Thummel v. King

• Decision Date: 12 September 1978
• Docket Number: No. 60340,60340
• Parties: Elmer THUMMEL, Plaintiff, v. Daryl KING and O. J. Swander, Defendants-Appellants, W. L. Brady Investments, Inc., Defendant-Respondent, W. L. Brady, and Robert Lee Barnes and Judy Barnes. O. J. SWANDER, Appellant, v. W. L. BRADY INVESTMENTS, INC., Respondent.
• Court: Missouri Supreme Court

Page 679

570 S.W.2d 679

Elmer THUMMEL, Plaintiff, v. Daryl KING and O. J. Swander, Defendants-Appellants, W. L. Brady Investments, Inc., Defendant-Respondent,

W. L. Brady, and Robert Lee Barnes and Judy Barnes.

O. J. SWANDER, Appellant, v. W. L. BRADY INVESTMENTS, INC., Respondent.

No. 60340.

Supreme Court of Missouri, En Banc.

Sept. 12, 1978.

Lloyd S. Hellman, Sandler, Balkin, Hellman & Weinstein, Kansas City, for appellants.

Donald G. Stubbs, Stubbs & Mann, Kansas City, for respondent.

FINCH, Judge.

These consolidated cases come before this court on transfer from the Missouri Court of Appeals, Kansas City District. In its written opinion (Turnage, J.), that court affirmed No. 773678 with modification and affirmed No. 772702. ¹ In the latter case, the court declined to consider all but two sub-points of appellant Swander's eighty page brief which attempted to raise nine points, one of which contained five sub-points, citing various failures to comply with Rule 84.04. ² In his application to transfer Swander alleged that such action by the court below was contrary to prior decisions of this court and presented a question of general interest and importance to the bar. We granted transfer in order to clarify what Rule 84.04 requires. We affirm No. 772702 and affirm with modification No. 773678.

We shall decide these cases as though they were here on direct appeal. Art. V, § 10, Mo.Const.; Rule 83.09. However, in the interest of providing the fullest guidance to the bar, we shall refer in the course of our discussion to the court of appeals' disposition of the various points raised in No. 772702.

Inasmuch as the main point to be decided in No. 773678 bears significantly upon No. 772702, it will be helpful to address that appeal first. We adopt without quotation marks portions of the court of appeals' opinion.

In No. 773678 Elmer Thummel brought suit to enforce a mechanic's lien on lot 43, Fairway Hills, in Jackson County, Missouri. Thummel had done brick work in the construction of a fireplace in the house built on such lot and claimed his bill in the amount of $1,126 had not been paid. Thummel named W. L. Brady Investments, Inc. (Brady) and O. J. Swander, among others, as defendants. Swander filed a cross claim for indemnity against Brady, claiming it had guaranteed to Swander it would pay all mechanic's liens.

The court found Thummel was entitled to recover $1,126 plus interest, and declared such amount to be a mechanic's lien on the lot in question. No question is presented as to the propriety of that judgment. However, the court found Swander was not entitled to judgment on his cross claim against Brady because a judgment was not entered against Swander for the amount due Thummel.

On his appeal Swander asserts he should have been given a judgment against Brady because an agreement between them obligated Brady to indemnify Swander against the Thummel judgment and lien. He argues that even though Thummel did not obtain a personal judgment against him, the mechanic's lien resulted in an obligation on his part by reason of his liability on the warranty deed given when he sold the lot.

Swander borrowed $30,200 from Brady as a construction loan to construct a house on lot 43. Swander permitted all of the paperwork to be in his name, even though he claimed he was doing this only as an accommodation for his son-in-law, Daryl King. As a part of the transaction, Swander and Brady entered into a construction loan agreement. It recited it was made in consideration of Brady making a construction loan to Swander and provided generally for the payout of the loan to pay all construction costs. Under this agreement, Brady was to make disbursements for labor performed and materials used in building the house after Swander had approved the bills. The agreement contained a final paragraph which was typed in a printed form as follows:

"11. Borrower agrees to pay 2% Construction loan fee and for other services including approval of plans, supervision of construction, periodic inspection, payment of all bills of labor, materials, taxes and insurance guaranteeing against liens, accounting, and for other necessary services during construction and/or the term of this agreement, and the borrower agrees to pay an additional 1% If W. L. Brady Investments, Inc. does not get the end loan."

