Opinion
January 9, 1951 —
February 6, 1951.
APPEAL from a judgment of the circuit court for Green county: HARRY S. Fox, Circuit Judge. Reversed.
A. L. Skolnik of Milwaukee, for the appellants.
For the respondents there was a brief by Bruce M. Blum of Monroe, attorney, and Clifford G. Mathys of Madison of counsel, and oral argument by Mr. Mathys.
Action commenced February 15, 1950, by Harry F. Guentner and Alvin Moritz, copartners doing business as Guentner Moritz, to recover reasonable value of services rendered W. B. Gnagi, John A. Schindler, N.E. Bear, Fred W. Kundert, and Leshe G. Kindschi, copartners doing business as Monroe Clinic. Judgment was for defendants. Plaintiffs appeal.
In December, 1946, or early January, 1947, Mr. Scherer, acting as business manager for the Monroe Clinic, engaged plaintiffs to audit the clinic's books for the year 1946, the work to be begun shortly after income-tax time. The exact time was not definitely fixed, Mr. Scherer presuming it would be about April 1, 1947, and the plaintiffs having in mind May 1, 1947. Mr. Scherer testified that he had requested a report prior to September 22, 1947. In any event, the work had not yet commenced on October 7, 1947, as evidenced by the following letters:
"September 22, 1947 "Mr. Harry Guentner, C.P.A. "411 E. Mason "Milwaukee, Wisconsin "Dear Harry: "We only have three months in which to get our audit work out of the way. Will you be out before long to take care of the job for us? I am anxious to get some figures on the amount of money which was available for distribution to the partners for the year 1946. "Hope to see you soon. "Very truly yours, "Harold E. Scherer, "Business Manager" "October 7, 1947 "Mr. Harold Scherer "Business Manager "The Monroe Clinic "Monroe, Wisconsin "Dear Harold: "I have been out of town for several weeks and trust you will pardon my delay in answering your letter. I am now completing a municipal audit and expect to be in Monroe the latter part of this month. "In the meantime, I have contacted Al Moritz and requested him to at least get started on the detailed checking with you the latter part of this week. This will eliminate some of the time required for detailed checking when I am with you so that we can concentrate on the heavy work. If necessary, I can also bring along an associate from this office to expedite matters. I hope that the family and yourself are in good health and am looking forward to being with you in the near future. "Best wishes to all, I remain, "Very truly yours, "Harry F. Guentner "Certified Public Accountant"The audit was begun sometime after October 7, 1947. Scherer testified that between September 22, 1947, and August 27, 1948, the date of the letter terminating the agreement, there were several telephone conversations and quite a few conferences, and that sometime in the summer of 1948 he (Scherer) had a conversation with the plaintiff Guentner in which he impressed upon him the necessity for completing the audit, saying that "he [Guentner] had better get the audit completed right away." On July 14, 1948, Guentner sent Scherer the following letter reporting the status of the audit.
"July 14, 1948 "Mr. Harold Scherer "Business Manager "Monroe Clinic "Monroe, Wisconsin "Dear Harold: "Al Moritz informs me that he had made arrangements satisfactory to you to complete the audit of the Monroe Clinic, etc., in the very near future and stay with the work until its completion. I will, of course, then be with him. By doing so, we might be in a position to hold down the cost to the clinic. "All of the detail work with the exception of a considerable portion of the accounts receivable has been completed, and to my knowledge there remains only an analysis and verification of some of the assets and liabilities and the final preparation of the Monroe Clinic report. The examination of the building and drugstore records should not take up very much time. "If there is anything further that I can do for you at this end, please let me know. "With best wishes, I remain "Very truly yours, "Harry F. Guentner, "Certified Public Accountant"In response to this letter, Mr. Scherer wrote the following:
