Potter & McArthur, Inc. v. City of Boston

• Court: Appeals Court of Massachusetts
• Citation: 446 N.E.2d 718,15 Mass.App.Ct. 454
• Decision Date: 11 March 1983
• Parties: POTTER & McARTHUR, INC. v. CITY OF BOSTON.

Page 718

446 N.E.2d 718

15 Mass.App.Ct. 454

POTTER & McARTHUR, INC. v. CITY OF BOSTON.

Appeals Court of Massachusetts,

Suffolk.

Argued Feb. 10, 1983.

Decided March 11, 1983.

Elizabeth H. Kunz, Boston, for plaintiff.

John R. Devereaux, Asst. Corp. Counsel, Boston, for City of Boston.

Before GRANT, CUTTER and KASS, JJ.

CUTTER, Justice.

This action, brought in 1972 by Potter & McArthur, Inc. (Pomar), seeks to recover a balance allegedly due from the city under a fixed fee contract dated January 7, 1969 (and signed by the mayor on January 23, 1969). The contract was for services as naval architect in connection with a fireboat to be designed by Pomar and constructed for the city. The fixed fee of $22,600 was to be paid in accordance with a stipulated schedule based upon Pomar's completion of specified stages of its work. The case was submitted to a Superior Court judge upon a statement of agreed facts. This incorporated by reference numerous exhibits and at least parts of some depositions. The trial judge, on cross motions, denied summary judgment for Pomar upon Pomar's claim for the balance of its fixed fee (above amounts already paid to it, in accordance with the payment schedule in art. VII of the contract, as particular segments of Pomar's work were completed). The judge, however, granted summary judgment for Pomar for $3,895.15 on account of extra work (claimed to be due under art. V of the contract). From the judgment, both the city and Pomar appealed.

1. The trial judge ruled that despite the contract for a stipulated fixed fee, the contract "was essentially a divisible contract." As Professor Corbin has stated, the conclusion that a contract is "divisible" rather than "entire" may be confusing and is not invariably dispositive of all related issues. 3A Corbin, Contracts, § 694 (1960 & Supp.1982). See 6 Williston, Contracts, §§ 861 & 862 (3d ed. 1962 & Supp.1982). Upon the agreed facts before us, however, we think that the several parts of the contract were separable in the sense that Pomar's performance and the city's payments could "be apportioned into corresponding pairs of part performances so that the parts of each pair ... [may be] properly regarded as agreed equivalents," as discussed in Restatement (Second) of Contracts, § 240, and comments c, d & e (1979). See also id. at § 183.

The contract (art. VII), in prescribing specified part payments of the total fixed fee for each segment of Pomar's work, expressly stated that the sum paid "shall be payment in full for all work done and all services rendered by the Architect [Pomar] under this contract" after the event giving rise to the next (if any) prior part payment and before the event which was to be the occasion for the payment then being made. Pursuant to art. VIII, Pomar's services could have been discontinued by the city's fire commissioner at any time. ¹ The trial judge could reasonably conclude on such language that each installment of fixed fee was an agreed equivalent of the segment of work for which it was paid or to be paid, and that (in the circumstances) Pomar as architect would not be entitled to any payment for its performance of further work until it was able to proceed, and in fact did proceed, to the next segment of its performance. The Massachusetts cases seem to be consistent with the flexible rule laid down in the Restatement. See, e.g., a case where the earlier cases are collected, Bianchi Bros. v. Gendron, 292 Mass. 438, 443-446, 198 N.E. 767 (1935). ² See also Barrows v. Fuller, 253 Mass. 79, 83-84, 148 N.E. 374 (1925); Carrig v. Gilbert-Varker Corp., 314 Mass. 351, 357-358, 50 N.E.2d 59 (1943). Compare Rich v. Arancio, 277 Mass. 310, 313-314, 178 N.E. 743 (1931); Carlo Bianchi & Co. v. Builders' Equip. & Supplies Co., 347 Mass. 636, 649-650, 199 N.E.2d 519 (1964). If the city in fact had discontinued the contract, there would have been no doubt (under the contract terms just mentioned) that Pomar would have had no claim to any portion of the fixed fee not earned by it prior to the discontinuance.

In the circumstances, the failure of the city formally to discontinue the contract made no difference to Pomar. Article VI of the contract provided that if "construction of the fireboat is commenced within eighteen months after the written approval by the ... [fire commissioner] of the contract drawings and detailed specifications, the Architect [Pomar] shall render full architectural and engineering services in connection therewith and shall fully supervise the construction of the fireboat." Pomar's obligation to engage at all in the construction phase of the contract was thus dependent upon commencement of the boat's construction within eighteen months after the approval of Pomar's drawings and detailed specifications. It is agreed that such approval was received on April 29, 1969. Various delays ensued, which here need not be recounted in detail, and it was only after the third request for bids that a bid was obtained (from Grafton Boat Co., Inc., hereinafter Grafton, on a somewhat changed proposal form and modified specifications) for a fireboat which could be built within the price limit set in the contract (as then modified). A contract with Grafton was signed by the mayor on November 23, 1970, more than eighteen months after the city's approval of Pomar's plans and specifications.

An officer of Pomar on September 4, 1970, had written to the fire commissioner calling to his attention that the eighteen-month period just mentioned would expire in October, 1970, and that art. VI of the contract limited "the obligation of ... [Pomar] to commence technical services for supervision during construction" to that eighteen-month period. The letter also recommended renegotiation and amendment of Pomar's contract with the city at a higher fixed fee. On December 24, 1970, the same officer of Pomar wrote to the fire commissioner sending to him a copy of a letter from Grafton to Pomar requesting Pomar to review construction drawings. The final paragraph of Pomar's letter read, "At this time, we have no contractual arrangement with the [c]ity ... or funds to review the submitted material and we ... request ... instructions on how to deal with this matter."

In view of all the circumstances, including the discussions (mentioned in part 2 of this opinion) between the representatives of Pomar and the fire commissioner and of the latter's inaction about arranging a suitable amendment of Pomar's contract with the city, we are of opinion that the city, as well as Pomar, reasonably could be found to be no longer bound to go forward with Pomar as supervisor of the construction aspects of the contract.

2. When Grafton made its bid, ultimately accepted by the city in slightly modified form, the fire commissioner encouraged, and may have requested, Pomar to examine the Grafton bid and to provide the city at least with comments and recommendations concerning its adequacy. Pomar contends that such work was within Article V of the contract ³ and that it was properly performed by Pomar in reliance on discussions with the...