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Zeigler & Son v. Chicago Northwestern Dev. Co.





APPEAL from the Circuit Court of Lake County; the Hon. HARRY D. STROUSE, JR., Judge, presiding.


This appeal arises out of an action by a plumbing contractor for breach of contract against his general contractor. A mechanic's lien count in the complaint was severed for a separate trial and is not involved in this appeal. The contract count was tried before a judge without a jury and a judgment for $85,354 plus costs was awarded to the plaintiff. In this appeal the defendant contends (1) that the plaintiff failed to prove that it performed or that the defendant breached the basic contract between the parties; (2) that the trial court's award of certain challenged extras is not supported by the evidence, and (3) that the trial court's award of damages contained elements which were speculative and contrary to the manifest weight of the evidence.

The testimony developed at trial established that the plaintiff, William Zeigler and Son (hereinafter referred to as "Zeigler"), is a plumbing contractor who bid on the plumbing work for certain apartment buildings being constructed by the defendant, Chicago Northwestern Development Co. (hereinafter referred to as "Northwestern"). The written contract entered into between the parties in April 1973 provided that the plaintiff would do the interior plumbing, including installation, in 30 buildings, containing six apartments each, for $1550 per unit, or $9,300 per building, being a total of $279,000. The contract was silent as to change orders or extras. Work apparently progressed smoothly enough on the contract until about April 1974, at which time Zeigler complained about rising material costs. Zeigler's manager, Haviland, testified that in September or October of 1974, he spoke with Northwestern's field superintendent (LaBrant) concerning inclusion of these price increases in future billings and that LaBrant told him, "Yes, go ahead and put them in there and we will pick them up at the end." In December of 1974, Zeigler submitted an invoice, including an increase of $805 per building, reflecting such price increase on materials. Northwestern paid only the original agreed price and ignored the increased billing. Later that month, Zeigler submitted further bills outside the original contract covering certain extras, one invoice for trim on four buildings in the amount of $12,000 and other extras for sump pumps, dishwashers, frost-proof sill cocks and gas piping, totaling in all $27,222. Zeigler said all of these items were due at that time but Northwestern paid only a major part of the invoice for trim and did not pay the other extras.

Certain "additional work authorizations" were submitted by Zeigler between April 3, 1973, and November 1974, but some of these were not signed as being authorized by Northwestern. These, together with some price increases and some items disputed as to whether or not they should be considered as being included in the original contract figure, were not paid by Northwestern and by June of 1975 there was $40,000 for which invoices had been rendered and which had not been paid. Some of these items were apparently still under discussion while others were flatly denied by Northwestern as being unauthorized extras and price increases which were not included in the original contract price. The difference between the parties was further augmented in August of 1974, when a dispute arose over the basis of payment for the plumbing work for a pool house, Zeigler claiming the agreed price was $10,700, whereas Northwestern apparently claimed that it had rejected that bid and that the agreement (oral) had been for the work to be done on a time and material basis. Thus, by September 1975, there were unpaid Zeigler invoices in the amount of around $50,000.

At that point, Zeigler threatened to quit work. Haviland, Zeigler's chief executive officer, met with Northwestern's representatives and informed them that "the only way it was going to go back on the job" was if its invoices to Northwestern "were satisfied." According to the testimony of Haviland, he was told the invoices would be paid. However, the disputes continued as to certain items, which remained unpaid and Zeigler did not return to the job.

So far as we can discern from the testimony and a summary sheet covering the plaintiff's exhibits, at the time Zeigler ceased work on the contract, Northwestern had paid some $161,000 on invoices rendered by Zeigler. Of these there were approximately $51,000 or $52,000 outstanding and unpaid invoices, including disputed increases and materials furnished and work performed as extras and which were disputed by Northwestern as being either unauthorized or as included in the original contract price. These invoices carried dates from February 1974 to August 1975. The largest items were those involving sump pumps and extra sill cocks, rendered in December of 1974, and the pool house (later withdrawn as a disputed item) which was rendered in August of 1975.

