Earhart v. William Low Co.

• Decision Date: 22 October 1979
• Citation: 25 Cal.3d 503,158 Cal.Rptr. 887,600 P.2d 1344
• Court: California Supreme Court
• Parties: , 600 P.2d 1344 Fayette L. EARHART, Plaintiff and Appellant, v. WILLIAM LOW COMPANY et al., Defendants and Respondents. L.A. 30993.

Page 887

158 Cal.Rptr. 887

25 Cal.3d 503, 600 P.2d 1344

Fayette L. EARHART, Plaintiff and Appellant, v. WILLIAM LOW COMPANY et al., Defendants and Respondents.

L.A. 30993.

Supreme Court of California.

Oct. 22, 1979.

Robert C. Coates, Eichhorn, Fielden, Wetherbee & Coates, and Gregory S. Day, San Diego, for plaintiff and appellant.

Norvin L. Grauf, San Diego, for defendants and respondents.

TOBRINER, Justice.

In this case we must determine whether a party who expends funds and performs services at the request of another, under the reasonable belief that the requesting party will compensate him for such services, may recover in quantum meruit although the expenditures and services do not directly benefit property owned by the requesting party.

In the instant case, plaintiff asserts that, at defendant's request, he expended sums in commencing the construction of a mobile home park on land owned by defendant and on an adjacent parcel owned by a third party. When defendant refused to compensate plaintiff for any of the services so rendered, plaintiff sued in quantum meruit.

While permitting plaintiff to recover the sums which he expended on the parcel actually owned by defendant, the trial court denied plaintiff recovery for the expenses incurred in construction on the adjoining parcel, reasoning that under past California cases defendant received no direct "benefit" from construction on the property that he did not own. Plaintiff now appeals from the trial court's adverse judgment limiting his recovery, contending that he should be permitted to recover in quantum meruit despite the absence of defendant's ownership of the adjoining parcel.

As we shall explain, plaintiff is entitled to prove defendant's liability for the reasonable value of plaintiff's services rendered on both parcels of land. The trial court in the instant case apparently felt constrained to limit plaintiff's recovery because of this court's decision in Rotea v. Izuel (1939) 14 Cal.2d 605, 95 P.2d 927. In that case the court denied quasi-contractual recovery on the ground that the only "benefit" received by the defendant was the "incidental benefit" which he may have found in the satisfaction of obtaining compliance with his request.

In view of the facts of the present case, we reject such a broad limitation of the remedy of quantum meruit. Here, plaintiff claims that defendant urged him to begin work on the mobile home park for which he and defendant had long been negotiating. Plaintiff further asserts that, under defendant's supervision, he immediately commenced construction, justifiably relying on his belief that defendant would pay for the requested performance. If the trial court finds these facts to be true and, thus, that plaintiff rendered the very performance that defendant requested, we believe that principles of fairness support plaintiff's recovery for the reasonable value of his labor.

This appeal comes before us on an abbreviated record. The facts, which are sufficient for the resolution of the general legal issue presented, have been gleaned from the pleadings, the partial transcript, the trial court's findings, and the parties' briefs on appeal. (Cf. Scala v. Jerry Witt & Sons, Inc. (1970) 3 Cal.3d 359, 367 fn. 4, 90 Cal.Rptr. 592, 475 P.2d 864.)

Plaintiff Fayette L. Earhart is the president and owner of Earhart Construction Company. For approximately two months in early 1971, plaintiff and defendant William Low, on behalf of defendant William Low Company, ¹ engaged in negotiations for the construction of the Pana Rama Mobile Home Park. These negotiations culminated in a construction contract which was to become binding when defendant obtained the requisite financing to build the park and when plaintiff secured a labor and material or performance bond for the work. Neither condition was ever fulfilled.

The proposed park was to cover a number of acres, some of which defendant owned, and the balance of which were owned by Ervie Pillow. In May 1971 defendant and Pillow entered into an escrow agreement in which Pillow agreed to sell her tract to defendant on the condition that defendant obtain financing for the mobile home park. According to plaintiff, a "special use permit" allowing the construction of a mobile home park on Pillow's land was of particular interest to defendant. Plaintiff claimed that the permit would expire on May 27, 1971, without possibility of renewal, unless work on the property were "diligently under way" by that date.

