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Phil. & Arnold, Inc. v. Borgsmiller

OPINION FILED APRIL 10, 1984.

PHILLIPS AND ARNOLD, INC., PLAINTIFF-APPELLANT,

v.

FREDERICK J. BORGSMILLER, INC., ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Jackson County; the Hon. Bill F. Green, Judge, presiding.

JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

The plaintiff, Phillips and Arnold, Inc., brought an action in the trial court to recover $15,000 on a contract for $30,000 between plaintiff and the defendants, Frederick J. Borgsmiller and Frederick J. Borgsmiller, Inc. The defendant Frederick J. Borgsmiller was a shareholder of the defendant corporation, which was dissolved shortly before suit was brought. Following a bench trial the court entered judgment ordering that the plaintiff take nothing by its suit. The plaintiff has appealed raising two issues, which we quote:

"1. Whether, under the facts as presented, a valid and enforceable [sic] contract was entered into between the Plaintiff and the Defendant, entitling the Plaintiff to recover the full contract price of $30,000.

2. Whether, under the facts as presented, any defense, enforceable at law, was presented by the Defendant which would preclude the Plaintiff from recovering the full contract price for the work done."

Plaintiff alleged in its complaint that on October 8, 1980, the plaintiff, called Phillips Lathing Company, Inc., at that time, had entered into a contract with the defendant corporation for the installation of insulation and 30,000 square feet of acoustical ceilings and that the plaintiff had subsequently performed the contract. The defendants concede that the plaintiff and the defendant corporation entered into a contract on October 8, 1980.

The evidence showed that the work was to be performed on a Grandpa Jone's store to be constructed in Johnston City for the defendant corporation as owner. On or about September 8, 1981, while the building was under construction, the defendant corporation sold the building in question to Grandpa John's, Inc., which undisputedly had possession and control of the building after that time. When the building was sufficiently constructed that the plaintiff could begin its work on it, the plaintiff did so. Plaintiff's secretary and treasurer, Paul Phillips, testified that, according to the plaintiff's records, it had begun work on the building on September 18, 1981. One of the defendants' witnesses, Ron Williams, testified that the plaintiff had begun work on the building "after the middle of September" in 1981; another of the defendants' witnesses, Wayne Taylor, testified that the plaintiff had begun work on the building before September 1, 1981. Plaintiff completed the work in October of 1981.

The contract provided for payment of the entire sum of $30,000 "within 30 days of invoice date." A statement dated October 30, 1981, for the amount of $30,000 was sent to the defendant corporation at P.O. Box 649, Murphysboro, Illinois. Having received no payment, the plaintiff sent a letter dated January 11, 1982, to the defendant corporation at the same address concerning the amount of $30,000 due on the contract and the necessity of the plaintiff's filing a lien on the property if the bill were not paid within the next 15 days. On January 14, 1982, the plaintiff received a check from Grandpa John's, Inc., dated November 17, 1981, in the amount of $15,000. Grandpa John's, Inc., had drawn another check to the plaintiff on the same date in the amount of $15,000, but had never released that check. The plaintiff received no further payment. On April 30, 1982, the defendant corporation was dissolved. Upon dissolution assets of the corporation were distributed to the defendant Borgsmiller, a former director of the corporation. The following July the plaintiff brought suit to recover the remaining $15,000.

The evidence in no way suggests that the work plaintiff performed was unsatisfactory. The defendant Borgsmiller testified that the post office box the defendant corporation had used, that is, the box to which the plaintiff had sent the statement of October 31, 1981, and the letter of January 11, 1982, was not used by the defendant corporation after September 8, 1981, but was used, instead, after that time by Grandpa John's, Inc. The defendant Borgsmiller had not notified plaintiff of the change of address and was not aware that any employee of the defendant corporation had done so. The defendant Borgsmiller indicated that he had received no correspondence from plaintiff after September 8, 1981, and had become aware that the plaintiff had not been paid when suit was brought against him. The defendant Borgsmiller testified that he had not instructed the plaintiff not to commence work on the project.

Wayne Taylor, a carpenter who had been employed by the defendant corporation from September of 1980 to September of 1981 and by Grandpa John's, Inc., from September of 1981 to May of 1982, testified that he had superintended the construction of the store in question, which had commenced around June of 1981, and that during the construction by plaintiff of the accoustical ceilings, when the witness was employed by Grandpa John's, Inc., he had had a conversation with Paul Phillips in which "Paul asked me if I thought he would have any problems getting his money being it had changed hands." Asked the question, "At that time did he indicate who he was concerned about getting his money from?" The witness answered, "The new man that had taken over." Later, on cross-examination, the witness stated that Paul Phillips had not expressly referred to Grandpa John's, Inc., but that the witness "took it for granted that he was talking about Grandpa Johns [sic]." The witness testified concerning defendant's exhibit No. 1, a copy of a purchase order dated November 9, 1981, and signed by the witness, from Grandpa John's, Inc., to the plaintiff with respect to "contract on putting [sic] in ceiling tile. [sic] at. [sic] G.J.J.C." He testified to having submitted the order, which indicates a "unit cost" of $30,000, to a secretary for Grandpa John's, Inc. He had, he said, no knowledge of what had happened to the original or any copies of the purchase order after having given it to the secretary. The secretary did not testify. He testified further that as an employee of the defendant corporation he had had the authority to accept proposals for construction and to submit them to the defendant Borgsmiller and that as an employee of Grandpa John's, Inc., he had had the same kind of authority for that corporation. He stated that he had obtained the proposal from plaintiff that was accepted by the defendant Borgsmiller and that he had not obtained such a proposal from the plaintiff while he was an employee of Grandpa John's, Inc. In his position, he said, he was aware of any contracts between Grandpa John's, Inc., and contractors working on new construction and that he was unaware of any contracts whatever between the plaintiff and Grandpa John's, Inc.

In rebuttal Paul Phillips denied having talked with Wayne Taylor at the job site about payment for the work being performed. He testified that, as one of the plaintiff's officers, he was unaware of any agreement between the plaintiff's and Grandpa John's, Inc., concerning the work at the store in Johnston City. He stated that he had not seen the purchase order about which Wayne Taylor had testified until the afternoon of trial.

Upon the conclusion of trial the court stated that it was going to reserve ruling for seven days. In response to a question from counsel for plaintiff concerning novation, the court responded:

"Whether he has agreed to it or not [sic] but you can understand from me there is no novation. I don't think that there is any question. I just don't think so. You will hear from me within seven days on this."

In its written judgment the trial court made several findings of fact, including the finding that plaintiff's predecessor, Phillips Lathing Company, Inc., had entered into a contract with the defendants on October 8, 1980, to install insulation and acoustical tile in the Grandpa John's store in Johnston City for $30,000. In paragraph five of its findings the court stated:

"Although there is some evidence that Mr. Phillips had a conversation with Mr. Wayne Taylor indicating that he was aware of the transfer of ownership, there is no evidence as to the date of the conversation. The evidence is clear that no one on behalf of FREDERICK J. BORGSMILLER officially notified Phillips Lathing Company, Inc. that the contract between FREDERICK J. BORGSMILLER, INC. and FREDERICK J. BORGSMILLER and Phillips Lathing Company, Inc. was being cancelled or that FREDERICK J. BORGSMILLER, INC. and FREDERICK J. BORGSMILLER would not be responsible for the amount of the contract. Also, there is no evidence that at any time anyone from ...


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