Opinion
No. 21712
Decided March 19, 1930.
Contracts — Entire or separable, and substantial performance — Contract not rendered separable by installment payments or additions and subtractions — Courts adopt parties' interpretation as single contract — Substantial performance precluded by substantial omission — Owner's occupancy does not excuse substantial performance of building contract.
1. A provision in an entire contract for payment in installments, which installments are not referable to separable items or portions of the construction but are referable to the construction as a whole, does not render or characterize such contract separable.
2. Where an entire contract is supplemented by several separable additions thereto, the separable additions thereto will not convert the original entire contract into a separable contract, unless an intention to so convert the original contract appears by the supplemental contract or has been so construed by all the parties to the contract.
3. Where the parties to an original entire contract have, in pursuance to authority conferred by such contract, made additions to and subtractions from the plans and specifications of such contract, and have, in their dealings with reference to such contract, plans and specifications and supplements thereto, interpreted the same as constituting a single contract, and each has pleaded his cause of action and his defense upon that theory, a court will adopt the interpretation of the parties in that respect.
4. There can be no substantial performance where there exists a substantial omission to perform.
5. The occupancy, by the owner, of a building constructed under an entire contract does not afford a reason for excusing substantial performance.
ERROR to the Court of Appeals of Hamilton county.
This action was begun in the court of common pleas by the H.C. Hazen Contracting Company, suing for a balance due upon a contract between it and the defendant, Maurice M. Condon, for wrecking, altering, constructing, and erecting a certain building in the city of Cincinnati. Various issues were made by the pleadings, but the only issues brought here are the issues of law, whether the contract was entire or separable and whether there was substantial performance of the contract by the plaintiff.
The case, by agreement of counsel, was submitted to a special master, who made separate findings of fact and conclusions of law, and found for the plaintiff in the sum of $3,034.34. Exceptions to the findings of fact were filed by both the plaintiff and the defendant, all exceptions were overruled, and the trial court, upon the findings of fact of the special master, rendered a judgment for costs for the defendant and dismissed plaintiff's petition. Error was prosecuted to the Court of Appeals, where the judgment of the trial court was reversed and judgment for the plaintiff rendered in the sum found by the special master.
The findings of fact of the special master are as follows:
"Finding No. 1"That on July 27, 1925, plaintiff, The H. C. Hazen Contracting Company, entered into the following contract with the defendant, Maurice M. Condon (See 'Exhibit 1'):
" 'Cincinnati, Ohio, July 27, 1925.
" 'Mr. M.M. Condon, Cincinnati, Ohio — Dear Sir: We propose to furnish the necessary labor and materials, to wreck your old building, and erect a new building, as per plans and specifications submitted, for the sum of thirteen thousand nine hundred and thirty-five dollars ($13,935.00).
" 'The above is based on 12 1/2% added to the net cost of labor and materials, including the plans and specifications.
" 'Any materials taken out of old building, that are in good condition, shall be re-used.
" 'Any alterations or changes that can be made as the work progresses to cut down the above amount, you are to receive the full benefit of same.
" 'Any additions that may be made, which are not included in the plans and specifications, the work to be done on a basis of 12 1/2% added to the net cost of labor and materials.
" 'Invoices to be presented the first of each month for all labor and materials put in the building the month previous, payment to be made on the fifth of each month.
" 'Respectfully submitted,
" 'H. C. Hazen Contracting Co.
" 'HCH*L (Signed) Per H. Hazen.
" 'Witnesses: (Signed) L.E. Stenger
" 'D.A. Dickman.
" 'Accepted: M.M. Condon
" 'Witnesses:
" '(Signed) C.G. Bertke
" 'Chas. E. Maddox.'
"Finding No. 2
"Changes
"Pursuant to the terms of the said contract plaintiff began to rebuild defendant's building known as 424 Lawrence street, in the city of Cincinnati. During the progress of the work the following changes were agreed upon between the parties:
"(a) At the time Hazen entered upon the contract the north foundation wall was of stone construction up to the level of the ground, and from the level of the ground to the top of the building the north wall was constructed of brick. The plans and specifications provided that the north stone foundation wall was to be repaired and underpinned and that the brick wall on the north from the line of the stone foundation to the top of the building was to be 'pointed up and put in first class condition.' After The H. C. Hazen Contracting Company had begun work under its contract it was agreed by The H. C. Hazen Contracting Company and the defendant, Condon, that the entire north wall including both the north foundation wall of stone and the north brick wall from the top of the foundation wall to the top of the building was to be torn down. An arrangement was entered into with the property owner on the north by which no new north wall for the Condon building was to be erected, and the south wall of the adjoining building on the north by consent of its owners was used as the north wall of the Condon building. In lieu of the north wall by an agreement between the plaintiff and the defendant, concrete pilasters or columns were erected to support the first floor and roof of the garage.
