Summary
allowing recovery for architect who created blueprints that were valueless to the defendant because defendant did not own some of the land at issue in the blue-prints
Summary of this case from Lindquist Ford v. Middleton MotorsOpinion
September 4, 1963 —
October 1, 1963.
APPEAL from a judgment of the county court of Milwaukee county: L. J. FOLEY, JR., Judge. Affirmed.
For the appellant there was a brief by Charne Tehan of Milwaukee, and oral argument by Irvin B. Charne.
For the respondent there was a brief by Wolf, Haese, Emmert Wilking of Milwaukee, and oral argument by William J. Haese.
On February 23, 1961, Gilbert C. Barnes (plaintiff-respondent), a professional engineer, met with Emanuel Lozoff (defendant-appellant), a realtor and lawyer, at the proposed site of a new motel on West Capitol drive in the city of Wauwatosa, Wisconsin. Lozoff was the owner of a parcel of land located on the south side of West Capitol drive, immediately west of North One Hundred Seventh street. This parcel had a frontage of 200 feet on Capitol drive and a depth of 120 feet. There was a restaurant building located on the northeast portion of the parcel. To the west of the defendant's property was a Pate service station, located on the southeast corner of Capitol drive and Highway 100, also known as Lovers Lane road.
To the south of this property of Lozoff and the service station was a public alley, and south of the alley was a parcel of land consisting of three lots, each having a frontage of 40 feet on Highway 100 and a depth of 120 feet. Mr. Lozoff owned the southernmost of these three lots and the other two lots belonged to the service station.
Near the restaurant the parties discussed the construction of a 56-unit motel, at an approximate construction cost of $300,000. Lozoff asked Barnes if he could design such a building on his property adjacent to the restaurant. During the course of their conversation, in response to a question by Barnes as to land available for parking facilities, Lozoff indicated that in addition to the parcel of land fronting on Capitol drive he owned "a lot" fronting on Highway 100. He waved his hand in the direction of Highway 100, to indicate the position of this property. The parties continued their discussion and negotiations in another restaurant in the vicinity.
After a trial to the court, the trial court concluded that Lozoff hired Barnes to draft the final working plans for the motel at a fee of four percent of the total construction costs, on the condition that Lozoff would be able to secure the necessary financing for such construction and would be able to find a tenant to operate the motel. He also determined that the parties agreed further that Barnes would draft the preliminary plans and specifications for the motel, which would be utilized in the attempt to gain the financing and a suitable tenant.
Thus, the trial court found (in part):
"That the plaintiff and the defendant on the 23rd day of February, 1961, entered into an agreement concerning the design and building of a motel property on Highway 100 and Capitol Drive, in the City of Wauwatosa, Milwaukee County. The plaintiff was to design the building and was to receive as architectural fees 4% of the total cost of construction. If the plaintiff acted as a general contractor he was to receive 6% of the total cost of construction for a combined fee of 10%. It was further agreed that in the event that the project did not go ahead, `that nobody would get hurt.'"
He entered as a conclusion of law:
"That the plaintiff and the defendant on the 23rd day of February, 1961, entered into a verbal contract for the preparation of plans and preliminary specifications for a motel property on Highway 100 and Capitol Drive, in the City of Wauwatosa, Wisconsin."
