text:
    UNITED STATES FIDELITY AND GUARANTY COMPANY, Appellant, v. Jack L. MILLER, t/d/b as Miller Lumber Company, Appellee.
    Court of Appeals of Kentucky.
    March 25, 1977.

      E. Preston Young, Louisville, William 0. Miller, Maysville, for appellee.
    Rocco J. Celebrezze, Louisville, for appellant.
    Before HOWARD, LESTER and PARK, JJ.
   PARK, Judge.

In this proceeding, the appellee, Jack L. Miller, trading as Miller Lumber Company, seeks to recover on payment bonds executed by the appellant, United States Fidelity and Guaranty Company (U.S.F. & G.) for lumber sold and delivered to the Mattingly Bridge Company, Inc. (Mattingly Bridge). The case was tried in the Jefferson Circuit Court without the intervention of a jury. The circuit court entered judgment in favor of Miller against U.S.F. & G. for the amount claimed. U.S.F. & G. appeals.

Mattingly Bridge entered into two contracts with the Department of Highways for work on the Shawnee Parkway in the City of Louisville. The two contracts are dated April 3 and April 11, 1969. Both contracts contained identical provisions relating to a performance and payment bond. The contracts provided:

“Such bond, when approved by the Department shall be for the use and benefit of the Department, and each person furnishing materials, labor and supplies for use in the performance of this contract.”

Attached to the contracts were performance and payment bonds executed by Mat-tingly Bridge as principal and by U.S.F. & G. as surety.

The bonds provided that the principal and surety were “held and firmly bond unto the DEPARTMENT OF HIGHWAYS in its official capacity as agent of the Commonwealth of Kentucky, hereinafter called the DEPARTMENT, and to each and every person, firm, or corporation who may furnish labor, materials or supplies for use on the project hereinafter identified.” The bond was conditioned upon the prompt payment of “persons supplying the principal with labor, supplies and materials in the prosecution of the work provided in the said contract.” No issue is raised with respect to the fact that Miller did furnish Mattingly Bridge the lumber claimed in the complaint. The sole question to be decided is whether the lumber constituted materials furnished “for use on the project” and “in the prosecution of the work.”

The lumber furnished by Miller to Mat-tingly Bridge was covered by four invoices. The lumber included in the first two invoices was shipped on March 13 and March 27, 1969. The lumber in question was delivered to Mattingly Bridge at a job site in Sebree in Webster County, Kentucky. The two invoices for the Sebree shipments totaled $13,666.92. On March 5 and March 13, 1970, Miller shipped lumber to Mattingly Bridge at two locations in Louisville. The invoices for the two Louisville shipments totaled $13,511.20.

The Sebree project involved the construction of a bridge over the Green River. Mat-tingly Bridge was a subcontractor of Nashville Bridge Company, the prime contractor for the project. This project was not bonded by U.S.F. & G. Although a payment bond may have been furnished by Nashville Bridge Company as prime contractor, Mat-tingly Bridge furnished no payment bond on the Sebree project.

Following completion of the Sebree project, a substantial amount of lumber was brought by truck to Mattingly Bridge’s facilities in Louisville. Some of the material consisted of lumber which had never been used. The bulk of the lumber brought back from Sebree had been salvaged and cleaned after being used on that job. It is clear that some of the lumber shipped by Miller to Mattingly Bridge at Sebree was not salvaged. Miller’s brief estimates that “approximately 80% or more” of the lumber shipped to Sebree was brought back to Louisville. Accepting the testimony of a truck driver and the yard foreman for Mat-tingly Bridge, the material brought from Sebree to Louisville was used and consumed in carrying out Mattingly Bridge’s two contracts on the Shawnee Parkway project.

At the time that Miller made the two shipments to Louisville in March 1970, Mat-tingly Bridge was engaged in projects other than the two contracts on the Shawnee Parkway. According to Mattingly Bridge’s yard foreman, all of the lumber from the two Louisville shipments was used and consumed in the construction of the various bridges included in the two Shawnee Parkway contracts. There was other evidence that some of the lumber from the Louisville shipments was actually used on projects other than the two bonded Shawnee Parkway contracts.

In the opinion of the circuit court, two principal questions were presented in the case, namely:

“The first is, whether or not the performance bond of United States Fidelity and Guaranty Company indemnified the use of certain forms and other similar devices which had previously been used at another job, bonded by a different surety, but reused on the instant job for which plaintiff furnished supplies in Jefferson County under Exhibits A., B., C. or D.
“The second question is whether or not material delivered to certain storage sites by the plaintiff, to be used upon a project or job, admittedly covered by the surety, was chargeable against the insurer, although later diverted by the principal, Mattingly, to a new or different purpose than contracted for.”

Implicit in the circuit court’s statement of the issues is a finding of fact that all of the material brought from Sebree was actually used on the Shawnee Parkway contracts and that a portion of the Louisville shipments was diverted from the Shawnee Parkway contracts although originally intended for those contracts. These factual findings are supported by substantial evidence, and they are not clearly erroneous. CR 52.01.

The circuit court answered both of its stated questions in favor of Miller against U.S.F. & G. With respect to the Sebree shipments, the circuit court concluded that the surety on a payment bond was liable for material used and consumed on the bonded project although the material had been originally furnished for and used on another project. The circuit court would also hold the surety on a payment bond liable for material furnished for the bonded project, but which was ultimately diverted for use on another project not covered by the bond. This court concludes that there is a basic inconsistency in the circuit court’s holdings. Although the circuit court did not err in holding U.S.F. & G. liable for the Louisville shipments, it was error for the circuit court to enter judgment for Miller against U.S.F. & G. on the Sebree shipments.

