George W. Ultch Lumber Co. v. Hall Plastering, Inc.

• Decision Date: 13 September 1979
• Docket Number: Civ. A. No. 75CV480-W-B.
• Citation: 477 F. Supp. 1060
• Parties: The GEORGE W. ULTCH LUMBER COMPANY, Plaintiff, v. HALL PLASTERING, INC., and Mid-Continent National Bank, Defendants, United States of America, Intervening Defendant and Claimant.
• Court: U.S. District Court — Western District of Missouri

477 F. Supp. 1060

The GEORGE W. ULTCH LUMBER COMPANY, Plaintiff, v. HALL PLASTERING, INC., and Mid-Continent National Bank, Defendants United States of America, Intervening Defendant and Claimant.

Civ. A. No. 75CV480-W-B.

United States District Court, W. D. Missouri, W. D.

September 13, 1979.

COPYRIGHT MATERIAL OMITTED

Stanford C. Madden, Kansas City, Mo., for defendant Hall Plastering, Inc.

Thomas A. Schwindt, Berman, DeLeve, Kuchan & Chapman, Kansas City, Mo., for defendant Mid-Continent Nat. Bank.

E. Eugene Harrison, Asst. U. S. Atty., Kansas City, Mo., for intervening defendant and claimant United States of America.

FINDINGS OF FACT, CONCLUSIONS OF LAW, ORDER GRANTING MOTION OF UNITED STATES AND DENYING MOTION OF MID-CONTINENT NATIONAL BANK FOR SUMMARY JUDGMENT, AND ORDER DENYING MOTION OF STANFORD C. MADDEN FOR AN ATTORNEY'S LIEN

WILLIAM H. BECKER, Senior District Judge.

INTRODUCTION

In this case the United States of America (United States), claiming to be a holder of a federal tax lien, and Mid-Continent National Bank (Bank), claiming to be an assignee of a contract right, have conflicting claims to a fund consisting of $6,141.94 deposited in the registry of this Court for ultimate distribution by judgment of this Court. In addition, Stanford C. Madden (Madden), counsel for Hall Plastering, Inc. (Hall), claims an attorney's lien against the fund.

The United States and Bank have each filed a motion for summary judgment. The parties agree to the material facts. Only questions of law, to be decided by this Court, remain.

DECISIONS

For reasons stated hereinafter, the motion of the United States for summary judgment will be granted; the motion of Bank for summary judgment and the motion of Madden for an attorney's lien will be denied.

PRELIMINARY FINDINGS OF FACT

This interpleader action is one of a series of actions begun in the Circuit Court of Jackson County, Missouri. The United States, intervening defendant in this action, removed this interpleader action to this Court as related hereinafter. The claim of the United States is based on recorded assessments for unpaid federal taxes for the years 1968 and 1969 described hereinafter. The only parties now remaining in this action are the United States, Bank, Hall and Hall's attorney, Madden.

The original state court action was entitled The Geo. W. Ultch Lumber Company v. Jesse C. Hastings Construction Company, Hall Plastering, Inc. and United States Fidelity and Guaranty Company, civil action No. 744431 in the Circuit Court of Jackson County, Missouri. In this state court civil action the plaintiff The Geo. W. Ultch Lumber Company (Ultch) sought relief because of the failure of Hall to pay for materials sold and delivered to Hall by the plaintiff Ultch, one of the materialmen of Hall. Later, this state court civil action No. 744431 was consolidated with a second state court civil action entitled Mid-Continent National Bank v. Hall Plastering, Inc., William and Sharon Hall, Harry and Madge Taylor, and Jesse C. Hastings Construction Company, civil action No. 736898, in the Circuit Court of Jackson County, Missouri, in which on February 14, 1972, the state court entered judgment for Bank and against Hall for damages in the amount of $20,223.89, which represented the unpaid amount of the loan by Bank to Hall. In state court civil action No. 736898 Bank recovered liquidated damages of $20,223.89 because Hastings Construction Company (Hastings) had failed to make the agreed payments to Bank in accordance with a loan agreement made by Hall and Bank and an assignment by Hall to Bank, described hereinafter (Stipulation, ¶¶ 20, 21; Cross Claim of Bank, ¶ 8). That judgment for damages in favor of Bank against Hall remains unsatisfied.

The United States intervened in state court civil action No. 744431, described above, and removed that action to this Court under §§ 1441, 1444, and 1446(b), Title 28, United States Code. This Court granted Bank leave to intervene in the removed action, dismissed the petition (complaint) of the plaintiff Ultch, and by interlocutory judgment discharged defendants Hastings and its surety United States Fidelity and Guaranty Company (U.S.F. & G.). Prior to its discharge Hastings paid into the registry of this Court $6,141.94, which is the fund presently claimed by the United States and Bank and the subject of the attorney's lien claim of Madden.

STIPULATED ADDITIONAL FACTS AND MOTIONS FOR SUMMARY JUDGMENT

The United States, Bank, Hall and Madden agree to the following material facts.

