Opinion
JUDGES: Dooling J. pro tem. We concur: Spence, Acting P.J., Sturtevant, J.
OPINION
Dooling, Judge
R. C. Storrie & Company, a copartnership composed of Robert B. Muir and Robert C. Storrie, had a general contract with the Feather River Power Company to build a hydro-electric project in the high mountains on certain tributaries of the North Fork of the Feather River. The project was one of great magnitude, and under their contract Storrie & Company were to receive a flat price of $ 7,691,889. In connection with this contract Storrie & Company furnished a labor and materialmen's bond in the sum of $ 3,850.000. with Fidelity and Deposit Company of Maryland, Globe Indemnity Company, Hartford Accident and Indemnity Company, Maryland Casualty Company and United States Fidelity and Guaranty Company as sureties on such bond. Hereafter these companies will be referred to as Storrie's sureties.
The project involved, as one item, the construction of a storage dam in Buck's Valley to impound the waters of Buck's Creek. Under the specifications this dam was to be a rock fill dam with a gravity concrete section in its central part immediately over the bed of Buck's Creek. The upstream toe of the dam was to be buttressed against a concrete cut off wall extending below the surface to a depth to be prescribed by the engineers of the Feather River Power Company and the upstream face of the dam was to be covered by a series of concrete slabs resting at the bottom upon the cut off wall as a base.
On May 28, 1926, Storrie and Company entered into a sub-contract with H. H. Boomer for the construction by him of the Buck's Creek dam, the work to be done in accordance with the plans and specifications of the Feather River Power Company and to the satisfaction of that company's engineer. Under this sub-contract Storrie and Company were to deliver at the damsite to Boomer all cement, gravel, sand, steel and other metal work which was to be a permanent part of the dam. Boomer was to furnish all other materials and labor and equipment. Certain air compressors then being installed were to be delivered to Boomer and operated at his expense. Boomer was to pay for the electric power used by him at actual cost as metered by Storrie and Company. Boomer agreed to purchase certain equipment from Storrie and Company and to assume all the benefits and obligations of Storrie and Company under a contract which Storrie and Company had with one Anderson to operate cook houses, commissaries and camp buildings.
It was further agreed that work was to commence immediately and be completed on or before December 1, 1927. Boomer was to be paid for his work according to an agreed schedule of unit prices for quantities which were to be estimated by the engineers of the Feather River Power Company, such estimates to be made monthly for work completed during the previous month. On the basis of such estimates Storrie and Company were to pay Boomer monthly ninety per cent of the estimate, the remaining ten per cent to be paid upon the completion of the contract. Storrie and Company were to complete the excavation for the concrete gravity section of the dam, but Boomer was to make the excavation for the cut off wall.
Boomer furnished a performance bond in the sum of upon which the Aetna Casualty and Surety Company was the surety.
When Boomer commenced performance of his subcontract almost immediately friction developed between Boomer and Storrie and Company and such friction and disputes continued as long as Boomer remained on the job. A discussion of the nature and character of these disputes will be deferred to a later portion of this opinion. Suffice it to say here that when Boomer shut down for the winter at the end of 1926 a much smaller portion of the work had been done by him than the parties had anticipated at the inception of their contract. In a mutual effort to speed up the work in 1927 Boomer and Storrie and Company entered into a supplemental agreement on March 4, 1927, whereby the original contract between them was considerably modified. By this supplemental agreement it was provided that Boomer should open up the work not later than April 1, 1927, and that commencing with May 1927 Boomer should place not less than 40,000 cubic yards of material each month until the completion of the dam. Storrie and Company agreed to pay Boomer all of the ten per cent estimates previously retained under their original contract with Boomer. The unit prices for loose rock fill were materially increased, it being recited that such increase should be construed as covering any cost Boomer had theretofore or might thereafter incur for stripping quarries, transportation of rock, and developing new quarries. Storrie and Company waived their right to retain ten per cent of the monthly estimates but after May 1, 1927, if during any month 40,000 cubic yards of loose rock should not be placed in the dam the ten per cent for such month was to be retained by Storrie and Company until completion. Except as modified by the supplemental agreement it was agreed that the original agreement should remain in full force and effect. Other provisions of the supplemental agreement will be mentioned in connection with the discussion of specific points urged on the appeals herein.
Boomer proceeded with the work on the dam in 1927 and the disputes between Boomer and Storrie and Company continued much as before, culminating with Boomer's leaving the job uncompleted in December 1927.
