Petitioners Brief — City of Menasha v. Furton

19

IN THE

SUPREME COURT OF THE UNITED STATES

Ocroser Term, 1945

No.

CITY OF MENASHA,

Petitioner,

vs.

CLARENCE FURTON, TRUMAN FURTON, LUKE

FURTON, FRED FURTON, ann RALPH JOHN-

SON, Co-PaRTNERS DOING BUSINESS AS F'urtToN BroTHers

Construction Company,

Respondents.

BRIEF IN SUPPORT OF PETITION FOR WRIT

OF CERTIORARI.

The Opinion of the Court Below.

The opinion of the Cireuit Court below is reported in

149 F. (2d) 945 and at R. 115-119.

Jurisdiction.

The statement concerning jurisdiction is set forth in

the petition and is incorporated herein by reference.

Statement of the Case.

The statement of the case appears in the petition and is

incorporated herein by reference.

20

Specifications of Error.

The Cireuit Court of Appeals for the Seventh Circuit

erred in the following respects:

1. In holding, in conflict with the decisions of this

Court, that Rule 56(c) of the Rules of Civil Procedure re.

quires that on motion for summary judgment by defend.

ant, the Court must accept plaintiffs’ fact allegations

and statements in their affidavits, and only on the assump-

tion of their verity, yet insufficient, may summary judg-

ment be entered against them, excluding establishment

of contrary facts beyond controversy by affidavits sub

mitted by the defendant.

2. In reversing the judgment of the District Court with

directions to try all issues without ascertainment, or pro-

vision for ascertainment, of material facts which exist

without substantial controversy, contrary to the letter and

spirit of Rule 56(d) of the Rules of Civil Procedure.

3. In holding (in conflict with the decisions of this

Court) that the alleged representations of elevation of

underlying rock contained in the plans and specifications,

under the facts and circumstances disclosed in the record,

might be held to be warranties and the basis for recovery

by plaintiffs for breach of warranty.

4. In reversing the summary judgment of the District

Court dismissing plaintiffs’ complaint.

at

ARGUMENT.

The Holding of the Lower Court that Rule 56(c) of the

Rules of Civil Procedure requires that on Motion for

Summary Judgment by Defendant the Defendant must

Accept Plaintiffs’ Fact Allegations and Statements in

their Affidavits and Only on the Assumption of their

Verity, Yet Insufficient, may Summary Judgment be

Entered against them is in Conflict With the Decisions

of this Court.

Rule 56(c) of the Rules of Civil Procedure provides in

part:

‘¢. .. The judgment sought shall be rendered forth-

with if the pleadings, depositions, and admissions on

file, together with the affidavits, if any, show that

except as to the amount of damages there is no genuine

issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.’’

The holding of the lower Court is in conflict with the de-

cision of this Court in the case of

Sartor v. Arkansas Nat. Gas, 321 U. S. 620, 64 S.

Ct. 724, 88 L. Ed. 967 (cited with approval in

Associated Press v. U. 8S. —U.S.—, 65 S. Ct.

1416, 89 L. Ed. 1512, 1515).

In this case this Court stated the correct interpretation

of Rule 56(c) of the Rules of Civil Procedure as being

that summary disposition should be on evidence which a

jury would not be at liberty to disbelieve, and which would

require a directed verdict for the moving party.

The meaning of the Court is clarified by its citation of

American Insurance Co. v. Gentile Bros. Co., (C.C.A. 5th)

109 F. (2d) 732, 735, in which is cited the case of Port of

99

Palm Beach Dist. v. Goethals, (C.C.A. 5th) 104 F. (2d)

706, 709, and by its citation of the case of Wittaker v. Cole.

man, (C.C.A. 5th) 115 F. (2d) 305, 306.

Application of the ‘erroneous rule by the lower Court

obviously resulted in the Court ignoring the fact that there

was no order of defendant’s engineer in writing direct-

ing performance of the work, a condition precedent to

recovery of compensation for the work as extra or ad-

ditional work pursuant to the contract. The great im-

portance of this single fact in the ultimate result at which

the Court arrived will be. developed in a subsequent head-

ing into which the subject fits more logically.

