Summary
holding that the phrase "actual cost" excludes overhead, stating: "The use of the two words `actual cost' emphasizes the meaning of the parties, of excluding in the accounting between them any idea of profit, and everything except what fairly might be reckoned as a part of the real cost of directly effecting the alteration of the fixtures"
Summary of this case from Opinion No. 2007-012Opinion
No. 3601.
November 20, 1928. Rehearing Denied November 29, 1928.
Appeal from Panola County Court; J. G. Strong, Judge.
Action by Fred Mailander against the Continental State Bank of Beckville. From a judgment for plaintiff in an unsatisfactory amount, he appeals. Affirmed.
See, also, 277 S.W. 232.
The action was brought by appellant to recover of the bank $319.05 upon an account for material furnished and labor and services performed between June 27 and July 4, 1924, in rearranging certain fixtures in the bank building. The petition alleges that the bank contracted with the plaintiff "to pay plaintiff the reasonable and customary charge for services rendered and material furnished by the plaintiff in rearranging the defendant's fixtures in the bank building," and that the sum sued for "is the reasonable and customary charge therefor."
The defendant, after denial that the sum sued for was a reasonable and customary charge for the labor done and material furnished, specially pleaded that plaintiff agreed to do the work and furnish the material "at actual cost plus twenty per cent."; that the actual cost of the work did not exceed $50 and the material furnished $27.95, which sums added to the expenses incurred of $45 and the 20 per cent. above cost aggregates $145.90, the only amount payable; that the work was negligently done, lessening the price therefor. By supplemental petition the plaintiff set up that "the actual cost" of such work to plaintiff was as follows:
Labor ............................... $83 00 Plaster, wire and putty ............. 6 30 Desk extension ...................... 26 95 Overhead expense .................... 103 75 Traveling expense and board ......... 45 87
Total ............................ $265 87 That 20 per cent. is ................ 53 18
Aggregating ...................... $319 05
There was no controversy over the items of $26.95 and $45.87. The controversy in the trial and on appeal relates to the other items: Of labor; plaster, wire, and putty; and overhead expense. The jury answered the special issues submitted that: The $103.75 "overhead expense" as charged in the account was not an expense necessary in the performance of the contract; $65, and not $83, was a reasonable charge for the labor performed; $6.30 was a reasonable charge for the "plaster, wire and putty." Judgment was entered for the plaintiff for $144.12 "plus 20 per cent.," aggregating $173. The defendant in its answer tendered into court $145.90. The appellant challenges the jury finding as respects the "overhead expense" and the cost of "labor."
It appears that the plaintiff, Fred Mailander, was engaged in manufacturing bank and store fixtures at Waco. About three years previous to May, 1924, the appellant sold and installed in the bank building of appellee at Beckville certain fixtures used in banks. In May, 1924, the bank concluded to have the fixtures as already set up so rearranged or replaced as to reduce the open space in the lobby and do away with certain small rooms. The fixtures were to be set conformably to a plan adopted; and a rear partition consisting of marble, wood, and glass had to be taken down and brought forward about 10 feet, and a new desk extension provided. To that end the bank and appellant entered into an agreement, evidenced by correspondence, by which the appellant was to take down and set out the fixtures conformably to the plan and was to charge therefor "actual cost plus twenty per cent." In order to make and do the work of rearrangement, it was necessary for the appellant, and so contemplated by the bank, to send an expert workman from its factory. The expert workman came and made the alterations. He alone did the work. His traveling expenses and board were charged. A new desk extension was provided, of the cost of $26.95. This was the only new fixture furnished. In resetting the marble 20 feet of new copper wire and 25 pounds of plaster and some putty were used, aggregating $6.30. The workman claimed that it required, and he actually put in, 75 hours' time to do the work, "with eight hours getting ready to go and return," making a total of 83 hours. His price charged was $1 an hour, aggregating $83. There was evidence on the part of the bank going to show that fewer hours than 75 were actually put in by the workman on the job. Such testimony was that the workman "wasted much time in visiting with the customers of the bank and loafing on the job"; "that fifty hours would well cover the time had the workman worked as one usually does under the same conditions." The appellant testified: "The basis on which I caused this work to be performed was what is known as a cost plus basis; that is, the total cost to me, including overhead expense, plus 20 per cent. profit to me. I arrived at the cost charged the bank by figuring the actual cost to me of materials, traveling expenses and net amount actually paid out for labor, and adding overhead expense. Plus 20 per cent. is my profit. * * * The overhead expense does not represent a penny of profit to me, but represents money spent by me in keeping up my business. It is necessary for me to maintain my factory and business in order to be in a position to furnish service such as was given the bank in this instance. This costs money, in particulars as rent, taxes, insurance, depreciation and maintenance expenses. The only way I can make my business pay these expenses and keep from operating at a loss is to charge each job with its pro rata part, as was done in this case. * * * This is the regular system for figuring cost plus jobs that we have been using for the past twenty-five years. It is the same system used by nearly every manufacturer in our line of business. It was adopted by the National Manufacturers Association five years ago."
