STANDARD CONSTRUCTION CO. INC. v. National Tea Co.

Thomas Gallagher, Justice

(dissenting).

I am of the opinion that the evidence is insufficient to support a finding that Standard furnished extra labor and material for compaction at a cost of $71,815.66. It appears conceded and the trial court found that extra work or labor called for by defendant was to be provided by Standard on a “cost-plus” basis. This would imply that Standard had the burden of establishing the actual cost of such labor and material in furnishing any extras on the project. The trial court found that 44,454 cubic yards of machine compaction had cost Standard $1.50 per cubic yard and 3,699 cubic yards of hand compaction had cost it $4 per cubic yard.

Standard concedes that its books do not furnish sufficient basis to substantiate the amount claimed and submitted expert evidence as to the “value” of the compaction work done. It placed the blame for its inadequate, accounts on defendant for refusing to permit the hiring of additional personnel for maintenance of a cost accounting system, but this would hardly be sufficient to relieve it of the burden of establishing actual costs as required, particularly where it kept accurate records of all its costs and disbursements in connection with the contract.

Defendant offered the testimony of a certified public accountant who submitted in evidence an audit of the cost records of Standard from which he had segregated all items that could possibly have related to the compaction. From these he drew the conclusion that the whole compaction process had actually cost Standard 31 cents per cubic yard or a total of $16,989.90. Witnesses submitted by Standard in opposition to his testimony were unable to demonstrate any substantial error in his method of computation or to explain the difference between the costs found by him from Standard’s books and those later determined by the court. The auditor was able to make direct reference to entries from Standard’s books to substan*433tiate his testimony, and the methods he followed in arriving at cost figures were not seriously challenged.

Standard’s president, Thor Knutson, testified that he originally figured 30 to 35 cents per cubic yard for compaction. Sidney Hanson, Standard’s chief estimator, testified that the figure of 35 cents per cubic yard had been allowed for compaction on the original quantities figured by Standard’s general superintendent. Standard’s auditor testified that defendant was credited for certain compaction on the basis of 35 cents per cubic yard, since that constituted the basis of Standard’s original bid.

Evidence was submitted that on a similar contracting project, in which Standard was involved with “Red Owl Company” in a location only a few blocks away from defendant’s building, Standard had sublet the compaction to a reliable contractor on the basis of 34 cents per cubic yard, including excavating and grading as well. It would seem unreasonable to hold that Standard’s unit cost of 35 cents per cubic yard for compaction on defendant’s project, as covered in its original estimate, did not cover all its costs on this item.

Exhibit 33 submitted. by defendant established that Standard in its original contract and in 17 change orders subsequently submitted had agreed to do all earth handling work for $62,232.03,- a figure which included $19,427.84 for compaction. The actual cost of all earth handling, including compaction, excavating, backfilling, and grading, as shown by Standard’s books and records, amounted to $66,756.96. Under such, circumstances, the trial court’s finding that an additional $71,815.66 had been expended by Standard for compaction alone does not seem justified.