Southeastern Drywall v. Yeargin Const. Co.

214 S.E.2d 303 (1975)

25 N.C. App. 538

SOUTHEASTERN DRYWALL, INC. v. YEARGIN CONSTRUCTION COMPANY, INC.

No. 7526SC6.

Court of Appeals of North Carolina.

May 7, 1975.

*305 Joe T. Millsaps, Charlotte, for plaintiff.

Grier, Parker, Poe, Thompson, Bernstein, Gage & Preston by Gaston H. Gage and William P. Farthing, Jr., Charlotte, for defendant.

BROCK, Chief Judge.

The principles of law, reason, and logic which seem applicable to this appeal may be stated briefly.

The failure to pay an installment of the contract price as provided in a building or construction contract is a substantial breach of the contract and gives the contractor the right to consider the contract at an end and to discontinue work. 13 Am.Jur.2d Building and Construction Contracts § 102 (1964). Strict performance of a contract by one party may be waived by the other party, in which case there is, to the extent of the waiver, no right to damages for the failure to perform strictly. 17 Am.Jur.2d Contracts § 390 (1964). Where a party to a *306 contract refuses to fulfil it and bases his refusal on a particular ground, clearly and deliberately stated, all other objections are deemed waived. 17 Am.Jur.2d Contracts § 390 (1964).

In this case the trial judge made findings of facts and conclusions of law as follows:

"1. That the Plaintiff and the Defendant entered into a contract or (sic) or about the 19th day of April, 1972. "2. That Plaintiff had men available to work during the month of June and July and that during the last week in July and throughout the month of August and thereafter, Plaintiff diligently executed its part of the contract. "3. That after paying Plaintiff's statement for August, 1972, in September, 1972, and after paying Plaintiff's statement for September in October, 1972, the Defendant failed to make the third monthly payment in November when, in the course of dealings, it would have been due, and finally made a partial payment which was received by the Plaintiff on December 12, 1972, the Defendant having deducted, without good and sufficient provocation, the sum of $1,054.62. "4. That the Plaintiff received a partial payment of its October 18, 1972, billing on December 12, 1972, and upon receipt of that partial payment, the Plaintiff immediately notified the Defendant that the Defendant had breached its contract and that the Plaintiff would no longer continue to work for the Defendant. "5. That on December 12, 1972, Plaintiff had a full crew of men on the job and were working in Building # 11 when the representative of Yeargin Construction Company advised Plaintiff to terminate work in Building # 11 because the roof would have to be removed and corrected and at least a part of the drywall work would have to be redone as a result of the removal of that roof. "6. That at the time of the breach of the contract by the Defendant Corporation, the Defendant Corporation was justly indebted to the Plaintiff in the sum of $8,818.23. "NOW, THEREFORE, BASED UPON THE FOREGOING FINDINGS OF FACTS, THE COURT CONCLUDES AS A MATTER OF LAW: "1. That the Defendant Corporation breached the contract of April 19, 1972, by failing to remit to Plaintiff the full amount of its October 18, 1972, invoice in the normal course of business during the month of November, 1972. "2. That the Defendant Corporation further breached its contract with Plaintiff Corporation by failure to remit the entire sums due under the October 18, 1972, billing and by `back charging' to Plaintiff the sum of $1,054.62, which had been arbitrarily and without just cause, paid to a South Carolina drywall contractor called in to work on Thanksgiving Day, 1972, a legal holiday. "3. That the Plaintiff Corporation was justified in walking off the job as of December 12, 1972, and suing for damages. "4. That by breaching its contract, Defendant lost all entitlement to benefits under the contract."

The above findings of fact are not dispositive of the issues raised by the pleadings and the evidence.

Finding number 1. identifies neither the nature nor the provisions of the contract which the court found the parties had entered into. It may be reasonable for us to assume that the judgment refers to the contract which was allowed in evidence as plaintiff's exhibit No. 1. However, the judgment with this indefinite finding number 1. would always be open to question.

Finding number 2. identifies neither the work plaintiff had men available for nor plaintiff's duties under the contract.

*307 Finding number 3. does not determine the requirement for payments under the contract.

Finding number 6. does not identify the claims comprising the sum of $8,818.23. It seems that the only item which the court found to be delinquent was the sum of $1,054.62 withheld from the payment received by plaintiff on 12 December 1972.

The first conclusion of law by the trial court is not supported by the findings of fact.

There was no finding of a contractual provision requiring defendant to pay the 18 October 1972 invoice in November 1972. Further, the findings of fact disclose that plaintiff continued to work until 12 December 1972, which conduct would seem to acquiesce in the delay and to waive payment in November, if such were required by contract. Additionally, plaintiff has clearly and deliberately based its refusal to perform after 12 December 1972 upon its objection to defendant's withholding the sum of $1,054.62 from the payment received on 12 December 1972. In its complaint plaintiff alleged the grounds for its election to rescind in the following language:

"5. That on or about the 12th day of December, 1972, Defendant failed and refused to pay sums then due and properly billed to Defendant by Plaintiff. "6. Upon the failure of Defendant to honor Plaintiff's statement for payment, Plaintiff elected to rescind the contract due to the breach of the Defendant."

Strict performance of a contract by one party may be waived by the other party, in which case there is, to the extent of the waiver, no right to damages for the failure to perform strictly. 17 Am.Jur.2d Contracts § 390 (1964). Where a party to a contract refuses to fulfill it and bases his refusal on a particular ground, clearly and deliberately stated, all other objections are deemed waived. 17 Am.Jur.2d Contracts § 390 (1964).

The second conclusion of law by the trial court is not supported by the findings of fact. There is no finding of fact to indicate that the withholding by defendant of the sum of $1,054.62 from its payment made to plaintiff on 12 December 1972 was in violation of a contractual obligation.

Although there may be a dispute between plaintiff and defendant over whether defendant improperly withheld $1,054.62 from the 12 December 1972 payment, there is no finding that this partial performance was a substantial default. It seems clear that before rescission is justified for failure to strictly perform, it must be shown that the default was substantial. See 13 Am.Jur.2d Building and Construction Contracts § 101 (1964). There was no finding of fact by the trial judge to support a conclusion that defendant's conduct in withholding the $1,054.62 from the 12 December 1972 payment was a substantial default, justifying rescission by the plaintiff.

Because the findings of fact are not dispositive of the issues raised by the pleadings and the evidence, and because the findings of fact do not support the conclusions of law, the judgment appealed from must be reversed and a new trial ordered.

Reversed and remanded.

PARKER and ARNOLD, JJ., concur.