K & G Const. Co. v. Harris, 4

• Decision Date: 24 October 1960
• Docket Number: No. 4,4
• Citation: 164 A.2d 451,223 Md. 305
• Parties: K & G CONSTRUCTION COMPANY v. Glendal W. HARRIS and Arthur E. Brooks.
• Court: Maryland Court of Appeals

Page 305

223 Md. 305

164 A.2d 451

K & G CONSTRUCTION COMPANY v. Glendal W. HARRIS and Arthur E. Brooks.

No. 4.

Court of Appeals of Maryland.

Oct. 24, 1960.

Frank P. Flury, Riverdale, for appellant.

Leonard S. Blondes, Silver Spring, for appellees.

Before BRUNE, C. J., and HENDERSON, HAMMOND, PRESCOTT and HORNEY, JJ.

PRESCOTT, Judge.

Feeling aggrieved by the action of the trial judge of the Circuit Court for Prince George's County, sitting without a jury, in finding a judgment against it in favor of a subcontractor, ¹ the appellant, the general contractor on a construction project, appealed.

The principal question presented is: Does a contractor, damaged by a subcontractor's failure to perform a portion of his work in a workmanlike manner, have a right, under the circumstances of this case, to withhold, in partial satisfaction of said damages, an installment payment, which, under the terms of the contract, was due the subcontractor, unless the negligent performance of his work excused its payment?

The appeal is presented on a case stated in accordance with Maryland Rule 826 g.

The statement, in relevant part, is as follows:

'* * * K & G Construction Company, Inc. (hereinafter called Contractor), plaintiff and counter-defendant in the Circuit Court and appellant herein, was owner and general contractor of a housing subdivision project being constructed (herein called Project). Harris and Brooks (hereinafter called Subcontractor), defendants and counter-plaintiffs in the Circuit Court and appellees herein, entered into a contract with Contractor to do excavating and earth-moving work on the Project. Pertinent parts of the contract are set forth below:

'Section 3. The Subcontractor agrees to complete the several portions and the whole of the work herein sublet by the time or times following:

"(a) Without delay, as called for by the Contractor.

"(b) It is expressly agreed that time is of the essence of this contract, and that the Contractor will have the right to terminate this contract and employ a substitute to perform the work in the event of delay on the part of Subcontractor, and Subcontractor agrees to indemnify the Contractor for any loss sustained thereby, provided, however, that nothing in this paragraph shall be construed to deprive Contractor of any rights or remedies it would otherwise have as to damage for delay.

"Section 4. (b) Progress payments will be made each month during the performance of the work. Subcontractor will submit to Contractor, by the 25th of each month, a requisition for work performed during the preceding month. Contractor will pay these requisitions, less a retainer equal to ten per cent (10%), by the 10th of the months in which such requisitions are received. ²

"(c) No payments will be made under this contract until the insurance requirements of Sec. 9 hereof have been complied with.

"Section 5. The Contractor agrees----

"(1) That no claim for services rendered or materials furnished by the Contractor to the Subcontractor shall be valid unless written notice thereof is given by the Contractor to the Subcontractor during the first ten days of the calendar month following that in which the claim originated.

* * *

* * *

"Section 8. * * * All work shall be performed in a workmanlike manner, and in accordance with the best practices.

"Section 9. Subcontractor agrees to carry, during the progress of the work, * * * liability insurance against * * * property damage, in such amounts and with such companies as may be satisfactory to Contractor and shall provide Contractor with certificates showing the same to be in force.'

'While in the course of his employment by the Subcontractor on the Project, a bulldozer operator drove his machine too close to Contractor's house while grading the yard, causing the immediate collapse of a wall and other damage to the house. The resulting damage to contractor's house was $3,400.00. Subcontractor had complied with the insurance provision (Sec. 9) of the aforesaid contract. Subcontractor reported said damages to their liability insurance carrier. The Subcontractor and its insurance carrier refused to repair damage or compensate Contractor for damage to the house, claiming that there was no liability on the part of the Subcontractor.

'Contractor gave no written notice to Subcontractor for any services rendered or materials furnished by the Contractor to the Subcontractor.

