Wasatch Const. Co. v. Utah Const. Co.

82 P.2d 101, 95 Utah 424, 1938 Utah LEXIS 58

• Court: Utah Supreme Court
• Decided: August 17, 1938
• Docket: No. 5899.
• Status: Published

Opinions

MOFFAT, Justice.

Accepting as nearly as we can the help of counsel where analysis and interpretation are helpful, we still discover that a statement of the case results in a composite of pleadings, evidentiary matters, and contentions as to the law, developed as the trial proceeded. Out of these, the trial court and counsel have sifted the testimony and analyzed the actions of the parties in an attempt to ascertain the terms of an oral contract that seemed to be added to or taken from and construed by the parties, sometimes differently, sometimes agreeably, as operations proceeded. Any attempted statement of facts or issues, or what the contract was, is of necessity a resulting composite. The issues are much like "Topsy,” they “just grew.” Such is not infrequently the result in differences arising out of executory oral contracts concerning such operations as are here involved. It is, therefore, not easy to make an adequate statement of the case without the involvement of data antedating the contract and matters said and done following the making of the oral arrangement. This results in fishing out of events what the parties were really attempting to do.

In April, 1930, highway building presented an opportunity for those equipped to engage in construction work. W. O. Creer was general manager of the Wasatch Construction Company, the plaintiff and appellant; W. H. Wattis (now deceased) was general manager of the Utah Construction Company. Both companies are Utah corporations. The managers were old acquaintances. They were both experienced in construction work. Mr. Creer called upon Mr. Wattis at the Ogden office of the latter and proposed that the two companies undertake jointly such jobs as they might be able to secure. An agreement was made — sufficient, at least, that they proceeded. The terms of the agreement are in dispute. The jobs handled pursuant to the understanding, and the extent thereof, form part of the differences.

Appellant contends that the parties agreed: That all bids were to be submitted in the name of the Utah Construction Company, which company was to furnish the necessary bond required by the highway authorities (this was done, and there is no dispute as to that) ; that the work should be carried on on a 60-40 basis that is to say, each party should furnish equipment according to its ability and convenience, on the basis of 60 per cent by respondent and 40 per cent by the appellant. The differences between the parties as to this item arise from analyses and arguments which have led them to different conclusions. The parties seem to be agreed that there was a contract, or at least a basic understanding, entered into in April, 1930, for a joint undertaking relating to road contracts; that operations were to be financed by the Utah Construction Company; that bids were to be submitted and contracts taken in its name; that W. O. Creer was to act as superintendent at a salary of $300 per month; that each party was to contribute equipment for use on the jobs; that the profits and losses were to be shared by the parties. Each project was an open question. Details were left to be developed as contracts and operations proceeded. Nothing is said about how many or what contracts were to be included, or how long the arrangement was to continue, nor the extent, character or amount or details of purchasing equipment, or methods of financing. Details provoked differences. Much is said by counsel about the “weighted value theory” as distinguished from the “rental value theory.” As nearly as we are able to determine, neither “weighted value” nor “rental value,” as used by counsel for either party, was a part of the contract or contracts, but the so-called “weighted value theory” and “rental value theory” are developments by counsel or the parties in attempts to arrive at a profit-sharing basis.

Appellant has assigned errors and respondent has assigned cross-errors. The complaint is in two causes of action. The first relates to the Utah-Idaho jobs and the Nevada contracts; the second relates to the Arizona jobs. Appellant has condensed its assignments of error, as they relate to the issues, findings and judgment of the court upon the first cause of action, to four questions for determination. They are: (1) What was the contract entered into in April, 1930? (2) What projects were joint operations? (3) What property, if any, was purchased as joint equipment? (4) What, if anything, was appellant entitled to recover ? As to these four questions, appellant states its position to be:

“(1) That as to contracts jointly performed, equipment was furnished by each party according to its ability and convenience on the basis of 60% by respondent and 40% by appellant, taking into consideration the rental value of the equipment and the time of use thereof; any difference to be adjusted at the conclusion of the operations, upon a debit and /credit basis.

“(2) New equipment purchased for us on the work was to be jointly owned on the 60-40 basis.

“(3) Profits or losses were to be shared on a 60-40 basis.

“(4) All Utah-Idaho contracts and those at Austin and Wells in the state of Nevada were joint operations under the contract of April, 1930.”

