Davis Erection Co., Inc. v. Jorgensen
| Citation | 534 N.W.2d 746,248 Neb. 297 |
| Decision Date | 30 June 1995 |
| Docket Number | No. S-93-1073,S-93-1073 |
| Parties | DAVIS ERECTION CO., Inc., a Nebraska corporation, Appellant, v. Dana JORGENSEN, doing business as Jorgensen Grading, Appellee, and Eriksen Construction Co., Inc., Garnishee-Appellee. |
| Court | Supreme Court of Nebraska |
Syllabus by the Court
1. Garnishment: Appeal and Error. Garnishment is a legal action; to the extent factual issues are involved, the findings of the fact finder will not be set aside on appeal unless clearly wrong; however, to the extent issues of law are presented, an appellate court has an obligation to reach independent conclusions irrespective of the determinations made by the court below.
2. Judgments: Debtors and Creditors: Garnishment. The claim of a judgment creditor garnishor against a garnishee can rise no higher than the claim of the garnishor's judgment debtor against the garnishee.
3. Garnishment: Liability: Service of Process: Time. A garnishee's liability is to be determined as of the time of the service of the summons in garnishment.
4. Garnishment: Liability: Service of Process: Time. In determining the liability of a garnishee to a garnishor, the test is whether, as of the time the summons in garnishment was served, the facts would support a recovery by the garnishor's judgment debtor against the garnishee.
5. Pleadings: Proof. The party who pleads a setoff bears the burden of proving it.
6. Pleadings: Claims. A counterclaim, setoff, or cross-petition, to be available as a matter of affirmative defense or affirmative relief, must be a claim upon which the defendant could, at the date of the commencement of the plaintiff's suit, have maintained an action on the defendant's part against the plaintiff.
7. Debtors and Creditors: Words and Phrases. A setoff is a debt for which an action might be maintained by the defendant against the plaintiff, that is, a debt for a certain specific pecuniary amount, recoverable in an action "ex contractu"; the claim must be such that at the date of the commencement of the plaintiff's suit, the defendant could have maintained an action against the plaintiff.
8. Debtors and Creditors: Intent. In order to exercise a right of setoff, there must first be an intent and decision to exercise the right to set off, a subsequent action which completes the setoff, and finally a record which verifies that the action has been taken.
Gregory C. Scaglione, of Koley, Jessen, Daubman & Rupiper, P.C., Omaha, for appellant.
No appearance for appellee.
Gregory P. Drew, Blair, for garnishee-appellee.
This garnishment proceeding arises out of the interplay of three construction contracts, one entered into by and between the judgment creditor and garnishor, plaintiff-appellant Davis Erection Co., Inc., and its judgment debtor, defendant-appellee Dana Jorgensen, doing business as Jorgensen Grading; another entered into by and between Jorgensen and the garnishee-appellee Eriksen Construction Co., Inc.; and still another entered into by and between Eriksen Construction and the County of Douglas. Determining that Eriksen Construction was not then indebted to Jorgensen, the district court in effect dismissed the within proceeding. Davis Erection thereupon appealed to the Nebraska Court of Appeals, urging, in summary, that in so ruling, the district court erroneously permitted Eriksen Construction to set off against its certain, liquidated, and mature indebtedness to Jorgensen the contingent, unliquidated, and immature claims Eriksen Construction asserts against Jorgensen. We, on our own motion, removed the matter to this court in order to regulate our caseload and that of the Court of Appeals. We now reverse the judgment of the district court and remand the cause for further proceedings.
Garnishment is a legal action; thus, to the extent factual issues are involved, the findings of the fact finder will not be set aside on appeal unless clearly wrong. See Action Heating & Air Cond. v. Petersen, 229 Neb. 796, 429 N.W.2d 1 (1988). However, to the extent issues of law are presented, we as an appellate court have an obligation to reach independent conclusions irrespective of the determinations made by the court below. See Sylvis v. Walling, 248 Neb. 168, 532 N.W.2d 312 (1995).
The county's contract with Eriksen Construction obligated the latter to remove a bridge and build a box culvert under a road. Eriksen Construction contracted part of its obligation to Jorgensen under a document which required Jorgensen to dig the ditch in which Eriksen Construction was to build the culvert, after which Jorgensen was to backfill the ditch with earth, regrade the slopes, build the road, and do other related work. In exchange, Eriksen Construction agreed to pay Jorgensen the "approximate amount of contract $65,064.35 ... [w]hen and as contract is paid by [the county] with 10% retained until project is accepted by" the county.
