Higgins v. Desert Braemar, Inc.

• Decision Date: 04 September 1963
• Citation: 219 Cal.App.2d 744,33 Cal.Rptr. 527
• Court: California Court of Appeals Court of Appeals
• Parties: Robert C. HIGGINS, Plaintiff and Appellant, v. DESERT BRAEMAR, INC., a corporation, Defendant and Respondent. Civ. 7121.

Page 527

33 Cal.Rptr. 527

219 Cal.App.2d 744

Robert C. HIGGINS, Plaintiff and Appellant, v. DESERT BRAEMAR, INC., a corporation, Defendant and Respondent.

Civ. 7121.

District Court of Appeal, Fourth District, California.

Sept. 4, 1963.

McCabe & Saevig, and Roger A. Saevig, Beverly Hills, for plaintiff and appellant.

Thompson & Colegate, Riverside, for defendant and respondent.

COUGHLIN, Justice.

The plaintiff, appellant herein, brought these consolidated actions to recover compensation for services rendered as a general contractor in connection with the construction of a 100-unit cooperative apartment project owned by the defendant, the respondent herein; one was upon a common count to recover the reasonable value of those services; and the other was to foreclose a general contractor's lien for the same services.

The parties involved in this transaction were the plaintiff, a licensed general contractor; the defendant Desert Braemar, Inc., herein referred to as the Desert Company, which was a corporation engaged in building, owning and operating cooperative apartment dwellings; the Braemar Construction Corporation, herein referred to as the Construction Company, which was a corporation engaged in promoting and constructing cooperative apartment dwellings, but did not hold a general contractor's license; and Paul J. Broman, herein referred to as Broman, who, during the times herein mentioned, was the treasurer or president and managing agent for both the Desert Company and the Construction Company.

By his complaints the plaintiff alleges, in substance, that at the request of the defendant, the Desert Company, he rendered services as a general contractor, in the construction of the latter's housing project, and that the defendant agreed to pay him the reasonable value thereof, which was $131,100.

The defendant denied the allegations of the complaint and alleged, among other things, that the services referred to in the plaintiff's complaint were rendered by him as an associate contractor with the Construction Company pursuant to an agreement between them to act as joint contractors for the subject project; that they did not have a license to do so; that, by reason of this circumstance, the transaction was illegal and the plaintiff was not entitled to maintain an action to recover for such services; and that the defendant, the Desert Company, was not a party to that agreement. The defense of illegality was predicated upon the provisions of § 7029 of the Business and Professions Code.

At the pretrial conference the plaintiff advanced the contention that he had entered into a written agreement with Broman, who was acting as agent for an undisclosed principal, viz., the defendant, to act as general contractor for the construction job in question; that he had done so; and that he was entitled to 10% of the cost of construction. The pretrial conference order incorporated this contention. Thus, in substance, there was added to the complaint an allegation that the services in question were rendered pursuant to a written agreement between the plaintiff and the defendant as an undisclosed principal.

Initially the plaintiff obtained sub-contracts for the framing and cleaning up work which was a part of the cooperative apartment construction. Thereafter, he was approached by Broman, purportedly on behalf of the Construction Company, to act as a general contractor for the job, provided he would post a performance bond; orally agreed to do so; subsequently signed a written agreement to this effect, dated July 17, 1956; on or about July 24, 1956, entered upon and in the discharge of his duties as general contractor; was unable to post the performance bond; following this, at the suggestion of Broman, entered into a written agreement dated August 16, 1956, to which the signatories were himself and Broman, the latter purporting to act for and as president of the Construction Company, pursuant to which he agreed to act as associate general contractor and was to receive as compensation therefor (a) $5000 in cash, (b) if the actual cost of construction was less than $1,061,354.00, one-half of the difference between these amounts, and (c) one-half of the profits over actial construction costs of approved extras; continued to render services as a general contractor until the project was completed; did not receive the compensation prescribed by the latter agreement; and, thereupon, brought this suit against the defendant.

