of performance but simply deficient or negligent performance of part.
That the parties adopted this view of the obligation to pay the monthly invoices after December, 1956, can be plainly seen from a letter of February 28, 1957, written by D&Z and 'approved and agreed to' by BICOA. This letter, written after a conference relating to payment of the cost of the oven revision and new parts, reads 'We are continuing to perform under this contract between us and you are agreeing to continue to make payments under this contract * * *.' It is true that the letter provides 'your payments * * * are without prejudice to any interpretation that either of us might place on the language of the contract'. However, the letter is an explicit and unconditional agreement to pay money 'under this contract', that is, on monthly invoices, and whatever the parties had in mind about the 'without prejudice' clause, the letter cannot be read 'We agree to pay you monthly for your work, but if our interpretation of the contract is that, for one reason or another, we think we do not have to, then we will not pay you'.
As to the home office charges, there is an additional defense based on a letter of October 17, 1956, written by D&Z in the course of the dispute about the amount of engineering charges mentioned above. The letter states, 'We are willing, therefore, to allow a credit of $ 6,000 on charges already presented and to terminate our home office engineering as of October 1, 1956.' The difficulty with this defense is that the letter in question was merely an offer which was rejected by BICOA, and the settlement of the disputed amount of charges was effected by a second letter written on November 6, 1956, which did not contain any statement that home office engineering would be terminated. I, therefore, find that there was no binding agreement on the part of D&Z to furnish home office engineering services without charge.
Even if it could be held that the offer to 'terminate our home office engineering' somehow survived the flat rejection of it by BICOA, it is clear from the situation existing at the time it was written that it was intended to refer only to home office engineering charges from October 1 to the completion of the plant, which the parties knew was close at hand and which actually took place in the latter part of November. When the letter of October 17 was written, neither party expected that D&Z would be doing much more work except field inspection and start-up operations and the letter expressly stated that D&Z would make a charge for those services. It was not until after the plant had been completely erected and put into operation and it had been discovered that the oven was wholly inadequate that D&Z began anew to perform this type of engineering services and then only upon the request of BICOA's president who found himself unable to get the manufacturer of the oven to remedy its deficiencies. The 'home office' engineering charges now claimed by D&Z, with the exception of some $ 1,163.77, were all incurred after D&Z had been expressly requested to resume its engineering work.
Under the principle of law stated in an earlier place in this discussion,
particularly when taken in connection with the promise to pay contained in the letter of February 28, 1957, it is clear that BICOA had no right to withhold monthly payments for the field engineering work done by D&Z from December 1956. It could have terminated the contract at any time it desired, but, if it elected to continue with D&Z, it was bound to pay for the work done by the later. This being so, D&Z, having done seven months' work without being paid for it, was fully justified and within its legal rights in quitting the job on July 31, 1957. Even if the contract could be construed as an agreement to produce a plant with a guaranteed capacity of 360,000 tons a year, D&Z's quitting the job when it did could not be assigned as a default on its part.
The contract contains the following clause relating to D&Z's compensation for services:
'If before completion of this plant you instruct us to increase the facilities to produce more than 250,000 long tons annually, the fee above named will be increased by 4% Of the additional cost resulting from such increase in capacity.'
Basing its claim upon the increased rated capacity of the plant, D&Z now claims an additional fee of $ 10,000.
The original contract contained an estimate of $ 974,000 for the 250,000 ton plant. After the change increasing the capacity of the plant was made, D&Z submitted at least two estimates of the total cost of the work. The one submitted on May 1 contained a list denominated 'Change of Scope Items' totalling $ 127,650. A later estimate submitted on July 26 with an accompanying letter stating that these estimates were based on completed drawings and bids contained an item for 'Changes increasing the scope of the work', totalling $ 36,200. The record does not contain any other evidence that will enable me to compute the actual increase in cost due to the increase in capacity as distinguished from increases of prices or of estimates that were originally too low, etc. It seems to me that unquestionably there was an increase of cost due to the increase in the size of the plant and that the estimated items referred to as changes in the scope of the work conservatively reflect that increase in cost. I, therefore, find that D&Z is entitled to recover an additional fee of 4% Of $ 163,580 or $ 6,554.00.
I find that in addition to the items already discussed D&Z is entitled to recover from BICOA the following:
Amounts actually paid to vendors in connection with
purchase of equipment $ 11,417.46
Charges accrued for work performed at D&Z's office which
would normally be included within Article III(4) 1,843.84
Amount due on original fee of $ 37,500.00 5,889.75
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