Court Opinion

ID: 9661261
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:33:52.418609+00
Date Added: 2024-06-11T18:14:26.785906
License: Public Domain

ON REHEARING
McCALEB, Justice.
A rehearing was granted in this case for the purpose of reconsidering the correctness of our interpretation of identical clauses appearing in two contracts between plaintiff and the Department of Highways wherein the Department engaged plaintiff to perform engineering services in the construction of two segments of the national system of interstate highways in Louisiana.
The decree rendered by this Court on first hearing affirmed the judgment of the trial court awarding plaintiff the sum of $151,634.45 plus interest and costs. The Court of Appeal had amended the district court’s judgment by reducing the award to plaintiff to $24,919.76 with legal interest and assessing only stenographic costs against the defendant, and all remaining costs were ordered to be paid by plaintiff. See 197 So.2d 188.
The facts of the case are set forth in detail by the Court of Appeal and also in our opinion on first hearing. The salient question presented to this Court is the meaning and interpretation to be given to a certain provision appearing in both contracts1 which controls plaintiff’s right to redress from the Department for damages occasioned by delays allegedly caused by the Department’s tardy approvals of work in progress and the quantum of damages, if any, recoverable thereunder.
Plaintiff's position is that certain delays in approval of work in progress were due to the fault of the Department of *123Highways, and he seeks recovery for the payroll costs of his entire engineering work •crew during the period of these delays, extending for twenty-six months on one contract and fifteen months on the other. 'The Department, on the other hand, while denying in any case any liability for work-crew payrolls during periods when no work was performed, maintains that the contractual clause at issue relieved it of responsibility for such delays even though they may have been caused by its tardy approval of work in progress or for any •other cause.
Plaintiff contends the contractual clause in ambiguous and proclaims that the exculpating provisions apply only to delays attributable to “various official agencies” other than the Department, i. e., the United States Bureau of Public Roads. Defendant asserts that the clause is clear and explicit and, hence, needs no interpretation.
The provision of the contract reads:
“Delays and Extensions:
“The ENGINEERS will be given credit and extension of time for delays beyond their control or for those caused by tardy approvals of work in progress by various official agencies, but no additional compensation shall be allowed ' for such delays.”2
This Court on first hearing, unlike the Court of Appeal, found the above-quoted provision ambiguous, insofar as the phrase "various official agencies” was concerned, and ruled that such phrase referred to all third party official agencies, other than the Department of Highways, “ * * * third parties whose approval or actions might be involved in the contract * * * ”, such as the United States Bureau of Public Roads which financed the major portion of these projects. It was reasoned that, when the language of the exculpating clause is considered in connection with the other provisions of the contract containing numerous references to the “Department”, it was intended by the parties that the phrase “various official agencies” was to apply to non-contracting agencies other than the Department. Further, in reconstructing the meaning of the phrase “various official agencies,” it was deduced that, should the exculpating provision be construed to mean that the Department *125would bear no responsibility for damages incurred by the contractor as a consequence of tardy approvals of work in progress by the Department, then the contracts would be subject to potestative conditions and null under Articles 2024 and 2034 of the Civil Code.
In its application for rehearing, as well as in argument, the Department urges that our opinion on first hearing has, in effect, rewritten the exculpating provisions to read “various official agencies exclusive of the Department of Highzvays” and that such an interpretation is wholly unwarranted since the Department of Highways is an official agency and no such exclusive term was provided. The Department also asserts the opinion on first hearing has lost sight of the fact that these contracts are for the employment of engineering services, and it was certainly not contemplated by the parties that the Department would be responsible to plaintiff for the cost of keeping a full-time staff during periods of delay.3
A review of the case convinces us that our initial ruling, which would interpret the “Delays and Extensions” clause so as to render the Department liable to plaintiff for additional compensation for delays resulting from the Department’s tardy approval of work in progress,' is not well founded. In fact, after reconsidering the contracts involved herein, we have no-hesitancy in holding that the above-quoted “Delays and Extensions” clause explicitly and unequivocally denies to plaintiff any right to recover from the Department additional compensation or damages occasioned by delays in progress of the work resulting, either from causes beyond the control of plaintiff, or for those caused by tardy approvals of work in progress by any official agency, including the Department.
