Capitol Hotel Co. v. Rittenberry

• Decision Date: 04 March 1931
• Docket Number: No. 3501.,3501.
• Citation: 41 S.W.2d 697
• Parties: CAPITOL HOTEL CO., Inc., et al. v. RITTENBERRY.
• Court: Texas Court of Appeals

41 S.W.2d 697

CAPITOL HOTEL CO., Inc., et al. v. RITTENBERRY.

No. 3501.

Court of Civil Appeals of Texas. Amarillo.

March 4, 1931.

Rehearing Denied September 9, 1931.

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Appeal from District Court, Potter County; W. E. Gee, Judge.

Action by E. F. Rittenberry against the Capitol Hotel Company, Incorporated, and

others, in which defendants filed a cross-action. Judgment for plaintiff, and defendants appeal.

Reversed and cause remanded.

Underwood, Johnson, Dooley & Simpson, of Amarillo, for appellants.

Stone & Guleke, of Amarillo, for appellee.

HALL, C. J.

This is an action by Rittenberry, an architect, against Ed R. Mayer, the Capitol Hotel Company, Inc., as the owners of the Capitol Hotel, and against the Illinois Standard Mortgage Company, Chicago Trust Company, and the National Bank of Commerce of Amarillo, as owners of liens against said hotel.

Plaintiff Rittenberry seeks to recover of Mayer and the hotel company a balance alleged to be due him as architect's fee, and prays for a foreclosure of his mechanic's lien on the property as against all of the defendants. The case was submitted to a jury under a general charge and resulted in a verdict and judgment in favor of Rittenberry against the hotel company for a balance due plaintiff of $16,215.46. The defendants, by cross-action, sought to recover of Rittenberry damages resulting from his want of skill, carelessness, and negligence in the performance of his duties as architect. The jury found in favor of Rittenberry and against the defendants on their cross-action.

The substance of plaintiff's petition is that on April 8, 1926, he and the defendant Mayer entered into a written contract, by the terms of which plaintiff undertook to furnish sketches, working drawings, specifications and detailed drawings, to generally superintend the work, and to audit all accounts in and about the construction of the hotel building. That the contract fixed plaintiff's fee at a sum equal to 5 per cent. of the cost of the hotel building, payable $1,800 when the contract was let and the remainder payable in installments as the building progressed; subject to the proviso that if the defendant did not proceed with the building, then the cash payment of $1,800 constituted full and final payment. It is alleged that the defendants decided to erect and did erect said hotel building; that Mayer formed a corporation known as the Capitol Hotel Company, Inc., to accomplish the erection of the hotel building and conveyed to said corporation the lots upon which the building was erected. That thereafter said corporation made a contract with the Brennan Company, a partnership, for the erection of said building on a cost-plus basis. That plaintiff forthwith, following his employment on April 8, 1926, began the preparation of plans and specifications for said building, and after the creation of the hotel company, which assumed plaintiff's contract, at its special instance and request, continued work upon such plans and specifications and continued to superintend the construction of said building until its completion, and that by reason of the premises, the defendants Mayer and the hotel company became obligated and bound to pay plaintiff 5 per cent. of the cost of such building, less admitted credits, leaving a balance due of $17,187.75, and as security therefor the plaintiff asserted a constitutional mechanic's lien on the lots described in the petition and claimed priority against the other defendants who were interested in a trust indenture lien against said property securing a bond issue.

The pleadings of the defendants are voluminous and will be stated when necessary in the consideration of the various propositions related thereto.

Under the first proposition, it is contended that the court erred in sustaining a general demurrer to the first count of the cross-action. The substance of this count is correctly set out in appellants' brief, from which we quote as follows:

(a) That when the defendant Mayer first came in contact with plaintiff in connection with the proposal to build the hotel in question, plaintiff held himself out as a skilled, proficient, and experienced architect, possessed of the usual skill and knowledge of one well trained in the art of architecture.

(b) That skilled architects generally possess, as a part of their art and professional service, the ability to estimate in advance, with reasonable accuracy, the cost of buildings planned and designed by them.

