Gollaher v. Midwood Const. Co.

• Citation: 15 Cal.Rptr. 292,194 Cal.App.2d 640
• Court: California Court of Appeals
• Decision Date: 10 August 1961
• Parties: Robert E. GOLLAHER, doing business as Gollaher Construction Company, Plaintiff and Respondent, v. MIDWOOD CONSTRUCTION CO., Inc., a corporation, Defendant and Appellant. Civ. 24765.

Page 292

15 Cal.Rptr. 292

194 Cal.App.2d 640

Robert E. GOLLAHER, doing business as Gollaher Construction Company, Plaintiff and Respondent, v. MIDWOOD CONSTRUCTION CO., Inc., a corporation, Defendant and Appellant.

Civ. 24765.

District Court of Appeal, Second District, Division 3, California.

Aug. 10, 1961.

Hearing Denied Oct. 11, 1961.

Louis R. Eglash and Jack Lincoln, Beverly Hills, for appellant.

Gerald H. Gottlieb, Beverly Hills, and Richard Rathbun, Reseda, for respondent.

FORD, Justice.

The defendant Midwood Construction Co., Inc., a corporation, has appealed from a judgment in favor of the plaintiff Gollaher for damages for breach of contract.

The plaintiff, doing business under the name of Gollaher Construction Company, and the defendant entered into an agreement which was dated February 25, 1957. That agreement was embodied in a printed form, with appropriate typewritten insertions in the spaces provided therefor, and in a typewritten page added thereto. In that page it was provided in part as follows:

'Gollaher Construction Company hereinafter known as the subcontractor agrees to supply all carpentry labor and equipment necessary to completely frame the four models for Tract No. 22848 in Northridge, with the following provisions: This contract covers all rough carpentry labor making house ready for plaster and stucco. * * *

'7. If it is decided by Midwood Construction Company to award to the Subcontractor Tract No. 22848 consisting of approximately 277 units, Subcontractor hereby agrees to accept this tract at the above mentioned unit prices [$765 per unit] and this agreement with the understanding also that the production schedule will by [be] 10 units a day in sequence, or as called for by Contractor.'

The present action arose out of the refusal of the defendant to permit the plaintiff to do the rough carpentry on units other than the four models. The findings of fact of the trial court may be summarized as follows: 1. The defendant originally asked the plaintiff to submit a bid for the framing of some 600 houses in Tract No. 22848; later the defendant reduced the number to approximately 277 houses and the plaintiff submitted a bid based on that number. 2. On February 25, 1957, the plaintiff was presented with the form of the agreement and for the first time learned that he was being asked to do work on four models only, on land other than in Tract No. 22848, at the amount bid per unit for approximately 277 houses. 3. When the plaintiff protested the reduction in the number of units, his attention was directed to paragraph 7 of the addendum (the language of which has been set forth hereinabove). 4. The plaintiff was thereupon 'given assurance by the defendant that, notwithstanding the terms of the proposed contract, he would be given the right to construct the balance of the units in Tract No. 22848.' 5. The parties signed the contract of February 25, 1957; '[a]ll prior negotiations of the parties by this writing were merged in the terms of this agreement,' but under the provisions of paragraph 7 of the addendum there was reserved 'the additional factor to be decided subsequent to the execution of the contract as to whether or not plaintiff was to be awarded this additional job.' 6. 'Thereafter, both orally and by numerous acts and by writings, the defendant did exercise its decision to award to plaintiff Tract No. 22848, consisting of approximately 277 units, at the same rate as he contracted to perform the work, labor, and services on the four models, and pursuant to this contract as between the parties the plaintiff constructed the four models under the plans and specifications of the defendant, with such modifications thereof as were specifically ordered by the defendant and approved by it, and the four models were, in due time, fully accepted and paid for by the defendant.' (Emphasis added.) 7. The plaintiff performed preparatory work 'necessary to framing the additional 261 units ¹ of houses, including the expenditure of time and money'; at all times 'plaintiff has been and now is ready, able, and willing to perform all other and further conditions and covenants of the said agreement on his part to be performed.' 8. 'On or about May 7, 1957, and at all times thereafter, without fault upon the part of plaintiff, defendant refused and failed to permit plaintiff to continue or complete performance of the said agreement, and on that date defendant repudiated and breached the said agreement, and thereafter proceeded to have the said 261 units of houses framed by another.' 9. The defendant failed and refused to pay to the plaintiff the contract price of $765 for each of the 261 units. 10. If the plaintiff had been permitted to complete his contract, he would have encountered certain conditions which would have increased his costs per unit; such conditions consisted of a strike in one of the building trades, an increase 'in the cost of certain building trade labor,' and adverse weather, as well as other matters. 11. Had the plaintiff been permitted to complete his contract, his costs would have been $703.80 per unit, or a total cost of $183,691.80 for 261 units; '[u]nder the contract plaintiff was entitled to receive $765.00 per unit, or $199,665.00'; 'because of the repudiation and breach of contract by defendant,' the plaintiff was damaged in the amount of $61.20 per unit, or in the total amount of $15,973.20. Judgment was entered for that amount, together with interest (from a date as to which the parties agreed) and costs.