"July 16, 1948 "Mr. Harry F. Guentner, C.P.A. "411 East Mason street "Milwaukee, Wisconsin "Dear Harry: "Our audit work for the year, 1946, is coming along perfectly O. K. Al is doing a splendid job. "I can see no reason why the building partnership should be audited at this time. After all it is very small and I would rather not do it at the present. "You mention in your letter about the cost. We in the Clinic Managers Association have discussed many times, and compared notes and are sure that our costs will not be any more than any other clinic of comparable size for a one-year audit. "Sincerely, "Harold "Harold E. Scherer, "Business Manager" There was no further discussion of the matter until August 27, 1948, when Mr. Scherer wrote the following letter to Guentner terminating the agreement: "August 27, 1948 "Mr. Harry Guentner, C.P.A. "411 East Mason street "Milwaukee, Wisconsin "Dear Harry: "In January, 1947, when you completed our audit for the period ending December 31, 1945, we asked you to make an audit of our records for the year ending December 31, 1946. "We are now in the third quarter of the year 1948, and we still have not received an audit report for the year 1946. "Our partners feel any audit made on the year 1946 would not be beneficial to them at this late date. Therefore we wish to terminate any agreement made with you, verbally or otherwise, for an audit report for the year ending December 31, 1946. "Sincerely, "H. E. Scherer "Harold E. Scherer, "Business Manager" The work on the audit which was commenced in the latter part of 1947 was not fully completed on August 27, 1948. No one else was engaged by the defendants to complete the audit report for the year 1946, but other auditors were engaged to give them an audit report for the year and a half ending June 30, 1948, that is, from January 1, 1947, to June 30, 1948. However, Mr. Scherer testified that after August 27, 1948. he made a request of Mr. Guentner for information reflected by the audit, but that he did not get the information he wanted. Mr. Guentner testified that he was not asked by the Monroe Clinic for any information after August 27, 1948.The amount sought to be recovered as reasonable value is based on the rate of $3 per hour for five hundred sixteen hours, plus $90 expenses, or $1,638. The following findings are quoted from the findings of fact made by the trial court:
"11. Shortly after the letter of July 16, 1948, the plaintiff, Mr. `Al' Moritz left his association with the plaintiffs.
"12. A report of the partnership earnings was furnished defendants at their request. There is no proof of the value of such services.
"13. No audit report has been furnished to the defendants by the plaintiffs and it cannot be said that they were unreasonably prevented from furnishing it by defendants' rescission.
"14. The plaintiffs failed to perform the services within a reasonable time and there was no excuse or justification for plaintiffs' delay.
"15. The defendants did not consent to the plaintiffs' delay."
The trial court made the following conclusions of law:
"1. Under the circumstances in the instant case it would be implied that the plaintiffs' services were to be completed within a reasonable time.
"2. The conduct of the defendants was not such as to estop them from complaining of the plaintiffs' delay or constitute a waiver of delay.
"3. The plaintiffs have failed to sustain the burden of showing that their services were rendered within a reasonable time.
"4. The plaintiffs have failed to sustain the burden of showing any valid excuse or justification for their delay.
"5. The plaintiffs have failed to sustain the burden of proving the value of any separate services rendered the defendants.
"The plaintiffs' complaint should be dismissed with costs."
Judgment was entered February 23, 1950, dismissing complaint with costs.
The letters written by the defendants' agent, Mr. Scherer, to the plaintiffs do not sustain any finding of fact warranting the conclusion reached by the trial court that "the conduct of the defendants was not such as to estop them from complaining' of the plaintiffs' delay or constitute a waiver of delay." On the contrary, there was no demand on the plaintiffs to finish the work within a specified and reasonable time by any notice of a determination to have a fixed result. The plaintiffs had every reason to believe that their method, slow and perhaps unsatisfactory as it was, would prove acceptable to the defendants until the peremptory notice of dismissal or rescission was received by them. It is a fact that the work was not completed at the time of the attempted rescission, but a few days, as it appears from the testimony, would have been sufficient.
As it is certain that the delay of the plaintiffs was not only tolerated but quite definitely excused under circumstances encouraging them to continue, the liability of the defendants to pay for such services exists. No notice of an intention on defendants' part to terminate the contract for failure to complete the work within a reasonable time was ever given. A proper notice giving a reasonable time for completion, such as is required by the circumstances chargeable to the defendants, should have been given. This failure is relied on by the plaintiffs for their cause of action on quantum meruit. Here again any other finding of fact is and would be contrary to the great weight and clear preponderance of the evidence.
