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holding that it is “a general rule of law that he who gains the labor ... of another must make reasonable compensation for the same.”
Summary of this case from Carazani v. ZegarraOpinion
44452 Record No. 801507.
March 11, 1983
Present: Carrico, C.J., Cochran, Poff, Compton, Thompson, Stephenson, and Russell, JJ.
Justice Thompson prepared and the court adopted the opinion in this case prior to the effective date of his retirement on March 2, 1983.
Quantum meruit recovery by engineer for reasonable value of services furnished to corporation affirmed; quantum meruit remedy and contracts implied in fact and law discussed.
(1) Contracts — Remedies — Quantum Meruit — Reasonable Compensation for Services Furnished Recovered Under.
(2) Contracts — Remedies — Quantum Meruit — Whether Plaintiff Entitled to Recover Value of Services on Quantum Meruit Theory Properly Submitted to Jury.
(3) Contracts — Contracts Implied in Law and in Fact Distinguished.
(4) Contracts — Remedies — Pleading and Practice — Instructions — Instruction 7, While Containing Introductory Sentence Referable to Contracts Implied in Law, Made Contract Implied in Fact Theory Clear and, Since Quantum Meruit Theory Explained in Other Instructions and Contract Implied in Law Not Pleaded, Instruction Would Not Confuse Jury.
(5) Contracts — Remedies — Quantum Meruit — Measure of Recovery.
(6) Contracts — Remedies — Quantum Meruit — Price Allegedly Agreed Upon in Unproven Oral Contract Would Not Limit Recovery.
A design engineer contracted with MDC that he would work as chief project engineer on commercial marine refrigeration equipment, the engineer being employed at a reduced salary until the line of equipment was developed. Then the line was to be transferred to a new corporation which would be owned by the engineer and MDC in proportion to the value of their respective contributions to the product. The engineer furnished the services and the line was developed. Then MDC transferred the marketing rights to a subsidiary, the manufacturing rights being retained by MDC. When MDC refused to modify this arrangement and offered the engineer only a 15% stock ownership in the subsidiary, he resigned and sued MDC, pleading in the alternative an express oral contract and a quantum meruit recovery for the value of his services rendered. The Court ruled sua sponte that there was no express contract. The quantum meruit issue was submitted to a Jury which returned a verdict of $170,000 for the engineer. The Trial Court entered judgment on this verdict, MDC contends on appeal that the Court erred in submitting the quantum meruit issue to the Jury and that Instruction 7 confused the Jury as to contracts implied in law and contracts implied in fact.
1. A person who gains by the labor of another must make reasonable compensation. After the services have been furnished and accepted, the fact that no price had been agreed upon, or that the compensation mentioned is too indefinite, does not prevent the recovery of a reasonable compensation on a theory of quantum meruit.
2. Under the pleadings and evidence presented, the question whether plaintiff was entitled to recover the value of the services he provided to MDC was a Jury question. The Court correctly submitted the case to the Jury on the issue of quantum meruit.
3. The distinction between a contract implied in law (quasi contract) and a contract implied in fact, is that in the former the assent of the parties is immaterial, the liability stemming from an implication of law arising from the facts and circumstances independent of agreement or presumed intention. The promise is implied from the consideration received. A contract implied in fact is similar to an express contract, the only difference being that in the latter all of the terms and conditions are expressed between the parties, while in the former some of the terms and conditions are implied in law from the conduct of the parties.
4. While the first two sentences of Instruction 7 referring to an implied contract created by law might confuse a Jury in some situations, it would not confuse the Jury in this case. The statements are abstract propositions. There being no contention of quasi contract or contract implied in law in this case, the instruction, by stating abstract propositions, was not misleading. The instruction clearly stated that the Jury could find the agreement between MDC and plaintiff either included additional undetermined compensation beyond plaintiff's salary or that it was limited to salary alone. Moreover, in addition to Instruction 7 the substantive law of quantum meruit was explained in two other instructions. Hendricks v. Meredith, 161 Va. 193, 170 S.E. 602 (1933), distinguished.
5. The measure of recovery on quantum meruit is the reasonable value of the services performed and not the amount of benefit which actually accrued to the person for whom they were performed. Instruction 7 thus was not erroneous for failing to require that MDC derive some benefit from the services rendered by plaintiff.
6. A recovery in quantum meruit can be had after services have been furnished and accepted even though no price has been agreed on or that the composition mentioned is too indefinite. Here the limit of recovery in the unproven oral contract would not limit the recovery in quantum meruit.
Appeal from a judgment of the Circuit Court of the City of Richmond, Division I. Hon. Willard I. Walker, judge presiding.
Affirmed.
Gregory S. Hooe (William H. Abeloff; Michael S. Shelton; Howard C. Vick, Jr.; Cohen, Abeloff Staples, P.C., on brief), for appellant.
John B. Thompson (Hugh T. Antrim; Thompson McMullan, on brief), for appellee.
