Kirkland v. Archbold

SKEEL, Presiding Judge.

This appeal comes to this court on questions of law from a judgment for the plaintiff in the sum of $200 entered by the court without the intervention of a jury. The action is founded on a written contract dated August 2, 1949, whereby the plaintiff agreed to construct certain alterations and to do certain repairs to a dwelling house . . . for the sum of $6,000.

The plaintiff claims to have started the work called for by said contract about August 5, 1949 and to have continued therewith until November 5, 1949, when he was forcibly and wrongfully ejected from the premises by the defendant's agent. It is plaintiff's claim that at the time he was wrongfully prevented from proceeding further with the work, the reasonable value of the work and materials expended by him and his sub-contractors . . . was $2,985; that only $800 had been paid thereon, leaving a balance due of $2,185, which he claims as the amount of his damages.

The defendant's defense is that her agent, as he had the right to do under the contract, tried to stop the plaintiff from proceeding to plaster the house until he had replaced all wood lath with rock lath as called for by the contract and also before the outside walls were lined with rock wool. It is the claim of defendant that plaintiff was attempting to plaster the house in direct violation of . . . the contract. . . .

It was the claim of the defendant that such work, of necessity, must be done before proceeding to plaster. Defendant also claims that much of the other work accomplished by the plaintiff was unsatisfactory and performed in an unworkmanlike manner, and was of no value.

The court, in rendering judgment for the plaintiff, held that plaintiff was in default under the provisions of the contract . . . and that the defendant acted within her rights in preventing plaintiff from proceeding with the plastering until such work had been completed.

. . . The contract provides:

‘The Owner agrees to pay the Contractor, as follows: $1,000.00 when satisfactory work has been done for ten days; an additional $1,000.00 when twenty days work has been completed; and additional $1,000.00 when thirty days work has been completed, and $1,000.00 on completion of the contract. $2,000.00 shall be paid within thirty days after the completion of the contract.’

The court held that . . . the contract provided for progressive payments and that such provisions ‘are severable from the remainder of the contract and if there has been full or substantial compliance with these provisions, the plaintiff is entitled to recover such progress payment.’ The court further held that the defendant having paid $800 on the first payment provided for, was an admission that ten days of satisfactory work had been done and therefore rendered judgment for $200, the balance due on the first payment.

The court committed error prejudicial to the rights of plaintiff in holding that the provisions of the contract were severable. The plaintiff agreed to make certain repairs and improvements on the defendant's property for which he was to be paid $6,000. The total consideration was to be paid for the total work specified in the contract. The fact that a schedule of payments was set up based on the progress of the work does not change the character of the agreement. . . .

The court found that the plaintiff and not the defendant breached the agreement, leaving the job without just cause, when the work agreed upon was for from completed. In fact, the plaintiff by his pleadings and evidence does not attempt to claim substantial performance on his part. The question is, therefore, clearly presented on the facts as the court found them to be, as to whether or not the plaintiff being found in default can maintain a cause of action for only part performance of his contract.

The earlier case law of Ohio has refused to permit a plaintiff to found an action on the provisions of a contract where he himself is in default. The only exception to the rule recognized is where the plaintiff has substantially performed his part of the agreement. . . .

The result of decisions which deny a defaulting contractor all right of recovery even though his work has enriched the estate of the other party to the contract is to penalize the defaulting contractor to the extent of the value of all benefit conferred by his work and materials upon the property of the other party. This result comes from unduly emphasizing the technical unity and entirety of contracts. Some decisions permit such result only when the defaulting contractor's conduct was willful or malicious.

An ever-increasing number of decisions of courts of last resort now modify the severity of this rule and permit defaulting contractors, where their work has contributed substantial value to the other contracting party's property, to recover the value of the work and materials expended on a quantum meruit basis, the recovery being diminished, however, to the extent of such damage as the contractor's breach causes the other party. These decisions are based on the theory of unjust enrichment. The action is not founded on the broken contract but on a quasi-contract to pay for the benefits received, which cannot be returned, diminished by the damages sustained because of the contractor's breach of his contract. . . .


Williston on Contracts, Vol. 5, p. 4123, par. 1475, says:

‘The element of forfeiture in wholly denying recovery to a plaintiff who is materially in default is most strikingly exemplified in building contracts. It has already been seen how, under the name of substantial performance, many courts have gone beyond the usual principles governing contracts in allowing relief in an action on the contract. But many cases of hardship cannot be brought within the doctrine of substantial performance, even if it is liberally interpreted; and the weight of authority strongly supports the statement that a builder, whose breach of contract is merely negligent, can recover the value of his work less the damages caused by his default; but that one who has wilfully abandoned or broken his contract cannot recover. The classical English doctrine, it is true, has denied recovery altogether where there has been a material breach even though it was due to negligence rather than wilfulness; and a few decisions in the United States follow this rule, where the builder has not substantially performed. But the English court has itself abandoned it and now holds that where a builder has supplied work and labor for the erection or repair of a house under a lump sum contract, but has departed from the terms of the contract, he is entitled to recover for his services and materials, unless (1) the work that he has done has been of no benefit to the owner; (2) the work he has done is entirely different from the work which he has contracted to do; or (3) he has abandoned the work and left it unfinished. The courts often do not discuss the question whether one who has intentionally abandoned the contract did so merely to get out of a bad bargain or whether he acted in a mistaken belief that a just cause existed for the abandonment. Where the latter situation exists, however, it would seem that the defaulter might properly be given recovery for his part performance. It seems probable that the tendency of decisions will favor a builder who has not been guilty of conscious moral fault in abandoning the contract or in its performance.

The drastic rule of forfeiture against a defaulting contractor who has by his labor and materials materially enriched the estate of the other party, should, in natural justice, be afforded relief to the reasonable value of the work done, less whatever damage the other party has suffered. Such a rule has been clearly recognized in the law of bailment where a defaulting bailee has enhanced the property of the bailor (Dobee on Bailments, Page 139 (1914) and also by statute a defaulting vendee in a conditional sales contract, where the vendor retakes the property, is entitled to a return of a just proportion of the money paid. G.C. Sec. 8570.

We conclude, therefore, that the judgment is contrary to law as to the method by which the right to judgment was determined. . . .

For the foregoing reasons the judgment is reversed and the cause is remanded for further proceedings.