Sides Const. Co., Inc. v. Arcadia Valley R-II School Dist., R-II

• Decision Date: 04 April 1978
• Docket Number: R-II,No. 38582,38582
• Citation: 565 S.W.2d 761
• Parties: SIDES CONSTRUCTION CO., INC., et al., Respondents, v. ARCADIA VALLEYSCHOOL DISTRICT, Appellant. . Louis District,Division Four
• Court: Missouri Court of Appeals

Page 761

565 S.W.2d 761

SIDES CONSTRUCTION CO., INC., et al., Respondents, v. ARCADIA VALLEY R-II SCHOOL DISTRICT, Appellant.

No. 38582.

Missouri Court of Appeals,St. Louis District,Division Four.

April 4, 1978.

Motion for Rehearing and/or Transfer Denied May 9, 1978.

Application to Transfer Denied June 15, 1978.

Roberts & Roberts, Geoffrey L. Pratte, Farmington, for appellant.

Spradling, Drusch & Dillard, A. M. Spradling, III, Cape Girardeau, for respondents.

DOWD, Presiding Judge.

This appeal involves a dispute between Sides Construction Company, respondent, and Arcadia Valley R-II School District, appellant, concerning the construction of a school and gymnasium. Respondent contended the appellant owed it $15,000 as the final payment on a construction contract plus $1,510 for additional work. Appellant counterclaimed alleging breaches of the contract in the amount of $158,000.

In this court tried case the trial judge heard complicated and diverse testimony from fourteen witnesses and, we believe, resolved the issues in a fair and reasonable judgment. The judgment entered awarded respondent $3,933.73, representing the $15,000 due on the contract plus $1,265.04 for additional work offset by damages for breaches of the contract totaling $12,331.31 with costs assessed against respondent.

Arcadia Valley R-II School District appeals. This court has been aided by scholarly briefs filed by both parties and commends the attorneys. For reasons hereinafter given, we affirm.

The principal parties to this dispute, Sides Construction Company and Arcadia School District, entered into a standard form "owner and contractor" agreement on September 10, 1969, for the construction of a classroom building and gymnasium for the sum of $1,096,531. The architect for the project was Haywood Snipes, who aided in the designation of specifications and drawings to be incorporated into the contract. Other provisions of the contract provided for monthly progress payments and for final payment, "provided the Work has then been completed, the Contract fully performed, and a final Certificate for Payment has been issued by the Architect."

Work proceeded on the project and, although it was not fully completed, the school district took possession of the classroom building in January of 1971. The gymnasium was available for occupancy in late August of 1971. Monthly progress payments of 90% of the contract price were made as scheduled and in June of 1971 the architect made arrangements for release of the final 10% due on the contract with the exception of $15,000 withheld to guarantee completion of "punch list" items and to cover possible damages for late completion. Prior to occupation of the classroom building and subsequent thereto Mr. Snipes, the architect, prepared "preliminary" punch lists of incomplete or defective aspects of the work. He conceded that the usual practice calls for the preparation by the architect of one punch list after the contractor gives notice that the building is complete, but claimed the preliminary lists were made at the request of Sides and were motivated by the necessity of getting the buildings ready for occupancy due to deteriorating conditions in the old school.

Subsequent to the payment of the 10% holdback a dispute continued concerning the existence of defects and whether they had been corrected. Beginning in 1972 Arcadia contacted several of Sides' subcontractors directly as well as several other companies and paid them to correct alleged defects in the work and in 1975 contracted with Walter Brockmiller, Inc., a second general contractor, to complete work on hardware and locks, power outlets, folding partitions, roof repairs, exterior painting, a backed up exterior drain, and water-damaged ceiling tile. For much of this work Brockmiller utilized the same subcontractors who had performed the initial work for Sides.

Legal action concerning the project was initiated when Robbins Floors, Inc., one of Sides' materials suppliers, sought recovery of $650. Sides subsequently entered a stipulation that it was liable in that amount to Robbins. Sides impleaded Arcadia School District in the amount of the Robbins claim and further alleged Arcadia's liability to them for the balance due on the construction contract, stating that it had performed all conditions precedent and terms of the contract. In its amended counterclaim Arcadia alleged compliance with the contract and that Sides had breached the contract by defective and improper installation and by failure to conform its work to plans and specifications with respect to the following items: (a) the roof, with resulting damage to ceiling tiles, plaster, paint, walls and flooring due to leakage, (b) wiring, (c) intercom system, (d) ventilation and heating system, (e) exterior paint, (f) stage doors, (g) carpeting, (h) locks and hardware, (i) outside drain, and (j) electrical, mechanical, heating and ventilation equipment.

