Gutmacher v. H & J Const. Co.

• Decision Date: 26 October 1966
• Docket Number: No. 8052,8052
• Citation: 419 P.2d 525,101 Ariz. 346
• Parties: C. H. GUTMACHER, G & W Investment Company, a copartnership, Appellants, v. H & J CONSTRUCTION COMPANY, Incorporated, a corporation, Appellee.
• Court: Arizona Supreme Court

Page 525

419 P.2d 525

101 Ariz. 346

C. H. GUTMACHER, G & W Investment Company, a copartnership, Appellants, v. H & J CONSTRUCTION COMPANY, Incorporated, a corporation, Appellee.

No. 8052.

Supreme Court of Arizona, In Division.

Oct. 26, 1966.

Elsing & Crable, Phoenix, for appellants.

Shimmel, Hill, Kleindienst & Bishop, Phoenix, for appellee.

UDALL, Justice.

H & J Construction Company, Inc. (hereinafter referred to as plaintiff) brought this action for breach of contract against G & W Investment Company and C. H. Gutmacher (hereinafter referred to as defendants) and Richard Peil and Leon Normand. Prior to the trial plaintiff was adjudicated a bankrupt, whereupon the trustee in bankruptcy, Walter F. Fulford, was substituted as party plaintiff. On defendants' application leave was granted to bring in WonderBowl-Downey, Inc. as a third party defendant and to file a cross-claim against said defendant. Plaintiff's motion for a separate trial of the issues existing between itself and defendants, apart from the third party complaint and answer, was granted and a separate trial was had. At the conclusion of the non-jury trial plaintiff and defendants filed simultaneous briefs and thereafter, the lower court ordered judgment in favor of plaintiff in the sum of $2,570.00 plus interest. Judgment was signed and filed, May 10, 1963, and on May 15, 1963, defendants moved for a new trial and to amend their answer to conform to proof. After both motions were denied, this appeal was taken.

The contract upon which the suit was based consisted of two letters, each dated August 1, 1961. Both letters were addressed to plaintiff construction company and signed by C. H. Gutmacher for G & W Investment Company and Richard Peil for Richard Peil & Leon Normand & Associates. It appears that defendants were acting as the agents of WonderBowl-Downey, a California corporation which was considering having a project constructed on certain property in Phoenix. Approximately two weeks previous to August 1, 1961, plaintiff had submitted a bid for the construction of said project. It developed that certain corrections in the foundation plans of the proposed construction became necessary, whereupon defendants employed plaintiff to perform the required engineering services in order to obtain the data needed to correct the plans. It was these engineering services which were the subject matter of the contract embodied in the two letters of August 1st.

The only witness at the trial was the witness of plaintiff, Edward L. Inman, who, at the time of the transaction was an employee of plaintiff. In Inman's capacity as estimator, he received defendants' letters and thereafter ordered a soil report and a topographical map from two independent engineering firms. Upon receipt of the report and map, Inman forwarded copies to an architect, Lee Linton, so that Linton could complete the foundation plans. There was no evidence adduced at the trial as to the amount which plaintiff paid to the engineering firms for the topographic and soil reports but, in support of their motion for new trial defendants filed two affidavits which tended to show that said costs amounted to $729.00.

There are five assignments of error presented to us on this appeal. Assignment No. 1 is the trial court erred in construing the written agreement upon which plaintiff relied as an undertaking to pay the sum of $2,570.00, the amount of the judgment, for the reason that the writings, fairly construed as a whole, and taken together, and assuming every condition therein referred to was complied with by the plaintiff, imposed upon the defendants no more than the obligation to reimburse plaintiff for the actual cost of the services therein referred to. Since the interpretation of a contract is a question of law to be determined by this Court, we are not bound by the interpretation placed upon the agreement by the trial court. Daily Mines Co. v. Control Mines, 59 Ariz. 138, 124 P.2d 324.

The two letters which comprise the written agreement read as follows:

Letter 1--

'This is your authorization to proceed immediately to obtain the necessary topographic and soil information necessary to have Lee Linton's plans completed for submission to the Phoenix Building Department for a building permit. * * *

'As we have explained, we have only until September 6th to get construction started and thus we must have these plans approved as soon as possible.

'Mr. Robert Johnson of the Planning Department has suggested you deliver the plans to either--

Hank Stroemer, or LeRoy Dennison

of the Phoenix City Building Department. Mr. Johnson has suggested that these men contact him, and he will explain to them the zoning status.

'It is further understood these costs shall be borne by the undersigned if you are not awarded the building contract, but if you are granted the building contract these costs shall be part of your costs.

'Upon receipt of this information, we shall have Linton's engineers make the necessary correction in the foundation plans for your submission to the Phoenix Building Department.'

Letter 2--

'Pursuant to the attached letter of authorization pertaining to the engineering on the property at 43rd Ave. and West Thomas Road it is our understanding that the total costs on this will be $2,570.00.

'It is further understood that if H & J Construction Co. is not award (sic) the contract for the construction we will no later than Sept. 15, 1961 pay this as per the attached letter.'

Defendants raise three arguments in contending that the proper interpretation of the letters is they are obligated only to pay the actual costs of the services therein referred to and are not obligated to pay the sum of $2,570.00. Their first argument is that the next-to-last paragraph in Letter 1 contains an implied conditional promise to pay costs entailed in connection with 'the necessary topographic and soil information' referred to in the first paragraph of the same letter. Defendants allege such is made clear by the declaration in Letter 1 that if plaintiff should be awarded the contract, the costs 'shall be part of your costs' because, while 'costs' may be absorbed by a construction company, this could not be true of a figure which included a substantial markup.

Defendants' second contention is that the statement in Letter 2 that 'our understanding' as to what the total costs will be does not alter the conditional nature of defendants' obligation, for such does not amount to a promise to pay the sum of $2,570.00 regardless of what the costs might turn out to be; the statement is merely a recital, a statement of belief or a statement of information. To substantiate their contention, defendants point to the fact that had plaintiff been successful in its bid for the proposed construction, it would simply have absorbed the actual costs, but if plaintiff was not successful plaintiff would be entitled to the mentioned sum, even though this latter sum was in excess of its actual costs.

The last argument of defendants is that the circumstances of plaintiff and defendants on August 1, 1961, indicate the contract was merely a conditional undertaking to reimburse actual costs. They contend plaintiff was interested in the general subject matter of the letters as a bidder on the proposed construction and accordingly, was by no means a stranger to the project...