Robert Wise Plumbing & Heating, Inc. v. Alpine Development Co.

• Decision Date: 13 October 1967
• Docket Number: No. 38556,38556
• Court: Washington Supreme Court
• Parties: ROBERT WISE PLUMBING & HEATING, INC., a corporation, Plaintiff, v. ALPINE DEVELOPMENT COMPANY, Inc., a corporation et al., Defendants, Sutherlan Fixture Company, a corporation, Respondent, Securities Mortgage Company, a corporation, Appellant.

Page 172

72 Wn.2d 172

432 P.2d 547

ROBERT WISE PLUMBING & HEATING, INC., a corporation, Plaintiff, v. ALPINE DEVELOPMENT COMPANY, Inc., a corporation et al., Defendants Sutherlan Fixture Company, a corporation, Respondent Securities Mortgage Company, a corporation, Appellant.

No. 38556.

Supreme Court of Washington, Department 2.

Oct. 13, 1967.

Rehearing Denied Dec. 22, 1967.

Monheimer, Schermer, Van Fredenberg & Smith, J. Dimmitt Smith, and David D. Hoff, Seattle, for appellant.

Murray, Scott, McGavick & Graves, E. M. Murray, and Robert L. Beale, Tacoma, for respondent.

HAMILTON, Judge.

The defendant, Alpine Development Company, Inc., hereafter referred to as Alpine, as owner, developer and general contractor, proposed to construct a 48-unit prefabricated apartment building in the vicinity of the Tacoma Mall in Pierce County, Washington. To accomplish this objective, it sought and obtained approval of a construction loan in the amount of $350,000 from appellant, Securities Mortgage Company, hereafter referred to as Securities. The loan documents, consisting of the application, the mortgage, and a promissory note, were executed in late 1962 and provided that funds would be advanced as construction progressed, subject to Securities' control and approval. Approximately $70,000 was disbursed in November, 1962, consisting of a $50,000 advance to Alpine and the payment of various initial expenses.

Alpine then commenced negotiations with respondent, Sutherlan Fixture Company, hereafter referred to as Sutherlan, to fabricate and deliver integral structural components of the apartment building. The negotiations culminated in an agreed price for the work in the amount of $109,300.25. Sutherlan, however, would not enter into a firm contract without an assignment of construction loan funds to insure payment. As a result, a document entitled 'Assignment of Funds' was executed by Apline on January 25, 1963, and accepted by Securities on January 30, 1963. This document reads as follows:

                                              ASSIGNMENT OF FUNDS
                -------------------------------------------------------------------------------
                                                                              January 25, 1963
                Securities Mortgage, Inc
                Securities Building
                Seattle, Washington                                RE: Alpine Village
                                                                   42nd and Prospect
                                                         --------------------------------------
                Gentlemen:
                 You are hereby authorized to remit directly the sum of $89,300.25 to
                Sutherlan Fixture Company, Tacoma, Washington, from the proceeds due
                the undersigned on the construction of the above captioned unit.
                 This assignment shall be irrevocable by the undersigned.
                                                         ALPINE DEVELOPMENT COMPANY, INC.
                                                         /s/ James R. Wornstaff
                                                         James R. Wornstaff
                                                         President
                 This assignment accepted this January 30th, 1963, subject to our controlling
                the funds in sufficient amount to cover and subject to closing
                conditions.
                                                            By /s/ R. M. Maloney Vice-President
                                                                      SECURITIES MORTGAGE, INC.
                DATE: January 30, 1963
                ---------------------------------------
                

On January 31, 1963, Securities issued an advance in the sum of $20,000 in the form of a check made payable to Alpine and Sutherlan as joint payees. Thereafter, on February 8, 1963, Sutherlan received the assignment document and executed a written contract with Alpine to perform the agreed upon prefabrication work. The contract acknowledged receipt of $20,000 as a down payment, but made no mention of any assignment of funds. The $20,000 check issued by Securities was endorsed by Sutherlan and returned to Alpine for payment to the project engineer in satisfaction of past engineering services performed for Sutherlan.

Sutherlan started prefabrication work immediately and commenced delivery to the project site in July, 1963. Thereafter, and on August 16, 1963, Sutherlan submitted to Alpine an application for a progress payment in the amount of $56,729, on the basis of 78 per cent of the work having been performed. Payment was not forthcoming, and on September 16, 1963, Sutherlan submitted a second application to Alpine for a progress payment in the total sum of $64,599 predicated upon 86 per cent completion. When payment upon this request was not made, Sutherlan ceased deliveries.

