Hammaker v. Schleigh

Pabke, J., delivered the opinion of the Court. C. Frank Schleigh, a builder and contractor, agreed with George W. Hammaker to reconstruct the latter’s building in Hagerstown; and, in an action at law by the builder and contractor against the owner to recover for work and labor done as a result of this contract, the plaintiff obtained a verdict of $3,275.33, .but the court directed the entry .of a remittitur damna to $2,800, and a judgment was rendered for this amount. The record presents sixteen exceptions.. ⁶⁵⁹ The first fifteen are to the rulings on evidence. The plaintiff offered no- prayer, and the case was submitted to the jury on the court’s instruction, and defendant’s, second, third, fourth and fifth prayers.

The defendant’s, first, sixth, seventh and eighth prayers were rejected, hut the defendant’s sixteenth exception was, confined to the court’s action in submitting its instruction to the jury. The important question on the record is the correctness of the court’s instruction, which will be first considered. The contract was made on November 17 th, 1925, is under seal, and the owner is the party of the first part, and the builder and contractor is the party of the second part. Omitting the formal beginning and ending, with the signatures, and the requirement that the party of the second part will carry insurance to compensate the workmen and to indemnify the party of the first part for any action for injury or damage done to third parties as a result of the rebuilding, the contract is in this, form: “The party of the second part hereby agrees to remodel, rebuild and reconstruct the Blue Ridge Knitting Building owned by the party of the first part agreeable to the plans and specifications attached hereto and made a part hereof at and for the sum of twenty-three thousand five hundred ($23,500.00) dollars payable as the party of the second part presents to the parly of the first part or Ms attorney, O. Walter Baker, receipts for and as the work progresses, the party of the second part agrees to complete the said building and turn same over to the party of the first part on the first day of March, A. D. 1926.

That the party of the second part hereby agrees to forfeit the sum of twenty-five ($25.00) dollars per day for each and every day after the 15th day of March that said building is not completed unto the party of the first part. “It is hereby further agreed by the party of the second part that the party of the first part may retain the sum of seven thousand five hundred ($7,500.00) dollars until said building is finally completed and accepted by the said party of the first part, same to be ⁶⁶⁰ retained for the purpose of paying 'any and -all bills amounting to the sum of seven thousand and five hundred ($7,500.00) dollars left unpaid by the party of the second part. * * * And the said party of the first part agrees to pay unto the party of the second part the sum of twenty-three thousand five hundred ($23,-500.00) dollars, and at the time and upon the occasions above set forth.” The specifications attached to the contract are lengthy. At the beginning is the general provision that the entire work is to be constructed and finished according to the specifications and “to the entire approval and acceptance of the owner and his architect”; and in the subdivision which deals with the electric wiring this condition is repeated, and in the subdivision which relates to the heating system the condition is that “it shall be installed complete to the entire satisfaction of the owner and the architect.” The only other portion of the specifications that need be inserted is the following specification for protection against fire: “Present building has sprinkler system. This shall be remodeled and continued to take care of the additional spaces. System shall be installed in accordance with the underwriter’s rules.” The existing sprinkler system at the time of the contract protected four floors of the building.

It consisted mainly of a number of pipes in which the water was carried throughout the building and there sprinkled when the water was automatically turned on by the melting of fuses under the heat generated by a fire. The reconstructed building was to be larger but with only three floors to protect, and the pipes in the original building were sufficient in length for the installation of the sprinkler system in the renovated and enlarged building. So, the subject matter of this part of the agreement was the subsisting system, which the contractor undertook to take down and to rearrange so as to conform to the floors and size of the reconstructed building in such a man ⁶⁶¹ ner that the system, when so remodeled, should be installed or placed in position for service in accordance with the underwriter’s rules. When not modified by other terms, a contract to install a sprinkler system would generally bind the promisor not only to set up and connect its parts but to furnish suitable and adequate material for its satisfactory operation.

