Call v. Alcan Pac. Co.

Decision Date31 May 1967
Citation251 Cal.App.2d 442,59 Cal.Rptr. 763
CourtCalifornia Court of Appeals Court of Appeals
PartiesNorman W. CALL, dba Capitol Painting and Sheetrock Service, aka Capitol Paint and Drywall, Plaintiff and Respondent, v. ALCAN PACIFIC COMPANY, a corporation, Defendant, Cross-Complainant and Appellant, v. GENERAL INSURANCE COMPANY OF AMERICA, a corporation, Defendant, Cross-Defendant and Respondent. Civ. 11293.

Lambert, Lemmon & Winchell, by James Winchell, Sacramento, for defendant, cross-complainant and appellant.

Fitzwilliam, Memering, Stumbos & DeMers, by Donald Walter and M. H. Pothoven, Sacramento, for defendant, cross-defendant and respondent.

William D. Heekin, Carmichael, for plaintiff and respondent.

FRIEDMAN, Associate Justice.

Plaintiff Norman Call was the drywall and painting subcontractor for a low rent housing project located in Yuba City. Defendant Alcan Pacific Company was the prime contractor. On July 25, 1963, Call withdrew his employees from the job. On the same date, July 25 (a Thursday), Alcan sent Call a telegram stating: 'your repeated failure to prosecute work diligently, including, but not limited to, the failure to maintain full crews and also pulling your crews off the Richland Housing Project, the most recent (of) which occurred today, you are hereby notified that unless you resume work with a full crew by Monday, July 29, 1963, we consider your contract terminated and take such action as authorized by our contract with you.' On monday, July 29, according to the trial court's findings, Alcan terminated the subcontract, taking possession of Call's materials, tools and appliances at the project site.

In September 1963 Call filed a lawsuit against Alcan, seeking an accounting and injunction. Alcan filed an answer and counterclaim, as well as a cross-complaint naming General Insurance Company of America, surety on Call's performance bond. General Insurance answered and filed a cross-complaint against Call. In April 1964 Call filed a new action against Alcan, seeking damages for breach of the subcontract and conversion of his equipment. In October 1964 a court order directed consolidation of the two lawsuits except for the cross-complaint filed by General Insurance against Call (which was severed from the remainder of the litigation by stipulation). The consolidated action was tried without a jury. On May 12, 1965, the trial court entered findings and on May 24 a judgment in favor of General Insurance and against Alcan. On August 30, 1965, findings and judgment were entered against Alcan in favor of Call, awarding the latter $16,785 damages for breach of contract plus $750 conversion damages, less $1,657.78 as a sum found due to Alcan.

On September 30, 1965, Alcan filed a notice of appeal. Although the notice of appeal bore several captions, including that of its cross-action against General Insurance, it stated only that Alcan was appealing from the August 30 judgment in favor of Call, omitting any mention of the General Insurance Company's judgment of May 24. General Insurance contends that the notice of appeal does not constitute an appeal from the judgment in its favor, and in any event that it was not filed within the 60-day period fixed by Rule 2, California Rules of Court. Status of Alcan's appeal vis-a-vis General Insurance is of no consequence if the August 30 judgment between Alcan and Call is to be affirmed. We turn to that judgment.

The trial court found that Call performed his subcontract until July 25, 1963, when he withdrew his employees from the construction site; that only a small amount of the subcontract remained to be performed; that earlier disputes and minor breaches had been waived or settled by negotiation and change orders and that the parties had by their actions waived arbitration provisions; that Call's cessation of work on July 25 and failure to work between then and July 29 did not constitute a material breach of the subcontract; that the project owner's inspection procedures were unreasonable; that, in choosing the date of July 29 on which to terminate the job, Alcan refused further performance in the face of the subcontractor's minor breach; that Alcan's conduct on July 29 in terminating the job and seizing Call's equipment and materials was a material breach of contract by Alcan.

Alcan appeals on the judgment roll and not on a reporter's transcript. Thus its attack on the trial court's findings is confined to such errors as appear on the face of the record; the question of the sufficiency of the evidence is not open. (Williams v. Inglewood Board of Realtors, Inc., 219 Cal.App.2d 479, 482, 33 Cal.Rptr. 289; Arruda v. Arruda, 218 Cal.App.2d 410, 414, 32 Cal.Rptr. 257.)

Essentially Alcan contends that the trial court erred in ignoring special requirements of the painting subcontract. In article 3 of the subcontract Call, the subcontractor, agreed that time was of the essence, that he would conduct the work diligently and 'supply a sufficiency of properly skilled workmen at all times to the satisfaction of the Contractor, * * *' article 10 of the contract gave the prime contractor an option to terminate the subcontract under specified conditions. 1 Article 11 provided for the arbitration of disputes and included an agreement that 'a dispute shall not interfere with the progress of the construction.'

A contract may contain a valid provision giving one or the other party an option to terminate it on specified conditions. 2 Here the subcontractor was required to supply a sufficency of properly skilled workmen at all times to the satisfaction of the contractor. A provision requiring performance to the promisee's satisfaction does not make the contract illusory since he cannot act arbitrarily; rather, according to the character of the contract, he will be held either to the standard of satisfaction in good faith or the standard of a reasonable person. 3

In a bilateral contract a 'time of the essence' clause may be both a covenant and a condition precedent upon which a reciprocal duty of the promisee depends. The clause has different consequences in each of these roles. If enforcement of the clause will result in an excessive penalty or forfeiture, the courts will frequently ameliorate the offender's position by the application of equitable principles. (3A Corbin on Contracts, pp. 353, 358, 360.) On the other hand, if a duty of the promisee is expressly conditional on the promisor's timely performance, the condition must be observed unless the promisee excuses it by waiver or other action. (Ibid., pp. 359--361.) Where the contract expressly provides that the promisee may cancel it by written notice upon the promisor's failure of timely performance, the former has an option to terminate by giving the prescribed notice. 4 Even without an express termination option, a number of authorities indicate that an owner has common law right to cancel a building contract if the contractor, without fault of the owner, fails to comply with a 'time of the essence' clause. 5 In any event, an option to terminate must be exercised in good faith. 6

Such a clause, to be sure, may be waived. Nevertheless, where a promised performance has a continuous character, waiver of one breach does not preclude the offended party from invoking his contract rights upon a later breach. 7 Thus, where time is expressly made of the essence, strict compliance may be waived and then reinstated by a definite notice or equivalent conduct. 8

In the present case the issue was not whether Call, the subcontractor, had been guilty of a minor or material breach by the standards applicable to contracts ungoverned by express conditions on the subject; nor, whether Alcan's consequential action correlatively became a minor or material breach. Rather, the issues were whether the subcontractor's conduct had been such as to activate the termination clause of the contract; whether Alcan had exercised its option to terminate; if so, whether Alcan had acted in good faith; and whether earlier waivers or other conduct abrogated Alcan's right to insist on continuing timely performance in compliance with the written contract.

The findings presented to the trial court do not declare on these essential issues. The findings do not respond to the issues in the case, and the failure to find on material issues is reversible error. 9

Call urges us to ignore the special subcontract provisions, arguing that they were part of the evidence underlying the findings, hence ineligible for consideration on this judgment roll appeal. To the contrary, a copy of the subcontract was incorporated by reference in Alcan's pleadings and hence became part of the judgment roll. (Code Civ.Proc., § 670.) Failure to find on the material issues presented by the parties' contract appears on the face of the record and requires reversal of Alcan's August 30, 1965, judgment.

We turn to Alcan's...

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