Eastover Stores, Inc. v. Minnix

Prescott, J., delivered the opinion of the Court. The defendant owner of a shopping center has appealed from a decree against him, which enforced a mechanics’ lien filed by the plaintiff contractor. The chancellor summed up the facts as follows: “This is a suit to enforce a mechanics’ lien filed on February 26, 1958, by the plaintiffs, general contractors, against the defendant owners for labor and materials furnished in the erection of a shopping center addition located in Oxon Hill Election District. The plaintiffs’ claim consists of the new contract price amounting to $1,055,591.68 plus various items claimed as extras, giving a total of $1,083,000.86, less payments of $902,029.96, leaving a balance of claim amounting to $180,970.90.

In their answer, as amended, to the bill of complaint defendants have claimed set-offs by way of recoupment, totaling $161,090.69, and also ask that they be allowed to deduct $33,972.88, representing mechanics’ liens filed by sub-contractors who supplied labor and materials to the plaintiffs on this project. “The transcript of testimony contains 419 pages and approximately 100 exhibits presented by both sides. In deciding the case it therefore becomes necessary to summarize the facts as briefly as practicable, and take up separately the claims of the respective parties. “Mr. A. Lloyd Goode has for many years been engaged in real estate development, particularly with reference to shopping centers. The defendants were organized in connection with developing what is generally known as the Eastover Shopping Center. In 1955 Mr. Goode completed the larger portion of the project on a portion of the property here involved, located on the Indian Head Highway, near the District Line.

Being experienced in the building business he himself completed the first portion of the project and did not build it through a contractor. The original portion of the shopping center, as well as the addition, was constructed upon filled ground, and testimony shows that considerable difficulty was experienced because of the seepage of water into ⁶⁶³ the stores constructed on the first portion of the development. “During the latter part of 1955 or early months of 1956 Mr. Goode determined to build the extension in this case. This portion of the development was to be constructed over a low lying area in which fill dirt had been deposited, making allowance for a basement, which ultimately became the site of the C-3, or J. C. Penny store. At first he intended to build the extension and in preparation for that ordered the necessary structural steel from Dietrich Brothers, steel fabricators, in Baltimore.

Dietrich accepted his order provided achitectural plans could be placed in his hands by June 1, 1956, and promised to deliver the steel about November, 1956, but did not guarantee delivery, steel then being in short supply due to a recent steel strike. The architectural drawings were not sent to Dietrich by June 1, but some of them were forwarded later in June. Goode then changed his order with Dietrich to a steel tonnage basis. Because of ill health he decided to seek bids from contractors for the construction of the extension rather than build it himself, based upon plans and specifications and other documents and addenda prepared by Louis H. Asbury and Associates, Architects.

The invitations for bids produced the one submitted by the plaintiffs, which resulted in the contract between the parties, dated August 29, 1956. The bid or proposal submitted by the plaintiffs recited that the ‘undersigned bidder having carefully examined the plans, specifications, and other documents and addenda, visited the site and being familiar with all requirements of the site.’ “Embodied in the contract upon which the bid was submitted were included the general conditions of the contract, specifications, and drawings. The specifications contained Addendum No. 1, which states that: ‘Structural Steel has been purchased from Dietrich Brothers, Baltimore, Maryland, for two hundred, fifty-nine dollars and thirty cents ($259.30) per ton. Total tonnage may be obtained from Dietrich.

Delivery is promised for November, 1956, but not guaranteed. Bidder should include cost of all structural steel in his proposal. Should increase in price occur ⁶⁶⁴ before delivery, Owners will pay any increased tonnage price.’ By Article 2 of the Contract it was provided: ‘The work to be performed under this Contract shall be commenced immediately and shall be substantially completed in 330 days.’ There was no stipulation as to liquidated damages, if any. “The general conditions of the contract, in Article 18 dealing with delays and extension of time, states that: ‘If the Contractor be delayed at any time in the progress of the work by any act or neglect of the Owner or the Architect, or of any employee of either, or by any separate Contractor employed by the Owner, or by changes ordered in the work, or by strikes, lockouts, fire, unusual delay in transportation unavoidable casualties or any causes beyond the Contractor’s control, or by delay authorized by the Architect pending arbitration, or by any cause which the Architect shall decide to justify the delay, then the time of completion shall be extended for such reasonable time as the Architect may decide. ‘No such extension shall be made for delay occurring more than seven days before claim therefor is made in writing to the Architect. In the case of a continuing cause of delay, only one claim is necessary.’ ” I After the appellees’ bid had been received and examined, the owners signed and forwarded, in accordance with the specifications, a formal written agreement, dated August 29, 1956, for execution by the appellees.

