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RAE v. CITY OF READING

September 12, 1938

RAE
v.
CITY OF READING



The opinion of the court was delivered by: MARIS

This was a suit for damages for breach of a contract dated April 5, 1934 between the plaintiff and the defendant providing for the construction by the plaintiff of a water supply tunnel, approximately 2,800 feet long, for the defendant. About 450 feet of the tunnel were to be constructed in open trench and the remainder by tunnel methods. According to plaintiff's testimony, in making his bid and entering into the contract, he relied upon the information furnished by the defendant as to the character of subsoil through which the tunnel was to be driven and the open cut section constructed. In addition to this his son visited the site of the work and examined the conditions existing on the surface, as well as the cores contained in certain boxes in the possession of the defendant, which were represented to have been the cores taken from borings on or adjacent to the line of the tunnel.

The plans furnished to plaintiff and other bidders contained a profile of the results of these borings which were represented to have been made in 1927 and purported to show the nature and character of the subsoil through which the tunnel was to be driven. Between the time the borings were taken and the plans were completed and distributed to bidders the location and elevation of the tunnel were somewhat changed. The resulted in the line of borings being approximately 150 feet away from one end of the tunnel and intersecting its line near the opposite end. When the elevation of the tunnel was changed its line was placed about 30 feet below the bottom of the borings at one end but at the other end they extended down into the tunnel section. The plans indicated that the borings all ended in solid limestone. They also showed an assumed rock line over the line of the tunnel which approximated the rock line which was taken from the borings but was not exactly the same. Typical cross sections of the work were also shown on the plan and all of them indicated the presence of solid rock in the area of the tunnel section.

 The plaintiff began work in April, 1934. He elected to drive the tunnel by sinking a shaft at about the middle of the tunnel and driving headings in both directions along the line of the tunnel. This method of operation was approved by the defendant's engineer. The shaft was located opposite bore hole No. 9 at Station 62 on the plan of the line of the tunnel, the location being decided upon because on the plans that bore hole showed solid limestone the entire distance down to the line of the tunnel and the surface at that point was best adapted to setting up the plaintiff's plant.

 However, shortly after commencing the work of excavating the shaft, instead of encountering solid limestone, the plaintiff encountered mud, clay and boulders and when the shaft was driven down near the elevation of the tunnel section of the work, water was encountered which, when mixed with the mud and clay, produced a condition which rendered the work very hazardous, difficult and expensive and made necessary heavy timbering and additional pumping equipment. This slowed down the progress of the work and rendered it much more expensive than it would have been had solid limestone been encountered.

 While the shaft was being excavated plaintiff complained orally to the defendant's engineers and other representatives of the conditions he was encountering. He continued making these oral complaints of the difference between conditions encountered and as represented on the plans as the work progressed. The defendant's representatives offered no relief to the plaintiff, however, nor did they request that his complaints be put in writing until August 20, 1934. On that day and thereafter his complaints were made in writing.

 The plaintiff had entered into a subcontract with Hadesty & Cullen, tunnel contractors, for the excavation by them of the tunnel section of the work but these subcontractors refused to go ahead with the work, complaining that conditions were not as represented on the plans and they quit work on July 21, 1934. The plaintiff, hoping that the condition might prove local, continued with the excavation, in the meantime making tests by diamond drill borings to determine what type of subsoil would be encountered along the line of the tunnel. Finally on August 20, 1934 the plaintiff filed a written complaint with the defendant's engineer and a number of conferences were thereafter held at which the plaintiff attempted to secure some sort of relief.

 In the meantime defendant's engineer had refused to issue to plaintiff an estimate for work done under the contract up to July 31, 1934, which plaintiff contended was required by the contract. Finally on August 28, 1934 plaintiff gave the defendant written notice of his intention to terminate the contract and thereupon rescinded the contract and abandoned the work. Thereafter he brought the present suit contending that his rescission and abandonment was justified by reason of the defendant's misrepresentations of the character of the subsoil and its refusal to make progress payments that he seeks as damages the cost of the work he did in partial performance of the contract. The case was tried to a jury which returned a verdict in the sum of $61,859.41. I submitted to the jury the following interrogatories:

 "1. Did the defendant in the plans and specifications upon which the plaintiff bid make material misrepresentations as to the character of the subsoil through which the Maiden Creek water supply tunnel was to be constructed, the falsity of which could not reasonably have been discovered upon an inspection of the site of the work?

 "2. If your answer to the first interrogatory is 'Yes,' did the plaintiff rely on the defendant's misrepresentations as to the character of the subsoil in making his bid and entering into the contract with the defendant, and was he damaged thereby?

 "3. If your answer to the first and second interrogatories if 'Yes,' did the plaintiff rescind the contract with reasonable promptness after he had ascertained that the misrepresentations as to the character of the subsoil were substantial and not merely local?

 "4. Was the plaintiff entitled to a monthly estimate or certificate for work done up to July 31, 1934 which the engineer refused to make and the defendant refused to pay for reasons other than the rate of progress of the work or the amount, quality, acceptability or fitness of the work or materials?

 "5. If your answer to the first, second and third interrogatories or to the fourth interrogatory is 'Yes,' what was the cost to the plaintiff of the work which he did under the contract?"

 The jury answered each of the first four interrogatories in the affirmative. In answer to the fifth interrogatory the jury reported the plaintiff's cost to have been $50,497.67. The defendant, having submitted a point for binding instructions which I reserved, thereafter moved for judgment in its favor on the point of law reserved and also for a new trial. The defendant has summarized its argument in support of its motion for judgment upon the reserved point as follows: "If plaintiff had the right to rescind for fraud, he waived such right by acting under the contract after full knowledge of his rights. Plaintiff had no right to rescind for non-payment, there being no material breach of the contract, since (a) he had not done enough work under the contract, properly interpreted to be entitled to payment, and (b) there was an honest dispute between the parties. In any event, plaintiff ...


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