# FILED
December 12, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk ABC SUPPLY COMPANY, IN C., ) Williamson Chancery ) No. 23986 Plaintiff/Appellant, ) ) VS. ) ) UNITED STATES FIDELITY AND ) Appeal No. GUARAN TY COMP

ANY; CHA RLES ) 01A01-9702-CH-00081 & VINZANT CONSTRUCTION CO., ) INC.; CA P-TENN

ASSOCIATES; ACI ) BUILDERS , INC. a/k /a ACI ROOFIN G, ) INC.; ADAM KEITH CHUNN; AND ) ALBERT NELSON CHUNN, ) ) Defendants

/Appellees. )
IN THE COURT OF AP PEALS OF

TENNESSEE MIDDLE SECT ION AT NASHV ILLE APPEA L FROM TH

E CHANCER

Y COURT OF

WILLIAMSON

COUNTY AT FRAN KLIN, TEN

NESSEE HONORABL E HENRY DE NMARK BELL, JUDGE Everett L. Hixson, Jr. R. E. Lee Davies Phillip E. Fleenor HARTZOG, SIL VA & DAVIE S Robert T. Witthauer Fifth Avenue, No. & Fair Street SHUMACKER & THOMPSON P.O. Box 664 Suite 500, First TN Building Franklin, TN 37065-0664 701 Market Street Chattanooga, TN 37402-4800 ATTORNEYS FOR PLAI NTIFF/APPEL

LANT John C. Beiter Luther Wright, Jr. NEA L & HA RW ELL BOUL T, CUMMI

NGS, CONNERS & 2000 First Union Tower BERRY 150 Four th Avenue , North 414 Union Street, Suite 1600 Nashville, TN 37219-2498 P.O. Box 198062 ATTORNEY S FOR DEF ENDANTS/ Nashville, TN 37219-8062 APPELLEES
AFFI RMED AND REMANDED
HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION

CONCUR: BEN H. CANTRELL , JUDGE WILL IAM C. KOCH, JR., JUDGE-2-

ABC SUPPLY COMPANY, IN C., ) Williamson Chancery ) No. 23986 Plaintiff/Appellant, ) ) VS. ) ) UNITED STATES FIDELITY AND ) Appeal No. GUARAN TY COMP

ANY; CHA RLES ) 01A01-9702-CH-00081 & VINZANT CONSTRUCTION CO., ) INC.; CA P-TENN

ASSOCIATES; ACI ) BUILDERS , INC. a/k /a ACI ROOFIN G, ) INC.; ADAM KEITH CHUNN; AND ) ALBERT NELSON CHUNN, ) ) Defendants

/Appellees. )



### O P I N I O N The captioned plaintiff, ABC Supply Co., Inc., (herea fter ABC) has appealed from the summary dismissal of some of the ca ptioned defendants.
Cap-Tenn Associates, (hereafter Cap-Te nn), as ow n er, engaged Char les & Vinzant Construction Co., Inc., (herea fter C&V), to construct a large commercial building. United States Fidelity and Guaranty

Company executed a bond g uaranteeing faithful perfor mance by C&

V, the gen eral co ntracto

r. The fo regoing defe

ndants we

re dismiss ed by

the summar

y ju dgment.

C&V engaged ACI

Builders a/k/a ACI

Roofing, Inc., (he

reafter ACI) , as subcontractor, to construct or apply the

roof of the building. Adam Keith Chunn and Albert Nelson Chunn, as guarantors for ACI , joined in an applic ation for

credit to be extended to ACI for the purchase of roofing materia ls from AB C.
Cap-Tenn, the owner, C&V, the general contractor a nd USF&G, the surety

of the general contractor, were dismissed by summary judgment. The Trial Court directed entry

of the partial summary judgme

nt as final as provided by TRCP Rule 54.02.-3- Judgmentwas ren dered in favor of ABC, the materia lman ag ainst

ACI, the roofing subcontractor, and its two guarantors for $40,418.37 plus $2,230.00 attorney f ees. This portion of the judg ment is not b efore t his Court on

appeal.
ABC, the plaintiff-app ellan t materialman, has filed a brief in this Court presenting the following issues: STATEMEN T OF THE

ISSUE S PRESENTED FOR REVIEW W heth er the court below erred in granting Summary Judgmentto Defend ants Unite d States F idelity Guaran ty Company (“USF&G”), Charles Vinzant Construction Company , Inc . (“C&V”), and Cap-Tenn Associate s (“CapTenn”) where: (a) genuine issues of

material fact exist under the do ctrin e of quantum meruit as to whether ABC was paid for ma terials supplied by it to the job under AB C’ s t he or y of

re co ve ry. (b) genuine issues of material fact exist under ABC’s bond claim as to (i) whether the ninety day notice provision containedin the bond isapplica ble and, if so, (ii) whether

