Steltz v. Armory Co., Ltd.

• Decision Date: 16 December 1908
• Citation: 15 Idaho 551,99 P. 98
• Parties: GEORGE STELTZ, Appellant and Respondent, v. THE ARMORY COMPANY, LTD., Respondent and Appellant
• Court: Idaho Supreme Court

99 P. 98

15 Idaho 551

GEORGE STELTZ, Appellant and Respondent, v. THE ARMORY COMPANY, LTD., Respondent and Appellant

Supreme Court of Idaho

December 16, 1908

MECHANIC'S LIEN - COMPLETION OF BUILDING - LATENT DEFECTS - BREACH OF BUILDING CONTRACT-WAIVER.

1. As a general rule, where the owner of a building accepts the same and takes possession thereof, and at the time of doing so the building is incomplete and contains patent and obvious defects, the acceptance will be deemed a waiver, and the contractor will be entitled to recover the amount earned on the contract.

2. An acceptance of a building or structure that has been completed, or which contains latent defects either in the class or character of its workmanship or the quality of material used, will not be deemed a waiver of such latent defects, but, on the contrary, the owner may maintain his action against the contractor for breach of the contract at such time as he discovers the extent of the defects or after he has had reasonable time and opportunity by due diligence to have discovered the same.

3. Where a building has been completed and the owner thereof has entered into possession of the same on the theory that the building is a completed structure, and he later discovers that the building was defectively constructed and not properly tied to the adjoining wall and the front falls out the owner may recover the damages thus incurred on account of breach of the contract as an offset against the contractor who is seeking to foreclose his mechanic's lien for the construction of the building.

4. The fact that the owner of a building went into possession thereof with knowledge that the building contained latent defects in its construction and inferior material, will not prevent his claiming damages for such defects as an offset against the contractor's action to recover the contract price therefor, unless an express waiver is shown or such other facts and circumstances as would amount to a waiver of damages.

5. Under the provisions of sec. 6 of the lien laws of this state (Sess. Laws 1899, p. 148), every person performing labor or furnishing material for a building or structure is entitled to a lien therefor, and the amount to be recovered under such lien is always measured by the amount found to be due him under his contract.

6. Where a building contract provides for a forfeiture of $5 per day for each day the owner is kept out of possession thereof after the day fixed by the contract for the completion of the building, such damages cannot be recovered by the owner in an action by the contractor to foreclose his lien unless the same is affirmatively pleaded by way of defense or cross-complaint.

(Syllabus by the court.)

APPEAL from the District Court of the Second Judicial District, for the County of Latah. Hon. Edgar C. Steele, Judge.

Action by the plaintiff to foreclose a mechanic's lien. Answer by defendant claiming damages for breach of the contract. Judgment for plaintiff and a setoff allowed in favor of defendant. Both parties appeal. Affirmed.

Judgment affirmed. Petition for rehearing denied.

Stewart S. Denning, for Plaintiff.

"A cause of action arising out of the transactions set forth in the complaint as the foundation of the plaintiff's claim or connected therewith in favor of the defendant, must, to avail such defendant, be set forth in the answer as a counterclaim." (Stevens v. Home Savings & Loan Assn., 5 Idaho 741, 51 P. 779; Murphy v. Russell & Co. 8 Idaho 151, 67 P. 427.)

"The acts of the party and all the circumstances may be taken into consideration in the determination of the question, whether there is an implied waiver of the condition precedent." (Boots v. Steinberg, 100 Mich. 134, 58 N.W. 657; Hanley v. Walker, 79 Mich. 607, 45 N.W. 60, 8 L. R A. 207; Justus v. Myers, 68 Minn. 481, 71 N.W. 667; Hobkirk v. Portland Baseball Club, 44 Ore. 605, 76 P. 776; Chamberlain v. Hibbard, 26 Ore. 428, 38 P. 437; Barker v. Nichols, 3 Colo. App. 25, 31 P. 1024.)