Respondent counter-states the questions as follows:

“(1) Was the 60-40% ratio in which Defendant and Plaintiff were, respectively, to furnish equipment adopted for the purpose of fixing the right of each party in the matter of furnishing equipment, with profits to be shared in the same ratio that the equipment furnished by each bore to the whole even if the 60-40 ratio were not maintained, as claimed by Defendant?

or

“Was this ratio adopted for the purpose of fixing a point at which rental would begin to run in favor of the one exceeding its quota, and for the purpose of fixing inflexibly the percentage of the profits to which each party would be entitled without any regard to the relative percentages of equipment furnished, as claimed by Plaintiff?

“(2) Was the time value of equipment furnished to be computed by multiplying the time of use by the unit of actual value, as claimed by Defendant?

or

“Was the time value to be computed by multiplying the time of use by the unit rental value, as claimed by Plaintiff?

“(3) Was new equipment, purchased during the progress of the work, and paid for wholly with Defendant’s funds, and necessary to bring Defendant’s percentage of equipment to approximately the 60 per cent ratio agreed upon, its own property, as Defendant claims?

or

“Was a 40 per cent interest therein immediately vested in Plaintiff, and Defendant required to carry the investment until earnings of the enterprise liquidated it, or in default of that be relegated to a claim against Plaintiff for its 40% interest, as claimed by Plaintiff?

“(4) If the latter, then was the income from the enterprise to be charged with the cost of such new equipment for the purpose of determining profits, as claimed by Plaintiff?

or

“Were such costs to be ignored in determining profits, as claimed by Defendant?

“(5) Was the time value of such new equipment, (assuming the adoption of Plaintiff’s theory of computing profits), to be ignored, (whether rental or actual) in determining the respective percentages of the whole contributed by the parties, as Plaintiff claims?

or

“Was the time value of this new equipment (again assuming adoption of Plaintiff’s theory of computing profits), to be included with the other equipment in determining the time value of the whole and each party given credit for the amount of its interest therein for the purpose of determining the percentage of the whole contributed by them, respectively, as Defendant claims?”

As to the first question — “What was the contract entered into in April, 1930?” — it has been largely answered in the statement of the case. A reading of the record, the findings and judgment of the court, and counsel’s analysis of the whole situation, forces us to believe that if there were a contract entered into at all in April, 1930, no one knows definitely what it is; or if we may speculate as to what it is, the agreement is to be pieced out of events and placed together by a consideration of what was done and said at different times, and as operations proceeded, up to the day of attempted final settlement, or the resulting dispute. If left entirely to what the record shows was said by Mr. Wattis and Mr. Creer on behalf of their respective companies when the preliminary arrangements were discussed, it may be doubted there was any enforceable contract at all. That bids were to be submitted and, if successful, the contracts taken in the name of the defendant comany, is testified to and subsequent events and operations established it as a fact. That Mr. Wattis and Mr. Creer discussed some matters as to the ratio of equipment to be furnished is also established. It is further clear that there was something said about the furnishing of equipment upon the ratio of 40 per cent by plaintiff and 60 per cent by defendant, which developed to be impracticable or impossible in an accurate mathematical sense. From this point, operations, in the broad sense of the term, are the primary factors in determining what the relationship of the parties really was.

At no time, unless it should be a mere coincident, would it normally be expected, where machinery of large and varied unit values and of diverse types are involved, and the time of use variable, that the exact 60-40 ratio would obtain. Nor is there anything from which it may be determined in advance the length of time any assembly of equipment or any unit thereof might be used. Both Mr. Creer, of the Wasatch Construction Company, and Mr. Corey of the Utah Construction Company, gave different and detailed accounts of what the alleged contract was thought, by each of them respectively, to be. The testimony of both of them was given in the light of subsequent developments and after the joint operations had developed situations and conditions that in all probability produced impressions resulting as much from what was subsequently said and done as from the terms of the first tentative understanding. The court had the task of ascertaining or constructing an understanding out of subsequent events as much as out of the original understanding from which the operations developed, proceeded and matured. So that while it may be said there was initiated an understanding sufficiently broad and definite in some of its terms to justify proceeding in pursuance of that first understanding of April, 1930, it was modified by subseqeunt operations to fit and meet the exigencies imposed by circumstances over which the parties in some instances had control; over others, they met the inexorable as best they could.

The foregoing discussion is illustrated in the second question submitted. Who owned the newly purchased equipment? By which company was it owned? Was it owned jointly? If so, in what proportions? After having checked all the evidence in the record and the stipulations of the parties, we believe the court’s findings are supported by the evidence. These questions are answered by the court’s find ings. We quote the findings thereon in preference to a restatement of the matters found in the record:

“9. During the performance of the joint contracts the following equipment was purchased jointly under and pursuant to the terms of the oral agreement herein referred to, for the prices set opposite the name of each item; and it was agreed between said parties that at the conclusion of the Utah-Idaho jobs the salvage value of said equipment was as set out in the column marked ‘salvage value’ beside the name of each item of equipment.” (Then follows a list of equipment.)