In this appeal, we review the propriety of a recovery on quantum meruit and the trial court's granting of a jury instruction.
Edward Rodak is a design engineer with an extensive background in the field of commercial marine refrigeration. Prior to 1972, Marine Development Corporation (MDC) had been engaged primarily in the manufacture and marketing of air conditioning units for yachts. Due to its success in this field, and the fact that its opportunity for expansion and future growth there had become quite limited, MDC investigated the possibility of developing an additional product line of commercial marine refrigeration equipment. Seeking a chief project engineer for this venture, MDC contacted Rodak because of his expertise in this area and began negotiations with him. According to Rodak, MDC offered him a "living wage." Specifically, the proposal was that Rodak would be employed at a substandard salary with the understanding that once the new product line was developed, it would be transferred to a new corporation which would be owned by Rodak and MDC in proportion to the value of their respective contributions to development of the product. Rodak accepted the offer and went to work for MDC in June, 1972.
Rodak remained with MDC until April, 1978. During that time, he designed and developed a new line of commercial refrigeration products suited for fishing boats. Rodak also set up the manufacturing facilities and supervised the manufacture of this refrigeration equipment.
In 1977, MDC organized a subsidiary corporation known as Commercial Marine Products (CMP) to which it transferred the marketing right to the new product line. The manufacturing rights, however, were retained by MDC. Rodak objected, insisting that this reorganization did not comport with MDC's earlier promise to transfer the entire commercial marine refrigeration operation to a new company. When MDC refused to modify the arrangement and offered Rodak only a 15% stock ownership in CMP, Rodak resigned and instituted the present suit.
In his motion for judgment, Rodak, pleading in the alternative, claimed in Count I that MDC had breached its oral contract and in Count II that MDC was liable to him on a quantum meruit basis. MDC denied these allegations in its grounds of defense, claiming that the annual salary which had been paid to Rodak was the only compensation to which he was entitled. During the presentation of Rodak's evidence, the court ruled sua sponte that, as a matter of law, there was no express contract. Count II, the issue of quantum meruit, was submitted to a jury which, at the end of the four-day trial, returned a verdict for Rodak in the amount of $170,000. The trial court entered judgment on the verdict, and MDC now contends that the trial court erred in: (1) submitting the quantum meruit claim to the jury, and (2) granting instruction number 7. We reject both contentions and affirm the judgment of the trial court.
I. Quantum Meruit.
[1-2] As to the appropriateness of Rodak's recovery on quantum meruit, there can be little doubt. In Hendrickson v. Meredith, 161 Va. 193, 198, 170 S.E. 602, 604 (1933), we said:
It is a general rule of law that he who gains the labor of another must make reasonable compensation for the same. Hence, when one furnishes labor to another under a contract which, for reasons not prejudicial to the former, is void and of no effect, he may recover the value of his services on a quantum meruit. [Citation omitted.]
See also Cochran v. Bise, 197 Va. 483, 90 S.E.2d 178 (1955); Burke v. Gale, 193 Va. 130, 67 S.E.2d 917 (1951); Ricks v. Sumler, 179 Va. 571, 19 S.E.2d 889 (1942); and Adam-Christian v. McGavock, 147 Va. 252, 13 S.E. 374 (1927).
In this same vein, we approve the conclusions of the Kansas Supreme Court in Brakensiek v. Shaffer, 203 Kan. 817, 821-822, 457 P.2d 511, 514-515 (1969):
Contract: Quantum Meruit. Where the parties contract for the doing of certain work, and the work is done and accepted, and it appears that there was a misunderstanding as to the price to be paid for it, the law rejects the understanding of each, and awards reasonable compensation. . . . .
However, after services . . . have been furnished and accepted, the fact that no price had been agreed on or that the compensation mentioned . . . is too indefinite does not prevent the recovery of reasonable compensation.
Here, after the trial court's ruling that no express contract between MDC and Rodak was proven, the sole remaining issue was the quantum meruit claim raised in Count II of the motion for judgment. Under the pleadings and evidence presented, the issue whether Rodak was entitled to recover the value of the services he provided to MDC was clearly a jury question, and the trial court was correct in submitting the case to the jury on Count II.
The ruling that no express contract had been proven is not before us for review.
II. Instruction number 7.
MDC argues that the trial court should not have given instruction number 7 and correctly points out that the first two sentences were criticized in Hendrickson v. Meredith, supra.'
