Howard v. Nicholson

• Decision Date: 13 September 1977
• Docket Number: No. 37156,37156
• Citation: 556 S.W.2d 477
• Parties: Robert J. HOWARD, d/b/a Howard Construction Company, Plaintiff-Appellant, v. Terry NICHOLSON and George G. Nicholson, his wife, Defendants-Respondents. . Louis District, Division Two
• Court: Missouri Court of Appeals

Page 477

556 S.W.2d 477

Robert J. HOWARD, d/b/a Howard Construction Company Plaintiff-Appellant, v. Terry NICHOLSON and George G. Nicholson, his wife Defendants-Respondents.

No. 37156.

Missouri Court of Appeals, St. Louis District, Division Two.

Sept. 13, 1977.

Paxton H. Ackerman, Clayton, for plaintiff-appellant.

Ziercher, Hocker, Tzinberg, Human & Michenfelder, Robert C. Jones, John G. Young, Jr., Herbert E. Bryant, Clayton, for defendants-respondents.

McMILLIAN, Presiding Judge.

Appellant Robert J. Howard appeals from a judgment entered by the circuit court of St. Louis County, Missouri, in favor of defendants Terry Nicholson and George G. Nicholson, his wife, denying appellant's claim for loss of profits in a breach of contract action.

Appellant and respondent Terry Nicholson entered into the contract which is at issue on November 6, 1969. Appellant was to construct a building in accordance with certain plans and specifications provided by Honey's International, Ltd. (Honey's) for $199,740 with a completion date of May 1, 1970. The building was designed to be used as a bridal salon. Respondents had signed a lease with Honey's on October 15, 1969. The lease provided that Honey's was to use the premises as a bridal salon for a term of 20 years.

Respondents later met with the Security Title Company to complete the financing arrangements. On November 14, 1969, respondents signed a note, deed of trust and a construction and disbursing escrow agreement. The escrow agreement provided for the construction and completion of all improvements by December 14, 1970, and was signed by both appellant and respondents, as well as representatives of Security Title Company and Hamiltonian Federal Savings and Loan Association (the mortgagee).

In December, 1969, appellant began demolition work at the building site and, at the request of respondent Terry Nicholson, rerouted electric, sewer and water lines across the property. During the late fall and winter months, appellant had also been trying to obtain necessary building permits from the City of Bridgeton (municipality where the property was located). Appellant had to assemble various documents and obtain the approval of the City Planning Commission. On March 6, 1970, appellant received a phone call from the City of Bridgeton informing him that the permits were ready to be picked up.

The next day appellant phoned respondent to tell him the good news. Appellant's version of this conversation was that respondent said that Honey's was having financial problems and to hold up on the permits and that if he (respondent) could not work with Honey's because of this financial situation he would work out something with appellant on another building in view of appellant's effort and time on the job. Respondent's version of the conversation was that he (respondent) was startled to learn that appellant was just getting the building permits, that although he said that it would be impossible to build the building in six weeks (by May 1, 1970), appellant nevertheless said he could, that he would have to call Honey's to find out if they approved, and that appellant should not do anything until he got in touch with him.

On March 10, 1970, appellant received a letter from respondent dated March 7, 1970. The letter stated that respondent was cancelling the construction contract because of appellant's breach of contract. The contract terms called for completion by May 1, 1970, that this was impossible in six weeks and Honey's would not accept occupancy.

Honey's filed a Chapter 11 petition in bankruptcy proceedings on December 16, 1969. The trial court awarded judgment to appellant on Count I, not presented on appeal, for the reasonable value of labor, work and materials furnished for the job and against respondents' counterclaim, and in favor of respondents on Count II, finding that respondents were excused from nonperformance by the doctrine of commercial frustration and appellant's breach.

For reversal, appellant argues that (1) the trial court erred in finding that respondents were excused from nonperformance on the doctrine of commercial frustration in that the rule in Missouri requires an Act-of-God, an act of law an impossibility and (2) the trial court erred in finding May 1, 1970, as the completion date and that appellant was unable to complete the building by that date. We affirm the judgment for the reasons discussed below.

