Triangle Electric Supply Co. v. Mojave Electric Co.Triangle Electric Supply Co. v. Mojave Electric Co.
In оur memorandum opinion of October 5, 1964, now reported as Triangle Electric Supply Company v. Mojave Electric Company, W.D.Mo., 1964,
Our order of October 5, 1964, therefore directed counsel for D & L to prepare a final order and to submit the same to counsel for National Union for approval. The parties, however, were unable to agree. We then directed the submission of additional suggested findings аnd conclusions, together with supporting briefs. We have studied those briefs and shall make additional findings and state additional conclusions in order that final judgment may be entered.
The latest briefs of the parties reveal that particular questions formerly in contest are no longer contested. We therefore note at the outset that “National Union concurs with D & L in its statement (Br. p. 2) that the legal principle applicable to the issues now remaining for decision will be the same no matter whether Missouri, California, or federal law is held to be controlling” (page 1 of National Union’s Supplemental Suggestions). National Union also agrees that, on the facts, the bond limitations of both the exterior and intеrior bonds are exceeded by items of damage as to which no
The area of conflict between the parties’ present positions relates to the questions of whether attorneys’ fees and pre-judgment interest may be included in the judgment in excess of the amount of the bоnds involved. National Union contends generally that neither item of damage may be allowed because to do so jvould exceed the $200,000 provided in the exterior bond, and the $330,000 provided in the interior bond. National Union also argues that pre-judgment interest may not be recovered in any event because the damages were not “liquidated;” beсause no demand was made on the surety; and because, as already stated, the sums provided in the bonds have already been exhausted by the allowance of other items of damage.
National Union’s factual assertion that no demand was ever made by D & L can not be sustained in light of paragraph 29(1) of the amended pre-trial order which stiрulated that “due notice of said defaults by Mojave was given National by D & L and due demand was made that National assume the duties of Mojave under said subcontracts.” That paragraph of the amended pre-trial order adds that “National refused to comply with said demand, however, claiming that it had been released from its obligations under said performance and payment bonds by virtue of the actions of D & L and Mojave above described.”
There is no question but that the demand referred to in that agreed statement was made on April 4, 1960. Hence the basic question for decision reduces itself to the question of whether attorneys’ fees and pre-judgment interest may be allowed as elements of damage over and above thе amounts specified in the bonds.
We deal first with the question of attorneys’ fees. In our memorandum of October 4, 1964, we noted that the situation presented by this branch of the case in regard to attorneys’ fees and pre-judgment interest was a bit different than the narrow question we ruled on summary judgment on the first branch of this case on June 30, 1963, now reported as Triangle Electric Supply Co. v. Mojave Electric Co., W.D.Mo.1963,
Our memorandum opinion of June 20, 1963 did not reach or rule the question of whether attorneys’ fees and pre-judgment interest might be recovered in a case where no agreement existed between the parties in regard to those particular items (page 914 of 217 F.Supp.). We did, however, hold that Illinois Surety Co. v. Jоhn Davis Co.,
The Court of Appeals, in affirming our order of June 20, 1963, agreed that Carter controlled the factual situation where the contract made express provision for the allowance of attorneys’ fees and interest. While the Court of Appeals limited its holding to that particular factual situation, as we had, it nevertheless helpfully stated that “where there is no express contract for interest or attorneys’ fees, it is necessary to look to state law to measure the extent of the subcontractor’s obligation” (page 1013 of 332 F.2d). The Court of Appeals relied upon John Dаvis Co. and by footnote directed attention to cases from the 4th, 9th and 10th Circuits that had allowed interest or attorneys’ fees on the basis of state law “in situations where no express contract relating thereto existed” (see cases cited in footnote 4 on page 1013 of 332 F.2d).
