Losli v. Foster

• Decision Date: 09 October 1950
• Docket Number: 31286.
• Citation: 37 Wn.2d 220,222 P.2d 824
• Parties: LOSLI et al. v. FOSTER et al.
• Court: Washington Supreme Court

222 P.2d 824

37 Wn.2d 220

LOSLI et al. v. FOSTER et al.

No. 31286.

Supreme Court of Washington.

October 9, 1950

Department 2.

Theodore B. Bruener, Aberdeen, for appellant.

A. D Gillies, Lester T. Parker, Aberdeen, for respondents.

HAMLEY, Justice.

This action involves the right of a builder to recover additional compensation from the owners of a dwelling, under the terms of a construction contract or on the basis of quantum meruit. It also involves the rights of three subcontractors as against the builder and the owners.

The action began as a suit in equity to foreclose certain liens filed by mechanics and materialmen in connection with the construction of a dwelling, and to secure personal judgments against the owners and builder in the total sum of $2,508.73.

The builder denied personal liability on the claims, and cross-complained against the owners to recover an alleged unpaid balance in the sum of $2,725.86 on the construction contract. The builder also asked that if the plaintiffs recover judgment against him, he be granted judgment over against the owners and that he be subrogated to any enforcible lien claims. The cross-complaint also sought recovery of $65.71 on the assigned claim of one C. H. Fulton, for certain painting work. The owners denied personal liability to either the plaintiffs or the builder, and denied the enforcibility of the liens.

The plaintiffs were Walter J. Losli, doing business as Smith & Losli, herein referred to as Losli; Kelly Westrom, doing business as Aberdeen Electric & Heating Company, herein referred to as Westrom; and Harry S. Elway. The defendants were Mr. and Mrs George Foster, Mr. and Mrs. Basil Johnson, and Arthur N. Hedstrom. The Fosters are the owners of the dwelling in question, which was built on their lot in Aberdeen, Washington. Mrs. Johnson is Mrs. Foster's mother. She took an active part in the dealings with the builder and materialmen. The Johnsons also loaned money to the Fosters so that the construction bills could be paid as the work progressed. Hedstrom was the builder.

The testimony at the trial was in serious conflict on nearly every phase of the case. We have carefully examined the record, bearing in mind that the matter is Before us for consideration de novo. The summary of facts set out below represents our appraisal of the evidence, after weighing the disputed testimony and considering the trial court's extensive memorandum opinion.

Mr. Foster is a logging truck driver and Mrs. Foster works as a waitress in her mother's cafe in Aberdeen. In December, 1947, the Fosters and Mrs. Johnson began looking at new homes in the Aberdeen-Hoquiam area. They became particularly interested in a house on Sumner avenue, in Hoquiam, which Hedstrom had built. He was present when the Fosters and Mrs. Johnson inspected the house. He told them he hoped to sell the house for twelve thousand dollars. They liked the general arrangement of the house, but wanted somewhat larger rooms and preferred to locate in Aberdeen. Hedstrom suggested that the Fosters buy a lot and engage him to build a house for them. He is a master builder of considerable experience, and has erected some two hundred homes in the Grays Harbor area.

Following Hedstrom's suggestion, the Fosters bought a lot in one of the better residential districts of Aberdeen. They then called upon Hedstrom to arrange for the construction of the house. No detailed plans or specifications were prepared, and no written contract was entered into. A draftsman was engaged to prepare a floor plan and sketches. The understanding was that Hedstrom would then work out the construction details as the building progressed.

Both Hedstrom and the owners believed that they had entered into an oral contract covering the job. However, their versions of this contract differed widely. The Fosters understood that Hedstrom had agreed to build the house for the actual cost of labor and the retail cost of materials and supplies, the total cost not to exceed twelve thousand dollars. It was their understanding that, under this arrangement, Hedstrom would obtain his profit from discounts he would receive in the purchase of materials and supplies.

Hedstrom understood that the oral contract was an arrangement whereby Hedstrom would charge $2.75 an hour for labor and the retail price for materials. To this would be added ten per cent on both items until a profit margin of five or six hundred dollars had been built up. The ten per cent markup would then be discontinued. Hedstrom did not intend to set any guaranteed maximum cost figure. However, we are convinced from the evidence that he did estimate the total cost of the house, as first planned, at not to exceed twelve thousand dollars, not including the cost of painting and linoleum, and the extra cost of certain de luxe fixtures which were later added.

