Marine Development Corp. v. Rodak, 801507

• Decision Date: 11 March 1983
• Docket Number: No. 801507,801507
• Citation: 300 S.E.2d 763,225 Va. 137
• Parties: MARINE DEVELOPMENT CORPORATION v. Edward RODAK. Record
• Court: Virginia Supreme Court

Page 763

300 S.E.2d 763

225 Va. 137

MARINE DEVELOPMENT CORPORATION v. Edward RODAK.

Record No. 801507.

Supreme Court of Virginia.

March 11, 1983.

Gregory S. Hooe, Richmond (William H. Abeloff, Michael S. Shelton, Howard C. Vick, Jr., Cohen, Abeloff & Staples, P.C., Richmond, on brief), for appellant.

John B. Thompson, Richmond (Hugh T. Antrim, Thompson & McMullan, Richmond, on brief), for appellee.

Before CARRICO, C.J., and COCHRAN, POFF, COMPTON, THOMPSON, ^* STEPHENSON and RUSSELL, JJ.

THOMPSON, Justice.

In this appeal, we review the propriety of a recovery on quantum meruit and the trial court's granting of a jury instruction.

Edward Rodak is a design engineer with an extensive background in the field of commercial marine refrigeration. Prior to 1972, Marine Development Corporation (MDC) had been engaged primarily in the manufacture and marketing of air conditioning units for yachts. Due to its success in this field, and the fact that its opportunity for expansion and future growth there had become quite limited, MDC investigated the possibility of developing an additional product line of commercial marine refrigeration equipment. Seeking a chief project engineer for this venture, MDC contacted Rodak because of his expertise in this area and began negotiations with him. According to Rodak, MDC offered him a "living wage." Specifically, the proposal was that Rodak would be employed at a substandard salary with the understanding that once the new product line was developed, it would be transferred to a new corporation which would be owned by Rodak and MDC in proportion to the value of their respective contributions to development of the product. Rodak accepted the offer and went to work for MDC in June, 1972.

Rodak remained with MDC until April, 1978. During that time, he designed and developed a new line of commercial refrigeration products suited for fishing boats. Rodak also set up the manufacturing facilities and supervised the manufacture of this refrigeration equipment.

In 1977, MDC organized a subsidiary corporation known as Commercial Marine Products (CMP) to which it transferred the marketing right to the new product line. The manufacturing rights, however, were retained by MDC. Rodak objected, insisting that this reorganization did not comport with MDC's earlier promise to transfer the entire commercial marine refrigeration operation to a new company. When MDC refused to modify the arrangement and offered Rodak only a 15% stock ownership in CMP, Rodak resigned and instituted the present suit.

In his motion for judgment, Rodak, pleading in the alternative, claimed in Count I that MDC had breached its oral contract and in Count II that MDC was liable to him on a quantum meruit basis. MDC denied these allegations in its grounds of defense, claiming that the annual salary which had been paid to Rodak was the only compensation to which he was entitled. During the presentation of Rodak's evidence, the court ruled sua sponte that, as a matter of law, there was no express contract. Count II, the issue of quantum meruit, was submitted to a jury which, at the end of the four-day trial, returned a verdict for Rodak in the amount of $170,000. The trial court entered judgment on the verdict, and MDC now contends that the trial court erred in: (1) submitting the quantum meruit claim to the jury, and (2) granting instruction number 7. We reject both contentions and affirm the judgment of the trial court.

I. Quantum Meruit.

As to the appropriateness of Rodak's recovery on quantum meruit, there can be little doubt. In Hendrickson v. Meredith, 161 Va. 193, 198, 170 S.E. 602, 604 (1933), we said:

It is a general rule of law that he who gains the labor ... of another must make reasonable compensation for the same. Hence, when one furnishes labor to another under a contract which, for reasons not prejudicial to the former, is void and of no effect, he may recover the value of his services on a quantum meruit. [Citation omitted.]

See also Cochran v. Bise, 197 Va. 483, 90 S.E.2d 178 (1955); Burke v. Gale, 193 Va. 130, 67 S.E.2d 917 (1951); Ricks v. Sumler, 179 Va. 571, 19 S.E.2d 889 (1942); and Adam-Christian v. McGavock, 147 Va. 252, 137 S.E. 374 (1927).

In this same vein, we approve the conclusions of the Kansas Supreme Court in Brakensiek v. Shaffer, 203 Kan. 817, 821-822, 457 P.2d 511, 514-515 (1969):

Contract: Quantum Meruit. Where the parties contract for the doing of certain work, and the work is done and accepted, and it appears that there was a misunderstanding as to the price to be paid for it, the law rejects the understanding of each, and awards reasonable compensation.

....

However, after services ... have been furnished and accepted, the fact that no price had been agreed on or that the compensation mentioned ... is too indefinite does not prevent the recovery of reasonable compensation.

Here, after the trial court's ruling that no express contract between MDC and Rodak was proven, the sole remaining issue was the quantum meruit claim raised in Count II of the motion for judgment. ¹ Under the pleadings and evidence presented, the issue whether Rodak was entitled to recover the value of the services he provided to MDC was clearly a jury question, and the trial court was correct in submitting the case to the jury on Count II.

II. Instruction number 7.

MDC argues that the trial court should not have given instruction number 7 and correctly points out that the first two sentences were criticized in Hendrickson v. Meredith, supra. ²

Hendrickson

* * *

The court instructs the jury that an implied contract is created by law to establish justice between parties. It does not require mutual assent, but may bind a party against his will. And the court further instructs the jury that if they believe by a preponderance of the evidence that ...Meredith performed services of value for ... deceased, at any time within three years prior to ... [his] death, for which no certain compensation was agreed on, and the said ... [deceased] accepted and profited by such services, then it shall be your duty to find for the plaintiff ... in such an amount as you may think said services were reasonably worth to the said ... deceased.

MDC v. Rodak

* * *

The court instructs the jury that an implied contract is created by law to establish justice between the parties. It does not require mutual assent, but may bind a party against his will. The court therefore further instructs the jury that if they believe by a preponderance of the evidence that ... Rodak performed services for which no definite compensation was agreed upon, and [MDC] accepted such services, then you shall find your verdict for ... Rodak in such amount as you may think such services were reasonably worth less the amount of compensation actually paid to ... Rodak by [MDC].

If you believe from the evidence that Rodak came to work for [MDC] for an agreed upon salary, or that the conduct of the parties created a contract for a definite salary, then you shall find for [MDC].

There, Meredith brought an action against the estate of the deceased, seeking to recover the value of the services she rendered during the last several years of his life. At trial, the only matter in dispute was whether the deceased had promised Meredith that, in addition to paying her $2.50 per week and furnishing her board and clothing, he would make provision for her and provide her a home as long as she lived.

In discussing these two sentences of the sole jury instruction given by the trial court in Hendrickson...