Case Name: McGRATH v. ELECTRICAL CONSTRUCTION COMPANY, INC.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1961-09-06
Citations: 230 Or. 295
Docket Number: 
Parties: McGRATH v. ELECTRICAL CONSTRUCTION COMPANY, INC.
Judges: Before McAllister, Chief Justice, and Rossman, Perry, Goodwin and Lusk, Justices.
Reporter: Oregon Reports
Volume: 230
Pages: 295–318

Head Matter:
Argued May 4,
reversed September 6, 1961,
petition for rehearing denied March 28, 1962
McGRATH v. ELECTRICAL CONSTRUCTION COMPANY, INC.
364 P. 2d 604
370 P. 2d 231
Frank TJeich, Portland, argued the cause for appellant. On the brief were Bryson and Deich, Portland.
Paul B. Meyer, Portland, argued the cause for respondent. With him on the brief were Norman B. Kobin and Leo Levenson, Portland.
Before McAllister, Chief Justice, and Rossman, Perry, Goodwin and Lusk, Justices.

Opinion:
ROSSMAN, J.
This is an appeal by the defendant, Electrical Construction Company, Inc., from a judgment which the circuit court entered in favor of the plaintiff in an action instituted by him to recover $15,27-5.38 which he averred was the balance due him upon a contract into which he and the defendant had entered. The judgment was based upon a jury's verdict. The defendant, prior to entering into a contract with the plaintiff, had signed an agreement with Portland General Electric Company whereby it (defendant) bound itself to perform for that concern some construction work upon a hydroelectric project near Estacada. After the defendant had entered into that undertaking it granted a subcontract to the plaintiff whereby the latter agreed to perform a designated part of the construction work specified in the contract between the defendant and Portland General Electric Company. In this action the plaintiff alleged that he had performed in full all of the work described in his subcontract with the defendant. He prayed for the recovery of judgment — not in the amount of the contract sum, but upon the basis of quantum meruit, and, in so doing, contended that the engineer in charge of the construction work through unreasonable, arbitrary action and demands had rendered the plaintiff's perf ormance of his contract more costly than it would have been if the engineer had acted reasonably. The judgment which the plaintiff recovered in the sum of $15,275.38 is the full amount which the complaint sought. The total sum due the plaintiff on the basis of the contract was $13,355.29 and it had been paid to him. But, on the plaintiff's quantum meruit basis the sum due him, as estimated by the plaintiff, was $28,630.67. When we deduct from it $13,355.29, the amount that has been paid, we have $15,275.38 which is the sum for which judgment was sought and recovered.
The first assignment of error challenges the trial judge's ruling which denied the defendant's motion for a directed verdict.
Before the defendant had entered into its contract with Portland General Electric Company it had received two letters from Ebasco Services, Incorporated, one dated August 15, 1958, and the other August 16, 1958. The concern just mentioned was the engineer of Portland General Electric Company, and was in charge of the contemplated work. The letters requested the defendant to submit a bid upon the outlined work and were accompanied with drawings and specifications. Each of the two letters concluded with a paragraph, which, after referring to the work that was the subject of the requested bid, stated that the bid should include:
" all your costs, expense and profit, direct and incidental, for your performance of the work in accordance with the foregoing understandings and the terms in the General Conditions, Specifications and Agreement of the Contract dated May 12, 1958, and all supplements thereto."
Before .the defendant submitted to Portland General Electric Company a bid in compliance with the requests from Ebasco Services, Incorporated, for a bid, it secured one from the plaintiff for the part of the work which became shortly the subject matter of the subcontract between the plaintiff and defendant. Prior to calculating his bid for the subcontract work the plaintiff was given the aforementioned letters, specifications and drawings. He was requested to base his bid as to some of the items shown in the drawings and specifications upon a lump sum basis and others upon a unit basis. The plaintiff's bid complied with that request. After its receipt the defendant incorporated it into the bid which it submitted to Portland General Electric Company and later was awarded the contract. Still later the defendant and the plaintiff entered into a subcontract for the work covered by the plaintiff's bid. As we have seen, the plaintiff contends that he performed in full the subcontract.
The defendant contends that the letters of August 15 and 16, 1958, that made reference to the general conditions of a contract between defendant and Portland General Electric Company and that were handed to the plaintiff for him to use in making his bid were effective to incorporate the general conditions into the contract that arose between him, as subcontractor, and the defendant, as prime contractor.
