Ray v. William G. Eurice & Bros., Inc

Ray v. William G. Eurice & Bros., Inc., 201 Md. 115, 93 A.2d 272, (1952). Name of the Case: Ray v. William G. Eurice & Bros., Inc. Court: Maryland Court of Appeals State: Maryland Year: 1952 Plaintiff(s): Mr. Calvin T. Ray & his wife Mrs. Katherine S. J. Ray, owners of the land and subsequent home that was supposed to be built by William G. Eurice & Bros., Inc.; Mr. Ray is an aeronautical engineer so he is a highly technical and precise man. Defendant(s): William G. Eurice & Bros., Inc. (Messrs. Eurice); two brothers: John and Henry Eurice, builders all their adult lives and successful builders for 15 years. They are old fashioned country or community builders; work does not call for specialized ability. Cause of Action: Breach of Contract Relief Sought: Damages/specific performance – unless they finish, the Ray’s intended to hold the company accountable for “any additional amount necessary to construct the house over and above the price called for in the agreement which was breached by the client.” Basis for dispute: Matter of law (subjective vs. objective theory) Legally Relevant Facts: Mr. and Mrs. Ray wanted to build a new home on a lot that they own. Based off of a recommendation, the couple entered into negotiations with William G. Eurice & Bros., Inc. An estimate submitted by William & Bros indicated at a first meeting that the house would be about $16,000. Mr. Ray had an architect draw up specifications in January of 1951 and subsequently arranged a meeting with Mr. Eurice to go over them so that a final bid, rather than the prior estimate, could be arrived at. This draft by the architect was 7 pages long and dated January 9, 1951. Mr. Ray & Mr. Eurice went over the specifications dated January 9, 1951, in Mr. Ray’s living room. Mr. Ray & Mr. Eurice went back and forth with each other on some specifications, for example, the pouring of a concrete wall vs. a concrete block. In some instances, Mr. Eurice asked for more latitude, asking for the phrase “or equivalent.” All agreed upon changes that were determined at this meeting were noted in green ink by Mr. Ray and Mr. Eurice was given a set of plans and a set of specifications so that he could make a formal bid in writing. On Feb. 14, Eurice Corp. submitted an unsigned, typed, 3-page proposed contract to build a house for $16,300 according to the following specifications. Most of those 3 pages did not have the specifications agreed upon in respects to the January 9th, 7-page specifications. Mr. Ray advised Mr. Eurice that he would have his own lawyer draw the contract. This was done. This contract was signed, stating the house would cost $16,300, and that the plans be in accordance with the plans designed by Mr. and Mrs. Ray, matching specifications of Sheets 1 through 7 dated January 9. Any deviation of those plans must be made only with prior assent of Mr. and Mrs. Ray. The memo dated February 14 was prepared by Mr. and Mrs. Ray on the night of the day that Mr. Ray said his lawyer would draw up a contract. The January 9 seven pages were retyped “from stencil” so cut at the Ray apartment and rewritten and identified as they were designated in the contract…”Sheets 1 through 5, dated 14 February 1951.” The contract was signed on February 22 at the office of the Eurice Corporation. Mr. Ray, Mr. John Eurice and Mr. Henry Eurice were present for the signing. After the contract was signed, Mr. Henry Eurice helped Mr. Ray fill out the F.H.A. form of specifications that is required to obtain the mortgage necessary for the home. They used the memo specifications from the February 14 memo. After this, the meeting broke, and a signed copy of both the contract and the plans and specifications were retained by the Eurice Corporation. To get his loan, both Mr. and Mrs. Ray and the Eurice brothers had to sign the contract and the copies of the plans and specifications that was with the building association. Mr. and Mrs. Ray signed each side. Mr. John Eurice signed the reverse side of each page of the drawings and of the contract specifications. He said that he did not look at any of these prior to signing them. On May 8, Mr. Ray received urgent notice of a conference from the Eurice Corporation. Once at the office, Mr. Henry Eurice told Mr. Ray that he had never seen the drawings, specifications, and the contract before, and that if he had to build according to those specifications he did not propose to go ahead. Attempts to reconcile were made but Mr. Henry Eurice said that he would not live up to the contract. A second meeting was held but that was the last time the Ray’s had contact with the Eurice Corporation. Excessive work and excessive cost were reasons for the Eurice brothers to not move forward with the construction. They believed the specifications of Mr. Ray were unreasonable. Mr. Ray’s lawyer gave written notice that unless the Eurice Corp. recognized their breach of contract that they would hold the company accountable. Suit was filed. Disputed