Moore, Friendly and Anderson, Circuit Judges.
The circumstances out of which this controversy arose are set out in the opinion of this court in the first appeal and will not be repeated here. 340 F.2d 293 (2 Cir.), cert. denied 380 U.S. 978, 85 S. Ct. 1341, 14 L. Ed. 2d 272 (1965). Two of the issues raised on the first appeal were disposed of in our prior decision and are not before us on this second appeal. We held that Scaduto*fn1 had no duty to construct embankments; we also held that Orlando had no right to retain $75,000 to pay Scaduto's creditors or to indemnify himself against claims made by Scaduto's creditors directly against him, Orlando, as prime contractor. Orlando had also retained $34,000 out of the estimated amount due Scaduto in April, 1956, for failure to take rock to embankment sites. This was a separate issue which was resolved at the second trial, and it was conceded by the appellant, Orlando, in his argument on the second appeal that the disposition of rock other than by delivery to embankment sites was made with the consent and under the direction of Orlando's engineer.
The main reason for remanding the case after the first appeal was the trial court's erroneous conclusion that the reference in Section 1 of the subcontract to the plans and specifications of the prime contract had no bearing on the case and need not be considered. We held that, while those plans and specifications could not be construed to increase the kind of work agreed to be performed under the subcontract, they did define some of its terms and governed the way in which the work was to be done, and that Sections A2.12 and A2.32 of the specifications of the prime contract became a part of the subcontract for these purposes. We said that the clause of the subcontract which incorporated these specifications was clear and unambiguous. Unfortunately clarity in the respective legal interests of the parties began and ended at that point.
The principal remaining issue, mentioned on the first appeal and again before us on the present appeal is whether or not the agreement between the parties, and the understanding for the so-called continuance of the agreement, required Scaduto to excavate and remove all of the Class A rock remaining in the 4.89 mile section of the Turnpike, or from the portion of the section on which he worked, at the agreed rate of $1.50 per cubic yard in such a manner as to comply with the design and profile of the excavated roadbed as shown by the plans and specifications and, if so whether Orlando had waived adherence by Scaduto to that standard and degree of performance. It must then be determined whether or not Scaduto performed his contractual obligations. We held on the first appeal that any doubt as to the scope of the work to be performed by Scaduto must be resolved against Orlando, 340 F.2d at 298-299. However, once the scope of the work is determined the burden of showing performance necessarily rests upon Scaduto.
The subcontract called for the excavation and removal of approximately 350,000 cubic yards of rock and provided that the work be started by August 1, 1955 and be completed by December 31, 1955. It appears that this subcontract was performed within the time prescribed and with sufficient compliance with its terms so that Scaduto was paid, exclusive of the 10% agreed retainage, for the estimated rock excavated and removed, except that Orlando has claimed, during the course of the litigation, that Scaduto breached the contract by not removing the rock to the grade and contour of the roadbed as prescribed by Section A2.32 of the specifications of the prime contract. The appellee, however, in effect claims that Section 11 of the subcontract required him, Scaduto, to do his work "in accordance with general directions given by the contractor [Orlando] as to the portions of the work which shall have priority" and that he, Scaduto, fully complied with all the directions given him by Orlando's engineer and excavated and removed rock where the engineer told him to.
At the end of December, 1955, there still remained large quantities of rock to be removed from Orlando's 4.89 mile section of the Turnpike and Orlando and Scaduto agreed to continue the subcontract beyond the termination date. Scaduto went forward with the excavation and removal of rock and the engineers, each month, made estimates of the quantities taken out and Scaduto was paid through the March, 1956 estimate, but Orlando withheld payment of the amounts estimated by the engineers to be due in April, May and June. On June 5, 1956 Scaduto removed all of his equipment and ceased any further work on the Turnpike.
The basic issue which we hold to require a second remand is presented by Orlando's principal contention on this appeal, that, from the time Scaduto commenced work in late July, 1955, to the time he discontinued the work on June 5, 1956 he was under a duty to comply with the specifications in Section A2.32 of the prime contract, incorporated by reference into the subcontract through Section 1 of that agreement, and that therefore Scaduto was obligated to excavate rock and remove other material in such a way that the resulting roadbed would reflect the Authority's plans in all respects, that is, it would be at the grade called for, the slopes would be cut back and the profile of the roadbed would conform to that depicted by the plans.
