Bischoff v. Francesa , 133 W. Va. 474 ( 1949 )

I concur in the opinion, prepared by Judge Riley, except that part which refuses to permit the deduction by the defendants of a proportionate part of the overhead expenses incurred by them in and about the carrying on of their contract with the United States Housing Authority. The amount of overhead expense involved, as reduced by the commissioner and the trial court, is approximately $2,142.61, and an additional allowance for taxes paid on overhead claimed to be $86.27, but which should be reduced in accordance with the reduction of the overhead expenses decreed by the court below.

I would allow these deductions on the basis of the contract between the plaintiffs and defendants, dated August 30, 1942, as written and executed, and without reliance on any modification of the terms thereof. As a matter of fact, I do not understand that any modification of the contract is claimed by any party to this litigation, unless it be what might be termed a readjustment brought about by a change in the character of work to be performed, imposed by the Housing Authority, and involving some change in prices to be paid for certain character of work. There was evidence which tended to show knowledge on the part of plaintiffs as to the expenditures made by the defendants under the contract between them, but this did not involve any claimed modification of the agreement; and aside from any such testimony, it would naturally be presumed that, in carrying on the work, plaintiffs would be bound to observe the work performed and expenditures made by the principal contractors in performing their contract with the Housing Authority, and on which the claim for overhead is based.

As pointed out in the majority opinion, the defendants contracted with the Housing Authority to do certain work in and about two projects at Point Pleasant. This work was to be performed at certain stipulated prices for material and services, and the aggregate of the contract could not be determined until the work had been completed. It has been determined, however, that the entire contract undertaken on the part of the defendants at the stipulated prices involves the sum of $373,139.72, of which the portion performed by plaintiffs was $43,541.87, which sum included $47.79 as a credit for salvage of buildings used by defendants' agents. The principal contractors were not permitted to deal with subcontractors, but the portioning out of the work among different persons does not seem to have been barred. So it is that the principal contractors entered into an agreement, evidenced by the writing of August 30, 1942, by which the plaintiffs undertook to do certain work, included in the entire contract with the Housing Authority, at the prices at which the principal contractors had bid for the work, less ten per cent. It should be borne in mind that what the plaintiffs were to do under this contract was furnish equipment and provide supervision and direction for the work they undertook to do, and it seems to have been contemplated that the principal contractors, the defendants herein, would furnish the materials to be used on the projects, and to take care of many other items of cost and expenditures in connection with the work, some of which are set out in the contract between the Housing Authority and the principal contractors.

At this point, it seems proper to point out that the defendants herein entered into a contract with the United States Housing Authority, which is part of the record, and to secure the performance of the undertakings on their part were required to, and did enter into, a performance bond which was intended to assure the performance of all of the terms and conditions of said contract. What the requirements of the contract were, aside from the principal requirement that the work be completed according to the contract, is well stated in the majority opinion, and it is unnecessary to repeat those requirements. The point is that the original contract with the Housing Authority, covering all the work involved, or the entire project, if we choose to use that term, was covered by the written agreement and the bond executed to insure its performance, and should be considered when we deal with the contract between the defendants and plaintiffs in this case.

The later contract, dated August 30, 1942, is referred to in the majority opinion, and provides that the second parties, the plaintiffs herein, should furnish the supervision and equipment, and direct the doing of certain work, for the prices set forth in the bid for the work made by the defendants herein to the Housing Authority, less ten per cent. It was provided that the price might be increased or diminished according to instructions of the original contracting authority. Then follows the language which is the basis of the controversy, so far as allowance of overhead expenses is concerned. That language is:

"The said First Parties shall, subject to the approval of the Second Parties, furnish and pay for all materials used on said project, the bond premium on the surety bond written by the First Parties to the original contracting authority in the proportion that the above items of work bear to the entire work on said project, shall pay the gross sales tax on the remuneration for the above items, the public liability and property damage insurance carried on the above items, the workmen's compensation insurance carried on the labor on the above items which shall be carried in the name of the First Parties, the social security tax and the old age pension costs on the labor on the above items of work, payroll of the labor placed upon the project under the direction of the Second Parties and any other costs and expenses on said work for which the First Parties might under their bond be liable. The cost of said labor, materials and insurance, and all other expenses above enumerated shall be deducted from the total aggregate amount earned on the project on the items of work set forth above, at the prices set forth and the remaining amount, if any, shall be the remuneration of the Second Parties for the supervision, the furnishing of equipment and direction of the doing of the above named items." (Italics supplied.)