Boomer originally commenced an action in Plumas County to foreclose a lien against the owners of the property (who have since ceased to be parties) and for a money judgment against the partners composing Storrie and Company. Later he commenced an action against Storrie's sureties upon their bond in which Storrie and Company intervened. Storrie and Company also commenced an action against Boomer and Boomer's surety, Aetna Casualty and Surety Company. These suits were ultimately combined for trial and tried before a jury in San Francisco. Boomer's actions contained inconsistent counts, one of them being upon a quantum meruit for the reasonable value of the work done less the payments received. This count proceeded upon the theory of rescission of the contract on the ground that performance had been prevented by Storrie and Company's failure to deliver materials as required by the contract. During the course of the trial upon motion of Storrie and Company and Storrie's sureties the court compelled Boomer to elect the theory upon which he should proceed. Boomer elected to proceed upon the theory of rescission for prevention of performance. The jury brought in a verdict against Storrie and Company and Storrie's sureties for $ 257,965.06. The court denied Storrie and Company a new trial but granted a new trial to Storrie's sureties. Boomer has appealed from the order granting Storrie's sureties a new trial. Storrie and Company have appealed from the judgment in favor of Boomer and Boomer's surety, Aetna Casualty and Surety Company, in the action brought by Storrie and Company against them. Storrie and Company and Storrie's sureties have appealed from the judgment against them and in Boomer's favor for $ 257,965.06. Storrie and Company have likewise appealed from an order of the court made after judgment was entered allowing Boomer to amend his complaint against them in the action which was, originally commenced to foreclose a mechanic's lien.
In a consideration of the appeal of Storrie and Company and Storrie's sureties from the money judgment against them it will be necessary to state in considerable detail the facts which were developed upon the trial. We have said that the disputes between Boomer and Storrie and Company were practically continuous throughout the time Boomer was on the job. These disputes fell into four principal classes: 1. Disputes concerning compressed air; 2. Disputes concerning the cut off trench; 3. Disputes concerning material deliveries by Storrie and Company; and 4. Disputes concerning roads and quarries.
Concerning the compressed air Boomer testified that when the original contract was entered into he had not seen the air compressors which were to be installed, and that he had never attempted to operate steam shovels with compressed air, but that Muir assured him that the compressors would be adequate to operate his steam shovels. The compressors did not furnish sufficient air to operate the shovels and Boomer was compelled to operate them with steam. Although the contract provided that Boomer should take over the operation of the compressors he never did so and at all times they were operated by Storrie and Company. During the greater part of the time that Boomer was on the job Storrie and Company were diverting some air to other parts of the work. In June 1927 both compressors were destroyed by fire. Storrie and Company installed a smaller compressor and removed the burned compressors to San Francisco and had them repaired. The burned compressors were not both returned for something like sixty days. During this time Boomer repeatedly complained to Storrie and Company about the delay in restoring the compressors and upon the trial he testified that by reason of the lack of air in July and August his operations were slowed up approximately one half.
The contract required Boomer to excavate for the cut off trench. Storrie and Company, however, actually did all of this excavating and Boomer at no time took it over. Boomer testified that when he went on the job he wished to take over this excavation but Storrie and Company would not allow it. Daring the entire course of his operations Boomer was making demands upon Storrie and Company to proceed more expeditiously with these excavations, claiming that he was being retarded in his other work by Storrie and Company's failure to make the excavations for the cut off trench rapidly enough. Upon the trial there was substantial evidence that delays in excavation for the cut off trench both delayed Boomer's operations and made them more expensive.
When Boomer entered into his contract one quarry was stripped. This later proved inadequate and Boomer was compelled to open other quarries and build roads to them. Boomer claimed extra compensation for this work and the supplemental agreement purported to settle this claim, at least so far as the quarries were concerned, by increasing certain of the unit prices.
While he was on the job Boomer repeatedly complained to Storrie and Company about delays in furnishing materials and for several months before December, 1927, he informed them that if the materials were not supplied as needed he would quit the job and hold Storrie and Company responsible. There is testimony which would support a finding that Storrie and Company did not furnish materials as rapidly as Boomer needed them and that this slowed up Boomer's progress and increased his cost. On December 3, 1927, Boomer finished pouring the third slab on the inner face of the dam. At that time all that remained to be done was to pour the fourth slab and complete the superstructure of the dam. It was Boomer's testimony that at that time there were not sufficient materials on hand to complete or proceed further with the work, that he waited until December 15, 1927, and no further materials having been supplied to him he moved off the job and never returned.
It is well settled in California that a contractor who is prevented from performing his contract by the failure of the other party to furnish materials has a choice of three remedies: He may treat the contract as rescinded and, recover upon a quantum meruit so far as he has performed; he may keep the contract alive, offering complete performance and sue for damages for delay and expense incurred; or he may treat the repudiation as putting an end to the contract for Purposes of performance and sue for the profits he would have realized. (McConnell v. Corona, 149 Cal. 60, 85 P. 929 ). Storrie and Company and Storrie's sureties admit this rule but claim that the evidence will not support a finding that Boomer was prevented from performance by Storrie and Company's failure to furnish materials. They argue that Boomer did not intend to go any further than the pouring of the third tier and that Storrie and Company knew this. Boomer testified that he was prepared to complete the contract if the materials had been furnished and that he waited on the job from December 3 to December 15 for that purpose. On November 27, l927, Boomer sent the following wire to Storrie and Company: " I am prepared to complete my contract on time. Ran out of material last night. Do you want me to hold crew here to put through the three unfinished slabs of the third section? This extra cost must be paid by you. I await your answer today" .