Application of this rule by the lower Court probably

caused the Court to ignore facts submitted by defendant

which supplemented facts presented by plaintiffs but

appear to controvert such facts because with the sup-

plementary facts the ultimate fact is contradictory to

the fact inferred from the partial presentation. These

facts will likewise be developed later.

Il.

The lower Court Erred in Reversing the Judgment of the

District Court with Directions to Try All Issues Without

Ascertainment, or Provision for Ascertainment, of Ma-

terial Facts Which Exist Without Substantial Contro-

versy, Contrary to the Letter and Spirit of Rule 56(d)

of the Rules of Civil Procedure.

Rule 56(d) of the Rules of Civil Procedure provides as

follows:

‘‘Rule 56(d). Case Nor Furzty ApsupicaTEp on

Motion. If on motion under this rule judgment is

not rendered upon the whole case or for all the re-

lief asked and trial is necessary, the Court at the

hearing of the motion, by examining the pleadings

and the evidence before it, and by interrogating coun-

23

sel shall, if practicable, ascertain what material

facts exist without substantial controversy, and

what material facts are actually and in good faith con-

troverted. It shall thereupon make an order specify-

ing the facts that appear without substantial

controversy, including the extent to which the amount

of damages or other relief is not in controversy and

direct such further proceedings in the action as are

just. Upon the trial of the action the facts so specified

shall be deemed established and the trial shall be

conducted accordingly.”’ ;

The District Court rendered judgment on the whole

case dismissing plaintiffs’ complaint. Therefore the oc-

easion for it to ascertain what material facts exist without

substantial controversy and what material facts are actual-

ly and in good faith controverted did not arise.

When the Appellate Court determined to reverse the

judgment of the District Court the same situation was

created as if the District Court had not rendered judg-

ment on the whole case. Is not the Appellate Court

then bound by the rule to ascertain what material facts

exist without substantial controversy, and what material

facts are actually and in good faith controverted? Or

is it then bound to remand the cause to the District Court

with directions that afford to the District Court oppor-

tunity to make such ascertainment?

That question has not been, but should be settled by this

Court.

Remanding the cause as the Lower Court did, with di-

rections to try all issues, was either without regard to

the letter and spirit of Rule 56(d) and the beneficial re-

sults intended to be accomplished thereby, or it was a

determination that not a single material fact exists without

substantial controversy, a situation which it will be

demonstrated later herein is not present in this case.

PORE AOE GFL LL IL CS IIE NO ‘

24

ITI.

The Lower Court Erred in Holding that the Alleged

Representations of Elevation of Underlying Rock Con.

tained in the Plans and Specifications, Under the Facts

and Circumstances Disclosed in the Record, Might be

Held to be Warranties and the Basis for Recovery by

Plaintiffs for Breach of Warranty.

MacArthur Bros. Co. v. U. S. 258 U. 8. 6, 42 S. Ct. 225,

66 L. Ed. 433.

Where representations in the contract and _ specifica- T

tions were alleged that a portion of the work would be § not

done in the ‘‘dry’’ and a portion in the ‘‘wet’’ and to do @ the :

the work in the ‘‘dry’’ the construction of certain coffer @ and

dams was specified and unanticipated conditions were @it sl

met and performance of the work became more expensive @ site

than anticipated, demurrer to the petition was sustained § delin

and the ruling affirmed on appeal to this Court. state

There was a similar statement to that in the proposal a

in the case at bar that the proposal was made with a full on

knowledge of the kind, quantity and quality of the plant, wil.

work, and materials required. In

The Court commented:

The Company’s ‘‘investigation may or may not 9), f

have been adequate. It, however, took its chances ies

on that. But in reality there was no representation

by the government nor is it alleged that the govern-

ment had knowledge superior to the knowledge of

the company. The latter acquired knowledge only

by the aid of their divers as work progressed. Such

being the situation does not the case present one of

misfortune rather than misrepresentation?’’

