American Const. Co. v. Lassig ( 1929 )

WALKER, J.

Appellant, American Construction Company, brought this suit against appellees, Oswald J. Lassig and Southern Surety Company, to recover on debt and for damages for breach of a building contract. Appellant was contractor for the construction of a hospital building in the city of Houston. It sublet the stonework, estimated at 9,600 cubic feet, to appellee Lassig for $48,-000. Lassig was to deliver 2,000 cubic feet of stone per month, beginning with August 1, 1923, and to continue his deliveries at that rate until the work was finished. He was given, however, 160 days in which to finish the work under his contract, and was to pay liquidated damages at the rate of $50 per day for each and every .day his part of the work was unfinished after the éxpiration of the 160 days. Lassig executed to appellant a. bond with appellee Southern Surety Company as his surety, to secure the performance of his obligations under the contract. On the ground that Lassig had defaulted in delivering the required stone, appellant, on the 15th. of February, 1924, canceled his contract. Las-sig had not in any month while his contract was in force delivered the amount of stone required of him, but from the inception of his contract until the time it was canceled delivered only 1,442.6 cubic feet of stone, for which appellant paid-Mm at the rate of $4 per cubic foot.

After canceling Lassig’s contract, appellant relet the unfinished work to another contractor, paying therefor practically the difference between the original contract price of $48,000 and the amount paid Lassig for the 1,442.6 cubic feet actually delivered. Appellant was delayed in the construction of the building, and was forced thereby to pay $5,035 in extra labor bills, which it charged against Lassig. Appellant also claimed liquidated damages against Lassig for 150 days at $50 per day. At the inception of the contract, appellant advanced Lassig $10,000, and furnished him, at his request, the necessary setting drawings and models. On the facts stated, appellant instituted this suit against appellee Lassig and his surety, praying for judgment for the $10,000 advancement, the liquidated damages in the sum of $7,500, extra labor expense in the sum of $5,035, the value of the setting drawings in the sum of $1,100, and of the models in the sum of $1,167.28. Appellant also prayed for interest on these several items. Lassig answered by general demurrer, general denial, and by way of cross-action that appellant wrongfully breached the contract, causing him damages in the loss of profits in the sum' of $12,000. The Southern Surety Company answered as did Lassig, and, in addition, pleaded unauthorized novations in the contract on which it was surety. <

The trial was to a jury, and, on appellant’s demands against Lassig, the jury found against its plea for liquidated damages and for the extra labor expense, that is, the extra labor expense was’ not proximately caused by any delay on the part of Lassig in furnishing the stone as called for in the contract. We affirm these findings as having support in the evidence. We say further, on the question of liquidated damages, that this issue was foreclosed against appellant by the terms of the contract itself, in that it was therein provided that liquidated damages were to be allowed only after the expiration of the 160 days, and, as appellant canceled the contract before the 160 days expired, no liquidated damages were recoverable. 'The judgment of the trial court denying appellant recovery on these two items is affirmed.

The jury fixed the value of the setting drawings at $720, and the trial court, on the undisputed evidence, fixed the value of the models at $1,167.28. In its judgment the trial court awarded appellant recovery for these two items in the sums stated, with interest as pleaded, and, as no assignment is before us attacking the correctness of the judgment as to these two items, it is affirmed in this respect.

Without dispute, it was shown that appellant advanced Lassig $10,000, on which Lassig had paid, under the terms of his contract, 15 per cent, of the value of the stone delivered, which the trial court found to be $722.41, and no assignment is before us against this allowance. This sum was allowed as a credit against the $10,000, leaving a balance of $9,277.59, which was awarded to appellant in the judgment of the trial court, but without interest. Appellant insists that it should have been awarded, interest on this item from the 15th of February, 1924. This assignment is sustained. It was provided in the contract between appellant and Lassig that “in the event this contract is cancelled, any unpaid balance of said Ten Thousand ($10,000.00) Dollars advanced shall then be immediately due and payable to contractor.” The trial court’s judgment as to the item of $9,277.59 is reformed by allowing interest thereon from the 15th of February, 1924, at 6 per cent, per annum, and, as so reformed, affirmed.

Appellant challenges Lassig’s pleadings in his cross-action as being bad on general demurrer. These assignments are overruled, but, if the objections to the pleadings should be presented on another trial as special exceptions, they should be sustained. Lassig’s cross-action was bad on special exceptions if properly presented, but good on general demurrer.

Lassig’s cross-action was based on the theory that appellant breached the contract by failing and refusing to receive stone properly prepared and properly delivered by him. The, facts were as follows: Lassig was very slow in delivering the stone. One time in the early part of the contract the architect refused a large quantity of stone that had been delivered, of which Lassig made complaint. The architect and appellant then agreed that a man named Ulrich, one of appellant’s servants, should be detailed to work with Lassig and inspect Lassig’s stone before it was prepared for the building and before it was delivered. Ulrich entered upon the discharge of this duty, with Lassig’s consent, about October. The relations between him and Lassig were not pleasant. At one time, after Lás-sig had prepared a large quantity of stone, Ulrich made a wholesale rejection of all of it, offering no explanation of his action, but the issue was raised that he was arbitrary, unreasonable, and wilful in his conduct. The jury found that Ulrich rejected stone that was according to the samples furnished the architect; that this rejection was the cause of some of the delay by Lassig in delivering the stone, and that this delay extended from the “time of the wholesale rejection in November, 1923, to cancellation of contract.”