The factual situation in regard to attorneys’ fees and the factual situаtion in regard to pre-judgment interest on this branch of the case are different. In regard to attorneys’ fees, Paragraph 36 of Exhibit D expressly provided that “in the event Contractor [¶] & L] engages the services of any attorneys for any action brought by either party on or under this contract, or by either party for its enforcement or in defending any actiоn brought against the Contractor due to the fault of this Subcontractor, the Subcontractor agrees to pay reasonable at
The basic rаtionale of our memorandum opinion of October 5, 1964, and our application of the rule of decision of our controlling court in American Casualty Co. of Reading, Pa. v. Brezina Const. Co., 8th Cir. 1961,
The parties are in agreement as to the amount of fees. Paragraph 18 of the amended pre-trial order states that “in the event the Court finds that attorneys’ fees are recoverable by D & L on account of the prosecutiоns of the causes asserted by D & L against National, at the trial level, the parties have agreed that a reasonable attorney fee therefor would be $25,000 * * *.” In addition the parties agreed that attorneys’ expenses incurred total $435.00. Accordingly, the judgment shall include a provision allowing attorneys’ fees in the amount of $25,000 and expenses in the аmount of $435.00.
We turn now to the question of pre-judgment interest. As an introduction to that subject, it should be stated that the allowance of pre-judgment interest is actually an assessment of damage for delay in the payment of a contractual obligation and does not represent, in the true sense of the word, interest as understood in banking circles. Mr. Justice Stоne makes this clear in Royal Indemnity Co. v. United States,
The fundamental theory of the assessment of what is known as “pre-judgment” interest represents the imposition of legal compensation for the use of money wrongfully withheld from рayment. As Mr. Justice Stone noted in Royal Indemnity Co., “the debtor has had the use of the money, of which its default has deprived the creditor,” and “interest upon the principal sum from the date of default, at a fair rate, is therefore an approximate measure of damage for the delay in payment” (pages 296-297 of 313 U.S., page 998 of 61 S.Ct.).
United States v. Seaboard Surety Co., 2d Cir. 1964,
The recent Missouri case of Cannon v. Bingman, Springfield Ct.App. 1964,
In our memorandum opinion of October 5, 1964, we noted that the action taken by National Union “[left] D & L without any benefit of the protection of the bonds whatever” (page 316 of 234 F.Supp.). We also noted that Nаtional Union disregarded the usual action and practice taken by surety companies in the event of default of their principal on a construction job. The ultimate result of National Union’s refusal to act meant that it had the use of the money involved in this litigation since the time it refused to comply with the demand it concedes D & L made upon it. It wоuld therefore seem apparent that unless, there is some compelling legal reason why pre-judgment interest should not be included in the judgment, it is obvious that justice requires that it be included.
The mere fact that the allowance of pre-judgment interest would exceed the amount of the bond is not a valid legal reason for its disallowance. The allоwance of pre-judgment interest in Illinois Surety Co. v. John Davis Co., supra, did in fact exceed the amount of the bond but that fact did not deter Mr. Justice Brandéis in affirming the assessment of that item of damage. Judge Mack, in the Court of Appeals opinion in the John Davis Co. ease, reported in 7 Cir.,
The law of Missouri is consistent with the principles just stated. Gary Realty Co. v. Sweeney, (1929),
The Suprеme Court of Missouri in the Gary Realty Co. case held that “our statute does not deny a recovery of interest in addition to the penalty of the bond, in cases where the action is brought for the breach of a condition for the payment of money, although such condition may be a collateral one” (page 510 of 17 S.W.2d, italics the court’s).
That case also held that “defendant’s refusal to pay after demand entitled plaintiff to interest from the date of such demand” on the theory that “a bond is a contract * * * and, being such, the statute allows interest on the amount due thereon after demand of payment” (page 510 of 17 S.W.2d). The Supreme Court of Missouri therefore affirmed the trial court which had allowed a recovery of рre-judgment interest “in addition to the penalty named in the bond” (page 509 of 17 S.W.2d).