Pursuant to this agreement, Barnes began to prepare the preliminary plans and specifications. He surveyed the property fronting on Capitol drive. With the aid of an architect, he prepared the preliminary plans and drafted renderings. Sometime prior to March 28, 1961, he submitted these renderings to a Mr. Brauer who was a broker for "Chicago interests" who were purportedly interested in becoming the lessees of the proposed motel. At this time the preliminary plans and renderings did not reflect the total parking area available for the motel. On March 28, 1961, Barnes called Lozoff and asked him for a survey of his property on Highway 100 so that he could plot out the parking facilities in this area. Under Lozoff's directions, the National Survey Service provided a plat survey, showing the three lots fronting on Highway 100. The outer lines of the entire property were drawn in heavy pencil on this survey and each of the three lots was marked by dotted lines. Based upon this survey, Barnes proceeded to design a parking area sufficient to provide a parking space for each unit of the motel, a requirement of the Wauwatosa building code. In June of 1961, Barnes showed the preliminary plans of the building and parking area to Lozoff. At that time Lozoff told Barnes he had incorporated into the parking area, property which did not belong to Lozoff. On the property Lozoff did in fact own, it was impossible to provide parking spaces equivalent to the number of units in the proposed motel. Thereafter Lozoff attempted to purchase sufficient property on Highway 100, or to obtain a variance from the Wauwatosa building commission. Both attempts failed. Because he could not obtain a building permit due to the inadequate parking facilities, Lozoff was unable to secure the necessary financing to bring the project to completion. The entire project was dropped.
In April of 1961, Barnes submitted a bill of $2,918 for the services he had performed to that point. He made another demand for payment by registered letter in August, 1961. Lozoff refused to pay, claiming that the plans were valueless to him and that Barnes had been derelict in his duty by not discovering that Lozoff did not own the property incorporated into the design of the parking area. Barnes sued, and after a trial to the court judgment was entered in his behalf on August 23, 1962, in the amount of $2,918. Lozoff appeals.
The first issue raised on this appeal is as follows: Is a professional engineer entitled to the reasonable value of his services when, in pursuance of an agreement to draft final plans and specifications for a motel, he prepares preliminary plans, specifications, and renderings based upon representations as to the client's property and other data wholly supplied by his client, if such preliminary plans, specifications, and renderings are valueless because they incorporate into the design of the parking area for the said motel, property not owned by the client?
This court has held that a professional person performing technical services may receive the reasonable value of such services for partial performance upon a contract which cannot be fully executed, if his performance was conducted in good faith. Cases from other jurisdictions have held that architects and engineers may recover the reasonable value of their services in quantum meruit for drafting preliminary plans and specifications which cannot be translated into final design, if their performance was undertaken in good faith.
Guentner v. Gnagi (1951), 258 Wis. 383, 46 N.W.2d 194.
Polak v. Kramer (1933), 116 Conn. 688, 166 A. 396; Sterling v. Marshall (D.C. Mun. Ct. App. 1947), 54 A.2d 353; Parrish v. Tahtaras (1957), 7 Utah 2d 87, 318 P.2d 642; 5 Corbin, Contracts, p. 473, sec. 1107, citing cases therein.
We must then ask, was Barnes acting in good faith when he drafted the preliminary plans and specifications and renderings for Lozoff? The contract contemplated two distinct performances by Barnes. He was to create the final design for the motel if appropriate financing could be found, and he was to draft the preliminary plans and renderings, which would be utilized to secure such financing. This was the task that he undertook. In determining whether he acted in good faith by relying upon Lozoff's representations as to the scope of his property ownership, we inquire, did he use the skill and judgment common among members of his profession?
"As a general rule, it may be said that as far as the preparation of plans is concerned, an architect [engineer] acts as an independent contractor, and his relationship with his employer is characterized as one of trust and confidence. Thus, good faith and loyalty to his employer constitute a primary duty of the architect [engineer]. In this regard, he is duty bound to make a full disclosure of all matters of which he has knowledge, and of which it would be desirable or important that his employer should be informed.
"By his contract, the architect [engineer] implies that he possesses the necessary competence and ability, including taste, to enable him to furnish plans and specifications prepared with a reasonable degree of technical skill. . . . This skill and ability which he is bound to exercise are such as are ordinarily required of architects [engineers], which is a higher degree than that required of unskilled persons. In testing the architect's [engineer's] competence, however, consideration should be given only to the knowledge that was available to his profession at the time he was employed." (Emphasis added.)
Anno. 25 A.L.R.2d 1086.
