McGrath v. Electrical Const. Co.
| Decision Date | 06 September 1961 |
| Citation | 364 P.2d 604,230 Or. 295 |
| Parties | John E. McGRATH, Respondent, v. ELECTRICAL CONSTRUCTION COMPANY, Inc., a corporation, Appellant. |
| Court | Oregon Supreme Court |
Frank Deich, Portland, argued the cause for appellant. On the brief were Bryson & Deich, Portland.
Paul R. Meyer, Portland, argued the cause for respondent. With him on the brief were Norman B. Kobin and Leo Levenson, Portland.
Before McALLISTER, C. J., and ROSSMAN, PERRY, GOODWIN and LUSK, JJ.
This is an appeal by the defendant, Electrical Construction Company, Inc., from a judgment which the circuit court entered in favor of the plaintiff in an action instituted by him to recover $15,275.38 which he averred was the balance due him upon a contract into which he and the defendant had entered. The judgment was based upon a jury's verdict. The defendant, prior to entering into a contract with the plaintiff, had signed an agreement with Portland General Electric Company whereby it defendant) bound itself to perform for that concern some construction work upon a hydroelectric project near Estacada. After the defendant had entered into that undertaking it granted a subcontract to the plaintiff whereby the latter agreed to perform a designated part of the construction work specified in the contract between the defendant and Portland General Electric Company. In this action the plaintiff alleged that he had performed in full and of the work described in his subcontract with the defendant. He prayed for the recovery of judgment--not in the amount of the contract sum, but upon the basis of quantum meruit, and, in so doing, contended that the engineer in charge of the construction work through unreasonable, arbitrary action and demands had rendered the plaintiff's performance of his contract more costly than it would have been if the engineer had acted reasonably. The judgment which the plaintiff recovered in the sum of $15,275.38 is the full amount which the complaint sought. The total sum due the plaintiff on the basis of the contract was $13,355.29 and it had been paid to him. But, on the plaintiff's quantum meruit basis the sum due him, as estimated by the plaintiff, was $28,630.67. When we deduct from it $13,355.29, the amount that has been paid, we have $15,275.38 which is the sum for which judgment was sought and recovered.
The first assignment of error challenges the trial judge's ruling which denied the defendant's motion for a directed verdict.
Before the defendant had entered into its contract with Portland General Electric Company it had received two letters from Ebasco Services, Incorporated, one dated August 15, 1958, and the other August 16, 1958. The concern just mentioned was the engineer of Portland General Electric Company, and was in charge of the contemplated work. The letters requested the defendant to submit a bid upon the outlined work and were accompanied with drawings and specifications. Each of the two letters concluded with a paragraph, which, after referring to the work that was the subject of the requested bid, stated that the bid should include:
'* * * all your costs, expense and profit, direct and incidental, for your performance of the work in accordance with the foregoing understandings and the terms in the General Conditions, Specifications and Agreement of the Contract dated May 12, 1958, and all supplements thereto.'
Before the defendant submitted to Portland General Electric Company a bid in compliance with the requests from Ebasco Services, Incorporated, for a bid, it secured one from the plaintiff for the part of the work which became shortly the subject matter of the subcontract between the plaintiff and defendant. Prior to calculating his bid for the subcontract work the plaintiff was given the aforementioned letters, specifications and drawings. He was requested to base his bid as to some of the items shown in the drawings and specifications upon a lump sum basis and others upon a unit basis. The plaintiff's bid complied with that request. After its receipt the defendant incorporated it into the bid which it submitted to Portland General Electric Company and later was awarded the contract. Still later the defendant and the plaintiff entered into a subcontract for the work covered by the plaintiff's bid. As we have seen, the plaintiff contends that he performed in full the subcontract.
The defendant contends that the letters of August 15 and 16, 1958, that made reference to the general conditions of a contract between defendant and Portland General Electric Company and that were handed to the plaintiff for him to use in making his bid were effective to incorporate the general conditions into the contract that arose between him, as subcontractor, and the defendant, as prime contractor.
