Mid-State Elec. Supply Co. v. Arizona Title Ins. & Trust Co.
| Decision Date | 26 January 1970 |
| Docket Number | No. 9812,MID-STATE,9812 |
| Citation | 105 Ariz. 321,464 P.2d 604 |
| Parties | ELECTRIC SUPPLY CO., an Arizona corporation, Appellant, v. ARIZONA TITLE INSURANCE AND TRUST COMPANY, an Arizona corporation, and Western Savings and Loan Association, an Arizona corporation, Appellees. |
| Court | Arizona Supreme Court |
Virginia Hash and Alena Cantor, Phoenix, for appellant.
Merrill W. Robbins, Phoenix, for appellee Arizona Title Insurance and Trust Co. Rawlins, Ellis, Burrus & Kiewit, by William H. Burrus, Phoenix, for appellee Western Savings and Loan Assn.
STEVENS, Judge of the Court of Appeals.
The issues before this Court on this appeal arise out of writs of garnishment served upon the lendor in connection with a construction loan and upon the holder of the builder's escrow.
In early 1964, the Al Ziegler Construction Company, Inc., a corporation, (Ziegler Construction) owned property in the City of Phoenix on which it desired to build an apartment. Ziegler Construction was also the general contractor for the construction of the apartments. Al Ziegler was a stockholder and an officer of Ziegler Construction. Before the trial in question, Ziegler Construction was adjudged bankrupt. In this opinion we will continue to refer to Ziegler Construction.
Ziegler Construction secured a construction loan from Home Savings and Loan Association (Home). Before the trial in question, Home was acquired by the appellee, Western Savings and Loan Association, and in this opinion we will continue to refer to home.
The proceeds of the loan were not paid by Home directly to Ziegler Construction. These funds were paid into a builder's escrow established with the Arizona Title Insurance and Trust Company, a corporation (Arizona Title). The builder's escrow related to only the one construction project. Those who were entitled to receive funds in connection with the construction of the apartment received them from Arizona Title.
The building loan with Home and the builder's escrow with Arizona Title were, in many ways, similar to the financial arrangements we find outlined in Pioneer Plumbing Supply Company v. Southwest Savings and Loan Association, 102 Ariz. 258, 428 P.2d 115 (1967). The loan with Home was surrounded with conditions. Home was not obligated to transmit money to Arizona Title until Home was satisfied that certain phases of the construction had been satisfactorily completed. Arizona Title would not disburse the funds received from Home unless the disbursement was approved by Al Ziegler and then only if the funds which he authorized to be disbursed were within the written contracts which Ziegler Construction had entered into with the various persons and companies supplying labor and material for the construction. Arizona Title could refuse to disburse funds on other grounds as well. These matters were all matters of contract as was the situation in the Pioneer Plumbing Case.
Eastern Electric Company (Eastern) entered into a written contract with Ziegler Construction to do the electrical work. The plaintiff-appellant, Mid-State Electric Supply Co., a corporation (Mid-State), was Eastern's supplier. On or about 25 May 1964 and before the construction was completed, Eastern ceased doing business and Mid-State sold electrical supplies directly to Ziegler Construction, the latter undertaking to complete the electrical work. Before the trial in question, Mid-State was adjudged bankrupt and in this opinion we will continue to refer to Mid-State.
Mid-State, as plaintiff, filed two lawsuits in the Superior Court. Cause No. 165341, which we will refer to as the garnishment action, was filed on 18 August 1964. Cause No. 171834, which we will refer to as the lien action, was filed on 17 February 1965. The two actions were consolidated for trial and the judgment entered following the consolidated trial was a single written instrument.
The garnishment action was in two counts. Ziegler Construction was the sole defendant. The first count was for Three Thousand, Ninety-Nine and 84/100 ($3,099.84) Dollars in relation to alleged credit extended by Mid-State to Eastern while Eastern was active in the building project and allegedly guaranteed by Ziegler Construction. The second count was for Nine Thousand, Seven Hundred Five and 83/100 ($9,705.83) Dollars and was based upon Mid-State's claim of furnishing materials to Ziegler Construction after Eastern withdrew from the construction project. At the trial no guarantee agreement was introduced into evidence. There was no written contract in relation to the Mid-State arrangements with Ziegler Construction.
At the time suit was filed there were separate writs of garnishment against Home and Arizona Title. These garnishees answered 'no indebtedness' and their answers were not controverted, thereby becoming final. On 25 November 1965, Mid-State caused separate writs of garnishment to be served on Home and on Arizona Title, each writ seeking the sum of Twelve Thousand, Eight Hundred Thirty-Six and 60/100 ($12,836.60) Dollars.
Arizona Title filed its answer in garnishment on 22 December and Home filed its answer in garnishment on 23 December. Arizona Title admitted holding some Twenty-Five Hundred ($2,500.00) Dollars, asserting that the same was being held subject to prior assignments. Home answered 'no indebtedness.' Thereafter Home sent to Arizona Title an additional Seventeen Thousand ($17,000.00) Dollars. This money was disbursed by Arizona Title. No portion thereof was disbursed to Ziegler Construction. Issue was joined on the answers in garnishment and at the time of trial Arizona Title held Two Thousand, Nine Hundred Twenty-Two and 29/100 ($2,922.29) Dollars in the builder's escrow.
Count One of the lien action was a typical lien foreclosure action with multiple defendants. The claimed lien was filed and recorded on 17 August 1964. The action was filed within the six-month period from that date. Count Two of this complaint stated a claim for relief against Arizona Title seeking to recover from Arizona Title the full sum of Twelve Thousand, Eight Hundred Thirty-Six and 60/100 ($12,83...
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