For purposes of comparison, the instruction in Hendrickson and instruction number 7 in the instant case are listed below:
Hendrickson MDC v. Rodak
The court instructs the jury The court instructs the jury that an implied contract is that an implied contract is created by law to establish created by law to establish justice between parties. It justice between parties. It does not require mutual does not require mutual assent, but may bind a party assent, but may bind a party against his will. And the against his will. And the court further instructs the court further instructs the jury that if they believe by jury that if they believe by a preponderance of the a preponderance of the evidence that . . . Merdith evidence that . . . Rodak performed services of value performed services for which for . . . deceased, at any no definite compensation was time within three years agreed upon, and [MDC] prior to . . . [his] death, accepted such services, then for which no certain you shall find your verdict compensation was agreed on, for . . . Rodak in such and the said . . . [deceased] amount as you may think such accepted and profited by such services were reasonably services, then it shall be worth less the amount of your duty to find for the compensation actually paid plaintiff . . . in such an to . . . Rodak by [MDC]. amount as you may think said services were reasonably If you believe from the worth to the said . . . evidence that Rodak came to deceased. for an agreed upon work for [MDC] salary, or that the conduct of the parties created a contract for a definite salary, then you shall find for [MDC].
There, Meredith brought an action against the estate of the deceased, seeking to recover the value of the services she rendered during the last several years of his life. At trial, the only matter in dispute was whether the deceased had promised Meredith that, in addition to paying her $2.50 per week and furnishing her board and clothing, he would make provision for her and provide her a home as long as she lived.
In discussing these two sentences of the sole jury instruction given by the trial court in Hendrickson, we stated:
The object of all principles or rules of law promulgated is to do justice between contending parties. If that is the interpretation of the first sentence in the instruction it is correct. There are quasi contracts, or "contracts implied in law," in which the assent of the parties is immaterial. In such cases the liability exists from an implication of law that arises from the facts and circumstances, independent of agreement or presumed intention. In such cases, the promise is implied from the consideration received, there the legal duty imposed upon the defendant defines the contract. [Citations omitted.]
But the facts do not bring this case within this class of quasi contracts. It belongs to that class of cases usually referred to by text writers as "contracts implied in fact," and the only difference between an express contract and a contract implied in fact is that in the former all of the terms and conditions are expressed between the parties, while in the latter some of the terms and conditions are implied in law from the conduct of the parties. Thus: "Where one renders services for another at the latter's request, the law, in the absence of an express agreement, implies a promise to pay what the services are reasonably worth, unless it can be inferred from the circumstances that the services were to be rendered without compensation." [Citations omitted.]
Without further discussion, these authorities are sufficient to show that, even as abstract propositions of law, the principles enunciated in that part of the instruction quoted are not fully stated, and even if they were, they are abstract principles which have a tendency to confuse, rather than to clarify, the issue to be decided by the jury.
Id. at 200-201, 170 S.E. at 605.
Against this background, we turn to an analysis of instruction number 7. On brief, MDC initially contends that, due to the inclusion of the two sentences found in the Hendrickson instruction, this instruction suffers the same infirmities. We disagree.
We acknowledge that in Hendrickson we criticized the first two sentences of the instruction there involved. It is obvious from our reading of instruction number 7, however, that the objections raised in Hendrickson are inapplicable in the circumstances of this case.
First, unlike its counterpart in Hendrickson, MDC's position was adequately covered by the inclusion of the last paragraph of the instruction. The jury was clearly instructed that it could find that the agreement between MDC and Rodak either included additional undetermined compensation beyond Rodak's salary or it was limited to the salary alone.
Perceiving no error, we need not address MDC's additional argument that the instruction's references to "definite compensation" and "agreed upon" salary are misleading.
Second, in addition to instruction number 7, the substantive law of quantum meruit was explicated in two other instructions. One instruction listed criteria from which the jury could ascertain the value of Rodak's services, while the other informed the jury how to deal with the significance of profit or lack thereof to MDC resulting from Rodak's services.
Third, there is no contention of a quasi contract or a contract implied in law in the instant case. Although MDC suggests that instruction number 7 could be misinterpreted by the jury to require that MDC pay to Rodak the reasonable value of his services without a finding that this additional compensation beyond the salary was agreed to, we conclude otherwise. Implicit in any verdict for Rodak based upon quantum meruit was a finding that something more than a salary had been promised. The instruction's first two sentences were statements of abstract propositions entirely extraneous to the issues raised by the pleadings. In Burks v. Webb, 199 Va. 296, 309-10, 99 S.E.2d 629, 640 (1957), we said:
The long established rule of this Court is that: "All instructions must be read in the light of the evidence, and if when so read they are not misleading, technical errors as to abstract propositions are not regarded as prejudicial." [Citations omitted.]
MDC asserts that the instructions failed to require that MDC needed to derive some benefit from the services rendered by Rodak. As Rodak points out, this argument overlooks the following statement in Hendrickson: "The measure of recovery is the reasonable value of the services performed, and not the amount of benefit which actually accrued from them to him for whom they were performed." Hendrickson v. Meredith, 161 Va. at 202, 170 S.E. at 605 (citation omitted).
Finally, MDC asserts that Rodak should not be allowed to recover more under quantum meruit than he would have under the express contract alleged in Count I. We find this argument untenable and again point to our quotation from Brakensiek v. Shaffer, supra.
Finding no reversible error in the court below, we will affirm the judgment.
Affirmed.