The general conditions gave to Ebaseo Services, Incorporated, the engineers for this project, the usual powers of supervision and inspection that are possessed by engineers upon construction work.
Plaintiff claims that the engineer interfered with Mm, delayed him and placed additional burdens on him to such a degree that he was forced to perform the job in a manner substantially different from and more costly than had been contemplated. Testimony which he presented supplied many particulars and instances in support of those charges.
The record indicates that the plaintiff originally expected to finish the work in five weeks. As it turned out, more than three months were required to complete the undertaking and the expenses thereof were more than 80 per cent beyond the .original figure. This, the plaintiff contends, was due to the arbitrary and unreasonable supervision exercised over Mm by the defendant and engineer. This unreasonable and arbitrary action, it is claimed, constituted an abandonment of the original contract.
The plaintiff also argues that since the original contract was abandoned and its prices can not be traced to the work he is therefore entitled to recover on the basis of quantum meruit.
The principal defense asserted by the defendant is that all of the work performed by the plaintiff was governed as to price, conditions and quantity by an express contract between the plaintiff and defendant and that the plaintiff has been fully paid in accordance with the contract.
The defendant contends, and we agree, that the references made to (1) the general conditions and (2) the agreement between defendant and Portland General Electric Company in the letters of August 15 and 16, 1958, were effective to include the agreement and the general conditions into the contract between plaintiff and defendant. Cerino v. Oregon Physicians' Service, 202 Or 474, 483, 276 P2d 397, 401 (1954); Spande v. Western Life Indemnity Co., 61 Or 220, 236, 117 P 973, 979 (1912); 12 Am Jur, Contracts, § 245.
Spande v. Western Life Indemnity Co., 61 Or 220, 236, 117 P 973, 979 (1912) states:
" It is a rule of construction of contracts that, where an instrument refers in terms to another instrument as containing part of the stipulation between the parties, that other instrument is itself a part of the contract between the parties
The above rule is quoted with approval in Cerino v. Oregon Physicians' Service, supra.
Therefore, the matters contained in the agreement and the general condition's of the contract dated May 12, 1958, between the defendant and the owner must be considered in the interpretation of the contract between plaintiff and defendant.
There is nothing in the record which directly or by inference indicates that the defendant, personally, in any way substantially hindered or delayed the plaintiff in his work. On the contrary, the plaintiff testified that the defendant was "helpful."
"Q Did anyone at Electrical Construction Company ever interfere with your work in any way?
"A I would say no; as a matter of fact, they were helpful."
This leaves only the activities of the engineer as accountable for the delays which the jury found made it impossible for the plaintiff to perform his duties under the contract as originally envisioned by the parties. Thus the plaintiff must, in order to charge the defendant with the consequences of the engineer's activity, rely on an inference to be drawn from the contract or on the relationship between the defendant and the engineer.
The defendant certainly can not be held accountable for the engineer's conduct on any agency theory, for he clearly was not the agent of the defendant. The latter did not hire the engineer, pay him or have any control over him. Therefore, none of the basic requi sites for an agency relationship, exist. In addition, the defendant was not even responsible for subjecting the plaintiff to the engineer due to the fact that the general conditions of the contract between the defendant and Portland General Electric Company specifically apply, under their own terms, to subcontractors:
"If the Contractor shall cause any part of the work to be performed by a subcontractor, the provisions of this Contract shall apply to such subcontractor and his or its officers, agents or employees in all respects as if he or it and they were employees of the Contractor. "
From the foregoing it is evident that the plaintiff must rely on the contract to bring him within the rule that .ordinarily, as between a subcontractor and the contractor who is in control of the general work to be performed, the law places the contractor under an obligation to the subcontractor to make good all losses consequent upon delays in the progress of the work not attributable to the subcontractor himself. Frank T. Hickey, Inc. v. Los Angeles Jewish Com. Coun., 128 Cal App 2d 676, 276 P2d 52 (1954); Norcross v. Wills, 198 NY 336, 91 NE 803 (1910); Walter R. Cliffe Co. v. Du Pont Engineering Co., 298 F 649 (1924). This rule, however, is applied against the contractor in situations where the responsibility may be placed on the contractor either because he might have prevented the delay or because the contract was not so phrased as to permit the inference of an intention that responsibility should rest elsewhere.
