Case Title: RICK D. HOGAN D/B/A/ CHEYENNE SASH & DOOR v. ROBERT W. POSTIN, REIMAN CONSTRUCTION COMPANY

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1985-02-25T00:00:00Z

Document:
RICK D. HOGAN D/B/A/ CHEYENNE SASH & DOOR v. ROBERT W. POSTIN, REIMAN CONSTRUCTION COMPANY1985 WY 33695 P.2d 1042Case Number: 83-178Decided: 02/25/1985Supreme Court of Wyoming
RICK D. HOGAN D/B/A/ 
CHEYENNE SASH 
& DOOR, APPELLANT (PLAINTIFF), 

v. 

ROBERT W. POSTIN, 
APPELLEE (DEFENDANT), REIMAN CONSTRUCTION COMPANY 
(DEFENDANT).

 
 
Appeal from the County 
Court.

 
 
Carole Shotwell 
of Urbigkit, Whitehead, Zunker & Davidson, P.C., Cheyenne, for appellant 
(plaintiff).

Larry Lawton of Lawton & 
Edwards, Cheyenne, for appellee 
(defendant).

Before THOMAS,* C.J., and ROSE, ROONEY,** BROWN and CARDINE, JJ.

* Became Chief Justice 
January 1, 1985.

** Chief Justice at time of 
oral arguments.

ROSE, 
Justice.

[¶1.]     Subcontractor Rick D. 
Hogan, d/b/a Cheyenne Sash & Door, brought suit against Reiman Construction 
Company and Robert W. Postin, the contractor and architect respectively on the 
restoration of the historic TivoliBuilding in Cheyenne. Hogan's 
complaint against Postin is the subject of this appeal. Hogan claimed that 
Postin made a measurement error in the architectural drawings of a window 
layout, and that as a result of this mistake Hogan incurred additional expenses 
of $2,413 in completing his portion of the project. The county court found in 
favor of Hogan, and an appeal was taken to the district court. The district 
court reversed the judgment against Postin on the basis of Hogan's failure to 
obtain a written agreement to pay for the extra work from the contractor or the 
owner of the building (the City of Cheyenne) as his contract 
required.

[¶2.]     We will affirm. 

FACTS1

[¶3.]     As an agent for the 
City of Cheyenne, architect Postin supervised 
portions of the restoration of the TivoliBuilding. Hogan subcontracted to do mill 
work and wood work under the direction of Postin.

[¶4.]     While preparing the 
shop drawings for two storefronts which were to be constructed by Hogan, a 
discrepancy was discovered between the ceiling height as it appeared on the 
original blueprint and as it was measured in the field, and adjustments, 
therefore, had to be made in the dimensions of the windows and the sills. Hogan 
notified Postin of the measurement difference, and Postin instructed him to make 
the windows the size indicated on the blueprints. The sill height was then 
necessarily 39 inches instead of the 27 inches appearing on the 
blueprints.

[¶5.]     Hogan built the 
storefronts in his shop pursuant to Postin's instructions. The day after the 
east storefront was installed, Hogan was notified that Postin was dissatisfied 
with the sill height. Upon speaking with him, Hogan learned that Postin wanted 
the sill height to be one foot lower (27 inches). Hogan and Postin discussed the 
best procedure for making the changes which were necessary for historical 
accuracy. Hogan said he would keep track of the time and materials required in 
making the changes, but no actual arrangements for payment were made. Mr. 
Reiman, the general contractor, agreed that the sill height was wrong and told 
Hogan to proceed with the alterations.

[¶6.]     In his complaint filed 
in county court, Hogan sought $2,413, the total amount of the invoices on the 
alterations, plus interest against Reiman Construction Company and/or Postin. 
Civil judgment was entered against Postin for the entire amount. The district 
court reversed on contract theory, finding that Hogan could not claim the right 
to be paid by anyone, including Postin, when he had not complied with the clear 
requirements of his contract.2

THE 
ISSUE

[¶7.]     Appellant states the 
issue as follows:

"* * * [W]hether, by 
virtue of a contract executed between a contractor, Reiman Construction Company, 
and a subcontractor * * * Appellant can recover from the supervising architect * 
* * monies expended because of appellee's miscalculation and error in 
measurement of dimensions on the appellant's worksite."

