Court Opinion

ID: 8192566
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:15:40.566585+00
Date Added: 2024-06-11T16:40:39.343635
License: Public Domain

The following opinion was filed January 5, 1918:
Eschweilee, J.
Probably much of the complication and long delays that have arisen in this litigation may be ascribed to the fact that each of the parties to the contract of April 2, 1908, from the first time any question arose thereunder, seemingly took diametrically opposed views as to their respective rights and liabilities. The trial court adopted the plaintiffs’ view, namely, that there was an absolute liability under that contract to pay to plaintiffs the amount mentioned therein on account of the work, without regard to the fact as to whether the United States government paid such amount for the same work or not. In coming to this conclusion much reliance was placed upon language found in paragraph I of the contract reading as follows:
“The moneys to be paid the contractors therefor shall be the sum or balance to be paid by the United States of America under the contract of Orman & Orook aforesaid, and which sum or balance is understood to be $641,131.34, to which is to be added and paid by the United States of America the hold-backs on schedules 1 and 2 as above set forth, aggregating $45,000, and penalties aggregating $7,050, and the further sum of $14,050 to be paid by the company to the contractors as hereinafter set forth.”
From this language it is argued that there was assumed *147by the defendant an absolute liability to the full extent of the gross amount mentioned therein, together with the hold-backs of $45,000, the penalties of $7,050, and the further sum of $14,050. There are, however, other provisions in the contract which must be considered in order to arrive at the legal effect of the instrument.
By paragraph V the defendant agreed to assign all warrants and pay over to plaintiffs all moneys received by it from the United States upon estimates of work done under the contract of Orman & Crook and to assign all warrants and pay over all moneys received by the defendant from the United States for hold-backs and for penalties charged against Orman & Orook, within five days after such warrants or payments, or any of them, shall have been received by the defendant, and in addition thereto the defendant agreed to pay the plaintiffs $14,050 and no more, which latter sum shall be in full for all other obligations and liabilities of the defendant to the plaintiffs; and there is further in paragraph X very'significant language to the effect that it is the true intent of the parties that the plaintiffs shall be bound for the completion of the uncompleted work in the same manner as if they had been the contractors with the United States instead of Orman & Crook, and that said plaintiffs shall look to the payments to be made by the United States for their compensation for all work done under such contract, and the company shall not be liable to the contractors for any greater sum than $14,050, except as was thereinbefore expressly agreed.
From the four corners of this instrument we construe it as fixing an absolute liability on the part of the defendant to pay the sum of $14,050; that the compensation for doing the work should be all the moneys that should be paid out by the United States government for or on account of the work required by it in order to complete the Belle Fourche project; that each party was under an implied obligation to as*148sist, wherever necessary, in taking the required steps to obtain from the government the amount that the government was willing to pay for the work as it went on or which should finally become due on the completion of the work; that it was incumbent upon the defendant to use reasonable diligence to collect from the government the sums of money that became due from the government to it under the Garfield contract, and then to assign the warrants or pay over the amounts within five days after the same should have been so collected by reasonable diligence from the government. Neither party had the right to sit back and insist that it was incumbent upon the other party to take all the steps necessary to obtain from the government the moneys for such work.
The defendant was not, as it contends, a mere trustee for the plaintiffs or a mere conduit through which the money was to pass from the government to the plaintiffs, nor were the plaintiffs mere assignees of the Garfield contract, because an assignment of such a contract is absolutely prohibited by sec. 6890, U. S. Comp. Stats., and neither party can be heard to assert that there was in effect such an assignment, for ■what cannot be permitted to be done directly will not be permitted to be done indirectly.
The United States government obligated itself, under the Garfield contract, to pay defendant, not the plaintiffs, and the defendant was the only one in position to demand the money for the work done. It either had the absolute duty to pay the whole amount due for the work or the implied duty to see to it that the work was paid for in such amount as the United States government should allow. It could not occupy the reputed position of Mahomet’s coffin.
Were authorities necessary to sustain this construction of defendant’s obligation they are at hand. Rumsey v. Livers, 112 Md. 546, 17 Atl. 295; Vermont M. Co. v. Mann, 36 Vt. 697; White v. Snell, 9 Pick. (26 Mass.) 16.