Boomer also on cross-examination testified that in November, 1927, he came to the conclusion that they were not going beyond the third slab that year, that he was so informed by engineers on the job and also possibly by Storrie.
From this evidence it is argued that Boomer had no intention of completing the job and Storrie and Company knew this. However the jury was not bound to find that Boomer ever agreed to a modification of the contract so as to provide only for the completion of the third slab in 1927. His mere knowledge that Storrie and Company intended to go no further that year, if that was the fact, would not modify their obligation under the contract to furnish the materials for completion in that year. In his wire of November 27 he explicitly stated: " I am prepared to complete my contract on time" . He was entitled under the law to quit the job at that time for failure to supply materials and his further language: " Do you want me to hold crew here to put through the three unfinished slabs of the third section? This cost must be paid by you", might reasonably have reference to the fact that that was the immediate unfinished work and that he was prepared to leave at that point unless materials were furnished at once. Whether or not this amounted to an expression of intention not to proceed beyond that point was for the jury. Boomer did not say: " I will not go beyond the third section" . In effect he said: " Unless you furnish materials at once I will quit with the third section unfinished" . He had previously more than once told Storrie and Company that he would finish if they furnished the materials, but if they did not he would quit. On September 17, 1927, Boomer wrote Storrie and Company: " We have notified you many times that we are out of cement more or less constantly and we want to call your attention to the fact that we expect to finish our work here on time this year" .
The court instructed the jury: " If you find from the evidence in this case, that Boomer did not intend to use any materials that might have been furnished after he had completed the pouring of the third slab in December, 1927, and Storrie and Company were aware that if such materials were furnished they would not be used, then there was no obligation upon Storrie and Company's part to furnish such materials at that time, or until they were advised by Boomer that such materials would be needed" .
Under this instruction the jury must have found that Boomer intended to proceed if materials were furnished. We are satisfied that under the evidence this was a question of fact for the determination of the jury, and that their implied finding on this point is not without substantial support in the evidence.
It is also argued that Boomer was not prepared to proceed further under winter conditions which then existed, and that sufficient materials were actually reasonably available to proceed had Boomer desired. On both these questions we have examined the record and are satisfied that as to both there was a substantial conflict in the evidence.
The jury was fairly instructed on the question of prevention of performance, no complaint is made of such instructions on this appeal, and the case is the familiar one of a conflict in the evidence on this point as to which the jury's verdict is conclusive on appeal.
It is further urged that " assuming that prevention of performance was shown, the contractor may not, where the contract has been fully liquidated up to a given stage, reopen the part of the contract which has been fully executed on both sides and seek to have his past work revalued" . In this connection it is pointed out that at the time Boomer left the job in December, 1927, the monthly estimates provided for in the contract had been made up to November 25, 1927, and Boomer had been paid in full for all work covered by these estimates with the exception of the retained percentage of ten per cent for three months after May, 1927, in which months Boomer had not placed 40,000 cubic yards of material in the dam as provided in the supplemental agreement. It is conceded that the general rule, and the one followed in California, is that where a contract has been rescinded for prevention of performance the plaintiff may recover the reasonable value of what he has done or supplied under the contract, even though such recovery may exceed the contract price. (Cox v. McLaughlin, 76 Cal. 60, 18 P. 100 ; S. F. Bridge Co. v. Dumbarton L. & I. Co., 119 Cal. 272, 51 P. 335 ; Laiblin v. San Joaquin Agr. Corp., 60 Cal.App. 516, 213 P. 529 ). It is insisted, however, that this general rule does not apply in cases where specific payment is provided in the contract for specific portions of the work, and such portions have been fully performed and payment for which has been fully ascertained and liquidated prior to the breach by the adverse party. In support of this contention are cited Rodemer v. Hazelhurst, 9 Gill 215 ; Doolittle v. McCullough, 12 Ohio St. 360 ; Wellston Coal Co. v. Franklin Paper Co., 57 Ohio St. 182, 48 N.E. 888 ; Philadelphia v. Tripple, 230 Pa. 480, 79 A. 703 ; and Farnum v. Kennebec Water Dist., 170 F. 173 . To these cases might be added 2 Sedgwick on Damages, 9th Ed., sec. 665b, p. 1319; 3 Sutherland on Damages, 4th Ed., sec. 713, pp. 2690-1; Keener on Quasi-Contracts, pp. 312-3; and the Restatement of the Law of Contracts sec. 351. The statements of these text writers, and we may assume section 351 of the Restatement of the Law of Contracts, are based upon the doctrine of those of the above cited cases which squarely apply the doctrine contended for. Of these there are only three, the Rodemer case, the Doolittle ease and the Farnum case. The other two cases while referring to the rule, held that under the facts involved it was not applicable.
