February 3, 1959 —
March 3, 1959.
APPEAL from a part of an order of the circuit court for Milwaukee county: HARVEY L. NEELEN, Circuit Judge. Reversed.
For the appellant there were briefs by Irving A. Puchner, attorney, and Harold W. Story and William E. Shaw of counsel, all of Milwaukee, and oral argument by Mr. Puchner.
For the respondent there was a brief by von Briesen Redmond, attorneys, and George F. Redmond of counsel, all of Milwaukee, and oral argument by George F. Redmond.
Action to recover damages for alleged breach of certain contracts. It appears from the complaint that in 1929 School District No. 1 of the village of Whitefish Bay was desirous of constructing a new high-school building. The district entered into a contract with Herbert W. Tullgren, a licensed architect, to draft and prepare plans for said building. Because it was impossible for the district to finance the cost of the construction of the entire building it was divided into five separate units designated by the letters "A" through "E" inclusive. In the written agreement with Tullgren in 1929 it was provided that he should be paid two per cent of the estimated cost of the entire building with additional fees to be paid for the performance of the incidental services usual to this type of employment.
Prior to September 23, 1931, the district had paid to Tullgren the sum of $35,000. On that date the 1929 agreement was rescinded and a new agreement was entered into. In the 1931 agreement it was estimated that the entire cost of the building would be approximately $1,500,000. The sum of $35,000 was credited to the school district and charged against the fees of Tullgren. The charge of two per cent for the plans was to be adjusted later as actual construction costs were ascertained and adjustments would be made accordingly. The 1931 agreement provided that in case of the death or incapacity of Tullgren he or his personal representative would have the right to assign his interest in the contract to a competent and experienced school-building architect approved by the district board of the school district, provided the assignee would agree in writing to carry out all of the terms of the agreement to be kept and performed by Tullgren.
On June 19, 1941, the school district and Tullgren entered into an agreement in writing modifying the 1931 agreement in certain respects. This agreement contemplated architectural services to be furnished by Tullgren in the construction of one unit which was to replace or be a substitute for unit "C." Apparently this was the second of the units to be constructed. No issues are raised as to this particular transaction.
Tullgren died on February 22, 1944, and his widow, the plaintiff in this action and his sole beneficiary in his last will and testament, was duly appointed as executrix of his estate. On December 12, 1944, Mrs. Tullgren, in writing, assigned all of the right, title, and interest of said Herbert W. Tullgren and his estate in and to the contracts of September 23, 1931, and June 19, 1941, to William J. Herbst. It was stated that the assignment was made in accordance with the terms of said contracts, and particularly paragraph 11 thereof. On the same date Mrs. Tullgren and Herbst entered into a separate contract wherein and whereby Herbst agreed to carry out all of the terms of the two contracts and any other contracts or agreements by him with the school district and that he would not assign or abandon any contract or agreement made by him with said school district nor make any settlement with said school district for less than the contract price without the consent of the plaintiff. By the agreement Herbst agreed to pay to the plaintiff a percentage of the fees he would earn as architect for the school district. Plaintiff reserved title to all of the original plans, specifications, work sheets, drawings, and other documents prepared by Tullgren in connection with said school building but provided that they should be made available to Herbst for his use. The contract further provided that if the school district should breach either of the existing contracts or any new contracts or agreements entered into with Herbst, he would bring action to enforce all claims of the parties against the school district and that if Herbst refused so to do the plaintiff might commence said action. The complaint alleged that the school district had notice of the execution of the assignment to Herbst and of the agreement between Herbst and the plaintiff.
On February 25, 1948, an agreement was entered into between the school district and William G. Herbst Associates a partnership, wherein Herbst Associates were employed to perform architectural services in the construction of a high-school gymnasium, referred to as unit "C" and a swimming pool, referred to as unit "D." This agreement further provided that the contracts between the school district and Tullgren in 1931 and 1941 should be terminated and superseded by that contract.
The complaint further alleges that unknown to the plaintiff until sometime in 1956, contrary to and in violation and breach of the 1931 and 1941 agreements with Tullgren, the school district entered into an agreement with architects other than Herbst Associates whereby said architects were engaged to construct an addition to the Whitefish Bay high school.
On March 28, 1957, plaintiff filed a claim against the village of Whitefish Bay, presumably for fees that would have been due under the original contracts. The claim was rejected on the ground that the school district was discharged from further liability to the plaintiff existing by reason of the contracts with her husband. Herbst declined to bring action against the school district and also disclaimed liability to the plaintiff for the reason that he had no intention to deprive plaintiff of any of her rights and he had executed the contract with the school district in 1948 with the understanding between him and the school board that all future architectural services in connection with the additions to the Whitefish Bay high school covered by the 1931 and 1941 contracts would be performed by him.
