Herbert Shaffer Associates, Inc. v. First Bank of Oak Park

• Decision Date: 17 July 1975
• Docket Number: No. 60391,No. 9081 and M,9081 and M,60391
• Parties: HERBERT SHAFFER ASSOCIATES, INC., Plaintiff-Appellee, v. FIRST BANK OF OAK PARK (formerly known as Oak Park National Bank), not Individually but as Trustee under Trust Agreement known as Trustichael Stein, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 703

332 N.E.2d 703

30 Ill.App.3d 647

HERBERT SHAFFER ASSOCIATES, INC., Plaintiff-Appellee, v. FIRST BANK OF OAK PARK (formerly known as Oak Park National

Bank), not Individually but as Trustee under Trust

Agreement known as Trust No. 9081 and

Michael Stein, Defendants-Appellants.

No. 60391.

Appellate Court of Illinois, First District, Third Division.

July 17, 1975.

Ancel, Glink, Diamond & Murphy, P.C., Chicago (Ronald S. Cope, Chicago, of counsel), for defendants-appellants.

Irving T. Zemans, Chicago, for plaintiff-appellee.

McNAMARA, Justice:

Plaintiff, Herbert Shaffer Associates, Inc., filed suit in the circuit court of Cook County to foreclose a mechanic's lien for architectural services expended by it in connection with work on a dwelling project in the City of Chicago. Defendants were the legal owner of the property, First Bank of Oak Park, as trustee, and the beneficial owner of the property, Michael Stein. Defendants counterclaimed for a refund of part of the money already paid to plaintiff, alleging that they had overpaid plaintiff on the basis of work completed by it. At the close of all the evidence, the trial court, as trier of fact, entered judgment for plaintiff, assessed damages in the amount of $6,340.32, and dismissed the counterclaim.

Although the voluminous record contains scores of exhibits, the case actually revolves upon the construction of a standard, written architect's contract. It was plaintiff's position at trial that pursuant to that document it was entitled to compensation for work done up to the time defendants terminated the contract. Defendants maintained that they had never terminated the contract and that plaintiff had been overpaid. The pertinent facts are as follows.

The parties entered into a written contract for services on December 17, 1970, although they had been working on an oral agreement since earlier in that year. As stated in the contract, the owners' intention was to erect 'a multiple dwelling building consisting of approximately thirty- seven units located on four stories' at 742--46 Gordon Terrace in Chicago. The contract specified that plaintiff was to prepare drawings for various phases of development of the project. These drawings were to consist of schematic design studies, design development drawings, and working (construction) documents. The manner in which plaintiff was to be compensated for its services is outlined in paragraph II of the contract. In pertinent part that provision reads as follows:

a. FOR THE ARCHITECT'S BASIC AND ADDITIONAL SERVICES, * * *, compensation computed as follows:

Principals' time at the fixed rate of Twenty-Five dollars ($25.00) per hour. * * *

Employees' time computed at a multiple of two & one-half (2 1/2) times the employees' Direct Personnel Expense as defined in Article 4.

Services of professional consultants at a multiple of one and one-quarter (1 1/4) times the amount billed to the Architect for such services.

c. FOR THE ARCHITECT'S REIMBURSABLE EXPENSES, amounts expended as defined in Article 5.

d. THE TIMES AND FURTHER CONDITIONS OF PAYMENT shall be as described in Article 6 and as follows:

Compensation for BASIC SERVICES shall be limited to a total of $15,000.00 and shall be due and payable according to the following Schedule of Payment:

On Completion of the Schematic & Design Development Phases:

One Thousand Dollars ($1,000.00)

On Completion of the Construction Documents:

Five Thousand, Five Hundred Dollars ($5,500.00)

During Construction Phase, on reaching roof level, the remainder of the compensation, not to exceed

Eight Thousand, Five Hundred Dollars ($8,500.00)

Compensation for ADDITIONAL SERVICES to be made monthly.

The above Schedule of Payments shall not be applicable under the conditions described in Article 5, paragraph 6.3 hereinafter.

