Opinion
Roger E. Stevens, Boulder, for defendants in error Western States Constr. Co., Inc., and The Travelers Indemnity Co.
Albert B. Dawkins, Denver, for plaintiff in error.
Wilson, Boltz & Boyens, Blaine L. Boyens, Denver, for defendants in error Ripple & Howe, Inc., and V. A. Vaseen.
John P. Donley, Greeley, for defendant in error Ralph A. Cowan, d/b/a G. & L. Gunite Co.
SILVERSTEIN, Chief Judge.
This case was transferred from the Supreme Court pursuant to statute.
This action was commenced in the trial court by one of the defendants in error, Western States Construction Company (Contractor) to recover damages for breach of contract against plaintiff in error, The City of Central (City) and Ripple & Howe, Inc. (Engineers). The City counterclaimed against the Contractor, cross-claimed against the Engineers, and joined V. A. Vaseen (an officer of the Engineers), and The Travelers Indemnity Company (the Contractor's bonding company) as additional defendants against whom it asserted cross-claims. At pretrial Ralph A. Cowan, doing business as G. & L. Gunite Company, was allowed to intervene to assert a claim against the Contractor. The Engineers filed a counterclaim against the City. All counterclaims and cross-claims were based on breach of contract.
After trial to the court, judgment was entered against the City on the claims of the Contractor and the Engineers. The cross-claims and counterclaims of the City were dismissed. Judgment was also entered against the Contractor on the claim of Cowan. This latter judgment is not involved in this appeal.
The City asserts error in the findings, conclusions and judgments of the trial court. We find no error and affirm the judgment.
The following pertinent facts are undisputed. In 1963 the City entered into a contract with the Engineers for a report on problems related to improving the City's public water supply, treatment and storage facilities. The report was delivered to the City in February 1964. Two addenda were later supplied. In May 1965, the City decided to construct new water facilities, including a reservoir and a filter plant, and to make changes and repairs to its distribution system. The City and the Engineers entered into a contract under which the Engineers were to prepare plans and specifications, obtain bids, assist in letting contracts, generally supervise the construction, review estimates of work in progress. They were also to recommend amounts for payment to contractor and make final inspection of construction. The Engineers' fee for their services was seven percent of the total cost of construction and equipment, plus specified amounts for supervision.
In June 1965, the voters of the City approved a $125,000 bond issue for the project. On October 6, 1965, a contract was signed between the City and the Contractor under which the Contractor was to perform specified work on a reservoir, construct a filter plant and make specified repairs on the City's pipe lines. The Contractor proceeded with the work through June 1966 and was paid according to the terms of the contract for all work up to June 1, 1966. However, the monthly billing of the Contractor for the work done through June, which was approved by the Engineer and submitted to the City council with a recommendation for payment, showed that the total payments to the Engineers and the Contractor would then exceed the amount of the bond issue.
The City refused to pay the bill and on July 6, 1966, sent the City Marshall to the work site to stop all work. The Marshall directed everyone to leave the premises. His order was obeyed and all work stopped. At this time the work was 89% Completed. This suit was started on August 5, and on August 13 the City terminated the contract. Thereafter the City hired a new engineer and contractor to complete the job.
The contract between the City and the Contractor was composed of three segments. The segments pertaining to the filter plant and the pipe line repairs provided for lump-sum payments. The third segment covered work on the reservoir which included the cleaning of an old reservoir site and waterproofing the floor and walls with gunite. The contract price for installing gunite was based on a unit price per cubic yard of gunite in place for the calculated amount required and for the same price per cubic yard for additional gunite, 'If additional required.' The total contract price of $103,067 was based on the lump-sum totals plus the amount of the basic, calculated amount of gunite. However the contract also provided that, 'Final payments will be made on measured or known quantities--unless bid on a 'lump sum' basis.' The amount of gunite installed greatly exceeded the basic calculated amounts and it was this fact which caused the cost of the project to exceed the amount of the bond issue.
The City contends that installation of the additional gunite constituted extra work for which written work orders were required under the contract and that the Engineers and the Contractor breached the contract--the Contractor by installing the gunite and the Engineers by approving the installation without such work orders. The City further contends that, under the terms of the contract, it was justified in stopping the work and terminating the contract because of this alleged breach. In addition the City contends that the Engineers acted fraudulently, or arbitrarily, capriciously and in bad faith, or did not exercise honest judgment in authorizing payment of sums in excess of the basic contract price and in excess of the bond issue.
The trial court found that the contract between the City and the Contractor was unambiguous, that the Contractor and the Engineers had performed in accordance with, and had not breached, their contracts with the City, and that there was no fraud, bad faith or failure to exercise honest judgment on the part of the Engineers. The court further found that the City breached its contract with the Contractor by refusing to pay the July statement, and that the City further breached the contract by stopping the work on July 6, and by terminating the contract. These findings were amply supported by the evidence and will not be disturbed. Fairways Living, Inc. v. North Denver Bank, 169 Colo. 23, 453 P.2d 190.
Based on these findings, the court entered judgments against the City and in favor of the Contractor and the Engineers. The City contends that these judgments are erroneous in law because the total judgments, when added to the sums previously paid, exceed the amount of the bond issue and the contract sum. This contention is without merit.
As found by the trial court, the contract is clear and unambiguous that the total contract price of $103,067 was based on the calculated basic amounts of gunite and that, if additional amounts of gunite were needed, they would be added to the basic price. The judgments conform to the terms of the contract.
The fact that the judgments, coupled with the amounts paid under the contract, exceed the amount of the bond issue does not vitiate either the judgments or the contract. The City claims that under the provisions of the City charter and the ordinances enacted pursuant thereto pertaining to the authorization for the issuance of the bonds, the City cannot be obligated to pay more than $125,000 for work done. Since the City has never elected to come within the purview of the general statutes pertaining to cities and towns, its obligation to pay must be determined by construction of the City Charter. See City of Central v. Axton, 150 Colo. 414, 373 P.2d 300, and Georgetown v. Bank of Idaho Springs, 99 Colo. 519, 64 P.2d 132. However, the provisions of the charter do not support the City's claim.
Charter of the City of Central, Art. V, Sec. 8, as amended, authorizes the City to issue and sell bonds to pay for expenses incurred in acquiring or constructing water facilities and provides for the procedures to be followed before such a bonded indebtedness can be incurred. The City followed all of the prescribed procedures. It is the City's position that this section of the charter establishes the exclusive source of funds for all work on the project. This is not correct. Art. V, Sec. 1 gives the city council power and authority to levy and collect taxes for city purposes. Art. V, Sec. 4 empowers the city council to appropriate money and provide for the payment of the debts and expenses of the City. The council is also authorized to sell water and to fix the prices for such sale and to fix and charge water rents for the use of the water. Art. V, Sec. 38 gives the council 'power to make all ordinances which shall be necessary and proper for carrying into execution the powers specified in this act, . . ..'
These provisions give the city council ample authority to pay the judgments and to obtain the funds therefor. The charter does not contain any provisions, customarily found in such charters or in statutes, which would require a prior appropriation or other condition precedent to the incurring of a debt. Furthermore, there is nothing in the City's contracts with the Contractor or the Engineers which in any way limits payment to proceeds from the sale of the bonds or specifies in any way what fund or funds are available for payment. The Contractor and the Engineers are entitled to payment from revenue available to the City and obtainable by the city council in its exercise of the above cited powers set forth in the charter.
The judgment of the trial court is affirmed.
COYTE and PIERCE, JJ., concur.