During the interval between January 31, 1963, and August 29, 1963, Securities advanced directly to Alpine on the construction loan sums totaling.$170,500. These advances, when added to prior advances and cast against the actual progress of construction, exceeded the optional advancement schedule set forth in the loan agreement and overrode an optional retained percentage provision. Securities then, on or about August 29, 1963, discovered that Alpine was not paying the construction accounts. Advances were halted and Securities undertook partial completion of the building. These steps were taken by Securities upon the strength of provisions in the loan agreement whereby Securities was in control of all advances and could assume completion of construction in the event of Alpine's default.

In the first part of November, 1963, Sutherlan made demands on Securities for payment of its progress applications upon the basis of the assignment document. Whether copies of Sutherlan's August and September progress payment applications had been originally forwarded to Securities is in dispute--Securities contending the November demand constituted its first notice of any work by or payments due Sutherlan. Securities did not honor Sutherlan's demands. Instead, Securities devoted the remainder of the $350,000 construction loan fund (then approximately $90,000) toward the partial completion and conservation of the apartment building.

Sutherlan, after commencement of this suit and by stipulation of the parties, furnished $9,709.61 worth of fabricated materials toward preservation and improvement of the building, for which it was paid. Nevertheless, after obtaining credit commitments in the amount of $12,709.71 from suppliers for returnable items, Sutherlan still had sundry underlivered fabricated materials on hand.

In June, 1964, the plaintiff, Robert Wise Plumbing & Heating, Inc., another subcontractor on the building project, commenced this action to foreclose a labor and materialman's lien against Alpine. Sutherlan and other lien claimants were joined as party defendants. Sutherlan, by answer, cross-claim and third-party complaint, sought foreclosure of its lien claim against Alpine and recovery against Securities, as third-party defendant, for breach of the assignment document in paying the funds covered thereby over to Alpine. Securities, in answer to the third-party complaint, denied liability and asserted, in essence, that the document in question did not amount to an assignment of the funds under the circumstances prevailing, and that it was without timely notice of Sutherlan's contract or claims thereunder.

The issues raised by the third-party proceeding came before the trial court upon Sutherlan's motion for summary judgment. Affidavits, depositions, exhibits, and briefs were filed on behalf of both parties. After considering the material and arguments before it, the trial court determined that no disputed issue of material fact existed with respect to the question of Securities' liability and accordingly entered an interlocutory summary adjudication, or a partial summary judgment. Trial on the remaining damage issue thereafter ensued, following which the trial court entered findings of fact, conclusions of law, and judgment, in the third-party action, granting recovery on behalf of Sutherlan against Securities in the sum of $66,082.05, together with interest and costs. Securities appeals.

Securities by its assignments of error, in essence, attacks (a) the trial court's interlocutory summary adjudication, and (b) the subsequent allowance and computation of damages.

With respect to the trial court's interlocutory summary adjudication of liability, it is conceded that the only disputed factual issue arising out of the affidavits, depositions, and exhibits presented on the motion for summary judgment is whether Sutherlan notified Securities of its contract with Alpine and of its requested progress payments prior to November, 1963. Otherwise, the factual background as heretofore outlined is undisputed. However, for purposes of the summary judgment procedure, we are required, as was the trial court, to review the material submitted for and against the motion in a light most favorable to Securities. Balise v. Underwood, 62 Wash.2d 195, 381 P.2d 966 (1963); Foote v. Hayes, 64 Wash.2d 277, 391 P.2d 551 (1964). Accordingly, we assume for purposes of our discussion that Securities was not formally and affirmatively advised of the terms of Sutherlan's contract with Alpine and/or Sutherlan's performance or demands for payment until the latter part of 1963.

Against this background, Securities' assignments of error and arguments on this aspect of the case basically present two questions: (1) Does the purported assignment document constitute an effective partial assignment of a future monetary obligation, and (2) is notice to Securities of the maturity of the obligation essential to Securities' liability.

With respect to the first question, Securities argues (a) the language of the document in question is not that of an effective assignment, (b) the surrounding circumstances and the actions of the parties negate any intention that the document be an assignment, (c) Securities' acceptance of the assignment was conditional, and (d) any rights acquired by Sutherlan under the document...