Salamon v. Terra

• Decision Date: 22 May 1985
• Parties: Walter SALAMON v. Alfred E. TERRA, Jr.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1029

477 N.E.2d 1029

394 Mass. 857

Walter SALAMON v. Alfred E. TERRA, Jr.

Supreme Judicial Court of Massachusetts Plymouth.

Argued March 8, 1985.

Decided May 22, 1985.

Howard G. Guggenheim, Brockton, on briefs, for plaintiff.

Talbot T. Tweedy, Taunton, on briefs, for defendant.

Before HENNESSEY, C.J., and WILKINS, ABRAMS, NOLAN and LYNCH, JJ.

ABRAMS, Justice.

The plaintiff, a builder, brought an action in a District Court seeking recovery in quasi contract for two partially completed houses which he had erected on two lots of land owned by the defendant. Finding that the defendant had been unjustly enriched, the judge held that a contract implied in law entitled the plaintiff to recover damages of $15,000, the value of the benefits conferred on the defendant's property. The defendant appealed, and the Appellate Division reversed the judgment and ordered entry of judgment for the defendant. The plaintiff now appeals to this court.

The facts reported to the Appellate Division by the judge are summarized as follows. In February, 1981, the plaintiff and the defendant entered into two written purchase and sale agreements whereby the defendant agreed to sell two lots to the plaintiff for $9,000 each, $8,500 of which consideration was to be paid on delivery of the deeds in August, 1981. The parties intended that the plaintiff would take possession of the lots by April 15, 1981. The plaintiff would pay for expenses incurred in his construction of the houses and then sell them to third parties. Both parties understood that the plaintiff would pay the defendant the balance of the purchase price for the lots from the proceeds of the house sales.

The builder partially completed the two houses but was unable either to obtain financing to complete them or to find purchasers, due to general adverse economic conditions. Although the dates of performance for the purchase and sale agreements were extended by several months, the builder was unable to pay for the lots. At all times, the owner was ready, willing and able to convey the lots. The judge found that there was neither fraud nor an express or implied promise in fact on the part of the defendant to pay the plaintiff for the value of the partially completed houses on the lots. The judge did find, however, that there was a contract implied in law. The defendant appealed to the Appellate Division. G.L. c. 231, § 108.

On appeal, the Appellate Division determined that the judge's finding of a contract implied in law, or a quasi contract, was erroneous because, even if the defendant was enriched and the plaintiff had suffered a detriment, the evidence did not support the conclusion that either of these results was unjust. The Appellate Division reasoned that no injustice existed where the reasonable expectations of the parties were not defeated. The Appellate Division also stated that there was no basis for a finding that the plaintiff reasonably expected that the defendant would pay for partially completed houses if the plaintiff were unable to perform the contract. The Appellate Division concluded that the plaintiff had entered a speculative commercial scheme, bore the risk of not completing or selling the houses, and therefore must bear the loss in a period of economic downswing. The plaintiff appealed to this court. G.L. c. 231, § 109.

On appeal the plaintiff argues that the Appellate Division order should be reversed because the evidence supports the judge's finding of a contract implied in law requiring the defendant to pay for the value of the partially completed houses on his property. He contends that the law allows him to recover on a quasi contract theory even where an express agreement existed between the parties covering the sale and purchase of the lots, and where the party asking for damages violated the agreement. He further argues that the evidence also supports the judge's finding that the plaintiff was not at fault in the breach of the contract and that the defendant had knowledge of the improvement of the property, assented to it, and was involved in a venture of common benefit to both parties, and thus should reasonably have expected to pay for it.

A quasi contract or a contract implied in law is an obligation created by law "for reasons of justice, without any expression of assent and sometimes even against a clear expression of dissent.... [C]onsiderations of equity and morality play a large part ... in constructing a quasi-contract...." 1 A. Corbin, Contracts § 19 (1963). It "is not really a contract, but a legal obligation closely akin to a duty to make restitution." Bloomgarden v. Coyer, 479 F.2d 201, 210 (D.C.Cir.1973). "A person who has been unjustly enriched at the expense of another is required to make restitution to the other." Restatement of Restitution, § 1 (1937). The underlying basis for awarding quantum meruit damages in a quasi-contract case is unjust enrichment of one party and unjust detriment to the other party. See U.S. Controls Corp. v. Windle, 509 F.2d 909, 912 (7th Cir.1975); 1 A. Corbin, Contracts § 19A (Kaufman Supp.1984). The Appellate Division stated the rule as follows: "The injustice of the enrichment or detriment in quasi-contract equates with the defeat of someone's reasonable expectations." See 1 A. Corbin, Contracts, supra.

Generally, if a landowner has requested that a person construct a structure on his or her property, it is reasonably expected that the landowner will pay for the services and benefit conferred, even if there was no express contract for the construction or if a contract has been violated. Hayward v. Leonard, 7 Pick. 181, 185 (1828). See Vickery v. Ritchie, 202 Mass. 247, 251-252, 88 N.E. 835 (1909); Gillis v. Cobe, 177 Mass. 584, 594-595, 59 N.E. 455 (1901). See also 2 G. Palmer, Restitution § 10.7(b ) (1978). The evidence in this case, however, does not support a conclusion that either party should reasonably have expected that the defendant would pay for the value of partially completed houses or expenses incurred by the plaintiff in the building of partially completed houses on his property. The defendant did not request or even desire that houses be built on...