402 P.2d 839 (Cal. 1965)
Defendant developer hired plaintiff architect to design a building and to assist in construction. The project was in two phases, and plaintiff was paid for phase one, as well as a percentage of his total fee for phase two. Defendant was compelled to abandon the project because he could not obtain a construction loan. Defendant adverse possessor then filed an action against defendant developer claiming title. Plaintiff brought an action against defendants to recover for services performed and to foreclose a mechanic's lien on the lot. The trial court entered judgment for defendant developer, holding that his obligation to make further payment to plaintiff was conditioned upon the existence of a construction loan. Plaintiff appealed.
- The court affirmed, holding that there was evidence that plaintiff knew defendant's ability to undertake construction turned upon the availability of loan funds, and the risk that a loan might not be obtained was a risk that was clearly anticipated.
- Defendant did not represent that funds had been obtained, and plaintiff knew that funds had not been obtained but chose to proceed with his work on the project anyway.
The court affirmed the judgment in favor of defendant developer because there was evidence that plaintiff architect knew that defendant's ability to pay him depended on the availability of loan funds, and it was a clear risk that a loan might not be obtained. The court also held that plaintiff chose to continue his work even though he knew there were no loan proceeds.
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