Roger's Backhoe Service, Inc. v. Nichols
2004 WL 1336257, 2004 Iowa Sup. LEXIS 198, 681 N.W.2d 647 (2004)
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Rule of Law:
Silence constitutes acceptance of an offer for services, creating an enforceable implied-in-fact contract, when the offeree takes the benefit of those services with a reasonable opportunity to reject them and with reason to know they were offered with the expectation of compensation.
Facts:
- Jeffrey S. Nichols, a funeral director, initiated a project to build a crematorium and expand his parking lot.
- The City of Muscatine initially approved plans for surface water drainage onto the adjacent street.
- After construction began, city officials changed the requirement, mandating an exploratory excavation to see if water could be drained into a subterranean creek.
- Roger's Backhoe Service, Inc. (Roger's) and the general contractor informed Nichols of the city's new mandate.
- Nichols testified that he refused permission for the exploratory excavation.
- For the next three days, Roger's proceeded with the excavation work in Nichols' presence, digging down approximately twenty feet to locate the underground creek.
- After the creek was located, city officials deemed it infeasible to connect the drainage and reverted to the original plan.
- Roger's submitted invoices to Nichols for the excavation, the subsequent refilling and tamping, and other site preparation work, which Nichols refused to pay.
Procedural Posture:
- Roger’s Backhoe Service, Inc. sued Jeffrey S. Nichols in Iowa district court (trial court) to recover payment for unpaid invoices.
- The district court entered judgment in favor of Roger's for the full amount claimed.
- Nichols, as appellant, appealed the judgment to the Iowa Court of Appeals.
- The Court of Appeals reversed the district court's judgment, concluding that no enforceable contract had been established.
- Roger's sought, and was granted, further review by the Supreme Court of Iowa.
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Issue:
Does a property owner's silence and inaction constitute acceptance of an offer for services, creating an enforceable implied-in-fact contract, when the owner knows the services are being performed on his property for his benefit, has a reasonable opportunity to object, and has reason to know the provider expects compensation?
Opinions:
Majority - Carter, Justice.
Yes. A property owner's silence and inaction create an enforceable implied-in-fact contract for services when the elements of acceptance by benefit are met. The court found that an implied-in-fact contract was established under the principles of the Restatement (Second) of Contracts § 69(1)(a). Even if Nichols initially expressed an objection, he was aware of and present during the three days Roger's performed the excavation. By failing to stop the work when he had the opportunity, his silence and inaction operated as an acceptance of Roger's services, which he knew were being offered with the expectation of payment. The court rejected the appellate court's conclusion that the services provided no benefit; the exploratory excavation was a necessary benefit because it was required by the city to resolve a stalemate and allow the project to proceed, regardless of the final outcome of the exploration.
Analysis:
This decision reinforces the doctrine of an implied-in-fact contract, where acceptance can be manifested through conduct rather than express words. It clarifies that under Restatement § 69, a party who knowingly and silently accepts services they have an opportunity to reject is bound to pay for them. The case is significant for its interpretation of 'benefit,' holding that work necessary to overcome a project's regulatory hurdle is beneficial, even if the work itself does not become a permanent part of the finished project. This precedent cautions property owners that they have an affirmative duty to halt work they do not intend to pay for, as passive acquiescence can form a binding contract.