25

Simpson v. U. 8. 172 U. S. 372, 19 S. Ct. 222, 43 L, Ed. 482.

This case involved the construction of a dry-dock and

the excavation of the pit or basin for the dock. Borings

to a depth of from 39 to 46 feet were made by the Navy

Department and the result of these borings was delineated

on a profile plan purporting to show the character of

the underlying soil, and showed that the soil was stable

and contained no quicksand. A copy of this plan was

given to the Contractor before it submitted its bid. The

location of the dry-dock was to be fixed by the engineer

later.

The Court clearly defines the issue as being whether or

not the United States by the written contract guaranteed

the nature of the soil under the site of the proposed dock

and assumed the entire burden which might arise in case

it should be ascertained that the soil under the selected

site differed to the detriment of the contractor from that

delineated upon the plan. The Court failed to find ‘‘any

statement or agreement, or even intimation that any war-

ranty, express or implied, in favor of the contractor was

entered into concerning the character of the underlying

soil.’’

In the MacArthur case the Court distinguishes the fol-

lowing three cases where the opposite result was reached

and warranties were found. These decisions point out

the features or elements essential to the finding of a

varranty, which are missing in the case at bar.

Hollerback v. U. S., 233 U. S. 165, 34 S. Ct. 553, 58 L. Ea.

898.

In this case the specifications contained positive repre-

entations as to the character of material to be en-

‘ountered, and contrary thereto the contractor ran into crib

vork 4,3’ high consisting of sand logs filled with stone, a

26

structure erected by the same agency for which the con.

tract on which the suit was based was being performed,

The court distinguishes the Simpson case.

U. 8. v. Atlantic Dredging Co., 253 U. S. 1, 40 S. Ct. 423,

64 L. E. 735.

In this case the Court characterized the representations

as follows:

‘*Representations made by the government were

deceptive in that the test borings gave information to

the government not imparted to bidders of materials

more difficult to excavate than those shown by the

maps and specifications.’’

Christie v. U. S. 237 U. S. 34, 35 8. Ct. 565, 59 L. Ed. 933.

In this case the Court pointed out ‘‘the time not being

sufficient for the contractors to make their own borings,

they relied upon the government borings.’’

The decision of the lower Court on the facts in the ree-

ord in the case at bar is in conflict with the decisions of

this Court. A review of those facts is contained under the

following heading.

IV.

’

On the Facts Beyond Controversy Presented in the Record

the Lower Court Erred in Reversing the Summary Judg-

ment of the District Court Dismissing the Amended

Complaint.

We summarize under this heading our comments on

the facts, as the most concise and logical method of show-

ing the relation of the facts to the matters to which we

have hereinbefore referred. We use as subheads the

factual issues enumerated by the lower Court as requiring

determination in remanding the cause for trial.

27

1. Were the bed rock representations in the drawings

warranties upon which plaintiffs could and did rely

in entering into the contract?

On plaintiffs’ own showing the representations were

only those contained in the plans and specifications (R.

12), were approximations of the elevation of underlying

rock relating particularly to the foundations upon which

structures were to be erected and not to the floor of the

basin (R. 97) and with no representations as to the method

to be employed in performance of the work or conditions

to be met in execution of the contract.

ESS OS lS

On plaintiffs’ own showing they were reauired to inform

themselves as to the actual conditions and requirements

of the work (R. 17, 21) knew before the contract was

executed that no test borings had been made, and that

information in reference to the elevation of underlying

rock was indefinite, and the defendant had no superior

knowledge. (R. 69-70.)

Plaintiffs’ complaint is only as to method of perform-

ance of the work, that it was more expensive than contem-

plated, and the difficulties are all related to the existence

of a softer material, or the presence of more water than

anticipated (R. 12-13) in the construction of a project sur-

rounded on three sides by bodies of water end below the

level thereof. (R. 97.)