“10. That the purchase price of the Cedar Rapids plant, the concrete mixer, the 100 horse power motor, the Primary crusher, the one-half ton truck and the Universal crusher were not charged to any individual project, nor was any charge made against plaintiff for its forty per-cent of that purchase price.

“11. That upon the Russel Gravel Plant and Waueksha motor the plaintiff paid the sum of $400.00, and the balance of the purchase price of said machines was paid by defendant; and the defendant also paid the plaintiff $240.00 on account thereof, leaving a net amount paid by plaintiff on said machines of $160.00.

“12. That the Adams grader and the McCormick unit were not purchased as joint Equipment, but were purchased by defendant for itself.

“13. That the parties stipulated and agreed to the following credits: To plaintiff, $35.00 for rental of ripper, and $75.00 for rental of Roadblade; to defendant, $7375.79 for repairs to plaintiff’s equipment and $345.36 for joint tools purchased pursuant to stipulation filed February 7, 1936.

“14. That plaintiff has been paid in cash on account of said joint enterprises, the sum of $4500.00.”

As to what projects were joint ventures, the court found in pursuance of a stipulation that the jobs referred so as the “Utah-Idaho jobs” were joint, and that the Nevada jobs were joint. As to the Nevada jobs, known as the “Austin Highway Project,” and the “Wells” contract, the court found that these contracts, as the others were taken in the name of the Utah Construction Company in pursuance of the joint understanding. Respondent assigns cross-error and maintains that the finding of the court to the effect that the Nevada projects were joint ventures is not supported by the evidence. There is a conflict in the evidence. It appears that Mr. Creer participated in matters pertaining to the securing of data and making estimates relating to the bids. It also appears he was consulted about and agreed to the subletting of the contracts to Hunt and Heiselt Construction Company. There was a question as to whether the whole job should be sublet or only part of it. As to the division of the profits out of these projects, the evidence supports the findings and conclusions reached by the court. The principal item in controversy is the making of an allowance to the subcontractor because of the loss he sustained and the payment to the subcontractor of a sum in order to effect the completion of the job. Had that sum been paid out of joint funds its allowance could not have been questioned, and had plaintiff paid the sum, we see no reason why he should not have been reimbursed — likewise as to the defendant.

There is an argument, interesting but scholastic, as to the matters which appellant is pleased to call “rental value” of the equipment, and what respondent denominates ■“weighted value.” We are unable to recognize any substantial difference when reduced to practical application. When there is an agreement as to value, (cost, reasonable, market, or inventory), and a calculation of use arises, the factors for determining the use value is the agreed value, “cost, market or inventory,” and the time of use is determined, the “rental value” or “weighted value” is the same in the end. In other words, the thing to be determined is the amount of rent to be paid for the use. Algebraically stated, where V equals Cost, Market or Inventory Value, and T equals the Time used, the rent is V times T equals R. Other factors may be injected for the purpose of arriving at the value, such as wear and tear or depreciation rates, upkeep, cost of operation, efficiency, duration or life length, etc., but in the last analysis the amount of rent is the ultimate matter to be determined. What factors go into the calculations, for the determination of value or the methods to be used or ends to be attained, may be more or less numerous and variable, but, once determined, rent is usually that value as one factor and time of use or occupation the other. It becomes at once apparent that any disturbance of the trial court’s final figures creates a confusion as to the selective factors entering into the formula and would create a situation in the instant case about which the parties might litigate with uncertainty and interminably.

A more difficult problem is presented upon plaintiff’s second cause of action, relating to what are referred to as the Oak Creek and the Pine Winslow jobs. Appellant contends for recovery of the rental value of the equipment of appellant used in the Arizona jobs, and 40 per cent of the rental value of certain joint equipment, claimed to have been purchased jointly for use on the Utah-Idaho jobs, which was also used in the projects in Arizona. Respondent contends, as we understand its position, that as to the Arizona projects, they were within the terms of the April, 1930, contract in so far as that contract provided for certain matters, viz.: The joint performance of such road contracts as should subsequently be agreed upon; that the operations under such contracts were to be financed by the Utah Construction Company; that the bids were to be submitted in the name of the Utah Construction Company; that W. O. Creer was to be superintendent of the construction work upon those jobs for $300 per month; and each party was to contribute equipment on some basis, 60 per cent and 40 per cent or according to ability and convenience or value, and time of employment.