"(b) It was agreed by the plaintiff and defendant that the plumbing provided for under the original contract should not be installed by The H. C. Hazen Contracting Company under its contract, but by a different contract between the defendant, Condon, and a plumber not employed through The H. C. Hazen Contracting Company, but employed by the defendant, Condon, directly.
"(c) The plans and specifications provided that the stone foundation wall on the south should be retained in the remodeled building, and that on top of the present stone foundation wall a reinforced concrete wall was to be built to the first floor level as shown on the plan. From the first floor level to the top of the building the old brick wall was to be repaired and retained. By agreement between the parties, it was agreed that the ol d stone foundation wall on the south should be removed up to the surface of the level of the ground and a reinforced concrete wall substituted. It was also agreed that the brick wall from the level of the first floor to the top of the building should be removed, and reinforced concrete substituted.
"(d) The plaintiff claims a number of other changes were agreed upon between the plaintiff and the defendant after The H.C. Hazen Contracting Company began work under the contract. I find that the plaintiff has failed to prove by preponderance of the evidence that these changes were agreed upon after the work was begun, and I, therefore, find the remaining items which the plaintiff claims as changes were included in the original plans and specifications as submitted at the time the contract was signed, namely, July 27, 1927.
"The building to be constructed under the terms of said contract was to be a garage to be built in accordance with the specifications (see Plaintiff's Exhibit No. 4), which specifications provided that 'all work shall conform in all respects with the laws and ordinance of the city of Cincinnati governing the same.'
"Finding No. 3. "Extras"I find that during the progress of the work the following extras were agreed upon by the parties that were not included under the contract nor in the plans and specifications:
"(a) A turntable to be installed in the cellar;
"(b) Concrete curbs on the runway extending from the doorway down to the level of the cellar floor;
"(c) A parapet wall constructed on the north side of the building supported by the concrete columns or pilasters.
"Finding No. 4."During the progress of the work the plaintiff rendered bills to the defendant as follows:
"On September 1, 1925, a bill for $2911.34. This bill was paid in two installments — the first on September 12 when the defendant paid to the plaintiff the sum of $2411.34; the second on September 17 when the defendant paid the plaintiff $500.00.
"On October 1, 1925, the plaintiff rendered a bill to the defendant for $5328.34. This bill was paid in three installments. The defendant paid the plaintiff $1500 on October 13; $936.63 on October 19; $2891.71 on October 31.
"I further find that in all the defendant has paid under this contract to the plaintiff $8239.68.
"On November 6, 1925, plaintiff rendered a bill to the defendant for $6666.50.
"On or about December 1, 1925, the plaintiff rendered bills to the defendant for $3362.18.
"I further find that in the bill dated November 6, 1925, for $6666.50 the plaintiff charged the defendant for 495 cubic yards of concrete at $10.50 a yard, making $5197.50 for concrete.
"I find that an error was made in the computation of the number of yards of concrete. This error was made by Jones, the engineer for the plaintiff. He reported to Hazen as a proper item to be included in this bill 495 yards of concrete at $10.50 a yard, making $5197.50. This error was not corrected until late in December, 1925. The bill should have been for 245.18 yards of concrete at $10.50 a yard, making $2564.39. The defendant, Maurice Condon, refused to pay this bill, and on November 25, 1925, the plaintiff ceased to work upon the building.
"Finding No. 5."On November 25, 1925, when the plaintiff ceased work upon the building the construction of the building had reached the following stage: The concrete for the walls and roof had been poured, but no roofing had been put on the roof. Conduits for electric wires had been installed but no wires had been strung through the conduits. A portion of the metal lath had been set in place for the plastering, but no plastering had been done anywhere in the building. Kalomein doors and the rolling steel doors, together with the steel transoms for the front of the garage, which were included in the contract by virtue of the plans and specifications, were on the building site, but had not been installed nor set in place. There was no glass in any of the windows above the cellar, nor in the skylight. The west wall of the office had not been completed. At the time the plaintiff stopped work, this west wall of the office consisted of channel upright wires only. The rolling steel doors and kalomein doors were sometime subsequent to November 5, 1925, removed from the building site by the plaintiff. The wiring, roofing, plastering and office wall, also were all required by the contract, plans and specifications to complete the building.
