Justice v. Arab Lumber and Supply, Inc.

• Decision Date: 09 September 1988
• Citation: 533 So.2d 538
• Parties: Jimmy R. JUSTICE and Kathryn H. Justice v. ARAB LUMBER AND SUPPLY, INC. 86-1433.
• Court: Alabama Supreme Court

Page 538

533 So.2d 538

Jimmy R. JUSTICE and Kathryn H. Justice v. ARAB LUMBER AND SUPPLY, INC.

86-1433.

Supreme Court of Alabama.

Sept. 9, 1988.

Marvin J. Wehl, Jr., and Robert E. Long, Jr., of UAW Legal Services Plan, Huntsville, for appellants.

Steven E. Haddock of Hardwick, Knight & Haddock, Decatur, for appellee.

STEAGALL, Justice.

This appeal arises from a suit by a materialman to enforce a lien against the "unpaid balance" due the original contractor by a homeowner. ¹ Following nonjury proceedings, the trial court awarded judgment for the materialman. We affirm.

Facts

On September 6, 1985, Jimmy R. Justice and Kathryn H. Justice, husband and wife, entered into a contract with a builder, Bobby Albright, to construct a dwelling house on their property situated in Morgan County, Alabama. The contract price was $67,000 and it provided that Albright was to furnish all labor and materials. All carpet, light fixtures, and wallcovering, and the intercom and other appliances were to be purchased by the Justices at no expense to Albright. Under the terms of the contract, the house was to be completed within 100 days of groundbreaking. The contract further provided that Albright was to receive payment through a series of five disbursements, which were listed in a schedule set forth in the contract.

To finance a portion of the construction price, the Justices on October 1, 1985, obtained a construction loan from United Tennessee Savings and Loan Association. The loan was secured by a mortgage on their land and the house that was to be constructed thereon. The proceeds of this loan were to be placed in a bank account ("construction account") and then disbursed to Albright by United Tennessee Savings and Loan and the Justices according to the disbursement schedule.

Construction commenced on or around October 1, 1985. Subsequent thereto, Albright received three disbursements as provided for under the terms of the contract: $11,000 on December 17, 1985; $15,000 on January 13, 1986; and $16,000 on February 10, 1986. ² As of February 10, 1986, Albright had thus received a total of $42,000 of the total contract price of $67,000. The disbursements were made after the lender's representative and Jimmy Justice had inspected the premises and found Albright's work to be satisfactory.

As of March 20, 1987, the house had not been completed. Counsel for the Justices sent a letter to Albright pointing out that the house had not been completed according to the specifications of the contract and demanding adequate assurance that the house would be completed within 15 days. The letter was accompanied by a "punchlist" of work that remained unfinished. Albright failed to respond to the letter. ³

Acting upon advice of counsel, the Justices notified United Tennessee Savings and Loan that Albright was in default and they subsequently made arrangements with other workmen to complete the house. As of February 10, 1986, the date of the last disbursement to Albright, there remained in the construction account $23,000. Between March 8, 1986, and March 11, 1986, the Justices moved into the partially completed house.

In early April 1986, Jack Hamilton, general manager of Arab Lumber and Supply, Inc. ("Arab Lumber"), contacted Kathryn Justice. He informed her that Arab Lumber had not been paid for materials that had been purchased on credit by Albright to construct the house and requested that no further payments be made to Albright by the Justices. Arab Lumber had given no advance notice to the Justices that it was furnishing construction materials to Albright to be used in construction of the home. ⁴ The total price for assorted materials furnished to Albright on credit by Arab Lumber was $21,790.59. Kathryn Justice indicated that no further checks would be presented to Albright until suppliers and materialmen had been paid.

Jimmy Justice, in a conversation with Jack Hamilton in March or April 1986, stated that it was his intention to finish construction of the house but that upon completion Arab Lumber would be entitled to any funds remaining in the construction account. ⁵ Arab Lumber maintains that it continued to furnish on credit materials for use in the construction of the Justices' house.

As indicated, the Justices retained other workmen to complete the house after Albright stopped working on the project. The Justices made payments from the construction account to various individuals and companies and also reimbursed themselves in the amount of $1,686.10 for materials and labor that they personally had furnished. ⁶ All of the work on the house was performed, according to the Justices, in accordance with the original contract specifications. They nonetheless maintained that at the time the funds in the construction account were nearly exhausted, the house was not completely finished according to specifications. The Justices then offered $2,000 remaining in the account to Arab Lumber in satisfaction of its claim for materials and supplies. The offer was refused.

