B-81806, MARCH 23, 1949, 28 COMP. GEN. 540

B-81806, MARCH 23, 1949, 28 COMP. GEN. 540

CONTRACTS - PAYMENTS - PARTIAL PERFORMANCE WHERE COMPLETE PERFORMANCE OF A CONTRACT COVERING ALTERATIONS AND ADDITIONS TO EXISTING GOVERNMENT-OWNED BUILDINGS WAS RENDERED IMPOSSIBLE DUE TO THE DESTRUCTION OF A BUILDING BY FIRE WITHOUT THE FAULT OF THE CONTRACTOR, THEREBY RELIEVING THE CONTRACTOR OF ALL LIABILITY UNDER THE CONTRACT, THERE IS NO OBJECTION TO THE PAYMENT OF AN ADMINISTRATIVELY DETERMINED AMOUNT IN FULL AND FINAL SETTLEMENT FOR THE VALUE OF WORK DONE AND MATERIALS FURNISHED PRIOR TO THE DESTRUCTION OF THE BUILDING BY FIRE.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, FEDERAL WORKS AGENCY, MARCH 23, 1949:

I HAVE YOUR LETTER OF NOVEMBER 22, 1948, REGARDING THE CLAIM OF THE J. SLOTNICK COMPANY OF BOSTON, MASSACHUSETTS, IN THE AMOUNT OF $29,138.53, REPRESENTING THE ESTIMATED PERCENTAGE OF ALTERATIONS AND ADDITIONS TO BUILDING NO. T-1875 AT FORT DEVENS, MASSACHUSETTS, COMPLETED BY THE SLOTNICK COMPANY IN ACCORDANCE WITH ITS CONTRACT NO. WA1PB-5797, PRIOR TO THE DESTRUCTION OF SAID BUILDING BY FIRE.

IT APPEARS THAT ON OCTOBER 10, 1946, THE PUBLIC BUILDINGS ADMINISTRATION ENTERED INTO CONTRACT NO. WA1PB-5797, WITH THE J. SLOTNICK COMPANY, COVERING ALTERATIONS AND ADDITIONS TO CERTAIN GOVERNMENT-OWNED BUILDINGS AT FORT DEVENS, MASSACHUSETTS, FOR THE MASSACHUSETTS STATE COLLEGE, FOR A TOTAL CONSIDERATION OF $289,632. IT FURTHER APPEARS THAT IN ORDER TO PROVIDE A MESS HALL FOR THE COLLEGE THE CONTRACTOR WAS ORDERED ON JANUARY 21, 1947, TO PROCEED WITH CERTAIN ALTERATIONS AND ADDITIONS TO BUILDING NO. T-1875, THE PRICE TO BE DETERMINED LATER BUT NOT TO EXCEED $70,605.00; THAT THE FINAL PRICE WAS ESTABLISHED ON MARCH 7, 1947, AT $62,636.43; THAT, ON MARCH 17, 1947, BUILDING T-1875 WAS DESTROYED BY FIRE WITHOUT ANY FAULT OF THE J. SLOTNICK COMPANY; THAT THEREAFTER IT WAS DETERMINED NOT TO RESTORE THE BUILDING; THAT ON APRIL 18, 1947, THE COMPANY FILED CLAIM FOR $29,138.53, BASED UPON THE ESTIMATED PERCENTAGE OF THE COMPLETION OF THE WORK AT THE TIME OF THE FIRE; AND THAT IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT THE COMPANY IS ENTITLED TO $20,606.79 FOR WORK PERFORMED MATERIALS FURNISHED TO THE BUILDING. WITH RESPECT TO INSURANCE COVERAGE, YOU STATE THAT:

THE PUBLIC BUILDINGS ADMINISTRATION DID NOT REQUIRE, AND THE CONTRACTOR DID NOT OBTAIN, INSURANCE TO COVER THIS WORK. THE STATE OF MASSACHUSETTS DID, HOWEVER, CARRY BLANKET INSURANCE TO COVER THE BUILDINGS BEING PROVIDED FO ITS USE IN ACCORDANCE WITH A REQUIREMENT OF THE WAR DEPARTMENT. THE INSURANCE COMPANIES INVOLVED HAVE MADE OFFERS OF SETTLEMENT TO THE STATE OF MASSACHUSETTS FOR THE BENEFIT OF THE UNITED STATES, BUT THE AMOUNTS INVOLVED ARE NOT SUFFICIENT TO COVER BOTH THE CLAIM OF THE WAR DEPARTMENT FOR ITS INTEREST IN THE BUILDING AND THE CLAIM OF THE PUBLIC BUILDINGS ADMINISTRATION FOR WORK PERFORMED UPON THE PREMISES.

YOU REQUEST A DECISION WHETHER THIS OFFICE WOULD HAVE ANY OBJECTION TO THE PAYMENT OF $20,606.79, TO THE J. SLOTNICK COMPANY IN FULL SETTLEMENT OF ITS CLAIM IN THE MATTER.

