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UNITED STATES V. ALGERNON BLAIR, INC.

479 F.2d 638 (4th Cir. 1973)

LEGAL ANALYSIS: It is an accepted principle of contract law, often applied in the case of construction contracts, that the promisee upon breach has the option to forego any suit on the contract and claim only the reasonable value of his performance. This may result in a situation where there would be no recovery under expectation damages under the contract and a substantial recovery under the reasonable value of the services rendered.

The measure of restitution in quantum meruit is the reasonable value of the performance rendered not to be diminished by possible losses. Some courts do hold that the contract price is usually evidence of the reasonable value of the services. Those same courts usually make that value the ceiling on a quantum meruit action. Most courts disagree with that position because once quantum meruit is invoked the contract does not exist. This was a situation wherein the court found the contract had been void ab initio and not just that P was seeking restitutionary remedies. If P had merely wanted restitution, then the profit and loss of the contract come into play. Here the pleading was misinterpreted by the trial court and it should have determined that the contract was first void ab initio. Here, even though expectation damages would not allow a recovery, P is entitled to recover under quantum meruit. An old common law definition: Quantum meruit: As much as he has deserved. When a person employs another to do work for him, without any agreement as to his compensation, the law implies a promise from, the employer to the workman that he will pay him for his services, as much as he may deserve or merit. In such case the plaintiff may suggest in his declaration that the defendant promised to pay him as much as he reasonably deserved, and then aver that his trouble was worth such a sum of money, which the defendant has omitted to pay. This is called an assumpsit on a quantum meruit. When there is an express contract for a stipulated amount and mode of compensation for services, the plaintiff cannot abandon the contract and resort to an action for a quantum meruit on an implied assumpsit.

In United States ex rel. Susi Contracting Co. v. Zara Contracting Co., 146 F.2d 606 (2d Cir. 1944), the prime contractor had unjustifiably breached a subcontract after partial performance by the subcontractor. The court stated: For it is an accepted principle of contract law, often applied in the case of construction contracts, that the promisee upon breach has the option to forego any suit on the contract and claim only the reasonable value of his performance. 146 F.2d at 610. The Tenth Circuit has also stated that the right to seek recovery under quantum meruit is clear. Southern Painting Co. v. United States, 222 F.2d 431, 433 (10th Cir. 1955). See also Great Lakes Constr. Co. v. Republic Creosoting Co., 139 F.2d 456 (8th Cir. 1943) (dealing with a prior statute).  Quantum meruit recovery is not limited to an action against the prime contractor but may also be brought against the surety, as in this case. Further, that the complaint is not clear in regard to the theory of a plaintiff's recovery does not preclude  recovery under quantum meruit. Narragansett Improvement Co. v. United States, 290 F.2d 577 (1st Cir. 1961). A plaintiff may join a claim for quantum meruit with a claim for damages from breach of contract. North Am. Graphite Corp. v. Allan, 87 U.S. App. D.C. 154, 184 F.2d 387, 389 (1950); 12 Williston on Contracts § 1469, at 210 (3d ed. 1970). The impact of quantum meruit is to allow a promisee to recover the value of services he gave to the defendant irrespective of whether he would have lost money on the contract and been unable to recover in a suit on the contract. Scaduto v. Orlando, 381 F.2d 587, 595 (2d Cir. 1967). The measure of recovery for quantum meruit is the reasonable value of the performance, Restatement of Contracts § 347 (1932); and recovery is undiminished by any loss which would have been incurred by complete performance. 12 Williston on Contracts § 1485, at 312 (3d ed. 1970). While the contract price may be evidence of reasonable value of the services, it does not measure the value of the performance or limit recovery. Scaduto v. Orlando, 381 F.2d 587, 595-96 (2d Cir. 1967); St. Paul-Mercury Indem. Co. v. United States ex rel. Jones, 238 F.2d 917, 924 (10th Cir. 1956); United States ex rel. Susi Contracting Co. v. Zara Contracting Co., 146 F.2d 606, 610-11 (2d Cir. 1944). It should be noted, however, that  in suits for restitution there are many cases permitting the plaintiff to recover the value of benefits conferred on the defendant, even though this value exceeds that of the return performance promised by the defendant. In these cases it is no doubt felt that the defendant's breach should work a forfeiture of his right to retain the benefits of an advantageous bargain. Fuller & Perdue, supra at 77.  Rather, the standard for measuring the reasonable value of the services rendered is the amount for which such services could have been purchased from one in the plaintiff's position at the time and place the services were rendered. See United States ex rel. F. E. Robinson Co. v. Alpha-Continental, 273 F. Supp. 758, 777 (E.D.N.C. 1967), aff'd 404 F.2d 343 (4th Cir. 1968), and aff'd sub nom. Ling Elec., Inc. v. Federal Ins. Co., 406 F.2d 561 (4th Cir.), cert. denied, 395 U.S. 922, 89 S. Ct. 1774, 23 L. Ed. 2d 239 (1969).