The general conditions gave to Ebasco Services, Incorporated, the engineers for this project, the usual powers of supervision and inspection that are possessed by engineers upon construction work.
Plaintiff claims that the engineer interfered with him, delayed him and placed additional burdens on him to such a degree that he was forced to perform the job in a manner substantially different from and more costly than had been contemplated. Testimony which he presented supplied many particulars and instances in support of those charges.
The record indicates that the plaintiff originally expected to finish the work in five weeks. As it turned out, more than three months were required to complete the undertaking and the expenses thereof were more than 80 per cent beyond the original figure. This, the plaintiff contends, was due to the arbitrary and unreasonable supervision exercised over him by the defendant and engineer. This unreasonable and arbitrary action, it is claimed, constituted an abandonment of the original contract.
The plaintiff also argues that since the original contract was abandoned and its prices can not be tracted to the work he is therefore entitled to recover on the basis of quantum meruit.
The principal defense asserted by the defendant is that all of the work performed by the plaintiff was governed as to price, conditions and quantity by an express contract between the plaintiff and defendant and that the plaintiff has been fully paid in accordance with the contract.
The defendant contends, and we agree, that the references made to (1) the general conditions and (2) the agreement between defendant and Portland General Electric Company in the letters of August 15 and 16, 1958, were effective to include the agreement and the general conditions into the contract between plaintiff and defendant. Cerino v. Oregon Physicians' Service, 1954, 202 Or. 474, 483, 276 P.2d 397, 401; Spande v. Western Life Indemnity Co., 1912, 61 Or. 220, 236, 117 P. 973, 979, 122 P. 38; 12 Am.Jur., Contracts, § 245.
Spande v. Western Life Indemnity Co., 1912, 61 Or. 220, 236, 117 P. 973, 979, 122 P. 38 states:
'* * * It is a rule of construction of contracts that, where an instrument refers in terms to another instrument as containing part of the stipulation between the parties, that other instrument is itself a part of the contract between the parties * * *.'
The above rule is quoted with approval in Cerino v. Oregon Physicians Service, supra.
Therefore, the matters contained in the agreement and the general conditions of the contract dated May 12, 1958, between the defendant and the owner must be considered in the interpretation of the contract between plaintiff and defendant.
There is nothing in the record which directly or by inference indicates that the defendant, personally, in any way substantially hindered or delayed the plaintiff in his work. On the contrary, the plaintiff testified that the defendant was 'helpful.'
This leaves only the activities of the engineer as accountable for the delays which the jury found made it impossible for the plaintiff to perform his duties under the contract as originally envisioned by the parties. Thus the plaintiff must, in order to charge the defendant with the consequences of the engineer's activity, rely on an inference to be drawn from the contract or on the relationship between the defendant and the engineer.
The defendant certainly can not be held accountable for the engineer's conduct on any agency theory, for the engineer was not the agent of the defendant. The latter did not hire the engineer, pay him or have any control over him. Therefore, none of the basic requisites for an agency relationship exist. In addition, the defendant was not even responsible for subjecting the plaintiff to the engineer due to the fact that the general conditions of the contract between the defendant and Portland General Electric Company specifically apply, under their own terms, to subcontractors:
'If the Contractor shall cause any part of the work to be performed by a subcontractor, the provisions of this Contract shall apply to such subcontractor and his or its officers, agents or employees in all respects as if he or it and they were employees of the Contractor. * * *'
From the foregoing it is evident that the plaintiff must rely on the contract to bring him within the rule that ordinarily, as between a subcontractor and the contractor who is in control of the general work to be performed, the law places the contractor under an obligation to the subcontractor to make good all losses consequent upon delays in the progress of the work not attributable to the subcontractor himself. Frank T. Hickey, Inc. v. Los Angeles Jewish Community Council, 1954, 128 Cal.App.2d 676, 276 P.2d 52; Norcross v. Wills, 1910, 198 N.Y. 336, 91 N.E. 803; Walter R. Cliffe Co. v. Du Pont Engineering Co., D.C.1924, 298 F. 649. This rule, however, is applied against the...
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