* * *

* * *

'Contractor was generally satisfied with Subcontractor's work and progress as required under Sections 3 and 8 of the contract until September 12, 1958, with the exception of the bulldozer accident of August 9, 1958.

'Subcontractor performed work under the contract during July, 1958, for which it submitted a requisition by the 25th of July, as required by the contract, for work done prior to the 25th of July, payable under the terms of the contract by Contractor on or before August 10, 1958. Contractor was current as to payments due under all preceding monthly requisitions from Subcontractor. The aforesaid bulldozer accident damaging Contractor's house occurred on August 9, 1958. Contractor refused to pay Subcontractor's requisition due on August 10 1958, because the bulldozer damage to Contractor's house had not been repaired or paid for. Subcontractor continued to work on the project until the 12th of September, 1958, at which time they discontinued working on the project because of Contractor's refusal to pay the said work requisition and notified Contractor by registered letters of their position and willingness to return to the job, but only upon payment. At that time, September 12, 1958, the value of the work completed by Subcontractor on the project for which they had not been paid was $1,484.50.

'Contractor later requested Subcontractor to return and complete work on the Project which Subcontractor refused to do because of nonpayment of work requisitions of July 25 and thereafter. Contractor's house was not repaired by Subcontractor nor compensation paid for the damage.

'It was stipulated that Subcontractor had completed work on the Project under the contract for which they had not been paid in the amount of $1,484.50 and that if they had completed the remaining work to be done under the contract, they would have made a profit of $1,340.00 on the remaining uncompleted portion of the contract. It was further stipulated that it cost the Contractor $450.00 above the contract price to have another excavating contractor complete the remaining work required under the contract. It was the opinion of the Court that if judgment were in favor of the Subcontractor, it should be for the total amount of $2,824.50.

'* * * Contractor filed suit against the Subcontractor in two counts: (1), for the aforesaid bulldozer damage to Contractor's house, alleging negligence of the Subcontractor's bulldozer operator, and (2) for the $450.00 costs above the contract price in having another excavating subcontractor complete the uncompleted work in the contract. Subcontractor filed a counter-claim for recovery of work of the value of $1,484.50 for which they had not received payment and for loss of anticipated profits on uncompleted portion of work in the amount of $1,340.00. By agreement of the parties, the first count of Contractor's claim, i. e., for aforesaid bulldozer damage to Contractor's house, was submitted to jury who found in favor of Contractor in the amount of $3,400.00. Following the finding by the jury, the second count of the Contractor's claim and the counter-claims of the Subcontractor, by agreement of the parties, were submitted to the Court for determination, without jury. All of the facts recited herein above were stipulated to by the parties to the Court. Circuit Court Judge Fletcher found for counter-plaintiff Subcontractor in the amount of $2,824.50 from which Contractor has entered this appeal.'

The $3.400 judgment has been paid.

It is immediately apparent that our decision turns upon the respective rights and liabilities of the parties under that portion of their contract whereby the subcontractor agreed to do the excavating and earth-moving work in 'a workmanlike manner, and in accordance with the best practices,' with time being of the essence of the contract, and the contractor agreed to make progress payments therefor on the 10th day of the months following the performance of the work by the subcontractor. ³ The subcontractor contends, of course, that when the contractor failed to make the payment due on August 10, 1958, he breached his contract and thereby released him (the subcontractor) from any further obligation to perform. The contractor, on the other hand, argues that the failure of the subcontractor to perform his work in a workmanlike manner constituted a material breach of the contract, which justified his refusal to make the August 10 payment; and, as there was no breach on his part, the subcontractor had no right to cease performance on September 12, and his refusal to continue work on the project constituted another breach, which rendered him liable to the contractor for damages. The vital question, more tersely stated, remains: Did the contractor have a right, under the circumstances, to refuse to make the progress payment due on August 10, 1958?

The answer involves interesting and important principles of contract law. Promises and counter-promises made by the respective parties to a contract have certain relations to one another, which determine many of the rights and liabilities of the parties. Broadly speaking, they are (1) independent of each other, or (2) mutually dependent, one upon the other. They are independent of each other if the parties intend that performance by each of them is in no way conditioned upon performance by the other. 5 Page, The Law of Contracts, p 2971. In other words, the parties exchange promises for promises, not the performance of promises for the performance of promises. 3 Williston,...