Webster’s Unabridged Dictionary, “Install”; Metzler v. Thye, 163 Cal. 95 , 124 Pac. 721, 722 ; Long v. Ulmer Machinery Co., 77 Cal. App. 66 ; Bernstein v. Alcorn, 194 Iowa, 1109 . But in view of the fact that the building was equipped, when the contract was made, with a particular system, and that, by explicit language, it is “this” system which “shall be remodeled and continued to take care of the additional spaces,” the meaning of the specification here in controversy is, under the circumstances existing at the formation of the contract, that the contractor was to use the pipes of the subsisting system. This interpretation is supported by the fact that the cost of remodeling with the pipes of the existing system was $500, which would have been increased to $3,600 or $3,750, if new pipes were to be supplied.

It is not reasonable to imply an intention of the parties that the contractor should assume so great a burden as the possibility that the pipes then in use would not be fit for their continuation in a similar use. The exterior of the pipes gave no indication of a defective condition, and there is no evidence that the plaintiff knew of any fault at the time of the contract, nor that he believed that the pipes were not adequate for the proposed remodeling, and so he must be taken to have contracted upon the assump: tion that the pipes were suitable in quality for the specified purpose. It was not until the plaintiff had taken the sprinkler system down that it was discovered that the pipes had become so rusted and weakened by scale on the interior that they would not continue to withstand the necessary water pressure nor deliver the requisite volume of water. The underwriter inspected the pipes, and declined to approve the remodeled system, if these pipes were used.

As has been seen, the plaintiff was to be supplied by the ⁶⁶² defendant with the pipe of the old system. If, therefore, the pipe, through a latent and unknown defect, could not be used as intended, the plaintiff was not in default, as he, through a subcontractor, had dismantled the old system, but could not proceed with the remodeling because he had contracted with respect to the sprinkler system upon his assumption of quality with reference to certain equipment which the defendant had, and the plaintiff was to use, but which, unknown to the plaintiff, did not possess the quality ascribed. The owner did not offer to supply new pipes, which the plaintiff was under no obligation to furnish. Stewart v. American Bridge Co., 108 Md. 200, 218, 219 .

The plaintiff offered testimony which tended to show either a full or substantial performance of the contract, with the exception of the remodeling of the sprinkler system. The instruction of the court charged the jury on the measure of damages recoverable upon either of these two alternative theories. Since there was no special exception to this prayer on the ground of the insufficiency of testimony to support the several findings of fact submitted to the jury, and the meas- . ure of damages is not identical, it will be necessary to state the rule upon each hypothesis. On the first hypothesis the trial court instructed the jury that, if the plaintiff had fully performed his part of the contract except as to the installation of the sprinkler system, and if the failure of the plaintiff to install this system were due to a defect in the quality of the pipes of the original system that made it impossible for the system to be installed so1 as to obtain the approval of the underwriter if these pipes were used, and if this defect were unknown to both the parties at the time of the contract, then the plaintiff would be entitled to receive payment in full for the construction of the building, less such amount as the jury might find it would have •cost the plaintiff to install the old sprinkler system and less twenty-five dollars per day as liquidated damages from the day the contract fixed for the completion of the building until the building was completed or occupied by the defendant, unless the jury should further find that the plaintiff was de ⁶⁶³ layed in the completion of the building by the defendant, and, in that event, the amount should be reduced by the number of days of delay for which the defendant was so responsible.

On a finding of full performance of the contract, with the exception of the reconstruction of the sprinkler system, there was error in allowing to the plaintiff as the measure of his damages the contract price, less the expense to1 the plaintiff of the installation of the old sprinkler system, because the contract price was single; and, therefore, the contract price, when so reduced, embraced the profit of the plaintiff on account of that part of the work which he had not performed by reason of the discovery of the defective condition of the pipes and their rejection by the underwriter. The right to this profit does not follow merely because of an impossibility of performance resulting from a latent and material defect of which both the contracting parties were ignorant. If this were not true, the plaintiff would be entitled to his profit without the impossibility of the performance of his promise being legally chargeable to any breach of contract or of duty on the part of the defendant. Where parties enter into a contract upon the common assumption that a particular and essential state of things exists with reference to a substantial subject-matter, the nonexistence of that state of things, through default of neither party, ends the liability and prevents the accrual of a duty dependent upon it.

