Martinson v. Brooks Equipment Leasing, Inc.

• Decision Date: 03 October 1967
• Citation: 152 N.W.2d 849,36 Wis.2d 209
• Parties: Rose M. MARTINSON, Executrix of the Estate of Norman C. Martinson, Dec'd., Appellant, v. BROOKS EQUIPMENT LEASING, INC., a/k/a Sun Village Apartments et al., Respondents. Delmer KNIPFER, Plaintiff-Respondent, v. BROOKS EQUIPMENT LEASING, INC., Defendant-Respondent, Rose M. Martinson, Executrix of the Estate of Norman C. Martinson, Dec'd., Defendant-Appellant, and Four Lakes Concrete Corp., a Wis. corporation, Impleaded Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 849

152 N.W.2d 849

36 Wis.2d 209

Rose M. MARTINSON, Executrix of the Estate of Norman C.

Martinson, Dec'd., Appellant, v. BROOKS EQUIPMENT LEASING, INC., a/k/a Sun Village Apartments

et al., Respondents.

Delmer KNIPFER, Plaintiff-Respondent, v. BROOKS EQUIPMENT LEASING, INC., Defendant-Respondent,

Rose M. Martinson, Executrix of the Estate of Norman C.

Martinson, Dec'd., Defendant-Appellant,

and

Four Lakes Concrete Corp., a Wis. corporation, Impleaded

Defendant-Respondent.

Supreme Court of Wisconsin.

Oct. 3, 1967.

Rehearing Denied Nov. 28, 1967. See 154 N.W.2d 353.

Vernon Molbreak, Madison, for appellant.

Roberts, Boardman, Suhr & Curry, Madison, for respondent Brooks, Thomas G. Ragatz and Gerald T. Conklin, Madison, of counsel.

BEILFUSS, Justice.

The issues on appeal are two:

1. Were the claimed 'extras' included within the April 15th contract?

2. Was the imposition of $2,000 in liquidated damages unjustified?

It appears that at the time the contract was signed, April 15, 1965, the plans and specifications actually used to build the pool were not in existence. The only plans and specifications existing were those which accompanied the bid materials sent to interested contractors. These plans and specifications prepared by respondent's engineer, William Dries, called for an all metal pool with a diatomaceous earth filter system that was to be constructed 'deck level.' The bid forms, however, included space for an alternative bid on an all concrete pool. Appellant obtained information on such a pool from the National Pool Company and submitted his bid for a concrete pool based on this information.

Before the contract was signed, a representative of National Pool Company showed Mr. Brooks and Mr. Dries a concrete pool with a sand filter system housed in an underground concrete filter house. Brooks decided to construct an identical pool. Neither appellant nor his employee, Mr. Shaw, were present when this pool was viewed. Both appellant and Shaw met with Dries and the National Pool representative on April 13, 1965. The evidence is in dispute but Dries' notes taken at this meeting show that an underground filter house was discussed.

Two days after this meeting the contract was signed. The contract provided that the pool would be constructed according to 'plans to be submitted by National Pool Company.' The contract price agreed upon ($27,163) was the amount of the appellant's bid plus an additional $50 for a stairway down to the filter house.

On or about April 15, 1965, appellant requested National Pool to prepare and send plans and specifications for an all concrete pool. These plans, dated April 22, 1965, and showing a sand filter system housed in an underground concrete filter house, were received by the appellant. The plans were returned to National Pool to be revised as to some details, and were again received by appellant about May 8, 1965. At this time construction had either not begun or barely begun. In any event, appellant was aware that there was to be an underground filter house at this time if not before.

Appellant contends the underground filter house was an 'extra' and not included in the April 15th contract. Respondent contends that the National Pool plans, though not in existence when the contract was signed, were incorporated by reference and became a part of the contract.

Sec. 2.15 of the specifications, and Article 6 of the typewritten portion of the agreement incorporated the 'drawings' into the contract. Appellant contends the term 'drawings' is ambiguous since in other contract instruments the term 'plans' is used. Therefore appellant contends that construing the contract against the party who drafted it, respondent, 'plans' are not incorporated.

It is more logical to conclude that the terms 'plans' and 'drawings' were intended to be used synonymously throughout the instrument. However, the point need not be pursued since Article 6 of the typewritten provision also lists as an incorporated document 'Plans to be submitted by National Pool Company.' The face of the contract itself leaves no doubt that the National Pool plans were intended to be incorporated.

The National Pool plans were not in existence at the time the contract was signed; however, matters not presently in existence may nevertheless be made a part of a contract by reference. ² This should not be taken to mean, however, that items such as plans and specifications unagreed upon may be incorporated without some identification in the original contract and some form of adoption by the person sought to be charged with performance.