Placing its reliance on the parol evidence rule, the defendant primarily contends that there was no contract with respect to 261 units upon which a recovery by the plaintiff could be based. Succinctly stated, the question presented is whether there is any support in the record for that part of the findings of fact, emphasized above, that after the execution of the agreement of February 25, 1957, 'both orally and by numerous acts and by writings, the defendant did exercise its decision to award to plaintiff' the work on the houses other than the four models.

Under paragraph 7 of the typewritten page of the agreement, the defendant was given the privilege or option of having the plaintiff do the framing work on approximately 277 units in Tract No. 22848 for $765 per unit. It is obvious that the defendant could exercise that right only by words spoken or acts done on its behalf after the execution of the contract of February 25, 1957. Evidence of such words or acts was not received for the purpose of varying the terms of the contract or changing the rights of the parties for which provision was made therein, but rather for the purpose of showing the exercise by the defendant of its privilege or option in harmony with the terms of the agreement; upon such exercise the duties and rights of the plaintiff as well as the obligations of the defendant were as set forth in the agreement. Such purpose is obviously consistent with the substantive law embodied in the parol evidence rule. ²

We turn then to the question of the sufficiency of the evidence to sustain the findings that the defendant did in fact exercise its privilege or option under the provisions of paragraph 7 and did thereafter breach its obligation, so assumed, that the plaintiff should be allowed to do the designated work and be paid $765 per unit therefor. 'In considering this question, we must follow the rule that we are 'bound by the decision of the trial court if there is any substantial evidence' to support the finding and must accept 'the full force of the evidence adduced, together with every inference favorable to the prevailing party that may be drawn therefrom, and excluding all evidence in conflict therewith.'' Talizin v. Oak Creek Riding Club, 176 Cal.App.2d 429, at page 434, 1 Cal.Rptr. 514, at page 517; see also Estate of Nidever, 181 Cal.App.2d 367, 370, 5 Cal.Rptr. 343.

With respect to the change in the number of units to be built, Jerome Snyder, president of the defendant Midwood Construction Co., Inc., testified in part as follows: 'The City notified me on January 17th [1957] that I could develop 277 lots of which 261 were one size and 16 were another size. It was at a later date that we decided that we were not going to build houses on 16 of the lots because they were larger lots * * *. Well, the later date was a business decision that we made and it might have been March or April of '57.' The four models were constructed 'approximately a half to three-quarters of a mile north of the tract.'

The plaintiff testified that he commenced the framing of the models on March 14, 1957. He completed his work on April 5, 1957. About March 20, 1957, Mr. Knott, an employee of the defendant, called the plaintiff and told him that the defendant required a statement from him so to where he would obtain equipment for the work on the 261 units. He went to the defendant's office and signed a document with respect to that matter on March 21, 1957. On April 8 or 9, Mr. Knott telephoned again; as to that conversation, the plaintiff testified as follows: 'Ken Knott said that prior to starting the 261 units that Midwood Construction requested from me a verification of my Workmen's Compensation insurance and adequate public liability insurance carried by me for them on this particular 261 units.' The plaintiff said he would send such verification to Mr. Knott. Pursuant to that conversation, the plaintiff called his insurance agent. On April 23, Mr. Knott called him again and said that Mr. Snyder and Mr. Levine (secretary of the defendant corporation) wanted to see him in their office on the next morning. The plaintiff went to that office the next day. As to the conversation which then occurred, he testified: 'The first thing that was stated was by Jerry Snyder when I walked in; that they had changed their minds and they were not going to give me the 261 units as they previously agreed to * * * I asked...