Considering the plain language used above, along with the terms of the agreement between the principal contractors and the Housing Authority, I am of the opinion that the contract is plain and unambiguous. "That is certain which can be made certain," and to arrive at what the parties meant, we have only to give to the language employed its plain and ordinary meaning, and to refer to the principal contract to ascertain the obligation of the principal contractors. When we do this, we have no difficulty in ascertaining what it was that the defendants had the right to deduct from the final amount to be paid to the plaintiffs. The majority opinion agrees that while the contract is difficult to interpret, it is, nevertheless, unambiguous, and then proceeds to devote several pages to an involved and highly technical discussion of the language used in the contract in what, I think, is a vain attempt to make it mean something other than what it was intended to mean by the parties who made the agreement, and which discussion, if it proved anything, established that the written agreement is ambiguous. When this discussion ended, it left the language of the contract, "and any other cost or expenses on said work for which the parties might under their bond be liable", without any meaning whatever. The attempt to give some meaning to the quoted language is not convincing. That language should be construed to mean that the parties should go to the performance bond to ascertain the terms thereof, and to the original contract to discover what items of work were to be performed by the principal contractors, and from there on to ascertain the proportionate share of the overhead cost involved which could be deducted. If it does not have that meaning, it does not mean anything. The majority opinion ignores every word of the quoted language, in violation of the elementary principal that, in interpreting contracts, or any written instruments, an attempt should be made to give force and meaning to all of the language employed therein. The bond premiums, and various taxes and insurance premiums, which the agreement between the parties litigant required to be paid by the principal contractors, are not, so far as I can observe, included in the agreement between the Housing Authority and the principal contractors, and for that reason were specifically provided for in the contract of August 30, 1942. Certain other items of taxes were paid which were not specifically provided for in said contract. After these specific items had been taken care of, there is put into the contract the broad provision that there should be deducted "any other cost or expenses on said work for which the first parties might under their bond be liable". An effort is made to play upon the words "work," "above items" and "project". But, in my opinion, it was not necessary to go to all of this trouble. There was but one project in which the plaintiffs were interested, and that was the part of the work for which they assumed responsibility and for which they were entitled to be paid the sum of $43,541.87, less ten per cent, and proper deduction for their share of overhead expense, as well as other deductions specified in their contract. The word "item" and the word "work" are used interchangeably, and, of course, refer to the project for which plaintiffs herein were responsible to the principal contractors. The effort to make this language mean something which, in my opinion, was never intended, violates the rule that in interpreting any written instrument, the intent of the parties should be made effective if possible to do so.

The majority opinion states that the contract, of August 30, 1942, was intended to leave the principal contractors, defendants herein, a profit of ten per cent. That may be true. It is not suggested that such a profit is unreasonable, and the plaintiffs herein seemed willing to permit the defendants to retain such a profit. Now by the majority opinion, they will be deprived of approximately one-half of that profit. There can be no doubt that there were heavy overhead expenses which the principal contractors were compelled to incur, in connection not only with the entire project, but for that part of the project which plaintiffs herein undertook to supervise, and that the plaintiffs received substantial benefits therefrom. The aggregate of this overhead was $21,615.01, but it included items of $2,080.00 and $1,153.00, referred to in the majority opinion which, in my opinion, were properly disallowed, bringing the overhead expenses, which, I think, the plaintiffs should share in the proportion stated in their contract, to approximately $18,382.01. The work represented by this overhead expenditure was, of course, performed during the period when plaintiffs were on the job, and they must necessarily have observed that work. They had the benefit of a part of the facilities provided by the principal contractors. Furthermore, when the job was completed, and when some of the structures erected by the principal contractors, and charged to the overhead expense account, were disposed of, the amount received therefor was distributed among those who may be here designated as de facto subcontractors, including the plaintiffs, and there was no objection on the part of the plaintiffs to such distribution. They accepted their share of the salvage value of these buildings. While I do not contend that this case should be decided on that development, I do say that it tends to show that at that time plaintiffs conceded their obligation to bear their proportionate share of the overhead expenses on the entire project for which the principal contractors had contracted with the Housing Authority.

This is merely another case which, in my opinion, should be decided upon the plain language of the agreement between the parties. They made a written agreement, and used language with full knowledge of its meaning. Giving to the language employed its plain meaning, as applied to the circumstances, we have nothing more than an agreement between the parties, who are the plaintiffs and defendants herein, that the first party should pay for certain bond premiums, certain insurance premiums, certain taxes and, furthermore, should pay "other cost or expenses on said work for which the first parties might under their bond be liable." The bond executed by the defendants was a performance bond, and refers to the contract covering the entire project bid for by the defendants. When we go to that contract, we can readily ascertain just what requirements thereof were covered by the bond. The items included in the claim for overhead on the whole project are fairly within the provisions and requirements of the contract with the Housing Authority, and in allowing a deduction for the proportionate share of these overhead expenses, we carry out what, in my opinion, was the intended purpose of the parties to the contract of August 30, 1942. When we do this, we give effect to every line and word of the contract. The commissioner before whom the testimony was taken in this case, and the trial judge, were of the opinion that a deduction for overhead on the basis apparently conceded as the best possible method of ascertaining the proportionate share of such overhead, and specified in the contract as "the proportion that the above items of work bear to the entire work on said project", properly chargeable to the plaintiffs, should be allowed. They differed somewhat as to what should be included, but I think the trial court was correct in the decree on that point, and I would affirm the same.

I would affirm the decree of the Circuit Court of Kanawha County except on the point of the allowance of interest. I am in agreement with the majority opinion that interest should run on any recovery from the 15th day of March, 1944.