The contracts and payments bonds themselves do not require that the materials actually be used and consumed on the project. The contract and bond are intended to protect persons furnishing the materials “for use” in the performance of the contract or who are furnishing materials “in the prosecution of the work.” In considering a similar question under the Miller act, the court in United States v. Fire Association of Philadelphia, 260 F.2d 541, 545 (2d Cir. 1958) held that the materialmen need not prove that the material was actually consumed in the project, stating:

“Thus requiring the supplier to trace specific materials after they have left his control may often place upon him an impossible burden of proof even when the items involved were in fact consumed. Moreover, even if appropriate tracing measures could be devised, the courts, in enforcing one remedial policy, should be hesitant to compel an industry to accept what may be artificial and burdensome accounting practices. But these problems aside, the policy of the Miller Act dictates that an exception ought not to be carved out of the surety’s liability for materials not actually consumed. For the statutory bond is of value to materialmen in our credit economy only as its coverage is predictable at the time the contract for the materials is created. Businessmen look to more than the contents of their cash registers in conducting their affairs. If, because the surety's liability is held suspended until the goods are consumed, the bond has little effect on the degree of certainty with which the supplier can expect to receive the purchase price of the materials sold or to be sold under the contract, it little aids the financial position of the persons Congress sought to benefit.
“These same considerations apply with equal vigor to appellant’s final assertion — that its liability on the bond does not extend to materials which the contractor innocently or fraudulently diverts from the bonded work to another project. Accordingly, it would be inconsistent with the preceding discussion to enlarge the holdings of past cases which have relieved the surety of his obligation only in circumstances where the supplier, at the time the materials were furnished, had constructive knowledge of the contractor’s intended use of them.”

See the annotation, 79 A.L.R.2d 843, 847 — 49. So long as it is reasonably anticipated that the materials would be consumed on the project, this court agrees with the circuit court that “it would be unreasonable and absurd to require the seller to follow the eventual use of materials as a condition precedent to recovery against the surety.”

Entirely different factors are presented by the Sebree shipments. The two shipments in March 1969 antedated the execution of the two contracts and payment bonds for the Shawnee Parkway projects in April 1969. It is obvious that the Sebree shipments were not intended for use on the Shawnee Parkway projects and that Miller did not furnish the materials in reliance on any payment bond executed by U.S.F. & G. A portion of the lumber included in the Sebree shipments was actually consumed in the construction of the bridge at Sebree. The great bulk of the material removed from the Sebree project to Louisville was used lumber. There was no evidence of the value of the lumber which was brought from Sebree and used on the Shawnee Parkway projects. Nevertheless, the circuit court allowed Miller to recover the full amount of the two invoices covering the Sebree shipments.

The rights of a materialman under a payment bond are not limited to the ma-terialmen’s rights under the Mechanic’s Lien Law. American Radiator and Standard Sanitary Corp. v. Albany Municipal Housing Commission, Ky., 441 S.W.2d 433 (1969). Nevertheless, the presence or absence of a right to assert a mechanic’s lien can be a guide to the interpretation of a payment bond. Massachusetts Bonding and Insurance Co. v. C. B. Duff & Co., 261 Ky. 255, 87 S.W.2d 363 (1935); Marion Steam Shovel Company v. Union Indemnity Company, 255 Ky. 817, 75 S.W.2d 541 (1934). There can be no valid mechanic’s lien when material is sold on the general credit of the contractor without any knowledge or intention on the part of the supplier that the material be used on a particular job or project. Central Contractors Service v. Ohio County Stone Co., Inc., Ky., 255 S.W.2d 17 (1953); Charles H. Conner & Co. v. Mason, 143 Ky. 635, 137 S.W. 235 (1911).

The court concludes that the bond executed by U.S.F. & G. was not intended to cover materials furnished to the contractor to enable him to perform another unrelated project not covered by the payment bond. This is particularly true when the materials are furnished prior to the execution of the payment bond. In furnishing the material included in the Sebree shipments, Miller did not rely upon the existence of any contracts for the performance of the Shawnee Parkway projects. The bulk of the material included in the Sebree shipments was actually used on the Sebree Bridge project, but the fact that most of the material was salvaged by Mattingly Bridge and later consumed in performing the Shawnee Parkway project could not make U.S.F. & G. liable for the original sales price for the material. The lumber shipped to Sebree was not furnished “for use” on the Shawnee Parkway projects nor was it supplied to Mattingly Bridge “in the prosecution” of the work provided for in the contracts on the Shawnee Parkway.

The judgment of the circuit court relating to the Louisville shipments in the amount of $13,511.20 is affirmed; the judgment of the circuit court with respect to the Sebree shipments in the amount of $13,-666.92 is reversed and remanded with directions to the circuit court to enter judgment dismissing that portion of Miller’s complaint.

All concur.


source: Caselaw Access Project

author: GANT, Judge.

license: Public Domain

text:
    Robert J. SCHMIDT, Appellant, v. Otis FOREHAN, etc., et al., Appellees. EAGLE SAVINGS ASSOCIATION, Cross-Appellant, v. Robert J. SCHMIDT, Cross-Appellee.
    Court of Appeals of Kentucky.
    April 1, 1977.

      Howell W. Vincent, Covington, for appellant and cross-appellee, Robert J. Schmidt.
    John R. Elfers, Kenton County Atty., Covington, for appellees, Otis Forehan and Rita Buckley.
    Donald L. Stepner, Adams, Brooking & Stepner, Covington, for appellee, Judge James J. Gilliece.
    Larry A. Neuman, Cincinnati, Ohio, for appellee and cross-appellant, Eagle Savings Assn.
    Before GANT, HOWERTON and WHITE, JJ.
   GANT, Judge.

On June 10, 1948, Ann P. Schmidt was divorced from the Appellant herein, Robert J. Schmidt, by a judgment in the Kenton Circuit Court. This judgment provided for payment by the Appellant to Ann Schmidt of the sum of $12.00 per week for the support of their infant child, commencing May 21, 1948. The child was emancipated on November 5, 1964, and the Appellant, Robert J. Schmidt, had made no payments from the entry of the judgment on June 10, 1948, until this emancipation on November 5, 1964. In 1973 the mother of the Appellant died and he was named executor of her estate in Ohio on October 30, 1973, and was sole beneficiary. This estate consisted, in part, of better than $19,000.00 which was on deposit at the Eagle Savings Association, an Ohio corporation, one of the Appellees herein. On December 7, 1973, Ann Schmidt came back into the Kenton Circuit Court and filed her affidavit setting out the delinquency of the Appellant and sought an execution against these funds on deposit with the Appellee, Eagle Savings. After certain funds were permitted to be withdrawn in order to pay debts of the estate and costs of administration, Eagle Savings paid into the Kenton Circuit Court the sum of $17,913.00 pursuant to this execution and garnishment.

