". The court said: "It can hardly be said that this additional brickwork was 'extra work' within the meaning of the contract requiring a signed order by the architect. Rather we would say that this was 'additional work' without which the contract could not be performed. 'Extra work' for which an order must be issued by the architect before the contractor can recover for it, as used in the contract before us, refers to work arising out of but entirely independent of the contract, which was not required in its performance. But the 'additional work' for which we are allowing the contractors to recover is work that is necessarily required in the performance of the contract and without which it could not be carried out." As we have previously stated there is in the instant case no claim of error or miscalculation by the engineers in the preparation of plans and specifications. They made allowance for compaction in computing the amount of materials required in order to construct a bituminous mat of a fixed width and "2-j-" inches in thickness and it is conceded that the quantities recited in the specifications were sufficient to have constructed a bituminous mat of the required dimensions. The contract contemplated that plaintiffs would supply materials within the scope of the specifications and we cannot accept'the view that because payments were to be made upon the basis of unit prices the quantities of materials to be supplied were subject to increase or decrease without written authorization. It is our conclusion that as to quantities of materials there was not a substantial compliance with the specifications and that the referee was clearly right in holding that the increased materials for which plaintiffs demand payment' were beyond the requirements of the contract. The plaintiffs having furnished more materials than was required by the contract without having procured the necessary authorization, the state is not bound. Parties to a written contract are presumed to understand the import of its terms and to have entered into- the contract with knowledge of their respective rights and obligations.
Judgment for defendant.
RUDOLPH and SMITH, JJ., concur.