Dougherty v. Salt 125 N. E. 94 (1919)

 

August 9:   The subcontractor had a bulldozer accident that damaged the seriously damaged a wall that was part of the contractor’s construction project. 

 

August 10:  The contractor refused to pay the subcontractor's requisition due on August 10 because the subcontractor had not repaired or paid for bulldozer damage.  The subcontractor regarded the accident and the refusal to repair or pay for the damage as a breach of the subcontractor’s contractual obligation to perform “[a]ll work . . . in a workmanlike manner, and in accordance with the best practices.”

 

September 12:  The subcontractor discontinued working on the project because of the contractor's refusal to pay.  

The value of the work completed by the subcontractor on the project for which they had not been paid was $ 1,484.50.  If it had completed the remaining work to be done under the contract, it would have made a profit of $1,340.00 on the remaining uncompleted portion of the contract. It cost the Contractor $450.00 over the contract price to have another excavating contractor complete the remaining work required under the contract.]

It is immediately apparent that our decision turns upon the respective rights and liabilities of the parties under that portion of their contract whereby the subcontractor agreed to do the excavating and earth-moving work in "a workmanlike manner, and in accordance with the best practices," with time being of the essence of the contract, and the contractor agreed to make progress payments therefor on the 10th day of the months following the performance of the work by the subcontractor. The subcontractor contends, of course, that when the contractor failed to make the payment due on August 10, 1958, he breached his contract and thereby released him (the subcontractor) from any further obligation to perform. The contractor, on the other hand, argues that the failure of the subcontractor to perform his work in a workmanlike manner constituted a material breach of the contract, which justified his refusal to make the August 10 payment; and, as there was no breach on his part, the subcontractor had no right to cease performance on September 12, and his refusal to continue work on the project constituted another breach, which rendered him liable to the contractor for damages. The vital question, more tersely stated, remains: Did the contractor have a right, under the circumstances, to refuse to make the progress payment due on August 10, 1958?

. . . Promises are mutually dependent if the parties intend performance by one to be conditioned upon performance by the other, and, if they be mutually dependent, they may be (a) precedent, i.e., a promise that is to be performed before a corresponding promise on the part of the adversary party is to be performed, (b) subsequent, i.e., a corresponding promise that is not to be performed until the other party to the contract has performed a precedent covenant, or (c) concurrent, i.e., promises that are to be performed at the same time by each of the parties, who are respectively bound to perform each.

. . . The modern rule, which seems to be of almost universal application, is that there is a presumption that mutual promises in a contract are dependent and are to be so regarded, whenever possible. . . .

Considering the presumption that promises and counter-promises are dependent and the statement of the case, we have no hesitation in holding that the promise and counter-promise under consideration here were mutually dependent, that is to say, the parties intended performance by one to be conditioned on performance by the other; and the subcontractor's promise was, by the explicit wording of the contract, precedent to the promise of payment, monthly, by the contractor.

The damage to the wall was quite serious.  Suppose, however, for the sake of argument, that it was not.  Suppose that the subcontractor had performed all the work in "a workmanlike manner, and in accordance with the best practices"—except that it had done $10 damage to the wall and refused to repair it.  Would the fact that the contractor’s promise to pay was dependent on the subcontractor’s promise to perform the work in "a workmanlike manner, and in accordance with the best practices" excuse the contractor from paying the subcontractor?

 

(a) Yes, even if the breach was not material.

 

(b) Yes, but only if the breach was material.

In Shapiro Eng. Corp. v. Francis O. Day Co., 215 Md. 373, 380, 137 A. 2d 695, we stated that it is the general rule that where a total price for work is fixed by a contract, the work is not rendered divisible by progress payments. It would, indeed, present an unusual situation if we were to hold that a building contractor, who has obtained someone to do work for him and has agreed to pay each month for the work performed in the previous month, has to continue the monthly payments, irrespective of the degree of skill and care displayed in the performance of work, and his only recourse is by way of suit for ill-performance. If this were the law, it is conceivable, in fact, probable, that many contractors would become insolvent before they were able to complete their contracts. . . .

We hold that when the subcontractor's employee negligently damaged the contractor's wall, this constituted a breach of the subcontractor's promise to perform his work in a "workmanlike manner, and in accordance with the best practices." . . . And there can be little doubt that the breach was material: the damage to the wall amounted to more than double the payment due on August 10. . .

