Opinion
Rehearing Denied Dec. 29, 1970.
Page 858
Saunders, Dickson, Snyder & Ross, Glenn G. Saunders, Denver, for plaintiffs in error.
John W. O'Hagan, Greeley, John M. Evans, Denver, for defendant in error.
PIERCE, Judge.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
The parties appear here in reverse order of their appearances at trial, and will be referred to hereinafter by their designations below, or by name.
Plaintiff sued defendants for breach of an alleged oral contract under which he was to be general contractor for a motel project, claiming $36,000 in damages; or, alternatively, for $36,000 as the reasonable value of services rendered in Quantum meruit. He asserted a mechanic's lien for that amount on the project and sought foreclosure thereon.
Plaintiff's evidence can be summarized as follows:
In 1961, defendant Linstedt, a licensed Colorado architect with whom plaintiff had previously dealt, contacted plaintiff about being general contractor for the project. Linstedt was architect for the motel, which was to be owned and managed by a not yet existent corporation (ultimately incorporated on December 20, 1961, as Kayell Development Co., Ltd.), of which Linstedt was to be both a stockholder and an officer. Having previously heard of the project, plaintiff immediately told Linstedt that he would act as general contractor at cost plus either a seven and one-half percent cash fee, or alternatively a fee of twelve percent of the stock of the soon to be formed corporation. Linstedt accepted the first alternative and agreed that plaintiff would be the project's general contractor.
Plaintiff and his employee, Jenkins, thereafter after devoted some 1900 hours, over the two-year period from December, 1961 to December, 1963, in close cooperation with Linstedt on development of the motel. They contacted potential subcontractors, compiled bids to establish the overall cost of the project, and through suggestions and innovations, reduced that cost to within Linstedt's budgetary limits, which limits the latter frequently changed. Each budgetary change required solicitation and compilation of new bids.
These services where wholly consistent with those rendered under a 'negotiated contract,' (defined as one in which the contractor is chosen on a non-bid basis, and thereafter works with the owner and the architect to establish the final design and cost of a project and then seeks to bring the project within the owner's financial means). The services performed entailed much travel and consultation with Linstedt, or his staff, in places other than plaintiff's headquarters in Greeley, Colorado. They were rendered not only with Linstedt's acquiescence, but at his insistence, and their reasonable value was at least $36,000. Further, both parties intended that plaintiff, individually, and not his corporation, render them; and these services were rendered only because Linstedt had orally agreed in December of 1961 that plaintiff would be the general contractor for the motel and had repeatedly, both by public and private assurances over the two-year period involved, confirmed this agreement to plaintiff and to other persons in the construction field.
Finally, plaintiff's final figures, submitted to, and accepted by, Linstedt in December of 1963 without comment, which were predicated upon Linstedt's last budgetary changes, were virtually the same figures as those under which the motel was ultimately constructed. The final cost of the motel conformed in all material respects to these figures, and copies of bids solicited by plaintiff while compiling them had apparently been given by Linstedt to Titan Construction Company (the ultimate general contractor), and were the basis upon which Titan subsequently performed its work. Shortly after submitting these figures, plaintiff was dismissed from the project.
In answer to plaintiff's evidence, above, in support of his allegations, defendant introduced evidence which can be summarized as follows:
Linstedt had contacted plaintiff in 1961, but only to invite his corporation, through him, to become a 'member of the team' developing the motel. Neither plaintiff, individually, nor his corporation, received the general contract for the motel; and neither would have received it until posting a performance bond and contributing $25,000 in equity money to the motel. (Plaintiff denied any knowledge of these purported conditions precedent.)
Further, plaintiff's services were rendered in his corporate, and not individual, capacity and simply constituted 'goodwill,' customarily exhibited in the trade in the hope that the exhibiting party will receive a contract, but not because he has already received it.
On this conflicting evidence the court found a contract between plaintiff, individually, and Linstedt as agent for Kayell; and that Kayell had breached the contract. It also found that the reasonable value of plaintiff's services was $36,000 on his alternative claim in Quantum meruit. However, it awarded him $36,000 in damages, on the contract, granted him a lien against the motel, decreed foreclosure on that lien, and ordered sale of both the motel and the underlying land and entered judgment accordingly, with interest from the date of filing of the complaint and costs. It found against him on two other causes of action not involved in this appeal. Linstedt was dismissed from the action and no appeal was taken as to the portion of the judgment concerning that dismissal.
Defendants argue on appeal that the court erred (1) in finding an oral contract between plaintiff, individually, and Kayell, and in concluding that the contract was enforceable; (2) in ruling that plaintiff was entitled to interest from the date of filing the complaint; and (3) in concluding that plaintiff, individually, could assert his lien upon the motel, and that both the motel and the underlying land were subject to foreclosure sale.
I.
Defendants first contend that because of failure of certain purported conditions precedent, there was no oral contract between plaintiff and Kayell for the former to be general contractor on the motel; and that even if there were such a contract, it was unenforceable for want of defined parties, sufficiently defined terms, and mutuality.
In essence, the trial judge as finder of fact and upon controverted evidence, found:
First: that Kayell (through Linstedt) engaged plaintiff, individually, to be general contractor for the motel, under a 'negotiated contract'; that plaintiff's fee was to be seven and one-half percent of the ultimate cost of the general contract portion of the motel; that the ultimate cost would be determined only after extensive close coordination between plaintiff and Kayell (through Linstedt), which would result in establishment of a cost satisfactory to Kayell; and that this ultimate cost was finalized and accepted by Kayell (through Linstedt) in December of 1963, when Linstedt accepted plaintiff's final figures without comment--shortly after which he excluded plaintiff from further participation, and caused Titan Construction Company to do the general contract work.
