Home Bldg. Corp. v. Ventura Corp.

• Decision Date: 24 July 1978
• Docket Number: No. 59980,59980
• Citation: 568 S.W.2d 769
• Parties: HOME BUILDING CORPORATION, Plaintiff and Cross-Appellant, v. The VENTURA CORPORATION, Michael J. Mason and Susan Mason, Statutory Trustees, Defendants, and The Housing Authority of the City of Nevada, Missouri, Defendant and Cross-Appellant.
• Court: Missouri Supreme Court

Page 769

568 S.W.2d 769

HOME BUILDING CORPORATION, Plaintiff and Cross-Appellant, v. The VENTURA CORPORATION, Michael J. Mason and Susan Mason Statutory Trustees, Defendants and The Housing Authority of the City of Nevada, Missouri Defendant and Cross-Appellant.

No. 59980.

Supreme Court of Missouri, En Banc.

July 24, 1978.

Gerald D. McBeth, Ewing, Ewing, Carter, McBeth & Smith, Nevada, for plaintiff and cross-appellant.

Donald G. Stubbs, Stubbs & Mann, P. C., Kansas City, for defendant and cross-appellant.

Ben R. Swank, Jr., Slagle & Bernard, Kansas City, for amicus curiae.

FINCH, Judge.

This is an action wherein Home Building Corporation (HBC) sought a judgment for the balance due on modular housing units furnished to The Ventura Corporation (Ventura), plus a mechanic's lien on the real property on which the housing units were erected. The trial court entered judgment against the statutory trustees of Ventura for $72,476.46 and impressed a mechanic's lien on the property for that sum. However, on the basis that the property had been sold by Ventura to The Housing Authority of the City of Nevada, Missouri (Authority), a municipal corporation created pursuant to Chapter 99, ¹ and that § 99.200 precludes enforcement of such liens against property owned by housing authorities, the court ordered the lien stayed so long as the real estate was owned by Authority. Both HBC and Authority appealed. We have jurisdiction because one of the defenses asserted by Authority is that Chapter 429, insofar as it deals with establishment of mechanic's liens, is unconstitutional because violative of the due process clauses of the fourteenth amendment of the United States Constitution and Article I, § 10, of the Missouri Constitution.

Authority was created by action of the Nevada City Council to be "a municipal corporation exercising public and essential governmental functions" with the overall purpose of providing safe and sanitary housing for persons of low income. In pursuance of that objective, it contracted on April 27, 1973, with Ventura to purchase from it a completed housing project on a "turnkey" basis. Ventura agreed to construct 70 dwelling units (as described in an exhibit to the contract) on unimproved real estate which it owned and to convey the property by general warranty deed to Authority following satisfactory completion of the project.

Thereafter, on September 27, 1973, Ventura entered into a contract whereby HBC was to provide modular housing units for the housing project. HBC substantially performed its obligations under the contract, completing its work thereon on March 29, 1974. A dispute arose over certain alleged construction defects and $72,476.46 of the contract price was withheld. On July 31, 1974, HBC filed its mechanic's lien statement and on January 21, 1975, filed this action to foreclose the lien.

At the outset we must decide two threshold questions involving HBC's right to maintain this action. The first question involves the dual issues of whether HBC was required to serve notice of its intention to file a lien statement and whether its statement was timely filed. The answers to both of these issues depend on whether HBC was an original contractor or a subcontractor within the meaning of Chapter 429. If, as Authority contends, HBC was a subcontractor, it was required to serve notice of its intention to file a lien statement in accordance with § 429.100 and it was required to file its lien statement within four months after the indebtedness accrued as provided in § 429.080. HBC served no notice on either Ventura or Authority and it filed its lien statement four months and two days after the date on which the indebtedness accrued. If, however, HBC was an original contractor, no notice was required and HBC had six months in which to file its lien statement.

Authority argues that the best evidence as to the relationship of the parties and the status of HBC is that the contract between Ventura and HBC referred to them as contractor and subcontractor respectively. That characterization is not necessarily determinative. Rather, we must look to the language of Chapter 429 and determine whether under its terms HBC was an original contractor. J. H. Magill Lumber Co. v. Carter, 17 S.W.2d 581 (Mo.App.1929). The question of what Chapter 429 means when it speaks of an original contractor was stated in Vasquez v. Village Center, Inc., 362 S.W.2d 588, 593 (Mo.1962), when the court said: "One who makes a contract to perform labor or furnish materials with the then owner of the property is an original contractor." In other words it is a person or firm which has contracted directly with the owner concerning what such contractor is to do.