*149We are not unmindful of' the contentions made by the parties with respect to the telegram of April 6th and the two telegrams of April 8, 1908, from Mr. Griffin at Washington on behalf of defendant to plaintiffs, to the effect that the government agreed to the payment of the “hold-hacks” and “other requirements,” and from which latter expression it is insisted by plaintiffs that they were entitled to consider that the requirement as to the payment of the penalties of $7,050 had also been agreed to by the United States government. But we feel that the consideration ■ of the language of these telegrams is immaterial in the disposition of this case, for the reason that although the court below found that the Garfield contract of April 10th was received by plaintiffs after October 10th, yet it stands uncontradicted in the testimony that a letter purporting to contain a copy of the Garfield contract was sent by defendant to plaintiffs and the return receipt for such registered letter signed by the then bookkeeper of the plaintiffs at Janesville at about noon of April 10th. The bookkeeper whose signature appeared on such receipt was not called as a witness and the plaintiffs did not leave Janesville for the work until the evening of April 11th. That importance was attached to the plaintiffs having a copy of the Garfield contract is evidenced by article XII of the contract of April 2d, which required defendant to furnish such copy on or before April 10th.
We are satisfied that it must be considered as a verity in this case and any finding to thé contrary deemed modified, that the plaintiffs did receive on April 10, 1908, and have in their possession from then on, the so-called Garfield-contract of April 8th between the defendant and the government, and are chargeable with knowledge of its contents, and cannot be heard to say that they relied upon the language in these telegrams which might have led them to a different understanding as to the contents of such contract, and especially when they retained it without protest on the score of any in*150consistency between the face of the Garfield contract and any such understanding.
As to the item of $7,050, the so-called penalties withheld by the United States government from Orman & Crook under their contract, the following are verities in the case: That by the Garfield contract the United States government did promise and agree to pay to defendant the hold-backs of $45,000, but did not agree to pay these penalties; during the progress of the work, in the monthly statements from September, 1908, until June, 1911, and in the final estimate of December 21, 1911, there is no suggestion or intimation on the part of the government that it intended to change the position it had assumed under the Garfield contract with reference to these penalties; under such a situation the remission of such penalties would have been a favor on the part of the' government to either the defendant or the plaintiffs and not a matter of contract right; the plaintiffs at no time prior to the final settlement between the government and the defendant under the Garfield contract directed, suggested, or demanded that the defendant should require such a favor from the government; the time within which the defendant could properly request such favor was before the acceptance of the final estimate of December 21, 1911.
Considering these verities in the light of the construction that we have adopted of the contract between the parties, we can see no ground upon which the plaintiffs’ claim for these penalties can be .allowed, a'nd neither of the grounds upon which plaintiffs contend for a liability can be sustained; the first, namely, on the theory of an absolute liability of defendant, because we have determined that that was not the effect of the contract; or secondly, that the defendant, having made no effort to collect the same from the government, cannot be heard to say that it could not have collected them if such attempt had been made. This second contention is disposed of adversely to plaintiffs because, the matter of pen*151alties being one of favor and not of contract, it was as mncl'i incumbent upon tbe plaintiffs to ask for suck favor after the Garfield contract was brought to their attention as it was on the part of the defendant, and the plaintiffs having permitted that opportunity to go by without such application on their part, either directly or through defendant, plaintiffs cannot now hold defendant on the speculative theory that such a favor might have been granted if some one had asked for it.
It is true that in the testimony of Mr. Griffin with reference to the conference had between representatives of the parties as to the bringing of the suit in the district court of Columbia he testified that he mentioned there that such suit was to determine the question of the penalties as well as the payment of the hold-backs, but there was subsequently sent to the plaintiffs a written statement as to the nature of the Washington suit in which the penalties are not mentioned, and furthermore they and their counsel are chargeable with knowledge that a claim of such a nature as would be one for these penalties would have to be brought in the court of claims and not in the district court of the District of Columbia, the former court alone having jurisdiction over amounts for which the government had denied liability, as would be the case for these penalties.
The item allowed by the trial court of $4,469.47 is designated the Young claim because it is the balance or net cost to the plaintiffs arising from a transaction between them and one Young, who asserted title to considerable of the property which had been used on the work by Orman & Crook and left there by them in January, 1908. The government took possession of all such property, including the horses, supplies, tools, and materials, by virtue of the provisions of the contract with Orman & Crook, and continued to use the same in the prosecuting of the work during the interval between January and April 21, 1908.
