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Bethlehem Steel Co. v. Turner Const. Co.

Supreme Court of New York, Appellate Division

December 8, 1953

BETHLEHEM STEEL COMPANY, Appellant,
v.
TURNER CONSTRUCTION COMPANY et al., Respondents.

Page 70

APPEAL from an order of the Supreme Court at Special Term (GREENBERG, J.), entered June 30, 1953, in New York County, which denied a motion by plaintiff for summary judgment. Plaintiff sought to recover from defendant Turner Construction Company a sum alleged to be due under a written contract between them, and, upon the basis of that debt, also sought to enforce against real property of defendant Mutual Life Insurance Company of New York a mechanic's lien in the same amount.

COUNSEL

Ralph L. McAfee of counsel (Edward Q. Carr, Jr., with him on the brief; Cravath, Swaine & Moore, attorneys), for appellant.

Frank A. Fritz of counsel (A. T. Antinozzi and Vincent Keane with him on the brief; Bleakley, Platt, Gilchrist & Walker, attorneys), for respondents.

Per Curiam.

The question presented on this appeal from a denial of plaintiff's motion for summary judgment is the meaning of the words 'component materials' in a contract by which plaintiff agreed to furnish, erect and paint all structural steel work in a building for defendant Mutual Life Insurance Company. While the contract was with the defendant Turner Construction Company, that company was acting for defendant Mutual and it is Mutual which will hereafter be referred to as the defendant. The controversy arises out of an escalator clause permitting an increase in the contract price if there should be increases in the prices of 'component materials, labor rates applicable to the fabrication and erection thereof and freight rates' in effect as of the date of the contract.

Plaintiff increased the price of steel after the contract date, although the price increase was in fact announced before the contract was executed. Plaintiff has billed defendant for such increased prices as well as other increases permitted by the escalator clause. Defendant challenges the validity of the extra charge insofar as it relates to an increase in steel prices, contending that it was never intended that plaintiff could unilaterally increase its contract charge by increasing its own charge for steel. Defendant asserts that by 'component materials', an increase in the cost of which would justify an increase in the contract price, the parties meant materials entering

Page 71

into the manufacture and cost of steel and not the steel itself. Plaintiff contends, on the other hand, that the clear meaning of the language used in its context is that by 'component materials' the parties meant steel, paint and the like of materials entering into the fabrication and erection of the steel on the job rather than the manufacture of the steel.

Defendant really offers nothing in support of its contention other than its own asserted understanding of the contract. We cannot find warrant for such an understanding in the contract and observe no triable issue.

The contract was for furnishing, erecting and painting structural steel work. The 'component materials' of such work would be the steel, the paint and other materials used in erecting the steel. It could hardly mean the numerous raw products from ore to blast furnace which entered into the making of the steel. Furthermore, clearly, the labor rates applicable to the fabrication and erection of the component materials meant labor rates applicable to the fabrication and erection of the structural steel on the job and not labor rates along the steel production line. We conclude, perforce, that the escalator clause in its entirety related to the erection job and not to the manufacture of steel.

There is this to be said concerning defendant's complaint about plaintiff's unilaterally effecting an increase in price by raising its own quotations for steel. It is unlikely that plaintiff raised its price apart from a market-wide increase by all steel producers. While it was assumed that plaintiff would supply steel of its own making, that was not a requirement of the contract. The facts in respect to the increase in steel prices can be developed on an assessment of the amount owing plaintiff.

The order appealed from should be reversed and the motion for summary judgment granted and an assessment of the amount due plaintiff ...


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