Homer v. Shaw

Brief Fact Summary.

Shaw (Defendant) was a general contractor for whom Lancaster was a subcontractor and agreed to do certain excavating and mason work.  Lascaster borrowed funds from Homer (Plaintiff), and gave him a written assignment of the sums due him under his contract with the Defendant. 

Synopsis of Rule of Law.

The parties, while they could not modify to the assignee’s prejudice the terms of the contract assigned without the assignee’s consent, or by a secret or fraudulent arrangement deprive him of the benefit of the assignment, were not precluded from entering into a new agreement if performance by the assignor had become impossible from unforeseen circumstances. 

Facts.

Lancaster later told Defendant that his finances rendered him unable to complete the project.  The parties met and agreed that Lancaster would complete the work and Defendant would pay the debts Lancaster already incurred and advance the money needed for future labor and material, plus pay him $25/week until the job was complete. 

An auditor found the new agreement between Lancaster and Defendant to be a rescission of the original contract and substitution of new one, and that the rights of the Plaintiff under his assignment did not extend to the sums payable to Lancaster after that date.

The Plaintiff alleged that Lancaster had completed the work, and asked for rulings that the new contract was merely a change in terms of payment, that Defendant owed no duty to pay Lancaster’s employees, and that after accepting the assignment Defendant could not deprive Plaintiff of his rights under it.

The trial judge refused these rulings and gave judgment for the Defendant.

Issue.

Did the trial court err?

Held.

No.  The Plaintiff’s requests for rulings were rightly refused, and the exceptions must be overruled.

·         It was a question of fact whether the parties entered into a new contract in good faith in order to enable Lancaster to complete the job.

·         The first contract was correctly treated as having been rescinded, and the Plaintiff had no enforceable claim against the Defendant under the assignment.

Dissent.

None

Concurrence.

None

Discussion.

The Plaintiff assignee could not recover under the rescinded contract between Lancaster and the Defendant.