Glasco Elec. Co. v. Best Elec. Co.

• Decision Date: 03 May 1988
• Docket Number: 52138,Nos. 52107,s. 52107
• Citation: 751 S.W.2d 104
• Parties: GLASCO ELECTRIC COMPANY, Plaintiff/Respondent/Cross-appellant, v. BEST ELECTRIC COMPANY, et al., Defendants/Appellants/Cross-respondents.
• Court: Missouri Court of Appeals

Page 104

751 S.W.2d 104

GLASCO ELECTRIC COMPANY, Plaintiff/Respondent/Cross-appellant, v. BEST ELECTRIC COMPANY, et al Defendants/Appellants/Cross-respondents.

Nos. 52107, 52138.

Missouri Court of Appeals,

Eastern District,

Division Four.

May 3, 1988.

Garry Seltzer, Murphy and Seltzer, St. Louis, for plaintiff/respondent, cross-appellant.

Weier, Hockensmith & Sherby, Dana Hockensmith, Hillsboro, for defendants/appellants, cross-respondents.

SIMON, Presiding Judge.

Defendants, Westview Health Care Associates (hereafter the "Company"), Lee F. Sutliffe, Westview Center, Inc. (hereafter "Westview"), Midwest Capital Corp., the Industrial Development Authority of Jefferson County (hereafter the "Authority"), and Michael C. O'Flaherty, appeal from a judgment and decree entered by the Circuit Court of Jefferson County, Missouri, encumbering property owned by the Company with a mechanic's lien in the amount of $24,563.65. Plaintiff, Glasco Electric Company (hereafter "Glasco"), cross-appeals from the trial court's refusal to declare that said mechanic's lien be given priority over the deed of trust securing the construction loan.

On April 15, 1983, the Company entered into a construction contract with Essex Contracting Inc. (hereafter "Essex"), for the construction of a nursing home known as the Westview Nursing Center (hereafter the "Westview project"). Essex, as general contractor, subcontracted with Best Electric Company (hereafter "Best"), for the electrical work on the project.

The Company had obtained financing for the Project from the Authority through an offering and sale of $3,975,000 in Nursing Home Revenue Bonds. The loan from the Authority is secured by a document styled "Deed of Trust, Mortgage and Security Agreement." It was executed on April 1, 1983, and recorded in the Office of the Recorder of Deeds for Jefferson County, Missouri, on May 6, 1983. On April 1, 1983, the Authority entered into a separate indenture of trust with Mercantile Trust Company, N.A., (hereafter "Mercantile") in order to secure the payment of the bond issue.

On June 18, 1984, Glasco served written notice of its intention to file a mechanic's lien on the Company and its general partners, Lee F. Sutliffe, Westview, and Midwest Capital Corp., by certified mail. Glasco's verified mechanic's lien statement was recorded in the office of the Circuit Clerk of Jefferson County on June 29, 1984. Glasco's lien statement consists of a mechanic's lien form, together with 78 exhibits made up of photocopies of Glasco's unpaid invoices to Best (hereafter referred to as the invoices). The total amount claimed to be due under the account set forth on the lien is $24,563.65. The lien recites that the first item of said account was furnished on or about January 31, 1984, and the last date the materials were furnished was May 7, 1984. However, the invoices attached to the lien statement begin January 4, 1984, and the testimony of Dennis Karius, credit manager for Glasco, shows that invoices No. 1 through No. 39 were dated prior to January 31, 1984. Karius testified, however, that Glasco is claiming a lien on the items listed in invoices No. 1 through No. 39, and that the correct dates are the invoice dates.

On August 9, 1984, Glasco filed a twelve count petition seeking to enforce its mechanic's lien for materials supplied, to recover for goods sold to Best, and to recover on a promissory note executed by Larry Best, president of Best Electric Company, and his wife, Ruth Best. Glasco's petition was amended on December 6, 1984, and Count XIII was added seeking to recover for goods sold to Best. Counts II through XI also contained claims against Best for various items sold on different accounts. Count I contained the mechanic's lien claim and Count XII contained the claim on the aforementioned promissory note. By the time of trial, the trial court had entered partial summary judgment on Counts II through XI and on Count XIII, in favor of Glasco and against Best. No appeal has been taken therefrom. On April 9 and 10, 1986, trial was had before the Circuit Court of Jefferson County on Counts I and XII. Judgment was entered in favor of Glasco on both Counts. The instant appeal and cross-appeal concerns only Count I, as Larry and Ruth Best have not appealed the individual judgment against them on Count XII.

