72 W. Va. 583 | W. Va. | 1913
Lead Opinion
The decree sought to be reversed by this appeal subjects to sale the building and grounds of the Davis and Elkins College for the satisfaction of mechanics’ liens.
The board of trustees contracted with Hobbs & Co. for the erection of the college building at the price of $47,378. The contractors so far proceeded with their undertaking that approximately $40,000 of the contract price was paid them under monthly estimates of the architect, as provided in the contract. Then, insolvency of the contractors intervened, and by proceedings in the Federal Court they were involuntarily declared bankrupts. In the bankruptcy proceedings, receivers appointed for the bankrupt contractors were directed to complete the building. The remainder of the contract price in the hands of the Board of Trustees, approximately $7,'000, was taken over by the bankruptcy court and applied toward the completion of the contract by the receivers. When the building was completed a considerable sum remained as assets of the bankrupts and was applied as such in the bankruptcy proceedings. Thus it will be observed, about $40,000 of the contract price was voluntarily paid by the owner to the contractors, and the residue was paid out by the owner under the order of the bankruptcy court.
Because of the insolvency of the contractors, many liens under Code 1906, chapter 75, section 3, were asserted against the property for labor performed and material furnished prior to the bankruptcy. It seems that the claims of the direct laborers were satisfied by orders and disbursements made in the bankruptcy court. The suit which we have before us involves the enforcement of liens claimed by material men and subcontractors of specific portions of the work. It is of course a proceeding under the statute, directed against the property, while the bankruptcy case had only to do with the residue of the contract price as assets of the bankrupt contractors.
Upon the report of a commissioner a number of liens have been decreed against the property, amounting in the aggregate
The main contention that the property is not at all subject to the claims that have been decreed as liens against it is based on the fact that all of the contract price was paid out by the owner. It is submitted that since about $40,000 of the contract price had been paid to the contractors before the claims were asserted-as liens, and since the residue was paid on the contract by order of the bankruptcy court, there is no liability against the property under the statute giving liens to mechanics, laborers, and others. In other words, it is insisted that when the contract between the owner and the contractor is recorded, the owner may pay out the contract price pursuant to the terms of the contract without liability for the claims of those who have performed labor or furnished material for the building, as long as the owner is given no notice that such claimants will look to the property for the payment of their claims. Under the present mechanics’ lien law, that enacted by the Legislature of 1891 and slightly amended' in 1903, all of which is contained in Code 1906, chapter 75, we can not sanction this contention.
That for which appellant contends was our law of mechanics’ liens prior to our present law. It was the law as contained in Code 1887, chapter 75. Perhaps it was the better law; but as judges wo have no province to say that it was, or to adopt it for that reason. Moreover, it may be that we should return to the principles of the enactment contained in Code 1887, chapter 75; but it is for the Legislature and not for this court to say that we shall. We must apply legislative enactments as we find them, though their policy or effect may be subject to sound criticism.
Tt will be necessary to define in a general way the meaning of the provisions of the present mechanics’ lien law in relation to the rights of those performing labor or furnishing material under a contract with the principal contractor, since appellant contends for a construction widely at variance with that which we must announce.
By our former statute it indeed was provided that a mechanics’ lien only affected what had not been paid by the owner to the contractor at the time the notice of the claim of lien was given,
The present statute gives a direct lien to one performing labor or furnishing material under a contract with the principal contractor or his subcontractor. To that extent it embodies the so-called Pennsylvania systéni as contradistinguished from the New York system which was the basis of the former statute contained in Code 1887, ch. 75. Phillips on Mechanic’s Liens, sec. 57; Boisot on Mechanics’ Liens, sec. 225; 27 Cyc. 89; Hunter v. Truckee Lodge, 14 Nev. 24. But in construing the present statute, section 3, which gives this direct lien, must be read in connection with section 5, whereby the owner may limit his liabilities by recording his contract with the principal contractor.