The standard of review exercised by this court is that of review of both the law and the evidence as in suits of an equitable nature, Rule 73.01. The supreme court of this state has interpreted this to mean that the judgment of the trial court sitting without a jury should be sustained on appeal unless there is no evidence to support the judgment, the judgment is against the weight of the evidence, the judgment erroneously declares the law, or the judgment erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). In addition the power of the court to set aside the judgment of a trial court on the ground that it is against the weight of the evidence must be exercised "with caution and with a firm belief that the decree or judgment is wrong." Id. at 32.

First, we consider appellant's second point. Appellant challenges the sufficiency of the evidence supporting the findings of the trial court. The trial court specifically found that (1) the completion date in the construction contract was May 1, 1970; (2) time was of the essence in this construction contract, and (3) appellant had not diligently performed so as to be able to complete construction by May 1, 1970. On the basis of these facts the trial court concluded that respondents had sufficient grounds to cancel the contract and to excuse them from further performance. Appellant argues that (1) the completion date had been changed to a later date, December 14, 1970, by a second contract between the parties (the construction and disbursing escrow agreement), and that the building could have been constructed by that date and (2) the conclusions of the trial court that appellant did not perform diligently was contrary to the evidence and that appellant could not complete construction by May 1, 1970, was merely an adoption of respondents' unilateral conclusion.

There were two separate contracts entered into which involved the construction of a building by appellant for respondents. The first contract executed November 6, 1969, was a standard construction contract between owner and contractor which incorporated the plans and specifications of Honey's and specified the price and the completion date of May 1, 1970. The second contract, the construction and disbursing escrow agreement, was executed November 14, 1969, by appellant-contractor, respondents-owners, and representatives of the mortgagee, Hamiltonian Federal Savings and Loan Association, and the escrowee, Security Title Company and provided for a construction date of December 14, 1970, which was different from that provided in the first contract.

Appellant argues that where there are two inconsistent contracts that do not expressly provide to what extent the second operates to discharge or as a substitution for the first, that the later contract, if valid, will control, e. g., Berry v. Crouse, 376 S.W.2d 107 (Mo.1964); Ragan v. Schreffler, 306 S.W.2d 494 (Mo.1957); Dill v. Poindexter Tile Company, 451 S.W.2d 365 (Mo.App.1970). This rule is inapplicable to the facts of this case. In each of the three cases cited the trial court found that the parties intended or contemplated that a later contract would supersede an earlier contract and thus control any inconsistent terms. Each set of contracts had been executed as part of the same transaction and concerned the same subject matter, for example the sale of farm land.

In the present case, the two contracts were executed as part of the same transaction, on the same subject matter but containing inconsistent provisions. Even if two instruments are executed as part of the same overall transaction, it does not necessarily mean that those instruments constitute one contract or that one contract has merged with another, absent some reasonable basis for finding that such merger was the intention of the parties. Elliott v. Richter, 496 S.W.2d 860 (Mo.1973); Four-Three-O-Six Duncan Corp. v. Security Trust Co., 372 S.W.2d 16 (Mo.1963). The parties executed the contracts for different purposes and never intended one contract to supersede or substitute for the other. The contracts were really complementary instruments the construction contract was the basic contract, setting forth the price and completion date. The escrow agreement was the financing agreement which was intended to disburse the construction loan in such a fashion as to protect the under-mortgagee, Hamiltonian Federal. In fact the completion date of December 14, 1970, had been selected by the representative of Security Title only because that was the date that the construction loan was due to expire and the permanent loan was to be put on by the mortgagee.

In addition there was evidence to support the conclusion of the trial court that time was of the essence in the construction contract. Cf. Transport Manufacturing & Equipment Co. v. Fruehauf Trailer Co., 295 F.2d 223 (8th Cir. 1961). Appellant was aware of the fact that Honey's required that the building be ready for occupancy by May 1, 1970, because the peak time for bridal business was in May and June.

There was also evidence to support the conclusion of the trial court that appellant could not have completed the building by May 1, 1970, and therefore breached the contract. Appellant testified that it would take approximately four months to obtain the necessary permits and complete the building according to the plans and specifications. Appellant experienced some difficulty with the administrative procedures of the City of Bridgeton, but himself contributed...