The contract sufficiently identified the plans as those to be submitted by National Pool.

The facts here wholly support the conclusion that appellant adopted the plans submitted by National Pool. After receipt of the plans appellant began the work, completed the underground filter house, and in fact gave respondent a request for payment and a lien waiver stating it covered, among other things, the filter house excavation and the pouring of the filter house walls. The filter house concrete walls were complete at this time yet it was not claimed as an 'extra' until much later. The contract provided that no extra or change shall be compensable unless authorized by the owner in writing prior to the installation of the extra or change. Admittedly the respondent-owner never gave such written authorization, nor did the appellant make claim for the extra until a considerable period of time after the claimed extra work had been completed. Appellant's conduct in actually installing the pool in accordance with the National Pool plans without apparent objection unequivocally shows he adopted them as part and parcel of the contract signed on April 15th.

Appellant does contend that his employee-agent, Mr. Shaw, voiced objection to the underground filter house shown in the National Pool plans some time in May of 1965. Shaw testified to this effect and also testified that Mr. Dries responded to the objection by commenting that things would be worked out. Even if such a statement was made, it does not overcome appellant's failure to obtain written authorization or to claim the underground filter house as an extra when he submitted his request for payment.

Furthermore, the evidence shows that Shaw knew the filter house was to be underground at the time the contract was signed. He denied this knowledge at trial, but his adverse examination read into the record reveals his knowledge of the stairway down to the filter house for which he requested an extra $50 before the contract was signed. Shaw's testimony with regard to this stairway is entirely inconsistent with his position that he did not know the filter house was to be underground. Since Shaw was indisputably appellant's employee and agent in regard to this contract, his knowledge is to be imputed to appellant. The general rule is that stated in Johnson v. Associated Seed Growers, Inc. (1942) 240 Wis. 278, 282, 283, 3 N.W.2d 332, 334 * * * the principal is chargeable with and bound and affected by such knowledge and notice as his agent received in relation to the matter over which the authority extend while acting within the scope of his authority in negotiating or attending to a particular transaction. 2 Am.Jur. p. 286, § 368; Brothers v. Bank of Kaukauna, 84 Wis. 381, 395, 54 N.W. 786; Venne v. Damrow Bros. Co., 192 Wis. 249, 254, 212 N.W. 796.'

Thus appellant must be held to have known an underground filter house was to be constructed at the time the contract was signed.

Appellant's knowledge of the underground filter house also refutes his contention that the National Pool plans were to be followed for the actual pool part of the project, and the other plans followed for the filter arrangement. If all that was before the court was the contract and its incorporated documents, it must be admitted that an ambiguity would exist since there is no indication which set of plans is to be followed. It is therefore correct to say that it may reasonably be taken in more than one sense. Wheelwright v. Pure Milk Association (1932), 208 Wis. 40, 46, 240 N.W. 769, 771, 242 N.W. 486. However, the contract is not the only evidence before the court. The court has evidence of the appellant's knowledge that the National Pool plans were the ones to be followed with regard to both the pool and the filter arrangement:

"'* * * Where such ambiguity does exist, then evidence of the circumstances under which the contract was made is proper to enable the court, in the light thereof, to read the instrument in the sense the parties intended, if that can be done without violence to the rules of language or of law.' Johnson v. Pugh, 110 Wis. 167, 170, 85 N.W. 641, 642. * * *" Wheelright v. Pure Milk Association, supra, 208 Wis. p. 45, 240 N.W. 769, 771.

'When the language of a contract is not clear and unambiguous the practical construction given to it by the acts of the parties is of 'great force' or 'entitled to great weight. " Cutler-Hammer, Inc. v. Industrial Comm. (1961), 13 Wis.2d 618, 632, 109 N.W.2d 468, 475. See also Joseph Mann Library Association v. City of Two Rivers (1956), 272 Wis. 441, 446, 76 N.W.2d 388; Georgiades v. Glickman (1956), 272 Wis. 257, 75 N.W.2d 573.

'Under such circumstances the court ordinarily will place the interpretation upon the terms of the contract which the parties in the course of their dealings have adopted.' Cutler-Hammer, Inc. v. Industrial Comm., supra, 13 Wis.2d p. 632, 109 N.W.2d p. 475; also George J. Meyer Mfg. Co. v. Howard Brass & Copper Co. (1945), 246 Wis. 558, 574, 18 N.W.2d 468.

Here the course of dealings is not in dispute. Appellant followed the National Pool plans and constructed an underground concrete filter house. His performance according to the National Pool plans leaves no room for contending the other plans were to be followed either for the pool or the filter arrangement.

The finding of fact...