This action was brought as a collateral attack against the procedure hereinabove outlined, naming Ann Schmidt and her attorneys as parties defendant, as well as the Kenton Circuit Judge, Kenton Circuit Court Clerk and Deputy Clerk and Eagle Savings Association. Pursuant to proper motion, the court dismissed this action against the Circuit Court Clerk and Deputy, the Circuit Judge and Eagle Savings, and it is from the orders dismissing these parties that the Appellant appeals.

Basically, the Appellant founds his contention that the Circuit Judge, the Circuit Court Clerk and Deputy Circuit Court Clerk were liable in this collateral attack on the grounds that the affidavit in support of the Petition for Execution clearly indicated on its face that the collection of any sums due and owing to Ann Schmidt prior to 1958 were barred by the Statute of Limitations. Appellant cites the cases of Boehmer v. Boehmer, 259 Ky. 69, 82 S.W.2d 199 (1935); Dalton v. Dalton, Ky., 367 S.W.2d 840, 842 (1963); Whitby v. Whitby, 306 Ky. 355, 208 S.W.2d 68 (1948); Bailey v. Bailey, Ky., 294 S.W.2d 942 (1956). The basic holding in each of these cases is set out in the case of Spencer v. Spencer, Ky., 312 S.W.2d 360 (1958), in which the court says, quoting Whitby, supra, as follows:

Although the judgment in a case such as the one before us is interlocutory in its nature, it is binding and final until modified and any payments which have become due previous to such modification constitute a fixed and liquidated debt in favor of the judgment creditor against the judgment debtor.

In each of these cases cited by the Appellant, and we might add several of them were relied upon by the Appellees, the sole question presented to the court was the right of the court to modify a decree providing for support by making it retroactive and, obviously, the court has held that this could not be done. In the Spencer case, supra, the husband sought to avoid payment on the grounds that his wife had taken the child out of the state and the court in that ease held that this could not be used in avoidance since these amounts were already adjudicated and had become a fixed debt of the husband. None of these cases directly attack the question as to when the Statute of Limitations runs on support payments in Kentucky.

The State of Ohio has directly attacked this question. In the case of Smith v. Smith, 168 Ohio St. 447, 156 N.E.2d 113 (1959), an action was brought by the wife against the husband some 14 years after the emancipation of the child, the judgment Statute of Limitations in Ohio being a 21-year period. The court therein recites the previous case of Roach v. Roach, 164 Ohio St. 587, 132 N.E.2d 742, as follows:

Where a court in a divorce action makes. an order for the support of a minor child of the parties payable in installments, over which order the court retains expressly or by implication continuing jurisdiction, such order must be reduced to a lump sum judgment as to unpaid and delinquent installments before an execution may be lawfully levied thereunder.

The court in the Smith case states that this latter case is the next step in the proceeding and states as follows:

The usual order for installment support payments is not rendered in the form of a judgment for a sum certain, payable in installments, but, as in the instant case, it is usually an order to pay a certain amount periodically until the minor for whose benefit the order is intended reaches a certain age — usually the age of majority .

Ohio and Kentucky both recognize that the court has no power to modify past support payments but Ohio goes on to hold that only when the child reaches the age of emancipation without intervening modifications by the court is the court able to fix a sum certain which is no longer subject to modification. Thus, Ohio uses the date of emancipation as the date upon which the Statute of Limitations begins to run, and we feel that this is the better law for Kentucky to follow.

In the case before us, there was not a judgment for $10,164.00, payable in weekly' installments of $12.00 each, but there was, in fact, a judgment that the husband pay $12.00 per week for the support of his infant child. An additional step would be necessary for execution to issue at any time during the period covered by the case before us, that step being to reduce the amount due to a lump sum payment by further proceedings. For the final amount due, this could not be fixed until the child attained his majority or was otherwise emancipated. It is the opinion of this court that the Statute of Limitations would not begin to run until such time as the delinquency was reduced to a lump sum payment or until emancipation of the child, whichever was the former. It is our further opinion that interest would not be due on said lump sum payment until that time, which, in the instant case, would be from the date of emancipation, and that it would be simple interest and not compound interest.

Appellant further contends that the circuit judge was liable for failure to notify the judgment debtor in this case. Ky.Rev.Stat. 425.190 does not require that the judgment debtor be served with notice by the court but merely places upon the garnishee the duty of notifying the judgment debtor, and we feel that this is without merit. We would also, under these circumstances, apply the doctrine of judicial immunity.

Nor do we feel that there is any liability upon the circuit court clerk or the deputy circuit court clerk, as there is a total absence of any indication of any administrative or ministerial act by these two persons which would render them liable to the Appellant.

The last question presented by the Appellant’s brief and, in part, presented by the Cross-Appellant, Eagle Savings, is the question of the dismissal of this action against Eagle Savings. Process was obtained by the Appellant against Eagle Savings by serving a vice president of that corporation whose residence was in Kentucky. It is admitted in this case, through pleadings, affidavits and absence of affidavits, that Eagle Savings did not transact any business in this Commonwealth or transact business outside the Commonwealth while regularly soliciting or doing business herein, or perform any act. which would subject him to the jurisdiction of the courts of this Commonwealth under the “Long Arm Statute,” Ky.Rev.Stat. 452.450, apparently confusing a statute relating to venue with the statute relating to jurisdiction. It is the opinion of this Court that the lower court properly sustained the motion to dismiss. Cross-Appellant would have this Court modify the findings of the lower court by sustaining its motion to quash, but it is our opinion that the notes contained in Kentucky Practice, Vol. 6, on page 46 thereof, under Rule 4.04(5), properly set out the procedure, as follows:

If a foreign corporation is not doing business in this state, the court could not acquire jurisdiction over it (assuming objection was properly and timely made) even if its president was served with summons. However, from a realistic standpoint, the service, as service, would be proper under this Rule. It would seem that the objection should be raised on ground 2 of Rule 12.02 (lack of jurisdiction over the person) either by motion or answer, rather than on ground 5 of that rule (insufficiency of service of process).