The contracts under which this suit is filed are contracts of employment by the Department of Highways of plaintiff’s engineering firm to perform various engineering services in connection with the construction by the Department of two segments of the national system of interstate highways in Louisiana. Under these agreements the plaintiff is the obligor, and he was required to furnish the services specified in the contracts which were divided into two phases, the first phase in both contracts to be completed within *127six months following date of notice to proceed, and Phase II to be completed within four months following notice to proceed with that phase. The contracts, as we have also noted in footnote 2, provided for additional compensation in the form of a lump-sum payment to plaintiff in the event of revision of the plans by the Department, either during or after completion of the work. And following the contractual provisions for payment of the provision requiring payment of ad-this additional compensation occasioned by revisions of plans is found the clause in controversy entitled “Delays and Extensions” which we have quoted above.
It will be noted at the outset that, unlike the provision requiring payment of additional compensation for revisions of plans, the delays and extension provision declares that “The ENGINEERS will be given credit and extension of time for delays beyond their control or for those caused by tardy approvals of work in progress by various official agencies, but no additional compensation shall be allowed for such delays.” (Italics ours.) We doubt that the intention of the parties could be expressed more succinctly and understandably than in this provision. Indeed, since it clearly specifies, and the contracting parties stipulate, that the obligee, the Department of Highways, is not to be liable for any additional compensation occasioned by such delays, that is, the delays which may occur from causes beyond plaintiff’s control, it matters not whether such delays are caused by the Department or by third persons.
Therefore, it is actually immaterial whether or not the Department was intended to be included among the “various official agencies” since the Department as the other contracting party was not liable to plaintiff for additional compensation occasioned by delays in the completion of the contract, whatever the cause of the delay. This was the contract of the parties and, as stated in Article 1901 of the Civil Code, it had the effect of law. Further, Article 1945 of the Civil Code, which treats of the interpretation of agreements, provides in part: “Legal agreements having the effects of law upon the parties, none but the parties can abrogate or modify them.” Upon this principle the article establishes the following rules applicable to this case:
“Second — That courts are bound to give legal effect to all such contracts according to the true intent of all the parties;
“Third — That the intent is to be determined by the words of the contract, when these are clear and explicit and lead to no absurd consequences; (Italics ours)
“Fourth — That it is the common intent of the parties — that is, the intention of *129all, — that is to be sought for; if there was a difference in this intent, there was no common consent and, conse- . quently, no contract.” •
Let us consider the contracts in question guided by the rules set forth in Article 194S. It was a contract of employment between Department and plaintiff for engineering services to be furnished under the terms of that agreement. And that agreement, in explicit and clear language provides that the plaintiff shall not be entitled to additional compensation in the event his performance is delayed as a result of acts beyond his control or whether it is occasioned by tardy approvals of work in progress by various official agencies. In such instances, the plaintiff is entitled only to credit and extension of time for his performance.
Under this view of the case, it would normally be superfluous to determine whether the Department was included in the part of the “Delays and Extensions” clause which refers to delays attributable to tardy approvals of work in progress by various official agencies.
However, since our original opinion was based on the conclusion that the Department was excluded from the term “various official agencies”, it is apt to express our present views concerning this conclusion. Initially, the conclusion had to be reached by determining that the provisions of the “Delays and Extensions” clause were vague and indefinite — a holding with which we do not agree for the reasons stated above.4
Furthermore, we do not perceive why the Department by any process of construction should be excluded from the *131term “various official agencies.” The fact that the word “Department” is used throughout the contract is not indicative of an intent to exclude it from the term "various official agencies.” The reason why the word “Department” is used throughout the contract is because it is one of the parties thereto (the obligee thereunder). The Department is an official agency, and the term “various official agencies” necessarily includes, we think, all official agencies which might be required to give approval of work in progress. The United States Bureau of Public Roads was one of these agencies, and there might have been others, besides the Department of Highways, which were required to give approval to the construction work in progress.
Nor do we find substance in the alternative reason for our conclusion on first hearing that, should the Department be included within the meaning of the term “various official agencies” as used in the “Delays and Extensions” clause, it would render that provision null as containing a potestative condition in violation of Articles 2024 and 2034 of our Civil Code.
In the first place, we entertain grave doubt that the “Delays and Extensions” clause is a condition of the contracts. It is simply one of the mutual covenants of the commutative contracts wherein the parties' agree that credit and extension of time for performance will be given plaintiff for all delays of work beyond his control or for delays caused by official agencies in approving work in progress, but it is understood and agreed that no additional compensation would be due plaintiff for such delays.
