Opinion
Recovery in quasi contract by a contractor for a part performance beneficial to and accepted by the other party is measured by the extent to which the contractor's performance has enriched the other party. The contract price cannot, alone, be treated as a basis for determining the value of work done under a contract not substantially performed. The Bankruptcy Act gives the trustee in bankruptcy of a party to an executory contract the option of assuming the contract within sixty days after the adjudication. If the trustee does not assume the contract, the bankruptcy operates as a breach of contract. The plaintiff, trustee in bankruptcy of W, did not act within the statutory period to assume the partially performed subcontract between W and the defendant. At the time of the bankruptcy, the steam work undertaken by W was far from complete. The defendant finished the work, using tools and materials left on the job by W. The contract price for the work was $11,500, the amount paid W was $4100, and the amount expended by the defendant to complete the work was at least $5056. Apart from the proof of these facts and the evidence that the cost of the materials supplied by W was $3014, there was nothing to show the reasonable value of W's part performance. Held: 1. The plaintiff could not recover for the part performance, since he failed to sustain the burden of proving its reasonable value. 2. Nor could he recover for breach of contract on the theory that the defendant, by undertaking to complete the work, prevented him from completing performance, because there was, as a result of the plaintiff's failure to assume the contract, a breach by W by reason of his bankruptcy, and hence no subsisting contract thereafter.
Argued May 5, 1959
Decided June 30, 1959
Action to recover damages for breach of a building contract and for the value of services and materials, brought to the Court of Common Pleas in the judicial district of Waterbury and tried to the court, Johnson, J.; judgment for the defendant and appeal by the plaintiff. No error.
H. John Weisman, with whom was Fred B. Rosnick, for the appellant (plaintiff).
Abraham S. Silver, for the appellee (defendant)
The plaintiff, a trustee in bankruptcy, brought this action to recover sums alleged to be due as a result of work performed by the bankrupt under a contract with the defendant. The amended complaint is in two counts. In the first count, the plaintiff seeks to recover a balance claimed to be due for the value of materials and services furnished by the bankrupt to the defendant; and in the second count, damages for breach of contract on the ground of prevention of performance.
The trial court's finding of the following facts is not subject to correction: Prior to July 9, 1954, the defendant entered into a contract to perform a portion of the work on the Litchfield high school, in Litchfield, under a subcontract from the general contractor. The defendant, in turn, entered into a subcontract with James B. Walker for the performance by him of the steam work for a price of $11,500. Walker started the work and was paid $4100 for what he did prior to August 23, 1955, when he filed a voluntary petition in bankruptcy. Thereafter, he performed no more of the work. He left on the job some tools, a welding machine and most of the materials needed for completion of the work. On September 6, 1955, he was adjudicated a bankrupt and the plaintiff was appointed trustee. Thereafter, at various intervals until February, 1956, the defendant, in part through the employment of another subcontractor and in part by using its own employees, completed the job. The plaintiff knew that the defendant was going ahead with the work, but he remained silent and offered no objection. He did not request permission to assume and complete the contract. Most of the materials used by the defendant in finishing the work were those left on the job by Walker. The amounts paid by the defendant for the completion were $3142.43 for materials and the labor of its own employees and $1913.77 to a subcontractor. In addition, the defendant entered $628 for overhead and profit and $1725 for the responsibility it was required to assume on a one-year guarantee for the proper operation of the steam work. The plaintiff offered no evidence of the cost of the labor furnished by Walker. Apart from evidence that the cost of the materials supplied by Walker was $3014.56, the plaintiff offered no credible evidence of the reasonable value of the materials, services and labor furnished by Walker. The contract was not substantially performed by Walker.
The claim of the plaintiff, under the first count, is that until Walker was prevented by financial difficulties from continuing to perform his contract he carried it out according to its tenor, his breach was not wilful, the defendant accepted and retained the benefit of his work, and the defendant should be required to pay the plaintiff the amount by which it was enriched as a result. Restatement, 2 Contracts 357. We referred to this theory in Kelley v. Hance, 108 Conn. 186, 188, 142 A. 683, and observed that it had its basis in quasi contract, to prevent unjust enrichment at the expense of a contractor whose work was of benefit to the other party and was actually accepted, although he did not fully perform. Where a recovery is warranted on this theory, it is for the value of the work less the damages attributable to the contractor's default. Ibid.; 5 Williston, Contracts (Rev. Ed.) 1475. The plaintiff had the burden of proving the value of Walker's part performance, that is, the extent to which his performance enriched the defendant. Franks v. Lockwood, 146 Conn. 273, 278, 150 A.2d 215. The first count set forth that the reasonable value of the materials and services furnished by Walker to the defendant was $9587.23. The plaintiff had the burden of proving this allegation. He argues that he sufficiently proved it by proof of the contract price, the amounts paid by the defendant under the contract, and the cost to the defendant of completing the work. This type of proof is usually deemed sufficient in cases where recovery is sought on the ground of substantial performance and where completion of the work contracted for may be accomplished, or the defect in the work remedied, by a relatively minor expenditure. Pinches v. Swedish Evangelical Lutheran Church, 55 Conn. 183, 187, 10 A. 264. Here, Walker left the work far from done. Substantial completion was not approached, and the plaintiff expressly disclaimed any right to recover on the theory of substantial performance. The trial court ruled that, under these circumstances, the contract price could not, alone, be treated as the basis for determining the extent of the defendant's enrichment, if any, from the materials and services furnished by Walker. The court was not in error in so ruling.
In the second count, the plaintiff claimed to be entitled to recover damages because he was prevented by the actions of the defendant from completing the contract. Under 70b of the Bankruptcy Act ( 52 Stat. 880, 11 U.S.C. § 110[b]), the plaintiff had the option of assuming the contract within sixty days after adjudication. The act provides that any contract not assumed within such time shall be deemed rejected. If the plaintiff chose not to assume the contract as provided in the act, the bankruptcy of Walker operated as a breach of the contract. Central Trust Co. v. Chicago Auditorium Assn., 240 U.S. 581, 589, 36 S.Ct. 412, 60 L.Ed. 811. The failure of the plaintiff to take steps to assume the contract was a rejection of it which related back to the date of the adjudication and marked the date of the breach by Walker. Napier v. Peoples Stores Co., 98 Conn. 414, 424, 120 A. 295. By virtue of the plaintiff's rejection, there was no longer a subsisting contract when the defendant undertook to complete the work, and therefore there was no foundation for a claim that the defendant had prevented performance by the plaintiff. 4 Collier, Bankruptcy (14th Ed.) p. 1236, n. 41; 2 Remington, Bankruptcy 1141.75.