This instrument is called a “contract proposal” by the appellees, who claim that it contained provisions not suggested or included in the invitation to bid or the appellees’ bid proposal. The bond that the appellees were required to furnish was obtained on September 12, and thereafter, on September 19, two copies of ⁶⁶⁵ the agreement were executed on behalf of the appellees and mailed to the owners. This agreement, as above stated, provided that the “work performed under this contract shall be commenced immediately and shall be substantially completed in 330 days.” A dispute arose in the trial below as to whether August 29, 1956, the date named in the written agreement, or September 19, 1956, the date when it was executed by the appellees, should prevail in computing the starting date for the 330-day period. The chancellor concluded that under the authority of District of Columbia v. Camden Iron Works, 181 U. S. 453, 461 , 1 the appellees could show by parol evidence that the contract, though dated August 29, 1956, on its face, was in fact not executed and delivered until September 19, 1956, and it took effect only from such date of delivery.

The appellants, in their original brief, did “not challenge the validity of this rule,” but contended the real issue was not to determine “when the parties became legally bound” by the contract, but by “what terms they became legally bound.” In their reply brief, they seem to shift their position so as to contend that a binding and effectual contract was “in effect since August 22, 1956, when the Contractor’s bid was accepted.” The application of a few fundamental principles of contract law will solve the problem. It is universally held that a manifestation of mutual assent is an essential prerequisite to the creation or formation of a contract. It is likewise universally agreed that it is possible for parties to enter into a binding informal or oral agreement to execute a written contract; and, if the parties contemplate that an agreement between them shall be reduced to writing before it shall become binding and complete, there is no contract until the writing is signed. And the intention of the parties in this respect must be determined by the facts and circumstances in each particular case.

Peoples Drug Stores v. Fenton, 191 ⁶⁶⁶ Md. 489, 493, 62 A. 2d 273 ; Power Service Corporation v. Joslin, 175 F. 2d 698, 702, 703 (9th Cir., 1949); 1 Williston, Contracts (Rev. Ed.), Sec. 28. It is, likewise, just as broadly and consistently held that parol evidence is inadmissible to vary, alter or contradict a writing which is complete and unambiguous, where no fraud, accident or mistake is claimed, Glass v. Doctors Hospital, Inc., 213 Md. 44, 57 , 131 A. 2d 254 ; but where doubt arises as to the true sense and meaning of the words themselves or difficulty as to their application under the surrounding circumstances, the sense and meaning of the language may be investigated and determined by evidence dehors the instrument. Vary v. Parkwood Homes, Inc., 199 Md. 411, 418 , 86 A. 2d 727 ; Rinaudo v. Bloom, 209 Md. 1, 11 , 120 A. 2d 184 . The chancellor, by his above ruling, in effect held that the parties contemplated that their agreement would be reduced to writing before it would become binding; that the appellees, before September 19, 1956, had not manifested their assent to the final formation of a contract and were, therefore, at liberty to withdraw from the negotiations prior to such manifestation, Peoples Drug Stores v. Fenton, supra, 191 Md. at page 494 ; that the parties did not agree to commence work “immediately” as of August 29, 1956 (as contended by the appellants) when they, at that time, had not finally and conclusively agreed upon the contract; that the language which states the “work performed under this contract shall be commenced immediately” is ambiguous when the starting time is not certain, hence the parol evidence was admissible; and that the parties intended this language to apply to September 19, 1956, the date when the agreement was finally executed by the appellees and delivered to the appellants.

We think the parol evidence was admissible for the purpose offered; and we are unable to say that any of the above findings of fact were clearly erroneous. Maryland Rule 886. The appellants cited five out-of-state and federal cases which they claim support their side of the point being here considered. Due to the difference of the language used and the attendant circumstances, we think all of them are distinguishable.

It would unduly prolong this opinion, which ⁶⁶⁷ must be lengthy due to the many questions raised by the appellants, to discuss them in detail. We find no error in the court’s ruling upon this point. II The court below found that the contractor was entitled to an extension of time of 145 days under the provisions of Addendum No. 1 and Article 18, set forth above, because of a delay in the delivery of structural steel, holding that such delay was a cause “beyond the contractor’s control.” The appellants assign no less than four reasons as to why this was error: (a) Conditions in the steel industry resulting from a prior strike, which were well known to the contractors at the time of their bid, cannot be construed to be a condition beyond its control under Article 18; (b) the maximum extension of time that could be granted under Article 18—assuming appellants’ argument to be wrong under (a)— is thirty-five days, being the maximum length of time the progress of the work was delayed; (c) the court below erred in failing to find the contractors were responsible for a part of the delay in the delivery of the structural steel; and (d) the contractor was not entitled to any extension of time under Article 18, as it did not comply with the notice provision thereof. (a) The appellants contend that the chancellor erred in allowing the contractors credit for any delay due to a shortage of steel caused by a previous strike in the steel industry.

