Pacific Coast Engineering Company, a Corporation v. Merritt-Chapman & Scott Corporation, a Corporation

On October 19, 1959, Pacific Coast Engineering Company (hereafter Paceco) sued Merritt-Chapman & Scott Corporation (hereafter Merritt-Chapman) in the California Superior Court in two actions, one for breach of contract and one for money withheld and interest. The actions were removed to the United States District Court in San Francisco. The district judge held that Paceco had committed an anticipatory breach and that Merritt-Chapman was justified in can-celling the contract. The court awarded damages to Merritt-Chapman on its counterclaim in the sum of $46,823.00. Pa-ceco appeals the judgment.

QUESTIONS PRESENTED

There are two questions involved in this appeal. One is whether the district court’s interpretation of the obligations of the parties under the terms of the contract is clearly erroneous; the other is whether Paceco was in breach of contract thus justifying Merritt-Chapman’s cancellation.

FACTS

The appellee, Merritt-Chapman, was the prime contractor in the Priest Rapids Project, which involved the construction of a dam on the Columbia River in the State of Washington. In the summer of 1957, Merritt-Chapman entered into a contract with Pacific Car & Foundry Co.,…