AS INDICATED IN YOUR LETTER, A MARKED DISTINCTION IS RECOGNIZED BY THE AUTHORITIES BETWEEN THE CASE OF A CONTRACTOR WHO UNDERTAKES TO ERECT A NEW STRUCTURE WHICH IS DESTROYED BY FIRE BEFORE COMPLETION AND THAT OF ONE WHO UNDERTAKES REPAIRS OR ALTERATIONS UPON AN EXISTING BUILDING WHICH IS DESTROYED WITHOUT FAULT OF SAID CONTRACTOR BEFORE THE REPAIRS OR ALTERATIONS ARE FINISHED. IN THE FORMER CASE, THE CONTRACTOR IS NOT RELIEVED OF HIS OBLIGATION TO ERECT THE STRUCTURE. IN THE LATTER CASE, THE CONTRACTOR IS RELIEVED OF ALL LIABILITY, SINCE THE PARTIES ARE HELD TO HAVE ASSUMED THE CONTINUED EXISTENCE OF THE BUILDING UPON WHICH THE WORK WAS TO BE DONE. THE RULE IS STATED IN WILLISTON ON CONTRACTS, VOLUME VI, SECTION 1965, AS FOLLOWS:

THOUGH ONE WHO CONTRACTS TO BUILD IS NOT DISCHARGED FROM LIABILITY ON HIS CONTRACT BECAUSE OF THE DESTRUCTION OF HIS FIRST OR OTHER ATTEMPTS TO PERFORM THE CONTRACT, THE SITUATION IS DIFFERENT WHERE THE CONTRACT IS TO DO WORK ON A BUILDING AND THE BUILDING IS DESTROYED. HERE THE PARTIES ASSUMED THE CONTINUED EXISTENCE OF THE BUILDING UPON WHICH THE WORK WAS TO BE DONE, AND IF THIS ASSUMPTION CEASES TO BE TRUE, THE OBLIGATION IS DISCHARGED. EVEN THOUGH ANOTHER SIMILAR BUILDING WERE ERECTED, THE CONTRACTOR WOULD NOT BE BOUND TO WORK UPON THAT. IT WOULD BE A DIFFERENT BUILDING AND A VARIATION OF HIS CONTRACT. THE MORE TROUBLESOME QUESTION, WHETHER THE BUILDER CAN RECOVER COMPENSATION FOR THE WORK WHICH HE HAS DONE, IS SUBSEQUENTLY CONSIDERED. SEE ALSO RESTATEMENT, CONTRACTS, SECTION 460.

WITH RESPECT TO THE QUESTION OF WHETHER THE CONTRACTOR IS ENTITLED TO COMPENSATION FOR WORK DONE AND MATERIALS FURNISHED PRIOR TO THE DESTRUCTION OF THE BUILDING, IT APPEARS THAT THE GREAT WEIGHT OF AUTHORITY IN THE UNITED STATES SUPPORTS AN AFFIRMATIVE ANSWER. UPON THIS SUBJECT WILLISTON HAS THE FOLLOWING COMMENT ( VOLUME VI, SECTIONS 1975, 1976 AND 1977):

ONE WHO WORKS UPON A BUILDING OR OTHER PROPERTY UNDER AN INDIVISIBLE CONTRACT WITH THE OWNER, REQUIRING HIM TO COMPLETE A CERTAIN TASK OR ACCOMPLISH A CERTAIN RESULT, CANNOT PERFORM HIS FULL UNDERTAKING IF THE BUILDING OR PROPERTY IN QUESTION IS DESTROYED. HE IS EXCUSED FROM LIABILITY FOR HIS FAILURE, BECAUSE THE CONTRACT REQUIRED THE CONTINUED EXISTENCE OF THE BUILDING. EQUALLY CLEARLY HE CANNOT SUE THE OWNER FOR LOSS OF PROFIT. IF THE DESTRUCTION OF THE BUILDING WAS WITHOUT FAULT ON THE PART OF THE LATTER, HE, AS WELL AS THE WORKMAN, IS EXCUSED FROM LIABILITY ON THE CONTRACT. BUT MOST AMERICAN DECISIONS ALLOW RECOVERY ON A QUANTUM MERUIT FOR THE VALUE OF THE WORK WHICH HAS BEEN DONE PRIOR TO THE DESTRUCTION. THE LAW OF ENGLAND AND OF A FEW OF THE UNITED STATES, HOWEVER, DENIES RECOVERY.

IN THE CASES UNDER CONSIDERATION, THE DEFENDANT HAS AGREED TO TAKE AND PAY FOR SOMETHING AND HE HAS GOT PART OF WHAT HE AGREED TO TAKE. THEREFORE, WHERE THE PLAINTIFF'S WORK, LABOR, AND MATERIALS, HAVE BEEN ADDED TO A BUILDING OF WHICH THE DEFENDANT IS THE OWNER, TITLE TO SUCH WORK, LABOR, AND MATERIALS FOLLOWS THE TITLE TO THE SUPERIOR PROPERTY AND THE DEFENDANT MUST PAY THE VALUE OF WHAT HE HAS RECEIVED.