For the reasons above stated, the judgment is affirmed.

ALL CONCUR.


author: HOGGE, Judge.

text:
    Sona SPARKS, Appellant, v. The BOARD OF EDUCATION OF ASHLAND INDEPENDENT SCHOOL DISTRICT et al., Appellees.
    Court of Appeals of Kentucky.
    April 1, 1977.

      Arthur L. Brooks, Brooks & Sullivan, Lexington, for appellant.
    John Marion Williams, Ashland, F. C. Bryan, Bryan, Fogle & Riggs, Mount Sterling, W. H. Dysard, Ashland, for appellees.
    Before HOGGE, COOPER and REYNOLDS, JJ.
   HOGGE, Judge.

This appeal is from a final order dismissing an action seeking a declaration of rights wherein the appellant alleged that the defendant board had failed to give “specific reasons” for its action in not reemploying her for the succeeding school year, and had denied her a hearing on same. The appellant further sought her reinstatement.

Appellees had filed a motion to dismiss the complaint for failure to state a cause of action. After considering the arguments of counsel, the court entered an order dismissing the complaint. In an accompanying opinion, the court stated that the statutory requirements had been satisfied and that appellant was not entitled to a hearing. This appeal followed.

Appellant had been employed by the Ash-land School System under a “limited contract”, as provided for in KRS 161.740. Pursuant to the requirements of KRS 161.-750, the School Board notified appellant on May 13,1975 that her contract would not be renewed. Upon request, and in compliance with the requirements of KRS 161.750(2), the School Board, by letter dated May 22, 1975, set forth the reasons for the Board’s decision not to- renew appellant’s contract. At the time she was notified of the School Board’s decision to not renew her contract, appellant notified the Board she had certain “grievances” within the meaning of the Policies and Regulations adopted by the Board, and demanded a hearing in accordance with the provisions of said Policies and Regulations. No hearing was ever held pursuant to that request.

Appellant first contends that she was entitled to the procedural safeguards provided for in KRS 161.750(2) and KRS 161.790, and that the action of the School Board violated those provisions. Appellee contends that the appellant was not entitled to the protection of either of the above provisions, and that the action of the School Board was, nevertheless, in compliance with KRS 161.-750(2).

The first issue, thus before the court, involves the construction of KRS 161.750(2) and KRS 161.790. KRS 161.750(2) provides as follows:

Any teacher employed under a limited contract and ineligible for a continuing contract shall at the expiration of such limited contract be deemed reemployed under the provisions of KRS 161.720 to 161.810 for the succeeding school year at the same salary plus any increment or decrease as provided by the salary schedule, unless the employing board shall give such teacher written notice on or before the fifteenth day of May of its intention not to reemploy him; upon request by the teacher, such written notice shall contain the specific reason or reasons why the teacher is not being reemployed. Such teacher shall be presumed to have accepted such employment, unless he shall notify the board of education in writing to the contrary on or before the fifteenth day of June, and a written contract for the succeeding year shall be executed accordingly.

Appellee urges that this provision is applicable to those teachers “employed under a limited contract and ineligible for a continuing contract”, and is, therefore, inapplicable to the appellant because she was eligible for a continuing contract.

KRS 161.740(l)(b) provides that a teacher is eligible for a continuing contract after the completion of four years service. At the time the action was taken by the School Board, the appellant had not yet fully completed four years employment, and was, therefore, ineligible for a continuing contract. She was, therefore, entitled to notice and a statement of the reasons for the decision of the Board not to renew her contract, as provided in KRS 161.750(2).

Appellant contends that the reasons, as set forth by the School Board, were insufficient because they were vague and eonclu-sory. The reasons given to the appellant for the Board’s decision were as follows:

1. Poor relationship with other teachers, particularly in the English Department, which has been a contributing factor to the lack of harmony and has affected the planning and program of this department.
2. Lack of cooperation with the principal and the guidance staff.
3. Poor attitude and disruptive influence.
4. Not in harmony with the educational philosophy of the school.
5. Not in the best interest of the school to award a continuing contract.

The trial court concluded that the reasons set forth above were sufficient. We agree for the reasons hereinafter set out.

Appellant cites several cases where it was held a proper construction of KRS 161.790 required that the supporting facts, including names, dates, and places, be set forth. Osborne v. Bullitt County Board of Education, Ky., 415 S.W.2d 607 (1967); Knox County Board of Education v. Willis, Ky., 405 S.W.2d 952 (1966). It is true that KRS 161.790 requires a very particular statement, as an adversary proceeding is contemplated as a prerequisite to termination of an existing contract. However, that provision relates to termination of an existing contract, not a renewal of a contract, as here. Since the contract of the appellant was not terminated, but simply not renewed, KRS 161.790 is inapplicable.

Assuming that the appellant was entitled to the benefits of KRS 161.750 in the instant case, we find that she was afforded every protection of that section. This section requires that a teacher employed under a limited contract shall be deemed reemployed unless the employing board shall give such teacher written notice on or before the fifteenth day of May of its intention not to reemploy her. This was done by the letter of May 13, 1975. Next, the written notice shall contain the specific reason or reasons for nonreemployment, if the teacher so requests. Here she made such a request and the specific reasons were furnished her by letter of May 22,1975. Nothing else was required.

There is no requirement in KRS 161.750 that the teacher be given a hearing, adversary or otherwise, upon the board’s determination not to reemploy or upon its assigned reasons for its action. The teacher does not need more specificity in order to prepare a defense. There is no defense nor forum for defense provided for by this section. In this enactment the legislature gives no reason for requiring specific reasons upon request, and we will not conjecture as to what it was. This requirement of giving specific reasons falls in the same category as those discussed in Snapp v. Deskins, Ky., 450 S.W.2d 246 (1970) wherein the court held that the presentation of reasons was not a condition of the validity of the transfer. Here the action of the board not to reemploy was final upon the giving of the notice of its action prior to May the fifteenth. Since the section contemplates no further action on the specific reasons and since they are not a condition of the validity of the board’s action, this requirement of specificity has been met in this case.

