O. C. Gove & Co. v. Island City Mercantile & Milling Co.

Strahan, J., delivered the opinion of the court. Upon the trial in the court below exceptions were taken to each of the foregoing instructions and also to the refusal of the qourt to give the instruction asked by the appellants. The correctness of these rulings presents the only question necessary to be considered on this appeal. The instructions given by the court practically present but one question, and that is, whether or not, where a mechanic or builder binds himself by a written contract to erect or repair a building or machinery, and he performs, not literally according to the terms of the contract, but still in such a manner as to be of some value to the owner, and the owner accepts it and uses' it, in an action on a quantum, meruit, he may recover for the reasonable value of such labor or materials, notwithstanding his failure to substantially perform the written contract. The instructions given by the court in effect declare that no recovery can be had in such case, while the one asked on the part of the plaintiffs, and which was refused by the court, states the converse of that proposition. An examination of what is the correct rule of law on that subject therefore becomes necessary. In making this examination it will be more convenient to first consider the instruction which the plaintiffs requested, because if that stated the law correctly the instructions given by the court were necessarily incorrect. 1. In a case like the one under consideration, “the law implies that the work done and the materials furnished were to be paid for. The general rule of law is, that while a special contract remains open, — that is, unperformed,— the party whose part has not been done cannot sue in indebitatus assumpsit to recover a compensation for wh at he has done until the whole shall be completed. But the •exceptions to that rule are in cases in which something has been done under a special contract, but not in strict accordance with that contract. In such case, the party cannot recover the remuneration stipulated for in the contract, because he has not performed that which was the [369] consideration of it. Still, if tbe other party has derived any benefit from, the labor done, it would be unjust to allow him to retain that without paying anything. The law, therefore, implies a promise on his part to pay such as the benefit conferred is really worth; and, to recover it indebitatus assumpsit is maintainable. Such is the law now in England and in the United States, notwithstanding many cases in the reports of both countries are at variance with it.” Mr. Justice Wayne in Dennotts v. Jones, 23 How. 240; L. ed., 240, book 16, pp. 442, 448; Stillwell v. Phelps, 130 U. S. 520; L. ed., book 32, p. 1035. “The defense is that it was not done in a workmanlike manner. In such case the rule is well established that the plaintiff may recover on a quantum meruit and quantum valebat what the work done and materials furnished were worth, where, as in this case, the parties cannot rescind and stand in statu quo, but one of them must derive benefit from the labor of the other.” Mr. Justice Works in Katz v. Bedford, 77 Cal. 319-321. Trowbridge v. Barrett, 30 Wis. 661, was an action to recover for a balance due for putting up a stationary engine and boiler, where it appeared that the plaintiff had not fully performed his part of the contract, and the court said; “There is no arbitrary rule of law,' which, in violation of every principle of natural justice, defeats the plaintiff’s right of recovery in such case, and permits the defendant to enjoy the fruits of such labor and expenditure without making remuneration therefor. The defendant had the right to recoup all damages sustained by him by reason of the failure of the plaintiff to fully perform his contract with him.” This doctrine is supported by an overwhelming weight of authority. Newman v. McGregor, 5 Ohio, 349; Allen v. McKibbin, 5 Mich. 449; Howell v. Medler, 41 Mich. 641; Hayward v. Leonard, 7 Pick. 180; 2 Parsons on Contracts, 523; Woodward v. Fuller, 80 N. Y. 312; Heckman v. Pinkney, 81 N. Y. 211; Cutter v. Powell, 2 Smith’s L. C. 61; Dermott v. Jones, 2 Wall. 1. And this court is fully committed to the same doctrine. Steeples v. Newbon, 7 Or. [370] 110; Tribone v. Strowbridge, 7 Or. 157; Todd v. Huntington, 13 Or. 9. Without in any manner entering upon the discussion oí the conflicting opinions and reasons to be found in the books on this vexed subject, it is sufficient to say that these cases are decisive of the question presented by the instruction under consideration. It stated the correct rule of law as announced by this court in the three cases above cited and the same should have been given. It results also that the instructions which were given by the court, and which are contrary to the doctrine of these cases, were erroneous and should not have been given. In the trial of this case the court below evidently undertook to apply what was said by this court in Gove v. The I. C. M. & M. Co., 16 Or. 93, to the facts disclosed by this record. That was an action between the same parties founded upon the written contract, and it was held that before the plaintiffs could recover on that contract, they must show a compliance with its terms. This is an action on a quantum meruit to recover the reasonable value of the material and labor, and we hold that it will lie. This distinction is noted in several of the cases above cited, and particularly in Todd v. Huntington, supra. Upon the re-trial of this action in the court below the plaintiffs will be entitled to recover whatever amount they can show their work and material placed in the defendant’s mill were reasonably worth subject to the right of the defendant to recoup from that amount such damages as it has sustained by the deviations from the written contract by the plaintiffs. These are the questions upon which the rights of the parties depend, and no doubt the trial court will exercise the power of amendment liberally so as to fully present them for trial before a jury. The judgment appealed from must be reversed and the cause remanded to the court below for a new trial.