Moreover, should the provisions of the clause be regarded as a condition, it cannot be considered as potestative under any aspect of the case. For a potestative condition, according to Article 2024 of the Civil Code, is one " * * * which makes the execution of the agreement depend on an event which it is in the power of the one or the other of the contracting patties to bring about or to hinder.” Surely, a contractual provision stipulating that the obligee shall not be liable for additional compensation, should he delay performance of the obligor by tardy approval of the progress of the work, cannot be adjudicated to be potestative. For the agreement did not vest the Department with the power of preventing plaintiff from performing his obligation under the contract and, had the Department attempted to do so, it would unquestionably have been required to respond in damages for breach of contract. On the contrary, the provision which has been said to be potestative, if it is enforced as written, does not have to do with performance. It merely provides that the Department shall not be liable for any compensation attributable to de*133lays caused by “tardy approvals of work in progress”; it does not vest in defendant the absolute right to prevent plaintiff’s performance, which is an essential quality of potestative conditions.5
This case, as noted in our original opinion, was brought to this Court because of an asserted conflict between the decision herein of the Court of Appeal, First Circuit, and that of the Court of Appeal, Second Circuit, in Sandel & Lastrapes v. City of Shreveport, 129 So.2d 620, which authority the First Circuit refused to follow. On first hearing, we found it unnecessary to discuss the Sandel case because of the interpretation given to the “Delays and Extensions” clause. ■ Since we reject our previous interpretation, we feel obliged to determine whether the Sandel case is correct, and, if so, whether it is distinguishable from the case at bar.
In the Sandel case, the contractors, Sandel and Lastrapes, entered into a written agreement with the City of Shreveport to construct an outfall pumping station for a fixed price. The contract provided that the City was to furnish the contractor with the necessary reinforced concrete pipe in 16 foot lengths which the con-tractors were to install after completion of the excavation. As a result of inordinate delays by the City in delivering this pipe, the contractors sustained damages and brought suit for recovery, contending that the City, by its deliberate delay in furnishing the materials for construction, had breached the contract. In denying liability, the City pleaded two provisions of the contract, the first of which (SC-6) declared in substance, “the Contractor’s attention is directed to the fact that he will have to accept the risk of any delays in delivery of equipment to be furnished by the Owner and that in the event he is delayed in the prosecution and completion of the work because of this condition of delay, he shall have no claim for damages or contract adjustment, other than an extension of time and the waiving of liquidated damages for and during the period of time occasioned by such delay.”
The Court of Appeal held, on the merits, that this provision (SC-6) was not applicable since it referred only to delays in the delivery of equipment, whereas the delays were occasioned by failure in the delivery of material, i. e., concrete pipe, *135which could not be considered as equipment.
The other provision of the contract pleaded by the City was SC-15, which declared in similar terms that the contractor will have to accept the risk of any delays “ * * * caused by the rate of progress of the work to be performed under other contracts or by the City or Others and that in the event he is delayed in the prosecution and completion of his work because of such conditions, * * * ” the contractor shall have no claim for damages or contract adjustment during the period of time occasioned by such delay or delays. Again, on the merits of the case, the Court of Appeal held that, since the City had deliberately failed to comply with its contract by furnishing the material required of it within a reasonable period, it was liable for the damages sustained by the contractor, and that the exculpating clause SC-15 was without application because the delays were not caused by the rate of progress of work “ * * * to be performed under other contracts * * *” either by the City or others.
On the facts found by the Court of Appeal on the merits of the case, we think it clear that the matter may be distinguished from the case at bar. However, it is true that, in considering an exception of no cause of action filed by the City, which was predicated on the provisions of Sections SC-6 and SC-15 of the contract, the Court of Appeal ruled that the exception was without merit because the exculpating clauses were contrary to public policy since they would permit a contractee “ * * * to stipulate exemption from negligent acts which cause injury.” No authority is cited for this holding, and we know of none which supports the view that it is against public policy for contracting parties to agree that, in case one of them fails to perform a certain act timely and thus delays the other in the performance of his obligations, the former will not be held responsible for any damages caused by the delay. Accordingly, in this respect, we find that the Court of Appeal, First Circuit, was correct in refusing to follow the decision in the Sandel case.
For the reasons assigned, the judgment of the Court of Appeal is affirmed. The right is reserved to plaintiff to apply for a rehearing.
SUMMERS, J., dissents and adheres to the original opinion of the Court.
SUMMERS, J., dissents from the refusal to grant a rehearing.

