Omaha Public Power Dst v. Employers’ Fire Ins Co. Case Brief

Summary of Omaha Public Power Dst v. Employers’ Fire Ins Co.
U. S. Ct. of App. [1964]

Relevant Facts: Pl Omaha is a public utility company in NE who desired to engage an independent contractor to dismantle and remove certain power lines in Omaha. Kirby was introduced and they executed a formal K. Kirby was required to obtain a performance bond insuring the work’s completion and certain liability insurance. As proof Kirby was required to submit to the Pl a certified copy of these policies, and the K would not b/c effective until such policies were in full force and effect. Kirby acquired a performance from Df and furnished copies to the Pl. Kirby’s business became financially unsound and his atty stated he would be unable to perform under the K. Pl made written demand upon the df to undertake performance w/ another contractor. Df declined these negotiations. Pl had the work performed and seeks reimbursement.

Legal Issue(s): Whether the provision in the K operated as a condition precedent to its existence or a condition precedent to performance of the work?

Court’s Holding: Condition precedent to performance of the work.

Procedure: D Ct dismissed action on the merits, w/o jury. Pl appealed. Affirmed.

Law or Rule(s): A condition precedent is either a condition which must be performed before a K becomes binding upon the parties to it OR must be fulfilled before a duty arises to perform the obligations of an already existing contract.

Court Rationale: The beginning of the agreement occurred upon the parties’ execution of the principal K embodying their exchange of bilateral promises. Kirby agreed to purchase equipment and remove the same in return for Pl’s promise to relinquish title of some of the materials removed.

The crucial paragraph immediately following the insurance provision requires in part that Kirby furnish the Pl w/ proof of the insurance’s procurement before commencing work. This proviso was further qualified “This K shall not become effective until such policies are in full force and effect." Assigning the parties’ words their plain and unequivocal meaning, the parties intended binding performance of their obligations under the existent K to be contingent upon occurrence of the described event. It was a condition precedent to performance of the work.

Pl is nevertheless precluded from entertaining suit for breach of contract for failure of Kirby to perform in the absence of the condition’s occurring AND impelling absolute performance of the parties’ promises. The clarity of the language selected by the parties must control as indicative of their intent.

Plaintiff’s Argument: The provision was merely a condition to proceed with the work but not a condition to the existence of an enforceable K.

Defendant’s Argument: The principle K contained a condition precedent to its existence which never occurred when the principal obligor failed to procure the requisite insurance.

Nascence-beginning or developing

Derogate – to take away or belittle

Surety – one who at the request of another, for the purpose of securing to him a benefit, is responsible for the performance by the latter of some act in favor of a third party.

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