Ry the Garfield contract the government permitted the *152defendant to have tbe possession and use of such property. By tbe contract between tbe parties hereto tbe defendant agreed in paragraph II that tbe plaintiffs should have tbe use of tbe plant, horses, mules, and materials of Orman & Crook taken into possession by tbe secretary as aforesaid, and provided that an inventory thereof might thereafter be annexed to tbe contract. The defendant also agreed that tbe contractors should have tbe use of said property without charge during tbe progress of said work, and 'that it would protect and defend tbe plaintiffs against a superior claim on tbe part of any other person affecting tbe possession of any of said property.
No inventory was ever attached to tbe contract, according to tbe above provision. One bad been made on February 1st, but plaintiffs testify that they did not see that one. Another was made April 21st at tbe time tbe supplies and materials were turned over by tbe government officials to tbe plaintiffs. Tbe plaintiffs testified as to this inventory that they would not accept it for tbe reason that all tbe property was not turned over to them. Defendant’s testimony was that it knew nothing of this inventory until long after tbe work was completed. In this inventory there was a statement to tbe effect that certain equipment was claimed and probably owned by Mark Young and that it was not included in tbe preceding part of tbe inventory of tbe Orman & Crook property, but is turned over to plaintiffs by order of tbe director of'the United States government service.
About June 1, 1908, tbe plaintiffs notified defendant that Young was now claiming tbe ownership of this property and insisting on its delivery to him or compensation for it, and they also asserted that to be deprived of tbe property at that stage of tbe work would seriously incommode its prosecution.
During tbe first stages of'the controversy concerning this claim of Young’s, plaintiffs notified defendant that there *153was a serious doubt as to Young’s ownership and that be was probably a partner instead of being an employee of Or-man & Crook, and the government at first took the stand that it would through the United States district attorney defend against any claim of Young. Subsequently the government refused to take any part in the controversy, and plaintiffs notified defendant that they were satisfied from the proceedings that had been taken in Denver in the bankruptcy of Orman & Crook and the adjudication there made that Young, as a matter of fact, owned this property, and suggested to the defendant that it and the plaintiffs should join in purchasing the property from Young. Defendant then took the position and maintained the same thereafter that it was under no obligation towards the plaintiffs with reference to this claim of Young and that they must protect themselves, and refused to participate in any proposed purchase of the claim of Young.
Thereupon the plaintiffs purchased for about $7,000 this property of Young and continued to use the same on the work. Thereafter they sold certain portions thereof in such manner that the net cost to them became the amount that was allowed by the court of $4,469.47. This purchase from Young was finally closed on August 26, 1908, and it was from that date that the court allowed interest on this balance.
It is contended in opposition to the allowance of this item that from the language of the inventory of April 21st, made at the time the property was turned over to the plaintiffs, they were bound to know from the recital that this was not the property of Orman & Crook, but was claimed by and probably owned by Mark Young, and that therefore, when they accepted the same with such notice, they could not charge the defendant with any liability on account thereof; or again, that the contract must be construed as guaranteeing to plaintiffs possession and use of and freedom from su*154perior claims only as to property actually owned by Orman & Crook and did not apply to or cover property which, although it might have been in the possession of the government and turned over to the plaintiffs, as a matter of fact was not owned by Orman & Crook; or lastly, that, plaintiffs having failed to give defendant an opportunity to defend by litigation against the claim of Young to this property and having settled with Young themselves without such litigation, the defendant cannot be held.
We are satisfied from a consideration of the testimony that none of these objections is tenable and that the findings of fact of the trial court upon which the allowance of this item is based are supported and should stand. The contract, it is true, is somewhat indefinite as to whether or not it was intended to cover property simply owned by Orman & Crook or property that was in the possession of and used by Orman & Crook in the carrying on of the work. Whatever doubt might have been in the language of the contract, it was proper for the court to solve it by the aid of the evidence presented at the trial, and there is sufficient support in that evidence to warrant the court in coming to the solution that it did.
There is no question but that this property was actually on the work and had been used by Orman & Crook and, after their departure, by the government in the actual prosecution of the work. • It was necessary for such work and might well be held to have1 been within the letter and the spirit of the contract.
