No. 75.

WELLS BROTHERS COMPANY OF NEW YORK v. UNITED STATES.

Decided November 8, 1920.

Submitted April 30, 1920.

Mr. Abram R. Serven and Mr. Burt E.- Barlow for ap­pellant.

Mr. Assistant Attorney General Davis for the United States. Mr. Jno. W. Trainer was also on the brief.

Where a contract for the construction of a public building, giving the United States a broad power to suspend operations where necessary in the opinion of its architects for the purpose or advantage of the work, permitted the United States to make changes of materials, and, besides providing against claims' for damages .on account of such changes, declared generally that no claim should be made or allowed to the contractor for any damages arising out of any delay caused by the United States, held, that a delay ordered to await an .appropriation by Congress for substituted materials and another in anticipation of the passage of a postal law because of which the plans were altered, would not support claims for damages under the contract. P. 85.

54 Ct. Clms. 206, affirmed.

Mr. Justice Clarke

delivered the opinion of the court.

This is an appeal from a judgment of the Court of Claims, sustaining a general demurrer to and dismissing the amended petition.

The ¿negations of this amended petition, admitted by the demurrer and essential to be considered, are:,

The appellant, a corporation organized under the laws of New York, and engaged in the general building and construction business, entered into a. written contract with the United States for the construction of a post office, and court house building in New Orleans, dated September 30, 1909, for which it was to be. paid $817,000, but its bond for performance was not approved until nine days later, on October 9; on the day after the contract was signed the United States “ordered and directed” appel­lant to delay ordering limestone, (as specified in the con­tract) for the exterior of the street, fronts of the building “for'the reason, as stated, that a change was contemplated in said exterior face stonework which would require an additional appropriation by Congress”; the appellant assented to a delay of two weeks only, but, although pro­testing that further delay would result in its dama’ge, it refrained from purchasing limestone until August 19,1910, when, the required appropriation by Congress having been obtained, a supplemental agreement was entered into by the parties to the contract by which marble was substituted for limestone for the street fronts of the build­ing, the compensation of the appellant was increased $210,500, and the time for completion of the building was extended from April 1, 1911, to February 5, 1912; during this delay the contractor proceeded with other work under the contract and prior to August 19, 1910, it had completed all the required excavation, foundation and structural steel work; after the “modification and addition of August 19, 1910, to the contract work” the appellant so proceeded with the performance of the contract that by February 1st, 1912, the building was substantially completed except the interior partitions, and thereupon the United States, again over the protest of appellant, “ordered and directed” a delay, which continued to Au­gust 24, 1912, until congressional legislation was obtained authorizing the Parcel Post, whereupon the plans for the interior arrangements of the building were adapted to that service and the building was completed.

The claim is wholly-for damages occasioned by the two delays thus described and the question for decision is, whether the terms of the contract authorized the Govem­vment to require such delays without becoming hable to the contractor for damages which may have been caused to it thereby.

The contract involved contains this provision:

“It is further covenanted and agreed that the United States shah have the right of suspending the whole or any part of the work herein contracted to be done, whenever in the opinion of the architects of the building, or of the Supervising'Architect, it may be necessary for the pur­pose or advantage of the work, and upon such occasion" or occasions the contractor shall, without expense to the United States, properly cover over, secure, and protect such of the work as may be liable to sustain injury from the weather, or otherwise, and for all such .suspensions the contractor shall be allowed one day additional to the time herein stated for each and every day of such delay so caused in the completion of the work; the same to be ascertained by the Supervising Architect; and a similar allowance of extra time will be made for such other delays as the Supervising Architect may find to have been caused by the United States, provided that a written claim there­for is presented by the contractor within ten days of the occurrence of such delays; provided, further, that no claim shall be made or allowed to the contractor for any damages which may arise out of any delay caused by the United States.”