In September 1992, one of the slopes caved in during the course of Jorgensen's work and slid into the excavated area because of the presence of a live spring. Jorgensen advised Eriksen Construction by letter that the unforeseen excavation problem resulted because of the effect the abnormal amounts of precipitation had on the ground water and recommended that additional time and cost be expended to remedy the situation, which it characterized as serious because the walls continued to slide.
After Jorgensen found he could not excavate the cave-in, he contracted with Davis Erection to do so. Eriksen Construction then obtained the county's oral approval for extra compensation and later wrote the county that Jorgensen had secured a contractor to excavate the area and that in accordance with the county's verbal agreement, a claim for the costs incurred and time lost would be submitted.
Eriksen Construction thereafter billed the county $33,121.63 for the cave-in work, including charges made by Jorgensen in the sum of $1,400 and by Davis Erection in the amount of $13,637.
Following a series of negotiations, the county issued a change order on June 18, 1993, approving payment to Eriksen Construction of $25,967 for the cave-in work. In its view, the remaining portion of Eriksen Construction's claim represented charges for work contemplated by its original contract with the county. On July 6, 1993, the county drew a warrant directing its bank to issue a $25,967 check to Eriksen Construction. However, Eriksen Construction paid neither Jorgensen nor Davis Erection for the work they did in connection with the change order.
In the meantime, Jorgensen had written Eriksen Construction on June 17, 1993, that the latter's failure to pay and its failure to require the county to issue a change order constituted a breach of the contract between Jorgensen and Eriksen Construction and that Jorgensen would withdraw his equipment from the jobsite until the change order was executed and payment made.
That same day, Eriksen Construction wrote Jorgensen that all requests had been promptly presented to the county, that no one from Eriksen Construction had given verbal directives to perform extra work, and that Jorgensen had been paid all sums due to him to date. The letter further called Jorgensen's attention to the provision in their contract providing that " 'no extra work shall be allowed or changes made ... or paid for by [Eriksen Construction] unless and until authorized by [Eriksen Construction] in writing before the work and/or changes are begun.' " The letter also advised Jorgensen that their contract required him "to be on the jobsite with sufficient equipment and manpower to perform the balance of [the] contract...."
Negotiations between Eriksen Construction and Jorgensen apparently continued, for by letter dated June 18, 1993, Jorgensen advised Eriksen Construction that payment under the change order of $12,437 was acceptable, $11,987 for Davis Erection and $450 for Jorgensen.
Jorgensen testified that he decided not to leave the job, returned to the site, and proceeded to work when the weather permitted. However, on or about June 21, 1993, the owner of the backhoe which Jorgensen had leased terminated the arrangement. Jorgensen needed a backhoe but could not rent one. As a result, Eriksen Construction rented a backhoe for him. Eriksen Construction's witness testified that normally, an amount for the rental of the backhoe would be withheld from any payment due Jorgensen, but no written agreement regarding the matter was executed. However, Eriksen Construction estimated the total rental cost for the 5-week period Jorgensen kept it to be $9,000. In addition, there was a $3,467 charge for damages to the backhoe.
In the interim, on July 15, 1993, Davis Erection obtained a $15,137.79 default judgment against Jorgensen. Davis Erection thereafter caused issuance of its summons in garnishment, which Eriksen Construction received, along with the order of garnishment and garnishment interrogatories, on July 28, 1993.
During the evening of July 28, Eriksen Construction's president placed a telephone call to Jorgensen and asked why Eriksen Construction had been served with a garnishment summons. Jorgensen told the president that he could not continue on the job because of the weather, nonpayment under the change order, and "a multitude of things," including the garnishment. The president requested that Jorgensen put his intentions in a letter.
In a letter dated July 29, 1993, Jorgensen stated that he was not able to complete the remaining work because of the weather, untimely payment under the change order, financial problems, and the legal action instituted against him, and requested that he be released from the project. Eriksen Construction responded by letter that it would finish the work contemplated in their contract and charge Jorgensen for any costs...
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