Brooks v. Hayes

• Decision Date: 29 October 1986
• Docket Number: No. 83-1521,83-1521
• Citation: 395 N.W.2d 167,133 Wis.2d 228
• Parties: John and Judith BROOKS and State Farm Fire and Casualty Company, a Foreign Corporation, Plaintiffs-Appellants-Petitioners, v. Wayne HAYES, d/b/a Wayne Hayes Real Estate, and Claude Marr, Defendants- Respondents.
• Court: Wisconsin Supreme Court

Page 167

395 N.W.2d 167

133 Wis.2d 228

John and Judith BROOKS and State Farm Fire and Casualty Company, a Foreign Corporation Plaintiffs-Appellants-Petitioners, v. Wayne HAYES, d/b/a Wayne Hayes Real Estate, and Claude Marr Defendants- Respondents.

No. 83-1521.

Supreme Court of Wisconsin.

Argued Sept. 4, 1986.

Opinion Filed Oct. 29, 1986.

Stuart B. Eiche, Milwaukee (argued), for plaintiffs-appellants-petitioners; Schulz & Schapekahm, S.C., Milwaukee, on brief.

John W. Roethe, Edgerton (argued), for defendants-respondents; Roethe, Buhrow, Roethe, Pope & Fish, Edgerton, on brief.

SHIRLEY S. ABRAHAMSON, Justice.

This is a review of an unpublished decision of the court of appeals filed September 19, 1985 (table) 126 Wis.2d 513, 376 N.W.2d 868, affirming a judgment in the circuit court of Jefferson county, John B. Danforth, circuit court judge, dismissing the complaint.

The issue presented on review is whether a general contractor who hires an independent contractor to perform services under the general contractor's agreement with a landowner to "provide all necessary labor and materials and perform all work of every nature whatsoever to be done in the erection of a residence" is liable to the landowners for damage to their property caused by the independent contractor's negligent construction. ¹ We hold that a general contractor who has a contractual duty of due care in performing the construction contract may be liable to the owner for damages when an independent contractor hired by the general contractor negligently performs under the construction contract and causes property damage to the owner. We reverse the decision of the court of appeals and the judgment of the circuit court, and we remand the cause for a new trial.

I.

The issue arose in the following circumstances. In May of 1978, John and Judith Brooks, hereafter plaintiff-owners, contracted with Wayne Hayes, doing business as Wayne Hayes Real Estate, to construct a Windsor Home, a "package, predesigned, precut" home, on a lot they owned. ² While Hayes was primarily a real estate broker, he also sold Windsor Homes.

The construction contract required Hayes to "provide all necessary labor and materials and perform all work of every nature whatsoever to be done in the erection of a residence for" the plaintiff-owners. The circuit court found that the plaintiff-owners and Hayes contemplated that subcontractors hired by Hayes would perform much of the home construction work and Hayes would not control the method of construction. The circuit court further found that Hayes had no personal experience in construction.

Lavern Maasz of Hayes Realty acted as "expeditor" at the work site. Maasz visited the work site approximately once a day to ensure that the construction progressed and all necessary materials were on hand. The circuit court found that neither Hayes nor his associates exercised any control over the details of the work.

During construction, the plaintiff-owners requested that a "heatilator" be installed as "an extra" to increase the efficiency of the fireplace. Claude Marr, who had been hired by Hayes to do the masonry work, including the fireplace, installed the heatilator.

The plaintiff-owners moved into the house in the winter of 1978. When the plaintiff-owners used the fireplace they smelled smoke in areas of the house remote from the fireplace. In response to their complaints, Maasz of Hayes Realty inspected the fireplace system, once with Marr and once with a different mason. The plaintiff-owners also hired a mason to inspect the fireplace system. None of these three masons could detect the cause of the problem.

The plaintiff-owners withheld final payment under the construction contract pending resolution of their claim that the fireplace and other masonry work were defective. Unable to discover the cause of the smoke odor, Maasz, acting on behalf of Hayes, and the plaintiff-owners agreed to resolve the claims relating to the masonry work by reducing the purchase price of the home by $700.00.

The plaintiff-owners used the fireplace with some frequency until November 1, 1980, when a fire in the home caused structural damage around the fireplace and smoke damage both to the house and to personal belongings, including clothes and furniture. The circuit court found, and the parties do not dispute this finding, that the mason's negligence in installing the heatilator caused the fire.

