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Watson Lumber Co. v. Mouser

JULY 10, 1975.




APPEAL from the Circuit Court of Madison County; the Hon. HARRY MONDHINK, Judge, presiding.


This cause is an appeal by the defendant-purchasers, Leo Kamadulski and Fannie Kamadulski, from a portion of an order entered by the circuit court of Madison County denying the relief requested by plaintiff's, Watson Lumber Company's, complaint, granting the "cross complaint [sic]" of the defendant-contractor, Lloyd Mouser, against the defendant-purchasers and defendant-sellers, Charles Klann and Clara Klann, and denying the amended counterclaim of the defendant-purchasers against the defendant-contractor.

The following facts are undisputed. The defendant-sellers, Klann (hereinafter referred to as "sellers"), contracted to sell an unimproved parcel of real estate to the defendant-purchasers, Kamadulski (hereinafter referred to as "purchasers"). The purchasers entered into an oral contract for the construction of a house on this parcel with the defendant-contractor, Mouser (hereinafter referred to as "contractor"). The contractor began construction of the house, however, he left the project prior to its completion. The house was completed by the purchasers. The purchasers paid the contractor $5000 in cash and the contractor gave the purchasers a credit on the contract price in the amount of $11,896.25 for work performed for contractor by purchasers (including a prior judgment for work performed). After the house was completed the plaintiff, Watson Lumber Company, from whom the contractor and purchasers had purchased much of the material used in construction of the house, filed a materialman's lien against the contractor and the purchasers.

Subsequently, plaintiff filed suit to foreclose the materialman's lien. The plaintiff named as defendants the purchasers, the sellers, and the contractor. The purchasers and the sellers each filed an answer to the plaintiff's action and a counterclaim against the contractor for indemnification. The contractor filed an answer and, in addition, filed a pleading entitled "Cross-Complaint" against the purchasers and the sellers on the oral contract for construction of the house. The purchasers and the sellers each filed an answer to "Cross-Complaint" of the contractor. The purchasers, alone, filed an amended counterclaim against the contractor for damages caused by his alleged breach of the oral construction contract. The contractor answered the purchasers amended counterclaim and in his "Reply to the Answer to Cross-Complaint" denied "each and every affirmative allegation set forth" in the sellers and the purchasers answer to his "Cross-Complaint."

The trial court was then called upon to hear evidence and arguments concerning each of the aforementioned pleadings. At the close of the plaintiff's case, the trial court entertained and granted the purchasers' and the sellers' motion for a directed verdict with respect to the plaintiff's foreclosure action. No appeal has been perfected from this order. After the trial court heard the arguments and received the evidence proffered by each of the defendants, it entered a "Decree" finding: (1) that the contractor was indebted to the plaintiff in the amount of $5234.74 for materials used in the construction of the house; (2) that the purchasers owed the contractor $28,025 on the oral contract and $5,749.78 for "extras" on the contract, less a credit to the purchasers of $24,055.30, leaving a balance due of $9,719.48; (3) that the purchasers "should take nothing by their Amended Counterclaim"; and (4) that the contractor was entitled to a mechanic's lien on the property to the extent of $9,719.48. In the second portion of its "Decree" the trial court ordered: (1) that the purchasers pay the contractor the sum of $9,719.48; (2) that in the event such payment was not made, the property should be sold at public auction; (3) that the contractor should be paid from the proceeds of such sale; and (4) that the contractor pay the plaintiff $5,237.74 out of the monies he was to receive from the purchasers. While the trial court did not enter any specific findings or orders on the sellers' counterclaim or on the contractor's "Cross-Complaint [sic]" against the sellers, the effect of those portions of the "Decree" ordering the property sold if the purchasers failed to comply with the order to pay the contractor was to rule against the sellers because they owned the underlying fee subject to their contract for sale with the purchasers.

A notice of appeal was filed in the trial court by the plaintiff; however, the record discloses that the plaintiff has failed to take any action to further pursue such appeal. A notice of appeal was also filed by the purchasers. This appeal only concerned those portions of the trial court's "Decree" which were entered to the detriment of the purchasers. It is this appeal that is presently before this court.

No question is raised on the pleadings on this appeal. We note, however, that there is no pleading in Illinois properly denominated a "Cross-Complaint." Ill. Rev. Stat., ch. 10, par. 38(1).

