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July 12, 1983


From the Circuit Court of St. Charles County; Civil Appeal; Judge Donald E. Dalton.

Before Satz, P.j., Litz, Sp.J., Houser, Sr.J.

The opinion of the court was delivered by: Houser

Appeal from a judgment in favor of James Lawing, d/b/a Jim Lawing Associates, and against Interstate Budget Motel, Inc. rendered on a petition for damages for breach of an oral agreement to pay Lawing a $10,000 fee as profit and wages for supervising construction of a motel in Wentzville, and from the judgment against Interstate on its counterclaim against Lawing for defects in construction.

I. On the Petition

It is uncontroverted that Robert Bross, President of Interstate, and James Lawing entered into an oral contract for Lawing to serve as contractor, supervisor or project manager in constructing the motel. The work commenced in May, 1978 and was finally completed in November, 1979.

In this court-tried case it is our duty to determine whether the finding and judgment for Lawing, based upon the existence of an express oral contract by Bross to pay Lawing $10,000 for supervising and coordinating the project, is supported by substantial evidence under the scope of review prescribed in Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976).

In his pre-trial deposition Lawing stated that prior to the beginning of the project there was an agreement to pay him a $10,000 supervision fee but at trial, in direct contradiction to his deposition, Lawing nullified this testimony by testifying that the $10,000 figure "was not agreed to" at the time the project was begun. Lawing's trial testimony was simply that after construction commenced Lawing mentioned a $10,000 supervision fee to Bross; that Bross did not "say anything against it;" "did not deny it;" and "did not say anything." Furthermore, at trial Lawing testified the parties were on a cost-plus basis; that all of the bills submitted to Interstate for labor "included the ten percent profit and ten percent overhead;" that Lawing was hoping to have a profit percentage built into his numbers; that he was "hoping to make it on the profit that was being charged and all the labor that was done on that job."

The surrounding circumstances do not support the existence of an agreement to pay the $10,000 fee. An item of $10,000 for supervision does not appear in the documentation. Three written estimates listing the various project costs were prepared and submitted to Crossroads Economic Development Corporation of St. Charles County in support of Interstate's effort to obtain financing for the motel. The first cost estimate, dated July 1, 1977, under the heading "Jim Lawing and Associates," signed by Lawing, listed thirty one separate items totaling $1,000,000, but it did not contain a $10,000 item for supervision. A second cost estimate totaling $1,154,000 made no reference to a supervision cost. After construction commenced costs ran considerably higher than the estimates. To obtain additional financing a third and final cost estimate was prepared by Bross. Dated May, 1979, it contained thirty one items totaling $1,554,000, but it did not contain a $10,000 item for supervision. The only writing in evidence referring to such a fee is an unsigned sheet of yellow paper headed "I.B.M. Estimate 7/12/78," partly in Lawing's handwriting and partly in the handwriting of his wife Shirley, who was Lawing's bookkeeper. One of the twenty nine items listed was "Supervision $10,000." This was written in by Shirley at the direction of Lawing. This paper was prepared several months after the project was begun. There is no evidence that Bross or any other officer or agent of Interstate approved this paper or used it in preparing a cost estimate in support of an application for financing, or that it was ever submitted to Crossroads.

Bross testified that he never had a Discussion with Lawing regarding a $10,000 supervision fee. The first he became aware of a $10,000 fee was when it was brought to his attention on the yellow sheet dated 7/12/78. He ignored it -- never really considered it -- thought nothing of it -- because Bross had "never worked with Jim that way." Bross testified that the reason Lawing showed that figure on the July, 1978 paper was to raise the overall cost in justification of a request for a larger loan; that the list prepared by Lawing contained other items that could not be justified, which were included by Lawing to "jim up" the cost estimate. Lawing admitted that he prepared this paper because Bross needed "revised numbers" to substantiate additional loans.

Shirley Lawing, who as bookkeeper personally prepared the papers in connection with this project, and who for ten years had familiarized herself with the business, thus described their modus operandi: Lawing would pay for materials furnished and wages earned by laborers. Periodically Shirley would bill Interstate for the amounts advanced for labor and materials. Interstate would then reimburse Lawing. To the amounts Lawing reported having paid laborers and employees on an hourly basis Lawing would have Shirley add ten percent for profit and ten percent for insurance, tools and overhead. Nothing was added for amounts paid to material men and sub-contractors. Shirley testified that Lawing normally made his profit for performing construction work in this manner, i.e., "by putting the profit in on top of the wage rates that (Lawing) paid (his) employees." It was a cost-plus arrangement. Lawing's testimony confirms that they were operating on a cost-plus basis. In addition to the profit thus factored into the wages, Lawing was compensated for doing physical labor as a carpenter on the job for a total of 325 hours, for which he was paid the union rate paid other carpenters ($16.50 to $18.00 per hour), plus the profit percentage. Lawing also did the footings and foundation work for the motel, at a contract price of $64,000.

The previous history of the relationship between the parties detracts from Lawing's theory of a contract. In all of their previous dealings, according to Lawing, they had operated on a cost-plus basis. Lawing had built two buildings for Bross; had done repair work for him on another motel, and on a filling station; had installed the foundations on the trailer sales lot. Previously they had followed the same type of billing procedure employed on the Interstate motel, namely, "Time and cost. Time and material." To Shirley's knowledge no specific additional supervision fees were charged in any of their past dealings. The $10,000 charge in the instant case was the first deviation from the normal, standard method of dealing.

It was Lawing's burden to show that a proposal made by Lawing was accepted by Bross as made, Crossley v. Summit Lumber Co., 187 S.W. 113 (Mo. App. 1916), and to make that proof by a preponderance of the evidence. There is no substantial evidence, much less a preponderance of the evidence, that Bross accepted a proposal by Lawing that Interstate pay the fee in question. Lawing's deposition testimony affirming the existence of such a contract was destroyed by his trial testimony to the contrary. His testimony that he broached the subject to Bross who remained mute is insufficient to show a meeting of the minds. "It is an old maxim that silence gives consent; but this is not a rule of law. It is certain that, if the only facts are that A makes an offer to B and B remains silent, there is no contract." 1 Corbin on Contracts § 72 (1963). "The minds of the contracting parties must meet upon and assent to the same thing in the same sense and at the same time." Macy v. Day (Mo. App. 1961) 346 S.W.2d 555. If Lawing made Bross an offer (which Bross denies) there had to be an acceptance by Bross to perfect a contract, but according to Lawing's own account Bross neither accepted nor rejected the offer -- did nothing which could be construed as an acceptance. Bross, who remained mute, was under no obligation to speak. Previous dealings between the parties gave Lawing no reason to believe that silence was intended by Bross to signify a manifestation of assent. Under these circumstances silence cannot be transformed into acceptance. Lawing's self-serving yellow paper has little if any weight in the tally. Interstate did not accept, adopt or acquiesce in the listing of the fee in this paper. The omission of the item from the three cost estimates that were submitted to crossroads, however, is significant. That Lawing was paid in this case, as in all previous dealings, on a cost-plus basis tends to refute his claim. Finally, Bross denied ever having discussed the subject with Lawing.

It is our Conclusion that the judgment, based upon the existence of an oral contract to pay Lawing a $10,000 supervision fee, is not ...

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