Electric Supply Co. v. U.S. Fidelity & Guaranty Co.

• Decision Date: 13 January 1969
• Docket Number: No. 8628,8628
• Parties: ELECTRIC SUPPLY CO., Inc., a New Mexico corporation, Plaintiff- Appellant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, a Maryland corporation, and Robert Lockwood, d/b/a Lockwood Construction Company, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 324

449 P.2d 324

79 N.M. 722

ELECTRIC SUPPLY CO., Inc., a New Mexico corporation, Plaintiff- Appellant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, a Maryland

corporation, and Robert Lockwood, d/b/a Lockwood

Construction Company, Defendants-Appellees.

No. 8628.

Supreme Court of New Mexico.

Jan. 13, 1969.

Robinson & Ortega, Albuquerque, for appellant

Montgomery, Federici, Andrews, Hannahs & Morris, Santa Fe, for appellee United States Fidelity & Guaranty Co.

McKenna, Sommer & Lawler, Santa Fe, for appellee Robert Lockwood.

OPINION

CARMODY, Justice.

In this action, plaintiff sought to recover damages by reason of the failure to pay for certain electrical materials. The trial court granted summary judgments in favor of both the individual defendant and the defendant surety company.

The case is an outgrowth of an extremely involved series of transactions relating to the construction of a sizable apartment unit project in Santa Fe known as La Casa Loma Apartments. While it is not necessary to detail all of the many ramifications, the following is necessary to convey a proper understanding of the present litigation.

Originally, defendant Lockwood and one Hatch entered into a contract for the construction of the apartments. A few days later, the base contract was apparently amended, purporting to make Lockwood the agent rather than a general contractor. Subcontracts were entered into, and United States Fidelity & Guaranty Company executed a performance bond for the base contract and another bond relating to the electrical subcontract. Many firms were not paid for labor or material, including the plaintiff which furnished materials to subcontractor Grimes-Morris, Inc., also known as the Grimes-Morris Elect. Contractors. This latter company went bankrupt, and plaintiff sued to recover from the alleged contractor and the surety. Prior to the filing of this case, the holder of the construction loan commenced an action to foreclose its mortgage. After the instant case was at issue, efforts were made to salvage the project and suspend the mortgage loan foreclosure. A memorandum of agreement was executed on January 2, 1967, for the purpose of forming a limited partnership between the holder of the construction loan, Hatch, defendant Lockwood, and the various suppliers of labor and materials who had not been paid. This agreement and the subsequent certificate of formation of the limited partnership were executed by all parties concerned, including the plaintiff, except Grimes-Morris. Briefly, the memorandum discloses that there was a deficiency in expense of building the apartments amounting to some $445,000.00 over and above the initial loan of $1,340,000.00. The agreement then stated:

'WHEREAS, the parties hereto, for the purpose of consummating this transaction, closing the loan, and securing the insurance of the Federal Housing Administration, desire to settle any and all claims against each other; * * *.'

and

'2. The creditors of Hatch shall own 40% of the general partnership and their undivided ownership is set out in Schedule B along with their contribution. Each creditor's contribution is hereby made in consideration of their release of all claims and their liens to subject property. Attachment C hereto is a lien release to be effective with the final formation of the limited partnership.'

The agreement then provided that the holder of the construction loan would receive 58% ownership in the apartment complex, Hatch would receive 2%, and the creditors 40% divided among them depending on the amount owed to each one. Plaintiff, whose suit was for approximately $2,600.00, was to receive 0.76%. As stated, the agreement was duly signed by all except Grimes-Morris, presumably because it had gone bankrupt. Another unexplained error now appears, viz., that the various percentages allocated to the creditors did not total 40%, but actually only totaled 35.6%, thereby leaving unallocated the other 4.4% interest in the partnership. As to this, the plaintiff now contends that, there not having been a proper disposition of the entire 40%, a partnership never truly came into existence. This argument is, however, incidental to the basic dispute involved in the entire case, which resolves itself into the question as to whether the memorandum of agreement and the instrument of partnership clearly and unambiguously show that the plaintiff and lienholder for materials supplied and used in the apartments secured an interest in the land and the improvements constituting the Casa Loma Apartments in exchange for whatever rights the plaintiff had against Lockwood and the surety.

The trial court, in ruling upon the motions for summary judgment, determined, in effect, that there was an accord and satisfaction, and plaintiff's claim was therefore barred. Although other questions are raised by the plaintiff, our determination of the correctness of the court's ruling as to the claimed accord and satisfaction is determinative. In this connection, the plaintiff urges, on three separate grounds, that the granting of the summary judgment was improper. The first of these is that the trial court could not even consider a defense of accord and satisfaction, because the defendants had not alleged the same in any supplemental pleading.

The answer to this argument can be best understood when the sequence of events in the record is related: Lockwood filed his answer on August 9, 1966, and United States Fidelity and Guaranty Company's answer was originally filed on August 4, 1966, and an amended answer on November 30, 1966. On January 2, 1967, the memorandum agreement was executed by the people concerned, including the plaintiff. What is termed 'Withdrawal of Claim of Lien and Release of Lien' was executed by plaintiff on January 16th. Formal execution of the partnership contract itself took place on February 28th. The record does not disclose any further occurrences until September 13, 1967, when United States Fidelity and Guaranty Company filed its motion for summary judgment. This was followed by Lockwood's companion motion on September 18th. The summary judgment itself was entered on December 8, 1967.

Plaintiffs strongly rely on Chavez v. Kitsch, 70 N.M. 439, 374 P.2d 497 (1962), which held that the failure to plead the defense of the statute of limitations amounted to a waiver under Rule 12(h) (§ 21--1--1(12)(h), N.M.S.A.1953), and that the trial court erred in considering the same as long as the pleadings had not been amended. However, the instant case is not at all like Kitsch, because here the only possible claim of a waiver must be based upon failure to apply to the court to file a supplemental answer. Rule 15(d) (§ 21--1--1(15)(d), N.M.S.A.1953) has to do with supplemental pleadings, and we see nothing therein that would require the parties in this case to have applied to the court to file such a pleading, or that, failing to do so, the right to rely upon happenings since the date of the answers would be waived. Rule 12(h) (§ 21--1--1(12)(h), N.M.S.A.1953) does not contemplate a waiver under these circumstances. In addition, supplemental pleadings and amended pleadings are different in that a supplemental pleading relates to facts which arose after the original pleading was filed, whereas an amended pleading includes matters that occurred before. See, 1A Barron & Holtzoff, Federal Practice and Procedure (Rules Ed., 1960), §§ 441 and 455. There is no question but that an amendment, if properly requested, could have been allowed under Rule 15(d), supra. In any event, the motions for summary judgment were fully controverted in the trial court, as well as here; there was no surprise and no prejudice, as such, has been urged by the plaintiff. Compare, Harvey v. Bokum, 70 N.M. 444, 374 P.2d 500 (1962); see, Hayes v....