The Rodemer case was one wherein plaintiff had a contract for grading a railroad payable on monthly estimates of quantities as the work progressed, four-fifths immediately and the balance on completion of the work. Estimates and four-fifth payments were made to October 29, 1845, and on November 6, 1846, defendant expelled plaintiff from the work. Plaintiff sued for the reasonable value of all the work done. The court held that as to those portions of the work as to which the monthly estimates had been made the plaintiff could only recover the balance due upon these settlements, and could not reopen and revalue them upon a quantum meruit. The court said, in part: " He is concluded by these settlements, and by reason of their being closed as distinct and separate portions of the contract, he cannot reopen them again to prove and recover the actual value of his work. His claim has in fact been liquidated upon the quantity of work done and the value ascertained by the prices in the contract, and he is effectually barred by adopting the adjustments and receiving payments under them. The partial payments bind him to the whole settlement. And so far as the work has been ascertained and adjusted under the contract, he is entitled to recover only the balance upon the basis of these settlements, whatever may remain in arrear including the twenty per cent" .
The Doolittle case was also a railroad construction case at unit prices with installment payments on the basis of such unit prices. Defendants wrongfully terminated the contract after part performance.. Said the court, at page 368:
" It is certain that where there has been a part performance, and that part paid for, under the contract, according to its terms, and the contract has then been terminated wrongfully, by the party so having paid, it cannot be that the termination of the contract occasions damage or gives any right of action to the other party in regard to the part so performed and paid for under the contract" .
The Farnum case while it may be taken as supporting the same rule, is weakened as an authority on the point by the fact that it was decided under the law of Maine, and Maine is one of the states holding to the minority view, which is not the law in California, that upon rescission for prevention of performance the recovery in quantum meruit cannot exceed the contract rates. If in no event can the recovery exceed the contract rates then it plainly cannot exceed that price when the price for the work done has been ascertained and liquidated.
The Wellston Coal Co. case was one decided in Ohio. It cited the Doolittle case with apparent approval, but distinguished it on its facts. In that case plaintiff had a contract with defendant for the sale of coal to defendant for one year at an uniform price per ton. The price of coal varied with the season. Defendant took coal from plaintiff under the contract and paid at the contract rate during the portion of the year when the contract price was lower than the market price and repudiated the contract when the market price fell below the contract price. The court said at pages 889-90:
" The general rule is that, when full performance of a contract has been prevented by the wrongful act of the defendant, the plaintiff has the right either to sue for damages, or he may disregard the contract, and sue as upon a quantum meruit for what he has performed. The plaintiff has pursued the latter course; and it seems well settled, both in reason and authority, that he had the right to do so. 2 Sedg. Meas. Dam. (8th Ed.) 664; Chamberlin v. Scott, 33 Vt. 80 ; McCullough v. Baker, 47 Mo. 401 ; Kearney v. Doyle, 22 Mich. 294 ; Buffkin v. Baird, 73 N.C. 283 ; U.S. v. Behan, 110 U.S. 338 ; 4 S.Ct. 81, 28 L.Ed. 168 ; Merrill v. Railroad Co., 14 Wend. 586 ; Clark v. Mayor, etc., of New York, 4 N.Y. 338 .
" But it is claimed, on the authority of Doolittle v. McCullough, 12 Ohio St. 360, that the contract price must still be the measure of the plaintiff's recovery. There are many expressions in the opinion in that case that seem to support this view, and much of the reasoning is to the same effect. But all that is there said must be taken as said with reference to the facts of that case. The rule there stated may be regarded as a proper one in a case where, as in that case, it appears from the claim of the plaintiff that the breach of the contract by the defendant worked no loss, but a benefit, to him, on the ground, as appears, that, had he been required to complete the work, he would have suffered, a much greater loss; for, if the least inexpensive part of the work could not have been done without loss, it follows that the doing of the remaining part, under the contract, would have resulted in a still greater loss. The action upon a quantum meruit is of equitable origin, and is still governed by considerations of natural justice. Hence, when one has performed labor or furnished material under a contract that is wrongfully terminated by the other party before completion, the question arises whether the party not in fault should be confined to the contract for what he did, or to a quantum meruit; and this must depend upon whether the act of the other party in terminating the contract works a loss or not to him, regard being had to the contract. If it works no loss, but is in fact a benefit, as in the case of Doolittle v. McCullough, there are no considerations of justice requiring that he should be compensated in a greater sum for what he did than is stipulated In the contract. These considerations exercised a controlling influence in the case just referred to. The plaintiff had a contract with the defendant for the making of certain excavations in the construction of a railroad. He was to receive for the entire work 11 cents per cubic yard. He had performed the least inexpensive part of the work when the contract was wrongfully terminated by the defendant; and on this part, by his own showing, he had suffered a loss. The proof showed that the performance of the remainder, being hardpan, would have cost him a great deal more. It was then evident, as the court observed, that he had sustained no loss, but a benefit, from the termination of the contract by the defendant. But in the case before us the facts are very different. They are in fact just the reverse. The contract was for the delivery of coal at a price generally received during the dullest season of the whole year. The defendant received the coal during the season when the market was above the contract price. He had the benefit of the difference between the market and the contract Price; but when the dull season arrived, and the advantages of the contract would accrue to the plaintiff, the defendant repudiated it. The difference between the two cases is thus apparent. In the case before us, justice and fair dealing require that the defendant, having repudiated the contract, should pay the market price for the coal at the time it was delivered. In the former case, as the repudiation of the contract by the defendant did not enrich him to the loss of the plaintiff there were no considerations of justice on which the plaintiff could claim more than the contract price for what he had done under the contract. The object in allowing a recovery of this kind is not to better the condition of the plaintiff under the contract, were it performed, but to save him from a loss resulting from its wrongful termination by the defendant, or, in more general words, to prevent the defendant from enriching himself at the expense of the plaintiff by his own wrongful act. The real test in all cases of a plaintiff's right to recover as upon a quantum meruit for part performance of a contract, wrongfully terminated by the defendant depends upon the Consideration whether the defendant is thereby enriched at the loss and expense of the plaintiff. If so, then the law adds a legal to the moral obligation and enforces it." .