The contract further declares that the contractor:

' ‘ Will make any omissions from, additions to, or changes in, the work or materials herein provided for whenever required by said party of the first part; . . . and that no claim for damages, on account of such changes or for an­ticipated profits, shall be made or allowed.”

It would be difficult to select language giving larger discretion to the United States to suspend the pei’formance of the “whole or any part of the work” contracted for, or to change the work or materials, than that here used. The provision for the protection of the work shows that long interruptions were contemplated with a compensat­ing extension of time for performance provided for, and it is admitted that, eight days before its bond was approved and it became bound, the appellant received its first order to delay, for the reason that “a change was contemplated in sáid exterior face stonework which .would require an additional appropriation by Congress.”

Such a delay as was thus ordered was certain to be an infidenite and very probably a long-continued one, but the appellant, experienced contractor that it was, did not hesitate to submit to it by permitting the approval of its bond, which rendered its obligation under the contract complete, more than a week after notice had been received of the order. Thus, with much the longest delay com­plained of ordered and actually entered upon, the appel­lant consented to be bound by the language quoted, which vested such comprehensive discretion over the work in the Government. That this confidence of the contractor was not misplaced is shown by the fact that this first delay resulted in the substitution of marble for limestone for the street fronts of the. building and in a supplemental agreement by which it received additional payments, aggregating $210,500, and an extension of ten months for the completion of the work.

In addition to all this it must be noted that the first paragraph, above quoted, concludes with this independent proviso:

“Provided, further, that no claim shall he made or allowed to the contractor for any damages which may arise out of any delay caused by the United States.”

Here is a plain and unrestricted covenant on the part of the contractor, comprehensive as words can make it, that it will not make any claim against the Government “for any damages which may arise out of any delay caused by the United States” in the performance of the contract, and this is emphasized by being immediately coupled with a declaration by the Government that if such a claim should be made it would not be allowed.

Such language, disassociated as it is from provisions relating to “omissions from,” the making of “additions to, or changes in,” the work to be done, or “materials” to be used, can not be treated as meaningless and futile and read out of the contract. Given its plain meaning it is fatal to the appellant’s claim.

Men who take million-dollar contracts for Government buildings are neither unsophisticated nor careless. In­experience and inattention are more likely to be found in other parties to such contracts than the contractors, and the presumption is obvious and strong that the men signing such a contract as we have here protected them­selves against such delays as are complained of by the higher price exacted for the work.

We are dealing with a written contract, plain and com­prehensive in its terms, and the case is clearly ruled in principle by Day v. United States, 245 U. S. 159, 161; Carnegie Steel Co. v. United States, 240 U. S. 156, 164, 165; Dermott v. Jones, 2 Wall. 1, 7, and Chouteau v. United States, 95 U. S. 61, 67, 68. The judgment of the Court of Claims dismissing the petition must be

Affirmed.

United States Court of Appeals, Second Circuit.

No. 261, Docket 89-7581.

PORT CHESTER ELECTRICAL CON­STRUCTION CORPORATION, Appellant, v. HBE CORPORATION and the Fireman’s Fund Insurance Company, Defendants-Appellees.

Decided Jan. 23, 1990.

Argued Oct. 30, 1989.

Before VAN GRAAFEILAND, PIERCE and PRATT, Circuit Judges.

James Olivero, New York City (Lawrence E. Leykam, Ross & Cohen, New York City, of counsel), for plaintiff-appellant.

Jeffrey J. Kalinowski, St. Louis, Mo. (Richard P. Sher, Ian P. Cooper, Peper Martin Jensen Maichel and Hetlage, St. Louis, Missouri and Peter Stergios, Jerrold Goldberg, Epstein Becker & Green, P.C., New York City, of counsel), for defendants-­appellees.