Section 5 provides that “no payment by the owner, or his agent, to a contractor, shall affect or impair the lien of a laborer, or material man, provided for in section three.” But this provision is immediately followed by these words: “But such owner may limit his liabilities so that the amounts to be paid by him shall not exceed in the aggregate, the price stipulated by the contract between himself and the contractor, by having the said contract, or so much thereof, as shows the contract price, and the times of its payment, recorded in the office of the clerk of the county court of the county, where such house or other structure is situated, prior to the performance of the labor and the furnishing of the material, or the machinery for the same.” Here we have that which gives the owner right to limit his liabilities under the contract. It does not define the liabilities as being merely those arising from liens. It is broad enough to take in any other liability under the contract. The provision, however, must be taken in relation to the preceding one that says no payment shall affect or impair any lien. Both provisions must be given effect. Taken together, they plainly say that though no payment by the
We hold, therefore, that the owner must take notice of all liens under section 3 that have set in when a payment to the contractor becomes due; that he can at no time make a payment under the contract to the impairment of a lien that may be perfected and relate back under section 3 to a time prior to the proposed payment, on account of labor performed or material furnished before that time. But we also hold that the laborer or material man must likewise take notice of all payments that have become due and may have been paid under the terms of the contract prior to the beginning of the performance of labor or the furnishing of material by him.
We do not overlook the fact that under section 3 the right to liens begins to run when any labor is performed or material furnished, and that the incipient right continues on down during the performance and furnishing and even for thirty-ñve days thereafter. Let it be distinctly noted that we hold that after such lien rights begins to run, the owner can not pay to the contractor even at the times mentioned in the recorded contract without still being1 liable to the laborer or material man. But where a payment at a time and in the amount mentioned in the contract can be made without interference of liens, or where it can be made by the contractor’s clearing up all lien liabilities to the date of the same, it may be made by the owner and thereafter his liabilities for liens is reduced accordingly.
When the contract is recorded, the amount of the contract price is, in a sense, a fund for the payment of liens given by section 3, for which fund the property may be resorted to, but the evident meaning of section 5 is that the fund may be reduced by payments made in accordance with the recorded contract, as to those who do not begin to perform labor or furnish material until after those payments are made. This provision works no injustice to laborers or material men. They may observe by the recorded contract when payments by the owner to the contractor
It is only when the contract is not recorded that the right to liens given by section 3 to those performing labor or furnishing-material under a contract with the principal contractor or his subcontractor, has full sway. The alternative provision immediately following the provision for recording the contract- makes this clear. When, however, the contract is recorded, the limita
While it appears in the case under consideration that all of the contract price was paid by the owner to the contractors, the latter part thereof by the judgment of the bankruptcy court, still no case is pleaded or proved- that brings appellant within any saving of the statute in relation to the limiting of liabilities under the building contract by the recording thereof. Though we consider the contract a recorded one, still appellant has made no showing that any payment of the contract price by the owner-limited its liabilities thereunder in any way. The contract calls for monthly payments by the owner to the contractor in no specific amounts, but only for monthly payments of ninety pet cent of the estimated work done at the time of each payment. It is not shown when the work was begun so that we may fix the dates when the monthly payments became due, nor is it shown what the date and the amount of each payment was. Therefore, we can not see that any payment under the contract was made so as to be out from under liens, claimed, or so as to limit the liens to any particular part of the fund. The burden was on appellant to show that its liabilities for liens was limited. As far as we can see from the record, none of the-liens proved, reported, and decreed were limited by any of the payments which appellant made to the contractors. Indeed, from the record generally it would seem that all the payments, other than the one under the order of the bankruptcy court, were made regardless of the liens claimed. If appellant could have proved otherwise, it should have done so before submitting its case for final determination.
The contract between the owner and the contractors involved in this case was recorded without having been acknowledged or proved by witnesses. The' question whether it is a recorded contract in contemplation of the statute is raised and argued. We need not say, in view of our finding that no case of a limiting of liabilities is made, even if the contract was properly recorded. The aggregate of the liens claimed and involved in this case, about $15,000, is far under the $40,000 of the contract price paid by the owner to the contractors. The question of recording, therefore, becomes an immaterial one.
It is submitted as to several of the liens decreed that they are-
It is suggested in appellant’s brief that the question of the liability of the property for the liens claimed against the same in this suit is res judicata — that the bankruptcy court decided that which we are called upon to decide. This point is not sustained by the record. Indeed res judicata, is not pleaded or presented by the record in any way. Of the orders and judgments of the bankruptcy court the record shows only that the- contractors were declared bankrupt and that the residue of the contract price was expended under the order of that court. Such action by the bankruptcy court affects no question in this suit. We are cited to the published opinion of the court in the bankruptcy case. That alone will not do for a showing of res judicata. It appears-from the opinion that the case involved only ascertainment of the assets of the bankrupts and ascertainment of the debts to. which those assets were liable. For the purposes of that case all the mechanics’ liens involved here, but one, were upheld as valid against the assets of the bankrupts. However, the case in bankruptcy did not and could not involve the question whether the property of appellant was liable for these mechanics’ liens. Appellant was not the bankrupt, nor could these liens be there adjudicated as against its property.