On June 27, 1986, Arab Lumber sent notice to the Justices of its intention to file a lien for materials and supplies against their house for the unpaid account totaling $25,002.80. ⁷ On July 16, 1986, a verified statement of lien was filed by Arab Lumber against the Justices' property and against any unpaid balance due the contractor (Albright).

On August 14, 1986, Arab Lumber filed the instant suit against the Justices, Bobby Albright, and the lender, United Tennessee Savings and Loan, for the unpaid balance of the account. The complaint alleged separate counts, seeking recovery under the following theories: a materialman's lien against the Justices' real estate; breach of an expressed or implied contract between Arab Lumber and the Justices for payment for the materials supplied in the construction of their house; fraud and/or deceit by the Justices in representing to Arab Lumber that it would be paid for all or for a substantial portion of the materials furnished; and a quantum meruit claim for goods furnished by Arab Lumber to the Justices or for their benefit.

Prior to trial, Bobby Albright received a discharge in bankruptcy of the debt owed to Arab Lumber. On September 11, 1986, United Tennessee Savings and Loan filed an answer maintaining that its mortgage was a first and paramount lien against the property that was the subject of the pending action and was therefore superior to any right, title, and interest claimed by Arab Lumber.

The Justices filed an answer to the complaint, denying any and all liability. United Tennessee Savings and Loan (presently known as United Federal Savings Bank) filed a motion for summary judgment alleging that its mortgage lien upon the real estate was superior and prior in all respects to any mechanic's lien found to exist in favor of Arab Lumber. The motion was granted, and judgment was entered in favor of United Federal Savings Bank on June 9, 1987.

The case was tried to the court, without a jury, on June 9 and 10, 1987. On July 2, 1987, the trial court entered judgment for Arab Lumber and made the following written findings:

"The court finds from the evidence that the contract price for the construction of the house was $67,000.00; that the contractor had been paid $42,000.00 at the time he left the job; that the contract was ninety percent (90%) complete at that time; and that the contractor was due to be paid an additional $18,300.00 ($67,000 X 90%--$42,000.00).

"The court finds further that at the time the contractor quit the job, he owed for labor and material the sum of $33,921.57, of which $21,790.59 was owed to plaintiff and the balance owed to various other suppliers. The plaintiff's amount of $21,790.79 was 64% of the total amount owed to suppliers by the contractor at the time he quit the job. The court finds therefore that the plaintiff was due to be paid from the amount owing the contractor the sum of $11,712.00, being 64% of $18,300.00.

"Judgment is hereby entered for the plaintiff and against the defendant Jimmy R. Justice and Kathryn H. Justice in the amount of $11,712.00 plus interest at the legal rate from April 5, 198.

"It is further ordered that the plaintiff have a lien for the amount of $11,712.00 on the real estate of the defendants Justice as described in the complaint, subject to the first mortgage on the property; the lien is hereby ordered affixed.

"It is further ordered that the plaintiff have and recover from the defendant Bobby Albright the sum of $21,890.57 (which amount includes the amount of the judgment against the defendants Justice).

"Costs of this proceeding are taxed to the defendants Justice, for which execution may issue.

"ORDERED and DONE on this the 2nd day of July, 1987."

"/S/ RUDOLPH W. SLATE

"CIRCUIT JUDGE"

The Justices appealed.

I

The Justices contend that the finding of the trial court that the house was 90% complete at the time the contractor quit work is unsupported by the evidence, erroneous, and due to be reversed. Such a finding was, of course, germane to the disposition of this case at trial, because in order to determine the unpaid balance owed the contractor, Albright, the trial court necessarily had to first determine the percentage of completion at the time Albright stopped working.

It is well settled that where a trial court bases its judgment upon findings of fact in a nonjury case in which the evidence is presented ore tenus, that judgment is reviewed on appeal with a presumption of correctness. Gray v. Reynolds, 514 So.2d 973 (Ala.1987); Stiles v. Brown, 380 So.2d 792 (Ala.1980); M.D. Pharmaceutical, Inc. v. Mitchell, 510 So.2d 827 (Ala.Civ.App.1987). Moreover, in conjunction with this rule, the findings of a trial court will not be disturbed on appeal unless the record shows the evidence to be so unsupportive of the judgment as to make it plainly erroneous, palpably incorrect, or manifestly unjust. Gaston v. Ames, 514 So.2d 877 (Ala.1987); Sims...