The plaintiff-owners sued both Marr and Hayes. The circuit court dismissed Marr from the suit because he had been adjudicated a bankrupt. The circuit court dismissed the complaint against Hayes as well, concluding that Hayes was neither personally negligent in the construction nor vicariously liable for the negligence of the independent contractor.

The court of appeals affirmed the dismissal of the complaint against Hayes, relying on the independent contractor rule. This rule limits the doctrine of respondeat superior. The generally accepted independent contractor rule is that "one who contracts with an independent contractor is not liable to others for the torts of the independent contractor." Snider v. Northern States Power Co., 81 Wis.2d 224, 232, 260 N.W.2d 260 (1977).

Further, the court of appeals concluded that this case did not fall within any of the many exceptions to the independent contractor rule. One exception is that an employer of an independent contractor is vicariously liable for the tortious conduct of the independent contractor if the duty cannot be delegated to the independent contractor. Another exception is that an employer of an independent contractor is vicariously liable for the torts of an independent contractor if the activity of the independent contractor is inherently dangerous. The court of appeals viewed Hayes' duty as delegable; it further concluded that the activity delegated was not inherently dangerous. Accordingly, the court of appeals held in favor of Hayes on the basis of the independent contractor rule.

II.

The plaintiff-owners' principal argument on review is that the independent contractor rule does not apply to the case at bar. According to the plaintiff-owners, the fact that there is a contractual relation between the plaintiff-owners and Hayes and that the damage was to property of the plaintiff-owners, not a third party, distinguishes this case from the typical tort case in which the independent contractor rule protects the general contractor from vicarious liability to a third party for the independent contractor's tortious conduct.

The plaintiff-owners contend that although the construction contract was silent with regard to the level of performance or standard of care required of Hayes or the subcontractors, the contract implicitly imposes on Hayes the duty to perform with due care. ³ We agree with the plaintiff-owners' interpretation of the contract and, for purposes of this review, Hayes has not disputed this interpretation of the construction contract. The plaintiff-owners' interpretation is supported by Colton v. Foulkes, 259 Wis. 142, 146, 47 N.W.2d 901 (1951), in which the court adopted the rule that "accompanying every contract is a common-law duty to perform with care, skill, reasonable expediency and faithfulness the thing they agreed to be done, and a negligent failure to observe any of these conditions is a tort, as well as a breach of contract." See also Milwaukee Cold Storage Co. v. York Corp., 3 Wis.2d 13, 25, 87 N.W.2d 505 (1958); Fisher v. Simon, 15 Wis.2d 207, 211-212, 112 N.W.2d 705 (1961); Peterson v. Sinclair Refining Co., 20 Wis.2d 576, 583, 123 N.W.2d 479 (1963).

Although Hayes assumed a contractual duty to the plaintiff-owners to perform the construction contract with skill and due care, Hayes delegated the performance of the contract to others. The question then is whether the delegation of performance of the masonry work relieved Hayes of liability for breach of contract when the mason, an independent contractor, negligently performed that part of Hayes' contractual obligation.

The plaintiff-owners assert that Hayes may not avoid responsibility to them for his failure to perform his contractual duty of due care merely by hiring an independent contractor. ⁴ We agree with this assertion. The hornbook principle of contract law is that the delegation of the performance of a contract does not, unless the obligee agrees otherwise, discharge the liability of the delegating obligor to the obligee for breach of contract. ⁵

Our conclusion that a general contractor is liable to the owner for breach of the contractual duty of due care when an independent contractor negligently performs the general contractor's work under the contract garners substantial support from cases in Wisconsin and other jurisdictions.

In Medley v. Trenton Investment Co., 205 Wis. 30, 236 N.W. 713 (1931), a landlord hired an independent contractor to exterminate vermin. Without any warning, the independent contractor filled an apartment with gas, and the gas leaked into another apartment causing a tenant's death. The court upheld a jury verdict against the landlord, holding that the independent contractor rule would not shield the landlord from liability. The relation between the landlord and the tenant distinguished this case from the case in which a third party sues the person who hired an independent contractor. The landlord owed "a special duty" to use reasonable care to protect the tenant from injury, a duty based on the relation between landlord and tenant, and the landlord was liable for breach of this duty. Id. at 37.

This court explained the Medley holding in a subsequent case as follows: "In this context, the term 'special duty' of reasonable care meant a duty created by the contractual relationship of landlord and tenant. A duty of reasonable care created by contract cannot be allocated to an independent contractor in a relationship with a party to the contract." Peterson v. Sinclair...