The appellee, Scaduto, asserts that it was never intended by the parties that he as subcontractor had a duty to remove the rock to align the cut and roadbed with the contours of the plans and specifications. He further, in effect, argues that, even if the specifications were incorporated by reference into the subcontract, Orlando waived the provisions by giving him day by day instructions, under Section No. 11 of the subcontract, as to what rock to remove from what particular places. The determination of this issue depends upon detailed and specific findings (which have never been made) as to the relative rights and duties of the parties under the subcontract, and facts which show whether any of its terms were modified or amended, whether the rights of a party were waived, whether a party breached a duty and like matters. Facts must be found as to the method of excavation and removal of rock under the initial subcontract between late July and December 31, 1955, whether Scaduto, who was not the exclusive subcontractor for removing rock, was assigned a particular portion of the 4.89 mile section, for which he had full responsibility in carrying out the subcontract for rock removal, or was assigned from day to day or every few days to various parts of the 4.89 mile section of the Turnpike, from other portions of which rock was being removed or had been removed by Orlando's men or other subcontractors, to take out particular areas and quantities of rock as directed by Orlando's engineer. In dealing with the matter of the completion of the initial subcontract the trial court should consider evidence of whether or not, on or about December 31, 1955, claims were made by Orlando that Scaduto had failed to comply with the specifications, whether Orlando's and the Turnpike's engineers approved or disapproved Scaduto's work, whether any conditions were placed by them on the estimates for the payments to Scaduto for the work done and whether Orlando after December 31, 1955 made any claim for indemnity under Section No. 12 of the subcontract for work not fully performed during the period from July to December 31, 1955.
With regard to the agreement between the parties for the continuance of the subcontract after December 31, 1955 there are no findings which disclose whether or not it was oral or written, what its terms were, the time within which it was to be performed, and particularly whether or not it called for the excavation and removal of a specific quantity of rock or all the remaining rock that had to be removed from the 4.89 miles of Orlando's contract and in strict compliance with specifications in Section A2.32 of the prime contract, or only an agreed portion of the 4.89 miles, or only rock in such quantities and from such locations in the 4.89 mile section as Orlando from time to time ordered, as well as other important provisions. The latest judgment of the trial court rests upon certain stated conclusions which stand unsupported by appropriate findings of fact.
For the most part the portion of the decision entitled "findings of fact" is only slightly different from the "conclusions of law." Nowhere is there a finding of the basic facts of the case. On remand the District Court must afford the parties an opportunity to offer such additional evidence as they may have on the questions to be decided, and the court must make detailed factual findings on the issues herein discussed.*fn2
Each party accuses the other of breaching the contract. The reasons originally given by Orlando for withholding from Scaduto the last three payments for estimated rock removal, i.e. Scaduto's failure to build embankments, Orlando's exposure to direct claims by Scaduto's creditors and the failure of Scaduto to take the removed rock to embankment sites, have been found untenable and have been resolved against Orlando. He now asserts, however, that Scaduto breached the contract prior to Orlando's withholding of the April, May and June payments and therefore furnished justification for the refusal to pay. He states that Scaduto breached in three ways: he did not perform the work fully and properly and in accordance with the specifications; he did not use adequate equipment for the proper performance of the work; and he did not pay what he owed to materialmen and suppliers. Neither of the last two charges would, even if true, have warranted a withholding of the payments due by Orlando for work already performed. It may be noted that the subcontract itself contained provisions relating to such eventualities.*fn3 Scaduto, on the other hand, claims that he fully and properly performed all of his duties under the agreement with Orlando and explicitly followed all of his directions, that any difficulties with procurement of equipment and payments to materialmen and suppliers were caused entirely by Orlando's withholding of money due him.
There remains, therefore, Orlando's charge that he was justified in withholding the payments because Scaduto did not comply with the plans and specifications and Scaduto's assertions that he did all he was required to do. We have already determined that that language of the subcontract, as originally drawn, clearly incorporated specifications A2.12 and A2.32 of the prime contract. The trial court has made no findings as to what was meant by the parties' agreement, about December 31, 1955, to continue the subcontract or what its terms were. It certainly could not have meant the same time period for performance or the same estimated quantity of rock to be removed. As stated above, the burden of establishing the scope of the work to be performed under the terms of the subcontract and the agreement for its continuance rests upon Orlando, but Scaduto has the burden of showing that he performed the work required of him; and, if he claims that Orlando waived any rights which Orlando had under the agreements or that any of the terms were changed by the conduct of the parties, Scaduto has the burden of proving those assertions.
The factual issues implicit in these conflicting claims should, to a substantial degree, be resolved by the findings above directed concerning the provisions of the agreements made by the parties, the relative rights and duties of each and whether each had performed the duties he had assumed. To the extent that they do ...