As thus limited the question whether plaintiff can recover in excess of the contract price depends upon whether it is equitable to permit him to do so in the particular case.
Philadelphia v. Tripple, a Pennsylvania case, discussed the Doolittle case and distinguished it but cannot in our judgment be said to have expressed approval of it. Rather the reasoning of that case may fairly be said to be opposed to the reasoning of the Doolittle case as explained in the Wellston case. The Pennsylvania Supreme Court in that case adopted as its opinion the report of the referee. The claim was made as in the Doolittle case that to permit the plaintiff to recover on a quantum meruit in excess of the contract rates would allow him to make a profit where if he had fully performed the contract he would have suffered a loss. The court said, however, at page 706:
" Even, however, if it be assumed that McMenamy, if allowed to complete his work, would have lost money in so doing, the referee is of opinion that the act of the defendant Dietrich, in discharging the plaintiff from further obligation to perform, gave rise to a right on the part of the plaintiff to recover for his disbursements. Let it be assumed that, in an extreme case, a builder has actually expended in the course of his work a sum in excess of the contract price and has not yet completed performance. If, under such circumstances, the builder finishes his work, the owner, upon paying the contract price, will receive the benefit of a large expenditure actually made, in return for the payment of a smaller sum of money. This result, which may well involve a hardship upon the builder, is made necessary by a proper regard for the contractual rights of the owner. The owner has made a valid contract, and this contract must be protected and enforced, even if the builder suffers.
" Let it further be supposed, however, that the owner, who finds himself in this position of advantage, voluntarily puts an end to his contract rights in the premises. This in legal effect he does if he himself breaks the contract or discharges the builder from his obligation to perform it. The situation which then presents itself is one in which the builder has in good faith expended money in the course of work done for the benefit of the owner, and has, in the absence of contract, an equitable claim to be reimbursed. The owner, on the other hand, has deprived himself of the legal right which would have sufficed to defeat the equity. He accordingly stands defenseless in the presence of the builder's claim.
" Such, it is submitted, is the legal analysis of the situation in which the parties to this action find themselves. It may, of course, be contended that Dietrich did not receive an actual benefit coextensive with McMenamy's expenditure. It is a sufficient answer to this contention to observe that (upon the facts as heretofore found) McMenamy expended the money in good faith and in the course of attempted performance. This is sufficient to give him an equitable claim for reimbursement.
" The defendants do not dispute the general proposition that a plaintiff may, as if in the absence of contract, recover the cost of work and materials in case he is prevented by the owner from finishing his work. The defendants earnestly contend, however, that the rule meets with an exception in case the disbursements exceed the contract price. In other words, they regard the difference between the price specified in the contract and the sum of the disbursements as the measure of recovery, and they insist that if the aggregate of disbursements equals or exceeds the contract price there can be no recovery at all.
" This view, as is indicated by the analysis made above, appears to the referee to involve a confusion of thought. How can the plaintiff's claim for disbursements actually made be met by the limitation contained in a contract, unless the defendant retains the right to enforce the contract? And how can it be contended that the defendant retains such a right when the contract has been discharged by his own act? It may well be that a plaintiff, upon defendant's breach, may offer the discharged contract as evidence of the value of that for which he is seeking recovery. The plaintiff in such a case has not broken the contract; he may fairly contend that its terms are at least an admission by the defendant which the jury should take into consideration."
It will thus be seen from this examination of the cases relied on by Storrie and Company and Storrie's sureties that in only three of them is the rule contended for by them actually applied and in only two, the Rodemer case and the Doolittle case, was the application of the rule necessary to the decision; since under the law of Maine the recovery would have been limited to the contract rates in the Farnum case in any event.
