Green Manor Construction Co. v. Highland Painting Service

• Decision Date: 18 May 1965
• Docket Number: No. 6425.,6425.
• Citation: 345 F.2d 657
• Parties: GREEN MANOR CONSTRUCTION CO., Inc., et al., Defendants, Appellants, v. HIGHLAND PAINTING SERVICE, INC., et al., Appellees.
• Court: U.S. Court of Appeals — First Circuit

345 F.2d 657 (1965)

GREEN MANOR CONSTRUCTION CO., Inc., et al., Defendants, Appellants, v.HIGHLAND PAINTING SERVICE, INC., et al., Appellees.

No. 6425.

United States Court of Appeals First Circuit.

Heard April 5, 1965.

Decided May 18, 1965.

Lee H. Kozol, Boston, Mass., with whom Charles G. Kadison, Jr. and Friedman, Atherton, Sisson & Kozol, Boston, Mass., were on brief, for appellants.

Joseph M. Corwin and Robert J. Sherer, Boston, Mass., with whom Frederick W. Roche, Roche & Leen and Corwin & Corwin, Boston, Mass., were on brief, for appellees.

Before ALDRICH, Chief Judge, and MARIS^* and BURGER^*, Circuit Judges.

ALDRICH, Chief Judge.

These are diversity cross actions in contract between Highland Painting Services, Inc., a subcontractor, and Green Manor Construction Co., Inc., a general contractor, on a government housing project.The respective bonding companies were joined as parties.Suit was instituted by Highland in July 1959 alleging wrongful termination of the contract on January 27, 1959 and seeking to recover the value of work, including extra work, performed thereunder.Green Manor's answer admitted the execution of the contract, alleged it was terminated May 28, 1959(which we believe was a misstrike for January 28, 1959) and generally denied the remaining allegations.By way of counterclaim it alleged that it terminated the contract on January 28, 1959 because of Highland's breach and was obliged to employ another painter to remedy Highland's defective work and to do unfinished work, and sought damages therefor.The reply to the counterclaim was that the breach had been Green Manor's.Various other pleadings are not presently relevant.The case was referred to a master, whose comprehensive report was, with now immaterial exceptions, confirmed by the court.From judgments in Highland's favor on the complaint and on the counterclaim Green Manor appeals.

The principal dispute concerns the termination of the contract.Although the parties took no such position, and each charges a wrongful termination by the other, not only in the pleadings, but also in the requests for findings, the master found that the termination was "by mutual agreement, although the same was never expressed in so many words."This discovery on his part is supported by no evidence in the record.Although Highland now asserts two subsidiary matters which we will come to, its principal argument in support of the master's position is that he"was entitled to infer, as he apparently did, that the truth lay somewhere between the conflicting extremes testified to by the presidents" of the two companies.As will be shown later, this was an erroneous application of that principle.Nor was the master's conclusion supported by the necessary subsidiary findings, sound or otherwise.

Although we do not discover in the record that Green Manor knew it initially, Highland had never before undertaken a job of this consequence.Prior to submitting its bid it discussed the work with Green Manor and said that it could accomplish it.After the bid had been accepted Green Manor offered to assist Highland with advice in scheduling, etc., but this offer was rejected.From the beginning Highland was undermanned and undersupervised, fell behind generally, and did unsatisfactory work in various respects.Green Manor complained continually.It twice sought to terminate the contract, but relented when Highland promised to improve.Highland did not keep its promises.Finally, with Highland's knowledge and "acquiescence" Green Manor brought in another painting concern, Garbutt, to expedite the work.This was done in response to government complaints about delay.On January 28 Highland walked off the job.At that time it was in default in several respects.Although at the trial it sought to show that Green Manor had been in default, and had impeded its work, the master resolved these issues against it.He further found that Highland was incapable of doing the work, and that Green Manor knew, or should have known, this before the contract had been entered into.

Some hours after Highland abandoned the job without request or excuse, it asked Green Manor for a termination notice.¹Green Manor thereupon sent a telegram which, after referring to the prior termination notices, said, "BE ADVISED OF TERMINATION OF YOUR CONTRACT ORDERB-0913 YOU HAVE FAILED TO CONFORM WITH THIS CONTRACT ORDER IN EACH AND EVERY RESPECT."According to Highland, on oral argument, the master drew the conclusion that the contract was terminated by mutual agreement from this telegram, aided by the fact that Green Manor knew or should have known of Highland's incapacity, and by the fact that Garbutt had been brought in to remedy Highland's deficiencies.

Highland's argument was not how the master put it.His concluding finding was that "Since" Green Manor entered into the contract with knowledge of Highland's lack of experience and ability, "and since" there was an agreement that Green Manor would employ Garbutt "to assist Highland Painting without effect upon Highland Painting's entitlement to recover its full subcontract price, and since" the subcontract was "terminated by mutual agreement, tacit or express," Green Manor cannot recover for breach of contract, although it would be allowed a setoff, against Highland's quantum meruit recovery, for the cost of correcting the work that Highland had already performed.This finding is totally unsupportable, either fully or in part.Even if Green Manor knew Highland lacked experience, where Highland had contracted to do the work it is scarcely a defense for nonperformance that its capacity should have been suspect.²Nor could even the most naive contractor think that the risk of his capacity was assumed by the other party when he was required to be bonded.Citation for the principle that the promising party takes the risk seems hardly necessary.However, seeRowe v. Inhabitants of Peabody, 1911, 207 Mass. 226, 93 N.E. 604;Peerless Cas. Co. v. Weymouth Gardens, Inc., 1 Cir., 1954, 215 F.2d 362, 364;Restatement, Contracts§ 455.We cannot conceive how business could be done on any other basis.

As to the asserted agreement that Garbutt would "assist" Highland at Green Manor's expense without affecting Highland's right to the full contract price, it is not clear whether this language meant assist Highland by doing new work, or by correcting the old.If the latter, it is inconsistent with the master's finding that Green Manor was entitled to charge Highland for this assistance.If by assist he meant replace Highland on the new work we cannot believe that, no matter how he expressed it, the master thought Green Manor was going...