From what appears in the record, this agreement or understanding of April, 1930, is what may be termed an agreement to make subsequent agreements if and when terms and conditions presented agreeable opportunities. A sort of general contract under which other contracts were to be made. As we read the record, each project was a separate undertaking which either party could have accepted or rejected as a joint venture.

The court found that in addition to the Utah-Idaho and Nevada jobs “the parties agreed to perform jointly on like terms two contracts in the state of Arizona.” (Italics added.) The court further found the work incident to the construction of the Oak Creek and Pine Winslow jobs and the transactions of the business relating thereto was done by plaintiff while a foreign corporation to the state of Arizona (plaintiff not having qualified to do business there as a foreign corporation). As a conclusion of law, the court decided that the contracts entered into in Arizona were null and void, being in violation of the laws of the state of Arizona.

The difference between the parties is: Plaintiff maintains that the Arizona jobs were constructed by plaintiff upon a rental basis as to its machinery; while defendant claims that they were undertaken as a joint venture, controlled in its general provisions by the April, 1930, understanding, but as to the contract for construction and the details thereof, those jobs were separate contracts. Both parties agree the contract was entered into in Flagstaff, Arizona. In response to a question by the court, when the court asked whether there was any controversy as to where the Arizona agreement was made, the answer indicated that it was made in Flagstaff, Arizona. In plaintiff’s complaint, first filed in Arizona, and admitted in proof, it was so alleged. The oral discussions between Mr. Creer and Mr. Corey would also justify such a finding.

Appellant argues, or at least submits a number of authorities supporting the doctrine that an isolated act of business done, or a contract entered into by a corporation foreign to the state where the isolated contract or single transaction of business occurs, does not come within the law requiring a foreign corporation, before doing business as such in a foreign state, to comply with the laws of such state whereby it qualifies to do such business. The cases cited support the doctrine contended for, but the evidence discloses that the Arizona contracts contemplated, and were, operations of considerable magnitude for constructing two separate highway projects in the state of Arizona. Both parties to the transactions moved considerable equipment to the state, maintained road camps and conducted operations involving the expenditure of considerable sums of money. An appropriate statement is found in one of the cases cited by both parties. It is an Arizona case wherein many cases are discussed and applied. The court, in a case similar to the instant case, said:

“We have been unable to find a single case where acts going to the extent of those performed by plaintiff in this state have been held not to amount to the doing of business and in the vast majority of cases which fall within such statutes * * * had done far less than did plaintiff in this case.” National Union Indemnity Co. v. Bruce Bros., Inc., 44 Ariz. 454, 38 P. 2d 648, 652.

Some matters of detail are argued relating to what was covered by the agreement of April 1930. Some as to operations and other details such as “rental values” or “weighted values,” the specific projects covered, net profits, joint equipment, specific items of equipment, salvage values and disputed debit and credit items. Except as further noticed, we have disposed of those items in the discussion heretofore made. As supporting the construction, that the alleged agreement of April, 1930, was an agreement contemplating future agreements, a basic understanding from which to proceed in making construction contracts, these may be noted. Plaintiff was not required to participate in any of the contracts taken by defendant. Plaintiff participated, or had the option to participate, in part of the construction covered by the principal contract taken in the name of the Utah Construction Company, such as doing the grading, or furnishing the gravel, or doing the surfacing, or handling, more or less completely, the whole project, or doing none of the construction work, yet participating in subletting — as in the Nevada jobs. Nothing is said about net or gross profits. It took an interpretation of operations over three or four years in addition to the oral discussions and under standings to reach a basis upon which profits should be divided. The court realized this, and in the light of the whole situation, it determined what equipment was separately owned or used and what was jointly owned or used, but neither party agrees fully with what the court found, nor with the basis of values nor the rental values.

As to the question of costs, the trial court decided that each party should pay its own costs. Appellant thinks the trial court abused its discretion in so deciding. There are reasons why plaintiff should have been allowed its costs to follow the judgment. Most of the elements of the cause pertain to legal questions the ultimate of which is the recovery of damages arising out of an alleged conversion. On the other hand, the court was confronted with the matter of unravelling a series of transactions and operations intertwined with oral understandings and operative interpretations, and with matters of accounting which both parties seem to have regarded as sufficient to justify treating the proceeding as one in equity. It was so treated, and whether the cause was one in equity or not, is not before us. It may be added that the plaintiff failed upon part of its theory upon the first, and entirely upon its rental theory upon the second cause of action. We cannot say the trial court abused its discretion in the matter of costs, and, while the judgment must be affirmed, because of the nature of the case, we are disposed to follow the trial court’s precedent and hold that each party bear its own costs on this appeal. Such is the order.

Judgment affirmed.

HANSON, J., concurs. LARSON, J., concurs in the results.