-allowance for worthless building.

stead of hard brick, as required by the contract. The judgment below was based on the finding that the building was worthless. Manifestly, if the defective conditions could have been remedied, the building was not worthless. None of the witnesses for the Society were able to say this could not be done. On the other hand, an experienced builder gave it as his opinion that the defective brick could have been removed and hard brick put in their stead at a reasonable expense. In our opinion,

I. Introductory, 137.

II. Majority rule, 137.

III. Minority rule, 143.

I. Introductory.

It is not the purpose of this note to discuss the proper measure of damages for the breach of a building contract, but only to consider how far that measure is affected by a wilful or intentional departure in materials or workmanship from the terms of the contract. It is generally conceded that the common-law rule requiring. a strict or literal performance of a contract has been greatly relaxed in actions on building contracts, so that a builder need only substantially perform his agreement in good faith in order to support a recovery. 6 R. C. L. 967. In such case the builder is entitled to recover the contract price, less a deduction for the damage caused by the omissions or defects. 6 R. C. L. 968. By a "wilful" or an "intentional" departure, as the phrase is used in this note, is meant a departure in bad faith.

II. Majority rule.

By the weight of authority a building contractor who wishes to take advantage of the doctrine of substantial performance must not be guilty of a wilful or an intentional departure from the terms of his contract. If he

New York. Fox v. Davidson (1899) 36 App. Div. 159, 55 N. Y. Supp. 524; D'Amato v. Gentile (1910) 54 App. Div. 625, 66 N. Y. Supp. 833, affirmed in (1903) 173 N. Y. 596, 65 N. E. 1116; D'Andre v. Zimmerman (1896) 17 Misc. 357, 39 N. Y. Supp. 1086; May v. Menton (1896) 18 Misc. 737, 41 N. Y. Supp. 650; Kohl v. Fleming (1897) 21 Misc. 690, 47 N. Y. Supp. 1092; Smith v. Gugerty (1848) 4 Barb. 614; Hopper v. Cutting (1891) 37 N. Y. S. R. 504, 13 N. Y. Supp. 820. North Dakota. Braseth v. State Bank (1904) 12 N. D. 486, 98 N. W. 79.

Pennsylvania.-Gillespie Tool Co. v. Wilson (1888) 123 Pa. 19, 16 Atl. 36; Wade v. Haycock (1855) 25 Pa. 382.

In Perry v. Quackenbush (Cal.) supra, it appeared that a contractor agreed to erect a building of the best material, according to certain plans and specifications. The owner of the land, as a part of the contract, executed and delivered to the contractor a promissory note for the contract price and a mortgage to secure the same. In an action to have the note and mortgage canceled, it appeared that the material used in the construction of the house was secondhand and inferior to that contracted for, and the foundation was smaller than that contracted for. The trial court canceled the mortgage only to the extent of the difference between the value of the building as contracted for and its value as built. The appellate court held that the deviations from the terms of the contract were intentional departures, amounting to a fraud, and that the rule in regard to recovery in cases of substantial performance did not apply where the departures from the terms of the contract were made in bad faith, and held accordingly that the owner of the land was entitled to have the whole mortgage canceled. It was said: "It is found, for instance, that defendant did not furnish the quantity or quality of materials called for, and did not construct the building in a good and workmanlike manner. That the foundation was not as large as contracted for, and instead of good hard brick he used old, secondhand brick of poor quality. The piers were only one-fourth part as large as called for, and of inferior old brick, and only half as many of them. There was no first-class lumber in the framework, and some of it was old refuse lumber from other buildings. The paint used was inferior to that called for in the agreement. . . . If there were no other findings save the specific findings, I think it a case where the ultimate fact that the contract has not been substantially performed would be necessarily inferred. The findings may be, in fact, unjust to defendant, but we cannot go behind them; if true, they show an intentional departure from the contract,-in fact, an at

tempted fraud. Under such circumstances the court would not have been justified in finding that there had been a substantial performance. Nor does the finding that the difference between the value of the house as actually constructed and as it should have been was only $350 tend to show that the contract had been substantially performed. That might have been true, though the structure were totally unlike the house contracted for. The owner has a right to have built the structure he contracted for, and not another. Even his caprices, as expressed in the contract, must be complied with, even with, even though though they would not have added to the value of the structure, or may have lessened its value. It is only when this plan has been substantially embodied in the work that the court can have an occasion to estimate the deficiencies. The authorities are very clear upon this point. There are a variety of cases to which the so-called modern equitable rule had been applied.

Good faith, however, on the part of the contractor, is not enough. The owner has a right to a structure in all essential particulars such as he has contracted for; and to authorize a court or jury to find that there has been a substantial performance, it must be found that he has such a structure. The court cannot say that anything is immaterial which the parties have made material by their contract. One has the right to determine for himself what he deems a good foundation, or what materials he desires to be used, and if he contracts for them, neither the contractor nor the court has the right to compel him to accept something else which may be shown by the witnesses to be just as good or even better. No precise rule can or ought to be laid down upon this subject, but whenever such a case arises, courts and juries should see to it that the design of the owner shall not be defeated in any important respect. I think the judgment should be modified by giving plaintiffs a decree in accordance with the prayer of the complaint."

