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Scully v. Morrison Hotel Corp.

DECEMBER 24, 1969.

JOHN J. SCULLY, AS RECEIVER FOR SAFEWAY CONSTRUCTION COMPANY, PLAINTIFF-APPELLEE,

v.

MORRISON HOTEL CORPORATION, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County; the Hon. NORMAN C. BARRY, Judge, presiding. Reversed and remanded.

MR. JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT.

Plaintiff, John J. Scully, as Receiver for Safeway Construction Company, filed a complaint at law against defendant Morrison Hotel Corporation alleging a balance due Safeway of $136,360.36 on an oral agreement for work performed and monies expended by Safeway at the Morrison Hotel. After defendant's answer was filed denying the existence of the agreement, plaintiff filed a reply amending his claim to include an additional amount owed Safeway by the defendant of $29,080 representing the salary of Safeway's superintendent at the Morrison which was allegedly agreed to be paid by the defendant. The jury returned a verdict of $136,360.36 in favor of plaintiff, on which the judgment was entered and from which this appeal is taken by defendant.

Defendant seeks reversal of the trial court's adverse ruling on its motion for a directed verdict, or in the alternative, requests a new trial contending that the verdict is against the manifest weight of the evidence and that the trial court erred in making certain evidentiary rulings.

In the fall of 1956, Murray Gold, president of Safeway Construction Company, had a series of meetings with William H. Rubin, president of the defendant. The matters discussed at these meetings are in dispute, as are the subsequent events.

Gold testified that in October of 1956 Rubin requested him to assume direction of the contracting work at the Morrison Hotel, to put the various laborers on Safeway's payroll and to supervise the work done, allegedly, because Rubin was having problems with some of these workers.

Gold further testified that soon after the initial meeting which had occurred in Rubin's office, another meeting was held there with Harold Kerman, Gold's fellow stockholder, director, and officer of Safeway, and Burke, auditor of the defendant, now deceased. Gold stated that at this second meeting an agreement was reached whereby Safeway would take over direction of the workers at the Morrison Hotel putting them on its payroll in return for a cost plus consideration which was based on the total payroll of the workers plus 10% for insurance and taxes, 12% overhead, and 10% profit.

Rubin testified, however, that Gold approached him about assuming the work at the Morrison in order to create a reference for future jobs. Rubin stated that at that time he was having no problems with his laborers, but that at the request of Gold he entered into an arrangement whereby the laborers were to be taken over by Safeway on a cost basis including only payroll plus 10% to cover insurance and taxes.

Kerman's only recollection of meetings wherein terms were allegedly discussed occurred late in 1956 before actual work started. He testified that at one meeting in the coffee shop of the Morrison Hotel with Gold, Rubin and Kerman present, Rubin requested Gold to take over the work at the Morrison, because Rubin was having trouble with the laborers; that at a second meeting attended by Rubin, Gold, Grande, the Hotel's general manager, and Kerman there was a discussion about which specific trade union laborers were to be taken over, but that he left early and recalls nothing else.

Gold testified that thereafter Safeway started first assuming the payroll for the painters and later the carpenters, steamfitters, and plumbers and that the normal billing procedure he followed was to take the time cards at the end of the week back to the office and prepare invoices therefrom for presentation on the following Monday. While the first week's invoices reflected the profit and overhead, this practice was allegedly discontinued at the request of Rubin, who stated that it would be a tax benefit to omit them. Rubin, according to Gold, promised to reimburse Safeway at a later time for these figures, but even after frequent requests during the period of 1956-1959 never did. In early 1957 it became necessary to hire someone to supervise the work and Rubin agreed to assume the superintendent's salary as part of the job cost on the profit-overhead package. Safeway was never paid amounts due under this package.

Alice Galatola, office employee of Safeway testified that at the direction of Gold she filled out the weekly invoices attributable to the Morrison work after receiving the time cards of the workers from her husband, who was employed by Safeway as superintendent of the work. She stated that the billing period was Thursday to Wednesday and the invoices included the profit and overhead figures. Mrs. Galatola then testified that the original copy of the invoice was given to Mr. Gold for presentation to the Morrison.

Evidence presented at trial showed two sets of invoices. One typewritten set was for a Thursday-to-Wednesday billing period, including 10% profit and 12% overhead. The other set was in Gold's handwriting and covered a Monday-to-Saturday billing period, but did not recite any overhead and profit figures. The cancelled checks of the defendant match the amounts on the handwritten invoices and exceed the amounts in the typewritten invoices, although the latter included charges of 12% and 10% which did not appear on the handwritten invoices.

Rubin testified that the only invoices presented to him by Gold were the handwritten ones which were accompanied by waivers of lien for the amounts so invoiced. Gold testified that the waivers of lien were given, because Rubin told him that the First National Bank, holder of Morrison's mortgage, required them.

Gold further testified that in February of 1959 Safeway had to cease operations at the Morrison for lack of funds due to the failure of Rubin to reimburse Safeway for the profit and overhead as per oral agreement. In March of 1959 defendant paid Safeway $7,000 and in return Gold gave Rubin a waiver of lien for "all labor furnished and material delivered to date." However, Gold stated that check and waiver were for specially priced extra work Safeway had done at the Morrison. Subsequently, Safeway returned the workers to the Morrison payroll and quit the job.

Safeway closed operations in 1959 and Scully was appointed receiver on December 8, 1959. Scully testified that he could not find the books and ...


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