On May 27, 1968, Hastings entered into a contract with Northgate Theaters, Inc. (Stipulation, ¶ 1). In this contract Hastings agreed to make "alterations and additions" to the Towne Theatre, 1114 Main Street, Kansas City, Missouri (Stipulation, ¶¶ 1, 2). U.S.F. & G. was the surety on the performance bond of Hastings covering the Towne Theatre project. On June 12, 1968, Hall entered into a subcontract with Hastings to do plastering work at the Towne Theatre (Stipulation, ¶ 3). Specifically, Hall agreed to construct the following: drywall partitions, soundboard, insulation, rigid board insulation, suspended gypsum ceilings and sprayed-on acoustical finish. As stated above, on August 28, 1968, Hall obtained a loan from Bank and assigned to Bank, "its successors and assigns, to its and their own proper use and benefit all the Assignor's right, title and interest in and to all monies due or to become due from Hastings Construction Company under a certain contract dated June 12, 1968 between the Hall Plastering, Inc. and the said Hastings Construction Co. . . ." (Stipulation, ¶¶ 5, 6). On the same day, Bank gave Hastings written notice of the assignment, and Hastings acknowledged in writing the assignment (Stipulation, ¶¶ 7, 8). A financing statement concerning the assignment, however, was never filed of record (Stipulation, ¶ 9).

Hall failed to pay Federal Insurance Contribution Act (F.I.C.A.) and Federal Unemployment Tax Act (F.U.T.A.) taxes, owed by Hall, for the years 1968 and 1969. The Internal Revenue Service (IRS) made assessments for these unpaid taxes against Hall in 1969 and 1970. From November 3, 1969 to August 7, 1970, the IRS filed with the Recorder of Deeds of Jackson County, Missouri, notices of federal tax liens against Hall totalling $37,611.68 for the unpaid F.I. C.A. and F.U.T.A. taxes (Stipulation, ¶¶ 10-18). On January 3, 1976, the United States refiled notices of these federal tax liens with the Recorder of Deeds of Jackson County, Missouri (Stipulation, ¶ 19).

On April 27, 1977, a "Motion of the United States of America for Summary Judgment" was filed in this Court. A "Motion of Mid-Continent National Bank for Summary Judgment" was filed in this Court on May 11, 1977. Hall, Bank, the United States and Madden filed a "Stipulation of Facts" on March 24, 1977, and a "Stipulation" on June 30, 1977. The latter "Stipulation" states that all claims to the fund are submitted for the decision of this Court upon the following: (1) claims of Bank, the United States, Hall and Madden; (2) the "Stipulation of Facts"; and (3) motions for summary judgment filed by Bank and the United States. On September 7, 1978, this Court requested the following additional information from the remaining parties:

1. The dollar amount of all of Hall's "accounts," as defined in § 400.9-106, RSMo, outstanding on August 28, 1968, and the maximum and minimum of such accounts of Hall during each month in 1968 from January to and including August, 1968;

2. The dollar amount of all of Hall's "contract rights," as defined in § 400.9-106, RSMo, outstanding on August 28, 1968, and the maximum and minimum of such contract rights of Hall during each month in 1968 from January to and including August, 1968;

3. (a) The dollar amount payable to Hall as subcontractor for full performance of the subcontract entered into by Hall and Hastings on June 12, 1968, and

(b) the total dollar amount actually paid to Hall for performance of said subcontract;

4. The dollar amount of all of Hall's "accounts" outstanding on August 28, 1968, assigned to Bank, excluding the assignment of August 28, 1968, and the maximum and minimum of accounts assigned by Hall to Bank during each month in 1968 from January to and including August, 1968;

5. The dollar amount of all of Hall's "contract rights" outstanding on August 28, 1968, assigned to Bank, excluding the assignment of August 28, 1968, and the maximum and minimum of contract rights assigned by Hall to Bank during each month in 1968 from January to and including August, 1968; and

6. The dollar amount of all loans made by Bank from January 1 to August 31, 1968, computed on either a monthly or quarterly or total basis.

The material additional information provided in response to the request of the Court is discussed hereinafter.

MOTIONS FOR SUMMARY JUDGMENT

I. THE ASSIGNMENT OF THE CONTRACT RIGHT BY HALL TO BANK IS SUBJECT TO ARTICLE 9, "UNIFORM COMMERCIAL CODE—SECURED TRANSACTIONS," §§ 400.9-101 et seq., RSMo

Missouri law is the applicable state law in this action. The Uniform Commercial Code, as enacted in Missouri, is found in Chapter 400, RSMo. With certain exceptions, Article 9 thereof, supra, applies to any transaction which is intended to create a security interest¹ in personal property, including accounts² or contract rights,³ and to any sale of accounts or contract rights. § 400.9-102(1)(a), (b), RSMo. Article 9 applies to security interests created by contract including assignment. § 400.9-102(2), RSMo. The Uniform Commercial Code Comment to § 9-106 (§ 400.9-106, RSMo) explains that an "account" is "a right earned by performance, whether or not due and payable, the ordinary commercial account receivable." A "contract right" is described as "a right to be earned by future performance under an existing contract." Because Hall did not complete the work it had agreed to perform for Hastings in the subcontract dated June 12,...