United States District Court, Southern District of Illinois, N.D
June 20, 1969
THE UNITED STATES OF AMERICA, FOR THE USE OF J.C. SCHAEFER ELECTRIC, INC., AN ILLINOIS CORPORATION, PLAINTIFF,
O. FRANK HEINZ CONSTRUCTION CO., INC., AN ILLINOIS CORPORATION; AMERICAN CASUALTY CO. OF READING, PENNSYLVANIA, A PENNSYLVANIA CORPORATION; AND NATIONAL FIRE INSURANCE CO. OF HARTFORD, A CONNECTICUT CORPORATION, DEFENDANTS.
The opinion of the court was delivered by: Robert D. Morgan, District Judge.
OPINION AND ORDER
This cause comes before the Court on plaintiff's motion for
summary judgment, raising the sole question of whether "* * *
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of
law." Rule 56, Federal Rules of Civil Procedure.
This suit is brought under the Miller Act, 40 U.S.C. § 270a,
270b (1964). This Act is highly remedial in nature to assure
the payment of federal subcontractors and "is entitled to a
liberal construction and application." MacEvoy v. United
States, for Use and Benefit of Calvin Tomkins, 322 U.S. 102,
107, 64 S.Ct. 890, 893, 88 L.Ed. 1163 (1944).
A great many facts are admitted and therefore not in
dispute. Among such are the following: On or about July 6,
1966, the real plaintiff herein, J.C. Schaefer Electric, Inc.
(herein called Schaefer), orally communicated a "bid" to the
president of defendant Heinz of $508,800.00, plus $28,740.00
for alternative "A", to perform the electrical work required
on a proposed construction project on which Heinz was
submitting a general contractor's bid to the United States. On
July 7, 1966, Heinz submitted its bid and named Schaefer
therein as the proposed electrical subcontractor. Heinz
thereby became the successful bidder on the government
contract. Shortly thereafter, O. Frank Heinz, president of
defendant Heinz, orally asked Schaefer to reduce the amount of
its bid for the electrical work and Schaefer refused. On
August 2, 1966, defendant Heinz filed with the contracting
officer of the General Services Administration a request to
permit Heinz to change the electrical subcontractor in his
bid. Under the government contract terms this may be done only
with government consent. This request was initially denied
1966, with final denial ordered October 20, 1966.
On August 12, 1966, defendant Heinz entered into a
construction contract with the United States, acting by and
through the Public Building Service of the General Services
Administration. Thereafter, defendants American Casualty
Company of Reading, Pennsylvania, and National Fire Insurance
Company of Hartford entered into a Payment Bond as sureties
for defendant Heinz.
On November 2, 1966, Schaefer received from defendant Heinz
a message on corporate paper and signed by the vice president
of Heinz which stated:
"Confirming my phone conversation with you of
today — we will write you an order to proceed with
Base Bid & Alternative `A' work for the quoted
price. * * * You will receive our order this week.
In the meantime you will proceed with the work. * *
On or about November 2, 1966, Schaefer, with the knowledge and
consent of defendant Heinz and under the above quoted
authority, commenced to perform the subject electrical work.
On November 8, 1966, Schaefer received a purchase order
numbered GSA-95-125 which contained therein the following
"This contract is subject to the possible
termination which may result from a pending
appeal to the Board of Contract Appeals of the
General Services Administration of the United
States Government; which appeal filed on October
27, 1966, by O. Frank Heinz Construction Company,
Inc., seeks the right to substitute a
subcontractor for all or a part of the work and
materials referred to in this Purchase Order.
"Acceptance of this contract constitutes
acceptance of said condition of substitution."
These terms were unacceptable to Schaefer and an amended
purchase order was requested by letter which, in pertinent
"Fourth: * * * It should be obvious
that we can not become committed to
purchase materials for this job nor to
start the same under the threat of
possible termination through the appeal
which you mentioned. We had thought all
difficulties relating to this matter
were fully settled.