HBC contracted directly with Ventura. Since Ventura was the record owner of the property and was exercising dominion over the the real estate at that time, this would appear to cause HBC to be an original contractor. However, Authority argues that when Ventura contracted with HBC it was not the owner of the property because it had contracted to sell to Authority, thereby making Authority the equitable owner. It follows under Vasquez, argues Authority, that HBC was not an original contractor. We disagree. It is true that Authority had become the equitable owner and it also is true that in Vasquez the court held that an equitable owner, exercising the rights of a proprietor in the land at the time a contract is made, may be the owner thereof for purposes of the mechanic's lien statute. It does not automatically follow, in the factual situation presented, that Ventura was not the owner of the property in question. Ventura, not Authority, was building the housing units. It was exercising dominion over the property when HBC contracted to furnish the modular housing units. Therefore, HBC was an original contractor and its lien statement, filed four months and two days after completion of its work, was timely filed. J. H. Magill Lumber Co. v. Carter, supra. ² It was not required to serve notice of an intention to file such a statement.

The second threshold issue involves the question of whether HBC commenced this action within six months after filing its lien statement as required by § 429.170. Authority recognizes that the suit actually was filed within the six month deadline but it claims that HBC did not commence the action as required by § 429.170 in that it did not join all indispensable parties within the six months. It points out that the corporate charter of Ventura, named and served as a party, had been forfeited on January 1, 1975, by the Secretary of State and that HBC should have named the statutory trustees of Ventura as necessary and proper parties defendant under § 351.525. Not having done so, says Authority, HBC did not comply with § 429.170 and the suit is barred.

The records in the office of the Secretary of State, if examined, would have disclosed the forfeiture of Ventura's charter. HBC was unaware of that development and named Ventura as a party defendant. Service was had on Ventura's registered agent. Thereafter, Ventura filed an answer in which it admitted its corporate existence. The pleadings of Authority did likewise. It was not until sometime later (September 1976) that HBC learned that Ventura's charter had been forfeited. It so advised the court and sought and was granted leave to amend and name the statutory trustees of Ventura as parties defendant. Thereafter, Authority filed a pleading denying, for the first time, the corporate existence of Ventura.

This issue is governed by Rule 55.33(c), V.A.M.R., which became effective September 1, 1973. It governs relation back of amendments changing the party against whom a claim is asserted. Three requirements for such relation back are stated.

The first requirement is that the claim or defense asserted against the new party must arise out of the conduct, transaction or occurrence set forth in the original pleading. Clearly, this requirement was satisfied. The claim against the statutory trustees is the same one asserted in the original petition against Ventura and is based on the transactions set forth in the original pleading.

The second requirement is that the party to be brought in by amendment must have received such notice of the institution of the action within the period provided by law for commencing the action against him that he will not be prejudiced in maintaining his defense on the merits. The statutory trustees in this instance were the officers of Ventura when its charter was forfeited. While there was no direct evidence offered at trial to show that they had notice of the suit when filed in January 1975, the record supports an inference that they did. It shows that the petition and summons were served on Ventura's registered agent and that thereafter a timely answer was filed by Ventura, admitting, among other things, its corporate existence. The filing of this answer was an act attributable to the officers of Ventura. There is no evidence to indicate that such inference is not reasonable or proper.

The third requirement under Rule 55.33(c) is that the party to be joined knew or should have known that, but for a mistake by HBC concerning the identity of the proper party, the action would have been brought against him. We find this requirement to be satisfied. The statutory trustees added as parties defendant were the officers and directors of the corporation, designated by statute to be successors in interest to the corporation. This would indicate that they should have known that, absent HBC's mistake in overlooking Ventura's status as a corporation whose charter had been forfeited, they would have been named in their capacity as statutory trustees as parties defendant.

It is significant that Authority has not contended in its briefs or in oral argument that Rule 55.33(c) does not govern. We hold that it does govern and that HBC commenced its action within six months as...