In the Maryland Casualty Company case, the Court of Appeals for the Eighth Circuit followed Gary Realty Co. That case affirmed the action of then District Judge Collet who entered judgment “in excess of the face of [the] bond” (page 1005 of
The Court of Appeals in Maryland Casualty Co. expressly held that the fidelity bond there involved was not a “penal bond” subject to the Missouri statutes relating to such bonds. It is clear from what we said in our memorandum opinion of October 5, 1964, that we, in the same manner, do not view the bonds here involved as “penal bonds.” We hold the bonds here involved must be considered as contracts which at least call fоr collateral conditions and undertakings not
Finding nothing in either the federal or state law that would prohibit the allowance of pre-judgment interest, we find and determine that such interest should be allowed as an item of damage for the delay in payment that National Union elected to cause and that pre-judgment interest should be allowed from the date of the demand admittedly made on April 4, 1960.
We therefore make further the following supplemental findings and state supplemental conclusions of law.
Supplemental Findings of Fact
10. Although not separately recoverable, by reason of the failure of National Union’s principal, Mojave, to promptly pay all who furnished labor and material in the prosecution оf the work of the exterior electrical subcontractor, D & L reasonably incurred expenses in the amount of $83,301.74 in resolving and satisfying claims of persons so furnishing.
11. The costs reasonably incurred by D & L in completing the work of the exterior electrical subcontract after National Union on April 4, 1960 refused to undertake its completion did exceed the face amount of that subcоntract, $200,-000.00, as the parties could upon that date reasonably have determined that they would.
12. Although not separately recoverable, by reason of the failure of National Union’s principal, Mojave, to promptly pay all who furnished labor and material in the prosecution of the work of the interior electrical subcontraсt, D & L reasonably incurred expenses in the amount of $28,479.41 in resolving and satisfying claims of persons so furnishing.
13. The costs reasonably incurred by D & L in completing the work of the interior electrical subcontract after April 4, 1960, did exceed the face amount of this subcontract, $330,000.00, as the parties could upon that date have reasonably determined that they would.
14. Interest on $200,000.00 computed from thе date of default and demand, April 4, 1960, at six per cent per annum to November 16, 1964, would amount to $55,487.80, and accumulates thereafter at a daily rate of $32.90. Interest on $330,000.00, computed for the same period and at the same rate, would amount to $91,455.00, and accumulate at $54.24 per day, a total interest to November 16, 1964, of $146,942.80 and $87.15 per day thereafter.
15. A reasonable attorneys’ fee for the prosecution of the instant cross-claim through trial would be $25,000.00.
Supplemental Conclusions of Law
1. This Court is possessed of jurisdiction over the subject matter hereof and the parties hereto.
2. As a direct result of the breach of the conditions of the instant bonds, cross-claimants were damaged in the sum exceeding the face amounts of said bоnds, $530,000.00, so that the obligees, herein identified as D & L Construction Company & Associates, are entitled to judgment against the obligor, National Union Fire Insurance Company of Pittsburgh, Pa., in said sum of $530,000.00.
3. In addition thereto such cross-claimants are entitled to recover as a part of such judgment interest upon such sum of $530,000.00 at the rate of six per cent per annum from the date not later than thеir demand upon cross-defendants, April 4, 1960.
4. In addition thereto, and not limited thereby, such cross-claimants are entitled to recover of such cross-defendant a reasonable attorneys’ fee for the prosecution through trial of such cross-claim in the amount of $25,000.00, and expenses in the amount of $435.00.
5. Cross-claimants are entitled to judgment against crоss-defendant National Union Fire Insurance Company of Pittsburgh, Pa., computed to November 16, 1964, in the sum of Seven Hundred Two Thousand Three Hundred Seventy-seven and 80/100 Dollars ($702,377.80), with interest thereon at the rate of six per cent per annum from the date hereof
For purposes of the record, we expressly refuse to make the supplemental findings and conclusions most recently suggested by National Union.
Counsel for D & L will submit an appropriate final judgment within five (5) days.
It is so ordered.