• 1 Northwestern tried to persuade Zeigler to return to the job without success. In November of 1975, Northwestern wrote to Zeigler pointing out that certain buildings had not been completed and asking Zeigler to return to finish these buildings otherwise Northwestern would have no alternative but to secure another contractor to complete the work. These letters were apparently ignored. Zeigler filed suit against Northwestern in March of 1976, alleging breach of contract and included as damages not only the unpaid invoices (somewhat adjusted), but also loss on materials bought and fabricated for the particular job and for loss of profits. We note that Zeigler's complaint filed in March of 1976 alleges that Northwestern "in violation of its agreement with the plaintiff, hired another plumbing contractor to continue work agreed to be accomplished and paid for under the agreement dated April 3, 1973 * * *." However, in view of Zeigler having taken the initiative to remain off the job, the hiring of another contractor by Northwestern, after written notice and request to Zeigler to return to the job, cannot be regarded as a breach of contract in and of itself. Zeigler's theory is actually based on a breach of contract for failure to pay open invoices within a reasonable time after they were rendered. The prayer for damages included approximately $51,900 for unpaid invoices, $58,000 for unused materials and $30,000 for loss of profit, totaling almost $140,000.

In the trial, three categories of disputed items emerged on which damages might be based, conceding that there was a breach of contract for which such damages would be proper. These were: (a) the disputed invoices; (b) the loss on unused materials purchased or fabricated for the particular contract, and (c) loss of profits. At the conclusion of the rather voluminous evidence involving details of many disputed items, the court awarded Zeigler $85,354 as damages for breach of contract. While the total amount of the judgment cannot be exactly reconciled in a breakdown of the claim, it consisted roughly of $30,700 for unused materials, $10,580 for profit and something over $44,000 for disputed unpaid invoices. Some $15,000 of these invoices is not contested on this appeal. The balance amounting to a little less than $29,000 was allowed by the trial court for work and materials furnished in the performance of the work either by oral agreement of the parties or by code requirements not set out specifically. Thus, the trial court not only found for the plaintiff in connection with the major part of the disputed invoices, but also awarded the plaintiff damages for loss of profit and unused materials, as part of the damages for breach of contract.

• 2, 3 We consider first the defendant's contention that the plaintiff failed to prove that it performed or that the defendant failed to perform the basic contract between the parties. The contract is silent as to change orders or extras, making no reference to such contingencies. Where the written contract contains no provision as to authorization for such extras, or how or when they shall be paid for, an oral request by one party for such extra work to be performed and its performance by the other party, does not add to or alter the basic contract between the parties, as to its essential terms. While the extras merit reasonably prompt payment after they have been performed, we cannot say that reasonably prompt payment of invoices within the written original contract, accompanied by a failure to promptly acknowledge and pay for invoices submitted for work which was not provided for in the original contract, and for which there is no written authorization, can invalidate the whole contract and place the contractor in a position to repudiate the entire contract and demand damages for its breach.

• 4 The burden, we think, is on the contractor who performs the extra work not delineated in the original contract to prove that it was either not part of the original contract requirements or that it was specifically requested by the owner subsequent to the original contract, before nonpayment for such additional work can be regarded as a breach of contract.

In the much quoted case of Watson Lumber Co. v. Guennewig (1967), 79 Ill. App.2d 377, 394, the court clearly defined the situation of the contractor performing additional or extra work:

"The contractor must make his position clear at the time the owner has to decide whether or not he shall incur extra liability. Fairness requires that the owner should have the chance to make such a decision. He was not given that chance in this case in connection with all of these extras. Liability for extras, like all contract liability, is essentially a matter of consent * * *."

• 5 Thus, the contractor who performs work not within the terms of the specifications of the basic written contract without an authorization from the owner is not foreclosed from payment, if he can prove either that the owner (in this case, the general contractor) agreed to such work or that it was contemplated by the parties, either in fact or in law (as, for instance, by the code requirements of the community). But, the contractor carries the burden of proving that the parties intended that he be paid for such work over and above the agreed original price. As the court said in Castle Concrete Co. v. Fleetwood Associates, Inc. (1971), 131 Ill. App.2d 289, 293-94:

"`In a building and construction situation, both the owner and the contractor have interests that must be kept in mind and protected. The contractor should not be required to furnish items that were clearly beyond and outside of what the parties originally agreed that he would furnish. The owner has a right to full and good faith performance of the contractor's promise, but has no right to expand the nature and extent of the contractor's obligation. On the other hand, the owner has a right to know the nature and extent of his promise and a right to know the extent of his liabilities before they are incurred. Thus, he ...

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