"Finding No. 6."I find that the plaintiff ceased work on November 25, 1925, and that on or about that date plaintiff removed the kalomein doors that had been purchased from the Moeshl-Edwards Company, and other material that was on the ground but not installed in the building. The defendant, Maurice Condon, expended the amount set out below to complete said building, and I further find that the sums expended represent the reasonable cost of the completion of the building at that time.
(a) For plastering, roofing with three-ply composition roofing, flashing for the parapet wall and finishing other items in the building (under a contract with Wal- ters) .................................... $2,700.00 (b) Electric wiring under a contract with William F. Ritter ........................ 171.06 (c) Glass purchased from The Pittsburgh Plate Glass Company ...................... 71.00 (d) Coke for heating building during con- struction ................................ 12.10 Total amount expended .................. $2,954.16
"I find that after the work had begun on the building by agreement between the plaintiff and defendant, the plumbing was taken out of the general contract, and it was agreed that the defendant, Maurice Condon, employ his own plumber. This he did, and expended the sum of $742.65, which I find represented the reasonable cost of the installation of the plumbing at that time.
"I further find that the reasonable cost of the kalomein doors as ordered from the Moeshl-Edwards Company will be $721.25, plus $100.00 for installation. These are the doors that were taken away by the plaintiff.
"I also find that the reasonable cost of the fire proof transoms removed by the plaintiff was $88.00 at that time.
"I further find that the defendant is entitled to $450.00 damages by reason of the delay in the completion of the building caused by the abandonment of the work by the plaintiff.
"I find that the plaintiff is entitled to recover from the defendant
(a) By reason of the changes agreed upon between the plaintiff and the de- fendant, by which concrete pilasters or columns were erected in place of the north foundation wall, and in place of the north brick wall of the building ...... $624.18 (b) By reason of the tearing down of the south foundation wall ..................... 111.00 (c) For the construction of the south con- crete foundation wall, up to the surface of the level of the ground ................ 1,645.61 __________ $2,380.79
"Finding No. 7."I find that the plaintiff is entitled to recover from the defendant for the following extras agreed upon during the progress of the work:
(a) Installation of a turntable ............ $732.32 (b) Concrete curbs on the runway to the basement ................................. 28.89 (c) Parapet on the north wall .............. 84.41 __________ $845.62
"Finding No. 8."I find that the defendant is entitled to the following credits:
(a) The north wall was not underpinned as provided for in the plans and specifi- cations. I, therefore, find that the defendant is entitled to a credit for the failure to do this work of ............... $235.93 (b) Plaintiff admits that the defendant is entitled to a credit by reason of the shortening of the building 3 feet. I, therefore, find that the defendant is entitled to a credit of .................. 396.80 (c) Defendant is entitled to a credit from the plaintiff by reason of the substitu- tion of concrete for brick ............... 198.60
"Finding No. 9."The defendant has not been able to complete the building because the plaintiff removed the steel doors, kalomein doors and transoms from the building, and made it impossible for said defendant to secure said steel doors elsewhere. The defendant has substituted temporary doors, made of wood. The defendant has been ordered by the commissioner of buildings of the city of Cincinnati to vacate the premises by reason of the fact that fireproof doors have not been installed, but the building commissioner has been induced to stay his hand pending this litigation."
Messrs. Freiberg, Simmons Forchheimer, for plaintiffs in error.
Mr. Chester S. Durr and Mr. Charles H. Urban, for defendant in error.
The controlling question in this case is whether the written contract, plus the agreements for additions to and subtractions from the plans and specifications, is entire or separable; and the contrary judgments rendered by the trial court and the Court of Appeals are due to those courts having reached different conclusions upon the subject of the divisibility of the contract.