Professor Corbin, [Contracts] in para. 954, states further: “The unexcused failure of a contractor to render a promised performance when it is due is always a breach of contract . . .  Such failure may be of such great importance as to constitute what has been called herein a ‘total’ breach. . .  For a failure of performance constituting such a 'total' breach, an action for remedies that are appropriate thereto is at once maintainable. Yet the injured party is not required to bring such an action. He has the option of treating the non-performance as a ‘partial’ breach only.” In permitting the subcontractor to proceed with work on the project after August 9, the contractor, obviously, treated the breach by the subcontractor as a partial one. As the promises were mutually dependent and the subcontractor had made a material breach in his performance, this justified the contractor in refusing to make the August 10 payment; hence, as the contractor was not in default, the subcontractor again breached the contract when he, on September 12, discontinued work on the project, which rendered him liable (by the express terms of the contract) to the contractor for his increased cost in having the excavating done -- a stipulated amount of $450.

If the court had found that the promises were not mutually dependent, it would not have held that the contractor was justified in refusing to make the payment.

 

(b) False

. . .

 

Judgment against the appellant reversed; and judgment entered in favor of the appellant against the appellees for $450, the appellees to pay the costs.

Walker & Co. v. Harrison

(a) The term of this lease shall be 36 months.

(c) Maintenance. Lessor at its expense agrees to maintain and service the sign together with such equipment as supplied and installed by the lessor to operate in conjunction with said sign under the terms of this lease; this service is to include cleaning and repainting of sign in original color scheme as often as deemed necessary by lessor to keep sign in first-class advertising condition and make all necessary repairs to sign and equipment installed by lessor.

The sign was completed and installed in the latter part of July, 1953. The first billing of the monthly payment of $148.50 was made August 1, 1953, with payment thereof by defendants on September 3, 1953. This first payment was also the last. Shortly after the sign was installed, someone hit it with a tomato. Rust, also, was visible on the chrome, complained defendants, and in its corners were "little spider cobwebs." In addition, there were "some children's sayings written down in here." Defendant Herbert Harrison called Walker for the maintenance he believed himself entitled to under subparagraph (d) above. It was not forthcoming. He called again and again. "I was getting, you might say, sorer and sorer. * * * Occasionally, when I started calling up, I would walk around where the tomato was and get mad again. Then I would call up on the phone again." Finally, on October 8, 1953, plaintiff not having responded to his repeated calls, he telegraphed Walker that:

 
YOU HAVE CONTINUALLY VOIDED OUR RENTAL CONTRACT BY NOT MAINTAINING SIGNS AS AGREED AS WE NO LONGER HAVE A CONTRACT WITH YOU DO NOT EXPECT ANY FURTHER REMUNERATION.

Walker's reply was in the form of a letter. After first pointing out that "your telegram does not make any specific allegations as to what the failure of maintenance comprises," and stating that "We certainly would appreciate your furnishing us with such information,". . . and concludes as follows:

The benefit Harrison anticipated was advertising via the sign.

(b) The extent to which the injured party may be adequately compensated in damages for lack of complete performance;

The condition of the sign may have decreased its effectiveness as an advertising mechanism. To the extent this is true, monetary compensation for the decreased effectiveness could adequate compensate Harrison.
(a) Yes
(b) No

(c) The extent to which the party failing to perform has already partly performed or made preparations for performance;

Walker agreed to and did “construct and install, at its own cost, one 18 feet 9 inch high x 8 feet 8 inch wide pylon type d.f. neon sign with electric clock and flashing lamps.” It also agreed to “to maintain and service the sign.” They did not do so properly at first, but later did repair the problems with the sign.
Walker, therefore, did, to a considerable extent, perform its contractual obligations.
(a) Yes
(b) No

(d) The greater or less hardship on the party failing to perform in terminating the contract;

The hardship on Walker of terminating the contract would be that they would have constructed the sign at their own expense and would not receive the rent the expected in return.
(a) True
(b) False

(e) The willful, negligent or innocent behavior of the party failing to perform;

The court later characterizes the delay in repairing the sign as “irritating,” but it does not find that the delay was willful or negligent.

(f) The greater or less uncertainty that the party failing to perform will perform the remainder of the contract.

Walker repaired the sign, and
(a) the facts, however, indicate that they may not keep it in repair in the future.
(b) there is nothing in the facts that Walker will not keep the sign in repair—other than their initial failure to do so..