Plaintiff asks for relief in the alternative. She states that if the legal position of the school district is correct and that its contract with Herbst discharged it from any liability to the plaintiff, said contract is a breach of the agreement between her and Herbst and that Herbst is liable to her for damages. On the other hand it is alleged that if the legal position of the school district is incorrect, then the plaintiff has been damaged by breach of the contracts by the school district. The prayer in the complaint demands judgment against the school district and in the alternative against Herbst.
Each defendant demurred separately to the complaint on the ground that the complaint did not state facts sufficient to constitute a cause of action. By order dated July 30, 1958, the demurrer of the defendant school district was sustained and the demurrer of the defendant Herbst was overruled. Plaintiff appealed from that part of the order sustaining the demurrer of the defendant school district.
The first argument made by the plaintiff is that contracts for the performance of architectural services in connection with the construction of a high school in separate units over a long period of time are valid. In that connection she cites Jacobberger v. School Dist. 122 Or. 124, 256 P. 652, and Altman v. Uniontown School Dist. 334 Pa. 336, 5 A.2d 896. The school district does not take issue with the decisions in those cases but states that they were enforced within a reasonable time whereas the action in the present case was started twenty-six years after the date of the principal contract. The time involved in the Oregon case was ten years and in the Pennsylvania case it was thirteen years.
If we assume that the school district is correct in its contention we should know more of the background and the facts and circumstances than we can glean from the pleadings. At this stage of the record we can only say that the contract is prima facie valid and the complaint in that respect is not demurrable.
The plaintiff next contends that the contract was assignable. This was a contract for personal services that ordinarily would not be assignable but because of the specific provision in the contract the school district consented to the assignment and the school board does not take issue with this allegation.
The plaintiff finally contends that the employment of an architect other than Herbst was a breach of the contracts with Tullgren. The school district on the other hand contends that the assignment by Mrs. Tullgren to Herbst was an absolute assignment; that Herbst then stood in the shoes of Tullgren and that he had as much authority to cancel the 1931 and 1941 agreements as Tullgren would have had. The assignment from plaintiff to Herbst was absolute in form with this exception:
"It is understood that this assignment is made in accordance with the terms of said contracts and particularly paragraph 11 thereof."
Paragraph "Eleventh" of the 1931 contract reads as follows:
"It is further agreed and understood that this contract is not assignable except as in this paragraph provided. In case of the death or incapacity of the architect to perform the same, he or his personal representatives shall have the right to assign his interest in this contract to a competent and experienced school-building architect approved by the district board of the district, provided such assignee shall undertake and agree in writing to carry out all of the terms of this agreement by the architect to be kept and performed. Said board shall not refuse approval of such assignee arbitrarily or unreasonably. In the event of the failure of the architect or his personal representatives to make such an assignment within thirty (30) days after being requested so to do in writing- by said district board, or in the event of the architect's refusal to promptly and expeditiously carry out his part of this agreement, then the district shall have the right to employ another architect to do so at the expense of the architect and to freely use in the construction of said proposed building, or any part thereof, including said two gymnasiums, any plans, drawings, or specifications theretofore prepared by the architect for said building."
The 1931 contract further provided that all of the detailed plans, working drawings, specifications, and engineering computations and calculations were instruments of service and remained the property of the architect.
It appears that the school district desired the completion of an entire building that would be in harmony with the original design and that its plan could best be carried out by the use of Tullgren's original drawings, blue prints, and specifications. In the separate contract between plaintiff and Herbst the plaintiff retained title to all of the original plans, drawings, and work sheets but with consent to Herbst to have the full use thereof. The separate agreement further provided that Herbst would carry out all of the terms of the 1931 and 1941 contracts and that he would not assign or abandon any of the contracts, nor make any settlement with the school district at less than the contract price without the consent of the plaintiff.
The complaint alleges that the school district had notice not only of the assignment to Herbst but of the separate agreement that was entered into. The school district, although admitting notice, contends that it was not a party to the assignment or the separate agreement between the plaintiff and Herbst and that there can be no liability on its part under a contract to which it was not a party.
By the terms of paragraph 11 of the 1931 contract the consent of the school district to an assignment of the contract was a conditional one. It would only consent to such assignment if the assignee was a competent and experienced school-building architect who would undertake and agree in writing to carry out all of the terms of the contract to be performed by Tullgren. The obvious advantage of this provision was that it would make all of Tullgren's plans, specifications, and work sheets available so that the added units would harmonize with the original plans. There was no provision therein for a further assignment, and the power to revoke by the assignee would violate the spirit of the 1931 contract. A revocation by Herbst would also violate the terms of the agreement between plaintiff and Herbst and the complaint alleges knowledge thereof by the school district.
The school district makes other arguments that can best be determined after trial. Under our liberal forms of pleading we are constrained to hold that the complaint states a cause of action and cannot be dismissed on demurrer.
By the Court. — That part of the order appealed from is reversed. Cause remanded with directions to enter an order overruling the demurrer of the school district and providing that the school district have the usual time after the date of the order to interpose an answer.