They argue the contractors undertook an unconditional obligation under the contract “to substantially complete” the project in 330 days; that under the circumstances surrounding the making of the agreement, it was reasonable to assume that the contractors guarded against the uncertainty of delivery of the structural steel by making an allowance for such delay in computing the time for the substantial completion of the work, and they cite the cases of State, to Use of Lane v. Dashiell, 195 Md. 677, 689-690 , 75 A. 2d 348 , Link Belt Engineering Co. v. United States, 142 F. 243 (E.D. Pa., 1905), and Max ⁶⁶⁸ well v. United States, 3 F. 2d 906, 909-910 (4th Cir., 1925), aff’d 271 U. S. 647 , as authority for their contention. We find no fault with the chancellor’s interpretation of this part of the contract. By the express terms thereof, the contractors were not to be responsible for any delay in the progress of the work for “any causes beyond the Contractor’s control.” The evidence is conclusive that the failure of delivery of the structural steel was occasioned by a “cause beyond the Contractor’s control.” In the Dashiell and Maxwell cases, the obligations assumed, unlike the case at bar, were unconditional. The Link Belt Engineering Co. turned upon an interpretation of a definition of “unavoidable delays” contained in the contract involved.

(b) and (c) We think the trial court properly disposed of these questions in the following manner: “In considering this aspect of the case it should be remembered that immediately prior to and contemporaneous with the execution of the contract it was common knowledge that structural steel was in short supply due to a recent steel strike. It was evidently with this in mind that Mr. Goode undertook to order steel for the project early in April when he himself expected to do the construction work. The parties dealt upon the basis that Goode’s order with Dietrich was the only practical source of supply for the necessary structural steel. The testimony and exhibits indicate that the condition under which Dietrich promised, but did not guarantee, delivery of steel in November, had not been fulfilled by Mr. Goode, nor the architect, prior to June 1, because the architectural drawings had not been forwarded before that time.

Moreover, the evidence indicates that Minnix did all that might have been reasonably required of him to expedite the fabrication of the steel by Dietrich and its delivery upon completion of the preliminary construction. “The Court concludes that it is apparent from the ⁶⁶⁹ testimony that the date when structural steel would be available was an important factor in Minnix’s proposal to complete the work within 330 days. The failure to deliver adequate steel until April 24, 1957, can not be attributed to any failure on the part of Minnix, or indeed by Dietrich, which was his only practical source of supply. The causes for the delay, while possibly contributed to by the lateness in furnishing architectural drawings, were doubtless due to the conditions in the steel industry following the recent strike. * * *' “Much of the defendants’ testimony was devoted to criticism of the progress of the preliminary work necessary before erection of the structural steel. They apparently take the position that if the plaintiffs were entitled to an extension because of failure to deliver steel the extension should only be for a 35 day period between March 21, 1957, when preliminary work was completed, and April 24, 1957, when steel was delivered in sequence.

Although Minnix learned as early as [the] Fall of 1956 that he could not expect delivery of steel until Spring, the defendants say that he should have augmented his crew of workmen at greater expense to complete the preliminary work earlier in order to be reasonably entitled to an extension. Had he undertaken to do this rather than minimize his expenses it would have availed the defendants nothing, nor could it have shortened the period within which the building could have been completed after delivery of steel. See Jefferson Hotel Co. v. Brumbaugh, 168 F. 867, 874 (4th Cir., 1909). “It is urged by defendants’ counsel that this case should be governed by the decision in Schmulbach v. Caldwell, 196 F. 16 (4th Cir., 1912), which distinguishes the Jefferson Hotel case. The Court does not feel that this is justified because the contract here involved does not, as in the Schmulbach case, have a mutual provision for measured or liquidated ⁶⁷⁰ damages.

It is not necessary to apply the rationale of either the Hotel or the Schmulbach case because, as the Court views it, the plaintiff did not cause, nor control the cause of, the delay in delivering steel and should have been entitled to an extension of 145 days within which to substantially complete the contract. This would extend the time of completion until January 6, 1958. The principle of apportionment of blame for delay enunciated in the Schmulbach case