VAN GRAAFEILAND, Circuit Judge:

Port Chester Electrical Construction Corp. (Port Chester) appeals from a sum­mary judgment of the United States Dis­trict Court for the Southern District of New York (Wood, J.) dismissing Port Ches­ter’s action against HBE Corporation (HBE) and Fireman’s Fund Insurance Com­pany for breach of contract and quasi con­tract recovery. The sole issue before us is whether the district court erred in holding as a matter of law that Port Chester’s claims were barred by a “no damages for delay” clause in the contract. Because we conclude that the district court did err, we reverse and remand.

HBE was the general contractor for the renovation of the Nyack Hospital in Nyack, New York. Port Chester was an electrical subcontractor of HBE. Fireman’s Fund Insurance Company was HBE’s surety on the project. Port Chester contends that, because of an extraordinary number of de­sign changes, errors and stop orders, lack of timely access to work space and equip­ment and other infirmities on the job, its costs to complete its work were increased unreasonably to its substantial damage. In rejecting this claim, the district court relied on a clause in the contract between Port Chester and HBE which reads in perti­nent part as follows:

Contractor may, from time to time, modi­fy or alter the work schedule, but in such an event, no such modification or altera­tion shall entitle Subcontractor to any increase in the consideration of the Sub­contract.

The district court held that this clause “clearly and unambiguously prohibits dam­age claims based on delay” and precludes recovery by Port Chester. We disagree.

Our line of reasoning begins with the universally accepted proposition that contract provisions aimed at relieving a party from the consequences of his own fault are not viewed with favor by the courts. See, e.g., Gross v. Sweet, 49 N.Y.2d 102, 106, 424 N.Y.S.2d 365, 400 N.E.2d 306 (1979); Willard Van Dyke Pro­ductions, Inc. v. Eastman Kodak Co., 12 N.Y.2d 301, 304, 239 N.Y.S.2d 337, 189 N.E.2d 693 (1963); 4 Williston on Con­tracts, Third Edition § 602A. According­ly, such provisions are construed strictly against the party seeking exemption from liability. See Gross v. Sweet, supra, 49 N.Y.2d at 106, 424 N.Y.S.2d 365, 400 N.E.2d 306; Willard Van Dyke Produc­tions, Inc. v. Eastman Kodak Co., supra, 12 N.Y.2d at 304, 239 N.Y.S.2d 337, 189 N.E.2d 693; Sanford v. Brown Bros. Co., 208 N.Y. 90, 96-97, 101 N.E. 797 (1913). “Words intended to exempt a party from liability because of its own fault are to be construed strictly against it.” Wilson & English Construction Co. v. New York Central R.R. Co., 240 A.D. 479, 483, 269 N.Y.S. 874 (1934). Thus, although “no damages for delay” clauses are recognized as valid in New York, see Corinno Civetta Construction Corp. v. City of New York, 67 N.Y.2d 297, 309, 502 N.Y.S.2d 681, 493 N.E.2d 905 (1986), they must be construed strictly against the party seeking exemp­tion from liability resulting from his own fault. Forward Industries, Inc. v. Rolm of New York Corp., 123 A.D.2d 374, 376, 506 N.Y.S.2d 453 (1986) (mem.)) Ippolito­Lutz, Inc. v. Cohoes Housing Authority, 22 A.D.2d 990, 254 N.Y.S.2d 783 (1964) (mem.). Construed in this manner, the clause at issue herein does not “clearly and unambiguously prohibit damage claims based on delay.”