Appellant' further urges that she was entitled to a hearing upon her “grievance” claim in accordance with the adopted Policies and Regulations § 3051 and § 3052. Appellant admits that constitutional due process protections do not attach in the absence of substantive property right to her job. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Appellant further admits she does not have a contractual right to employment and that there is no limitation on the School Board’s authority to terminate her. She argues, however, that the procedural rules create a “kind of” property right not to be terminated except in accordance with such rules.

While appellant may be correct in asserting she had a contractual right to a hearing to settle grievance, the adopted grievance procedure has no applicability to the Board decisions regarding contract renewal. The hereinabove discussed statutes fully provide for the procedural requirements in relation to nonrenewal of teacher contracts. The statutory procedure is preemptive and there is nothing to indicate that the grievance procedure was intended to supplement the statutory requirements.

The decision in this case is hereby affirmed.

All concur.


text:
    Claude E. COOMBS, Appellant, v. BENEFICIAL FINANCE COMPANY, Appellee.
    Court of Appeals of Kentucky.
    April 1, 1977.
    Ronald L. Coombs, Eubanks, Lorenz, Coombs & Rankin, P.S.C., Louisville, for appellant.
    Kenneth L. Burhans, Louisville, for Beneficial Finance Co.
    Before GANT, HOWERTON and WHITE, JJ.
   GANT, Judge.

On October 21, 1974, the Appellant, Claude A. Coombs, signed a certain promissory note as surety and co-obligor for one June Mclnerney to the Appellee, Beneficial Finance Company. The first payment was due on December 4, 1974, and apparently the Appellant learned immediately thereafter that the principal on the note had no intention of making payments thereunder. On December 27, 1974, Appellant notified the Appellee, pursuant to Ky.Rev.Stat. 412.-110, that it should immediately proceed to collect from the principal.

This statute requires the creditor, after receipt of such notice, to bring such action “to the next term thereafter at which he can obtain judgment and in good faith prosecute the suit with reasonable diligence . ” Appellee did not bring action against the principal until April 2,1975, and on July 15, 1975, Miss Mclnerney filed bankruptcy and had her debt to Appellee discharged.

On October 15,1975, this action was filed by the Appellee against the Appellant and no process was issued. On November 5, 1975, Appellant filed Answer and Counterclaim, the Answer alleging that the failure of the Appellee to comply with the provisions of Ky.Rev.Stat. 412.110 discharged him from his obligation and the Counterclaim alleging a violation of the Truth in Lending Act. The lower court dismissed the Counterclaim, holding that the one-year limitation on actions thereunder barred any recovery thereon and granted to the Appel-lee a summary judgment on his complaint in the amount of $1,370.59, together with interest from the date of the judgment. It is from this judgment that the Appellant appeals.

The issues in this case are quite simple. The first issue is whether or not the execution of the note by the Appellant constituted a waiver of his rights granted to him under Ky.Rev.Stat. 412.110. The waiver in its entirety is as follows:

All parties hereto, including makers, sureties, grantors and indorsers severally waive demand and presentment for payment, notice of protest and protest of this note and agree that their liability hereunder shall not be affected by an extension of time of payment of all or any part of the amount owing hereon at any time or times and waive, as to this debt, any and all exemptions permitted by law to be waived. (Emphasis ours).

The lower court and the Appellee rely on two Kentucky cases, viz., Owensboro Savings Bank & Trust Co.’s Receiver v. Haynes, 143 Ky. 534, 136 S.W. 1004 (1911) and the case of People’s State Bank v. Atwood, 212 Ky. 462, 279 S.W. 670 (1926). The first of these cases involved the identical statute to Ky.Rev.Stat. 412.110, which at the time was numbered Ky.Stat. 4668. In this Owens-boro Savings Bank case, notice had been given by the surety to commence action, just as in the present case. However, there was a vast difference in the language contained in the note itself. The body of the note sued on in that case provided as follows:

The parties hereto, including the makers and endorsers of this note, hereby expressly waive presentment thereof for payment, notice of non-payment, protest and notice of protest, and diligence in bringing suit against any party hereto, either maker or endorser.

That case went on to say that where the waiver is inserted in the body of the note it becomes a part of the contract of the endorser and is binding upon him.

In the second case above referred to, People’s State Bank, supra, the same principle was applied where the bank had extended the time of payment but in that case there was a specific waiver of “all defenses on the ground of any extension of time of payment.” In the instant case, however, there was no specific language waiving “diligence in bringing suit” as was found in the note in the Owensboro Savings Bank case, supra. Thus we have the very narrow question of whether the last phrase contained in this waiver constituted a waiver of diligence in bringing suit, The phrase to which the court refers is “ . . . and waive, as to the debt, any and all exemptions permitted by law to be waived.”

After a search of several standard dictionaries, legal dictionaries and other definitions found in numerous eases, the Court finds that the most common synonym for the word “exemption” is the word “immunity.” We find no definition by which “exemption” could be tortured into meaning “diligence in bringing suit.” Appellee attempts, in his brief, to give us a definition from Words and Phrases, when he states, “An exemption is defined as ■ a personal privilege which means ‘to release, discharge, waive, relieve from liability,’ ’’ citing Words and Phrases, Vol. 15A, Exemption pp. 345-346. Actually, Appellee has taken one case saying that an exemption is defined as a personal privilege when applied to jury duty or military service and another case which defines the word “exempt” and not the word “exemption.” We have, indeed, pursued the meaning of the word “exemption” throughout the various fields of law and find no cases in which it follows this consolidated and misused definition of the Appellee. This Court is totally aware of the fact that these notes are commonly used in conjunction with security agreements and that the word “exemption” is most often applied to exemptions provided by the Bankruptcy Act, so that the maker, endorser, surety or co-obligor under these notes agrees to waive that part of the security agreement and note not covered under the exemption provided by that Act. The note used herein was prepared by the Appellee and it must therefore be bound strictly by the language thereof. We cannot even discover any instance in which the word “exemption” was used synonymously with “defenses” and we feel that the lower court erred in its finding that the signature of the Appellant to this note constituted a waiver of his rights pursuant to Ky.Rev. Stat. 412.110.