Also, as a part of the transaction, Swander executed a bond in which he acknowledged himself firmly bound to Brady in the sum of $30,200. The condition of the bond was that Swander would indemnify and hold Brady harmless by reason of any loss which Brady might suffer from the failure of Swander to fully complete the house or by reason of any mechanic's liens or any unpaid labor and material bills.

Swander also executed an affidavit and agreement in which he agreed to hold any party making a loan on lot 43, Fairway Hills, and the title insurance company who issued title insurance on such lot, harmless against any and all liens, claims or suits of any mechanic, laborer, materialman, or supplier, and all liens in connection with the construction of a building on such lot.

The testimony clearly showed that Brady had no funds on hand remaining from this construction loan when Thummel presented his bill for payment. The proceeds of the construction loan had been exhausted by the payment of previous bills for labor and material which had been presented to Brady for payment. Even so, Swander contends in his cross claim that Brady should have paid Thummel because under paragraph 11 of the construction loan agreement Brady guaranteed to pay all liens. In his brief Swander says the language of paragraph 11 is clear and unambiguous and the only function of the court is to enforce Brady's obligation.

The position Swander takes totally overlooks the relationship between Swander and Brady and the position they occupy. Brady was making a loan to Swander by which Swander would have the money to construct a house. There is nothing to indicate that Brady undertook to pay any amount for the construction of this house over and above the amount of the loan made to Swander. Although his testimony was equivocal, Swander admitted he would be responsible for all costs in constructing the house in excess of the amount of the loan. He now contends the loan agreement fastens liability on Brady for the Thummel bill without mention of a basis to require Brady to pay more than the loan amount. In the face of Swander's admission and all the other evidence, including Swander's bond and his hold harmless agreement, paragraph 11 could not support a finding that Brady is obligated to pay more than the loan proceeds. Its language does not so require.

Swander complains that the trial court made no finding on his cross claim. Such a finding should have been made. However, the evidence does not support a finding in Swander's favor. For that reason the judgment will be modified by adding thereto "judgment in favor of W. L. Brady Investments, Inc., and against O. J. Swander on Swander's cross claim." As modified, the judgment is affirmed.

In No. 772702 Swander brought suit against Brady for an accounting, for an injunction against foreclosure of notes and deeds of trust held by Brady and for other equitable relief. Brady filed an answer and counterclaim and the case was tried without a jury. The judgment was favorable to Brady and Swander appealed.

The accounting made by the court involved the transactions concerning five lots in Fairway Hills subdivision, on all of which houses were constructed pursuant to contractual arrangements between Swander and Brady, the nature of which was described in our discussion of the Thummel suit. Each of the houses was constructed by King on a lot owned by Swander. King only completed one of the houses. The others, only partially constructed when King walked off the job, were finished by another contractor named Morganstern.

King was to and did submit monthly to Brady the bills covering labor and materials on each job. These were on a Request for Payment form which was to be approved and signed by Swander. These bills were then paid by Brady out of funds derived from the construction loans made by Brady on the various lots. It later developed that some of the signatures of Swander on the Request for Payment forms submitted to Brady were actually written by King or his wife, who was Swander's daughter. Swander contended that Brady was not entitled to credit in the accounting for unauthorized advances to King based on these forgeries.

Swander was the only witness to testify on his behalf in the trial of this case. Several witnesses, including W. L. Brady (defendant's president), King and Morganstern, testified for defendant. There was considerable dispute in the respective versions of what occurred. For example, there was a dispute as to whether Brady furnished accounting reports to Swander as the work progressed. Swander testified he received only one monthly report whereas defendant's evidence was that he was sent regular monthly reports. Another dispute involved whether Swander hired Morganstern to finish the jobs after King walked off or whether he was hired by Brady. Still another dispute concerned what happened when the first two houses were sold. W. L. Brady testified that construction costs on these houses exceeded the amount of the loans available and that he told Swander he would have to come up with the additional money to take care of the overrun. He said that Swander stated he would do so in a few days but meanwhile wanted Brady to release his notes and deeds of trust on these two lots and complete the sales. Brady did that but then Swander did not come up with the additional funds. Consequently, when lots were sold subsequently to the Caldarellos and the Hansons, Brady would not release its deeds of trust and it threatened foreclosure of said deeds of trust if Brady was not paid the balance due it. Swander testified that h...