Court Opinion

ID: 9833439
Source: CourtListenerOpinion
Date Created: 2023-09-01 22:43:02.077441+00
Date Added: 2024-06-11T07:44:02.760062
License: Public Domain

On Motion for Rehearing.
In this motion for rehearing it is conceded that the failure of the hotel company to meet its payments at maturity was a substantial breach of the building contract, and authorized the contractor to rescind. But, it is insisted, the contractor did not exercise that right, and therefore the original building contract remained in force throughout all the subsequent negotiations, or was in full force at the time demand was made upon the contractor to proceed with the construction work. Upon that proposition the appellee bases an argument that the April agreement is of no importance in determining the rights and liabilities of the parties in this controversy. The April agreement, it is contended, was entered into solely for the purpose of adjusting the damages claimed by the contractor as a result of the enforced suspension of the construction work and arranging for the payment of the overdue installments, and it is immaterial whether it ever became effective or not. We cannot agree to that conclusion. In the original opinion we treated the April agreement as fixing the conditions upon which the contractor was willing to resume operations under the building contract.
When the default in paying the February installment occurred, the contractor had a legal right to cease further operations under the building contract, repudiate that contract in its entirety, and sue for the dam; ages which had then accrued. Or he might suspend work and propose terms upon which further performance of the building contract would be resumed and continued. The contractor did cease construction work, and so notified the hotel company, and never thereafter resumed. If the contractor was within its legal rights in thus suspending construction work, when did that right cease? At what state in the negotiations which followed did the duty of resuming work arise? Clearly no such obligation existed on April 18th, when the collateral contract of that date was entered into. At that time three installments were due and unpaid; the damages claimed as a result of the enforced suspension of the construction work were unsettled. The hotel company had made it plain to the contractor that it was without funds and could not pay what was then due, nor could it meet further payments without a loan from an outside source. The continued suspension of work by the contractor, and its persistent demand for payment of what was then due, gave all the notice needed to inform the hotel company that the contractor did not intend to proceed further under the original, contract except upon the terms then .proposed. At that stage of the negotiations, and in view of the admitted financial condition of the hotel company, the contractor was not required to resume work until the terms agreed to on April 18th had been complied with by the hotel company. By that contract the hotel company was not only to pay what was then due, including *572damages, but was to furnish assurance that it could meet future installments when due. The stipulation for securing a loan of $100,: 000 could have no other meaning. It was also stipulated that these proposed terms were to be complied with on- or before May 1st following. They tVere not complied with on that date, and before they were at a later .date the contractor gave,notice of its repudiation, of the contract.
The motion for rehearing is overruled.