I. N. Smith, for Defendant.

Where the owner takes possession, but does not waive defects, and thereafter latent defects appear, such possession is not a waiver of defects of which the owner had no knowledge. (Barker v. Nichols, 3 Colo. App. 25, 31 P. 1024; United States v. Walsh, 115 F. 697, 52 C. C. A. 419; Monahan v. Fitzgerald, 164 Ill. 525, 45 N.E. 1013.) The fact that the owner has expressed his satisfaction with the work and accepted it does not estop him from showing that the employee had failed properly or sufficiently to perform the work. (Meyer v. Martin (Tex. Civ. App.), 50 S.W. 470; Mohney v. Reed, 40 Mo.App. 99; Hanley v. Walker, 79 Mich. 619, 45 N.W. 57, 8 L. R. A. 207.)

AILSHIE, C. J. Sullivan, J., and Stewart, J., concur.

OPINION

AILSHIE, C. J.

This action was instituted by the plaintiff for the foreclosure of a mechanic's lien. Plaintiff entered into a contract with the defendant corporation to furnish the material and construct an armory building in the city of Genesee. Plans and specifications were adopted, the price and terms of payment were agreed upon, and the building was erected. The company went into possession of the building and continued to use it for some six weeks, at which time an unusual windstorm occurred and blew down the front of the building. The company declined to pay the contractor, whereupon he filed his lien and prosecuted this action to foreclose the same. The defendant company answered, admitting the contract, but denying that the building was ever completed "in a good, substantial and workmanlike manner." It also alleged as an affirmative defense that the building was defectively constructed, in that the front wall was not properly tied to the adjoining building, and other defects were charged, whereby the defendant alleged damages in the sum of $ 200. The trial resulted in a judgment in favor of the plaintiff for a balance due of $ 700 on the contract and $ 28.50 for extras. The court found in favor of the defendant on its allegation of damages in the sum of $ 140, which sum was offset against the total balance due on the contract. Both parties appealed from the judgment; and since each party is both appellant and respondent in this court, we shall refer to them in this opinion as plaintiff and defendant. Findings 4, 5, 6 and 7 are as follows:

"4. The court finds that the defendant tendered into court the sum of $ 610, and is shown to have tendered the same amount to the plaintiff at a period long prior to the time of the case.

"5. The court also finds that the defendant corporation has been in possession of the building ever since the date shortly after its construction, and that they went into possession of the said building with full knowledge of the defect alleged to have been the cause of the falling of the wall.

"6. The court finds that the north wall of the building was defectively constructed and that it was not properly tied to the building, and that on an occasion shortly after the defendant had taken possession of the same, the wall was blown down by a high wind, and the court finds that all of the aforesaid facts are substantiated by the evidence.

"7. The court further finds that it would take the sum of $ 140 to replace the said wall, and that the defendant has been damaged to that extent, and the court finds that the defendant is entitled to deduct from the amount of the contract the sum of $ 140."

Defendant contends that the fifth finding to the effect that the company went into possession of the building with full knowledge of the defect alleged to have been the cause of the falling of the wall is unsupported by the evidence, while the plaintiff contends that findings 6 and 7, to the effect that the north wall of the building was defectively constructed to the defendant's damage in the sum of $ 140, is not supported by the evidence. We may dispose of these contentions on the part of both plaintiff and defendant by saying that there is a substantial conflict in the evidence on all these points, and that there is sufficient evidence in the record to support each of the findings. We would not disturb them on that ground. The contract provided that the plaintiff should construct this building "in a good substantial and workmanlike manner." Evidence was produced tending to show that the defendant complied with this provision of the contract. There was also a great deal of evidence produced by defendant to the effect that he had not complied with this part of the contract. There is also evidence both ways on the question as to whether defendant had knowledge in a general way of this defect at the time it entered into possession of the building. It must be admitted, we think, that the defect in not tying the wall to the adjoining building with spikes or ties was not an obvious or patent defect, but was rather a latent defect. Had it been a patent and obvious defect or a failure to complete the building, the defendant would, under ordinary circumstances, be held to have waived the same by taking possession of the building without doing so conditionally or protesting against its condition or demanding its completion. It may often happen...