Hedstrom encouraged the Fosters to start construction in the winter time, stating that he would then be more certain of a labor supply. Construction was begun on February 2, 1948. When Hedstrom presented his first bill to Mrs. Johnson, covering the period to March 15, 1948, she questioned whether he could build the house for twelve thousand dollars. Hedstrom then noted on the back of the bill some figures which appear to indicate that he then estimated the total cost of construction at $11,683, not including the excepted items already referred to. The $11,683 figure, however, apparently included a two-thousand-dollar item for lumber which was being supplied by the owners.

A month later, when the second bill was presented, Mrs. Johnson again expressed concern regarding the total cost of construction. As a result, Hedstrom arranged to have the materialmen send their bills directly to Mrs. Johnson, so that she could see that he was not receiving a discount. At this time Hedstrom also discontinued the ten per cent markup and reduced the labor charge from $2.75 an hour to $2.65, except in the case of the foreman. Hedstrom also acceded to the Fosters' request that they be permitted to subcontract certain parts of the work, in an effort to hold down costs. The Fosters, through Mrs. Johnson, paid Hedstrom's first two bills in full and two thousand dollars of the third bill, making a total of $10,160.95. The $685.04 balance on the third bill, and the final bill, in the sum of $2,040.82, have not been paid. The total of these, $2,725.86, is the amount sued for in Hedstrom's cross-complaint.

The house in question is of frame construction with siding and shingle roof. It has six rooms on one floor, including two bedrooms and a utility room. There is an unfinished upstairs, but no basement. Most of the rooms are comparatively large, and there is an attached two-car garage. Among the special features of the house are plate glass corner windows; mahogany mantel over the fireplace; built-in book-cases in the living room, and built-in china closet in the dining room; a wardrobe extending across one end of the master bedroom; de luxe plumbing fixtures; and covered front and back porches. Good quality materials were apparently used in constructing the house, and the record reveals little criticism of the workmanship.

The record shows that if Hedstrom's claim were allowed in full, the cost of constructing the house would be $19,596.64. This does not take into account the $233.67 discount Johnson obtained on the lumber, or the value of services performed by Foster around the construction job.

Costs may have been somewhat increased due to changes in the plans and materials as the work progressed. The evidence as to this was inconclusive, however, since some changes tended to increase costs while others tended to decrease them.

Labor costs were increased substantially because Hedstrom kept his crew on the job regardless of weather. The months of February and March, 1948, were exceptionally wet, and the efficiency of carpenters was reduced about fifty per cent on rainy days. Hedstrom testified that it was necessary to keep the crew on the job because the Fosters wanted possession of the house by June 1, 1948. Other circumstances, revealed at the trial, undoubtedly tended to increase or inflate labor costs above what they normally would be. Hedstrom, for example, had included his own son among those receiving a journeyman carpenter's wage of $2.06 1/2 an hour. Actually, the son was a so-called G.I. trainee to whom Hedstrom paid only $1.34 an hour. Hedstrom had no particular incentive to hold down labor costs, since he understood that a cost-plus contract was in effect. However, he did have a foreman in charge at all times, and was personally at the job from one to three times a day. The foreman's personal time records were not available at the time of the trial, so it was not possible to check the entries made in Hedstrom's books covering labor performed on the job. The trial court, in its memorandum opinion, summarized this aspect of the case as follows:

'The carpenters' labor cost charged on this job is grossly excessive. It seems to reach a total of $6,280.20. This figure of course does not include the labor in electric installation, plumbing installation, plastering, painting, fireplace, heating or concrete driveway. If the builder was proceeding on the assumption that he was operating cost plus, he might be more lax in supervision. He had other jobs in progress, and it is apparent either through error or lack of supervision or other cause the carpenter labor charged on this job is erroneous and too high. Some errors of rather minor importance were pointed out at the trial.'

With respect to the cost of materials supplied by Hedstrom from his own inventory, the testimony revealed a few minor overcharges due to errors in billing. A considerable amount...