[¶8.]     The issue is more 
succinctly stated as whether or not the appellee-architect owed a contractual 
duty to the appellant-subcontractor based on a contract to which appellee was 
not a party. While we agree with the outcome of the district court decision, we 
do not believe it is necessary to reach the question of whether or not the 
appellant complied with the proper procedure for securing payment for additional 
work. In affirming the judgment of an intermediate court, we may consider 
grounds not noticed or passed upon by the intermediate court. 5B C.J.S. Appeal 
and Error § 1815, p. 151, and cases cited therein. We have said that the trial 
court should be affirmed if it is correct on any theory. Valentine v. Ormsbee Exploration 
Corporation, Wyo., 665 P.2d 452 (1983); Heyl v. Heyl, Wyo., 518 P.2d 28 (1974); White v. Wheatland Irrigation District, 
Wyo., 413 P.2d 252 (1966). Relying on the 
disclosed-principal3 concept, we hold that Postin owed 
no contractual duty to Hogan.

THE 
LAW

[¶9.]     This court adopted the 
disclosed-principal rule in Thomas v. 
Gonzelas, 79 Wyo. 111, 331 P.2d 832 (1958). In that case, 
we held that an electrician did not state a cause of action against a lessee who 
ordered the installation of additional electrical equipment as an agent of the 
lessors. We accepted the position of Restatement of the Law, Second, Agency 2d § 
328:

"`An agent, by making a 
contract only on behalf of a competent disclosed or partially disclosed 
principal whom he has power so to bind, does not thereby become liable for its 
nonperformance.'" 331 P.2d  at 834.

Also see Starrett v. Shepard, Wyo., 606 P.2d 1247 (1980); Kure v. Chevrolet Motor 
Division, Wyo., 581 P.2d 603 (1978); 3 C.J.S. Agency § 
365, p. 180.

[¶10.]  In the case at bar, the appellant was 
well aware of the fact that the TivoliBuilding was owned by the City of 
Cheyenne and 
that Postin was supervising the project as an agent for the City. In ordering 
Hogan to correct the sill heights Postin was acting on behalf of the City, and 
thus did not become personally liable for payment on a contract. Thomas v. Gonzelas, supra; Restatement 
of the Law, Second, Agency 2d § 328.

[¶11.]  In Thomas v. Gonzelas, supra, this court 
also recognized the rule set forth in 3 C.J.S. Agency § 215 (now 3 C.J.S. Agency 
§ 365):

"`An agent who contracts 
on behalf of a disclosed principal and within the scope of his authority, in the 
absence of an agreement otherwise, or other circumstances showing that he has 
expressly or impliedly incurred or intended to incur personal responsibility, is 
not personally liable to the other contracting party * * *.'" 331 P.2d  at 
834.

Hogan does not 
allege that Postin expressed any intention of becoming personally responsible, 
although Postin did admit that the error was his fault. Absent an agreement to 
assume liability for nonperformance of a contract, an agent is not personally 
liable.

[¶12.]  Appellant argues that Postin did not have 
the authority to bind the City to pay for his professional "mistake, error and 
miscalculation." We do not agree. In an early Nebraska case, a contractor was suing an owner 
for an unpaid balance on a contract for the construction of a house. The 
contract required the builder to perform

"`* * * agreeably to the 
plans, drawings, and specifications prepared' by an architect named, to the 
satisfaction and under the direction of said architect." Erskine v. Johnson, 23 Neb. 261, 36 N.W. 510, 
511 (1888).

The architect 
made a mistake in drawing the grading line which resulted in additional work for 
the contractor. The owner of the home attempted to avoid liability, relying on a 
provision in the builder's contract requiring that extra work be contracted for 
in writing. The Supreme Court of Nebraska held that the writing provision was 
modified or waived because of the directions of the architect, and 
said:

"* * * As between the 
architect and [the owner], no doubt the architect would be liable for any 
mistake in the plans and specifications which increased the cost of the 
building; but as between the architect, 
who has the sole supervision of the work, and the contractor, the architect will 
be so far the agent of the owner as to bind him for alterations made necessary 
by the mistake of such architect, in order to complete the building according to 
contract; as where the plans and specifications called for windows which are 
too large or too small, whereby loss is occasioned to the contractor." (Emphasis 
added.) 36 N.W.  at 512.