We are not impressed by the rule announced in these two cases. It being settled as the general rule that upon prevention of performance the injured plaintiff may treat the contract as rescinded and recover upon a quantum meruit without regard to the contract price, why should he be limited to the contract price in case payments for portions of the entire contract have been made or liquidated? Those payments were received in full only on condition that the entire contract be performed. But if the contract is rescinded the prices fixed by the contract are also rescinded. As aptly said by the Pennsylvania Supreme Court in the passage quoted supra from Philadelphia v. Tripple: " Where the defendant undertakes to limit the plaintiff's recovery by treating the contract price as a limitation on such recovery, he is asserting a right under the very contract which he himself has discharged" .
To hold that payments under the contract may limit recovery where the contract is afterwards rescinded through the defendant's fault seems to us to involve a confusion of thought. A rescinded contract ceases to exist for all purposes. How then can it be looked to for one purpose, the purpose of fixing the amount of recovery? " A contract is extinguished by its rescission" . (Civil Code, section 1688 ). " Generally speaking, the effect of rescission is to extinguish the contract. The contract is annihilated so effectually that in contemplation of law it has never had any existence, even for the purpose of being broken" . (6 R. C. L. p. 942; Dyer Bros. Golden West Iron Works v. Central Iron Works, 72 Cal.App. 202, 209, 237 P. 386 ; Treadwell v. Nickel, 194 Cal. 243, 228 P. 25 ). In Clarke v. Manchester 61 N.H. 694, a case wherein payments for a portion of the services had been made according to the contract, the court said:
" The contract being entire the defendant cannot break one part of it and still insist upon the performance of the other part. When the defendants rescinded the contract they put it out of their power to enforce it upon the other party, but the other party may consider it as rescinded and claim pay just as though it had never existed" .
In Steere v. Formilli, 38 Cal.App. 194, 175 P. 806, where a building contract was breached by the owner and the contract provided for an estimate of the work done and materials furnished every three weeks and the payment of seventy-five percent of the value thereof upon such estimates, a recovery was had on quantum meruit for all the work done. The court said at pp. 195-6:
" The Principal Point made by the appellant is that the work done and materials furnished during each three weeks constituted under the terms of the contract a separate contract, and the settlement at the end of the three periods became accounts stated. This same point is Presented in several ways, but the effect is the same. The point is not new. It has been expressly held that the contract provision in question does not operate to make the contract separable but is a means provided by the contracting parties for estimating the amounts of the progress payments" .
In this case the Rodemer case was cited to the court and it refused to follow it.
In Woodward on Quasi-Contracts, sections 269, the author has this to say of the Rodemer and Doolittle cases:
" This rule is doubtless a sound one when applied to an agreement which is severable in the sense that it really constitutes two or more separate contracts. But the propriety of its application to cases like Rodemer v. Hazelhurst and Doolittle v. McCullough is at least questionable. Payments pro tanto in such cases are not received in extinguishment of the defendant's liability; or, at most, the extinguishment is subject to the condition that the contractor be allowed to complete the job and receive compensation, at the contract rate, for the whole of it. This is very clearly pointed out in a New Hampshire case, Clark v. Manchester, 1872, 51 N.H. 594 " .
In Laiblin v. San Joaquin Agricultural Corporation, 60 Cal.App. 516, 213 P. 529, the court at pages 532-3 quoted from Williston on Contracts section 1459:
" More frequently, however, the plaintiff is allowed to recover the real value of the services though in excess of the contract price. The latter rule seems more in accordance with the theory on which the right of action must be based--that the contract is treated as rescinded" . The author adds: " and the plaintiff restored to his original position as nearly as possible" .
We conclude that the rule of the Rodemer and Doolittle cases is illogical and not supported by reason; that a contract rescinded is no longer in existence for any purpose; that the defendant by his own wrong having put an end to the contract cannot insist on its terms to limit the recovery even though part payments have been made for part performance because the payments are received as satisfaction only on condition that the entire contract be performed according to its terms; but that the contract having been rescinded through defendant's fault he should place the plaintiff as nearly as possible in statu quo by paying the reasonable value of plaintiff's performance.
Storrie and Company and Storrie's sureties say that to permit such recovery in this case is to allow Boomer to recover over $ 250,000 when if he had completed the contract he would have received no more than $ 20,000. The answer to this is found in the language of Philadelphia v. Tripple, quoted supra:
" Let it be assumed that, in an extreme case, a builder has actually expended in the course of his work a sum in excess of the contract price and has not yet completed performance. If, under such circumstances, the builder finishes his work, the owner, upon paying the contract price, will receive the benefit of a large expenditure actually made, in return for the payment of a smaller sum of money. * * *
" Let it be further supposed, however, that the owner who finds himself in this position of advantage, voluntarily puts an end to his contract rights in the premises.* * * * The Situation which then presents itself is one in which the builder has in good faith expended money in the course of work done for the benefit of the owner and has, in the absence of contract, an equitable claim to be reimbursed. The owner, on the other hand, has deprived himself of the legal right which would have sufficed to defeat the equity. He accordingly stands defenseless in the presence of the builder's claim" .