In Norcross v. Wills, supra, the court, while recognizing and commending the above rule, held it inapplicable because the contract expressly provided that the architect was acting as agent of the owner. This case is similar to the one at bar. The subcon tractor sued the prime contractor for damages sustained as a result of wrongful delays caused hy the architect. Since the contract stated that the architect was the owner's agent the court held that the general rule holding the contractor liable for damages sustained by delays not the fault of the subcontractor did not apply as to acts of the architect. This case, therefore, states in effect that the contractor is not liable to the subcontractor for the acts of the owner's agents.
The case at bar is essentially the same situation, with the exception that the contract here does not specifically state that the engineer is agent of the owner. It is generally accepted, however, that the architect or engineer under whose supervision and direction the work is to be performed is the agent of the owner, not of the contractor. 17 CJS, Contracts, §505(3).
In addition, the agency relationship between the engineer and the owner, rather than between the engineer and the contractor, becomes further apparent from a reading of the contract. For example, the general conditions read:
"The Owner contemplates and the Contractor hereby agrees to a thorough, minute inspection by the Owner, or by any of its agents, of all the work and material furnished under this contract."
The portion of the contract just quoted refers to inspection of the work by "the Owner, or by any of its agents." Ebasco Services, the engineer under this contract, is the agent which this clause provided for. The same section of the contract (C-3 Inspection and Bight of Access) goes on to provide:
"When finished work is taken down for the purpose of inspection, the Contractor shall stand all the expense incident thereto in the event that the said work is found defective. The Owner shall pay the cost incident thereto in the event that the work exposed is found to be in accordance with the Specifications. "
Thus, the contract expressed the intention that the contractor was not to be responsible for the mistakes of the engineer.
The rule employed in the Norcross case which is, basically, that the contractor generally must answer to the subcontractor for damages due to delays suffered by the latter and not due to his fault, does not apply to delays caused by the owner's agent; it is, therefore, applicable to this case. It would be grossly unjust to imply that the defendant, under the circumstances, had covenanted with the plaintiff for the performance of the engineer who was the agent of the owner and over whom the defendant had no direction or control whatever.
Since it has been established that the defendant is not responsible for the action of the engineer it naturally follows that the latter's conduct could not produce a legal basis upon which the plaintiff, without the consent of the defendant, could abandon the contract. The plaintiff knew, or should have known had he read the general conditions, that the cooperation of the engineer would be essential to Ms successful performance of the contract. One who makes a promise which can not be performed without the cooperation of a tMrd person is not excused from performance because of inability to se'oure 'the required cooperation. Hensler v. City of Los Angeles, 124 Cal App 2d 71, 268 P2d 12 (1954); Sparks v. Cater Electrical Co., Inc., 151 Neb 675, 39 NW2d 274 (1949); 6 Williston on Contracts (Rev. Ed.) p 5413; 3 Elliott on Contracts §1916. In addition, 17 CJS, Contracts, §505 b. (1) states generally that where the delay of the subcontractor is not due to the fault of the contractor or his agent the subcontractor is not relieved from Ms contract. In the absence of a legal ground for rescission, if no option to terminate has been reserved, all the parties to the contract must assent to its rescission or abrogation, and there must be a meeting of their minds. Garland v. Shrier, 155 Or 387, 64 P2d 530 (1937); Coppock v. Roberts, 116 Or 253, 240 P 886 (1925); Owen v. Leber, 112 Or 136, 228 P 927 (1924); 17 CJS, Contracts, § 389. Garland v. Shrier, supra, stated the rule as follows:
"It is a rule generally applicable to contracts that, in the absence of an option reserved in the contract granting to one of the contracting parties •the right to rescind, the contract can not be abrogated or abandoned by either party without the consent of the other."
Thus, in order for the plaintiff to show a rescission or abandonment of the contract between himself and the defendant, since the engineer's conduct does not provide him with a legal basis, he must show that the defendant and he rescinded it. He alone could not do so. The record does not indicate any mutual assent or meeting of the minds contemplating an abandonment of the original contract. At most, the defendant encouraged the plaintiff to continue with the work by saying something to the effect that the plaintiff would be recompensed. According to the plaintiff, he was told, "We will help you get the money. We know it is costing you more money and we will assist you in that area."