The second ground for reversal urged by the Appellant was that the trial court erred in applying the one-year Statute of Limitations provided for in the Truth in Lending Act to his Counterclaim, and we feel that the court did not err in this respect. The action brought by the Appellee was filed in the Jefferson Circuit Court on October 15,1975. The case of Armstrong v. Logsdon, Ky., 469 S.W.2d 342 (1971) stands for the proposition that when one party commences his action prior to the expiration of the Statute of Limitations, a Counterclaim does not become barred afterward during the pendency of that action. We do not think that this case applies in the instant case, as Rule 3 of the Kentucky Rules of Civil Procedure provides that an action does not commence until a complaint is filed and a summons is issued. In the instant ease, summons was not issued and the action did not technically commence until the Appellant herein entered his appearance after the running of the Statute of Limitations. Accordingly, it is our opinion that the Appellant was barred from his Counterclaim when he filed this Counterclaim on November 5, 1975, being more than one year after the alleged violation of the Truth in Lending Act and we find that the judgment of the lower court was proper in this respect.

Had the Appellee been required to bring his action prior to October 21, 1975, the filing of his complaint without issuing process would not have so complied and he would have been barred by the Statute of Limitations. Appellant can hardly claim, under these circumstances, that when no process was issued this would extend his time of filing.

Accordingly, it is the opinion of this Court that the trial court erred in sustaining the motion for summary judgment on behalf of the Appellee and we find that there was, in fact, no waiver by the Appellant of his rights under Ky.Rev.Stat. 412.-110 by his signature to the note in question. We further find that the lower court properly dismissed the Counterclaim of the Appellant. The judgment herein is reversed in part and affirmed in part and remanded to the lower court for the entry of judgment in accordance herewith.

ALL CONCUR.


author:
BARDGETT, Judge.
      DONNELLY, Judge,

text:
    STATE of Missouri, Respondent, v. William H. CARLOS, Appellant.
    No. 59420.
    Supreme Court of Missouri, en banc.
    March 14, 1977.
    Rehearing Denied April 11, 1977.

      Robert G. Duncan, Kansas City, for appellant.
    John D. Ashcroft, Atty. Gen., Paul R. Otto, Asst. Atty. Gen., Jefferson City, James W. Humphrey, Jr., Kansas City, for respondent.
   BARDGETT, Judge.

This case is written on reassignment. Appellant William H. Carlos was convicted of murder in the first degree under section 559.010, RSMo 1969, in the circuit court of Jackson County and his punishment was assessed at life imprisonment. Following rendition of judgment and imposition of Sentence, an appeal was perfected to the Missouri Court of Appeals, Kansas City district. In that court the conviction was reversed and the cause was remanded but the cause was then transferred to this court by this court under Art. V, sec. 10, Mo.Const., and we will determine the cause as on original appeal.

On September 17, 1973, Dr. Lynn Weller was killed at his home by one Patrick McGuire. According to evidence presented by the state, and particularly through the testimony of McGuire and one Robert North, appellant hired McGuire to kill Weller.

Appellant first asserts that “the trial court erred in denying defendant’s motion for mistrial and or continuance when State’s witness McGuire refused to identify his alleged accomplice in that said identity was crucial and essential to the defense and was required for a fair and impartial trial and said refusal denied the defendant’s right to confront and cross examine the witnesses against him as guaranteed by Article I, Section 18(a) of the Missouri Constitution and the Sixth and Fourteenth Amendments to the United States Constitution.”

Patrick McGuire, called by the prosecution, testified on direct examination that appellant hired him to kill Dr. Lynn Weller and that on the evening of September 17, 1973, he shot Dr. Weller in the house of Dr. Weller. On direct examination, McGuire testified that “somebody” went with him to Dr. Weller’s house but refused to identify the person. On cross-examination, McGuire testified again that a man went with him to the Weller house and that the man “waited . in the area outside the house.” After further cross-examination of McGuire in which he admitted that he entered into a plea bargain with the state and was sentenced to twenty-five years on a reduced charge of second-degree murder, the following transpired:

“Q Right. Now, another part of the bargain, was it not, was that you were not going to have to tell who was involved in this offense with you, the other man that was out there at the premises?
A I think, that was part of it, yes.
Q Now, who was the other trigger man? Who was the other man out there?
A I would rather not answer.
Q Well, I would rather you would. Answer the question. Who was out there?
A (No response.)
Q Are you refusing to say?
A I would rather not answer.
Q (By Mr. Duncan) You have refused to answer the question of who it was. I would ask this question: Where is that man at now?
A I don’t know.
Q How did you contact him prior to the incident, the killing of Dr. Weller?
A I would rather not answer that.
Q Are you refusing to answer that?
A I am.
Q Did you pay him any portion of the money?
A No.
Q Has he been arrested?
A I don’t know.
Q Did he ever have any contact with Dr. Carlos?
A No.
MR. DUNCAN: I would make the same request, your Honor, as to how he contacted whoever this man was, and. ask that the Court order him to testify.
(Counsel approached the bench and the following proceedings were had:)
THE COURT: Do you want a recess now?
MR. HUMPHREY: Whatever you want to do.
(The proceedings returned to open court.)
THE COURT: Gentlemen of the jury, we will have a recess for twenty minutes.
RECESS
THE COURT: Mr. Duncan, would you repeat the questions to the witness?
Q (By Mr. Duncan) Mr. McGuire, I would ask you now, who was the other man that was present, hiding in the bushes, on the night of September 17th, 1973 at 7320 Manchester, the home of — or whatever the address is, and I believe that’s correct — the home of Dr. Weller, on the evening and there at the time that you killed Dr. Weller? What was that man’s name?
A I would rather not answer.
Q The second question: How did you get in contact with that man, whoever he was, regarding being with you on the killing?
A I would rather not answer that.
MR. DUNCAN: I would now, your Honor, ask that the Court direct Mr. McGuire to answer those questions and if he refuses, to hold him in contempt under Section 491.200 of the Missouri Statutes, by which he would be confined until he purges himself of contempt, and ask for a continuance pending him purging himself of contempt, or, in the alternative, granting a mistrial.
THE COURT: Mr. McGuire, the Court directs you to answer the questions asked. If you refuse to do so you are in contempt of this Court. Do you refuse to answer?
THE WITNESS: I do.
MR. DUNCAN: I would then, you Honor, ask for the relief I have previously mentioned.
THE COURT: All right. Mr. McGuire, the Court holds you in contempt of this Court for the refusal to answer the questions, and will commit you to the custody of the Jackson County Jail until such time as you purge yourself of your contempt. In this sense and for this purpose, you are your own jailer.
Since the Defendant is already in the custody of the Jackson County Jail, we may continue.”