The court's judgment awarded Sides the $15,000 due on the contract and $1,265 for additional work on extension of a drain. As an offset to the final payment the court awarded to Arcadia $12,331.31 representing amounts paid by Arcadia to correct defects. ¹

Appellant Arcadia School District's first alleged ground of error alleges that the trial court erroneously received and used evidence of an attempted "settlement" agreement in arriving at its final judgment, as evidenced by the failure to award appellant that portion of the Brockmiller bill attributable to exterior painting. Appellant claims the court was enforcing a settlement agreement reached in a meeting held at the Arcadia School on October 3, 1973, at which appellant claims respondent agreed to repaint an exterior canopy and correct other agreed upon defects within sixty days if appellant would release its claim for defects in other exterior painting and damages for late completion. This action is claimed to be improper because (a) even if a settlement agreement had been reached, the uncontradicted evidence established that the defects had not been corrected within sixty days if at all, (b) offers of settlement are inadmissible, and (c) the offer of settlement was beyond the scope of the pleadings.

We hold that the trial court correctly admitted evidence of the meeting between the parties and their attorneys in October of 1973. In a court-tried case the trial judge is allowed wide latitude in the admission of evidence, the court being more qualified than a jury to consider evidence of a transaction and utilize only that part which is competent in arriving at its judgment. Lee v. Rolla Speedway, Inc., 539 S.W.2d 627, 632 (Mo.App.1976). The issue on appeal of a court-tried case is never whether admission of certain evidence was reversible error, but rather whether the evidence was admissible or not and what the judgment of the appellate court should be based upon the admissible evidence. Menos v. Hodges, 499 S.W.2d 427, 429 (Mo.1973).

The general rule relied upon by appellant is that declarations or concessions made during the course of settlement or compromise negotiations are inadmissible against that party. Hunter v. Helsley, 98 Mo.App. 616, 620-621, 73 S.W. 719, 720 (1903); Greyhound Lines, Inc. v. Miller, 402 F.2d 134, 139 (8th Cir. 1968). If, however, a court can reasonably determine that the purpose of a meeting is to reach a final agreement as to items that in fact need to be corrected and are not in compliance with contract specifications, the proscription of the general rule does not then apply to resulting statements or agreements. In Hunter the court held that the rule against compromise declarations has no effect when evidence showed that a discussion between parties was to ascertain an amount actually owed to plaintiff and not to effect a compromise. 73 S.W. at 720-721. Even if part of the meeting was to effect a compromise agreement between the parties the court would be entitled under the liberal admission of evidence rule to consider evidence of the meeting in order to obtain any relevant evidence contained therein as to defects in the construction.

The fact that a period of sixty days was set for completion of the agree-upon items does not necessarily indicate the existence of a "compromise" agreement. Rather, it could be viewed as a mere designation of a reasonable time in which the work should be completed. In Bremen Bank & Trust Co. v. Bogdan, 498 S.W.2d 306, 311 (Mo.App.1973), a bank's proposal to make a secured loan to a customer to cover an overdraft was held not to be a compromise but was "merely for the purpose of working out by negotiation a method for satisfying (an acknowledged) debt."

There was sufficient evidence from which the court could determine that the purpose of the meeting at the school was to make a final determination as to existing defects for which Sides should be responsible despite testimony of several of the participants that it was to settle their differences. While appellant points particularly to the testimony of Harvey Berhle, Sides' job superintendent at the Arcadia project, that the purpose of the meeting was "(t)o try to settle" the punch list problems, it is not clear that he used those words in the "compromise" sense. His prior testimony indicated frustration at receiving multiple punch lists, each with additional items, and could thus be viewed as indicating that the purpose of the meeting was to finalize all legitimate complaints into a final list. The architect testified that because of the need for a January, 1971 occupancy of the classroom building he departed from standard procedure and agreed to prepare "preliminary" check or punch lists during construction. Mr. Donald Sides, vice president of Sides, testified that probably six to eight punch lists were received. Some of those present at the meeting conducted an inspection trip of the project. The record indicated that the school occupied the buildings while...