Vittert Const. & Inv. Co. v. Wall Covering Contractors, Inc.

• Decision Date: 28 September 1971
• Docket Number: 33977,Nos. 33919,s. 33919
• Citation: 473 S.W.2d 799
• Parties: -5854, 71-2 USTC P 9740, 11 UCC Rep.Serv. 226 VITTERT CONSTRUCTION AND INVESTMENT COMPANY, Plaintiff, v. WALL COVERNING CONTRACTORS, INC., a corporation, et al., Defendants, Charles W. Clark and Harold L. Clark, copartners, d/b/a Clark Painting Company, Defendants-Appellants, Brod-Dugan Company, a corporation, Defendant-Respondent, United States of America and Edwin P. Trainor, District Director of Internal Revenue, St. Louis, Missouri, Defendants-Appellants.
• Court: Missouri Court of Appeals

Page 799

473 S.W.2d 799

28 A.F.T.R.2d 71-5854, 71-2 USTC P 9740,

11 UCC Rep.Serv. 226

VITTERT CONSTRUCTION AND INVESTMENT COMPANY, Plaintiff, v. WALL COVERNING CONTRACTORS, INC., a corporation, et al., Defendants Charles W. Clark and Harold L. Clark, copartners, d/b/a Clark Painting Company, Defendants-Appellants Brod-Dugan Company, a corporation, Defendant-Respondent United States of America and Edwin P. Trainor, District Director of Internal Revenue, St. Louis, Missouri Defendants-Appellants.

Nos. 33919, 33977.

St. Louis Court of Appeals, Missouri.

Sept. 28, 1971.

Motion for Rehearing or to Transfer to Supreme Court Denied

Nov. 29, 1971 in No. 33919.

W. Layton Stewart, St. Louis, for plaintiff.

Charles S. Sigoloff, Sidney Rubin, St. Louis, for defendants.

Jack F. Allen, Clayton, for defendant-appellant Clark.

Shifrin, Treiman, Schermer & Gallop, Richard H. Ulrich, St. Louis, for defendant-respondent.

Daniel Bartlett, Jr., United States Attorney, James M. Gordon, Asst. U.S. Atty., St. Louis, Johnnie M. Walters, Asst. Atty. Gen., Fred B. Ugast, Acting Asst. Atty. Gen., Tax Div., Bennett Hollander, John A. Townsend, Attys., Tax Div., Joseph M. Howard, Acting Chief, Meyer Rothwacks, Chief, Appellate Section, U.S. Dept. of Justice, Washington, D.C., for defendant-appellant United States.

WOLFE, Judge.

This is an action on petition in interpleader filed by the Vittert Construction and Investment Company. This company was indebted to Wall Covering Contractors, Inc., in the sum of $4,246.44. It had received notices from two companies named as defendants in this action, each claiming that a part of the sum owing by the plaintiff had been assigned to them. Another named defendant had a judgment against Wall Covering Contractors, Inc. and had run a garnishment in aid of execution against the plaintiff for the amount of its judgment. The United States of America had filed a tax lien against Wall Covering Contractors, Inc., and the District Director of Revenue was made a party defendant.

The court entered an order restraining the judgment creditor from further proceeding on its garnishment. It restrained all of the defendants from making any claim in other actions in relation to the sum owed by the plaintiff to Wall Covering Contractors, Inc. It allowed the plaintiff attorney's fees and costs out of the $4,246.44 that it owed and directed that the balance of $3,791.44 be paid into the registry of the court. Proceedings and hearing thereafter were held to determine the rights of the parties named. At the conclusion of the hearing the court made an order of distribution of funds. Two of the named defendants, United States of America and Charles W. and Harold L. Clark, d/b/a Clark Painting Company, have appealed.

All claimants to the fund, paid into the registry of the court, appeared by counsel at a pre-trial conference. It was there agreed and stipulated between the parties that the allowance of attorney's fees and costs to the plaintiff in the total sum of $455.00 should be made, thus reducing the sum for distribution to $3,791.44. It was also stipulated and agreed by all parties that the Universal Accounts Company, a defendant, had a claim paramount to all other defendants in the amount of $2,044.88 on the sum to be distributed. This left a balance in the registry of the court of $1,746.56 with three claimants contending for it.

One of these claimants is the partnership of Charles W. and Harold L. Clark, d/b/a Clark Painting Company. The claim they assert is predicated upon an assignment of accounts by Wall Covering Contractors, Inc.

Another claimant is Brod-Dugan Company which had the judgment against Wall Covering Contractors, Inc. and had served a garnishment in aid of execution on Vittert Construction and Investment Company, plaintiff-intervenor.

The last of the three remaining claims is that of the United States of America which had filed tax liens in the sum of $10,096.69 plus interest against Wall Covering Contractors, Inc.

