Strouss v. Simmons
| Decision Date | 30 December 1982 |
| Docket Number | No. 6960,6960 |
| Citation | 66 Haw. 32,657 P.2d 1004 |
| Court | Hawaii Supreme Court |
| Parties | Charles A. STROUSS dba C.A. Strouss & Assoc., Plaintiff-Appellant, v. Dolly Slaughter SIMMONS, Robert Dean Simmons, U.S. Bancorp Realty and Mortgage Trust, Daniel P.S. Fong, Haruo Fujitomo, Danny Fong's Spreckelsville Hui, a Hawaii limited partnership, Julius Shulman, Inc., and Argonaut Insurance Company, a foreign corporation, Defendants-Appellees, and ARGONAUT INSURANCE COMPANY, Cross-Claimant-Appellee, v. Dolly Slaughter SIMMONS and Robert D. Simmons, Cross-Defendants-Appellees, Woodrum and Staff, Limited, a Hawaii corporation, Edwin T. Murayama, Giovanni K.L. Chung and Albert Chong, Intervenors-Appellees. |
Syllabus by the Court
1. It is the function of courts to enforce contracts and not to make or alter them.
2. Appellate court may affirm judgment on any ground which appears in the record, regardless of whether the trial court relied on it.
3. Under second proviso of HRS § 507-46, mortgage recorded prior to date of completion, which complies with the conditions stated in the proviso, has priority over mechanic's lien based on visible commencement of operations for the improvement.
4. One invoking equitable estoppel must show detrimental reliance and reasonableness of reliance.
5. Funds disbursed by construction mortgagee for the maintenance and protection of the underlying property constitutes monies "used for the purpose of paying for the improvement" of the property. HRS § 507-46 (1976).
6. Construction mortgage lien has priority over mechanic's lien to the extent of payments advanced for the maintenance and protection of the underlying property. HRS § 507-46 (1976).
7. Interest on the amounts disbursed by the construction mortgagee under the building loan agreement does not constitute "money advanced under and secured by the mortgage [which] is thereafter used for the purpose of paying for the improvement" of the property. HRS § 507-46 (1976).
8. Construction mortgage lien does not have priority over mechanic's lien in the payment of interest under the building loan agreement. HRS § 507-46 (1976).
9. The purpose of the mechanic's lien statutory scheme is to protect mechanics and materialmen who have furnished both time and material for others.
10. Where the language of the law in question is plain and unambiguous, the court must give effect to the law according to its plain meaning.
11. Construction mortgagee was entitled to reasonable attorneys' fees incurred in protecting its rights in the course of litigation pursuant to a valid stipulation agreement in the construction loan mortgage.
12. By virtue of subordination agreement with prior purchase money mortgagee and right of subrogation, construction mortgagee is entitled to priority in the amount disbursed for the partial payment of the purchase money mortgage.
Richard L. Rost, Wailuku (Richard L. Rost, a Law Corp., Wailuku, of counsel) for plaintiff-appellant.
Robert A. Rowan and William M. Swope, Honolulu (Cades Schutte Fleming & Wright, Honolulu, of counsel) for defendants-appellees U.S. Bancorp Realty and Mortg. Trust.
James W. Boyle and Gerald A. Sumida, Carlsmith, Carlsmith, Wichman & Case, Honolulu, for defendants-appellees Dolly Slaughter Simmons and Robert Dean Simmons.
Walter T. Shimoda, Wailuku, for defendants-appellees Daniel P.S. Fong, Haruo Fujitomo and Danny Fong's Spreckelsville Hui.
Tamotsu Tanaka, Honolulu (Tamotsu Tanaka, a Law Corp., Honolulu, of counsel) for intervenors-appellees Edwin T. Murayama, Giovanni K.L. Chung and Albert Chong.
John Jubinsky, Honolulu (Ashford & Wriston, Honolulu, of counsel) for intervenor-appellee Woodrum and Staff Limited.
Before RICHARDSON, C.J., LUM and NAKAMURA, JJ., and OGATA and MARUMOTO, Retired Justices, assigned temporarily.
This is an appeal by Charles A. Strouss, an individual doing business as C.A. Strouss & Assoc., plaintiff, from an Amended Judgment and Order of Distribution of Proceeds, which was entered by the Second Circuit Court, in a case which arose in connection with a townhouse condominium development, known as Sugar Cove, at Spreckelsville Beach, Wailuku Commons, Maui.
Dolly Slaughter Simmons, wife of Robert Dean Simmons, undertook the development on land which she purchased from P.S. Fong and Haruo Fujitomo, general partners of Danny Fong's Spreckelsville Hui, a limited partnership. The purchase price was $455,000, with $100,000 down payment and purchase money mortgage of $355,000.