We will not set forth in detail the testimony offered concerning the need for servicing. Granting that Walker's delay (about a week after defendant Herbert Harrison sent his telegram of repudiation Walker sent out a crew and took care of things) in rendering the service requested was irritating, we are constrained to agree with the trial court that it was not of such materiality as to justify repudiation of the contract . . . The trial court, on this phase of the case, held as follows:

Hochster v. De La Tour

In the Queen's Bench, 1853

This was an action for breach of contract. On the trial, before Erle, J., at the London sittings in last Easter Term, it appeared that plaintiff was a courier, who, in April, 1852, was engaged by defendant to accompany him on a tour to commence on June 1st, 1852, on the terms mentioned in the declaration. On May 11th, 1852, defendant wrote to plaintiff that he had changed his mind, and declined his services. He refused to make him any compensation. The action was commenced on May 22d. The plaintiff, between the commencement of the action and June 1st, obtained an engagement with Lord Ashburton, on equally good terms, but not commencing till July 4th. . . .

[What follows is the discussion between the judges and the attorneys, Hugh Hill and Deighton, representing De La Tour.]

Crompton, J. When a party announces his intention not to fulfill the contract, the other side may take him at his word and rescind the contract. That word “rescind” implies that both parties have agreed that the contract shall be at an end as if it had never been. But I am inclined to think that the party may also say: “Since you have announced that you will not go on with the contract, I will consent that it shall be at an end from this time; but I will hold you liable for the damage I have sustained; and I will proceed to make that damage as little as possible by making the best use I can of my liberty.” This is the principle of those cases in which there has been a discussion as to the measure of damages to which a servant is entitled on a wrongful dismissal. . . .

Hugh Hill and Deighton, contra. . . .[T[he defendant's position . . .is . . . that an announcement of an intention to break the contract when the time comes is no more than an offer to rescind. It is evidence, till retracted, of a dispensation with the necessity of readiness and willingness on the other side; and, if not retracted, it is, when the time for performance comes, evidence of a continued refusal; but till then it may be retracted. . .

Crompton, J. May not the plaintiff, on notice that the defendant will not employ him, look out for other employment, so as to diminish the loss?

[Hugh Hill and Deighton] If he adopts the defendant's notice, which is in legal effect an offer to rescind, he must adopt it altogether.

Lord Campbell, C.J. So that you say the plaintiff, to preserve any remedy at all, was bound to remain idle.

Erle, J. Do you go one step further? Suppose the defendant, after the plaintiff's engagement with Lord Ashburton, had retracted his refusal and required the plaintiff to travel with him on the 1st of June, and the plaintiff had refused to do so, and gone with Lord Ashburton instead? Do you say that the now defendant could in that case have sued the now plaintiff for a breach of contract?

[Hugh Hill and Deighton] It would be, in such a case, a question of fact for a jury, whether there had not been an exoneration. . . .

LORD CAMPBELL, C.J., now delivered the judgment of the Court.

On this motion in arrest of judgment, the question arises, whether if there be an agreement between A and B, whereby B engages to employ A on and from a future day for a given period of time, to travel with him into a foreign country as a courier, and to start with him in that capacity on that day, A being to receive a monthly salary during the continuance of such service, B may, before the day, refuse to perform the agreement and break and renounce it, so as to entitle A before the day to commence an action against B to recover damages for breach of the agreement; A having been ready and willing to perform it, till it was broken and renounced by B. The defendant's counsel very powerfully contended that, if the plaintiff was not contented to dissolve the contract and to abandon all remedy upon it, he was bound to remain ready and willing to perform it till the day when the actual employment as courier in the service of the defendant was to begin; and that there could be no breach of the agreement before that day to give a right of action.

If the plaintiff has no remedy for breach of the contract unless he treats the contract as in force, and acts upon it down to the 1st of June, 1852, it follows that, till then, he must enter into no employment which will interfere with his promise “to start with the defendant on such travels on the day and year,” and that he must then be properly equipped in all respects as a courier for a three months’ tour on the continent of Europe. But it is surely much more rational, and more for the benefit of both parties, that, after the renunciation of the agreement by the defendant, the plaintiff should be at liberty to consider himself absolved from any future performance of it, retaining his right to sue for any damage he has suffered from the breach of it.  Thus, instead of remaining idle and laying out money in preparations which must be useless, he is at liberty to seek service under another employer, which would go in mitigation to the damages to which he would otherwise be entitled for a breach of the contract.