The defendant in effect elected to stand upon its own construction of the contract and deny responsibility in any manner for this Young controversy. Having so elected, it is bound by such election, and could not in the face of that stand require the plaintiffs to go through the useless formality of tendering to defendant the defense of any lawsuit between plaintiffs and Young.
*155The first statement or estimate appearing in the record from the United States government 'for the doing of the work after the plaintiffs commenced in April, 1908, was dated September 30th. On such statement or estimate was an item of deduction from the amount to he paid for such work of $4,594.81 under the designation “Supplies and materials purchased by U. S. and turned over to National Surety Com-panySubsequently it identifies it as estimate No. 5, which is in the nature of a bill October 1, 1908, for materials and supplies purchased by the United States upon suspension of Orman & Crook contract, for use in connection with the work covered by said contract and turned over po the National Surety Company on April 21, 1908. Of this bill about $246.21 was for lumber, harness, hardware, and other materials, and the balance of $4,348.68 was for hay, ice, coal, potatoes, and other food supplies. It was found by the court below, and there is evidence to support it, that the United States from time to time consumed part of the materials and supplies on hand when they took the plant over in January, 1908, and it even supplied other materials and supplies, and that all such were used in connection with and as a part of the plant and were upon the work when the contract between the parties was made, and that both parties assumed that such supplies and materials were a part of such plant; that the amount of such item was deducted by the government under the Garfield contract; that such deduction was never consented to by plaintiffs, and that such claim of the United States was .and is a superior claim against the property turned over to the plaintiffs by the government such as is mentioned in paragraph II of the contract.
Defendant’s objections to the allowance of this claim are substantially, first, that it was not'covered by the contract between the parties and is not a claim or lien against the property; and secondly, that if it should be such a lien," the *156deduction was acquiesced in without objection by the plaintiffs and that they therefore must be held to have waived, as against the defendant, any claim for such item. It was as much due to the failure of the defendant as of the plaintiffs to see to it, that the proper inventory as to the property intended to be covered under defendant’s guaranty of quiet possession in the contract was not made and attached to the contract, for such an inventory might easily have solved all doubtful questions which have arisen on this subject. In default of such inventory the court below must necessarily have resort to evidence to determine from all the surrounding circumstances and the situation of the parties what was intended to be covered by the contract. From such consideration the court arrived at the conclusion that this property, as well as that claimed by Young, was intended to be made secure in the possession of the plaintiffs for the prosecution of the work, and we cannot disturb such findings.
While there is much force in the contention of the -appellant that the plaintiffs waived their claim as to this matter by the acquiescence of the plaintiffs in the deduction during the time the government was sending in monthly estimates from September, 1908, until June, 1911, and in the final estimate of December 21, 1911, yet it does not necessarily follow that, as a matter of law, such tacit acquiescence in the deduction so far as the government was concerned in its dealings under the Garfield contract, to which, of course, the plaintiffs were not parties, amounted to a waiver of their claim as against the defendant under their separate contract. Manifestly a final adjustment of affairs between the plaintiffs and the defendant could not be expected to be determined until at least the adjustment with the government under the Garfield contract had been disposed of, and before that was done by the defendant this present action had been commenced.
There is a further substantial ground to support the find*157ings and conclusion of tbe trial court as to.botb of these preceding items, namely, tbe so-called Young claim and tbe government deduction. That is founded upon tbe unqualified admission of a liability as to both of these items, although not as to tbe full amount thereof, that was made by tbe vice-president and counsel, Mr. Griffin, in February, 1914, and during tbe progress of tbe trial of this action.
A conference was bad in Chicago with reference to tbe situation then present, arising under tbe contention of tbe government that tbe bold-backs should be paid to tbe trustee in bankruptcy for Orman & Crook and not to tbe defendant. At that time tbe situation as to these two other items was discussed, and in consideration of an extension of time for tbe trial of tbe present lawsuit, then pending, it was agreed that an investigation should be made into tbe plaintiffs’ claims for this Young item and 'the government deduction item, and information was furnished by plaintiffs to defendant for such examination. A further extension of time was requested for tbe investigation of these claims and such extension granted, and thereafter the vice-president of defendant caused checks to be drawn, one for $3,763.04 on tbe Young claim, and another for $246.21 on tbe government deduction item, and sent tbe same to defendant’s counsel at Milwaukee, notifying plaintiffs’ counsel, by two communications, that tbe defendant was satisfied that there was a liability of tbe defendant for these two items and to tbe amount evidenced by these two checks. After these checks reached Milwaukee defendant’s counsel there took a different view of tbe situation and advised tbe defendant that a liability for tbe same did not exist, and for that reason tbe checks were never delivered.
