Prescon Corp. v. Savoy Construction Co.

Finan, J., delivered the opinion of the Court. Prescon Corporation, the appellant, executed a contract with Savoy Construction Co., Inc., appellee, to supply the latter with specialized structural building ma ⁵⁴ terials for the sum of $113,300. Appellant claims the appellee breached the contract and sued to recover losses in the amount of $46,559. 1 The lower court, sitting without a jury gave judgment for the appellant in the amount of $770, the cost of preparing shop drawings. From this judgment of the Circuit Court for Montgomery County, the appellant appeals.

We are of the opinion that this case should be remanded for further proceedings pertaining to the damages sustained by the appellant, for reasons that we shall hereafter set forth. The contract dated August 4,1967, in pertinent part provides: “[Prescon] Furnish all post tensioning mastic coated flat tendons as shown on structural drawings SI through S9, as revised to 6/9/67. Tendons to be shipped wrapped with end anchorages attached, ready for placement in forms. Prescon to loan adequate stressing equipment to meet the needs of the steel placer and field supervision, both without time limitation.

Furnish six copies of shop drawings within two weeks of date hereof for garage and four weeks for balance. Unloading of trucks by Savoy Construction Company, Inc. The foregoing shall be furnished for the sum of * * * Lump sum $110,-000. Tax, 3%, $3,300; Total, $113,300.00.” Under the “Terms” on the face of the order is found the following: “One-half of one percent — 10th PROX. FOB JOB SITE OR POINT OF DELIVERY, Supplier guarantees to ship all quantities required per plans and specifications, if so stated above.

Extras for additional quantities will not be honored except in case of plan change and upon written change order or proof of loss of material at job site. THIS ORDER MAY BE CAN- ⁵⁵ CELLED IF (a) material is not delivered on time, (b) material is not exactly as ordered, or (c) material does not conform ‘to any and all code requirements of any and all authorities having jurisdiction.’ BALANCE OF ORDER MAY BE CANCELLED if after the use of a portion of the material the material fails to satisfy the purchaser. In this event the purchaser shall be obligated to pay only for the portion of material used, and only at the agreed price.” On August 8, 1967, appellant dispatched a telegram to the appellee confirming a telephone conversation between representatives of the two companies which had been held the preceding day wherein it was agreed that the appellant would cease preparation of shop drawings until notification from the appellee. On September 1, 1967, the appellee notified the appellant by letter that it was cancelling the contract.

Mr. Robert Meyer, a partner in the structural engineering firm which rendered the structural design for the Chateau Apartments, the building for which the material covered by the contract was intended, stated in his testimony that, “Our plans [for which Prescon was to supply the material] were withdrawn for the reason that the structural design appeared to the owner and the builder to be more expensive than another method proposed by another engineer.” The appellant filed a declaration in May of 1968. In the affidavit accompanying a motion for summary judgment, which was denied, it was set forth that Prescon incurred an expense of $700 in rendering shop drawings prior to the date of cancellation, that it would have cost Prescon $68,441 to have fully performed the contract and that its anticipated profit would have been $45,859. The appellant sought to support its alleged loss of profit of $45,859, by the testimony of Mr. Ken Braselton, Vice President of Sales and Marketing of Prescon. It al ⁵⁶ so endeavored to introduce into evidence cost data which ■consisted of a series of IBM sheets and which purported to support this loss of profit.

However, the evidence was not admitted on the objection of appellee’s counsel. The ■objection was based upon the premise that, although the sheets were compiled in the usual course of business, they were duplicates of originals and further that the originals, sought to be authenticated through Braselton, had not been prepared under his supervision and direction. The rationale followed by the lower court in limiting damages to $770, the cost of preliminary expenses and shop drawings may be gleaned from the following excerpt from its opinion: “* * * As will be hereinafter indicated, it is extremely doubtful whether any final contract existed sufficient to warrant an award for breach ■of contract if damages had been sufficiently proven. An integral part of the contract was the structural drawings (SI through S9) as revised on June 9, 1967.

