C. F. Halstead Contractor, Inc. v. Dirt, Inc.

• Citation: 294 Ala. 644,320 So.2d 657
• Parties: C. F. HALSTEAD CONTRACTOR, INC., a corporation v. DIRT, INC., a corporation. SC 1085.
• Decision Date: 21 August 1975
• Court: Alabama Supreme Court

Page 657

320 So.2d 657

294 Ala. 644

C. F. HALSTEAD CONTRACTOR, INC., a corporation v. DIRT, INC., a corporation.

SC 1085.

Supreme Court of Alabama.

Aug. 21, 1975.

Rehearing Denied Oct. 2, 1975.

Crenshaw & Minor, Montgomery, for appellant.

Thomas A. Deas, Mobile, for appellee.

BLOODWORTH, Justice.

This appeal involves the respective rights and obligations of a contractor and his subcontractor under a contract for the preparation of a construction site. Appellant contractor (defendant below) appeals from a judgment rendered on a jury verdict for the full amount sued for by appellee subcontractor (plaintiff below).

Appellant, C. F. Halstead Contractor, Inc., is a general contractor who contracted to build a warehouse and building for Lowe's Department Stores on Dauphin Street in Mobile. Appellee, Dirt, Inc., is a site contractor. Halstead negotiated a subcontract with Dirt under which Dirt was to install the site work for the project. Dirt agreed to remove unsuitable soil from the site (referred to as 'undercutting'), to haul in sufficient dirt (referred to as 'backfill') to achieve the compaction necessary for construction, and to render other services necessary for the preparation of the construction site.

The parties initially considered contracting on a 'unit price' basis. However, after determining that an 'undercut' of one foot and a 'backfill' of two feet should be sufficient, the parties finally contracted on a 'cost-plus' basis with the compensation to Dirt to equal the amount of Dirt's cost on the job plus a profit in the amount of 15 percent of the cost, but with the total compensation not to exceed $50,000.00. The written contract stated that Dirt was to '(f)urnish all labor, materials, and equipment necessary to install the site work' and specified that the work to be performed was to include, but not to be limited to, an undercut of one foot.

After the work had commenced, the subcontractor, Dirt, discovered a spot where the soil was soft, requiring an undercut deeper than the one foot originally contemplated. Harrison, president of Dirt, informed Tatum, president of Halstead, of the necessity of a deeper undercut. Tatum authorized Harrison to undercut to whatever extent was necessary. It is from this authorization that the instant controversy has arisen.

Dirt contends that Tatum's authorization of a deeper undercut constitutes a modification of the contract from its original 'cost-plus' basis and that Dirt is entitled to additional compensation for the additional undercutting and backfill. Halstead contends that the authorization did not amount to a modification, that the additional work fell within the terms of the original 'cost-plus' contract, and that no additional compensation was ever authorized.

Dirt's substantiation of its cost consists solely of its records as to the number of truckloads of undercut and fill dirt which were hauled; Halstead contends that such records are relevant only in 'unit price' contracting. Halstead maintains that one performing services under a 'cost-plus' contract is under a duty to keep accurate, detailed records of actual expenses and is not entitled to compensation in the absence of such records.

At trial, the testimony clearly established the fact that an additional undercut was performed. However, the testimony was in conflict as to the quantity of additional dirt removed and the quantity of additional dirt used as backfill. Dirt's records of the number of truckloads of dirt removed and added were at variance with the calculations of Dirt's expert witness. On the basis of measurements taken by 'bornings' at the site, the expert, a registered engineer, calculated the additional work to be significantly less than the amount of additional work reflected by Dirt's records. (This conflict is largely due to a difference in the methods of apportionment between what was necessary to achieve the undercut of one foot and the additional undercut.) Healstead argues that, if the cost of the amount of the additional work computed under the expert's calculations were billed on the basis of Dirt's usual 'unit price,' the additional cost would total only $3,903.10. Under the calculations based on its owned records of truckloads, Dirt claimed $11,800.00 for the additional work. The jury awarded the full amount sued for. Halstead contends that the jury award is excessive.

In short, this appeal presents three basic issues for review: 1. whether there was sufficient evidence upon which the jury could find that Tatum's authorization of additional undercut constituted a modification of the original contract; 2. whether a subcontractor who claims compensation under a 'cost-plus' contract is entitled to payment in the absence of an itemization of its costs; 3. whether the jury's verdict was excessive because is exceeded the amount testified to by the subcontractor's expert witness and because it was rendered in the exact amount sued for.

1. On the issue as to whether there was sufficient evidence to find a modification of the original contract, Halstead cites Badders & Britt v. Davis, 88 Ala. 367, 6 So. 834 (1889) for the proposition, viz.:

'* * * If he (defendant-owner) made no promise to pay, then the presumption arises that the alterations were agreed to be made, and were made, without extra charge.'

Halstead argues that there was no express promise to pay in the instant case, therefore the presumption is that the additional work was performed without extra charge and that there was no effective modification of the contract.

We think the answer to this assertion lies in this Court's holding in Bonie v. Griffin, 252 Ala. 299, 40 So.2d 870 (1949) where the Court said:

'* * * It is no objection that no written contract or order covered these (additional) items, if the additional work was mutually agreed upon by the parties or done under circumstances implying mutual assent. * * *'

Even more recently, we held in Huffman-East Development Corporation v. Summers Electric Supply Company, 288 Ala. 579, 263 So.2d 677 (1972):

'(6) The extra work performed by Claburn was at the request of the appellants. The work and labor and material furnished thereto became a part of the permanent improvement of the apartment building and enhanced the value of the appellants' property. Where one knowingly accepts services rendered by another and a benefit results, the law implies the promise to pay a reasonable value. Shirley v. McNeal, 272 Ala. 696, 133 So.2d 873.'

Looking to the evidence in the case at bar, we find that Harrison (Dirt's president) testified as follows at trial:

'(W)e called Mr. Tatum (Halstead's president) long distance at Montgomery; and I talked to him to start with and told him what we were confronted with, and he asked me what my recommendation was. I told him that it looked to me like we were going to have to go six inches or more deeper to turn out a good job.'

'Mr. Tatum told me, said, 'Lamar, if you feel like that is what you have got to do to do it, do it, but just don't go to the extreme with it.' * * *'

'(O)n the way back to the job, I asked Mr. Tillman (Halstead') superintendent) about that (getting...