Such admission of liability, after full opportunity for examination and consideration, is of great weight and would be amply sufficient to support these findings of tbe court. Having admitted the obligation as to each of these items, *158the defendant cannot limit it to the exact amount which it conceded it was willing to pay on those two items.
It is urged by defendant that under the contract nothing* was due or payable until the engineer’s certificate had been obtained by the plaintiffs and presented to or filed with the United States government, but from the view we have taken of the rights and liabilities of the parties to this contract we do not consider that such is a material question in the case. Such certificate was only necessary as between the government and the defendant under the Grarfield contract, and the duty to obtain it rested primarily upon the defendant. Such a provision was to protect the United States government and not the defendant, and although the plaintiffs were to stand in the shoes of Orman & Crook under the original contract, yet plaintiffs’ obligations under that contract would be to the government and not to defendant. The defendant, especially where it has continually repudiated any obligation to be an active agent in securing the money from the government, is in no position, under the contract of April 2d, to insist on any such condition being performed on the part of plaintiffs.
Again, the defendant urges that, since it appeared that after the work was completed certain claims were made against the plaintiffs for alleged balances due to subcontractors or others employed on the work, therefore until such claims had been satisfied and discharged plaintiffs could not maintain this action. Reliance for such position is placed upon the provision in article I of the contract of April 2d by which plaintiffs agreed to pay for all materials, labor, and supplies furnished, used, or necessary in said work, and to discharge any attachments or liens that might be filed by any person furnishing such materials, labor, and supplies. The answer to this contention is that such action on the part of plaintiffs is not expressly made a condition precedent to its receiving the money from the government, nor is it one by implication; the defendant had ample security by withholding funds sufficient to cover such claims, or requiring such *159claimants to be made parties heretp. And lastly, as found by the trial court in its fourteenth finding, the defendant ■ never based its refusal to act upon either the failure of plaintiffs to obtain such releases or the engineer’s certificate.
The estimate of December 21, 1911, or-so-ealled final estimate, was not forwarded by defendant to plaintiffs until July 19, 1913, and it was then returned by them to the defendant, which on October 24th sent the final estimate, with the necessary release executed by it, to the government officials having charge of the work and accounts in this matter. The comptroller of the treasury rendered an opinion November 11, 1913, in substance advising that the payments of the hold-backs could not safely be made to any other than the trustee in bankruptcy of the firm of Orman & Crook, and suggesting the advisability of some suit being instituted to determine to whom such fund could safely be paid. There- • upon the defendant was notified that unless steps were taken requiring some other disposition- thereof, the government would, in Eebruary, 1914, pay such hold-backs to such trustee in bankruptcy of Orman & Orook. Thereupon, after consultation with plaintiffs and their counsel, defendant instituted a suit in its own name in the district court of the District of Columbia making the proper government officials parties thereto as well as the trustee in bankruptcy. During the pendency of such action the government paid the item of $24,860.08 which was paid over to plaintiffs on August 28, 1914. An adverse decision was made on the hearing of said action in the district court as to the other item of hold-backs and an appeal taken by defendant, and on the appeal a final judgment rendered determining that the payment of the hold-backs could properly be made, as provided in the Garfield contract, to defendant, and, such judgment being complied with by the government, the. amount so received was turned over to defendant and held by it to be disposed of subject to the decision of the court on the plea in abatement.
. In the prosecution of such lawsuit the defendant incurred *160expenses amounting to about $3,400 and claims that it should be allowed such sum as in the nature of a counterclaim against the plaintiffs, again relying in support of such claim upon the position it had planted itself upon with reference to the contract, namely, that any steps that defendant took to obtain this money from the government to be paid over to the plaintiffs were in the nature of a favor and not an obligation, and that, having brought this suit and obtained the money, it should be reimbiirsed its expenses.
Under the view of the contract that we have deemed it right to take, the bringing of this lawsuit in order to obtain the money from the government was one of the implied obligations that the defendant assumed towards the plaintiffs, and it was merely doing what it ought to do under its contract of April 2d, and the trial court was therefore correct in disallowing this amount.