The court found that the claim of the Clark Painting Company was subordinate to the claim of Brod-Dugan, the judgment creditor, and subordinate to the claim of the United States of America. The part of its decree relevant to the appeal before us is as follows:

'1. That the cost of this action shall be satisfied from the funds now in the registry of the Court.

'2. Defendant Brod-Dugan is entitled to be paid the sum of $844.54 from the funds in the registry of the Court.

'3. The United States of America is entitled to receive the balance of the fund of $1,746.56 now in the registry of Court after deducting the sums provided in paragraph 1 and 2 hereof.'

As stated, Clark Painting Company has appealed from the decree and the United States of America also has appealed. Brod-Dugan, the judgment creditor, is here as a respondent.

We shall first consider the appeal of Clark Painting Company. There was in evidence by answer to interrogatories propounded to defendant Clark the following document:

'AGREEMENT

'THIS AGREEMENT made April 10, 1967, between Wall Covering Contractors, Inc., hereinafter called 'Seller' and Charles W. Clark and Harold L. Clark, partners doing business as Clark Painting Company, hereinafter called 'Purchaser.'

'1. Seller agrees to sell and purchaser agrees to purchase the accounts receivable of Seller listed on Schedule A attached hereto and made a part hereof. The agreed sale price is $5,101.44.

'2. Purchaser agrees to assume the risk pertaining to all of said accounts receivable and Purchaser shall be deemed the owner of all of said accounts sold by Seller to Purchaser.

'3. Seller represents and warrants that each account is based upon an actual sale and delivery of merchandise or service, that the customer is liable for the payment of the amount stated in the invoice according to its terms without offset, defense or counterclaim. Seller agrees to indemnify and protect Purchaser against liability, loss or expense caused by or arising out of the rejection of the goods or alleged claims, defenses or offsets of every kind other than those resulting from financial inability to pay.

'4. Seller and purchaser agree that all customers of the Seller, included in the aforesaid accounts receivable, shall be notified of the sale of the accounts receivable to Purchaser and that all payments due under said accounts shall be made direct to Purchaser.

'5. Purchaser agrees that if Purchaser collects more than $5,300.00 on the aforesaid accounts receivable sold by Seller to Purchaser, after deducting all collection costs, including but not limited to attorney's fees and court costs, that it shall pay over any excess amounts to or for the benefit of the Seller as follows:

'(a) On direction of Seller, to pay any excess amounts to the Internal Revenue Service, U.S. Treasury Department, to apply on any Federal Tax due by the Seller.

'(b) On direction of Seller to pay any excess amounts to the State of Missouri to apply on any State Tax due by the Seller.

'(c) The remainder, if any, to Seller.

'IN WITNESS WHEREOF, the parties have signed this agreement this 10th day of April, 1967.

'WALL COVERING CONTRACTORS, Inc., Seller

By /s/ William H. Clodfelter

Its President

/s/ Charles E. Sykes

Its Secretary

CLARK PAINTING COMPANY, A Partnership, Purchaser

By /s/ Charles W. Clark

Partner.'

The exhibit attached to the agreement listed 37 accounts totaling in amount $10,301.76. Two of the accounts assigned were accounts owing to Wall Covering Contractors, Inc. by Vittert Construction and Investment Company, intervenor.

It is upon the foregoing agreement that Clark Painting Company claims a lien superior to the claim of the United States for taxes and the claim of Brod-Dugan, the judgment creditor. The court heard evidence at the request of Brod-Dugan and William H. Clodfelter, president of Wall Covering Contractors, Inc., was called as a witness. Clodfelter testified that during the year 1966 his company was in financial difficulties because its accounts outstanding for payment were not being paid in sufficient quantity to meet expenses. After consulting with an attorney he was advised to go to Universal Accounts Company which engaged in factoring accounts. He did this and assigned part of the accounts owing by plaintiff-intervenor to the factoring company. As stated above, this assignment was given first priority upon the money paid by intervenor into court by agreement of all parties.

At some time in January or February of 1967, William Clark of the Clark Painting Company talked to him about the financial problems of Wall Covering Contractors, Inc. and told Clodfelter that he thought that he could help him out and spoke of buying his company. He stated that thereafter, on April 12, 1967, he reached an agreement with the Clarks that Wall Covering Contractors, Inc. would operate as a separate unit of the Clark Painting Company and would work out of Clark's place of business, paying $25.00 a month rent. Wall Covering Contractors, Inc. moved into Clark's place of business with the understanding that the Clarks were to handle the financial end of the business and as payments on accounts came in, Clark would forward to Universal Accounts payments from accounts that had previously been factored with them and place the remainder in a special fund to meet Wall Covering Contractors' current expenses and repay Clark...