USF&G, C&V and

Cap-Tenn had actual notice of theclaim sufficient to satisfy the notice requirement; and (c) the “Joint Check Rule” relied upon by USF&G, C&V, and

Cap-Ten n to extinguishthei r liab ility to ABC is inapplicable because of th e existence of contemporaneous contracts covering the samesubject matter which preclude the application of the joint check rule. (Emphasis supplied) Cap-Tenn, the owner- appelle e, has fi led a bri ef in re sponse to a ppellant ’s issues. C&V, the general cont

ractor , and USF&G, its surety , have filed a brief and supplemental brief presenting the following issue:

Whether the Chanc ery

Court wascorrect i n gra nting Summary Judgment f

or the De

fendant s/Appellees Unit ed States Fidelit

y Gu aranty Company

and Charles & Vinzant Construction Company, I nc.
On June 21, 1995, C&V, the gener al contr actor, ACI, the roof su

bcontra ctor, and ABC, the ro ofing m ateri al fur nish er, ex ecuted the fo llow ing “ Joint Check Agreement ”:-4- This Joint Check Agreement entered into this 21 day of June , 1995 , between (General Contractor) Charles & Vinzant Construct ion Co
. 500 Southland Dr., Suite 102, Birmingham, AL 35226 205-823-6761 (hereinafter referr ed to) as (subc ontractor) ACI Roofing, Inc
. 1808 Pulaski Hwy., Fay

etteville, TN 37334 615-433-6949 (hereinafter

referre d to as Subcontractor) and American Builders & Contractors Supply Co., I nc. d/b/a/ ABC Supply Co., Inc. (hereinaf

ter referred to as ABC). The par ties here to agree as follo ws: 1. Any

and all payments between General and Subcontractors in con ne ction with the Project described below shall be made only by checks issued

in the joint names o f Subcontractor and ABC by the General pursuan t t o invoicessubmitted b y Sub contractor to General. Cool Springs Market Building located at 2000 Mallory L

ane, Franklin, Tn. 37065 615-771-7954 2. All checks issued by Genera l jointly to Subcontractor and ABC as set

out a bove shall be delivered to ABC by Subcontractor, whereu

pon Subcon

tractor will endor se said checks and surrender them to ABC for depo sit by ABC. Subcontract amount

of $225,140.00. 3. One purpose o f this Joint Check Agr eement isto provide the payment of invoice s rendered by ABC on sales of all materials to Subcontractor for use on the project, n ot i n excess of Subcon

tractor amount. Th

is agre ement does not constitute an assignment of funds, and, except to the extent of payment actually received and retained by A BC, the execution of th is Agreement and taking of such joint check shallnot effect (sic) o r otherwi se impair any bond, lien or other creditor rights and remedi es which ABC now has or may hereafter have. This Agreement shall remain in full force and effect until writtencan cellation is forwarded to General and Subcontractor by a

n authorized repre sentative of ABC and all outstanding invoices owed by Subcontractor

to ABC are pai d in full. ABC’s rights contained herein are a por tion of the consider ati on for ABC’s agreement to supply materials for the Project.
The record contains a further document entitled Joint Pa ym ent Agreement , but it contains no date, no blanks are filled in and it contains only the signa ture of ABC and ACI. The signature of C&V, the gene r al contr actor, d oes not ap

pear in t he space provided

for it.-5-

Plaintiff’s reliance upon the “second contract”is misplaced because thegeneral contractor was not a par ty to it.

The record

also contains a tabulation of deliveries claimed by ABC to have been made to ACI from July 26, 1995, to Aug ust 18, 1995, amounting to a total of $82,492.21.

On July 2 5, 1995, A CI sub mitted a pa yme nt r equest to C&V seeking pay ment for $75,234.00 worth of r

oofing material s. It a

ttached to this req

uest an in voice fo r these ma terials datedJuly 24, 1995, purportedly prepared by

ABC. ABC insists, without contradiction by CapTenn, C&V, or USF&G, that ACI actually for

ged this invoice.

In accordance

with the Joint Check Agreement , C&V issued a check payable to ABC and ACI in the amount of $67,710.60 which represented the $75,234.00 less 10% “retainag e” of $7,523.40 . The “retain age” was reta ined by C&V to as sure tha

t ACI w ould satisf

actorily complete its contra

ct to cons truct t

he roo f. Sec. 13 Am Jur.2d Building and Construction contracts §§21.p24. Upon satis factor y pe rforman ce of the roof con tract, A BC and AC I would be entitled to payment of the ac cumulatedretainage by a check pay able to both under the joint check agreement. To the extent of the retainage, the summary judgment in favor of C&V and USF&G is reversed.