The contract of April 2, 1908, was made by defendant on one side and by Hayes Brothers Company, a Janesville corporation, and John W. Peters, on the other. The corporation filed a certificate of dissolution in Eebruary, 1913, with the secretary of state, and no question is raised but that such certificate was regular, sufficient under the statute, and properly filed. By sec. 1764, Stats., it is provided that after such dissolution such corporation shall nevertheless continue to be a body corporate for three years thereafter for the purpose of prosecuting and defending actions and enabling it to settle and close up its business, dispose of and convey its property, and divide its capital stock, and for no other purpose.
After the three-year period expired John W. Peters died, and the present plaintiff, Mary Kathryn Peters, was appointed administratrix of his estate and substituted in his stead as a party plaintiff.
The defendant now suggests as a difficulty, without offering any solution or remedy for such, first, that a partnership *161cannot be formed between a corporation and an individual, and that therefore there was no such joint interest in this contract that upon the dissolution of the corporation it became the property of the individual who survived; and second, that there is no one to whom in safety to itself it can pay the amount due for the completion of the work, which it concedes it still holds, belonging to some one else than itself.
' ■ The defendant, however, elected to enter into this contract with the two entities, the corporation and -an individual, and is not in a position now to contend that such a contract could not be properly made. The corporation by its own hand in February, 1913, died, and by virtue of the statute above quoted became dead beyond all probability, if not all possibility, of resurrection in February, 1916. Whatever rights it may have had in and to this fund, not having been disposed of by any action on its part at the time of such death, necessarily passed to someone or somewhere, but certainly did not revert to the defendant. No other resting place is suggested for this fund by the parties and none occurs to us other than the person also interested in. the contract who survived, namely, Mr. Peters, and we hold, therefore, that under the record in this case whatever interest and ownership there was in the funds here in question passed on the death of the corporation, as it would have on the death of an individual copartner, to the surviving partner, so far at least as the defendant in this action is concerned, and that the present plaintiff, the administratrix of the estate of Peters, is the proper person to whom payment may be made, and the plea in abatement was properly overruled.
Interest was allowed by the court below on the various items of damages for which judgment was directed. From December 21, .1911, on the hold-backs of $44,768.22 to the date of the entry of judgment, and on. the item of $24,860.08, the amount for the final work, to August 28, 1914, the date when such sum was paid over to plaintiffs.
*162As to these two items we think that that date is fixed at least thirty days too early, because under the contract as -we have construed it the defendant’s obligation was to take the necessary steps to collect the amounts due under the Garfield 'contract from the government and pay them to the plaintiffs, yet that would necessarily involve a reasonable time for the government officials to check over and approve of any such final estimate.
It appears that about thirty days was' the time taken, from October 24, 1913, to [November 22, 1913, after the final release was signed by the defendant and returned to the government, before the government took action warranting, the disbursement of these amounts; that would seem to be a reasonable time, and the obligation to pay would therefore not rest upon defendant until after such time had passed and would bring the period for the running of the interest as to these two items embraced in the final estimate of December 21, 1911, up to January 21, 1912, and the judgment should be modified accordingly.
We do not overlook the fact that by the fifteenth finding the trial court found that the time between July 1 and December 21, 1911, was a reasonable time within which the defendant could and should have taken the necessary steps to collect from the government the amounts due for this work. There is no evidence, however, that any of the delay between the preceding government estimate of June, 1911, and the final estimate of December 21, 1911, was due to any delinquency on the part of the defendant or that such interval was unreasonable in view of the nature of the work and all the other circumstances, or that such was not the regular routine for such accounts to take. It was a very large project, costing over a million dollars, and some time must necessarily elapse between the time of the actual completion of such work and the time, when the government could safely say that it was ready to make its final estimate. ■ In the ab*163sence of showing to the contrary, it is presumed that the final estimate was made lay the government with reasonable dispatch. The filing, therefore, of this final estimate on December 21, 1911, as a public record, so to speak, was the date at which defendant’s activities should begin, and, as we have just seen, thirty days from thát date a reasonable time from which its liability as to interest’should begin.
The allowance of interest on the Young claim from August 26, 1908, is proper and will not be changed.