"We shall expect an amended Purchase Order to be
sent to us promptly, taking care of the above
An amended purchase order was never received by Schaefer.
After other correspondence, not pertinent to this case,
Schaefer mailed a letter to defendant Heinz on November 15,
1966 stating that Schaefer would proceed with the work based
upon Heinz's letter to it dated November 2, 1966.
During the ensuing course of this construction work,
defendant Heinz issued to Schaefer a series of sixteen "Change
Orders" initiated by and through the president of Heinz and
bearing his signature. These orders had printed on their face
the words "Contract Amount" and "Revised Contract Amount," the
first of which stated the amount submitted by Schaefer to
defendant Heinz on July 6, 1966 as the "Contract Amount." This
amount was accurately and successively changed as change
orders were issued, so that the final figure was Schaefer's
bid price adjusted by the changes. The electrical work was
completed and accepted by October 23, 1968.
Schaefer has been paid $463,671.00 to date, but seven
invoices and three requests for payment of the balance of
$78,933.04 have been submitted to defendant Heinz and have not
been honored. That balance, which is the balance of the
Schaefer bid price as adjusted by change orders, is the
subject of this law suit.
Rule 56 was intended to avoid trial of immaterial issues
where the material facts are certain. In ruling on a motion
for summary judgment, this Court's function is to determine
a genuine issue of material fact exists and grant summary
resolution where there is no such issue, and on the
substantive law the movant is entitled to judgment. Inferences
to be drawn from the underlying facts must be viewed in the
light most favorable to the party opposing the motion. United
States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d
176 (1962). Summary judgment was properly granted, however,
where movant's direct, positive and uncontradicted evidence
was opposed only by claim of a contrary inference arising from
the proof. Lavine v. Shapiro, 257 F.2d 14 (7th Cir. 1958).
Defendant's sole contention is that summary judgment should
not be granted on the ground that there is a genuine issue of
material fact for the jury as to whether the defendant Heinz'
president ever unequivocally accepted the fixed price offer of
Schaefer. Heinz contends that he did not — that there was no
"meeting of the minds" on the Schaefer price for the electrical
work. Heinz acknowledges that Schaefer was entitled to
something for his work and materials, but contends that it must
be on a quantum meruit basis. Said defendant seeks to support
his contention by distinguishing between the admitted or
"evidentiary" facts as stated hereinabove, and the "ultimate"
fact of whether a contract has been formed — whether a fixed
price contract could have been formed without his conscious and
intentional assent to the price. This Court recognized that
there are distinctions between "ultimate" and "evidentiary"
facts, but does not find the distinction applicable to the
question now before the Court.
As the defendant Heinz points out in its brief, in order to
grant Schaefer's motion, the Court must conclude that the
offer of Schaefer was accepted by defendant Heinz, if not by
conscious and intentional acceptance, then by a course of
conduct which constitutes acceptance as a matter of law. It is
not necessary for the determination of this case, and this
Court does not undertake to determine whether or not an
express contract exists between Schaefer and Heinz. Rather,
the issue to be determined is whether the conduct of Heinz, as
a matter of law, constitutes acceptance and thereby
establishes an implied contract between the parties. Whether
or not a contract exists here, therefore, is a question of law
and not one of "ultimate fact" preventing summary judgment.
Where the essential facts are not in dispute, the question of
whether an implied contract exists is one of law. 17A C.J.S.
Contracts § 611 (1963); 12 I.L.P. Contracts § 46 (1955);
Cottingham v. National Mut. Church Ins. Co., 290 Ill. 26,
124 N.E. 822 (1919).
Implied contracts include contracts implied in fact and
"quasi" or constructive contracts. In the case of In re Estate
of Brumshagen, 27 Ill. App.2d 14, 23, 169 N.E.2d 112, 117
(1960), the Court stated:
"An implied contract is proven by circumstances
showing that the parties intended to contract or
by circumstances showing the general course of
dealing between the parties. An agreement may be
said to be implied when it is inferred from the
acts or conduct of the parties * * *"
It is clear that a "meeting of the minds" is not required to
be shown by an unequivocal acceptance in an implied contract.