That holding is 
directly applicable to this case and leads us to conclude that Postin did have 
the power to "bind" the City within the meaning of Restatement of the Law, 
Second, Agency 2d § 328 and is, therefore, not personally liable for the amount 
of the invoices as claimed by Hogan.

[¶13.]  The position that Postin did have the 
authority to order the refabrication of the storefronts is also supported by the 
language of the only document before this court which is indicative of his 
authority. A provision of the subcontract agreement requires Hogan to perform 
his contract

"* * * according to the 
plans and specifications * * * of Robert W. Postin, Architect, and to the full satisfaction of said 
Architect." (Emphasis added.)

The implication 
of this provision is that Postin could require performance meeting his standards 
and could require that mistakes be cured. The language of the subcontract 
agreement is evidence of the actual authority of Postin to bind the City of 
Cheyenne.

[¶14.]  Because Postin acted as an agent for a 
disclosed principal, expressed no intent to assume personal liability and acted 
within his authority in ordering the correction of the storefronts, we hold that 
Postin owed no contractual duty to the appellant according to the 
disclosed-principal concept.

[¶15.]  Affirmed.

1 Any factual 
discrepancies have been resolved in favor of the appellant, who prevailed in the 
trial court. Younglove v. Graham&Hill, Wyo., 
526 P.2d 689 (1974).

2 The subcontract 
agreement specifically required:

"Seventh. No extra work 
or changes under this contract will be recognized or paid for, unless agreed to 
in writing before the work is done or the changes made; in which writing shall 
be specified in detail the extra work or changes desired, the price to be paid 
or the amount to be deducted, should said changes decrease the amount to be paid 
hereunder."

3 Restatement of the Law, 
Second, Agency 2d § 4(1) defines "disclosed principal":

"If, at the time of a 
transaction conducted by an agent, the other party thereto has notice that the 
agent is acting for a principal and of the principal's identity, the principal 
is a disclosed principal."

ROONEY, Justice, dissenting, 
with whom CARDINE, Justice, 
joins.

[¶16.]  As set forth in the majority opinion, the 
facts in this case are simple and uncomplicated. Appellee architect made a 
serious design mistake. Appellant told him about it, but appellee told appellant 
to continue with the construction including the mistake. Appellant did so. 
Later, appellee told appellant to redo the work for the purpose of correcting 
the mistake. Appellant did so and now seeks to be paid for the extra 
work.

[¶17.]  I fault the majority opinion in three 
respects: (1) it misinterprets the nature of the cause of action; (2) it is 
inconsistent in its reasoning; and (3) it fails to recognize the waiver of the 
requirement for prior written authorization of a change.

NATURE OF THE 
CASE

[¶18.]  The majority opinion improperly 
considered this action to be on a contract between the owner and 
contractor-subcontractor in which "change orders" were required to have prior 
written approval.

[¶19.]  The owner was not made a party to this 
lawsuit. Appellant is not seeking payment from it. Appellant recognized that the 
extra work was not a result of a change in that for which the owner originally 
expected1 but was a result of appellee's 
mistake in not directing performance to that which the owner originally 
expected. The owner could certainly object to payment to appellant for the 
mistake made by one who was being paid by the owner to not make mistakes and who 
was being paid to see that others involved in the project did not make mistakes. 
The lawsuit was for value received by the 
appellee for the extra work. This being so, neither the agency relationship 
between owner and appellee nor the procedure in the owner's and 
contractor's-subcontractor's agreement requiring written directions in a change 
order have any relevance to the matter. Appellee was not acting on behalf of 
anyone but himself when he asked appellant to redo the windows. The owner would 
not be asking for a "change" in the original request to reestablish the 
historical appearance of the building. Appellee was obligated to plan the 
restoration. He made a mistake in doing so. He was obligated to correct it. Only 
he received value from the extra work performed by 
appellant.

[¶20.]  Accordingly, appellant's legal action is 
against appellee for value received. The "change order" provision of the 
contract was for the benefit of the owner. Snowball v. Maney Bros. & Co., 39 
Wyo. 84, 270 P. 167, 61 A.L.R. 199, reh. denied 271 P. 875 (1928); Headley v. Cavileer, 82 N.J. 635, 82 A. 908 (1912). It is not pertinent to this cause of action. Nor does the agency 
relationship between the owner and appellee have any application to the cause of 
action against appellee for the value of services rendered by appellant to 
appellee for himself and not rendered to or for appellee's principal, the 
owner.