Strouss was the general contractor of the project under a cost plus fixed fee contract. He originally undertook the construction for a guaranteed maximum price of $1,145,945, which included a fee of $50,000. The guaranteed maximum price was subsequently increased to $1,194,825, including the same fee. Both the original maximum price and the amended maximum price were subject to reimbursement for costs of changes requested by the developer.
U.S. Bancorp Realty and Mortgage Trust, an Oregon business trust, which had its office in Portland, Oregon, provided interim financing for the project upon building loan agreement, promissory note, and mortgage, which were executed jointly and severally by Dolly Slaughter Simmons and Robert Dean Simmons.
In this opinion, the amended judgment from which this appeal has been taken will be referred to as the judgment; Danny Fong's Spreckelsville Hui, as Spreckelsville Hui; U.S. Bancorp Realty and Mortgage Trust, as Bancorp; Dolly Slaughter Simmons and Robert Dean Simmons, severally, as well as jointly, as Simmons; and the document executed by Strouss' project manager, entitled PRIORITY AGREEMENT, mentioned in paragraph 6, on page 5, of this opinion, and attached as Appendix A at the end of the opinion, as Appendix A.
The law firm of Carlsmith, Carlsmith, Wichman and Case, represented by James W. Boyle and Gerald A. Sumida, served as Simmons' counsel on all matters in the case which involved legal questions.
The judgment was entered under H.R.C.P., Rule 54(b), relating to judgment upon multiple claims or involving multiple parties, because the case was tried on a bifurcated basis upon the following agreement of the parties:
(a) Question of priority of mechanic's lien asserted by Strouss and the mortgage lien of Bancorp would be tried first (b) In case the question of priority of lien should be decided in favor of Bancorp, such decision would resolve the entire controversy; and
(c) In case the question of priority should be decided in favor of Strouss, then the trial would proceed on other issues raised in the case.
There are seven paragraphs in the judgment, but the only portions thereof which are pertinent to this appeal are the following:
(a) Paragraph 1, which reads: "Judgment is hereby entered in favor of U.S. Bancorp Realty and Mortgage Trust and against Robert Simmons and Dolly Slaughter Simmons in the sum of $1,827,023.04";
(b) Paragraph 2, which reads: "The mortgage lien of U.S. Bancorp Realty and Mortgage Trust securing the payment of $1,827,023.04 from Robert Simmons and Dolly Slaughter Simmons is prior, paramount and superior to the lien asserted by Charles A. Strouss, dba C.A. Strouss & Assoc."; and
(c) Portion of paragraph 3, which reads: "This is a Final Judgment of the claims asserted by U.S. Bancorp Realty and Mortgage Trust against ... Charles A. Strouss, dba C.A. Strouss & Assoc., ... against U.S. Bancorp Realty and Mortgage Trust ...."
The quoted portions of the judgment are based on Conclusions of Law Nos. 5 and 6, which read:
The sum of $1,827,023.04, mentioned in the judgment consisted of the following items:
Amount disbursed to Simmons
under the building loan
agreement $1,365,622.00
Interest on the amount
disbursed 410,903.49
Maintenance and protection of
property 23,955.99
Attorneys' fees and costs 26,541.56
-------------
TOTAL $1,827,023.04
The foregoing figures were established by the testimony of Richard P. Buono. Buono was an employee of Bancorp Management Advisers, Inc.
Following are the facts and chronology of events which are material to the decision of this case:
1. On November 1, 1973, Simmons and Strouss executed their construction contract.
2. On December 19, 1973, Boyle sent the following telegram to Strouss:
"US BAN TRUST HAS AGREED ISSUE A ONE MILLION SIX HUNDRED THOUSAND DOLLAR INTERIM LOAN AND THEREFORE ON BEHALF OF MRS SIMMONS WE HEREBY GIVE YOU NOTICE TO PROCEED UNDER YOUR CONSTRUCTION CONTRACT DATED NOVEMBER 1 1973"
3. Upon receipt of Boyle's telegram, Strouss proceeded to order materials for shipment to the construction site, and commenced construction sometime during the middle of January 1974, and, in any event, before February 4, 1974.
4. On January 3, 1974, Bancorp sent to Simmons a letter approving an interim construction loan of $1,600,000, to be disbursed under the terms and conditions of building loan agreement to be executed by Bancorp and Simmons.
5. On January 25, 1974, Simmons and Strouss executed the second amendment to their construction contract, which...
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