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Robinhorne Const. Corp. v. Snyder

JULY 30, 1969.

ROBINHORNE CONSTRUCTION CORPORATION AND RED ARROW CONSTRUCTION, INC., PLAINTIFFS-APPELLANTS,

v.

JACK O. SNYDER AND PEOPLES BANK OF BLOOMINGTON, ILLINOIS, AS TRUSTEE UNDER MCLEAN COUNTY LAND TRUST NO. D-161, DEFENDANTS-APPELLEES. JACK O. SNYDER, COUNTERCLAIMANT-APPELLEE,

v.

ROBINHORNE CONSTRUCTION CORPORATION, INC., ORIN L. ROBSON, RED ARROW CONSTRUCTION, INC., AND UNITED STATES FIDELITY AND GUARANTY COMPANY, COUNTERDEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Champaign County; the Hon. BIRCH E. MORGAN, Judge, presiding. Judgments affirmed.

CRAVEN, P.J., DELIVERED THE OPINION OF THE COURT.

Rehearing denied and supplemental opinion October 24, 1969.

This appeal is from judgments in two actions filed in the Circuit Court of Champaign County arising out of construction contracts for the erection of a Howard Johnson Motor Lodge in Urbana.

The first suit filed by Robinhorne Construction Corporation prayed for an accounting and damages from its join-venturer in the construction, Red Arrow Construction, Inc., and Orin L. Robson, and the owner, Jack O. Snyder. Snyder counterclaimed against the joint-venturers and their surety, United States Fidelity & Guaranty Company (U.S.F. & G.), claiming damages for breach of contract and for the costs of suit against the surety.

The second suit filed by Robinhorne and Red Arrow Construction, Inc., sought a temporary injunction to restrain the owner, Snyder, from completing construction of the motor lodge and to enforce a mechanic's lien against the property.

The two suits were consolidated for trial and heard by the court without a jury. After numerous hearings the trial court entered judgment against Robinhorne Construction Corporation and in favor of all defendants upon the first suit for an accounting and damages. On the counterclaim of the owner, Snyder, the court entered judgment against the contractors, Robinhorne, Red Arrow and Robson, and their surety, U.S.F. & G., in the amount of $159,832.64 with interest at six percent. Also, separate judgment on the counterclaim of the owner, Snyder, was entered against U.S.F. & G. for costs of suit including legal and accounting fees and expenses in the amount of $28,498.86 and interest. In the second suit a judgment was entered against the contractors and in favor of the owner Snyder.

The contractors and their surety appeal from the judgments on the counterclaim in the first suit and the contractors appeal from the judgment in the second suit.

The disposition of this appeal of the consolidated cases is dependent wholly upon the rights of the property owner and the contractors under the construction contract or contracts entered into by them. These rights involve determination of the basis of payment for construction and the termination provisions and completion by the owner Snyder under the applicable contract terms. The evidence is both detailed and conflicting, but so far as pertinent to the issues here on appeal, requires certain review.

The owner, Jack O. Snyder, and his trustee, Peoples Bank of Bloomington, in April of 1965, employed a licensed architect to prepare plans and specifications for a Howard Johnson motel and restaurant on the land of the owners in Urbana.

The architect prepared the plans and specifications, using document forms recommended by the American Institute of Architects for lump-sum bid construction contracts. These were put out for bid. No lump-sum bids having been received by bid date, the owners proceeded to negotiate a cost-plus contract with Robinhorne Construction Corporation as contractor.

On July 10, 1965, the owners and Robinhorne entered into a written construction contract prepared by the owners' attorney upon a 1951 form recommended by the American Institute of Architects for cost-plus contracts, but the general conditions, plans and specifications of the previous contract were not changed. This contract, by a rider attached to paragraph 4, provided that the owner Snyder pay the contractor the cost of construction plus a six percent fee, but that the cost-plus six percent should not exceed $1,018,700.

Thereafter, difficulties arose in the ability of the contractor Robinhorne to provide a performance bond and in the cost of such bond. It also was learned by Robinhorne that it would be unable to perform the work. Thus, a supplemental agreement was made that Red Arrow Construction, Inc., would become a joint-venturer with Robinhorne and O.L. Robson.

The supplemental agreement also provided that the performance bond to be furnished by the joint-venturer contractors be reduced to $500,000 for the general contract work; that subcontractors be obtained for the mechanical, electrical, masonry, store-front and dry-wall portions of the building, who would furnish performance bonds for their respective portions of the contract; and that a new contract be entered into by all parties.

On October 19, 1965, the final construction contract was executed and backdated to July 10, 1965. It was prepared by the owners and their attorney and was on a 1963 American Institute of Architects form for a cost-plus contract. This contract provided that the owner Snyder pay the contractors the cost of the improvements plus six percent, provided such total did not exceed $500,000, excluding the subcontracted work. This maximum of $500,000, plus the estimated subcontracted excluded work equaled the original contract price of $1,018,700. No change was made in the original plans and specifications and general conditions prepared for the proposed original contract. A rider attached to paragraph 5 of the final contract provided that the contractors were to receive an additional fee equal to one-half of ...


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