In Beha v. Ottenberg (D. C.) su

pra, an action to enforce a mechanics' lien, it appeared that a contractor performed work and labor and furnished materials on the premises of defendant, under a written contract. The work was to be done in a workmanlike manner and the materials were to be of the best. On the hearing it was admitted that the work was not done strictly in accordance with the terms of the contract and the materials were not of the required quality. Complainant contended that the contract was substantially performed, and that an expenditure of a comparatively small amount of money would put the work in the condition provided for in the contract. defendant contended, on the other hand, that the plaintiff had wilfully and fraudulently varied from the terms of the contract, and that the materials were so inferior and the work so defective as greatly to depreciate the value of the building. The court said: "Of course, if there has been a fraudulent disregard of the contract, nothing whatever could be recovered in any court."

The

In Bowen v. Kimbell (1909) 203, Mass. 364, 133 Am. St. Rep. 302, 89 N. E. 542, an action to recover the balance due under a building contract, the referee found that the builder intentionally departed from the terms of the contract in the quality of the plaster. The court held that the intentional departure was conclusive against the builder's

right to recover. It was said: "We think that the referee's finding of fact that the plaintiff was guilty of an intentional departure from the contract, in a substantial matter, is conclusive against his right to recover, as well under the rule in Massachusetts as it would be under that in other states. It shows a lack of good faith on the part of the plaintiff in his dealings with the defendants under the contract."

In Phillip v. Gallant (1875) 62 N. Y. 258, an action to recover the contract price of a building, the referee found that there had been a substantial performance, and that the work was defective in but slight par

ticulars. The court held that in order to support a recovery for the contract price of a building contract, there must be no wilful or intentional departure. It was said: "When a builder has in good faith intended to and has substantially complied with the contract, although there may be slight defects caused by inadvertence or unintentional omissions, he may recover the contract price, less the damage on account of such defects. There must be no wilful or

intentional departure."

In Kohl v. Fleming (1897) 21 Misc. 690, 47 N. Y. Supp. 1092, it was held that since any intention to perform substantially a building contract was negatived by the contractor's refusal to complete the work when called on, he was not entitled to recover the contract price, nor was he entitled to be credited with that amount, less a proper amount as a necessary expense to which the defendants were put in the completion of the work. It was said: "Upon the issue of per

formance the evidence was in direct conflict; but from the testimony adduced for the defense, the trial court was well authorized to find that the plaintiff had not substantially fulfilled the agreed requirements, and had refused to supply the omissions when his attention was called to them. This being found as a fact, the plaintiff was not entitled to a recovery of the contract price, nor could he demand that he be credited with that amount, less deductions for the necessary expense to which the defendants were put when completing the work (Woodward v. Fuller (1880) 80 N. Y. 312), since any intention to substantially perform was negatived by his refusal to complete when called upon."

In Elliott v. Caldwell (1890) 43 Minn. 357, 9 L.R.A. 52, 45 N. W. 845, it appeared that a contractor agreed to construct dwelling house for a gross sum. In an action on the contract to recover the contract price, it was found that the contractor fraudulently and intentionally varied from the terms of the agreement in many material respects. The supervisor of

the work had been discharged because he conspired with the contractor to vary from the terms of the contract. The court held that a contractor who intentionally and fraudulently varied from the terms of the contract, and who sued thereon, could not claim the benefit of the doctrine of substantial performance, and could recover nothing. It was said: "Upon such a state of facts, the plaintiffs cannot recover on the express contract, because they have not performed it on their part, and performance is a condition precedent to payment. They have not at all brought themselves within the liberal rule of 'substantial performance' laid down in Leeds v. Little (1890) 42 Minn. 414, 44 N. W. 309, for the omissions and deviations were not slight and easily remedied, but substantial, and remediless except by tearing down and rebuilding the structure. Neither were they the result of mistake or oversight, but intentional and even fraudulent. And we may remark here, in passing, that the very nature of the deviations, as in using inferior and defective material all through the building, is intrinsic evidence strongly supporting the finding that plaintiffs acted fraudulently. No case, we think, can be found where the doctrine of 'substantial performance' was applied to such a state of facts. Το justify a recovery upon the contract as substantially performed, the omissions or deviations must be the result of mistake or inadvertence, and not intentional, much less fraudulent; and they must be slight or susceptible of remedy, so that an allowance out of the contract price will give the other party substantially what he contracted for. They must not be substantial and running through the whole work, so as to be remediless, and defeat the object of having the work done in a particular manner. And these are questions of fact for the jury or trial court. Olmstead v. Beale (1837) 19 Pick. (Mass.) 528; Woodward v. Fuller (N. Y.) supra. It may seem a harsh doctrine to hold that a man who has built a house shall have no pay for it, but the other party can well say: 'I never made

any such agreement. I agreed to pay you if you would build my house in a certain manner, which you have not done.' The fault is with the one who voluntarily violates his contract."

