Carter v. Quick, 77-186

• Decision Date: 03 April 1978
• Docket Number: No. 77-186,No. 2,77-186,2
• Citation: 563 S.W.2d 461,263 Ark. 202
• Parties: Hayden CARTER, Appellant, v. Lee QUICK et ux., Appellees
• Court: Arkansas Supreme Court

Page 461

563 S.W.2d 461

263 Ark. 202

Hayden CARTER, Appellant, v. Lee QUICK et ux., Appellees.

No. 77-186.

Supreme Court of Arkansas, Division No. 2.

April 3, 1978.

Rhine, Rhine & Young by Robert E. Young, Paragould, for appellant.

Mooney & Boone by Joe C. Boone, Jonesboro, for appellees.

FOGLEMAN, Justice.

Appellant Hayden Carter contracted to build a dwelling house for appellees Lee and Irline Quick on property they owned about one mile west of Paragould. The oral contract was entered into sometime in October, 1973. Plans and specifications were furnished by the Quicks. The agreed price was $25,000. The Quicks moved into the house in December, 1973, and were occupying it when this suit was filed. They commenced this action for breach of contract, alleging that Carter had represented and warranted that the residence would be constructed in a good workmanlike manner and that the quality of construction would be equal to, or better than that of Carter's own residence. The Quicks also alleged negligence in the performance of the contract. Carter denied all material allegations of appellees' complaint. ¹ The case was tried by the court, without a jury, and judgment for $4,060 for damages was granted the Quicks, but Carter was allowed $205 on his cross-complaint, which was not abstracted. Carter alleges several grounds for reversal and we find merit in one of them and reverse the judgment on that account.

Carter moved for a "directed verdict" on the ground, among others, that the Quicks failed to show a breach of the contract because no evidence was presented as to the quality of workmanship of his own residence. The Quicks had complained more about the workmanship in the brick veneer on their house than anything else, but they also complained of the fireplace, allegedly out-of-plumb doors and windows, the use of ungalvanized nails in walls, the location of a switch and fuse box and floors they said were not level. There was substantial evidence that the workmanship in laying the brick was defective and the circuit court gave judgment on this item for the lowest estimate of the cost of replacement, $4,000. He also allowed $20 for reframing the garage door, $20 for moving either a fuse box or a water heater and $20 to repaint the garage to cover rust on ungalvanized nails. There was substantial evidence to support the awards of all except the last item. On that item, it seems clear that appellees prevented the repainting that Carter offered to do.

The terms of the contract were shown by the testimony of Lee Quick and Carter. Lee Quick said that Carter declined to enter into a written contract but promised that "he would build the house with the same quality and be as good as his own," with certain exceptions not material here. Prior to this agreement, the Quicks had viewed Carter's residence. Carter testified that he told the Quicks, "If you want to look at my house, look it over. I'll build you one just like it with the same material and workmanship as my house." He said he used ungalvanized nails in his own house and that they are visible. He also testified that the brickwork on his own house was comparable to that on the Carter house and that the Quick house was "as good and workmanlike as the house I was living in at the time." The abstract of the evidence does not reflect any evidence that Carter agreed, as the Quicks alleged, that the house "would be constructed in a good and workmanlike manner with proper construction." ² Carter's testimony was the only evidence pertaining to the quality of the workmanship on his own house.

We are not presently concerned with the question whether there was an implied warranty of the quality of the materials and workmanship used on the construction of the Quick house. For the purposes of this opinion, we assume that there was. But, according to the testimony in this case, there was an express warranty. Although we have no cases involving the effect of an express warranty upon an implied warranty in building contracts, we conclude that implied warranties are not applicable when there is an express warranty, by analogy to pre-Commercial Code sales contract cases, the reasoning in such cases being appropriate to a contract such as this. The oral contract here was based upon an express warranty of quality in unequivocal language even though the words "warrant" and "warranty" were never used. Harris v. Hunt, 216 Ark. 300, 225 S.W.2d 15; Nichols v. Lea, 216 Ark. 388, 225 S.W.2d 684; Ives v. Anderson Engine & Foundry Co., 173 Ark. 112, 292 S.W. 111; Warren v. Granger, 151 Ark. 453, 236 S.W. 607. Where a contract contains an express warranty on the subject of an asserted implied warranty, the former is exclusive and there is no implied warranty on that subject. C. B. Ensign & Co. v. Coffelt, 119 Ark. 1, 177 S.W. 735; Elder Grocery Co. v. Applegate, 151 Ark. 565, 237 S.W. 92; Earle v. Boyer, 172 Ark. 534, 289 S.W. 490; Reed v. Rea-Patterson Milling Co., 186 Ark. 595, 54 S.W.2d 695. In C. B. Ensign & Co. v. Coffelt, supra, it was argued that there was an implied warranty of the suitability of a carbide gas lighting plant, but we held that there was no such warranty when the contract included an express provision that the plant would diffuse light equal to a sample exhibited. It would be difficult to find a more analogous situation. The evidence was not sufficient to show a breach of warranty. Appellant's motion should have been granted.