At a former trial of this matter the defendant moved for a nonsuit upon the ground that the plaintiff could not recover under the agreement of August 16, 1956 because the parties thereto had not obtained a joint contractor's license as required by § 7029 of the Business and Professions Code, and upon the further ground that no privity of contract existed between the plaintiff and the defendant; the trial court granted the motion and entered judgment of dismissal accordingly; the plaintiff appealed; and this court reversed the judgment. (See Higgins v. Standard Fed. Sav. & Loan Ass'n, 188 Cal.App.2d 68, 10 Cal.Rptr. 200.) Subsequently, the matter was tried a second time and the issues presented by the common count cause of action, as modified by the pretrial conference order, were submitted to the jury for decision, but the instructions thereon permitted recovery by the plaintiff only upon a finding that the Construction Company, acting through Broman, executed the agreement of August 16, 1956 on behalf of the defendant, as the undisclosed agent of an undisclosed principal, and limited the amount of recovery to $5000. The reason for this limitation was the determination by the trial court that the evidence was insufficient to establish the existence of any profit from the construction as planned, or from the extras, in which the plaintiff would share under the terms of that agreement. The jury rendered a verdict in favor of the plaintiff in the sum of $5000. In the foreclosure action the trial court found that the agreement of August 16, 1956, was executed by the Construction Company, acting through Broman as agent for the defendant, the latter being an undisclosed principal; that this agreement was valid because a general contractor and an owner may act jointly as a general contractor without obtaining a joint contractor's license (Bus. & Prof.Code, § 7050); that the plaintiff had rendered the services required thereby; that he had not been paid therefor; and that the amount of his recovery should be $5000. The plaintiff appeals from the judgments in both actions and contends that the trial court erred in instructing the jury that if they found for the plaintiff the amount of his recovery would be limited to $5000, and in refusing to permit him to introduce evidence (a) in proof of the reasonable value of his services; (b) to show his activity with respect to the framing subcontract; and (c) to prove that the August 16, 1956 agreement was obtained by fraud.

There is evidence from which the jury could have concluded that the total cost of construction, including extras, was $1,248,143.90; that the cost of the extras alone was in excess of $300,000.00; that the consequent actual cost of construction, without extras, was $948,143.90; that the difference between the actual cost of construction and $1,061,354.00 was $113,211.00; and that, under the terms of the August 16, 1956 agreement, the plaintiff was entitled to one-half of the latter amount, i. e., $56,605.50. The trial court's rejection of this evidence as a matter of law, and its instruction to the jury that any award in favor of the plaintiff and be limited to $5000, i. e., the cash payment provided for in the subject agreement, was error. (Daniels v. City & County of San Francisco, 40 Cal.2d 614, 623, 255 P.2d 785; Hampton v. Occidental, etc., Steamship Co., 139 Cal. 706, 708, 73 P. 579; Bowman v. Collins, 181 Cal.App.2d 807, 810, 5 Cal.Rptr. 776; Gould v. Samuels, 132 Cal.App.2d 459, 469, 282 P.2d 566; Moran v. Zenith Oil Co., 92 Cal.App.2d 236, 243, 206 P.2d 679.)

In the foreclosure action the trial court found that the actual cost of construction of the housing project was not less than $1,061,354, and concluded that the plaintiff was entitled to recover only the $5000 cash payment. However, the fact that the trial judge instructed the jury as a matter of law that any recovery by the plaintiff should be limited to the $5000 cash payment, together with his remarks to counsel with respect thereto, establish that his finding that the actual cost of construction was not less than $1,061, 354, was based upon the belief that there was a failure of proof tending to establish a contrary finding. This was a mistaken belief and dictates the conclusion that the finding in question did not result from a consideration of the evidence at hand. The failure of the court to consider the evidence was error.

The judgment must be reversed and the case remanded for a new trial because of the errors noted. Nevertheless, the remaining contentions for reversal urged by the plaintiff should be considered because of the...