The first issue to be resolved on this appeal concerns the question of what, if any, liabilities exist under the terms of the building construction contract between the contractor and the purchasers. Both the contractor and the purchasers agree that they entered into an oral contract for the construction of purchasers' house. Nor is there any dispute that oral contracts between parties are valid in Illinois provided, as in the instant case, they are not barred by the Statute of Frauds. (Case International Co. v. American National Bank & Trust Co., 18 Ill. App.3d 297, 309 N.E.2d 750; Morris v. Anderson, 121 Ill. App.2d 169, 259 N.E.2d 601; C. Iber & Sons, Inc. v. Grimmett, 108 Ill. App.2d 443, 248 N.E.2d 131.) It is, instead, the terms of this oral contract that the parties dispute. In the instant case the contractor alleges that in addition to the oral terms of the contract there were written plans and specifications, in the form of blueprints and amended blueprints of another house, which were incorporated into this contract. Notwithstanding this incorporation, if true, in Illinois, such a contract partly in writing and partly in parol is considered to be an oral contract. Railway Passenger & Freight Conductors' Mutual Aid & Benefit Association v. Loomis, 142 Ill. 560, 32 N.E. 424; Bank of Marion v. Robert "Chick" Fritz, Inc., 9 Ill. App.3d 102, 291 N.E.2d 836; Wielander v. Henrich, 64 Ill. App.2d 228, 211 N.E.2d 775; Bertlee Co. v. Illinois Publishing & Printing Co., 320 Ill. App. 490, 52 N.E.2d 47.

The contractor testified that the agreed contract price was $29,500 while the purchasers testified that the agreed contract price was $29,000. The trial court's "Decree" found that "* * * there is due and owing on the verbal contract the sum of * * * ($28,025.00) * * *." The trial court made no finding as to the agreed contract price. The trial court also found "[t]hat the said verbal contract was performed or substantially performed * * *." The record herein is devoid of any evidence which would support the trial court's figure as the agreed contract price, and it, therefore, is our conclusion that the trial court's figure represents an abatement in the full contract price reflecting a credit to the purchasers for the contractor's failure to fully perform. Thus, that portion of the trial court's finding "[t]hat the said verbal contract was performed or substantially performed * * *" is here reversed insofar as it finds full performance, as that finding is against the entire weight of the evidence. We are left with the finding of substantial performance.

As we discussed in the case of Watson Lumber Co. v. Guennewig, 79 Ill. App.2d 377, 397, 226 N.E.2d 270:

"Under the common law, one seeking recovery on a contract, had to prove literal performance of his promises in order to hold the opposite party to his promise to pay. This was particularly harsh in building and construction cases because literal performance in every detail is unlikely. Moreover, labor and materials expended upon an owner's land could not be returned to the contractor if the owner avoided the contract. It was therefore held, and became the rule in Equity, that if the owner got substantially the thing for which he bargained, he must pay for it * * *."

Originally the doctrine of substantial performance held that:

"A substantial performance, in good faith, is sufficient. As was said in Sinclair v. Talmadge, 35 Barb. 602: `If there has been no willful departure from the terms of the contract, or omission in essential points, and the laborer has honestly and faithfully performed the contract in all its material and substantial particulars, he will not be held to have forfeited his right to remuneration by reason of mere technical, inadvertent or unimportant omissions or defects. The law imposes no such liability and enforces no such penalty.' Glacius v. Black, 50 N.Y. 145, is to the same effect * * *." (Keeler v. Herr, 157 Ill. 57, 60, 41 N.E. 750.)

Also see Palmer v. Meriden Britannia Co., 188 Ill. 508, 59 N.E. 247; Mason v. Griffith, 281 Ill. 246, 118 N.E. 18; Shepherd v. Mills, 70 Ill. App. 72, aff'd, 173 Ill. 223, 50 N.E. 709; School Directors v. Roberson, 65 Ill. App. 298; Cook v. American Luxfer Prism Co., 93 Ill. App. 299, for the same enunciation of the strict requirements of substantial performance of the work required under the contract and strict good faith on the part of the contractor. However, where there was performance by the contractor, substantial or otherwise, but a lack of good faith, recovery under the doctrine of substantial performance did not lie and the contractor, to recover anything, was required to sue under a theory of quantum meruit; and abandonment of a project was held to vitiate good faith. George Thompson & Son Co. v. Holtzer-Cabot Electric Co., 184 Ill. App. 475, 76 A.L.R.2d 805 (abstract opinion).

• 1 The doctrine of substantial performance as it has emerged from its early enunciation has continued to be limited in application to those factual situations where there has been both substantial performance of the work required under the contract and good faith on the part of the contractor. As was held in ...

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