A discussion was then had between the trial judge and counsel, the motions for continuance and mistrial were denied, and the parties proceeded with the trial.

The granting of a continuance or the declaration of a mistrial necessarily and properly rests largely in the discretion of the trial court and an appellate court will disturb the action of the trial court only where we find a clear abuse of discretion. State v. Cuckovich, 485 S.W.2d 16, 21-22, 23-24 (Mo. banc 1972). No one could tell when, if ever, McGuire might decide to answer the questions. Either action by the trial court would have aborted the trial. Neither action was justified nor practical under the circumstances. We find no abuse of discretion in this case.

Appellant contends in this court that “the trial court committed prejudicial plain error by failing to strike the testimony of State’s witness McGuire after McGuire refused on cross examination to reveal the identity of his alleged accomplice to the murder for which appellant was charged.”

When McGuire refused to identify the man who had accompanied him to the Weller residence at the time Dr. Weller was killed, defendant, in addition to asking that McGuire be punished for contempt, sought a mistrial or, in the alternative, a continuance until McGuire purged himself of contempt on the basis that his right of confrontation had been denied. The trial court held McGuire in contempt but denied a mistrial or a continuance. Defendant did not then or at any other time thereafter ask that all or any part of McGuire’s testimony be stricken. In his motion for new trial, defendant raised no issue about being entitled to have McGuire’s evidence stricken and made no complaint that the court should have stricken it on the court’s own initiative. When this appeal was briefed for the court of appeals, no such contention was asserted by appellant and no reference to the plain-error rule was made. Clearly, the issue was not preserved.

In its opinion the court of appeals raised sua sponte the question of whether failure of the trial court to strike McGuire’s testimony on its own initiative was plain error and held that it was. Of course, after the case was transferred here, defendant, prompted by the opinion of the court of appeals, now for the first time seeks relief on that basis.

Has there been such a miscarriage of justice, required by Rule 27.20(c), that we should convict the trial court of error in not acting on its own initiative to strike all or part of the testimony of McGuire?

In the first place, McGuire did not decline to testify as to whether his companion had had any dealings with defendant Carlos. After testifying on direct examination with reference to the contract made with him by defendant for the murder of Dr. Weller, McGuire was asked on cross-examination whether his companion had any dealings with defendant. He answered that he had not. Defendant did not ask any other questions on this subject. Hence, it is clear that defendant was not denied the right of cross-examination as to the murder contract. Clearly, he would not have been entitled to have the testimony of McGuire concerning the murder arrangements stricken even if he had asked therefor. He was not denied his right of confrontation and cross-examination thereon.

The other phase of McGuire’s testimony pertained to the actual murder of Dr. Weller on the night of September 17,1973. He testified that a companion accompanied him but denied that his companion had entered the Weller house or that he and his companion had gone to the house for the purpose of robbery. McGuire’s testimony was in conflict with that of Mary Graves who testified that the other man had entered the house with McGuire. McGuire was cross-examined extensively by counsel for defendant and answered all questions regarding these matters except those which sought the name of his companion and how he had contacted him.

It is defendant’s theory that, if he had been furnished the name of McGuire’s companion, he might have been able to impeach McGuire’s testimony by showing that robbery was their motive and possibly that McGuire was not even present and did not kill Dr. Weller.

At and prior to the time this case was tried, the state suspected that one George Peters was the companion of defendant and it had procured a warrant for his arrest in connection with the Dr. Weller matter. Despite a nationwide search, it had been unable to find him at that time. The transcript disclosed that counsel for defendant had been allowed to examine the state’s file and knew about George Peters. At the time McGuire refused to name his companion, the prosecuting attorney stated to defendant’s counsel that it suspected McGuire would name Peters if he answered the question. Counsel acknowledged that he already knew this from looking at the state’s file. Peters had been charged as a participant with McGuire in this murder and defense counsel knew it. He also knew or strongly suspected that if McGuire answered the question, he would name Peters. So, if the question was asked to discover the name of the “other person”, it made little difference whether the question was answered or not because defense counsel already had that information and could have used it in cross-examining the witness.

In the context of this ease, the primary issue for the jury was whether the defendant knowingly and intentionally aided or encouraged McGuire in the killing of Dr. Weller. Dr. Weller died as a result of a shotgun wound in the head. All of the evidence supports the finding that McQuire shot Dr. Weller in the head with a shotgun. As noted supra, the testimony of Mary Graves who was present at the murder conflicts with McGuire’s account in that Graves said the “other man” accompanied McGuire into Weller’s house and shot and wounded him first with a handgun. McGuire was fully cross-examined on all of the events that transpired at Weller’s house and answered all questions except to identify his companion or say how he (McGuire) contacted him prior to the murder.