These statements do not evidence an intention to abandon the original contract. They may be construed as promises to pay more money to the plaintiff if he would continue to perform under the contract, hut since the plaintiff was already bound to so perform, there is no consideration to support them.
A promise not supported by consideration is not enforceable. In Hoskins v. Powder Land & Irr. Co., 90 Or 217, 223, 176 P 124, 127 (1918) the court quoted with approval from Corpus Juris:
" Thus a promise to pay additional compensation for the performance by the promisee of a contract which the promisee is already under obligation to the promisor to perform is without consideration."
The case of Jones & Carey v. Risley, 91 Tex 1, 7, 32 SW 1027, 1030 (1895) is illustrative of this problem. There the specifications required the materials to be subject to the engineer's approval. The masonry subcontractor claimed the right to use a certain type of stone. The prime contractor verbally agreed to pay him the extra cost of using the stone required by the engineer. The trial court instructed the jury that if they found these facts to be true they should find for the subcontractor. In reversing, the appellate court ruled:
"* # # and since the subsequent promise of Jones and Carey to pay him extra compensation was for the purpose of inducing him to do what he was already bound to do under such written contract, there was no consideration to support the same."
The last basis upon which the plaintiff might assert a right to sue the defendant for injuries resulting from the conduct of the engineer, arises from the Indemnity Clause, Section 12 of the Agreement. That clause, after stating that the contractor will save harmless the owner or those connected with Mm from any and all damages on account of personal injuries or property damage growing out of the performance of the contract goes on to state immediately thereafter :
" It is intended by this provision to save harmless the Owner from any and all claims made by employees of Contractor arising out of industrial accidents, as well as all other claims."
The construction of this particular clause of the contract involves the rule of ejusdem generis. Basically, the rule provides that when general words follow an enumeration of specific persons or things, the general words are not construed in their widest extent, but axe applied only to pexsons or things of the same general ldnd or class as those specifically enumerated. In addition, the rule of ejusdem generis in contracts is peculiarly 'applicable where specific enumeration precedes the word "other" followed by general words. U. S. Fidelity & Guaranty Co. v. Thomlinson-Arkwright Co., 172 Or 307, 141 P2d 817 (1943); Kirkley v. Portland Electric Power Co., 136 Or 421, 298 P 237 (1931). The ejusdem generis rule, therefore, is particularly applicable in the present case, for the words "all other claims" follow the specific enumeration of personal injuries, property damage and industrial accidents. Hen'ce the words "all other claims" must be restricted and related to personal injuries, industrial accidents and property damage.
Thus, a construction ef the Indemnity Clause which would include the type of injury and conduct complained of here is not feasible. The defendant contractor, therefore, need not, per se, bear the plaintiff's burden in 'this instance.
The only authority upon which the plaintiff bases his right to hold the defendant for 'his injury is United States Steel Producing Co. v. Poole Dean Co. (CCA 9, 1917), 245 F 533. In that case the court held that the defendant, the principal contractor, who 'subcontracted with plaintiff to do part of the work, could not defeat plaintiff's claim on the theory that the plaintiff was doing work for defendant's principal, the plaintiff having no contractual relations with the principal. While this holding may be perfectly sound it clearly is not authority for the proposition that the prime contractor is to be responsible for any and all interferences caused by the owner's agents.
A careful reading of the record discloses that the defendant, personally, did not substantially interfere with the plaintiff's performance of the contract. Further, since the engineer was the agent of the owner and in no way under the control or direction of the defendant, the engineer's conduct did not provide the plaintiff with a legal ground upon which a rescission or abandonment of the contract with the defendant could be based. Therefore, since there is no evidence of a mutually accepted agreement to abandon the original contract, the plaintiff continued under a duty to perform. This, in turn, negates any promise of the defendant to recompense him for his additional expenses other than legitimately presented "extras," for a promise to pay another for what he is already bound to do fails for lack of consideration.
Finally, since the Indemnity Clause in the agreement did not cover this situation, the plaintiff must fail.
We sustain as meritorious the. first assignment of error. It is unnecessary to consider, the others.
The challenged judgment is reversed.
Leo Levenson, Norman B. Kobin and Paul R. Meyer, Portland, for the petition.