The testimony of the bank cashier was: "I have been a business man and banker for many years. I have had occasion to understand in a general way, the business term `cost plus.' It does not invariably include `overhead charge.' In this case I have been charged with `overhead expense, $103.75.' Such a charge was never contemplated by me in this transaction and was never mentioned by any one until the time the plaintiff rendered me this bill. Never at any time did I agree to pay such a charge for the bank. It was not agreed between us that this `overhead' should be charged in this work."
Sleeper, Boynton Kendall, of Waco, and Sam T. Holt, of Carthage, for appellant.
Woolworth Baker, of Carthage, for appellee.
The appellant agreed to take down and reset the bank fixtures of the appellee, and to provide the new material necessary to adapt the fixtures to the alterations, for the "actual cost plus twenty per cent." of doing the job. The appellant, in making up the actual cost of the job, in addition to "plus twenty per cent.," charged the appellee with a certain proportion of the ordinary expenses of operating his factory and business, denominated "overhead expense." The question to be determined is whether the appellant was entitled to charge the appellee for the item of "overhead expense," in addition to the amounts expended directly upon the alteration of the fixtures for labor and material.
In view of the work to be done and the relations of the parties to the work, the object of the provision "actual cost plus twenty per cent." was, it seems, to include in the accounting between them only the money actually paid for necessary labor and material in directly effecting the alteration of the fixtures, with "twenty per cent." added as compensation to the plaintiff. The negotiations of the parties confirm the conclusion that they intended, by "actual cost" used in the agreement, to refer to the sum actually paid for necessary labor and material in doing the particular job, and in no wise inclusive of any charge for overhead expenses of the appellant's factory at Waco. The particular job does not appear to have been considered as a "factory job," and as such strictly differing from a simple contract to perform labor and furnish materials. The fixtures in the bank were merely to be taken down and set conformably to a different plan. The dismantling and setting up of the fixtures was, as understood, the ordinary practical work of an expert mechanic to be performed by him only at the place of work, the bank building. The appellant was merely to provide that expert workman from among the workmen of his factory, and be paid the value of his labor and his expenses of travel and board. New material, "if any were necessary," in setting out the fixtures, was to be shipped from the factory to the place of work, and to be paid for as in case of ordinary sale of such material. It was contemplated that in case new material was necessary to be used, only a very little would be required. And only a desk extension, of the admitted cost of $26.95, was needed and used besides the copper wire, plaster, and putty, of the cost of $6.30. In fact, the situation and negotiations of the parties, prior to and up to the time of the agreement indicate that they mutually considered all the cost of doing the job would consist substantially of the money paid out for labor of the expert mechanic and his traveling and boarding expenses, with "twenty per cent." added to the aggregate amount as compensation to the contractor. No mention was made during the negotiations concerning overhead expenses being in the estimate of "actual cost" to the appellant.
It is manifest, we conclude, that it could not have been mutually intended by the parties that the appellant could agree to make the alteration required, and then insist, merely because he operated a factory and sent an expert mechanic, that the overhead expenses should be reckoned as a part of the actual cost of directly effecting the alteration of the fixtures. In the nature of things the overhead expense in running the factory was treated as distinctly apart from the real cost of doing the job at the bank. Such expenses were in no wise necessary to adapt the existing fixtures to the rearrangement in the bank. The overhead expense would have been incurred whether the present job had been done or not. It is believed that by their agreement the parties have precluded themselves from showing anything inconsistent with the natural and ordinary meaning of the words "actual cost plus twenty per cent." The use of the two words "actual cost" emphasizes the meaning of the parties, of excluding in the accounting between them any idea of profit, and everything except what fairly might be reckoned as a part of the real cost of directly effecting the alteration of the fixtures. The express limitation to pay further or added expense, profit, or compensation was that of "twenty per cent." The "cost plus basis," which appellant testified he relied upon as authorizing him to include overhead expense, was not the terms of the present agreement. The case is quite different from a contract by a factory to sell and install, in the first instance, its products.
As to whether the workman actually worked 83 hours or less became a pure matter of fact for the jury to determine. The evidence in that respect was sufficiently conflicting to require the court to pass the decision to the jury.
The judgment is affirmed.