Melvin Kantor, a licensed architect and associate in plaintiff's firm, enjoyed both a business and social relationship with Stein at the time the latter approached him in early 1970 to relate his interest in erecting a high rise, multiple unit dwelling on the subject property. A meeting was arranged in February at plaintiff's offices, attended by Kantor, Stein, and Herbert Shaffer, plaintiff's president. As a result of that and subsequent meetings, Stein engaged plaintiff on a fee basis to prepare some preliminary studies on the economic feasibility of Stein's plan. Sometime between March 13, and 19, plaintiff presented its analysis of the plan, and Stein determined his proposal was economically unfeasible. Stein then instructed plaintiff to study the feasibility of a low rise dwelling of 37 units. Later in March, Kantor informed Stein that a zoning variation would have to be obtained in respect to the location of the building on the site. Stein replied that zoning would be no problem, that he would secure the zoning change, and that plaintiff should proceed with the preparation of the preliminary designs on the operating premise that the variation had already been secured.

Kantor further testified that the sketches and drawings prepared under his supervision concerning the project were continually being modified and revised by Stein or his financial backers. Stein would appear at plaintiff's office frequently and observe the work being done. Reproductions of the preliminary plans were continually being mailed or given to Stein or his representatives. On October 20, 1970, Kantor appeared and testified on defendants' behalf before the Zoning Board of Appeals. The variation request was denied.

Plaintiff continued to work on the project. On February 6, 1971, a final definitive design plan for the project was complete and was forwarded by transmittal letters dated February 7 and 9. On February 18, Kantor sent Stein a letter verifying that the plans submitted were final. His reason for sending the letter was to prevent further changes by Stein.

Kantor then directed Ronald Ringman, another licensed architect and associate in plaintiff's firm, to begin preparation of working drawings. Stein had asked to have those drawings prepared as soon as possible. Under Kantor's supervision, Ringman prepared definitive working drawing sketches of the project between February 15 and March 5 in connection with the preparation of final working drawings. At the time Stein ordered the work stopped on March 12, the final working drawings were at an incomplete stage.

On cross-examination, Kantor testified that the stage of completion of the working drawings at the time work was stopped could not properly be characterized as partial, although he conceded that a substantial amount of work still remained before they could be considered completed. Kantor further testified that on Amrch 10, 1971, he became aware of certain proposed zoning amendments that would directly affect the project so as to necessitate a variation or a substantial change in the plans.

Ronald Ringman, the principal draftsman of the working drawings, testified that to a certain degree the preliminary and working drawings bear similarities. He noted that substantial progress can be made in the preparation of working drawings without a final preliminary drawing and without final structural calculations.

Herbert Shaffer, plaintiff's president, testified that he makes it a practice to enter into a business log notes of important visits, telephone calls, and meetings at work. He used this log to refresh his recollection in testifying. After his company began work on plans for a low rise dwelling project, Shaffer informed Stein that a zoning variation would be needed. Stein stated that he would take care of that problem and told Shaffer to proceed on the basis of their oral agreement.

On March 11, 1971, Shaffer learned that the city council was considering the passage of certain zoning amendments which would affect the plans for the project. Shaffer informed Stein and suggested that it might be to Stein's advantage to stop work until the zoning problem was resolved. The following day Stein ordered plaintiff to stop work. When Shaffer later inquired about the status of Stein's pending request for a zoning variation, Stein replied that the combination of the old zoning problem and the purported passage of the new zoning amendments dictated the submission by him of an amended request for additional zoning relief before the proper authorities. On April 1, Stein asked Shaffer to prepare modified drawings to present to the authorities detailing how his present ones could be revised, and offered to pay plaintiff $500 for the work. Shaffer replied that such work would be covered under the 'Additional Services' provision of the contract and accordingly demanded that his firm be paid on an hourly and not a flat fee basis. Stein said that he would not pay more than $500 for this work and recommended that the parties terminate their relationship. Shaffer agreed, and quickly informed Stein that the amount due plaintiff for services and reimbursable expenses for this project and two others totalled approximately $12,700. Stein stated that such an amount was a lot of money. Shaffer replied that if Stein agreed to pay him $10,000 beyond the $1,000 already paid he would settle the account. Stein agreed to pay that amount within the next ten days. Shaffer confirmed the settlement agreement in a letter to Stein dated April 15, 1971.

Shaffer made repeated demands for payment during the succeeding months. While acknowledging the debt, Stein made continued requests for delay. Shaffer further testified that by August 20, Stein had sent two checks totalling $5,000. On August 30, Stein told Shaffer that he was ready to proceed with the project on the basis of the existing contract. Stein told Shaffer that he had obtained zoning board approval on July 29 to construct a low rise multiple unit dwelling of 34 units. He wanted Shaffer to abandon the drawings prepared by his firm and to prepare working drawings on the basis of the $15,000...