Michigan Bell Telephone Co. v. C & C Excavating Co.

276 N.W.2d 487, 87 Mich. App. 758, 1979 Mich. App. LEXIS 1934
CourtMichigan Court of Appeals
DecidedJanuary 3, 1979
DocketDocket No. 77-4895
StatusPublished
Cited by1 cases

This text of 276 N.W.2d 487 (Michigan Bell Telephone Co. v. C & C Excavating Co.) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michigan Bell Telephone Co. v. C & C Excavating Co., 276 N.W.2d 487, 87 Mich. App. 758, 1979 Mich. App. LEXIS 1934 (Mich. Ct. App. 1979).

Opinion

R. M. Maher, J.

Michigan Bell Telephone Company brought this interpleader action to determine rights of potential claimants to a sum of money due defendant C & C Excavating for services rendered under a construction contract between Bell and C & C Excavating, as general contractor. Other defendants include various subcontractors and the Michigan Department of Treasury. Default judgments were entered against all defendants except the Department of Treasury and two subcontractors. The Treasury Department, Shores Re-Steel, Inc., and Auburn Supply Company, Inc., filed answers and cross-claims alleging priority of their claims to the subject fund. Shores Re-Steel and Auburn Supply also filed counterclaims against plaintiff Michigan Bell, alleging that plaintiff was liable for certain sums due them from the general contractor, C & C Excavating, for work [761]*761performed and materials supplied for the job performed for Michigan Bell by C & C.1 From judgments rendered against Bell in favor of the Treasury Department, Auburn Supply and Shores Re-Steel, Michigan Bell now appeals.

Auburn Supply based its counterclaim on a provision of the contract between Michigan Bell and C & C Excavating which provides as follows:

"The Contractor, if required by the Construction Superintendent before the making of any payment, or at any time during the progress of the work, shall furnish said Construction Superintendent with evidence, in such form as the Construction Superintendent shall require, that all claims, causes of action for damages and all claims or liens for payment of wages or salaries or for payment for tools, machinery or supplies have been paid, released or settled, and in case such evidence be not furnished as aforesaid, such amount as said Construction Superintendent may consider necessary to meet any and all of such claims, shall be retained from any moneys otherwise due the Contractor hereunder, until such claims, causes of action or liens shall have been fully satisfied and until such evidence shall have been furnished.”

Shores Re-Steel also relied on the above-quoted contract provision, alleging in one count that it was a third-party beneficiary of the contract between Michigan Bell and C & C Excavating, and that Michigan Bell breached a duty owed to subcontractors under the contract with C & C to withhold payment from C & C until C & C furnished evidence that claims of subcontractors had been paid. In a second count, Shores Re-Steel [762]*762alleged that Michigan Bell was negligent in failing to withhold payment from C & C until furnished evidence of payment of claims. In a third count, Shores Re-Steel alleged wrongful disclosure by Michigan Bell in response to a writ of garnishment served on Bell on November 2, 1973, in connection with a lawsuit brought by Shores Re-Steel against C & C Excavating.

Although the pleadings alleged primarily that Michigan Bell was negligent in failing to withhold payment from C & C Excavating under its contract until C & C furnished evidence of payment to subcontractors, the evidence presented at trial was directed at establishing that Michigan Bell’s agent had agreed to pay the subcontractors’ accrued claims against C & C Excavating. The trial court’s opinion, on the other hand, states that once C & C abandoned the project, Michigan Bell assumed the role of general contractor and thereby assumed C & C’s obligations to the subcontractors. The trial court also ruled that Michigan Bell negligently continued to pay C & C after it became aware that C & C had abandoned the project. Thus it appears that the counterclaims were pled on one theory, tried on a second theory and decided on still a third theory. We find, however, that none of the theories presented entitles counterplaintiffs to recover from Michigan Bell.

Dealing first with Shores Re-Steel’s challenge to the garnishment disclosure, we agree with the trial court that Shores’ failure to file a timely challenge to the disclosure under GCR 1963, 738.6 and 738.9 bars it from raising the issue in this proceeding.

Prior to trial, all parties stipulated to the validity of the claims asserted by defendants against C & C Excavating. It was further agreed that the [763]*763question of priority of claims to the interpleader stake would be submitted for decision on briefs to be filed after the trial. The sole issue upon which testimony was taken was the counterclaims of Auburn Supply and Shores Re-Steel against Michigan Bell.

Auburn Supply presented testimony of Daniel Alexánder, the secretary-treasurer of C & C Excavating, Inc., to the effect that he told a representative of Michigan Bell, one Ed Heichel,2 at the end of July, 1973, that C & C was in financial difficulties and could not finish the job, and that Alexander would undertake to finish the job started by C & C, forming a new company for that purpose. Alexander further testified that Heichel agreed to pay subcontractors directly, and did in fact pay some subcontractors. He testified that he sent letters to Mr. Heichel authorizing direct payment of Auburn Supply and Shores Re-Steel. Stephen Messina, president of Auburn Supply, testified that he believed oh the strength of Mr. Alexander’s telephone conversation with Mr. Heichel, which he overheard, that his company would be paid directly by Michigan Bell for past and future deliveries of materials.3. Messina acknowledged that no representative of Michigan Bell had ever told him directly that Bell would pay him.

As evidence in support of its counterclaim, Shores Re-Steel adopted the testimony of Daniel Alexander and entered into evidence a writ of garnishment previously served on Michigan Bell.

[764]*764All the many theories raised in this case allege negligence on the part of Michigan Bell. In order to recover on a negligence theory, the subcontractors must prove that Michigan Bell owed them a duty, that it breached that duty and that they were damaged as a result of that breach, Clark v Dalman, 379 Mich 251; 150 NW2d 755 (1967). The primary theory pled by the subcontractors in their counterclaims was that Michigan Bell’s duty to them arose out of Bell’s contract with C & C Excavating. The evidence presented at trial sought to establish that Michigan Bell promised to pay C & C’s obligations to its subcontractors. The theory on which the trial court apparently based recovery was that Michigan Bell assumed the obligations of C & C Excavating by continuing the construction project after it knew of C & C’s precarious financial position.

The Supreme Court dealt with the first two theories in Roulo v Automobile Club of Michigan, 386 Mich 324; 192 NW2d 237 (1971), a case similar on its facts to the case at bar. In Roulo, as in the case now before us, the general contractor on a construction project went bankrupt, leaving a subcontractor unpaid. The subcontractor sued the owner of the building which was the subject of the contract, claiming that the owner was negligent in not requiring the general contractor to furnish a labor and material bond, as specified in the construction contract. The trial court granted defendant’s motion for summary judgment for failure to state a cause of action, and the Supreme Court affirmed. The Roulo

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Bluebook (online)
276 N.W.2d 487, 87 Mich. App. 758, 1979 Mich. App. LEXIS 1934, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michigan-bell-telephone-co-v-c-c-excavating-co-michctapp-1979.