Northern Farm Supply Inc. v. Sprecher

• Decision Date: 08 July 1981
• Docket Number: 13305 and 13306,13297,Nos. 13296,s. 13296
• Citation: 307 N.W.2d 870
• Parties: 33 UCC Rep.Serv. 1226 NORTHERN FARM SUPPLY, INC., (# 13306) and Multi-States Builders, Inc., (# 13305), Plaintiffs and Appellees, v. Robert SPRECHER, (# 13296 and # 13297), Defendant and Appellant, and Beadle County A.S.C.S. of Huron, South Dakota; Wilson Redi-Mix of Miller, South Dakota; and the United States Government, by and through the Farmers Home Administration of Huron, South Dakota, Defendants.
• Court: South Dakota Supreme Court

Page 870

307 N.W.2d 870

33 UCC Rep.Serv. 1226

NORTHERN FARM SUPPLY, INC., (# 13306) and Multi-States Builders, Inc., (# 13305), Plaintiffs and Appellees, v. Robert SPRECHER, (# 13296 and # 13297), Defendant and Appellant and Beadle County A.S.C.S. of Huron, South Dakota; Wilson Redi-Mix of Miller, South Dakota; and the United States Government, by and through the Farmers Home Administration of Huron, South Dakota, Defendants.

Nos. 13296, 13297, 13305 and 13306.

Supreme Court of South Dakota.

Argued May 29, 1981.

Decided July 8, 1981.

Drew C. Johnson of Maloney, Kolker, Fritz, Hogan & Johnson, Aberdeen, for plaintiffs and appellees.

Thomas M. Tobin of Maynes, Tonner, Maynes & Tobin, Aberdeen, for defendants and appellant.

DUNN, Justice.

Multi-State Builders, Inc. (MSB) and Northern Farm Supply (NFS) brought action against Robert Sprecher (Sprecher), seeking to recover the balance due on a construction contract for a hog confinement building. The circuit court entered separate judgments in favor of MSB and NFS. We affirm in part, reverse in part, and remand.

In July of 1979, Sprecher entered into a contract whereby MSB and NFS agreed to construct a hog confinement building. A hog confinement building is a structure designed to house hogs and to provide automatically for the feed and waste disposal of the hogs. During negotiations with MSB and NFS, Sprecher was informed of various systems used for waste disposal. He decided to purchase a hog confinement building 30' wide and 160' long with an open gutter fresh water flush waste removal system. Sprecher's system was designed with an open gutter four feet five inches wide running the length of the building. Two 300-gallon tanks of water on each end of the building were to flush every four hours to wash away the waste. The waste and water were then routed to a large storage lagoon.

Construction began on the building in September 1979, with the front half of the building being completed during the first week of December 1979. After Sprecher moved 290 hogs into the completed portion of the building, he had problems with the waste disposal system. The gutter had been installed improperly because instead of sloping toward the outside wall where the heaviest concentration of wastes accumulated, the gutter sloped the opposite way. Sprecher immediately notified MSB and NFS that the waste disposal system was not operating satisfactorily.

MSB and NFS employees came to Sprecher's farm three times to correct the problem. On the first visit, the frequency of the flushing and the diameter of the downspouts were both increased. When this correction proved unsuccessful, the employees tried to repair the leaky valves in the tanks to ensure that the tanks would be full when flushed. This also was unsuccessful. Angle irons were placed in the middle of the gutter to hold the water on the low side of the slope nearest the outside wall. The waste system still did not function properly.

Sprecher decided to seek outside advice from Gemi Enterprises of Sioux City, Iowa. One of their employees, Tim Frankl, examined the problems associated with the waste disposal system including the improperly sloped gutter, the frequency of flushing and the angle iron. He advised Sprecher to convert to an aerated continuous flow open gutter system. After three weeks of shoveling manure in the middle of winter and jeopardizing the health of his hog herd, Sprecher decided to follow Tim Frankl's advice.

MSB and NFS demanded additional payment on the contract before they would make further corrections on Sprecher's building. Sprecher refused to make further payments until the building was functioning properly. MSB and NFS later agreed to supply parts and labor for the installation of the continuous flow systems, as suggested by Gemi Enterprises. This new system remedied Sprecher's waste problems.

Along with the waste disposal problems, Sprecher claims that: there were problems with the feeding system, only one floor drain in the alleyway was installed rather than five as the contract specified, the concrete work was shoddy and filled with cracks around the pen posts, the pot washer was not supplied, the electrical system was improperly installed, the angle iron in the gutter injured the hogs, the grate over the gutter opening was defective and the fair market value of the building was $44,000 less than the contract price.

In February of 1980, MSB and NFS filed a mechanic's lien to collect the amount still owed on the construction contract. In the action to foreclose on that lien, the circuit court entered separate judgments and findings of fact and conclusions of law in favor of MSB and NFS. Sprecher appeals.

Sprecher contends that MSB and NFS did not substantially complete their contracts. The rule of substantial performance as applied by this court to building contracts is summarized in Aldrich v. Wilmarth, 3 S.D. 523, 54 N.W. 811 (1893), as follows: "(W)here the builders have in good faith intended to and have substantially complied with their contract, although there may be slight defects caused by inadvertence or unintentional omissions, they may recover the contract price, less the damages sustained on account of such defects." Id. at 529, 54 N.W. at 813.

The Aldrich rule does not set forth an absolute criteria to be examined by courts in determining whether performance is substantial. However, this court has examined such factors as whether the defect can be easily remedied and was not caused by inadvertence, Hulst v. Benevolent Hall Ass'n., 9 S.D. 144, 68 N.W. 200 (1896); whether the deviation from the contract defeated the purpose of the contract in any substantial manner, Van Den Hoek v. Bradwisch, 273 N.W.2d 152 (S.D.1978); and the extent of nonperformance in relation to the full performance promised, Dixon v. Nelson, 79 S.D. 44, 107 N.W.2d 505 (1961).

The question of whether there has been substantial performance in a given situation is a question of fact to be determined by the trial court. Hulst v. Benevolent Hall Ass'n., supra; Van Den Hoek v. Bradwisch, supra. We cannot substitute our judgment on factual questions for that of the trial court unless the finding of fact is clearly erroneous. In re Estate of Hobelsberger, 85 S.D. 282, 181 N.W.2d 455 (1970); SDCL 15-6-52(a). The record indicates that the circuit court considered the substantial performance criteria and the evidence supports its finding. We affirm this finding.

Sprecher contends that the circuit court should have adopted the diminution of fair market value measure of damages rather than basing recovery on the cost of repairs. The choice between the two measures depends on the circumstances. Many courts determine the appropriate measure of recovery as follows:

If the contract is substantially performed, and the breach of contract can be remedied without taking down and reconstructing a substantial portion of the building, the amount of damages is the cost of making the work conform to the contract. Or, where the defects cannot be remedied without reconstruction of a substantial portion of the work, the measure of damage is the difference in value between what it would have been if built according to contract and what was actually built.

Dobler v. Malloy, 214 N.W.2d 510, 518 (N.D.1973). See also H. P. Droher and Sons v. Toushin, 250 Minn. 490, 85 N.W.2d 273 (1957).

In the case before us, there was substantial performance of the contract and the facts indicate that the waste removal system was made to function effectively through the conversion to the aerated waste disposal system, without reconstructing a substantial portion of the building. The circuit court applied the proper measure of damages.

Sprecher contends that the circuit court erred in failing to award to him $6,939.89 for the cost of an aerated waste disposal system, $1,209.31 for the cost of installation, and...