The Authority and Michael C. O'Flaherty were joined in the action to impress the mechanic's lien. O'Flaherty served as the trustee under the "Deed of Trust, Mortgage and Security Agreement," given by the Company to the Authority. However, Mercantile Trust Company, N.A., serving as "corporate trustee" under the separate indenture of trust securing the bond issue, was not made a party to the action. In February, 1985, Glasco moved to join Mercantile as a defendant, but said motion was later withdrawn and Mercantile was purportedly dismissed as a party defendant. Glasco also filed a brief with the trial court in February, 1985, admitting that an encumbrancer not joined, in this case Mercantile, would not be bound by the proceedings.

An issue at trial involved the sufficiency of the description of the materials supplied by Glasco, as set forth in the account contained in the lien by the 78 invoices. Ed Kasten, Glasco's branch manager, was able to identify various trade terms and references that appeared on certain invoices. He explained the meaning of abbreviations used in the electrical industry that appeared on certain invoices, and he testified that he was familiar with most of the descriptions provided on the invoices attached to the mechanic's lien. For example, he testified that the item description "1 TW CONDUIT--EMT," contained in invoice number 17, referred to a one inch thin, three wall conduit made of metal tubing. He testified that the item description "LEV 5821-1 8W IV SQL RCPT," contained in invoice number 40, referred to a duplex ivory receptacle. Kasten testified that most of the item descriptions contained in the invoices are designed for persons in the electrical industry and that the items described in the invoices were of a type that would be used in the Westview project. Kasten testified further that Best had never protested that materials ordered from Glasco were not received.

Robert Mayberry, an employee of Davis Electric Co. which contracted to supply labor to Best on the Westview project, and an electrician for 23 years, testified that there were a good number of items listed on the invoices that he could not identify. Mayberry testified, however, that as foreman for Davis Electric, he had no doubts that all of the materials furnished by Glasco were actually installed in the Westview project.

Dennis Karius, credit manager for Glasco, specifically reviewed eleven of the invoices attached to the mechanic's lien and testified that eight were either partially or completely illegible.

Robert Church, the electrical estimator responsible for bidding on jobs for Best, testified that Glasco was its majority supplier of electrical materials for the project. Church testified that his responsibilities on the project included ordering major items for the job, as well as making on-site inspections. Church testified that there was never a time when material ordered from Glasco was not received and that there was never an occasion when material ordered from Glasco, designated for use in the project, was used in a project other than Westview. Church testified that it was his responsibility to insure that the materials ordered from Glasco were used at the Westview project and that to the best of his knowledge, all of the materials described in the invoices were actually installed in the Westview project. Church also testified that the prices he had been quoted by Glasco seemed fair and reasonable.

Testimony showed that Best and Glasco had been doing business since approximately 1968, and that Best had several running accounts with Glasco, including an account on a personal obligation, in the form of a promissory note signed by Larry Best and his wife, Ruth Best.

The materials supplied to Best by Glasco for use in the Westview project were paid for by Best until December, 1983, or January, 1984. JoAnn Gill, a "cash applicator" at Glasco responsible for crediting payments received to open accounts, identified defendants' Exhibits A, B and C at trial. Defendants' Exhibit A is a check dated 12/28/83 from Best to Glasco in the amount of $28,069.29. According to Ms. Gill, no remittance instructions, regarding application of the payment, were received with the check, so it was applied in proportion to all Best accounts, including Westview, bringing all accounts current to November, 1983. Ms. Gill testified that when payment was received without written directions as to application on multiple accounts, company policy was to call the debtor for instructions. She also testified that if instructions were not forthcoming, the payment would be applied to the oldest invoices outstanding.

Defendants' Exhibit B is a check dated 2/9/84 from Best to Glasco in the amount of $20,204.09. Ms. Gill testified that there was application advice attached to this check indicating that five accounts other than Westview were to be credited. Ms. Gill testified that this check was applied to accounts other than Westview. Defendants' Exhibit C is a check dated 2/24/84 from Best to Glasco in the amount of $9,298.60. Ms. Gill testified that no application advice was received with this check. The payment was credited to various accounts, including Westview, paying invoices from December 1, 1983 through December 29, 1983.

Larry Best testified that he had received full payment from Essex for all the material purchased from Glasco and used in the Westview project. Larry Best testified that with respect to defendants' Exhibit A (a $28,069.29 check) he spoke with Dennis Karius about the application of the payment and instructed Karius to apply the payment to the...