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Pan American Realty Trust v. Twenty One Kings Inc.

decided: March 24, 1969.


Freedman, Van Dusen and Aldisert, Circuit Judges.

Author: Per Curiam


Defendant (appellant) challenges judgments entered February 5, 1968, in two civil actions, which were consolidated for trial to the court, contending that the trial judge incorrectly interpreted separate building and architectural contracts under which plaintiffs had rendered the services for which they recovered on a quantum meruit basis. Pan American Realty Trust recovered a judgment of $27,823.14 for engineering services and expenses, with interest from April 12, 1966, an attorney's fee of $2,500., and costs. The judgment for De Leo Associates Company was for architectural services and expenses in the amount of $30,196.75, with interest from April 12, 1966, an attorney's fee of $2,500., and costs.

I. No. 17,386

The building contract was dated December 3, 1965, and provided for payment "in current funds" of costs of construction of an Apartment-Office and Underground Parking Building, plus a fee of $35,000., by the defendant-owner. Articles 13 and 14 provided:

"The Contractor shall, between the first and seventh of each month, deliver to the Architect a statement, sworn to if required, showing in detail and as completely as possible all moneys paid out by him on account of the cost of the work during the previous month for which he is to be reimbursed * * *.

"The Architect shall check the Contractor's statements of moneys due, * * * and shall promptly issue certificates to the Owner for all such as he approves, which certificates shall be payable on issuance."

A rider to this contract, executed the same day, specified that "The contractor agrees to supply all additional funds needed to complete the job that is not raised by a first mortgage, * * * [which funds were to] be advanced at the beginning of the job."*fn1 A second rider dated December 8, 1965 specified that "The contractor shall commence with the work under the main contract without undue delay."*fn2 The defendant-owner never secured the first mortgage contemplated by the contract and unilaterally cancelled the contract on April 12, 1966.*fn3 Meanwhile, the contractor had rendered the services and incurred the expenses comprising the $27,823.14 described above. Construing the above documents together in Pan American Realty Trust v. Twenty One Kings, Inc., V.I., 297 F. Supp. 143, 148-150 (1968), the trial judge:

"* * * concluded that until the owner had secured a commitment for a first mortgage loan the contractor was not obligated to advance the additional funds beyond that loan which would be needed to complete the building contract. For, until that event occurred, it would not be possible to know what amount of additional funds would be needed. But if, and when, a first mortgage commitment was secured the plaintiff contractor could know exactly how much additional money had to be put up and then could proceed to do so.

"* * * A cardinal principle governing the construction of contracts is that the entire contract must be considered and, as between possible interpretations of ambiguous provisions, that will be chosen which best accords with the sense of the remainder of the contract. A written contract is to be construed so as to give effect to all of its parts, and any construction which would render the agreement meaningless should be avoided.*fn4 * * * These obligations of the contractor were conditioned upon the prior procurement by the defendant of a commitment for a first mortgage loan. To accept the defendant's view would be to render the contract unworkable and meaningless. The defendant, having been unable to secure the contemplated first mortgage commitment, did not perform its part of the contract, and thereby discharged the plaintiff from the duty of further performance by the impossibility of rendering it. * * * The plaintiff contractor, upon notification from the defendant under date of April 12, 1966 to 'do nothing further under the provisions of this contract' was entitled to treat the contract as absolutely and finally broken by the defendant. * * * Accordingly upon the defendant's recission of the construction contract the plaintiff was entitled to recover the money it had actually expended and for the services it had actually performed."*fn5

After careful consideration of the record and the contentions of defendant, we have decided that the judgment should be affirmed for all the reasons stated by the trial judge.*fn6

II. No. 17,387

The architectural contract, dated February 26, 1965, provided for a fee not to exceed $15,000. plus expenses of personnel, including consultants for surveys, soil tests, auditing, etc., as well as reimbursable transportation and living expenses.*fn7 Most of the work done under this contract, as amended, was completed prior to the execution of the building contract in December 1965. In the above-mentioned rider dated December 8, 1965, defendant agreed that "$14,500 more or less" of the architect's fee was unpaid and that expenses were due the architect, which sums then due were to be paid by defendant "during construction." This rider also provided "First monies paid by financial institution financing construction shall be allocated to architects fees."

For the reasons stated under I above and those in the findings, conclusions and April 29, 1968, opinion of the trial judge, the record justifies the trial judge's conclusion that the failure of the defendant to raise the first mortgage money, which it had agreed to use to pay the architect, did not relieve it from liability for the expenses incurred, and fees earned, by ...

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