Plaintiff maintained that on May 25, 1971, defendant telephoned him to inform him that he had secured the necessary financing for the park, and, waiving all conditions to the contract, urged plaintiff to move equipment onto the property and commence work immediately in order to "save" the special use permit. Plaintiff's crew began work at once and continued to work for one week, often in the presence of defendant. On June 1, 1971, plaintiff submitted a progress bill to defendant and at that time learned that defendant had not secured the requisite financing. Defendant refused to pay plaintiff's bill, revealing that in the interim he had signed a construction contract for the park with another firm.

At trial, defendant took issue with a number of plaintiff's assertions. According to defendant, the validity of the Pillow permit was irrelevant to his plan to construct a mobile home park since he had obtained a permit himself, and, as he testified, "As long as I had my permit, (Pillow's auto) court could be developed." Furthermore, defendant denied telephoning plaintiff and asserted that he had never asked plaintiff to work "specifically" on the Pillow property. Rather, defendant claimed that plaintiff began construction before either of the conditions to the written agreement had been met, in order to get "kind of a leg up there in (defendant's) eyes towards getting the contract eventually. . . . (Plaintiff) was going to take a gamble in there subject to requisite financing" and without charge to defendant.

At the conclusion of the trial, the court determined that plaintiff was entitled to recover from defendant on a theory of quantum meruit. ² Stating that "(g)enerally speaking, the court has a tendency to believe the testimony of Mr. Earhart and to disbelieve the testimony of Mr. Low," ³ the trial court specifically found that plaintiff had furnished machinery, labor, and materials to defendant's property "at the special instance and request of defendant."

In assessing the amount of the damages to which plaintiff was entitled under quantum meruit, however, the court limited plaintiff's recovery to the reasonable value of the work done on defendant's tract, declining to award damages for the reasonable value of services rendered in construction on the Pillow property. Acknowledging that plaintiff's services "were furnished both to the Pillow property and to the Low property," the trial court interpreted this court's decision in Rotea v. Izuel, supra, 14 Cal.2d 605, 95 P.2d 927, as precluding plaintiff's recovery with respect to the work on the Pillow property. The court stated in this regard: "(I)t is an established proposition of law in California . . . that you can't get recovery for services furnished to a third person, even though the services were furnished at the request of the defendant. . . . So the plaintiff can't recover for services furnished Mrs. Pillow. . . . (E)ven though the plaintiff renders services or delivers a product, if it is of no value to the defendant, then the defendant doesn't pay for it. All he pays for is the value of what he got, notwithstanding how much it cost the plaintiff to produce it. That's the proper measure in this case." ⁴

Because the court construed the governing cases as barring recovery for work on the Pillow property as a matter of law, the court made no factual findings as to whether plaintiff had actually furnished labor and materials to the Pillow property at defendant's request nor as to the value of any work that may have been done. Plaintiff now appeals from the trial court judgment insofar as it denied him recovery for services allegedly rendered with regard to the adjoining Pillow parcel.

To understand the trial court's seemingly arbitrary refusal to grant complete recovery on the basis of quantum meruit, we must first examine this court's decision in Rotea v. Izuel, supra. Briefly to summarize the facts in that case: plaintiff's wife died, leaving five minor children in plaintiff's care. Plaintiff's sister-in-law Eugenia subsequently moved into plaintiff's home to assist in taking charge of the children. Although Eugenia later became ill, she nonetheless continued to care for the children.

Antonio Izuel, Eugenia's brother, also lived in plaintiff's home. Antonio helped support the family and, over the years, along with plaintiff and plaintiff's children, took care of Eugenia during her illness. On Antonio's death, plaintiff brought suit to recover from Antonio's estate the reasonable value of services rendered by plaintiff in caring for Eugenia. In support of plaintiff's claim, plaintiff's children testified that Antonio "promised to pay (their) father out of his estate for Eugenia's care."

Preliminarily this court stated that plaintiff could not recover upon his claimed oral agreement, since it violated the statute of frauds, and that plaintiff's cause of action, "if any, was one for the reasonable value of the services performed." (14 Cal.2d at p. 608, 95 P.2d at p. 929.) The court distinguished cases that admitted proof of an oral agreement to show that the parties did not intend any services to be gratuitous, on the ground that there "the services were performed with respect to and for the direct benefit of the deceased person and under such circumstances as to create an original obligation implied in law to pay the reasonable value of such services, which obligation arose independently of the terms of the...