The jury found further that Ulrich rejected the stone with knowledge that it was according to the samples furnished the architect, and that this rejection prevented Lassig from completing the performance of his contract. The jury further found that Ulrich instructed Lassig to deliver the stone in different quantities than that specified in the contract, that Lassig delivered the stone as required by Ul-rich, and that Ulrich was authorized to instruct Lassig’ to make the deliveries as actually made by him. The jury further found that it would have reasonably cost Lassig $33,600 to furnish the stone required by his contract. The jury’s findings on all the issues submitted to it have abundant support in the evidence. On this last finding Lassig would have had a profit on his contract of $14,400 had he been permitted to finish it, but, as he limited his damages by his plea to $12,000, the trial court limited his recovery against appellant to that sum, and found against appellant for that sum. On this finding the trial court entered the following judgment in Lassig’s favor. On the undisputed evidence appellant had paid Lassig for the stone delivered at the rate of $4 per cubic foot. On the verdict of the jury fixing the total cost at $33,-600, the trial court estimated the cost to Lassig of delivering the 1,442.6 cubic feet at $3.50 per cubic foot, thereby finding that Las-sig had a profit of 50 cents per cubic foot or $721.30 on the stone actually delivered. As his total profits were fixed at $12,000, and as appellant, on the last conclusion, had paid Lassig $721.30 of the profits, the court deducted that sum from the $12,000 and allowed Lassig recovery for the balance, with 6 per cent, interest from the date the contract was breached. Prom that sum the trial court deducted the several items already discussed, found by it in appellant’s favor, and awarded appellee Lassig judgment against appellant for the balance, being $1,916.28. Appellant has many assignments against this part of the trial court’s judgment. We have already overruled the assignments attacking Lassig’s pleadings. But the following assignments must be sustained:

Appellant would be liable to Lassig for the acts of Ulrich only in the event Ulrich was its agent, with authority from it to do, in its name and in its behalf, the things actually done by him. The agency of Ulrich was a controverted issue. The evidence was very strong that he was a special agent of the architect, acting entirely under the architect’s authority, with no duty to appellant. There was evidence, however, that he was appellant’s agent. On this issue appellant requested the trial court to submit to the jury this question, which was refused: “Was Ul-rich authorized by the plaintiff to reject any stone?” This question carried to the jury an essential element of Lassig’s cross-action. As appellant requested its submission, the trial court was without authority to make a finding thereon. North v. Atlas Brick Co. (Tex. Com. App.) 13 S.W.(2d) 59.

Again, there was no basis in the jury’s verdict whereby the trial court could estimate Lassig’s profit on the unfinished work. If appellant wrongfully breached the contract, Lassig’s damages on the facts of this ease were the profit he would have made on the unfinished work. The stone already delivered had been paid for, and was out of the case. Neither party made any complaint; regarding this stone. By proper issues the proportionate value of the stone delivered to all the stone called for by the contract should have been determined and this amount taken from the $48,000, the original contract. Lassig’s measure of recovery was the difference between that sum and the cost of delivering the balance of the stone. From the jury’s verdict, we cannot, nor could the trial court, find what it would have cost Lassig to finish his contract, nor can we determine the proportionate value of the stone delivered. The court was in error in assuming that the proportionate valup of all the stone was $3.50 per eublic foot and entering judgment on that basis. The stone actually delivered was plain stone, the cheapest stone called for by the contract. About 85 per cent, of the stone was of that character, but the remaining 15 per cent, was very expensive, being highly carved. There is no basis in the evidence by which the trial court, independent of or in aid of the jury’s verdict, could have determined on a proportionate basis the value of the stone delivered nor its cost to Lassig. Therefore the finding that Lassig made a profit of $722.41, which is the basis of the judgment in Lassig’s favor, has no support. It follows that the judgment on Lassig’s cross-action must be reversed and remanded for a new trial.

Without discussing the merits of the propositions of the Southern Surety Company that Lassig and appellant had changed the original contract, the judgment in its favor relieving it of liability on its bond is affirmed. As we construe this bond, there was no obligation on the part of the surety company to indemnify appellant for the $10,000 nor for the setting drawings nor for the models. As appellant’s recovery is limited to these items, it has no cause of action under the bond.

The issues between Lassig and the Southern Surety Company, as made by their pleadings, were settled by the court’s judgment in a manner satisfactory to them, and those issues are not before us for review.

Affirmed in part, in part reformed and affirmed, and in part reversed and remanded.