The evidence of defendant’s guilt was strong. The likelihood that, if McGuire had told who his accomplice was, defendant could have located him and secured from him testimony in that trial which would have shown that McGuire was not present when Weller was killed, or that robbery was their motive, is minimal at best. According to the evidence, nothing was taken except some change observed and taken by McGuire. Dr. Weller’s wallet was not taken and the house was not ransacked. There was no evidence to support a theory of robbery as the motive. On the other hand, there was evidence that the killing was pursuant to a murder contract with defendant. There was positive evidence by North and McGuire as to the arrangements made by defendant for Dr. Weller to be murdered; there was testimony by Mary Graves that she recognized McGuire at the Weller home when the doctor was killed; and there was testimony that subsequently McGuire reported to defendant about the killing in North’s presence and that at that time defendant handed McGuire an envelope which North understood contained a payment.

Although the defense knew Peters was believed to be McGuire’s companion at the murder, there is no evidence as to what efforts, if any, were made by the defense to locate and subpoena Peters.

In State v. Brown, supra note 1, this court adopted the method of determining whether or not to strike testimony as set forth in United States v. Cardillo, 316 F.2d 606 (2d Cir. 1963), cert. den., 375 U.S. 822, 84 S.Ct. 60, 11 L.Ed.2d 55 (1963). Brown involved a situation where testimony of a nonparty defense alibi witness was stricken because the witness refused to answer questions as to the identity of the third of three robbers. The constitutional right of a defendant to call witnesses in his defense and the right to cross-examine his accusers was fully discussed. In Brown the conviction was reversed and the cause remanded because the trial court abused its discretion in striking the testimony of the alibi witness as infringing upon the defendant’s constitutional right to call witnesses in his defense. The particular circumstances in Brown demanded that result under the rule of Car-dillo.

In the instant case, the defense never requested that any testimony of McGuire be stricken. The court has carefully considered all aspects of this case under the Cardillo rule and concludes that the failure of the trial court to, sua sponte, strike all or part of McGuire’s testimony did not unduly curtail the defendant’s right to cross-examine or prejudice the defendant in the trial of this case much less result in a manifest injustice or miscarriage of justice under Rule 27.20(c). The point is overruled.

Defendant next asserts “the trial court erred in refusing to give defendant’s instructions A and B pertaining to the weight to be given the testimony of an accomplice and an informer and the failure of the trial court to give said instruction was illegal, improper, and an abuse of its discretion, and in violation of Missouri Supreme Court Rule 26.02(6), and denied the defendant his constitutional right to due process of law.”

In State v. Lang, 515 S.W.2d 507, 510-511 (Mo.1974), this court disposed of a similar contention as follows:

“Missouri Approved Criminal Instruction (MAI-CR) 2.01 is now the required instruction on the weight and value of the evidence and the believability of witnesses. Note 2 following that instruction provides, with an exception not applicable here: ‘ * * * no other or additional instruction may be given on the believability of witnesses, or the effect, weight or value of their testimony. Without limiting the foregoing, no instruction may be given to the effect that the jury may convict on the uncorroborated testimony alone of any one witness or class of witnesses, or that the testimony of any one witness or class of witnesses, when uncorroborated, must be received with great caution or must be weighed any differently than that of other witnesses.’ In view of this mandate the Court could not, upon a retrial, give any instruction concerning the weight and value of the testimony of an accomplice, even if a correct one were offered. For this reason alone, if there were no others, the case should not be reversed for the failure to so instruct.”

Defendant’s final point relates to the action of the trial court in allowing the prosecuting attorney to cross-examine one of the state’s witnesses. Mary Eggleston testified for the state concerning a telephone conversation she had with defendant in which she stated the defendant was very angry with Weller and threatened to kill him. On direct examination she said nothing about any further conversation with the defendant concerning that incident. On cross-examination she testified that, after the conversation related in her direct testimony, defendant phoned her back and stated he did not really mean that he wanted to kill Weller and he was just angry and upset when he made that statement. On re-direct the prosecutor was allowed to ask the witness about a statement she had given to the police in which she related the conversation concerning the killing of Weller but made no mention of a subsequent call recanting that intent. The prosecutor claimed surprise by the testimony of this witness given on cross-examination and was permitted to cross-examine the witness concerning her testimony about the second call from the defendant.

The defendant contends the court improperly allowed the prosecutor to refer to the statement given to the police and to subsequently cross-examine the witness. In State v. Rack, 318 S.W.2d 211 (Mo.1958), the court stated at 217: “A trial court may, within its discretion, permit cross-examination of a party’s own witness where there is a basis of surprise and where the witness is evidently friendly to the other side and has made statements contrary to his testimony at the trial. A trial court may exercise its discretion in such circumstances.”

In the situation here presented, it is evident the state was surprised by the witness’s statement on cross-examination that defendant called back and explained his previous statement concerning the killing of Weller. It further appears the witness was friendly to the defendant and had omitted this information from her previous statement. She also had failed to make this information known to the assistant prosecutor when he interviewed her. For these reasons the court did not abuse its discretion in permitting the state to cross-examine this witness.

The judgment is affirmed.

SEILER, C. J., FINCH, J., and HOUSER, Special Judge, concur.

HENLEY, J., concurs in result.

DONNELLY, J., concurs in result in separate opinion filed.

MORGAN, J., not sitting.

RENDLEN, J., not participating because not a member of the court when cause submitted.

DONNELLY, Judge,

concurring'in result.

In State v. Brown, 549 S.W.2d 336 (Mo. banc 1977), decided concurrently herewith, I protested the adoption of the Cardillo rule. I would not apply it in this case primarily because it violates the dictates of Smith v. Illinois, 390 U.S. 129, 88 S.Ct. 748, 19 L.Ed.2d 956 (1968).

I concur in the result reached in this case only because I can find no manifest injustice or miscarriage of justice under Rule 27.20(c). See United States v. Qualls, 500 F.2d 1238 (8 Cir. 1974).

      . Subsequently, the Missouri Court of Appeals, Kansas City district, ordered transfer to this court, after opinion, State v. Brown, 549 S.W.2d 336 decided concurrently herewith, which also involves questions relating to the refusal of a witness to answer questions on cross-examination.