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Meco Systems2/14/2001
theater property and in favor of Subcontractors for the foregoing amounts.
MECO's second point charges the trial court with reversible error for entering judgment against MECO on Subcontractors' breach of contract claims. In urging reversal, MECO relies on the "pay if paid" language in the contracts it signed with Subcontractors. Specifically, Article 2.1 of the subcontracts provided that Subcontractors should be paid in installments and, further, that
" ayment of the approved portion of Subcontractor's Application for Payment shall be conditioned upon receipt by [MECO] of his payment from . In the event, does not make payment to [MECO] on the Application for payment submitted by Subcontractor, [MECO] is relieved and discharged herein from making payment to Subcontractor until payment is made."
Additionally, a final pay clause in the subcontracts (Article 2.4) recited that "Subcontractor shall be entitled to final payment upon approval by , Architect and [MECO] of Subcontractor's Work and upon final payment having been received by [MECO] for all of Subcontractor's Work. . . ." (Emphasis supplied).
According to MECO, any "principled reading" of these provisions "will find [them] unambiguous" and as such, the clauses must be read as a condition precedent to MECO's obligation to pay. Continuing, MECO claims Subcontractors bore the burden of proving performance of the condition precedent, i.e., proving MECO had been paid by DBE for Subcontractors' work. Based on the premise that Subcontractors did not prove this condition precedent had been met, MECO urges reversal of the money judgments favorable to Subcontractors and against MECO.
In response, Subcontractors argue, inter alia, that inconsistent provisions in their agreements with MECO render the "pay if paid" clause ambiguous; consequently, they insist that such provision merely sets a reasonable time for MECO to pay and does not create a condition precedent to payment. As authority for the latter proposition, Subcontractors rely most heavily on American Drilling v. City of Springfield, 614 S.W.2d 266 (Mo.App. 1981).
The subcontract provision analyzed in American Drilling provided that "partial payments [from contractor] shall not become due to [subcontractor] until ten days after [contractor] receives payment for such work from [the owner]." 614 S.W.2d at 271-72 n.7. This court rejected as "unsound" the contractor's argument that such provision meant the contractor was "not obligated, and cannot be expected, to pay any money to [subcontractor] until [contractor] has been paid an equal sum from [the owner]." Id. at 273. In doing so, we adopted what appears to be the majority view concerning such clauses, namely:
"A clause which provides that the contract shall pay a subcontractor within a stated number of days after the contractor has received payment from the owner merely fixes the time when the payment is due and does not establish a condition precedent to payment.
"In Midland [Engineering Co. v. John A. Hall Const. Co., 398 F.Supp. 981 (N.D.Ind. 1975)] it is said the clause is not intended to provide the contractor with an eternal excuse for nonpayment. Peacock [Const. Co. v. Modern Air Conditioning, Inc., 353 So.2d 840 (Fla. 1977)] points out that the subcontractor will not ordinarily assume the risk of the owner's failure to pay the general contractor and in order for that risk to be shifted to the contractor, the clause must unambiguously express that intention." Id. at 273 (emphasis supplied).
As written, American Drilling is authority for the proposition that if a "pay if paid" provision is clear and unambiguous, it will be interpreted as
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