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Vrla v. Western Mortgage Co.

November 10, 1972

VRLA, RESPONDENT,
v.
WESTERN MORTGAGE COMPANY, APPELLANT



Appeal from Circuit Court, Multnomah County. Pat Dooley, Judge.

Dale A. Rader, Portland, argued the cause for appellant. With him on the brief were Rader & Kitson, Portland.

Gary Peterson, Portland, argued the cause for respondent. With him on the brief were Peterson, Chaivoe & Peterson, Portland.

In Banc. Bryson, J.

Bryson

Plaintiff, a licensed architect, commenced this action to recover the reasonable value of his services rendered while he was employed by defendant. Defendant appeals from a judgment for plaintiff in the amount of $8,230.

On March 1, 1968, Mr. Herbert Albright, president of defendant corporation, orally engaged plaintiff to design 98 apartment house units for construction on three acres of land in Multnomah County, Oregon, owned by defendant. Plaintiff was to prepare working drawings which would gain the approval of a lending agency for a construction loan. Plaintiff testified that the agreed compensation for the job was $300 per apartment unit, to be paid from the proceeds of a construction loan to be obtained by defendant. The parties did not discuss plaintiff's compensation in the event that the loan could not be procured.

During the next one and one-half years, Albright, on two occasions, substantially modified plaintiff's design instructions, but the parties maintained their basic $300 per unit agreement for plaintiff's compensation. Plaintiff worked without pay during this period, although at one point, when the project seemed to be folding, plaintiff offered to settle with defendant for $8,640. On September 26, 1969, Albright sent plaintiff a check for $500, which plaintiff assumed was a partial payment for his services. In late 1969 Albright terminated the project because he was unable to obtain a construction loan. Plaintiff then brought this action to recover the reasonable value of his services, reduced by the $500 payment.

Defendant contends that because the parties agreed to compensate plaintiff from construction loan

funds, the procurement of those funds was a condition precedent to defendant's duty to pay. Since the loan was never obtained, defendant argues that he should not have to pay.

When courts are faced with agreements which anticipate a payment from a specified source, difficult problems of interpretation arise. In this case the parties failed to provide for plaintiff's compensation in case the loan was unobtainable. The trial court felt, and we agree, that the agreement to pay plaintiff from loan proceeds was a "limitation on * * * time of payment and not * * * a denial of any payment for plaintiff's services if the loan was not made." There is evidence to support the trial court's finding.

"'Where, from the contract, it appears that a stipulation for payment on receipt of a specified fund, or a provision indicating the source from which a fund for payment or performance is to be procured, is inserted merely for the purpose of fixing the time at which performance shall become due, such stipulations will not be regarded as evidencing conditions precedent, but performance may be demanded within a reasonable time after the fund should have been realized or the contingency from which it is to be secured should have happened.'" Mignot v. Parkhill, 237 Or 450, 457-58, 391 P2d 755, 759 (1964), quoting 17A CJS 583, Contracts ยง 456.

Undoubtedly, the trial court considered defendant's $500 payment to be evidence of defendant's original promise to pay, and that the parties never considered the ...


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