Knotts v. Clark Const. Co.

• Decision Date: 09 November 1917
• Docket Number: 2358.
• Citation: 249 F. 181
• Parties: KNOTTS v. CLARK CONST. CO.
• Court: U.S. Court of Appeals — Seventh Circuit

249 F. 181

KNOTTS v. CLARK CONST. CO.

No. 2358.

United States Court of Appeals, Seventh Circuit.

November 9, 1917

On Petition for Rehearing, January 2, 1918.

W. J Whinery, of Hammond, Ind., for plaintiff in error.

Sidney Stein, of Chicago, Ill., for defendant in error.

Before KOHLSAAT, MACK, and ALSCHULER, Circuit Judges.

MACK Circuit Judge.

While several counts were filed in this action, counsel agree that the common counts and another count on the contract having been expressly abandoned, the trial proceeded on the amended first additional count. In this count plaintiff alleged the execution of a written contract to furnish the material and labor for the construction of certain store and office buildings in Gary, Ind., to be completed by April 15, 1907, in accordance with plans and specifications made a part of the contract for the consideration of $56,500, payable in monthly installments as the work progressed, with a right on the part of the defendant to retain 15 per cent. to secure the performance; payments to be made on the architect's certificate. It further averred waiver of the time requirement for completion; the issuance of an architect's certificate for $2,500 in April; the refusal of payment thereof; the demand for additional certificates in May, June, and July; defendant's direction to the architect to refuse them and his consequent refusal; the performance of work and delivery of material both before and after the delivery of the architect's certificate for $2,500; defendant's refusal to pay either the one certificate or any sum for the work performed and material furnished pursuant to the contract and amounting to over $13,000; plaintiff's abandonment of the work because of defendant's refusal to pay and the arbitrary and fraudulent act of the architect in the refusal of certificates; the sale by plaintiff of material on hand for $1,200, with a loss of $5,000; and defendant's further failure to pay any part of the moneys to plaintiff's damage in the sum of $25,000. The conflicting evidence was resolved by the jury in favor of the plaintiff. It found against the defendant on his claim of set-off, and returned a verdict of $10,000 in favor of the plaintiff. To reverse the judgment rendered thereon, defendant sued out a writ of error.

1. The cause of action as alleged in this count is for recovery of the sums expended under and pursuant to the contract as the damages alleged to have been sustained by reason of defendant's breach. This breach is alleged to have consisted in the refusal to pay the architect's certificate, and in the further refusal to pay for the work monthly as it progressed; the securing of an architect's certificate, condition precedent to the obligation so to pay, having, under the allegations, been waived by reason of the fraudulent and arbitrary action of the architect in refusing to give the certificate because of defendant's alleged direction to him so to act.

While the count does not state that the moneys so expended were the reasonable outlays of the plaintiff in the performance of the contract, the omission of this allegation could not be taken advantage of on motion in arrest of judgment or on writ of error. Any defect in this respect was cured by the verdict. The declaration furthermore states sufficient grounds for plaintiff's abandonment of the contract. Persistent refusal to pay installments due under a building contract, under the circumstances alleged in this declaration, amount to a renunciation on the part of the owner and justified abandonment of further performance; for obstruction to performance need not be physical. Actions such as those alleged are just as effective in absolving the other party from any further readiness or offer to perform as a condition to the enforcement of the liability to answer for the damages sustained by reason of the breach. Phillips & Colby Construction Co. v. Seymour, 91 U.S. 646, 23 L.Ed. 341; Dobbins v. Higgins, 78 Ill. 440; Keeler v. Clifford, 165 Ill. 544, 46 N.E. 248; National Tool Co. v. Standard Shoe Machinery Co., 181 Mass. 275, 63 N.E. 900.

For reasons more fully stated in considering the measure of damages, the declaration in our judgment states a good cause of action.

2. The vital question in this case is that of the measure of damages. Defendant contends, as stated by counsel in his supplementary brief:

'The claim in the case at bar is limited to compensation for the work actually done in an effort to carry out the contract. This work can only be measured by the contract price, and any other value regarding it is wholly immaterial. The contract provides no special price covering the alleged work and material furnished under the contract in the case at bar. Therefore its value could only be determined from evidence showing what

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