C&V delivered the $67,710.60 check to ACI , and ACI endorsed the check and delivered it to ABC which endorsed and dep osited it to the cre dit of ABC in its bank account on or about August 22, 1995. However, ABC drew and delivered a check to ACI for $23,324.12 and now seeks to recov er f

rom C&V and its surety this amount of $23,324.12 whic h it has already
rec eivedfrom C &V and p aid to ACI. Not hing i n thi s recor d supp orts t he righ t of ABC to collect this $23,32

4 from C& V or its sur

ety for the s e cond time. T herefore, we affirm the summary judgmen t in favor of C&V a

nd USF& G on this cl aim.-6- ABC attempts to rely upon the above mentioned “ Joint Pa yment Ag reement ” which containsthe word s: NOW, THEREFO RE, in co nsideration of Supplier furn i shing the work

for said Project, and other

valuable considerat ion, Contract

or agr ees to ma ke pay ment for s aid Work by issuance

of a che ck made p ay able join tly t o Supplier and Subcontractor. Subcontractor agree s that such joint chec k payment shall be applied agains t Subcontractors’s contract price with Contractor. Pay ment of the aforesaid amount shall be due at Sup pli er’s place of business. In the event

Contractor and

Subcontractor are for any reason in disagreement as to monies due from Contract or to Subcontractor, at the time pay ment for t he afor esaid wo rk is due to Subcontractor, Contra c tor agr ees to ma

ke full payment to Su ppli er dir ectly, in lieu o f issu ing a joint check, and Subcontractor agrees that said money so pai d by Contractorto Supplier sha ll be applied agains t Subcontractor’s co ntract price with contractor. Contractor sh all not be oblig ated to ma ke pay ment to Supp lier if S ubcontractor

becomesindebted

to Contractor for d

efault under sa id contra ct. Nothing containe d herein

in this agreement shall be const ruedas a waiver of any

of the Contractor’s right s o r remedies against the Subcontra ctor or o thers. Ad di ti on al ly, this agreement shall in no way creat e an obligation upon Contractor

to make payments in excess of the a mounts due Subcontra

ctor unde r the subc ontract , or that th is agreement shallnot be construed to crea te a con tractua

l obliga tion to supplier on the part

of Contractor except as set forth in th

is agree ment.
As stated a

bove, th is “ J oint Payment Agreement ” wa s s ign ed o nl y by ABC and ACI. No other party executed it.

ABC asserts that it has furnished a total of $81,921.71 of materials used in the roofing job and has r

eceive d only

$75,234.0 0 therefor. C &V responds that ABC has not y et proven the actual delivery and use

of the invoiced materials in the roofing project. More o ver, C &V has its ri gh t o f r et ai na ge , o r d el ay o f p aym ent, until the roof contract has bee

n satisfa ctorily performed

by ACI . Upon pro of of such per formance, the rights of ABC and ACI to the retai nage may be enf

orced. Until such performance is proved the questi on of liabi lity of C&V-7-

and its surety cannot be

determined. Moreover, the performanc e of the notice provision of the
sur ety u nde rta ki ng o f US F&G has not bee n sh own by ABC or A CI.

It is undisputed that ABC received and deposited a check for the full a mount of itsbill. Its voluntary pay

ment of part of the check to ACI did no t create any obligation upon C&V or USF&G to reimburse ABC for said voluntary payment. The only

claim which ABC might

have agains tCap-Tenn, the owners of the land, would be unjust enrichment. However, the record is clear that Cap-Tenn. has pai d all it wa s obligated to pay under its contract. Therefore, no claim for unjus tenrichment may be asserted against Cap-Tenn. See Paschall’s Inc. v. Dozier , 219 Tenn. 45, 407 S.W.2d 150 (1966). As we re ad the co mplaint AB C did not ass ert this c laim against C&V and USF&G.

The case is not closed in the Trial Cour t, where ABC will have an opportunity to prove and enforce such rights as it may b e able to establish to the retainage held by C&V to assure satisf actory performance of the roofing contract by ACI. Any

dispute as to satisfactory completio n of the r

oof will r emain ope

n for litig ation in the

Trial Cour

t.

The summary judgme

nt dismissing C&V, the general contractor, a nd USF&G, the
su re ty, on the g eneral

contract, is reversed to allow ABC to assert its right to the retainag e. In all other respects, the summary judgment dismissing Cap-Tenn, C &V and USF&G is affirmed.-8-

Costs of this appeal are taxed against the appellant, AB C. The cause is remanded to the Trial Court for further necessary procedure.

AFFI RMED AND

REMANDED

HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION

CONCUR:

____________________________ BEN H. CANTRELL , JUDGE

____________________________ WILL IAM C. KOCH, JR., JUDGE