Second: that plaintiff's duties under this 'negotiated contract' were well-known by him and by Kayell, as matters of industry practice, and were, in fact, virtually completed prior to plaintiff's exclusion from the project.
Third: that there were no conditions precedent to this 'negotiated contract.'
These findings are all supported by evidence in the record and are binding upon this Court on review. Adler v. Adler, Colo., 445 P.2d 906. We hold, as the trial court concluded, that they establish an oral contract, with definition of the parties thereto, and the terms thereof, sufficient to enable enforcement.
Defendants also contend, however, that there was no mutuality of obligation under this contract and that, therefore, it was not binding.
Although mutuality is required to enforce an executory contract, its absence is no longer material when the contract has been executed and duties not originally enforceable have been performed. Fisk Mining & Milling Co. v. Reed, 32 Colo. 506, 77 P. 240. Such was clearly the case here.
For the reasons above, we hold that the trial court's conclusion with regard to an enforceable oral contract was correct.
II.
Defendants next contend that the trial court erred in awarding plaintiff interest from the date of his complaint, instead of from the date of judgment, only.
In the absence of some agreement on interest between the parties, it is statutorily regulated. C.R.S.1963, 73--1--2, provides:
'Creditors shall be allowed to receive interest * * * at the rate of six per cent per annum * * * on money due on account from the date when the same became due, * * *'
Monies due on an oral contract have been held by the Colorado Supreme Court to be monies due 'on account,' within the meaning of this statute and its predecessors, and subject to interest at the legal rate from the date due (Donley v. Bailey, 48 Colo. 373, 110 P. 65), if liquidated. We hold that such monies are also subject to interest from any date after the date due (such as, in the instant case, the date of filing the complaint) when the complaint prays for interest from some particular date thereafter. If unliquidated, interest may be assessed from the date of judgment only. Hendrie v. Board of County Commissioners, 153 Colo. 432, 387 P.2d 266.
In the instant case, the trial court found on the evidence that the monies claimed were due on either January 7th or 8th, 1964, the date on which the court found the breach of oral contract to have occurred. The court also found on the evidence that plaintiff's performance under the contract had been virtually completed and that any further performance remaining would not have affected his charges (damages). The court further found that plaintiff's charges had been calculated by him, using the agreed-upon seven and one-half percent factor, and were fixed by him at $36,000; and that that figure had been included in the final figures submitted to Kayell (through Linstedt). The contract also provided for additional payments to be made to the general contractor for supervisory duties which were not part of the $36,000 and were not claimed by plaintiff.
Under these circumstances, plaintiff's damages were established to the precise amount, and liquidated, and it was proper for the court to conclude that plaintiff was entitled to interest from the date due, or thereafter, as prayed for by the plaintiff--specifically, from the date of the filing of the complaint, which was several months thereafter.
We find no error in the court's conclusion.
III.
Defendants finally contend that the trial court erred in (a) granting plaintiff a lien on the motel, and foreclosure thereon, and (b) ordering sale of the underlying land (on which a lien was not granted), as well as sale of the motel.
a.
The gist of defendants' first contention is that plaintiff had no lien on the motel because he did not assert one in his lien statement, instead describing only the land underlying the motel as property against which the lien was asserted, without reference to the motel itself. Yet, they argue, he had no lien on the land either, since he did nothing for the landowners/ lessors (the Weinholds), which would sustain such a lien, but only for their lessee (Kayell). We agreed that plaintiff had no lien on the land (Lierz v. Cook, 136 Colo. 221, 315 P.2d 535), and note that the trial court did not grant him one.
However, we think that plaintiff had a valid lien on the motel, even though he did not specifically describe it in his lien statement as property against which the lien was asserted.
In his lien statement, plaintiff gave the complete legal description of the land underlying the motel. Thereafter, the statement recited that '(t)he said lien is held for or on account of labor performed in furnishing designs, specifications, drawings and estimates of costs for construction of motel building being constructed on premises.' We hold that the description of the land, plus the statement of the basis for the lien, quoted Supra, make the nature of the lien sufficiently clear to anyone willing to be advised.
b.
The gist of defendants' second contention is that the court erred in ordering sale of the underlying land (upon which it did not grant a lien), concurrent with sale of the motel (upon which it did grant a lien). We agree.
No authority has been cited for the proposition that a court may decree the sale of land which is leased, rather than owned, by the owner of an overlying improvement upon which a lien has been asserted (and foreclosed). C.R.S.1963, 86--3--3(1) does provide for sale of land underlying an improvement when 'necessary for the convenient use and occupation of such * * * improvement.' This statute, however, only applies when the land is owned by the party owning the improvements or when, prior to foreclosure on the lien, that party obtains title to the land underlying his improvements. (See e.g., Jones v. Mawson-Peterson Lumber Co., 112 Colo. 493, 150 P.2d 795; and Atkinson v. Colorado Title & Trust Co., 59 Colo. 528, 151 P. 457). Short of such circumstances, the lien claimant is entitled to a lien (and foreclosure) on the improvements and leasehold interests only. (See, e.g., C.R.S.1963, 86--3--3(2); Miller v. Davis, 26 Colo.App. 483, 145 P. 714; Atkinson, supra. But, compare: Lierz, supra.)
Accordingly, we hold that under the circumstances of this case, it was error for the trial court to order sale of the land underlying the motel in conjunction with the sale of the motel itself.
For the reasons advanced above, the trial court's judgment on the alleged contract and breach thereof is affirmed, as is its award of interest on plaintiff's damages resulting from this breach, and as is its granting of a lien on the motel, decree of foreclosure thereon and order of sale thereof. The court's order of sale of the land underlying the motel, however, is erroneous and is reversed.
Judgment is affirmed in part and reversed in part.
DWYER and ENOCH, JJ., concur.