The exception to the lien decreed Hanley, based on the fact that he was one of the bondsmen of the contractors, is not well taken. It suffices to say that no case was .pleaded, or otherwise made out, calling for an adjustment of liabilities between Hanley and appellant.
Lyon, who was a sub-contractor for the plumbing work, finished his contract under the receivers. It is contended that he lost his right to lien because he did not assert his claim by notice to the owner within thirty-five days after ceasing to perform labor and furnish material for Hobbs & Co. He gave the notice within the statutory time after ceasing work under the receivers. Was he working under the same contract ? If so, he could claim the lien within thirty-five days after finishing it. He testifies that he proceeded under the old contract; the receiver who negotiated with him in the matter testifies that he made a new and independent contract with him. Thus the evidence is in direct
The cross-assignment of error as to the lien of Kane & Keyser Hardware Co. will be sustained. We are of opinion that the commissioner improperly disallowed a large part of the claim asserted by this company, and that the court erroneously overruled the exception to the report of the commissioner in this particular. The lien claimed was for the sum of $1941.20. The amount allowed and decreed was $656.43, with interest to Feb. 15, 1910, making in all the sum of $886.17 as of that date. The decree should have been for the full amount claimed with interest to Feb. 15, 1910, making the sum of $2622.56 as of that date. From the evidence it appears that the items for which the lien is asserted are all within one continuous contract or running account, and that the commissioner was in error in considering that the right to lien had been lost as to some of the items by reason of lapse of time. We can not uphold the contention that the materials were furnished for separate and distinct purposes or under distinct contracts or orders. Therefore the decree will be modified and corrected as to the mechanics’ lien of .Kane & Keyser Hardware Co. The amount covered by that lien will now be decreed to be $2622.56, as of Feb. 15, 1910, instead of $886.17 as of that date.
If the college corporation is not protected by the bonds it took from the contractors and must .lose the amount of the liens decreed, it is indeed unfortunate. But its officers in that event must be themselves chargeable with the blame. The contract with Hobbs & Co. in express terms gave them the right to retain from any payment of the contract price as it became due an amount sufficient to cover all claims of laborers or material men that had become chargeable to the property at the time. The law enjoined on them the duty to look out for liens of sub-contractors, in any event. They could have fully protected the college corporation. But instead, they paid over .to the contractors, ostensibly on the personal responsibility of the latter. An investigation before payments, such as owners under our law must
The decree in this cause must be affirmed, except so far as hereinbefore modified and corrected in relation to the ■ lien of Kane & Keyser Hardware Co.
Modified and Affirmed.
Dissenting Opinion
(dissenting):
I think it is essential to determine whether the contract between the trustees and the Hobbs & Co., was recorded, in order to determine the rights of the appellees. If it was not a recordable paper, I admit that the simple act of spreading it upon the 'record by the clerk would not amount to a recordation. Raines v. Walker, 77 Va. 92; Abney v. Lumber Co., 45 W. Va. 446, 32 S. E. 256; Coal Co. v. Smith, 63 W. Va. 587.
It is contended that it was not recordable because it was not authenticated. I do not think authentication is necessary. There is nothing in the mechanics’ lien statute requiring it to be acknowledged or verified, to make it recordable. Boisot on Mechanics’ Liens, sec. 78, says: "Where the statute does not expressly so require, it is not necessary that a written contract, intended to secure a- mechanics’ lien, should be authenticated before being recorded, nor need it be verified by affidavit.” Section 3, chapter 74, -Code 1906, provides, in case of sale of goods where the seller delivers • possession but retains title until the goods are paid for, that the sale shall be void as to creditors of, and purchasers without notice, from such buyer, unless a notice oL’ such reservation be recorded in the clerk’s office of the county where the property is. There is no authentication required by •that statute and this Court has held that none is necessary to make the contract recordable. Wagon v. Hutton, 53 W. Va. 154; Hatfield v. Haubert, 51 W. Va. 190. And further, as indicating that the contract need not be acknowledged, the owner is not required to record the whole of his contract but may record only “so much thereof, as shows the contract price, and the times of payment.” The contract in this case was recorded July 9, 1903, before any work had been done or material fur■nished by appellees. The statute says the owner may limit his liabilities, so that the amount to be paid by him shall ndt exceed in the aggregate the price fixed in the contract, by recording his contract with the principal contractor. I think it is clear that
A comparison of the present statute with the mechanics’ lien law, as it was in 1887, will afford material aid, I think, in ascertaining the purpose for which the changes in the law were made.