Anson on Contracts (Corbin’s Am. Ed.), secs. 374, 373; 3 Willis-ton on Contracts, secs. 1937, 1948, 1952, 1953, 1956. If, however, the nonexistence, either of something which is a substantial subject-matter of the contract, or of some condition or particular state of things which is of the substance of the contract, is attributable to some breach of contract or of duty on the part of the defendant, and prevents the plaintiff from completing the performance of his contract, then the plaintiff is entitled to- be placed in the same condition he would have been in but for the defendant’s default, and, so, to recover the profit of the contract. Supra. ⁶⁶⁴ The vice of the part of the prayer now under discussion is that it does not malte the right of the plaintiff to recover his profit for the frustrated installation of the system of fire protection depend upon some breach of duty or of contract of the defendant preventing the plaintiff, although ready and willing, from so completing the performance of the contract.

There was evidence that the owner of the building which was to be reconstructed employed an architect to prepare the plans and specifications for this renovation and enlargement. This expert specified that the sprinkler system in use should be taken apart and replaced in the remodeled building. The contractor had no choice in the matter, and it was a condition of the performance of his undertaking that he put back the original sprinkler system in the reconstructed building. The sprinkler system was a mechanical device of a particular type, and the fact that its pipes in use had deteriorated so as to be unfit- for the purpose for which they were designed and then actually serving was a latent but fundamental defect.

The owner’s opportunity for knowing the length of time the system had been in service, its operating condition and effectiveness, and the other factors affecting the question of its being continued in service in the remodeled system, was superior to that of the contractor. It is but reasonable to believe that the architect, in specifying that the sprinkler system should be remodeled, did so after investigation, full information, and in the exercise in this employment of the professional skill and knowledge of an expert. In the absence of any countervailing circumstances, these facts would justify the contractor’s reliance, without first making an independent inquiry, upon the architect’s judgment that the material specified was fit for the purpose intended. 3 Williston on Contracts, sec. 1966, n. 28. See Reinhart Construction Co. v. Baltimore, 157 Md. 420 ; United States v. Spearin, 248 U. S. 132 , 63 L. Ed. 166 ; Christie v. United States, 237 U. S. 234 , 59 L. Ed. 933 ; Hollerbach v. United States, 233 U. S. 165 , 58 L. Ed. 898 ; United States v. Utah etc. Co., 199 U. S. 414 , 50 L. Ed. 251 ; ⁶⁶⁵ Kellogg Bridge Co. v. Hamilton, 110 U. S. 108 , 28 L. Ed. 86 ; Bentley v. State, 73 Wis. 416 ; Faber v. City of New York, 222 N. Y. 255 ; Langley v. Rouss, 185 N. Y. 201 ; MacKnigth Flintic Stone Co. v. New York, 160 N. Y. 72 ; Filbert v. Philadelphia, 181 Pa. 530 .

In the given situation, it is an implication of law that the owner warranted the fitness of the pipes for the purpose designed, and their unfitness was a breach by the owner of the implied warranty that would make it impossible for the plaintiff to complete his performance of the contract in this regard, and that would give him a right, if there were no defense available to the owner, to recover as damages any profit of which the contractor may have been deprived by reason of the owner’s breach. Balto. & O. R. Co. v. Stewart, 79 Md. 487, 499, 500 ; Bush v. Construction, Co., 88 Md. 665, 667, 668 . Upon the theory of an implied warranty by the builder of the quality of the pipes and full performance by the plaintiff, with the exception of the completion of the sprinkler system, the measure of damages would have been the contract price diminished by the cost to' the plaintiff of the installation. The contention of the defendant was that the measure of damages should be the. reasonable value of the work done, provided that amount did not exceed that proportion of the contract price which the jury would find that the cost of the work actually performed bore to the cost of the whole work contemplated by the plans and specifications.' This rule has application in a limited class of cases and especially where the work and labor unperformed is of a similar nature and kind, so as to form a constituent fraction of the whole or a specific division of it, agreed to be, but not, performed.

Proportion here implies a relative comparison of integral parts forming a homogeneous whole. The authority cited in support of the enforcement of the rule shows that the principle is not invoked where the plaintiff has fully