Plaintiff, a construction company, was building a project and contracted with defendants to do excavating and earth-moving work on the project. This contract included requirements that all work be done in a workmanlike fashion, defendants carry liability insurance, defendants submit monthly requisitions, and plaintiff pay the requisitions. While leveling the yard on August 9, defendants' bulldozer operator hit the house and collapsed a wall, doing $3,400 in damage. Defendants and their insurance carrier refused to pay, claiming that they were not liable. Plaintiff did not give written notice to defendant for any services or materials plaintiff gave them. Plaintiff was satisfied with defendants' work besides where they destroyed the wall.
On July defendants had submitted their monthly requisition for work done prior, which was due to be paid by August 10. After defendant destroyed the wall on August 9, plaintiff refused to pay the requisition because the bulldozer damage had not been paid for. Defendants continued working for another month, at which point they discontinued working due to plaintiff's refusal to pay but said they would return if plaintiff did pay them. The unpaid sum at that point was $1,484.50. They had $1,340's worth of work remaining to do, and it cost plaintiff $450 to have another contractor complete the remaining work.
Plaintiff sued for the damage to the house and the $450 it cost to replace defendants. Defendants counterclaimed for recovery of the $1,484.50 and for the loss of the expected $1340 of profit.
The jury found for plaintiff on the first count for $3,400. The CC judge found for defendants on the second count and the counter-claims in the amount of $2,824.50, which was appealed.
The promises were mutually dependent, as the parties intended each's performance to be conditional on the other's. Holding that contractor has to continue to pay a subcontractor for his work, regardless of the skill he exhibited and requiring the contractor to sue for damages afterwards, would lead to many contractors to become insolvent before completing their contracts.
The breach was material as the damage was over double what defendants were to be paid. This justified plaintiff to stop making payments and invalidated defendants' justification of their breach. Plaintiff treated the total breach as partial, still requiring defendant to finish the excavating work.