(c) That the plaintiff professed to have such ability and at the time of the beginning of his relation with defendants, and frequently thereafter, claimed and represented to defendants that he was well able to estimate with accuracy the cost of such hotel as he might plan and design for defendants.

(d) That defendants informed plaintiff, who well knew and understood all along, that the defendants considered it a matter of primary importance, upon which their whole course would depend, to know in advance, with reasonable certainty, what the cost would be if they undertook to construct the hotel, and plaintiff well knew that his claim of professional skill and ability to estimate such cost was the moving consideration with the defendants leading to the employment of plaintiff to act and serve as architect and superintendent in the premises, and plaintiff well knew that the defendants would not proceed with said hotel venture except in reliance upon an estimate of the cost thereof.

(e) That the only contracts ever made and executed between plaintiff and either of the defendants covering his services as architect in and about said hotel project was the contract of April 8, 1926, and the later and final contract of September 30, 1926, wherein reference is made to the first contract, and wherein the plaintiff acknowledged receipt of the payment of $1,800, and which recites that both parties desired to amend or alter the first contract of April 8th, in so far as it pertains to the fee to be paid to plaintiff, and then sets forth their agreement "that in the event a five-story building is erected under plans and specifications furnished by first party, then and in such event the maximum fee shall not exceed the total sum of $12,250.00 for architectural fee under said contract dated April 8, 1926, hereinabove referred to."

(f) That at the time said last-named contract was made, the defendants were yet undecided whether to proceed with the hotel venture, and as plaintiff well knew, the decision hinged mainly upon the question of the cost and the sufficiency of available financial resources to meet such cost.

(g) That after the plans for said hotel were revised so as to call for a six-story building to meet the requirements of the mortgage company which was to underwrite the proposed bond issue, the defendants were again concerned with respect to what the proposed building would cost, and in response to inquiries, the plaintiff claimed and represented to defendants that the building would not cost more than the amounts defendants had appropriated and arranged to borrow for that purpose, namely, $340,000.

(h) That said hotel was designed to have from 150 to 160 guest rooms.

(i) That the defendants had made a survey of the hotel business generally and with particular reference to Amarillo, and taking into consideration the various economic and competitive factors and the usual and ordinary cost of modern hotels, had concluded that a reasonable return on the investment could not be earned by the proposed hotel if it exceeded $2,000 per guest room, in addition to the fair proportionate cost of the ground floor rental space.

(j) That plaintiff agreed that such opinion was correct and expressed himself to defendants that he well realized that the cost would have to be held to said basis to leave any chance for a reasonable return and income on the investment.

(k) That plaintiff well knew and understood that the defendant hotel company would have been unwilling to proceed and involve itself in the heavy expenditure of such an enterprise if it had any idea that the building would cost more than the cost ratio above stated.

(l) That the matter of such cost was of such primary importance to defendants that they insisted with plaintiff that there must be no mistake on the point, and asked plaintiff to check his cost estimates again and calculate the cost in detail and let defendants have his written statement thereof.

(m) That thereupon, plaintiff acted upon such request, well knowing that defendants would depend upon him implicitly in that regard and regulate their conduct according to his advice, and thereafter, about April 11, 1927, he delivered to the defendants his written, signed, detailed statement estimating the cost at $374,729.00 for the labor and material necessary to build and complete said hotel.

(n) That when plaintiff submitted said written estimate, he explained to defendants that it ran more than the amount that defendants had been counting on, viz., $340,000, but that the excess was due to the fact that plaintiff had made his written estimate liberal and that, in fact, the building would cost substantially less than said estimate, but that in any event, the estimate represented the outside and maximum figure and that the defendants could depend upon it that the proposed hotel building would not, in any event, cost more than said written estimate.

(o) That defendants did rely upon the advice and estimate of plaintiff and had full faith and confidence in his ability to fix the ultimate cost. That they would not have proceeded with the building if they had not relied upon such advice and estimate, but relying thereon, did proceed with the construction in the month of April, 1927.

(p) That the plaintiff, as part of his duties, was bound to exercise superintendence over the construction of the building and keep account of the costs. That defen...