Neither a written offer and acceptance nor oral counterparts
are essential to establish a contractual relationship, for
unambiguous conduct of one party toward the other under such
circumstances as clearly to manifest an intention that one
party perform and the other party compensate for such
performance is sufficient. 17 C.J.S. Contracts § 4b (1963).
It is also clear that a contract implied in fact must
contain all the elements of an express contract. But, "* * *
where it appears that one has in fact made an offer to another
person and such person, by his acts or conduct, has accepted
the offer * * * it will be held that the latter has entered
into a contract." Voit Rubber Co. v. Peoria
Coca Cola Bottling Co., 280 Ill. App. 14, 22 (1935). Conduct,
therefore, can substitute for written or oral acceptance in
meeting the requirements for a contract implied in fact. This
applies to the price which is the only element questioned
here. It should be noted that only one price was ever
mentioned here and it was never changed except by specific and
mutually agreed change orders.
In the case of contracts implied in fact, the contract
defines the duty, while in the case of constructive contracts
the duty defines the contract. This relationship is well set
out in Beatrice Foods Co. v. Gallagher, 47 Ill. App.2d 9, 25,
197 N.E.2d 274, 283 (1964) when the Court stated:
"In an implied contract (fact) the agreement of
the parties is arrived at by a consideration of
their acts and conduct. In a quasi contract
obligation the principle upon which it rests is
equitable in nature, — it is an obligation similar
in character to that of a contract, but which
arises not from an agreement of the parties but
from some relation between them or from a voluntary
act of one of them, * *"
Thus "quasi" contracts are one more step removed from a
"meeting of the minds" and in fact are determined without
regard to the assent of the parties. The only essential
element for such a contract is the receipt of a benefit which
would be inequitable to retain. 17 C.J.S. Contracts § 6 (1963).
Looking to facts that are undisputed, and finding nothing to
render them even slightly ambiguous, this Court is fully
satisified that, as a matter of law, there is an implied
contract between Schaefer and the defendant Heinz at the price
originally quoted, as subsequently changed by agreed change
orders. In brief, the facts that defendant Heinz used
Schaefer's name in the bid submitted to the General Services
Administration after receipt from Schaefer of its offer; that
Schaefer refused to lower his price; that the defendant Heinz'
request to substitute subcontractors was denied; that the
message of November 2, 1966 instructed Schaefer to proceed
with the work at the "quoted price"; that full performance
with the admitted knowledge and consent of defendant Heinz
followed; that sixteen change orders had the designation of
"Contract Amount" and "Revised Contract Amount" upon their
faces, all clearly consistent with a contract at the amount
shown thereon, clearly establish an implied contract. The
conditional purchase order of defendant Heinz, which was
rejected by Schaefer, was simply a nullity, just as if it were
never issued. It adds nothing by way of support to the
contract found here, but it certainly does not destroy that
contract or tend in any way to do so.
Since this determination of implied contract on the
undisputed facts here is a matter of law, there is no genuine
issue as to any material fact for trial. Hence, the motion, in
the opinion of this Court, must be allowed.
Schaefer is entitled to statutory interest of five percent
on the balance due of $78,933.04. Ill.Rev.Stat. ch. 74 §
2 (1967). It is agreed that Schaefer completed its work on
October 23, 1968, but the affidavit of Schaefer's secretary
shows a deduction item of $379.84, dated January 20, 1969,
producing the contract balance found above. Since the said
unpaid contract balance did not become fixed until January 20,
1969, interest should commence from that date. Five months'
interest to date is $1,644.41.
Accordingly, it is ordered that plaintiff's motion for
summary judgment is allowed and judgment in the amount of
$80,577.45, including interest from January 20, 1969, is
entered against defendants, at defendants' cost.
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