In Franklin v. Schultz (1899) 23 Mont. 165, 57 Pac. 1037, it appeared that a builder agreed to erect a twostory and basement brick house in accordance with certain plans and specifications. One of the rooms in the basement was never plastered, and a flue was never built in that room. It was held that inasmuch as the builder failed to prove that the omission was unintentional or the result of an oversight, he could not recover. The court said: “This is not an action to recover what the services and materials were reasonably worth. It is to recover the agreed price fixed by an express contract in writing. The evidence does not tend to prove a substantial performance by the plaintiff of the contract; nor, under the circumstances, can it successfully be maintained that the failure to plaster, or the omission to build the flue, was unintentional or a mere oversight. The plaintiff may lawfully insist upon payment only when the conditions on which payment is due have been performed. 'While slight and insignificant imperfections or deviations may be overlooked, on the principle of "De minimis non curat lex," the contract in other respects must be performed according to its terms. When the refusal to proceed is wilful, the differ ence between substantial and literal performance is bounded by the line of de minimis. . . Substantial perförmance is not sufficient, except when it is understood as excluding only such unsubstantial differences as the parties are presumed not to have had in contemplation when they made the contract.' Van Clief v. Van Vechten (1892) 130 N. Y. 571, 29 N. E. 1017."

In D'Amato v. Gentile (1910) 54 App. Div. 625, 66 N. Y. Supp. 833, affirmed in (1903) 173 N. Y. 596, 65 N. E. 1116, it appeared that a contractor wilfully and deliberately varied from the terms of the contract

in workmanship and materials, using inferior material and making omissions and changes. In an action by the contractor for the balance of the contract price, the court held that a contractor who wilfully and deliberately deviated from the terms of the contract could not take advantage of the rule that a contractor who has in good faith substantially performed a contract might recover the contract price, less a suitable amount for defendant's damage. In such a case the contractor can recover nothing, while the owner of the building can recover his damage. It was said: "The character and extent of the defects, omissions, and departures from the plain meaning of the contract are so great in the case at bar that it cannot be fairly said that the plaintiff has substantially performed upon his part, especially as he has in the main purposely made the changes complained of by the defendant. While the wisdom of the rule which permits a recovery on a building contract in cases where there have been slight and inadvertent departures from the terms of the contract cannot be doubted, yet it must be borne in mind that it will not do to so far relax the rule that contractors can wilfully disregard and ignore the plain meaning and intent of a building contract, and then ask the court to adjust supposed equities based not upon a substantial performance, but upon a clear nonperformance of the contract. The plaintiff claims that the changes and omissions were made with the consent of the defendant. This is denied by the defendant. From the character of the omissions, defects, and changes, and from the appearance of the parties upon the witness stand, I am inclined to believe the defendant did not consent to any material change, but, on the contrary, endeavored to obtain full performance. The plaintiff evidently attempted to take advantage of the defendant by substituting in many respects an inferior class of work by making omissions and changes, thereby effecting a large saving to himself and consequent damage to the defendant, and also depriving the de

fendant of the benefit of his contract. The defendant was entitled to have a building constructed substantially according to the contract. This was not done. In lieu thereof there is forced upon him, through no fault of his, a building much changed from the plans and specifications, inferior in many respects, and with many defects of workmanship and material. It is quite reasonable to believe that the defendant never would have made a contract for the construction of such a building as he actually received. The equities of this case do not require the court to award the plaintiff the unpaid balance of the contract price after deducting a suitable amount for the defendant's damages, but rather to deny to the plaintiff the right to recover anything upon his contract, for the very good reason that he has failed to perform on his part, and at the same time has attempted to injure the defendant. The damages to the defendant, proven upon the trial, by reason of the defects, changes, and omissions, amounted to nearly 20 per cent of the contract price, the amount being based largely upon the difference in cost at the time the work was done. These defects were so general that they permeated nearly the entire structure. The evidence convinces me that the plaintiff deliberately attempted at nearly every opportunity to substitute inferior workmanship and material in the place of those required by the terms of the contract. As before stated, the defendant did not consent to the changes, nor has he waived, either expressly or impliedly by his acts and conduct, the nonperformance by plaintiff."

In Fox v. Davidson (1899) 36 App. Div. 159, 55 N. Y. Supp. 524, a contractor admitted that he left undone over one twentieth of the work contracted for, in the erection of an extension and completion of alterations to a building. The action being to foreclose a mechanics' lien against the property, the court held that the contractor, having intentionally deviated from the terms of the contract, could not recover. It was said: