## Facts

- Contractors agreed with a mine owner, through its superintendent, to sink an 8-by-11-foot mining shaft to the “ledge” and timber it, at \$10 per foot, with the contractors supplying everything.
- The contractors sank the shaft to the ledge and timbered it to within several inches of the ledge.
- The contractors asserted the company’s on-site supervisor ordered them to stop work and remove the timbers; the supervisor denied giving that order.
- The contractors sued to recover payment for labor and materials, alleging they were prevented from completing performance without fault on their part.
- The trial court instructed that if the company terminated the contract without the contractors’ fault, the contractors could elect to sue for damages on the contract or sue in assumpsit on the common counts (quantum meruit) for the fair value of work and labor, not what the work was worth to the company.
- The jury found for the contractors; the company sought review after judgments for the contractors in the justice and circuit courts.

## Issues

1. When an owner stops performance of a work contract without the contractor’s fault, may the contractor elect to recover on quantum meruit for labor and materials already provided?
2. In such a quantum meruit recovery, is compensation measured by the objective fair value of services rendered rather than the subjective value or usefulness of the partial work to the owner?
3. Was it proper to submit to the jury the factual dispute whether the owner actually discharged or stopped the contractors, and to condition recovery on a finding of adequate performance up to that time?

## Decision

- The Michigan Supreme Court affirmed the judgment for the contractors.
- The court approved instructing that a contractor wrongfully prevented from completing performance may elect either contract damages or quantum meruit.
- The court approved measuring quantum meruit by the fair value of the work and labor, not by what the work was worth to the owner.
- The court held the discharge/stop-work dispute was properly left to the jury, with the burden on the contractors.

## Legal Principles

- If an employer or owner terminates or prevents performance of a service or construction contract without fault by the contractor, the contractor may elect between (a) suing on the contract for damages or (b) suing in assumpsit on quantum meruit to recover the reasonable value of services rendered.
- Quantum meruit compensation is based on the fair (reasonable) value of labor and materials furnished, and is not limited by the owner’s claim that the partial work had little or no value to the owner.
- Where the right to recover depends on whether the contractor was stopped without fault and after adequate performance to that point, the existence of a discharge/stop order and related performance questions are for the jury under proper instructions.

## Conclusion

The court upheld a verdict allowing contractors who were found to have been wrongfully stopped from completing a shaft-sinking contract to recover in quantum meruit for the fair value of their labor and materials, rejecting a measure tied to the owner’s asserted lack of benefit from the unfinished work.


Mooney v. York Iron Co., 82 Mich. 263, 46 N.W. 376 (Mich. 1890)