On the record, the only testimony relating to an engineer's responsibility for determining ownership of property incorporated in the plans and specifications is Barnes' uncontroverted statement: "We normally work from surveys." In this case, the survey was provided at the direction of Lozoff. Barnes testified that engineers, as a class, would regard the plat survey as a description of a lot divided into parcels. Therefore, on this information, coupled with Lozoff's representation at the proposed site of construction, that he owned "a lot" on Highway 100, indicating this area with a wave of his hand, it is obvious that Barnes was following the standard practice of a professional engineer in drafting the parking design. Furthermore, at the time the parties entered into negotiations, Lozoff was well aware of the number of parking spaces that could be marked out on the lot be in fact owned on Highway 100. The testimony revealed that in 1960 he had received a plat survey indicating the space available for parking places. There can be no other conclusion than that Barnes undertook partial performance of this contract in good faith. An engineer is not required by the standards of his profession to conduct a title search on property which his client represents to be his own. That the plans are presently valueless is not relevant to the issue presented. As has been noted:
"In fixing the outer limits of quasi-contract restitution the key word, again, is `benefit' and its meaning, again, is shaped by the context. Where the contract is fully enforceable, its own terms provide the starting point in determining whether a benefit has been conferred. The question becomes whether something has been transferred, done or not done that was, in the language of the Restatement, `a part or all of a performance for which the defendant bargained.' [Restatement, Contracts, sec. 347 (1932)] It is assumed that in any event the injured party can insist on full indemnity in some form of action. No purpose therefore would be served by modifying the basic risks of gain or loss imposed by the original contract, as would occur if some kind of additional showing were required that the transfer, act or abstention `requested' produced some net advantage to the defaulting promisor. There is transferred to the restitution remedy, in other words, an underlying assumption of a regime of free contract, that the reasons motivating private exchanges and the calculation of advantages to be secured thereby are left to individual determination. This assumption is strongly confirmed by adopting as the measure of benefit a market value standard, . . . It therefore becomes unnecessary to inquire whether the performance `requested' or `bargained for' produced net gain of any kind. There are many illustrations. As instructive as any are the numerous cases where architects are promised reimbursement, usually on a basis of percentage-of-cost, for preparing plans for a structure that is never built, so that the plans are useless."
Dawson, Restitution or Damages, 20 Ohio State Law Journal (1959), 175, 190.
Lozoff bargained for a drafting of preliminary plans and specifications. This is what he received from Barnes based upon information that Lozoff had supplied.
The second issue on this appeal may be stated as follows: Is the appropriate measure of the reasonable value of the services a percentage of the cost of construction, or actual costs plus reasonable profit, determined by an hourly rate formula?
The measure of damages for one seeking the reasonable value of services in quantum meruit is defined in terms of the "rate of pay for such work in the community at the time the work was performed."
Mead v. Ringling (1954), 266 Wis. 523, 529, 64 N.W.2d 222, 65 N.W.2d 35.
The drafting of preliminary plans and specifications was the service performed in this case. The only testimony in the record relating to the "rate of pay for such work in the community" was Barnes' uncontradicted testimony that such services were compensated on a percentage-of-the-cost-of-construction basis, i.e., one percent of the estimated costs of construction. On the evidence adduced, that figure is equivalent to the damages assessed. Therefore, the court properly applied the correct measure of recovery.
We cannot close our consideration of this case without recalling what we said in Mead, supra, at page 529a:
"We cannot refrain from calling attention to the fact that a nominal sum spent for the drafting of an appropriate contract would have avoided this litigation. In the discussion necessary for the preparation of such a contract there would of necessity have been a meeting of the minds of the parties on the details before it could have been reduced to writing."
Parties who reach "an agreement" with a wave of the hand, or by jotting notes on a dinner napkin may expect disagreements to develop and expensive litigation to follow.
By the Court. — Judgment affirmed.