Some of the prominent features of the former statute were as follows:
(1) It gave the principal contractor, the laborer and material men liens of equal dignity.
(2) It required 'thirty days written notice to the owner, after ceasing to furnish material or perform labor, in order to preserve the lien.
(3) It limited all liens to the balance due from the owner to the principal contractor, at the time he was given notice of the lien, unless he had been notified in writing by the laborer or material man, before he did any' work or furnished material, that he would look to him for his pay; and in such case the lien was for the full value of the work done or material furnished by such person after giving .notice, notwithstanding it might exceed the contract price.
(4) It made no provision for recording the contract, and permitted the owner to make payments to the contractor according to the terms of his contract, and thus to affect, or limit the liens of the laborer and material man pro tanto, unless he had been notified by them in writing, as above stated.
The distinguishing features of the present law are:
(1) It subordinates the lien of the principal contractor to the liens of the laborer, material man and sub-contractor; and makes the latter liens of equal dignity.
(2) The time within which notice of the lien is to be given the owner is changed from thirty to thirty-five days.
(•3) Tt contains the same provision as the old law, whereby the laborer or material man may secure a lien for the full amount
(4) It does not expressly limit the amount of liens to the price stipulated with the principal contractor, but it provides that the owner may do so by having his contract with the principal contractor, “or so much thereof, as shows the contract price and the times of its payment”, recorded. If the owner records his contract before any work is done or material furnished, the liability of his property for liens is no greater, I think, than it was under the law of 1887. That such is the result of recording the contract, is clearly implied from the language of the latter part of section 5, which says what shall be the effect of his failure to record his contract. It says that, if he fails to record the contract, the property shall “be held liable for the true vg¿ue of all labor done, and material and machinery furnished therefor, prior to such recording, although the same may exceed, in t]ie aggregate, the price stipulated in the contract between the Owner and the contractor.” Note the words, “prior to such recording.” Must not the converse of this be true ? If his property is made liable because- of his failure to record his contract, is it not clear that the legislature intended that the recording should have the effect to relieve it of liability; and more especially so, when the act expressly says the owner may thus limit his liability so that the amount for which the property is liable shall not exceed, in-the aggregate the amount stipulated in the contract. What effect should be given to the language of sec. 5, viz.: “No pay^ ment by the owner or his agent, to a contractor, shall effect or impair the lien of a laborer, or materialman, provided for in section three of this chapter.” To give it full effect, as if it stood alone, would nullify the provision for limiting the owner’s liability; and would prevent him from carrying out his contract with the principal contractor. But all parts- of the act must be
■ The contract in this case was recorded before any material was furnished or work done; there is no evidence that the trastees were notified in' writing by any of the lien claimants that they would be looked to for pay before they did work or furnished material; the decree shows that the property is made liable for several thousand dollars more than the contract price, and for the foregoing reasons, I think the decree should have been reversed.
Concurrence Opinion
(concurring):
I concur in the conclusion in this case, but not in the construction of the statute, adopted by my associates.
Under the rules- of interpretation, a slight and unnecessary implication raised from certain terms used in section 5 of the statute cannot be permitted to limit, cut down or destroy the positive terms of section 3, giving the laborer and material man liens for their labor and materials, superior to that of the principal contractor, and of section 5 itself saying no payment to a contractor shall impair those liens.
No extensive argument in support of this position is offered
I must dissent from another proposition asserted by the opinion. Section 3 gives no lieji to a sub-contractor as such. He has a lien only for labor, materials or machinery furnished by him, and none for any share in the principal contractor’s profit.
The first proposition asserted by my associates will permit the owner and principal contractor, by the terms and provisions of their recorded contract, to defeat claims of laborers and material men and the second will permit the same thing to be done by transactions between the principal contractor and the sub-contractor, contrary to the manifest purposes and spirit of the statute as well as its letter.
Properly applied, the statute may be more onerous and burdensome upon owners, and principal contractors than due protection to the rights of laborers and material men requires, but that does not justify any modification by the courts. It is a question of policy or expediency for the legislature. Nothing will bring about the repeal of a bad law more quickly or effectually than rigid enforcement thereof.