. Since the provision is identical in both contracts of employment, we shall refer to it in the singular in our discussion of the issues presented.

. Other provisions of the contract having pertinence to this case are quoted at length in the opinion of the Court of Appeal, particularly the above-quoted provision and the paragraph entitled “Revisions of Plans” (see page 191 of 197 So.2d). Defendant admitted owing plaintiff a balance of $15,208.48 for work done under Contract 13, and the Court of Appeal found that the trial judge was correct in awarding plaintiff additional compensation for work performed under Contract 37 in the sum of $9,711.30. The total unpaid compensation of $24,919.76 for all balance due for services actually performed in no longer at issue in the case inasmuch as the Department has acceded to the Court of Appeal judgment.

. It is conceded that numerous delays occurred in the progress of the work in the instant case, which no doubt were taken into consideration by the parties at the time the exculpating clause was placed in the contracts. Apart from these delays, a number of revisions or changes took place, as well as additions to the project. (The Monkhouse Drive Interchange was one of these; an interchange initially was planned for Curtis Lane.) The opinion of the Court of Appeal discusses these revisions in detail.

. In this connection, the Court of Appeal in its opinion correctly observes:
“Before considering the hereinabove cited clear and unambiguous contract provisions which we deem decisive of the case at hand, we note that the parties are experienced in the complexities of highway construction and its attendant problems. Wo also find from the evidence that all concerned were or should have been aware of the delays normally to be expected in the course of road construction of the scope involved in these contracts. Nothing in the record indicates an overzealousness on defendant’s part to include exculpatory provisions in the contracts to diminish the effect of the agreements or take advantage of an inexperienced or naive party. The previously quoted paragraphs entitled ‘Revision of Plans’ and ‘Delays and Extensions’ expressly provide for the eventuality of delays and specifically and lucidly establish the mode of payment to plaintiff in the event delays should occur.
“We also find that as an experienced engineer, plaintiff was or should have been aware of the likelihood of such delays and signed the contracts with full knowledge and appreciation of the possibility that progress of the work would from time to time bo delayed by circumstancs revealed during planning and construction, by changes dictated by the defendant during work progress and by the necessity of approval of plans both by various segments of the Department involved in a project of such magnitude and by at least one agency of the Federal Government.” (See 197 So.2d at page 198.)

. In addition, it is to be observed that there are only certain potestative conditions which render an agreement null under Article 2034 of the Civil Code. These are called purely potestative conditions. See, among other cases, Morrison v. Mioton, 163 La. 1065, 113 So. 456; Stephen L. Guice & Co. v. Perkowski, La.App., 12 So.2d 692; and Humble Oil & Refining Co. v. Guillory, 212 La. 646, 33 So. 2d 182. See also Article 2035 of the Civil Code, and Brown, The Potestative Condition in Louisiana, 6 Tul.L.Rev. 23; Long v. Foster & Associates, Inc., 242 La. 295, 136 So.2d 48.