Myrtle Beach Lumber Co., Inc. v. Willoughby, 21380

• Decision Date: 20 January 1981
• Docket Number: No. 21380,21380
• Citation: 274 S.E.2d 423,276 S.C. 3
• Court: South Carolina Supreme Court
• Parties: MYRTLE BEACH LUMBER COMPANY, INC., Appellant, v. Harry G. WILLOUGHBY and Annette B. Willoughby, Respondents.

Page 423

274 S.E.2d 423

276 S.C. 3

MYRTLE BEACH LUMBER COMPANY, INC., Appellant, v. Harry G. WILLOUGHBY and Annette B. Willoughby, Respondents.

No. 21380.

Supreme Court of South Carolina.

Jan. 20, 1981.

Joseph F. Singleton, of Cross & Singleton, Conway, for appellant.

E. Windell McCrackin, of McCrackin & Barnett, and Larry L. Hanna, Myrtle Beach, for respondents.

LITTLEJOHN, Justice:

The court is called upon to determine which of two innocent parties must lose approximately $21,000.00 representing materials and supplies furnished for the construction of a residence.

The defendants, Harry G. Willoughby and Annette B. Willoughby (owners), employed E. J. Antol Builders (contractor) to build a residence. The contractor negotiated with Myrtle Beach Lumber Co., Inc. (supplier) for materials to be used in construction of the house. The supplier, knowing that the contractor was financially unstable, required the contractor to have the owners sign a form which it, the supplier, customarily used. The form, as executed, follows:

"AUTHORIZATION TO MAKE CHECKS JOINTLY TO CONTRACTOR AND TO Myrtle Beach Lumber Company

Please take notice:

This is to certify that I/We, Harry G. and Annette B. Willoughby, are the owners of a certain Lot located in Horry County. My contractor is E. J. Antol Bldgs. Inc.

In order to protect myself from liens for any material supplied by this company to improve my property and with the agreement and consent of my contractor, I hereby agree to make checks for Myrtle Beach Lumber Co. and the contractor jointly.

In Testimony Whereof, we have hereunto set our hands and seals this the 20th day of September, 1976.

s/ Harry Willoughby (SEAL)

s/ Bre Willoughby (SEAL)

____________

Witness

I, as Contractor, hereby consent to the checks to be made jointly to me and to Myrtle Beach Lumber Co. for the bills.

s/ E. J. Antol (SEAL)

Contractor

____________

Witness"

The contractor obtained the owners' signatures and returned the form to the supplier, which then furnished materials from approximately September 20, 1976, to completion of the house. There was no contact whatever between supplier and the owners until about April of 1977.

The owners financed the residence through Coastal Federal Savings and Loan Association in the amount of $48,000.00. As the work progressed, the lender supplied six checks (the last on January 31, 1977), payable to both the contractor and the owners. The owners endorsed all of the checks to the contractor and by so doing paid for the completed project. While monthly bills were submitted by the supplier to the contractor, no notice of any kind was given to the owners or to the lender of the indebtedness being incurred by the contractor for materials used. During the entire time of construction, the contractor was falsely reporting to the supplier that no payments had been received.

The supplier obtained an uncollectible judgment against the contractor and then initiated this action against the owners for breaching the contract set out above, alleging a loss in the amount of approximately $21,000.00.

The issues were tried before the master-in-equity, who recommended that the supplier's complaint be dismissed and that judgment be entered in favor of the owners. Exceptions were taken to the report, and the trial judge confirmed the master's report. The supplier filed this appeal. We affirm.

The testimony submitted to the master and to the judge was supplied by three witnesses: (1) a Mr. West, representative of the lender, (2) a Mr. Enter, representative of the supplier, and (3) Harry G. Willoughby, representing the owners.

The testimony of Mr. West is of no real consequence.

It was the testimony of Mr. Enter, for the supplier, that he did not see the owners at the time the agreement was signed, or make any contact with them whatsoever until the house was completed and the owners were moving in. He said that he failed to concern himself with the matter because he was relying upon the contractor's representations and because he had the agreement signed by the parties. He admitted that no notice was given to the owners or to the lender such that either might have done something to prevent the unfortunate situation which developed.

Owner Willoughby testified that he was unaware of the contractor's financial problems and that had he known that the supplier was not being paid, he would have seen to it that they got their money.

It is obvious that we have two innocent parties involved, one of whom must lose. When one of two innocent parties must suffer, the brunt should fall upon the one most responsible for the problem which developed. The unfortunate situation grows largely out of the ambiguous agreement prepared and submitted to the parties by the supplier. A study of the instrument makes understandable a layman's (owner's) difficulty in knowing what, if anything, to do under the circumstances. It is entitled "Authorization To Make Checks...