439 F.2d 1260 (8th Cir. 1971), 20198, Ted Spangenberg Co. v. Peoples Natural Gas, Division of Northern Natural Gas Co.

Docket Nº:20198.
Citation:439 F.2d 1260
Case Date:March 23, 1971
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 1260

439 F.2d 1260 (8th Cir. 1971)

TED SPANGENBERG CO., Inc., Appellant,



No. 20198.

United States Court of Appeals, Eighth Circuit.

March 23, 1971

Page 1261

Raymond E. Pogge, Pogge, root & Steege, Council Bluffs, Iowa, for appellant.

Frank W. Pechacek, Jr., Council Bluffs, Iowa, Philip J. Willson, Council Bluffs, Iowa, T. N. Wright, Omaha, Neb., for defendant-appellee.

Before VAN OOSTERHOUT and BRIGHT, Circuit Judges, and NEVILLE, district judge.

NEVILLE, District Judge.

Appellant here, plaintiff below, asserts that the trial court in a non jury diversity case, erred in its findings of fact and conclusions of law which resulted in an order of judgment for defendant, 305 F.Supp. 1129. After a careful review of the record and the briefs of counsel, we find no error and we affirm. A somewhat detailed recital of the facts is necessary to an understanding of the issues raised.

Plaintiff-Appellant, an Oklahoma corporation engaged in the business of installing heating and air-conditioning equipment, seeks a recovery of $12,966.94 from the defendant Peoples Natural Gas, Division of Northern Natural Gas Company (Peoples), an Iowa corporation engaged primarily in the business of supplying natural gas, for the installation of gas fueled heating and air-conditioning equipment in an apartment building constructed by one Cecil R. Sullivan (not a party to this action) in Council Bluffs, Iowa.

The well written memorandum opinion of Honorable William C. Hanson, the trial judge, sets forth the evidence at some length, much of which is undisputed. Spangenberg the president and major shareholder of plaintiff testified that on previous occasions he successfully had completed installation projects for Sullivan, and that the two of them were close friends. In November or December of 1965, Spangenberg orally agreed with Sullivan for a price of $25,000 to install the temperature control system in Sullivan's Council Bluffs apartment house construction project. It had been Sullivan's original intent to install gas fueled heating equipment with an electric air conditioning system. Spangenberg commenced work under this agreement in February of 1966, and on March 9 received part payment in the amount of $9,125.

The following month, Sullivan was approached by Peoples, the projected fuel supplier for the gas equipment, with a suggestion that he change his planned air conditioning component from electricity to gas fuel, contending for the advantages of a unitary gas system-- i.e., lower fuel and maintenance costs--despite an original cost increase of $6,000. Apparently from the outset, Sullivan and Peoples discussed the possibility that Peoples might finance the installation of a completely gas fueled system.

During the course of its negotiations with Sullivan Peoples' representatives were in contact with Spangenberg. Confusion surrounds the frequency and content of these discussions, there being no documentary evidence recording exactly what transpired. It is clear that sometime prior to April 22, Spangenberg attended a meeting with a Mr. Max Williams, representing Peoples, and a Mr. Fred Grasso, representing Engineered Equipment Company, the distributor of the gas air conditioning equipment which ultimately was installed. Another meeting of the parties was held in Tulsa, Oklahoma circa June 8, 1966 which was attended by a Mr. Duane Townsend the representative of Peoples and the one with whom plaintiff had the most contact.

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It does not appear that any work directly attributable to the installation of the gas air conditioning system was undertaken prior to June 11, 1966. Work however had progressed by that time under the original agreement between Spangenberg and Sullivan. The duct and grill work done by L. A. King and Spangenberg was completed in April, 1969. The work done by Nelson Heating and Air Conditioning was finished and paid for by April 3, 1966. The piping installation work done by Armstrong Cork and Supply Co. and Spangenberg was largely completed by June 1, 1966. On June 10, 1966 Spangenberg received a second part payment from Sullivan in the amount of $7,500. 1

At about this time, Peoples and Sullivan reached a preliminary agreement regarding the financing of the installation of a unitary gas system. The intentions of the parties at that stage and the conditions thereof are expressed in a letter from Peoples to Sullivan dated June 8, 1966. 2

On June 11, Spangenberg received specifications regarding the installation of the two Arkla chiller units to be used in the gas air conditioning system from the manufacturer's representative Engineered Equipment Company. On June 14 and 15, Peoples ordered the above mentioned equipment in its own name, although delivery and payment were not made until August 10, 1966. Spangenberg was requested by Peoples to produce his own drawings relating to installation of the gas equipment, and to supply Peoples with a list of his materials, suppliers, and sub-contractors. Spangenberg submitted a second revised list of labor and materials to Peoples on July 29, 1966, in which the total price for installation is stated to be $40,864. The cost increase over the $25,000 estimate in Spangenberg's original agreement with Sullivan is due in part to the changeover from electric to gas air conditioning, but further reflects the addition of 4 basement apartments and additional heating for other basement apartments and additional heating for other basement and hallway areas. In the latter part of August, 1966, Peoples requested and received confirmation of Spangenberg's revised charges from several of his subcontractors.

Spangenberg testified that at the time he submitted the lists of labor and materials

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he made inquiry to Mr. Townsend regarding the financing of the project. There is substantial dispute as to the nature of the oral representations made by Mr. Townsend but on August 4, 1966, Spangenberg received a letter from Peoples containing a written expression of Peoples' intent. 3 At the time of the receipt of this letter or within a few days thereafter all but $90 of the work to be performed by Spangenberg had been completed. 4

On October 17, 1966 after the gas facilities had been installed and tested, Peoples and Sullivan entered into formal agreements which the trial court found in effect crystallized these parties' intentions as originally expressed in the June 8, 1966 letter. At this time four instruments were executed by Peoples and Sullivan: an agreement, a promissory note, a security agreement and a gas sales contract. The agreement, which contains Peoples undertaking with regard to financing, makes Peoples' liability contingent upon Sullivan's obtaining certain disclaimers. 5

First Federal Savings and Loan Association of Council Bluffs, Iowa, the primary lending institution and holder of Sullivan's $450,000 note and mortgage on the apartment house, refused after the execution of the October 17th agreement to execute the desired disclaimer and in fact in the late fall of 1966 began...

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