Appellant also questions the measure of damages applied by the trial judge, i. e., the cost of replacing the allegedly defective brickwork. It is highly likely that this question will arise on retrial. Appellant contends that the proper measure of damages is the difference between the value of the building erected and the value of the building if it had been built according to the contract. In making this argument, appellant relies on Restatement of the Law, Contracts, § 346(1)(a)(ii) and language in our opinion in J. E. Hollingsworth & Co. v. Leachville Special School District, 157 Ark. 430, 249 S.W. 24. The Restatement rule is stated as follows:

The difference between the value that the product contracted for would have had and the value of the performance that has been received by the plaintiff, if construction and completion in accordance with the contract would involve unreasonable economic waste.

See also, 5 Corbin on Contracts 485, 491, § 1089.

In Hollingsworth, we approved the following declaration of law.

"A substantial compliance by the contractor is all that is required under the law, he being charged (where there is a substantial compliance) with the difference in value between the work as done and as contracted to be done, or the replacement of defective work where this can be done without great expense or material injury to the structure as a whole."

We also approved an award by the chancellor of the cost of tearing down and removing defective work and rebuilding a school building according to the original plans. The chancellor had stated the question to be decided thus:

"Could the defective masonry have been replaced with reasonable expense without tearing down the whole structure? If it could, then the district is entitled to charge only what such cost would have been, together with difference in value of brick, steel, lugs, caps, bases, etc., furnished and those contracted for. On the other hand, if the inferior masonry was all over the building so that the structure was unsafe (and the maximum of safety is required for school buildings where hundreds of little children are housed), and it was necessary to rebuild in order to be certain of durability, then the district was justified in dismantling the house as a whole and in the rebuilding to use materials conforming strictly to the contract."

That case was a suit by the contractor for breach of contract after his work had been stopped by the owner before the building was complete. The owner (school district) cross-complained. The damages awarded were the costs of the completed building, including the cost of tearing down and removing defective parts of the work done by the contractor. It seems, however, that the principles stated in the above quotations should apply in a case like this one where construction was completed and the contractor paid.

The underlying purpose in awarding damages for breach of contract is to place the injured party in as good position as he would have been had the contract been performed. Rebsamen Companies, Inc. v. Arkansas State Hospital Employees Federal Credit Union, 258 Ark. 160, 522 S.W.2d 845; 11 Williston on Contracts (3rd Ed.) 345, § 1363; 5 Corbin on Contracts 5, § 992. It has generally been considered that financial loss is the measure, as was said in the cited case. Yet, the difference in value of a building as erected and its value if it had been constructed according to the contract is not always appropriate where the contractor's performance is defective. See Annot. 76 ALR2d 805 (1961). It has always been recognized that in an action by a contractor to recover the contract price, where there has been substantial performance or the work has been accepted by the owner notwithstanding defects therein, the contractor is only entitled to recover the contract price, less the cost of correcting such defects. Mitchell & Pumphrey v. Caplinger, 97 Ark. 278, 133 S.W. 1032. The applicable rule was stated in Roseburr v. McDaniel, 147 Ark. 203, 227 S.W. 397, thus:

The rule established by decisions of this court is that, where a building contract is substantially performed, even though there are omissions and deviations therefrom, if such defects do not impair the structure as a whole and are remediable "without doing material damage to other parts of the building in tearing down and reconstructing, and may without injustice be compensated by deductions from the contract price," there may be a recovery for the amount found due after...