Manifestly, if the contract is entire there could not be substantial performance, under the following finding of fact of the special master: "The concrete for the walls and roof had been poured, but no roofing had been put on the roof. Conduits for electric wires had been installed but no wires had been strung through the conduits. A portion of the metal lath had been set in place for the plastering, but no plastering had been done anywhere in the building. Kalomein doors and the rolling steel doors, together with the steel transoms for the front of the garage, which were included in the contract by virtue of the plans and specifications, were on the building site, but had not been installed nor set in place. There was no glass in any of the windows above the cellar, nor in the skylight. The west wall of the office had not been completed. At the time the plaintiff stopped work, this west wall of the office consisted of channel upright wires only. The rolling steel doors and kalomein doors were sometime subsequent to November 5, 1925, removed from the building site by the plaintiff. The wiring, roofing, plastering and office wall, also were all required by the contract, plans and specifications to complete the building" — notwithstanding the special master's conclusion of law that the contractor had substantially complied with its contract.
We have no difficulty in reaching the conclusion that the written contract required the construction of a garage according to the plans and specifications, for an upset price of $13,935, and that it prescribed the rule for determining the price to be paid for every addition to the plans and specifications, and the rule for determining the sum to be deducted for subtractions from the plans and specifications.
Were it not for the fact that the owner exercised his right to add to and subtract from the plans and specifications, and thereby changed the upset price for the completed building by adding thereto the cost of separate items of such construction, and by subtracting therefrom the cost of separate items authorized by him to be omitted from the plans and specifications, no question of the divisibility of the contract could arise, for the original contract, plans and specifications called for a completed building, for a given price, no part of which price was apportioned or apportionable to any item or separate part of the construction; but the single price constituted the consideration for the job as a whole.
The provisions for additions to, changes in, and omissions from the plans and specifications contained a rule whereby the price of an authorized deviation from the plans and specifications was to be determined, which was to be added to or subtracted from the original consideration for the construction. But it is significant that no provision was there made for a subtraction for an unauthorized omission by the contractor. Does the fact that the contract authorized additions to and omissions from the plans and specifications, at a price or prices ascertainable by a rule created in the contract, render the contract as a whole divisible? If so, what proportion of the consideration price paid to the contractor in installments shall be credited to the original and entire contract, and what proportion shall be credited to the authorized additions thereto, and where shall the credit for authorized omissions be made?
Had the parties to this contract, in their dealings with each other in reference to the contract, treated the authorized additions and authorized omissions as separate transactions, and rendered their bills and made their payments accordingly, and had the pleader in his pleadings in this case pleaded his cause of action separately with reference to the original contract and with reference to the additions and subtractions therefrom, and had the master apportioned the payments to the original contract and to the several additions thereto and subtractions therefrom, this court probably would have adopted the parties' own interpretation of their own contract; but since they did not do so, but on the contrary intermingled labor and material in the construction provided for in the original contract, and in the construction provided for by additions to the contract, as though they were operating under a single contract, and rendered their bills and made their payments, and pleaded their cause and tried their case in the same manner, we will adopt their own interpretation in that respect; and since manifestly the additions to and subtractions from the original contract would not have been made but for the purpose of accomplishing the performance of the original contract, namely, the construction of a garage, we will not permit the additions and subtractions, which were divisible but authorized by the indivisible contract, to convert the original entire contract into a contract for labor by the day and material by the piece.
We do not regard the provision in the original contract for payment in installments as in any way tending to characterize the original contract as separable, since the amount of each installment was made dependent upon the actual expenditure for labor and material put in the building up to the first day of each month, and not dependent upon the completion of any separable portion of the building. Nor do we regard as significant in this case the fact that the defendant subsequently occupied the building for the purpose for which it was originally intended, since at the time the plaintiff breached the contract it was not so far completed as to permit of such occupancy, and it was only rendered tenantable by the expenditure of a comparatively large sum of money and extensive construction by the owner.
We therefore are compelled to hold that the original contract and the plans and specifications, plus the additions thereto and the omissions therefrom, constituted an entire contract; that the contractor breached the contract; that there was no substantial performance of the contract; and that the rule laid down in Witherow v. Witherow, 16 Ohio, 238, Allen v. Curles, 6 Ohio St. 505, and Larkin v. Buck, 11 Ohio St. 561, applies; and that the Court of Appeals was in error in applying to the facts of this case the rule laid down in Goldsmith v. Hand, Assignee, 26 Ohio St. 101.
The judgment of the Court of Appeals will be reversed and that of the court of common pleas will be affirmed.
Judgment of the Court of Appeals reversed and that of the Common Pleas affirmed.
MARSHALL, C.J., KINKADE, JONES, MATTHIAS and ALLEN, JJ., concur.