Loyal Erectors, Inc. v. Hamilton & Son, Inc.

• Decision Date: 04 December 1973
• Citation: 312 A.2d 748
• Parties: LOYAL ERECTORS, INC. v. HAMILTON & SON, INC. and Robert C. Ford, inc.
• Court: Maine Supreme Court

Page 748

312 A.2d 748

LOYAL ERECTORS, INC. v. HAMILTON & SON, INC. and Robert C. Ford, inc.

Supreme Judicial Court of Maine.

Dec. 4, 1973.

Lipman & Gingras by Sumner H. Lipman, Augusta, for plaintiff.

Brann & Isaacson by Peter Garcia, Lewiston, Linnell, Choate & Webber by Frank W. Linnell, Auburn, for defendants.

Before DUFRESNE, C. J., and WEATHERBEE, POMEROY, WERNICK and ARCHIBALD, JJ.

DUFRESNE, Chief Justice.

On July 7, 1971 the plaintiff, Loyal Erectors, Inc., initiated proceedings against the principal defendant, Hamilton & Son, Inc. (Hamilton), for the recovery of $40,301.58, plus interest, which the plaintiff asserts Hamilton owes it by virtue of certain contractual obligations. In the prosecution of its claim, the plaintiff, pursuant to Rule 4B, M.R.C.P., on July 15, 1971 served a trustee summons on Robert C. Ford, Inc. (Ford), requiring the latter to show cause through verified disclosure why execution issued upon such judgment as the plaintiff may recover against Hamilton, if any, should not issue against the credits, which, on the date of service, Hamilton had with Ford and which Ford had in its possession as trustee of Hamilton, to the value of the plaintiff's claim, together with a reasonable allowance for interest and costs. 14 M.R.S.A. § 2601.

In the Court below, the principal defendant (Hamilton), by motion properly served on the plaintiff, sought the discharge of Ford as trustee, on the ground that the principal defendant's credits with Ford at the time of service of the trustee process were contingent claims only and not absolute liabilities. 14 M.R.S.A. § 2602(4). Ford's discharge as trustee is the basis for plaintiff's appeal. We deny the appeal.

The decision of the Presiding Justice rested on facts which Ford imparted in its disclosure under oath pursuant to 14 M.R.S.A. §§ 2608, 2709. The disclosure was neither attacked nor contradicted. The plaintiff could have raised an issue in respect thereto by alleging and proving any facts material to the question of chargeability. In the absence of any proffered controversy, the trustee's sworn answers and statements must be deemed true. ¹ See, Schwartz v. Flaherty, 1905, 99 Me. 463, 59 A. 737; Hamilton v. Hill, and Cole, Trustee, 1893, 86 Me. 137, 29 A. 956.

The disclosure is the statutory answer which presents the issues of fact upon which the liability of the trustee depends in reference to the business relations with the principal defendant. It is upon those facts as disclosed by the trustee's sworn statements that the court must decide whether the alleged trustee had credits of the principal defendant in its possession of such a nature and under such conditions as made them available to the plaintiff in trustee process. Hibbard v. Newman, 1906, 101 Me. 410, 64 A. 720.

The disclosure reveals that Ford had entered into two contracts with Hamilton. Under the contract of April 21, 1969 Hamilton agreed to install a complete ventilation and duct work system in the high school building at Cape Elizabeth, Maine, in accordance with specifications and drawings prepared by a named architectural firm. The price which Ford promised to pay Hamilton for the complete job was $104,500.00. Payment of this money was to be made as the work progressed 'in the amount of ninety percent (90%) of the satisfactorily completed work.' The contract further provided that '(t)he retained percentage shall be paid within ninety-two (92) days of the final approval and acceptance of the building by the Architect.' The second contract executed November 24, 1969 called for the installation of a complete ventilation system in accordance with specifications and drawings prepared by another firm of architects. It was designed for the Waterville Osteopathic Hospital in Waterville, Maine. This contract carried the price of $36,061.00 with a similar progress payment clause, the retained percentage, however, to be paid within 90 days 'of the final approval and acceptance of the building by the Architect.'

Ford maintains that, at the time of service of the trustee summons on July 15, 1971, it had not in its hands and possession any goods, effects or credits of Hamilton subject to trustee process, even though Hamilton's requisition for payment of the sum of $2,174.85 under the first contract and the sum of $3,334.90 under the second contract for alleged completion of the work had not been paid and the retained amount by the prime contractor, Fred I. Merrill, Inc. (Merrill) under terms similar to those provided in the contracts between Hamilton and Ford was in excess of Hamilton's requests for payment.