To these facts plaintiffs added proofs that when the

absence of rock at the anticipated elevation where some

of the baffle walls were to be erected was discovered, they

submitted an estimate of extra work in trenching and

lowering of baffle walls of $9107.00 (R. 76), defendant’s

engineer foretold that the amount of work required would

probably be less than estimated (R. 77), final directions

in writing were issued by defendant’s engineer that trench-

ing for the footings only for the baffle walls should

28

be performed, in other words the foundations need not

be lowered, or more excavation performed than in dig-

ging trenches in which the footings under the baffle walls

were to be placed (R. 80-81) and that the final allowance

for this extra approved by plaintiffs was only $3000.50

(R. 84) or less than one-third the original estimate as fore-

told by defendant’s engineer.

By these facts alone plaintiffs established agreement

that the result of the absence of underlying rock at the

anticipated elevation required the performance of only

extra or additional work in payment of which the plaintiffs

accepted the sum of $3000.50. (R. 84.) ’

To these facts defendant added proof that in their

proposal plaintiffs certified, before the contract was

executed, that they had informed themselves fully in re-

gard to the conditions to be met in execution of the con-

tract. (R. 95.)

Consideration is necessary of non-completion of the

work, non-payment of lien claims, and non-assertion by

plaintiffs of any claim for a long time, all admitted by

plaintiffs, with details supplied by defendant, but since

the lower court treated these as separate factual issues,

they are discussed later in this brief.

We submit that by dismissing the original complaint

(R. 10-11) with substantially the same showing, the Dis-

trict Court established it as the law of the case that plain-

tiffs had no cause of action for breach of warranty; but

regardless of the correctness of that contention, the finding

of the lower court that a cause of action for breach

of warranty may exist on the facts presented by this

record is in conflict with the law on the subject, well es-

tablished by the decisions of this court.

2. Was plaintiffs’ failure to make the payments neces-

sary for the completion of the contract excused (a) by

29

defendant’s failure to make all payments due the

plaintiffs or (b) by the added cost and trouble trace-

able to the rock bottom representations?

It will be noted that this question recognizes as a premise

non-completion of the work and non-payment of lien

claims. (R. 14.) Plaintiffs’ alleged cause of action, how-

ever, rests on the premise that the work was completed

and the contract performed, but at an added expense

ereated by the alleged misrepresentation.

Reference to the contract establishes no right in plain-

tiffs to payment until completion of the work and pay-

ment of lien claims. (R. 19.)

So plaintiffs seek to excuse their delinquency by claim-

ing that defendant’s failure to pay plaintiffs caused fi-

nancial stringency of the plaintiffs and made it impossible

for plaintiffs to proceed and to pay lien claims. (R. 14.)

Financial stringency is an untenable excuse in the face of

performance bond with surety. (R. 34.)

~od

“

The lower court extracts from those allegations the

additional excuse (b) that the added cost and trouble

traceable to the alleged misrepresentations prevented

performance. But that is not the exeuse the plaintiffs

offer, or what the lower court meant because it describes

plaintiffs’ default as ‘‘failure to make the PAYMENTS

necessary for completion of the contract’’ (R. 119) there-

by placing plaintiffs’ default and defendant’s alleged

dereliction on a dollar and cents basis, the non-payment

of a specific sum or sums.

What did defendant owe? What could plaintiffs claim

it owed?

Not a sufficient amount under the contract. The amount

withheld (R. 47) was far less than the amount unpaid on

lien claims. (R. 55.)

30

Not damages for breach of warranty. Such claim must

be based on performance of the contract, admittedly not

accomplished. Claim of non-payment of the very amount

in litigation as a basic element of the right to recover that

amount is fallacious reasoning in a circle.

Payment for extra or additional work under the terms

of the contract is all that could be asserted. And thus

the allegations of paragraph 13 of the amended complaint

(R. 14) which we have termed ‘‘deceptive and confusing”

entered into the consideration of the matter and led the

lower court to a confused legal result, as we propose to

demonstrate.

A claim for recovery for extra or additional work under

the terms of the contract was never asserted by plaintiffs,

either in the original complaint (R. 2-5), the amended

complaint (R. 11-15), or in the Appellate Court. (2. 130.)

The monthly estimates of we~’ performed, approved by

plaintiffs, establish lack of oc: claim throughout the

progress of the work. (R. 84-o., 54, 66-67, 68-69.)