The clause provides that HBE may modi­fy or alter the “work schedule” but that a modification or alteration of the work schedule will not entitle Port Chester to any increased payment. When used with reference to time of performance, the word “schedule” has a definite and well-estab­lished meaning. It is a tabular statement of the time of projected operations and refers to what is supposed to be done at a particular time, not what is actually done. Bakkensen v. John Hancock Mutual Life Ins. Co., 222 Or. 484, 492, 353 P.2d 558 (1960). Webster defines it as a “written plan or proposal for future procedure typi­cally indicating the objective proposed, the time and sequence of each operation, and the materials required....” See Webster’s Third New International Dictionary 2028. In accordance with this well-estab­lished meaning, the prepayment of a por­tion of a scheduled payment required by former section 1639 of Title 15 U.S.Code (the Truth in Lending Act) has been held not to change the “schedule” of payments. Bailey v. Defenbaugh & Co., 513 F.Supp. 232, 238-39 (N.D.Miss.1981). So also the acceleration of the unpaid balance of a loan upon default has been held not to be a “scheduled” payment under the Act. Bart­lett v. Commercial Federal Savings and Loan Ass’n, 433 F.Supp. 284, 287 (D.Neb.­1977). A scheduled airline passenger ser­vice is one that is “appointed or designated to be performed at a fixed time in the future.” Dorsey v. State Mutual Life As­surance Co., 238 F.Supp. 391, 397 (N.D.Ga.1964), aff'd, 357 F.2d 600 (5th Cir.1966).

A passenger may be damaged by a plane’s failure to adhere to a scheduled flight time although the “schedule” has not been modified in any way. Likewise, Port Chester may have been damaged substan­tially by being delayed in the performance of its duties without there having been any modification or alteration of the “work schedule.” Indeed, it is not at all unlikely that Port Chester’s complaints are based, in part at least, upon its inability to com­plete its work according to “schedule.” Had HBE intended to insulate itself against all claims on account of delay, it would have been a simple matter for it to say so. Its reference to “schedule” changes did not accomplish this result.

We find support for this holding from the clause in the general contract between HBE and the Hospital which states in sub­stance that HBE’s subcontracts should con­tain provisions requiring all claims for dam­ages for delays to be submitted to HBE in sufficient time so that HBE could comply in the manner provided in the main con­tract for like claims by HBE upon the owner. We note further that the subcon­tract between Port Chester and HBE incor­porates the conditions of the general con­tract. Although the subcontract between Port Chester and HBE also provides that, if there is any inconsistency between the main contract and the subcontract the sub­contract shall govern, there is no inconsist­ency in the instant case if the provision at issue in Port Chester’s subcontract is held not to be a broad “no damages for delay” clause. Recognizing that apparently con­flicting contract provisions should be recon­ciled whenever this reasonably can be done, see Proyecfin de Venezuela, S.A. v. Banco Industrial de Venezuela, S.A., 760 F.2d 390, 395-96 (2d Cir.1985), we hold that the fact that the main contract discusses the filing of subcontractors’ claims for delay supports Port Chester’s contention that the clause in its contract dealing with the modi­fication of work schedules was not intend­ed to be a “no damages for delay” clause.

Because we hold that the district court erred in deciding summarily that the clause at issue was a “no damages for delay” clause, we need not reach the question whether the delays Port Chester encoun­tered fell within any of the exceptions to the ban against recovery of damages that are set forth in Corinno Civetta Construc­tion Corp. v. City of New York, supra, 67 N.Y.2d at 309, 502 N.Y.S.2d 681, 493 N.E.2d 905. We likewise do not reach the question whether HBE waived its right to rely on the clause as precluding claims for delay damages.

Having concluded that Port Chester’s claims were barred by the clause at issue herein, the district court did not address HBE’s two alternative arguments for dis­missal. The first argument was based on an alleged inability of Port Chester to allo­cate costs and damages arising from the various sources of delay. The second argu­ment was based on Port Chester’s alleged failure to comply with the notice of claim provisions contained in the contract. Al­though the district court’s failure to consid­er these arguments would not preclude us from relying on them as grounds for af-­firmance, see Heimbach v. Chu, 744 F.2d 11, 13 (2d Cir.1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1842, 85 L.Ed.2d 141 (1985), we are satisfied that, because both argu­ments invoke unresolved factual issues, neither of them presents a proper ground for summary judgment disposition.

In sum, we hold that the district court’s grant of summary judgment was error. We reverse the judgment and remand to the district court for further proceedings consistent with this opinion.