Butterfield v. Byron - 153 Mass. 517, 27 N.E. 667 (1891)

Rule:

Where one contracts to furnish labor and materials, and construct a chattel or build a house on land of another, he will not ordinarily be excused from performance of his contract by the destruction of the chattel or building, without his fault, before the time fixed for the delivery of it. When work is to be done under a contract on a chattel or building which is not wholly the property of the contractor, or for which he is not solely accountable, as where repairs are to be made on the property of another, the agreement on both sides is upon the implied condition that the chattel or building shall continue in existence, and the destruction of it without the fault of either of the parties will excuse performance of the contract, and leave no right of recovery of damages in favor of either against the other. 

Facts:

A contractor and a landowner entered into a contract, by which the former was to "make, erect, build, and finish" a hotel upon the land, and the latter was to do the grading, excavating, stone-work, brick-work, painting, and plumbing, and pay a certain sum as follows: each month seventy-five per cent of the value of the work of the preceding month, the balance in thirty days after completion. The building was destroyed by lightning shortly before completion, making timely completion by the contractor impossible.  The insurance companies paid for the advances that had been made to the contractor and for work and materials furnished by the insured and the insured assigned to the insurance companies whatever claims he might have had against the contractor. The trial court directed a verdict for the contractor in the insured's breach of contract claim. 

Issue:

Was the contract upon an implied condition that the building when begun should continue in existence until completed?

Answer:

Yes.

Conclusion:

The court held that the continued existence of the building was an implied condition in the contract under which the contract was not to be performed if the building was destroyed before completion. The court set aside the verdict, however, because the advances were made to the contractor on account of the entire sum to be paid; therefore, the parties had rights against each other with regard to payment that were not properly litigated.