The question of interest,on the government deduction of $4,594.87, which item first appears in the government estimate of September 30, 1908, brings up the oft discussed questions of when interest should be allowed in contract actions, and, when allowed, from what time. The confusion that has often arisen on such subject is fully shown in the discussion on the subject in the case of Laycock v. Parker, 103 Wis. 161, 178, 189, 79 N. W. 327.
In some cases for breach of contract and some sounding in tort a sum is allowed equivalent in amount to interest, not as interest, but simply as compensation for the delay, in order that the plaintiff may be fully remunerated. J. I. Oase P. Works v. Niles & Scott Co. 107 Wis. 9, 17, 82 N. W. 568.
Such a rule has been especially recognized in actions for injury to property. Voigt v. Milwaukee Co. 158 Wis. 666, 149 N. W. 392; Bagnall v. Milwaukee, 156 Wis. 642, 649, 146 N. W. 791.
But in many actions for breach of contract, where the contract itself does not expressly provide for interest, a demand for payment may be necessary in order to fix the period from which interest is ultimately to be computed. And in the absence of other form of demand the commencement of the action is treated as such demand. Laycock v. Parker, 103 Wis. 161, 188, 79 N. W. 327. Or, as ís stated in the case of State v. Milwaukee, 158 Wis. 564, 573, 149 N. W. 579, *164where no time of payment is fixed, in the contract, or where the claim is unliquidated, or where the question of liability is so involved in doubt that there are reasonable grounds for believing that no liability exists, a demand is, in the absence of peculiar equitable considerations, necessary to set interest running.
It is alleged in the complaint that demands were made before the commencement of the action for these various items, and issue was raised on this allegation by the general denial in the answer. We find no evidence in the record of anything in the nature of a demand for this particular item having been made prior to the commencement of this action. In the eleventh finding of fact, which concerns this item, it is declared that this deduction was made without the consent of plaintiffs; that they have not been paid, and that it was a superior claim; but no finding is made as to any demand for such sum by plaintiffs on defendant. It was deducted September, 1908, at the time the government made its first estimate under the Garfield contract, and appeared as a deduction through all succeeding monthly estimates as well as in the final estimate of December 21, 1911. The amounts were received by the defendant and turned over to the plaintiffs without any exception being taken by plaintiffs at the respective times as to this item.
The language of the item, namely, “Supplies and material purchased by U. S. and turned over to National Surety Company/'’ did not necessarily, as a matter of law, notify the defendant that such deduction was a superior claim against the property turned over to plaintiffs for which it must be responsible under the second clause of the contract, or that it must forthwith pay such sum to the plaintiffs in order to avoid liability. Under the nature of the transaction between the parties, it may well be said that the situation here is governed by the rule laid down in Ryan D. Co. v. Hvambsahl, 92 Wis. 62, 65 N. W. 873. In the absence of a prior *165demand, therefore, the commencement of this action December 3, 1913, must be considered the date from which interest on this item shall he computed.
In thus disposing of all the questions before us that are deemed material, it follows that the judgment below must be modified so that it shall provide for damages as of the
. date of the entry of judgment July 10, 1911, as follows:
Principal. Interest.
Young claim_:_' $4,469 47
Interest on this item as specified in findings $1,447.91, plus interest on $4,469.47 August 25, 1912, to judgment, of $1,307.35; total on this_ $2,755 26
Government deduction _ 4,594 87
Interest from December 3, 1913, to July 10, 1917 _ 993 18
Interest on $24,860.0'8 from January 21,1912, to date of payment, August 28, 1914_ 3,882 28
Hold-backs _:_ 44,768 22
Interest thereon from January 21, 1912, to July 10, 1917_'_ 14,684 70
Totals_._$53,832 56 $22,315 42
Totai principal _L_$53,832 56
Total interest _ 22,315 42
Total __•_$76,147 98
Costs in circuit court_ 114 28
Grand total _ $76,262 26
—instead of the sum of $87,473.45 as therein entered.
By the Gourt. — The judgment of the circuit court is modified to provide for the allowance of $53,832.56 as principal, $22,315.42 as interest, and $114.28 costs and disbursements, making a total of $16,262.26, and as so modified it is affirmed as of July 10, 1911; appellant to have its costs and disbursements in this court.
A motion for a rehearing was denied, with $25 costs, on April 3, 1918.