ARCHITECTS' CONTRACTS

ARCHITECTS' CONTRACTS

Where an architect has entered into a written contract with the state agreeing to provide detailed plans, specifications and estimates, and where such plans and specifications have been prepared, submitted and accepted by the state, the architect is entitled to be paid for his services as provided in the contract even though sufficient appropriations have not been made to complete the construction of the project.

                                                                  - - - - - - - - - - - - -

                                                                   May 23, 1957

Honorable Lloyd Nelson
Acting Director
Department of General Administration
Olympia, Washington                                                                                                                Cite as:  AGO 57-58 No. 68

Attention:  Mr. John A. Burnett, Supervising Engineer

Dear Sir:

            By letter previously acknowledged you have requested our opinion on the following question:

            Where an architect has entered into a written contract with the state agreeing to provide detailed plans, specifications and estimates, and where such plans and specifications have been prepared, submitted and accepted by the state, is the architect entitled to be paid for his services as provided in the contract before sufficient appropriations have been made by the legislature to complete the construction of the project?

             [[Orig. Op. Page 2]]

            The answer is in the affirmative as modified in the analysis.

                                                                     ANALYSIS

            Submitted with your request were copies of two contracts and a detailed statement of facts which are substantially as follows:

            Under date of April 11, 1951, the state of Washington, acting by and through the department of public institutions, entered into a contract with Naramore, Bain, Brady and Johanson, architects, for the preparation of plans, estimates and specifications for the remodeling and additions to hospital building at Rainier State School, this being contract No. 78.  The work was to be performed in three phases: Phase one encompassed the construction of a new addition to the hospital building; phase two covered the alterations and remodeling of the existing hospital building; and phase three covered the alteration and remodeling of the wing contiguous to the hospital.

            Phases one and two have been fully completed, both as to the architects' services and the construction of the improvements.  As to phase three, the architects have fully performed their services and the plans, specifications and cost estimates have been accepted, but a construction contract has not as yet been let due to lack of sufficient funds to complete the work.  The reasonably estimated cost of phase three is stated to be $142,000.

            There are, however, sufficient funds appropriated and available to pay the architects whatever amount is due them.  A claim for payment has been filed by the architects.  The director of the budget has denied the approval and payment of the claim for the reason that insufficient funds have been appropriated to complete the construction of the improvement.

            The authority of the department of public institutions (now the department of institutions) to execute the contract is found in RCW 43.28.020.  The particular question with which you are  [[Orig. Op. Page 3]] concerned involves the propriety of paying the architects before sufficient appropriations are available to complete the project.  Paragraph 7 of contract No. 78, reads as follows:

            "SEVENTH:  Payments for the work of the design architect as described in 'FIFTH' above shall be made as follows:  Upon completion of preliminary studies, a sum equal to 25% of the basic rate computed upon a reasonable estimated cost. During the period of preparation of plans and general working drawings (exclusive of details), monthly payments based upon the percentage of completion and aggregating at completion thereof a sum sufficient to increase payments to 90% of the rate or ratio of commission arising from this agreement, computed upon a reasonable cost estimate upon such completed plans and specifications, or if bids have been received, then computed upon the lowest bona fide bid or bids.  The final 10% shall be paid upon acceptance of the building or buildings by the Owner."

            The general rule of law concerning a situation where a project has been authorized by the legislature and an appropriation made therefor, but where the appropriation proves insufficient to complete the project, is that the state or its agencies may proceed with the project as far as possible under the appropriations made.

            The rule is stated in 81 C.J.S. § 114, page 1089, as follows:

            "* * * It has been held that where there is no limitation to the amount they are authorized to expend in the construction or maintenance, they may legally make contracts which involve an expenditure greater than the amount of a fund appropriated for the purpose, and, where the legislature evidently so intends, a contract may be let for part of the work although the sum appropriated is not sufficient to complete it."

             [[Orig. Op. Page 4]]

            A further statement of the rule is found on page 1090 of the same volume and reads as follows:

            "The commission may be authorized to contract for and procure whatever plans and specifications should be necessary and proper for the entire building when completed, although the commission is, under the statute, authorized to erect only a portion of such building, and an architect who has prepared plans which have been accepted and approved has been held to be entitled to recover for his services, although the plans call for the expenditure of a larger sum than is available."

            While our supreme court has not ruled definitely upon a situation similar to the one here presented, we find the general rule as above stated supported from other jurisdictions.  In the case ofMacDougall v. Board of Land Commissioners of State of Wyoming, 49 P. (2d) 663, reading from the bottom of page 667 of the opinion, the supreme court of Wyoming said:

            "* * * Where legislative authority exists for a contract, such as an erection of a building, power to do things absolutely necessary to accomplish the purpose, as, for instance, the employment of an architect at a fixed compensation, should probably be held implied.  * * *"

            In the case ofIngram v. State Wagon-Road Commission et al., 36 Pac. 702, the supreme court of Idaho had before it a situation where the state legislature had made an appropriation for the construction of a state highway.  The appropriation was not sufficient to complete the entire highway, but the board of land commissioners constructed as much as possible under the appropriation.  The only question presented was whether or not the board could let a contract for the construction of one section without simultaneously letting a contract for every section in the division for a sum not greater than the amount appropriated.  Construing this state of facts, the court said:

             [[Orig. Op. Page 5]]

            "* * * After a most careful consideration of said act, I am of the opinion that said question should be answered in the affirmative.  At the time the act was passed no survey of the proposed system of roads had been made, and no definite estimate had been or could be made as to the cost of the completion of said roads.  It was evidently the intention of the legislature to have the amount appropriated to each division expended towards its construction, and, if the sum appropriated for the construction of each division was not sufficient to complete the same, that such sum should nevertheless be expended towards its completion.  * * * "

            The case ofMarston v. State Hospital, 18 Pa. Superior Court, page 547, involved a suit for architect's fees.  At page 550 of the opinion, the court said:

            "It is alleged, that, it was found that the plans required the expenditure of a larger sum of public money than was available at that time, but it is not intimated that this objection was chargeable to the architect, nor that they were defective in any particular.  The fact that third parties did not accept the plaintiffs' plans and estimates would not prevent the recovery of his claim unless it was provided that the plans and estimates should have their concurrence."

            The case ofShipman v. State, 42 Wis. 377, generally supports the views of the opinions above cited.

            We have noted that the contract provides for the payment of 5% of either the bid price of the project or of the reasonably estimated cost of the project.  The contract further provides,  [[Orig. Op. Page 6]] in paragraph 7, for the payment of the contract in installments up to and including 90% of the agreed price, upon the completion of the plans and their acceptance by the department.  The final 10% becomes payable upon the completion and acceptance of the project by the department.

            It is therefore our conclusion that the architects having fully performed their contract, and money having been appropriated and made available for that purpose, they are now entitled to receive 90% of 5% of the reasonably estimated cost of the third phase of the project.

            We note that the contract further provides for an additional 1% for detailed supervision of construction.  If this detailed supervision is furnished by the architects, upon the completion and acceptance of the building, they will be entitled to the final 10% of the 5% of the estimated cost plus an additional 1% of the estimated cost for such detailed supervision.

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

ROY C. FOX
Assistant Attorney General