18. The balance unpaid predicated upon the hourly basis and at the rates specified in the contract between Charles B. Montgomery and James R. Soda is $ 13,871.41.
19. If the $ 3,000 discount is applied, the balance would be $ 10,871.41.
Conclusions of Law.
1. This Court has jurisdiction of the parties and the subject matter pursuant to the provisions of 40 U.S.C.A. § 270b.
2. Charles B. Montgomery having failed to comply with the conditions upon which the offer of a $ 3,000 discount by James R. Soda was predicated, is not entitled to the benefit thereof.
3. James R. Soda is entitled to recover the full unpaid balance of $ 13,871.41 with interest from November 15, 1953.
This action is instituted for the use and benefit of James R. Soda under the provisions of 40 U.S.C.A. 270a et seq., covering bonds of contractors on public works. The reference in paragraph two of the complaint to the Montgomery Construction Company as a corporation was amended when it developed that Charles B. Montgomery was doing business as Montgomery Construction Company, an unincorporated concern. The fundamental facts are stated in the Findings of Fact. There was no specific allocation in the general or 'prime' contract of a unit price for the excavation work to be performed. James R. Soda agreed to rent the equipment, fully operated, to do whatever excavation work was required of him by Charles B. Montgomery, at a specified hourly rental set forth in a letter to Montgomery. Had the cost of excavation been less than anticipated on the basis of the data shown in the plans and specifications of the original contract, it is quite evident that Montgomery would have paid the hourly rate specified in his contract with Soda and retained any such benefits. However, when rock was encountered and the work took longer than anticipated and the negotiations under the prime contract for changed conditions resulted in a smaller allowance therefor than he hoped for, he seeks to pass any loss of profits on this phase of his contract on to Soda. It is the defendant's position that Soda must be called a subcontractor and by that reason be bound by all the terms of the prime contract between the United States and Charles B. Montgomery. Whether a person contracting to rent equipment with operators for the performance of whatever excavation is required by the contractor is thereby to be called a subcontractor is not material to the issue here. Whatever the proper designation, he is not, in any event, bound by all the terms of the prime contract, including provisions such as adjustments in compensation for changed conditions unless such terms have been incorporated in his contract.
In Ottinger v. United States, 10 Cir., 230 F.2d 405, 406, a somewhat similar situation was present. There Ottinger contracted with the United States to construct powder magazines, roads, etc., at an ammunition depot. It included fertilizing, seeding, mulching, sodding, riprap, ditch checks, etc. Brown agreed to do this latter work at stated unit prices per acre, square and cubic yards respectively. The court there stated: 'The subcontract was in the form of a letter written by Ottinger and accepted by Brown.' The contract in that case, however, went farther than the one now before us in that 'It provided that Brown was to perform certain specific items of work relating to the vegetative cover, erosion control, and similar work on the project, in strict accordance with the specifications of the prime contract.' A dispute arose as to the proper method of computing the area of work done. The court, without reference to the prime contract or the amount paid thereunder, held that Brown's method of calculation was correct and that he was entitled to be paid accordingly. The court said: 'All the work was done under the supervision and direction of Ottinger, and Brown was entitled to be paid for work which he was directed to do, even though the amount thereof may not have conformed with the specifications of the prime contract.'
Conversely, in United States for Benefit and on Behalf of Lanehart v. United Enterprises, Inc., 5 Cir., 226 F.2d 359, 363, a subcontractor agreed to perform a specified portion of the painting called for by the plans and specifications of the original contract and at a specified total unit price. Under the terms of the subcontract the subcontractor agreed to be bound to the contractor by the terms of the general contract. By reason of such specific inclusion, the court held that 'as a result of the terms of the subcontract, Lanehart was bound by the decisions of the Government Engineer as to what the prime contract required, and that the Government Engineer's interpretation of the original contract was conclusive on Lanehart is correct.'
No such incorporation of the pertinent provisions of the prime contract into the contract between Montgomery and Soda has been shown in this case. Nor was there any competent evidence to indicate that Soda had ever agreed to any variation of his contract other than the conditional offer of a $ 3,000 discount. While Montgomery sought to create this inference by his own hearsay statements, he produced none of the persons to whom he attributed his information. The uncontradicted testimony of the plaintiff was that where a contract for the rental of equipment, fully operated, is on an hourly basis, the lessor, unless specifically otherwise provided, has the duty of keeping the machinery oiled and in repair; conversely, on a monthly basis the lessee would have such obligation. There was no evidence that there had been any discussion of any important matters such as this would have been in connection with such a variation of the contract. There was no indication that Montgomery had ever attempted to calculate the price on such a monthly rental basis.
As to the $ 3,000 offer of Soda, it is quite evident from the evidence presented by Soda that such offer was made for the sole purpose of aiding Montgomery in obtaining a speedy adjustment in order that payments would not be unduly delayed. Montgomery's employees who were present when such discussions took place were not called. Montgomery having failed to comply with the conditions, such offer would not how be construed as reducing Soda's claim for the full unpaid balance under his contract.
Soda would, therefore, be entitled to recover the full unpaid balance of $ 13,871.41 with interest from November 15, 1953, which would seem to be a reasonable time after the payment for this work was made to Montgomery by the United States.