Title: Mobile Turnkey Housing, Inc. v. Ceafco, Inc.

State: alabama

Issuer: Alabama Supreme Court

Document:

321 So. 2d 186 (1975)
MOBILE TURNKEY HOUSING, INC., a corporation and Commercial Contractors, Inc., a corporation
v.
CEAFCO, INC., a corporation By and Through Max E. Miller, as its Trustee.
SC 470.

Supreme Court of Alabama.
September 18, 1975.
Rehearing Denied November 6, 1975.
Donald F. Pierce, G. Hamp Uzzelle, III, Mobile, for appellants.
Bert S. Nettles, Mobile, for appellee.
ALMON, Justice.[*]
Respondents appeal from an adverse decree in a suit by a subcontractor against the general contractor.
In late 1968 the Mobile Housing Authority, pursuant to a program sponsored by the Housing and Urban Development Office (HUD), began to solicit bids for a housing project to be built in Mobile. The contract for "Jesse Thomas Homes," as the development was called, was awarded to Mobile Turnkey Housing, Inc. (Turnkey). Turnkey was incorporated by Commercial Contractors, Inc. (Commercial) for the sole purpose of developing this project. The Mobile Housing Authority transferred title to the property to Turnkey. Turnkey contracted with Commercial to act as general contractor in the construction of the project. Commercial sub-contracted with *187 Ceafco, Inc. (Ceafco), the complainant, to do the grading and site work on the project.
Ceafco encountered soil that could not be compacted to the required density, a situation which could only be corrected by bringing in large amounts of borrow fill. The trial court found that because of the encounter with bad sub-soil Ceafco ceased work on the project on May 15, 1969.
A meeting between representatives of Ceafco and Commercial was held on May 19, 1969, at which, according to the court's findings, Commercial orally agreed to bear this extra expense. (This oral promise was disputed by Commercial.) Ceafco went back to work and Commercial submitted a request to HUD for the extra cost$110,715.00. The Atlanta office of HUD refused this request, but the work continued and the site work was completed about the first of January, 1970.
Throughout the summer payments for the work were made to Ceafco on a periodic basis. About once a month Ceafco received payment for the work they had completed up to that point. Each time Ceafco received payment they executed a "receipt and lien waiver" which stated that Ceafco waived and released any right they might have to file a lien against the property for work done up to the last date of payment.
Ultimately the entire project was completed and the property was conveyed back to the Mobile Housing Board. Upon Commercial's refusal to reimburse Ceafco for the extra cost, Ceafco brought this suit.
As originally brought this lawsuit joined three respondents: Turnkey, Commercial and The Mobile Housing Board. However, Ceafco later amended its complaint to strike the Mobile Housing Board.
Ceafco's complaint, as later amended, bases a claim for relief on the oral agreement allegedly made between Ceafco and Commercial on May 19 and seeks to establish a lien in the amount of $110,715.00 on the property. After the commencement of the suit, but before the case went to trial, Caefco filed a petition for bankruptcy, and Ceafco is now maintaining this suit through its trustee.
In their answer, Commercial and Turnkey set out the following defenses to the complaint:
1. that Ceafco had received full payment under the contract of February 20, 1969;
2. that the "receipt and lien waiver" forms that Ceafco executed each time it received a periodic payment constituted waivers releasing Commercial from any liability on any claim connected with the project;
3. that the contract of February 20 stated that it was the entire agreement and any changes to it would have to be in writing (Art. XV of Contract), and that Commercial would not be liable for any extra work or material without written order (Art. IV of Contract); and
4. that, because Ceafco was already legally bound to provide borrow fill under the original contract of February 20, 1969, there was no consideration for any oral promise that might have been made between Ceafco and Commercial at the meeting of May 19.
The trial judge told the advisory jury in his charge that the doing of an act which you are already legally obligated to do is not sufficient consideration to support a contract. But an exception to this rule exists when due to unforeseen and extraordinary difficulties in performance the law must sustain the promise based upon standards of honesty and fair dealing.
*188 Following these instructions the jury returned interrogatories to the effect that the new promise to pay by Commercial to Ceafco was supported by adequate consideration and there was not a valid release of all claims by Ceafco supported by adequate consideration.
In its final decree the court found as follows:
Upon these findings, the court ordered that a judgment in the amount of $112,929.75 be entered against Commercial in favor of Ceafco, and decreed that a lien in this amount be placed upon monies owed by Turnkey to Commercial.
From this decree of the circuit court Commercial and Turnkey have appealed.
We view the dispositive issue to be whether the trial judge was in error in finding consideration for the new promise to pay additional money simultaneously with a finding that the original sub-contract covered the additional work encountered.
It is manifestly clear from the court's findings and the provisions of the contract set forth that Ceafco contracted to do the work regardless of any soil conditions that might be encountered. Further, the evidence tends to show that the provision of the contract which provided for the payment of an additional sixty-five cents per cubic yard for undercutting required as a result of unsatisfactory material below the surface was negotiated by the parties to provide for the very contingency which is the subject of this litigation.
The alleged "unforeseeable consequences" can hardly be termed as such when the contract in unambiguous terms provided for just such a contingency.
The well reasoned case of Shriner v. Craft, 166 Ala. 146, 51 So. 884 (1910), dealt with this problem and concluded by saying:
*190 This rule was further elaborated on in McDonough v. Saunders, 201 Ala. 321, 326, 78 So. 160, 165 (1917):
1 S. Williston, A Treatise on the Law of Contracts, § 130 (3d ed. 1957) provides:
See also Little v. Reddit, 264 Ala. 371, 88 So. 2d 354 (1956) and Hawkins v. First Federal Savings and Loan Ass'n, 291 Ala. 257, 280 So. 2d 93 (1973).
Admittedly there was evidence that Commercial furnished Ceafco with a soil test which indicated that there were no unsuitable soil conditions at the worksite. This matter was submitted to the advisory jury which found no fraud or misrepresentation. The trial court reached the same conclusion.
The principle of law which we follow seems on occasion to be rather harsh. Yet to hold otherwise would permit one party to a valid and unambiguous contract to use his failure of performance as a coercive force to extract a higher price than was originally contracted for.
In view of our holding, we do not find it necessary to reach other assignments of error.
The decree is due to be reversed and the cause remanded.
Reversed and remanded.
All the Justices concur.
[*]  This case was originally assigned to a justice formerly on this court. It has been reassigned to the writer who has listened to the tape recordings of the oral argument.