The complaint in this action asks for payment of services rendered between the 1st day of January, 1947, and the 15th day of July, 1948. As already stated, the services were rendered under circumstances visiting an obligation on the defendants. There was no time of completion fixed by the contract. Not only were the defendants, up to August 27, 1948, indifferent to the ending of the matter by the completion of the audit, but because of their letters and actions we must hold that they urged plaintiffs to continue with the work. The situation thus resulting must be ruled due to acts chargeable to defendants. Time as an essential element seems never to have been emphasized or brought into existence so far as the terms of the contract are concerned. This is a defect in defendants' case. The inquiry is not what, under other circumstances, the plaintiffs would be entitled to recover, but what they are to have for the work they were permitted to perform under an understanding which gave them a right to compensation. The rule is that there may be a recovery for part performance allowed on quantum meruit where the employer, notwithstanding a failure to fulfil in point of time, has permitted the contractor, without objection, to proceed with the work. "It is also said that one who wishes to rescind must manifest his election to do so without undue delay, or the right will be lost. It seems probable, however, that this is true . . . where there is further performance due under the contract from the other party which in the absence of notice he might suppose would be accepted in spite of his prior breach." 5 Williston, Contracts (rev. ed.), p. 4110, sec. 1469.
It is considered that, where time of performance of a contract is not fixed or where time is waived by the parties, neither one of the contracting parties "can thereafter rescind the contract on account of such delay without notice to the other requiring performance within a reasonable time, to be specified in the notice, or the contract will be abrogated. By the waiver, time as an essential element of the contract has been removed therefrom, but it can be restored by a reasonable notice demanding performance and stating that the contract will be rescinded if the notice is not complied with." Taylor v. Goelet (1913), 208 N.Y. 253, 258, 101 N.E. 867. And the law expects such action on the part of one of the contracting parties who has, by his conduct, given occasion to the other party to the contract for relying on the waiver of a requirement of performance. "The right to rescind for delay may be waived. Where delayed performance of a contract is accepted, there can be no rescission. After a right to rescind for delay is waived, time becomes essential thereafter only if proper notice is given and demand is made." 12 Am. Jur., Contracts, p. 1023, sec. 441. "If a party means to rescind a contract because of the failure of the other party to perform it, he should give a clear notice of his intention to do so, and where time is not of the essence of the contract he must give the other party a reasonable time thereafter to comply, unless the contract itself dispenses with such notice or unless notice becomes unnecessary by reason of the conduct of the parties. So, where time for performance has been extended with no intention manifested to hold to literal performance, or a provision wherein time is made of the essence is waived, notification and a reasonable time for compliance are necessary." 17 C.J.S., Contracts, p. 918, sec. 435.
The following quotation from 1 Black, Rescission and Cancellation (2d ed.), p. 623, sec. 219, supports our conclusion in this case: "Even where time is made the essence of the contract, this provision may be waived by the party for whose benefit or protection it is inserted, either expressly or by extending the time for payment or performance or by granting indulgence to the other party in this regard; and when such a waiver has been made, he cannot arbitrarily and summarily declare a forfeiture of the contract for delay, but must first demand payment or performance and give the other party a reasonable time and opportunity, after such demand, to comply." As the arrangement between the parties here did not specify the exact time at which performance was to be made, and the terms left the stipulations without definiteness, the interpretation as to the intention of the parties must be controlled by the meaning gathered from the surrounding circumstances. Where work is to be done and the provisions of the contract fix no time for the completion, a reasonable time is intended, and each extension, by word or acquiescence of a party, carries the same import. As said in 1 Williston, Contracts (rev. ed.), p. 112, sec. 40, the terms are "not too indefinite for enforcement because of the use of such . . . words of definition of the time of performance" and "the words must then be interpreted with reference to the particular circumstances of the case."
The foregoing conclusion is supported further by the fact, as appears from the evidence of both parties, that the defendants, from time to time while the auditing was in progress, requested and received information from the plaintiffs' work.
This leaves only the question as to the amount of the judgment, which must go in plaintiffs' favor. There is a substantial difference between the amount testified to by Guentner and the amount testified to by Mr. Guentner's former partner, Mr. Moritz. One fixed the amount at $1,548; the other testified that it should not exceed $700 or $800 or in that general neighborhood. The judgment dismissing the complaint must be reversed, and the cause remanded for the admeasuring of the damages on the basis of quantum meruit.
By the Court. — Judgment reversed. Cause remanded with directions to reinstate the complaint and proceed with the admeasuring of damages.