There was no meeting of the minds as to when work was to commence, or whether the plaintiff could ever satisfy code requirements. No plans, drawings or specifications that are referred to in this construction contract and constitute a part thereof were in evidence to show either the intention of the parties or the scope of the work, and the entire contract not being before the Court, same cannot be construed or determined. (United Surety Co. v. Summers, 110 Md. 95 ; Staley v. New, 250 Pac. 2nd 893 at 895; 13 Am.Jur.2nd, Par. 12 on Building Contracts). If there is a contract, loss of expected profits is a proper damage item for breach (22 Am.Jur.2nd, Par. 174).

However, this claim must fail because the evidence falls far short of showing any loss of profit with reasonable certainty sufficient to make any award except by sheer speculation. A bald statement of loss of ap ⁵⁷ proximately $46,559.00, unsupported by any details as to the various items which make up this figure, gives the Court nothing on which to work in arriving at a proper damage loss, if any there was. Of vital importance in a case involving orders for fabrications in building construction, is labor and materials, both of which are steadily advancing in price. Costs of interstate transportation, [etc.] * * * (Restatement Contracts, Sec. 831; M. & R. Builders, Inc. v. Michael, 215 Md. 340 ; Evergreen Corp. v. Milstead, 206 Md. 610 ; 22 Am.Jur.2nd, Par. 171, 172 & 174).

While the law does not require proof of loss of profits with absolute certainty, the claimant must nevertheless prove that profits claimed were reasonably certain to have been realized. (B. & O. R. R. v. Steward, 79 Md. 487 ). * * Aside from loss of profits, the plaintiff did testify that $700.00 was expended for shop drawings and the Court feels that this amount should be reimbursed, since this work was solicited and was sufficiently definite to be identified, and neither the cost nor the preparation of such shop drawings was contested. * * We do not quarrel with the general principles of contract law set forth by the learned trial judge in his opinion. However, we disagree with his construction of the agreement before us and the manner in which those principles were applied in the case at bar. As indicated in the quoted excerpt from the opinion, the court stressed the importance of the structural drawings and felt that their absence prevented it from construing the contract. 2 We believe this to have been a mis ⁵⁸ placed emphasis, as we do not place the same significance •on these plans in relation to the purported breach of contract.

No one disputed the existence of the plans. The .appellee did not contend that any inadequacy in the plans prompted its termination of the contract. We cannot see how they play any material part in the issue as to whether •or not a breach of contract occurred. It should be borne in mind that this was not per se a construction contract but primarily a contract to supply materials.

The language of the contract sets forth the supplier’s obligation. True, the plans are referred to in contract and thus incorporated in it by reference. However, as the trial judge .stated during the hearing, the plans were available to the parties. Furthermore, we think the trial judge’s emphasis ■on the necessity of introducing the plans into evidence is -inconsistent with his statement to the appellee’s counsel, .as it appears in the record: “All they (Appellant) have to do to make out a prima facie case is to submit the contract, which you have conceded to, show they are ready, willing and able to perform, and they have made out their case.

You have said in your opening statement that there was no work done, so the burden is on you at this time at this stage of the case.” • From the facts as they appear in the record it is apparent that the contract was clear and unambiguous. The appellee did not cancel the contract because of any defect in the material to be supplied, for failure of the material to conform to Building Code requirements, for late delivery of shop plans or material, or for any reasons which on the basis of the provisions of the contract, may have ¡supported a legitimate cancellation. Rather, it is undis ⁵⁹ puted that the contract was terminated because the owner of the Chateau Apartments, for whom the appellee was constructing the building, ex post facto to the execution of the contract, decided to save money by adopting a less expensive structural design. Such action cannot be viewed other than as a culpable explanation for the termination of the contract.

It is undisputed that the appellant was at all times ready, able and willing to perform. The nature and purpose of the subject matter was clear, the lump sum price was expressly stated. There was no doubt regarding the consideration. The court mentions that there was no meeting of the minds as to when the work was to commence.

The short answer to that is, that the appellee at the time of cancellation had already started work on the shop drawings. The contract provided that six copies of the shop drawings for the garage be furnished in two weeks from August 4,1967, and drawings for the balance of the building in four weeks. The construction of the Chateau Apartments was imminent and since it is not refuted that the appellant was ready, able and willing to perform, it is only reasonable to assume that the parties intended that delivery of the material would follow the plans within a reasonable time for incorporation into the building. Evergreen Amusement Corp. v. Milstead, 206 Md. 610, 617 , 112 A. 2d 901 (1955).

It is quite easy however to see