Even if it were true, then, that Boomer would only have received an additional $ 20,000 for the completion of his contract we are of the opinion that that does not prevent him from recovering the reasonable value of his services upon its rescission for Storrie and Company's breach. But Boomer points out that he had large claims for damages against Storrie and Company for continued delays and increased expense of operation due to their misconduct. If this is so it would furnish an additional reason for disregarding the rule of the Rodemer and Doolittle cases even if we felt disposed to follow them. It was Stated in the Wellston case that the rule of the Doolittle case should only be applied where it was equitable to do so. Upon the rescission of the contract it ceased to exist for all purposes, including the purpose of relying upon its terms for the purpose of recovering damages for any breach. (13 C. J. page 623, section 684). If Boomer had valid claims for damages arising under the contract by reason of the fact that his cost of operation had been wrongfully increased it Would seem inequitable to limit him to the recovery of the contract price upon a rescission for Storrie and Company's failure of performance.
The jury might well have found that Boomer's cost of operation had been substantially increased by Storrie and Company's continuing breaches. There is substantial evidence that Boomer suffered delays and increased costs by Storrie and Company's failure to deliver materials to the job as rapidly as required. There is evidence that Boomer's costs were considerably increased by failure of Storrie and Company to excavate the cut off trench as rapidly as should have been done. There is evidence that the diversion of air from the compressors to other portions of the work and the delay in restoring the burned air compressors hampered Boomer and increased his costs. As to the latter items of cut-off trench excavation and operation of the air compressors Storrie and Company points out that under the contract the cut-off trench should have been excavated by Boomer and the air compressors operated by him. The court instructed the jury as follows:
" The obligations of the parties under the contract were not changed by the fact that in carrying out the work one party may have from time to time done and performed part of the work which the agreement contemplated should be performed by the other party, unless you find from a preponderance of the evidence that the parties agreed that the obligation should be shifted. Mere performance of an act by one party for the benefit of the other, or acquiescence by one party in the performance by another, would not operate to shift the contractual obligation as to performance" .
No complaint is made of this instruction and the record does not show at whose request it was given. We may therefore assume that it was requested by Storrie and Company. Under this instruction the jury could find that the parties agreed that these obligations should be shifted if there was substantial evidence to support such finding. Such an agreement might be express or implied from the conduct of the parties. " An implied contract is one, the existence and terms of which are manifested by conduct" . (Civil Code, section 1621 ; Williston on Contracts, Vol. I, section 3; 6 Cal. Jur. P. 20, section 7; 13 C. J. pp. 241-3, section 8).
As to the cut-off trench Boomer testified that Storrie and Company in 1926 refused to let him take over its excavation. It is true as pointed out by Storrie and Company that the supplemental agreement of 1927 provided that Storrie and Company should continue the work required of Boomer under the original contract until Boomer should notify Storrie and Company that he was prepared to resume work on the scale contemplated by the supplemental agreement. But this referred to all the work as a whole, not to the cut-off trench alone. Boomer resumed the rest of the work and Storrie and Company continued to excavate the cutoff trench. Boomer constantly complained to Storrie and Company about their delays in such excavation and Storrie and Company at no time replied that the obligation was Boomer's, or in fact made any reply. Upon these facts the jury would be justified in finding that Storrie and Company impliedly agreed to assume the obligation of excavating the cut-off trench. The same is true of the operation of the air compressors. Boomer frequently complained of the diversion of air to other parts of the work, and after the compressors were burned insistently demanded that they be replaced promptly. Storrie and Company did not suggest that Boomer take over their operation and assumed to have the burned compressors repaired and replaced. The jury could well find that Storrie and Company impliedly agreed to assume these obligations.
That the jury must have so found is made clear by another instruction given to the jury:
" In determining the reasonable value of work performed by Boomer prior to the termination of his contract, if you find that he was prevented from completing the same, this finding should be limited to the reasonable cost and expense of performing the work contemplated by said agreement, or extra work performed by him, if any, at the instance of Storrie and Company, under the conditions which actually existed at the time of performance, but the reasonable value so estimated does not and should not include any loss or damage suffered by Boomer as the result of his own failure to perform the whole or any part of his obligations, express or implied, under said agreement in a reasonably efficient manner, if you find that any loss or damage did result from such causes" .
Counsel for Storrie and Company are at pains in their brief to demonstrate that in the amount awarded by the jury the items of increased cost due to delay in excavating the cut-off trench and the operation of the air compressors and the failure to replace the burned air compressors were included. If the jury did include these items we must assume in support of their verdict that they found that these obligations were not Boomer's but had been assumed by Storrie and Company.