Facts that are Legally Relevant: Mr. John Eurice contends that there were no specifications attached to the contract which was signed, at the time it was signed, and that Mr. and Mrs. Ray cannot say definitely that the specifications were physically attached. Mr. John Eurice says the first time he saw the specifications was two weeks after signing and that they were laying on the desk on the opened mail. Mr. Henry Eurice says that, although he was present at the time the contract was signed, and signed as a witness, that no specifications were attached to either copy of the signed contract, and that he did not see the specifications until “maybe a month later.” Mr. and Mrs. Ray say that the specifications were unquestionably in existence and Mr. Ray was unequivocal and positive in his statement that they were present, stapled together, and discussed at the time of signing the contract. Plaintiff’s Argument: The company breached our contract and should be held liable for excess cost to build the house above $16,300. Defendant’s Argument: We did not agree on such stringent specifications; those are unreasonable and they should not be held liable for breach of contract because those specifications were not what they intended to sign onto. Lower Court’s Disposition: The Circuit Court for Baltimore County found in favor of the defendant’s because “the minds of the parties, so different in their approach, to use a mechanical phrase, did not mesh.” Because the defendants were under the impression that the specifications in the contract were in relation to the one’s they had prepared, they shouldn’t be held liable. (subjective theory). Issue(s): Did the Eurice Corporation wrongfully breach their contract with Mr. and Mrs. Ray? Court Holding(s): We conclude that the appellee wrongfully breached its contract to build the plaintiff’s house for $16,300. Court’s Disposition: Judgment reversed with costs and judgment entered for appellants against appellee in the sum of $5,993.40. Court’s Analysis and Reasons for its Holding: Judge: the law is clear, absent fraud duress or mutual mistake, that one having the capacity to understand a written document who reads and signs it, or without reading it or having it read to him, signs it, is bound by his signature in law at least…There is not fraud or duress. If there was a mistake it was unilateral. Williston, Contracts (Rev. Ed), Sec. 1577 says as to unilateral mistake: (secondary, persuasive) o But if a man acts negligently, and in such a way as to justify others in supposing that the terms of the writing are assented to by him and the writing is accepted on that supposition, he will be bound both at law and in equity. Accordingly, even if an illiterate executes a deed under a mistake as to its contents, he is bound if he did not require it to be read to him or its object explained. Restatement, Contracts, Section 70: (secondary, persuasive) o One who makes a written offer which is accepted, or who manifests acceptance of the terms of a writing which he should reasonably understand to be an offer or proposed contract, is bound by the contract, though ignorant of the terms of the writing or of its proper interpretation. Restatement, Contracts, Section 20, (secondary, persuasive) o A manifestation of mutual assent by the parties to an informal contract is essential to its formation and the acts by which assent is manifested, must be done with the intent to do those acts, but neither mental assent to the promise in the contract nor real or apparent intent that the promises shall be legally binding, is essential. Williston, Contracts, Sec. 230: (secondary, persuasive) o The only intent of the parties to a contract which is essential, is an intent to say the words and do the acts which constitute their manifestation of assent. Judge Learned Hand: (primary, persuasive) o A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of that sort.  Landmark case for objective theory of contracts  The test in such case is objective and not subjective. Restatement, Contracts, Sec. 230 (Williston, Sec. 94, page 294): It follows that the test of a true interpretation of an offer or acceptance is not what the party making it thought it meant or intended it to mean, but what a “reasonable person” in the position of the parties would have thought it to mean. The decision for remedy was no difficulty.  Keystone Engineering Corp. v. Sutter (primary, binding). o When a contractor on a building contract fails to perform, one of the remedies of the owner is to complete the contract, and charge the cost against the wrongdoer.  See also: Williston on Contracts, Rev. Ed. Vol 5, Section 1363, p. 3825, Restatement Contracts, ch. 12, Section 346, Subsec. (1)(a)(i), p. 573 and Comment 1, p. 576.  See also Carrig v. Gilbert-Varker Corp., 314 Mass. 351, 50 N.E.2d 59, 62, 147 A.L.R. 927. (primary, persuasive) o The owner was entitled to be put in the same position that he would have been in if the contractor had performed the contract.