IN THE CASE NOW UNDER CONSIDERATION, THE RULE IN THE UNITED STATES, AT LEAST, SEEMS CLEAR THAT THE PLAINTIFF MAY RECOVER THE FAIR VALUE OF THE PERFORMANCE WHICH HE HAS RENDERED. IT IS SOMETIMES SAID THAT THE DEFENDANT IS LIABLE FOR THE BENEFIT WHICH HE HAS RECEIVED, BUT, UNLESS THE WORD "BENEFIT" IS GIVEN A MEANING WIDER THAN IS NATURAL, THE STATEMENT IS INADEQUATE. IN THE FIRST PLACE, THE WORD "BENEFIT" SUGGESTS THAT THE MATTER IS TO BE EXAMINED AS IT EXISTS AFTER THE IMPOSSIBILITY HAS SUPERVENED; BUT, AS INDICATED IN THE PRECEDING SECTION, THE AMERICAN LAW SEEMS CLEAR THAT WHERE THE DEFENDANT HAS RECEIVED PART PERFORMANCE REGARDED AS VALUABLE UNDER THE CONTRACT BETWEEN THE PARTIES, THE FACT THAT THIS VALUE HAS BEEN DESTROYED BY THE VERY CIRCUMSTANCES WHICH MAKE FULL PERFORMANCE OF THE CONTRACT IMPOSSIBLE WILL NOT PRECLUDE RECOVERY. TO THE SAME EFFECT, SEE RESTATEMENT, CONTRACTS, SECTION 468.

IN ANGUS, ET AL. V. SCULLY, 176 MASS. 357, 57 N.E. 674, THE PLAINTIFFS HAD CONTRACTED TO MOVE A HOUSE AND WHEN THEY HAD PARTIALLY PERFORMED THE OPERATION, THE HOUSE BURNED WITHOUT THEIR FAULT. IN ITS OPINION, THE COURT SAID:

* * * AUTHORITIES DIFFER AS TO THE RIGHTS OF THE PARTIES IN SUCH A CASE, BUT SO FAR AS RESPECTS THIS COMMONWEALTH THE RULE IS WELL SETTLED. STATED BY KNOWLTON, JR., IN BUTTERFIELD V. BYRON, 153 MASS. 517, 523, 27 N.E. 669, 12 L.R.A. 573. "THE PRINCIPLE SEEMS TO BE THAT WHEN, UNDER AN IMPLIED CONDITION OF THE CONTRACT, THE PARTIES ARE TO BE EXCUSED FROM PERFORMANCE IF A CERTAIN EVENT HAPPENS, AND BY REASON OF THE HAPPENING OF THE EVENT IT BECOMES IMPOSSIBLE TO DO THAT WHICH WAS CONTEMPLATED BY THE CONTRACT, THERE IS AN IMPLIED ASSUMPSIT FOR WHAT HAS PROPERLY BEEN DONE BY EITHER OF THEM; THE LAW DEALING WITH IT AS DONE AT THE REQUEST OF THE OTHER, AND CREATING A LIABILITY TO PAY FOR ITS VALUE, TO BE DETERMINED BY THE PRICE STIPULATED IN THE CONTRACT, OR IN SOME OTHER WAY IF THE CONTRACT PRICE CANNOT BE MADE APPLICABLE.' STATED MORE NARROWLY, AND WITH PARTICULAR REFERENCE TO THE CIRCUMSTANCES OF THIS CASE, THE RULE MAY BE SAID TO BE THAT WHERE ONE IS TO MAKE REPAIRS OR DO ANY OTHER WORK ON THE HOUSE OF ANOTHER UNDER A SPECIAL CONTRACT, AND HIS CONTRACT BECOMES IMPOSSIBLE OF PERFORMANCE ON ACCOUNT OF THE DESTRUCTION OF THE HOUSE WITHOUT ANY FAULT ON HIS ART, THEN HE MAY RECOVER FOR WHAT HE HAD DONE. * * SEE, ALSO, YOUNG V. CITY OF CHICOPEE, 186 MASS. 518, 72 N.E. 635.

ACCORDINGLY, YOU ARE ADVISED THAT THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO THE PAYMENT OF $20,606.79 TO THE COMPANY, IN FULL AND FINAL SETTLEMENT OF ITS CLAIM UNDER CONTRACT NO. WA1PB-5797 FOR THE VALUE OF WORK AND MATERIALS FURNISHED FOR BUILDING T-1875. OF COURSE, IT IS ASSUMED THAT FULL ADVANTAGE HAS BEEN OR WILL BE TAKEN OF ANY RIGHT OF SUBROGATION THE UNITED STATES MAY HAVE AS TO ANY INSURANCE COVERAGE ON THE BUILDING.