Storrie and Company and Storrie's sureties insist that Boomer's election to rescind came too late and that the right to treat the contract as rescinded was waived by the filing of the mechanic's lien suit in the first instance in which Boomer alleged the completion of his contract. They admit " the general rule in California that the plaintiff does not need to elect his course of action between contract and quantum meruit until the case is tried, and that a complaint may contain inconsistent counts" . But they say: " The rule for which we contend is that a plaintiff cannot make his election at the time the alleged breaching occurs to stand on his contract as having been completed, and then later turn and say that it was not in fact completed" . In support of this- contention they cite no California cases. Boomer quit the job after a prevention of performance. He then had the right to pursue either of the three remedies mentioned in McConnell v. Corona City Water Co., supra, including the right to treat the contract as rescinded and sue on a quantum meruit. The doctrine of election of remedies is based upon the ground that if the defendant is Prejudiced, thereby Plaintiff is estopped to pursue one remedy after having adopted another, (Campanella v. Campanella, 204 Cal. 515, 521, 269 P. 433 ; Roullard, v. Rosenberg, 193 Cal. 360, 224 P. 449 ; Cullinan v. Marcantil Trust Co., 80 Cal.App. 377, 387 ; Mansfield v. Pickwick Stages, 191 Cal. 129, 215 P. 389 ). Storrie and Company knew that Boomer had not completed his contract, but had quit after they failed to supply him with materials. They could not have been prejudiced, in any way by the filing of the mechanic's lien suit so as to estop Boomer afterwards to treat the contract as rescinded and sue on a quantum meruit.
Storrie and Company asked the court to submit certain special interrogatories to the jury. This the court refused to do. The matter was one in the discretion of the court. (Oberholzer v. Hubbell 36 Cal.App. 16, 171 P. 436 ). We find no abuse of discretion in this regard.
The witness Wapple was permitted to testify as to yardage in a drainage trench in excess of the engineer's estimates The contract having been rescinded the engineer's estimates were no longer conclusive and the testimony was material to the reasonable value of the work.
On the whole case, without further discussing the evidence, we are satisfied that the money judgment finds ample support and should be affirmed. Having reached this conclusion it necessarily follows that the judgment against Storrie and Company in their action for damages against Boomer and his surety must likewise be affirmed.
The amendment to conform to the proof of which Storrie and Company have taken a separate appeal should likewise be affirmed. The case having been tried on the theory of rescission it was proper to allow Boomer to amend the complaint in the mechanic's lien suit to state that theory. We cannot see how Storrie and Company were prejudicially affected by the fact, if it be a fact, that some of the allegations of the amendment find no support in the evidence.
This leaves for consideration only the appeal from the order granting Storrie's sureties a new trial. The order granting the new trial was made on the single ground that under section 1183 of the Code of Civil Procedure Storrie's sureties could not be held liable for any amount in excess of the price agreed upon between Storrie and Company and Boomer. Section 1183 provides that " said several liens shall not in any case exceed in amount the reasonable value of the labor done or materials furnished, or both, *** nor the price agreed upon for the same between the claimant and the person by whom he was employed. ****" . It is the contention of Storrie's sureties that this language limits a recovery on the bond given by them under section 1183 of the Code of Civil Procedure to the price agreed upon between Boomer and Storrie and Company in view of the fact that the reasonable value exceeds the agreed price. If the contract had not been rescinded this might well be true although Boomer's counsel argue that the limitation applies only to an action to foreclose the lien and not to a recovery on the bond. But the contract having been rescinded is there any longer a price agreed upon between Boomer and Storrie and Company within the meaning of the code section? We have heretofore pointed out that a rescinded contract has no existence for any purpose of fixing a " price agreed upon" ? If Boomer had undertaken the work originally at the request of Storrie and Company without any contract as to price he would be entitled to recover from Storrie and Company the reasonable value, and there being no agreed price he would likewise be entitled to a lien for the reasonable value. But having elected to rescind the contract Boomer is in exactly the same position. He has done labor for which he is entitled to recover the reasonable value because there is no longer an agreed price. He is therefore entitled to recover the reasonable value, likewise, from Storrie's sureties. The words " price agreed upon" must refer to a legally enforceable " price agreed upon" and are intended to give the owners as favorable treatment as the contractor. To give them the effect contended for by Storrie's sureties would permit the owner to profit by the contractor's wrongful conduct at the expense of the materialman or mechanic. There are apparently no express authorities on the question of whether a rescinded contract can be held to establish a " price agreed upon" within the meaning of this code section but we are satisfied that a rescinded, i.e. non-existent, contract cannot be made the basis of proving an agreed price for the purpose of this section any more than it can be so used between the parties to the contract themselves.
The money judgment in favor of Boomer is affirmed.
The judgment against Storrie and Company in their action for damages against Boomer and Aetna Casualty and Surety Company is affirmed.
The order granting Boomer leave to file an amendment to the complaint to conform to the proof is affirmed.
The order granting a new trial to Fidelity and Deposit Company of Maryland, Globe Indemnity Company, Hartford Accident and Indemnity Company, Maryland Casualty Company and United States Fidelity and Guaranty Company is reversed.
We concur: Spence, Acting P.J., Sturtevant J.