Crumley v. Walter M. Ballard Corp.

• Decision Date: 30 November 1950
• Citation: 224 P.2d 455,100 Cal.App.2d 698
• Parties: CRUMLEY v. WALTER M. BALLARD CORP. Civ. 14416.
• Court: California Court of Appeals Court of Appeals

Page 455

224 P.2d 455

100 Cal.App.2d 698

CRUMLEY v. WALTER M. BALLARD CORP.

Civ. 14416.

District Court of Appeal, First District, Division 2, California.

Nov. 30, 1950.

Hearing Denied Jan. 25, 1951.

Cooper, White & Cooper, Sheldon G. Cooper, George A. Helmer, San Francisco, for appellant.

Heller, Ehrman, White & McAuliffe, Lawrence C. Baker, San Francisco, for respondent.

PER CURIAM.

Action for damages for the breach of an express oral contract, and an express oral warranty. Judgment for the plaintiff, and defendant appeals.

In August, 1946, respondent was the owner and operator of the Commercial Hotel in Elko, Nevada. Appellant was and is engaged in the business of acting as consultant and advisor in remodeling and renovating hotel buildings.

Desiring to redecorate and remodel the public rooms of the Commercial Hotel, respondent entered into negotiations with appellant's Western General Manager, Harry S. Moyer, to obtain appellant's services in this regard. These negotiations resulted in the formation of a written contract. This contract was in the form of a letter from Moyer to respondent, dated August 19, 1946, which set out the terms under which appellant would perform services for respondent. Respondent indicated upon this letter his acceptance of the terms contained therein. So far as it is pertinent to this dispute, the text of this letter is set out below:

'Dear Mr. Crumley:

'Confirming arrangements made in Elko with you last week for the services of The Walter M. Ballard Corporation in interior design and decoration at your hotel properties in Elko, we are proceeding with plans for the following work for fees as stipulated:

'I. Ranchinn (This section dealt with services to be performed by appellant at Ranchinn, another hotel property owned by respondent, which services are not involved in this litigation.)

'II. Commercial Hotel

'All public spaces, including the following, will be completely redecorated:

'Dining Room

'Lobby-Lounge-Coffee Shop

'Casino and Bar

'Cocktail Lounge and Bar.

'It is understood that furnishings have been purchased for these areas. We will have to fill in, however, with decorative objects and a small number of additional pieces. The rooms in the old building, namely, the dining room-lobby-lounge, coffee shop and casino and bar will be planned for interior decoration for a period of approximately two years, when this building will be replaced. We will make a more permanent design and scheme for interior decoration for the cocktail lounge and bar, which room will probably remain fixed. We will prepare preliminary plans and sketches for the interior decoration and design of the above rooms and supervise the installation of any new equipment and schedule the work to completion for a fee of 15% of the cost of all work undertaken. A retainer fee of $3,000.00 will be due at the completion of our preliminary survey and awarding of contracts for the work.'

Then follow provisions for the payment of fees, and for payment of the expenses of appellant's personnel. As previously stated, respondent indicated on this letter his acceptance of the terms set out therein on August 27, 1946.

Subsequently respondent decided upon a more permanent and comprehensive scheme for fitting out the public spaces of the Commercial Hotel. Respondent then considered the installation of an air-conditioning system for these public spaces of the hotel. It appears uncontradicted that the air-conditioning system was not decided upon nor even mentioned until after the formation of the August 27, 1946 contract.

The trial court found as a fact: 'That on or about the 26th day of September, 1946, plaintiff and defendant orally agreed that defendant should prepare and furnish the plans and specifications and the engineering supervision for a proposed new air-conditioning system to be installed in and for the public spaces in said Commercial Hotel.'

The trial court also made the following findings: 'That on said 26th day of September, 1946 in the City of Elko, State of Nevada, and at other times in said City and State between said 26th day of September, 1946, and the 24th day of January, 1947, said defendant by its duly authorized representatives orally stated and warranted to plaintiff that the plans and specifications to be prepared by defendant would provide for an air-conditioning system which would function satisfactorily in all respects, would be properly engineered and would provide a uniform and comfortable temperature in all of the public spaces of said Hotel at all times and in all seasons of the year' (Finding Number VI), and 'That in accepting the plans and specifications prepared as aforesaid by defendant and in entering into said contract with said Detweiler & Detweiler (contractors who installed the system) for the installation of said air-conditioning system plaintiff relied upon the statements and warranty of said defendant hereinbefore mentioned in paragraph VI hereof.' It is for the breach of this agreement and warranty that respondent recovered judgment in the trial court.

On January 16, 1947, respondent informed Moyer that he regarded the August 27, 1946 contract as unsatisfactory, and '* * * that in lieu of said contract the undersigned proposes to pay a fixed fee of $11,000 to said corp. for the services to be performed under said contract, plus travel and subsistence expenses in connection therewith.'

This resulted in the second written agreement between the parties, again in the form of a letter from Moyer to respondent, dated January 21, 1947, and received by respondent on January 27, 1947. The complete body of this letter reads as follows.

'This agreement will serve to amend and supersede out contract of August 19, 1946, accepted August 27, 1946 in accordance with your proposal of January 16, 1947.

'It is agreed that a fixed fee is hereby established in the amount of $11,000.00 for the work to be undertaken as set out in our contract of August 19th, based upon work which has been completed at the Ranchinn and work to be completed at the Commercial Hotel in accordance with our drawings and specifications as of January 15, 1947.

'For any additional major changes required to architectural or structural drawings involving the redesign of existing approved plans there will be a fee of 15% on the cost of work involved in the execution of these changes.

'In addition to the above fixed fee it is agreed and understood that the Hotel will provide subsistence in the form of room and meals without cost to our project supervisor or additional technical personnel as needed in Elko to further the progress of the job, plus transportation to and from San Francisco to Elko or other points in the servicing or procurement toward the execution of the job as required.'

An acceptance of the terms of the letter was indicated upon the face thereof by respondent, with the proviso that what was to constitute 'major changes' would be mutually determined between the parties. This acceptance was not dated, but we may safely assume an acceptance on the date received, i. e., January 27, 1947.

The heating and cooling phases of the air-conditioning system were completed by the contractors awarded the work in July and October of 1947, respectively. Neither performed satisfactorily. The trial court found as a fact that the failure of the air-conditioning system to perform satisfactorily was due to the faulty design and plans supplied by appellant. The trial court further found this failure to be a breach of the express agreement and warranty of appellant that their design would result in a satisfactory air-conditioning system, and awarded damages accordingly.

There was direct and positive testimony at the trial with regard to the oral agreement and warranty concerning the design of the air-conditioning system, which supports the trial court's findings in this regard.

The trial court also found that defendant breached an implied warranty that the plans would be suitable for the purposes for which they were intended.

Appellant bases this appeal on the following grounds: (1) That the trial court erred in admitting evidence of the oral agreement and express warranty concerning the design of the air-conditioning system; (2) That the trial court erred in finding an implied warranty of suitability as regards the plans for the system; and (3) That the damages awarded were unreasonable and excessive.

The parol evidence rule is not merely a rule of evidence but a principle of substantive law. Estate of Gaines, 15 Cal.2d 255, 264, 100 P.2d 1055; Mulrooney v. Pietro, 79 Cal.App.2d 311, 314, 180 P.2d 62; Wigmore, 7th Ed., sec. 2400, et seq. The contracts involved here, both the written and the alleged oral agreements, were entered into and were to be performed in the State of Nevada. Thus the agreements of the parties are to be interpreted...