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April 10, 1961

Jacob LICHTER and Jennie L. Lichter, d/b/a Southern Fireproofing Company, Plaintiffs

The opinion of the court was delivered by: MARSH

In this action the plaintiffs, Jacob and Jennie L. Lichter, citizens of Ohio, and doing business as Southern Fireproofing Company (Southern), a partnership, seek to recover from the defendant, Mellon-Stuart Company (Mellon), a Pennsylvania corporation, with its principal place of business in Allegheny County, Pennsylvania, balances due on two construction contracts and damages for the alleged breach of each. Mellon counterclaimed for damages arising out of an alleged breach of one of the construction contracts. The court has jurisdiction because of diversity of citizenship. The law of Pennsylvania is applicable.

On August 20, 1955, Mellon executed the prime contract (Exhibits 3, 3A, 3B, 5a-k)* *fn1" with the Federal Reserve Bank of Cleveland (Owner) to construct a 10-story building as an addition to the Pittsburgh branch of the Federal Reserve Bank at Grant Street, Pittsburgh, Pennsylvania, and to make certain alterations to the existing 7-story bank building. The new building was to tie into the old building.

 Mellon, as general contractor for such work, entered into numerous subcontracts, including two subcontracts with Southern (Exhibits 1 and 2), dated September 19, 1955, whereby Southern agreed under one contract to perform the exterior stone work (stone contract) and under the other contract to perform the interior masonry work (masonry contract).

 The subcontracts incorporated the prime contract, so far as applicable, together with the plans, specifications and General Conditions. The prime contract provided that the work 'shall be substantially completed within twenty months after the execution of this Contract'.

 The subcontracts did not specify a time for the completion of the stone contract or the masonry contract, but provided:

 'That the Subcontractor * * * finish the said work fully, completely, and perfectly to the satisfaction of the Architect and the Contractor and as required by the progress of the work and as directed by the Contractor, time being of the essence of this contract, on the part of the Subcontractor. (Emphasis supplied.)

 'That the Subcontractor * * * do all work required hereunder in harmony with the other Subcontractors * * *, and with such speed that the Contractor and its other Subcontractors shall be enabled, so far as the assistance of this Subcontractor is requisite, to complete said building, within the time stipulated by the contract with the Owner.'

 The agreed price for the stone contract is $ 56,190, and for the masonry contract, $ 161,601; since Southern substantially performed both contracts, it is entitled to recover these amounts. Mellon is entitled to a credit for completing a small portion of the work required by both contracts. P.L.E. Contracts ยงยง 286, 296. Southern is also entitled to recover the cost of change orders, stipulated to be the sum of $ 7,858.86, and field orders, stipulated to be the sum of $ 4,103.66. Mellon is entitled to a credit of $ 220,966.43 paid to Southern on account of both contracts (supplemental pretrial order No. 1).

 Southern admits that it owes Mellon $ 2,157.17 for services furnished (T., p. 305; see amended complaint PP8, 15). In its brief Southern authorizes this credit (Southern's brief, pp. 4, 45; Exhibit 82; plaintiffs' Proposed Findings of Fact and Law).

 Southern was informed by Mellon that it could start the stone work prior to June 1, 1956, that the work should be completed within 60 to 90 days, and that the masonry work was to start in the middle of July, 1956 and be completed by December 1, 1956 (Exhibit 6).

 Southern calculated its bids on Mellon's representations that the stone work would be completed in the summer of 1956 and that the masonry work would be done in an enclosed building.

 The parties in the beginning did not contemplate that the stone work would be performed in the winter or that the masonry work would be performed during the winter months in an unenclosed building. See Progress Schedule received by Southern on October 13, 1955 (Exhibit 6). This schedule showed that the entire project was to be completed on June 30, 1957, which was two months and ten days longer than the twenty months' time limit specified in the prime contract. *fn2"

 The specifications, inter alia, provided:

 'Alterations (to the old building) * * * shall be done in definite sections or divisions, and work confined to limited areas, in which the work shall be completed before other sections or divisions are commenced.

 'Work on alterations within the existing building shall not be started until the addition is practically complete and comparable space or elevators can be provided in the addition. The Owner and contractor shall compromise and agree as to the time and ...

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