Ceco Corp. v. Plaza Point, Inc.

• Decision Date: 30 October 1978
• Docket Number: No. KCD,KCD
• Citation: Ceco Corp. v. Plaza Point, Inc., 573 S.W.2d 92 (Mo. App. 1978)
• Parties: The CECO CORPORATION et al., Plaintiffs, v. PLAZA POINT, INC., et al., and Argonaut Insurance Company et al., Defendants-Respondents, and Premier Stove Company, Intervenor-Appellant. 29471.
• Court: Missouri Court of Appeals

Page 92

573 S.W.2d 92

The CECO CORPORATION et al., Plaintiffs, v.PLAZA POINT, INC., et al., and Argonaut Insurance Company et al., Defendants-Respondents and Premier Stove Company, Intervenor-Appellant.

No. KCD 29471.

Missouri Court of Appeals, Kansas City District.

Oct. 30, 1978.

Walter K. Disney, Kansas City, for intervenor-appellant.

F. Philip Kirwan, Kansas City (of counsel, Margolin & Kirwan, Kansas City, for respondent, Argonaut Ins. Co.

Before SOMERVILLE, P. J., and DIXON and TURNAGE, JJ.

DIXON, Judge.

This complex litigation arising from claims for payment and liens on a large apartment building has narrowed to a single claim by Premier Stove as a supplier of stoves for the project against defendant Argonaut as the bondsman on a payment bond.

The sole issue raised by appellant from an adverse judgment of the trial court is that the trial court erred as a matter of law in finding appellant's claim not covered by the payment bond.

For understanding of the issue posed, some extensive recitation of the facts is necessary.Plaza Point, Inc. is a Missouri corporation which was formed to build a high-rise apartment building in Kansas City.Mel Kleb was the sole owner of Plaza Point.On December 1, 1969, Plaza Point entered into a joint venture with J. R. Seal-Wells Construction Company to construct the building as an "FHA" project.The joint venture was called "Seal and Point."The apartments would be owned by Plaza Point, and all of the documents refer to Plaza Point as owner.

On June 10, 1970, Plaza Point as owner entered into a contract with Seal and Point as contractors to secure the construction of the apartment building.On the same day, Seal and Point executed a payment and a performance bond through Argonaut Insurance Company relating to this project.The payment bond refers to Seal and Point as the principal, Plaza Point as owner, and Argonaut as the surety.

The terms of the payment bond were that Argonaut would make payments to claimants under the bond if Seal and Point failed to do so provided certain conditions of the bond were met.To qualify as a claimant under the bond, one needed to have a "direct contract with the principal or with a subcontractor of the Principal for labor, material or both . . ."

The record indicates that as early as August of 1970, J. R. Seal-Wells was experiencing financial difficulties.In July of 1971, Plaza Point notified Argonaut of Seal-Wells' default and of their intention to complete the project alone.From the record, it is not entirely clear at what point between these two dates that Plaza Point totally took over the project.The record reveals no participation by J. R. Seal-Wells after August of 1970.

Plaza Point contracted with Premier Stove on April 9, 1971 for the purchase of 99 stoves to be used in the apartment building.All of appellant's contact in relation to this contract was through Plaza Point.The order for the stoves denominated Plaza Point as the buyer and required shipment and charges directed to Plaza Point.Appellant's subsequent lien statement and all correspondence relating to the stoves was with reference to Plaza Point.Appellant received a note dated April 27, 1972 for the purchase price from Plaza Point, Inc., which was guaranteed by Kleb.The liability of Plaza Point and Kleb is not here in issue; the trial court noted that such liability would be the subject of separate litigation.

It is well settled that the right of a supplier of materials or of labor to recover under a contractor's bond is one based on the contractual concept of a third-party beneficiary.Before a supplier is found to be a third-party beneficiary, it must be shown that the surety contract was entered...