The trustee's sworn assertions further disclose that neither building at the time of service of the trustee process had been finally approved and accepted by the architect.

The issue on appeal is whether the Justice below was correct in discharging Ford as trustee pursuant to 14 M.R.S.A. § 2602(4) which provides:

'No person shall be adjudged trustee: . . . (b)y reason of any money or other thing due from him to the principal defendant unless, at the time of the service of the summons upon him, it is due absolutely and not on any contingency.'

Initially, we recognize that the ruling discharging the trustee was interlocutory. The present appeal, however, is not premature. The order discharging the trustee is subject to an immediate appeal as an exception to the 'final judgment' rule, because 'great and irreparable loss' may otherwise result. Foisy v. Bishop, 1967, Me., 232 A.2d 797. See, Field, McKusick and Wroth, Maine Civil Practice, § 4B.3.

Did the principal defendant, Hamilton, have a noncontingent claim against the trustee, Ford, at the time of service upon the trustee? In order to answer this ultimate question, we must determine whether the principal defendant's failure to secure 'the final approval and acceptance of the building by the Architect', which the contract between the parties required, caused the retained percentage moneys to come within the statutory exception precluding trustee process, on the ground that, prior to the approval and acceptance of the building by the architect, there is no money or other thing 'due absolutely and not on any contingency' within the meaning of 14 M.R.S.A. § 2602(4).

This determination must be made as of the time the trustee process was served, since the validity of the trustee process depends upon the state of facts as they existed at that moment. Holmes v. Hilliard, 1931, 130 Me. 392, 394, 156 A. 692; Hussey v. Titcomb, 1929, 127 Me. 423, 427, 144 A. 218; Williams v. Androscoggin and Kennebec Rail Road Co., 1853, 36 Me. 201, 210.

It should be further noted that the statutory reference to money or other thing due absolutely and not on any contingency does not mean that the amount of the debt must be certain, but rather, that the monetary obligation itself is absolute and not contingent. The mere fact that the amount due under an absolute indebtment may be unascertained or in dispute will not defeat a trustee process.

As stated in Davis v. Davis, 1862, 49 Me. 282:

'The contingency under this section (of the statute, as settled in Dwinel v. Stone, 30 Maine, 384), 'is not a mere uncertainty as to how the balance may stand between the principal and the supposed trustee; but it is such a contingency as may preclude the principal from any right to call the supposed trustee to settle or account."

See also, Wilson v. Wood, 1852, 34 Me. 123; Cutter v. Perkins, 1859, 47 Me. 557; Hussey v. Titcomb, supra.

We must have in mind, additionally, the provisions of 14 M.R.S.A. § 2628 to the effect that '(a)ny money or other thing due absolutely to the principal defendant may be attached before it has become payable, but the trustee is not required to pay or deliver it before the time appointed therefor by the contract.'

In Davis, supra, this Court ruled that the preliminary proof of loss required by a fire insurance policy was a condition precedent to the right of the insured to recover, and, as such, within the exclusionary clause of the trustee process statute, since the liability of the insurer does not become absolute, unless the preliminary proof of loss, as provided in the conditions of the policy, is furnished.

In Wilson, supra, it was held that, where the contract called for the payment of a commission when a particular note was collected, there existed no absolute indebtedness under the trustee process statute until after the note had been collected. Until that fact had taken place, there was only a contingent liability.

In Jordan v. Jordan, 1883, 75 Me. 100, this Court decided that a contract to pay commissions on the sale of goods 'as the goods should be paid for' did not create an absolute, but only a contingent, debt prior to payment, the Court stating: 'This is not a debt due in the present and payable in the future, for there may never be a debt.'

In Holmes v. Hilliard, supra, the contract provided for the purchase and sale of so much of the principal defendant's crop of sweet corn as should be approved as to quality by the supposed trustee, with payment for all the corn so received within sixty days from the close of the canning season. There, the Court said: 'Where money was to be paid on the contingency that work be well performed, trustee process was premature until the work had been duly performed.'

When, by the terms of the contract, the price was payable upon the completion of the work and there was no acceptance of the work by the trustee, the use of trustee process prior to the completion of the contract was premature, as there was nothing due, and 'non constat that there ever would be.' Otis v. Ford, 1866, 54 Me. 104.

A widow's allowance, resting as it does in the sound discretion of the Judge of Probate, is not subject to trustee process prior to its actual adjudication, because, prior thereto, it is a mere contingent right. Hussey v. Titcomb, supra.

From a consideration of these cases, it appears...