Defendant supplied some of the proofs that no claim was

asserted until, pursuant to the contract, upon determi-

nation of the defendant’s engineer and authority vested

in him (R. 23-24), the cont~act was declared in default. (R.

61-65.)

Non-payment by defendant with no request or demand

for payment, or even assertion of claim cannot be asserted

by plaintiffs as excuse for plaintiffs’ default.

Under the terms of the contract (R. 25) such claim could

not be asserted in the absence of written order from de-

fendant’s engineer, and timely submission of claim, the

absence of which were established beyond controversy.

(R. 51, 74.)

The excuses urged by plaintiffs are not material factual

issues.

31

3, Lack of written order by the engineer for the addition-

al work and expense, or a waiver by the parties of

such written order.

There is no factual issue as to written order as just

stated.

Waiver by the parties of such written order is not

pleaded, asserted or claimed by plaintiffs. The extent of

their assertion is the indirect assertion (Par. 13, R. 14)

of ‘the engineer’s direction in writing’? and when the

existence of this writing was challenged (R. 51), it was

not produced.

It was error on the part of the lower court to create

out of such circumstances an issue as to waiver of written

notice, not raised by the parties themselves. That error

demonstrates the fallacy in reasoning into which the lower

court fell by concluding that the allegations of para-

graph 13 of the amended complaint (R. 14) were an as-

sertion of claim for compensation for performance of

extra or additional work pursuant to the contract, not only

the assertion of excuse for non-completion of the contract

and non-payment of lien claims as that paragraph plainly

states. That fallacy is more conspicuous in view of the

pronouncement by plaintiffs’ counsel to the Appellate

Court that plaintiffs were not asserting such claim. (R.

130.)

4. Other factual questions raised by defendant, including

controversy as to the completeness of the work and

dispute as to time for completion of the work.

There are no other material factual issues raised by

defendant. Neither are the two specified by the lower

court. Specification of two issues, and exclusion of speci-

fication of others, would lead to the conclusion that the

lower court itself could point out no others.

32

Plaintiffs admit non-completion of the work and non.

payment of lien claims (R. 14) and that is all that is

material on that subject.

There is no substantial dispute as to time for completion

of the work. The bare facts were referred to by de.

fendant that the contract provided for completion on or

before the 30th day of June, 1942, ‘‘time being of the es.

sence of the contract’’ (R. 18), the contract was declared

in default February 2, 1943 (R. 64-65) and on plaintiffs’

own showing claim was submitted March 4, 1943 and the

work was then only substantially completed and lien claims

remained unpaid. (R. 74,14.) Defendant presented proof

that an extension of time for performance was granted.

(R. 56.)

The time of performance is material in showing that

while it was longer than contemplated, yet no claim for

compensation as set forth in the complaint was asserted

by plaintiffs during all the time that the work was in

progress. That does not make the question of time of

performance a material factual issue.

33

CONCLUSION.

Mindful of the rules of this Court, we have labored

diligently to present the questions, involved in as concise

form as possible. Presentation of the questions are un-

usually involved with factual matters and the errors

charged to the lower court have aggravated that involve-

ment. The task has been difficult, and we hope, capable of

accomplishment within the limitations prescribed by this

Court.

We have attempted to demonstrate that important ques-

tions of federal procedure pertaining to the summary judg-

ment rule are involved and that the alleged errors of

the lower court are more than a misinterpretation of well

established and important legal principles but amount to

a departure from the accepted and usual course of judicial

procedure, an assertion which is not extravagant, if this

Court will envision what would happen when this case

reached trial before the District Court with the directions

issued by the Appellate Court. The trial judge would be

restricted from exercising his judgment in determining

certain material facts in reference to which no additional

proofs can be offered because the Appellate court had

directed that all facts were in issue and such a trial would

be contrary to all orderly judicial procedure.

Respectfully submitted,

Emu Hersa,

Counsel for Petitioner.

Metvin F. Crowrey,

Harvey ©. Harrwie,

Of Counsel.