INCONSISTENT 
REASONING

[¶21.]  The majority opinion asserts that 
appellee had the power to order the refabrication and thus "bind" the city to 
pay appellant for appellee's mistake - subject to first presenting a change 
order. This assertion is founded on a principal-agent relationship between the 
city and appellee, which it is said relieves appellee from any responsibility 
for his mistake. The majority opinion buttresses this analysis by referring to 
language in the subcontract to which appellant was a party requiring appellant 
to perform "according to the plans and specifications" of appellee and to 
appellee's "full satisfaction."

[¶22.]  Yet, with all of this authority in 
appellee, the majority opinion does not recognize that the work done to correct 
appellee's mistake was actually doing the work to appellee's "full 
satisfaction." Nor does the majority opinion recognize the inconsistency of this 
power to "bind" the city with the lack of power to waive the requirement for a 
prior written order to correct appellee's mistake. And this brings us to my 
third disagreement with the majority opinion.

THE REQUIREMENT FOR PRIOR 
WRITTEN AUTHORIZATION FOR A CHANGE WAS WAIVED

[¶23.]  The Nebraska case quoted by the majority opinion, Erskine v. Johnson, 23 Neb. 261, 36 N.W. 510 
(1888), to substantiate the authority of appellee to "bind" the city in 
authorizing a change order, stated at 36 N.W. :

"Considerable stress is 
laid by the attorney of Erskine upon that portion of the written contract which 
provides that `no work of any kind shall be considered as extra unless expressly 
contracted for in writing before its commencement.' This provision may be waived 
by the parties by any contract, either verbal or written, subsequently made, 
which modified its condition. * * *"

This is the 
general rule:

"The provision in a 
private building or construction contract (whether between a property owner and 
a contractor or between a general contractor and a subcontractor) that 
alterations or extras must be ordered in writing can be avoided by the parties 
to the contract where their words, acts, or conduct amount to a waiver, 
modification, rescission, abrogation, or abandonment of such provision, or where 
the owner (or the general contractor in the case of a subcontract) by his acts 
or conduct is estopped to rely on it. * * *" Anno., Effect of stipulation, in 
private building or construction contract, that alterations or extras must be 
ordered in writing, 2 A.L.R.3d 620, 648 (1965).

See Snowball v. Maney Bros. & Co., 
supra.

[¶24.]  When appellee directed appellant to do 
the extra work, appellant was told to keep track of costs and expenses. 
Appellant had performed extra work at other times on the project without prior 
written approval - and he had no trouble securing payment. He 
testified:

"As Reiman Construction 
Co. asked me to perform extra work, I would invoice it. They would pay me for 
the invoices. Every extra that I performed up to the time of this discrepancy 
was paid for."

The habitual 
disregard of the requirement amounted to a waiver of it. Harrington v. McCarthy, 91 Idaho 307, 420 P.2d 790 
(1966); Howard J. White, Inc. v. Varian 
Associates, 178 Cal. App. 2d 348, 2 Cal. Rptr. 871 (1960); Arc & Gas Welder Associates, Inc. v. 
Green Fuel Economizer Co., 285 F.2d 863 (4th Cir. 1960), cert. denied 366 U.S. 919, 81 S. Ct. 1095, 6 L. Ed. 2d 241 (1961). And, accepting the majority 
opinion's recognition of the authority of appellee to "bind" the city, his 
direction to do the work amounted to a waiver of the requirement for a written 
change order.

SUMMARY

[¶25.]  In summary, I believe the requirement for 
prior written authorization for the extra work was waived by prior habitual 
disregard of it; and if appellee had agency authority from the owner to order 
the refabrication, he had authority, and exercised it, to waive the requirement 
for prior written authorization for the extra work. But, I would reverse the 
case on the basis that the requirement for prior written authorization for extra 
work was for the benefit of the owner and that this action is against the 
appellee architect, not the owner, for value received from work to correct the 
appellee's mistake, wherefore the requirement for prior written authorization is 
not relevant. Equity and justice place the burden to pay for appellee's mistake 
upon appellee - particularly when the mistake was called to his attention at a 
time when it could have been corrected without extra work, and he directed the 
work to be done including the mistake only to later direct correction of his 
mistake.

1 The owner expected the 
building to be renovated into its original appearance as a historical site. 
Appellee was employed as an architect to accomplish this 
purpose.