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United States v. Clementon Sewerage Authority

decided: July 21, 1966.

THE UNITED STATES OF AMERICA
v.
THE CLEMENTON SEWERAGE AUTHORITY, DEFENDANT AND THIRD-PARTY PLAINTIFF, V. ANNE K. WISE, EXECUTRIX OF THE ESTATE OF ALBERT G. WISE, DECEASED, AND JOHN G. REUTTER AND JOHN G. REUTTER ASSOCIATES, JOINTLY, SEVERALLY, OR IN THE ALTERNATIVE, THIRD-PARTY DEFENDANTS. ANNE K. WISE, EXECUTRIX OF THE ESTATE OF ALBERT G. WISE, DECEASED, APPELLANT



Hastie and Smith, Circuit Judges, and Kirkpatrick, District Judge.

Author: Hastie

Opinion OF THE COURT

HASTIE, Circuit Judge.

The Clementon Sewerage Authority was created as a municipal agency with authority to construct a sewerage system for the borough of Clementon, New Jersey. To this end, the Authority contracted with Albert Wise, an engineer, to prepare preliminary studies and final plans for the system, and to supervise construction. To partially finance the project, the Authority applied for and received from the federal Housing and Home Finance Agency the sum of $15,800 to be applied to the cost of preliminary plans and studies. After completing preliminary studies and while difficulties concerning final plans remained unresolved, Wise died. His interest is now represented by his estate. The project was completed by another engineer.

After the Authority failed to repay the sum advanced by the federal agency, the United States initiated this action against the Authority for repayment of the $15,800. In turn, the Authority, alleging a breach of contract by Wise, filed a third-party action against the estate of Wise for return of the sum of $15,800 which it had paid him for the preliminary studies. The estate of Wise counterclaimed for a balance, over and above the $15,800 received, allegedly due for further work performed under the contract in the preparation of final plans.

The district court, sitting without a jury, found for the government in its action against the Authority and for the Authority in its third-party action against Wise's estate. The estate's counterclaim was dismissed. The Authority did not appeal from the judgment against it in favor of the United States. The estate has appealed from the judgments in favor of the Authority on both the Authority's third-party claim and the estate's counterclaim. Thus, the only parties before this court are the Authority and Wise's estate. The dispute turns upon the construction of the contract between the Authority and Wise. This was, in all relevant contacts, a New Jersey transaction and the contested legal issues are questions of New Jersey contract law.

An unsigned written contract between the Authority and Wise, dated December 11, 1958, pleaded and in evidence in the instant case, contains the following term:

"Engineer covenants to complete (a) and (b) [(a) -- preliminary studies, (b) -- final plans] herein not later than April 1, 1959. * * *"

During the trial, the estate introduced a signed agreement, also dated December 11, 1958, which was identical with the contract pleaded except that it did not contain the above quoted time term. The estate claimed that the writing without the time term was the true contract. In order to find whether the contract with the time term or the one without it was the ultimate written agreement, evidence of the surrounding circumstances was admitted. The explanatory evidence, some of it rather equivocal, indicated that Wise wanted to perform the engineering work associated with the sewerage project and to that end, after discussion with the members of the Authority, submitted a proposed written contract on December 11 for the Authority's approval. The Authority wanted to add a time limit for completion of the preliminary studies and final plans and Wise agreed to this. However, in order to expedite the granting of a Housing and Home Finance Agency advance under 40 U.S.C. ยง 462(a) for "action preliminary to and in preparation for the construction of public works", the Authority's officers signed the contract as drawn. This was done on Wise's assurance that a new but identical contract with the addition of a time term would be executed. The Authority's solicitor noted such a term on the back of the initial writing. Accordingly, the lower court found that the time term writing was adopted and substituted for the original writing at a subsequent meeting of the Authority and that the later writing was the "paramount contract between Wise and the Authority".

We think the factual finding that this writing, though not signed, was meant to be the written expression of the bargain is sufficiently supported by the testimony in the record. The parties recognize that the parol evidence rule does not apply to such a resolution of conflict between writings. There was no error in the trial court's finding that the time term writing was the ultimate and legally effective written expression of the bargain.

Apart from the time term, the pertinent substantive provisions of the written contract read as follows:

"* * * The Engineer agrees to furnish and perform professional services as hereinafter set forth:

"(a) Preliminary studies including all necessary preliminary investigation, reports, preliminary general plans, estimates and costs for a proposed sewer system and plant, conferences with Authority, State of New Jersey Board of Health and any other governmental agency and preparation of application for any available governmental loans or grants.

"It is mutually agreed that the Engineer shall be compensated for this work in a sum of $15,800.00 and that this fee shall be paid not later than receipt of payment ...


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