*1 651 ELECTRICAL CO. SWAIN ELECTRIC SUPPLY CO. v. (1991)] N.C.
[328 therefore, Now, of North Supreme is ordered Court it Greene, conference, Carolina, R. George respondent, Judge that be, conduct deter- by this for the hereby, censured Court and he is to the administration prejudicial to be conduct mined the Court disrepute. office into brings judicial justice Frye in the con- participate did not MITCHELL and Justices of this case. sideration or decision CO., DURHAM, v. SWAIN OF INC. ELECTRICAL
ELECTRIC SUPPLY CO. COMPANY, INC., AND DAVIDSON JONES CONSTRUCTION Partnership I, a North WINSTONS VENTURE Carolina No. 181PA90 1991) (Filed May (NCI3d)— Liens tiered 1. Laborers’ and Materialmen’s — subrogation property to contractor’s real subcontractors statutory provisions, In light plain language structure, by to be achieved policy sought their first, second and third provides legislature, N.C.G.S. § to the con- separate tier subcontractors the lien on distinct from tractor’s lien on the real 44A-18. in N.C.G.S. funds contained 17-25, 67, 2d, seq. §§ 263 et Mechanics’ Liens Am Jur (NCI3d)— legislative com- legislative 2. Statutes 5.6 intent — in General Statutes records —commentaries mittee intent, does appellate court determining legislative deliberations of commit- to the record of the internal not look Even proposed legislation. legislature considering tees of the Statutes, which were with the General printed commentaries not treated as by the are legislature, not enacted into law authority. binding 17-25; 2d, §§ Statutes
Am Mechanics’ Liens Jur seq. et IN THE COURT SUPREME CO. v. SWAIN ELECTRICAL CO.
ELECTRIC SUPPLY *2 — (NCI3d) § 3 3. Laborers’ and Materialmen’s Liens subcontrac- Hen tor-subrogation to contractor’s A subcontractor assert whatever the contractor the owner’s real against proper- who dealt with the owner has Therefore, even if the owner ty project. has relating the contractor for the labor or the materials specifically paid by unpaid claiming subcontractor who supplied specific subrogation, that subcontractor retains a claim, the extent of his to whatever lien the contrac- rights However, tor otherwise has in the until the subcon- project. action, may prejudice tractor commences the the contractor waiver of the lien or rights through accept- subcontractor’s payment. ance of 2d, 67, 70, seq.,
Am Jur Mechanics’ Liens 263 et 296. dissenting. Justice Martin joins dissenting opinion.
Justice
WEBB
discretionary
Appeals,
On
review of a decision of the
Court
479,
(1990),
App.
97 N.C.
Michael J. for Skinner, Mabe, Jr., Manning, Fulton & John I. for defendant- Davidson and Jones Const. Co. and Venture I. appellants Winstons Johnston, Hord, Taylor, Allison & James W. Allison and Ahlum, AGC, Inc., Greg C. Carolinas amicus curiae. for P.A., Eleazer, Jr., Sturges, Weinstein & L. Holmes Erwin, Jr., Association, Fenton T. American Subcontractors for Inc., amicus curiae. MEYER, Justice. (hereinafter I defendant-appellant Winstons Venture “Owner”) hired defendant-appellant Davidson and Jones Con-
IN THE COURT SUPREME CO. SWAIN ELECTRICAL ELECTRIC SUPPLY CO. v. “Contractor”) (hereinafter to build Com- Company struction in turn hired Swain Inn motel Durham. Contractor fort (hereinafter Subcontractor”), Co., Inc. the “First-tier Electrical systems in The First-tier Subcontrac- project. install electrical Supply Electric Co. plaintiff-appellee, with the tor subcontracted (hereinafter Subcontractor”), Durham, Inc. “Second-tier into the construction incorporation for supply electrical materials (1989) definitions). (statutory project. generally See May continuing through Beginning December supplied materials to First- Second-tier Subcontractor $20,718.11, payment at no was tier Subcontractor valued Meanwhile, ever due to First-tier Subcontractor’s received. *3 Contractor, disputes with obligations failure to its perform the First-tier Subcontractor. between Contractor and arose for May payment not received the materials having On on all filed and served de- the Second-tier Subcontractor supplied, of lien in the notice of of lien and a claim amount fendants a claim (1989). $20,718.11. 44A-12, -19 At same of See N.C.G.S. §§ time, job. The First-tier the First-tier Subcontractor abandoned the money by no for work was owed Contractor Subcontractor fact, has Inn Contractor project. related to the Comfort (who the time of claim the First-tier Subcontractor at Bankruptcy of the United States jurisdiction trial was under the Court) of contract. for breach Subcontrac- on 2 Second-tier Finally, plaintiff October by filing suit as its claim of tor commenced enforcement of fur- days of last by statute within 180 the Contractor’s1 required (1989). Plaintiff filed See N.C.G.S. nishing of materials. it is entitled under claiming any and all liens this suit day, the bond posted 44A. On that same Contractor N.C.G.S. ch. 44A-16(6),thereby plain- of canceling certain to N.C.G.S. pursuant tiff’s liens. sometime in late 1987 and completed project Contractor final the Owner. payment
thereafter received a from by way only the Contractor’s plaintiff’s 1. viable claim is Since pertinent inquiry here. See rights, it which are the is the Contractor’s actions only parties briefs address The record and N.C.G.S. § It can be were furnished the Second-tier Subcontractor. dates materials last furnishing long was Second-tier Subcontractor assumed in this case that as they job, being on behalf of the Contractor. were furnished materials ELECTRIC SUPPLY CO. v. SWAIN ELECTRICAL CO. The trial court held plaintiff that the Second-tier Subcontrac- tor’s lien was limited to amounts owed the Contractor First-tier plaintiff Subcontractor at time the filed its effec- reversed, tively any denying plaintiff relief. The of Appeals Court first-, second-, holding that N.C.G.S. 44A-23 provides and third- tier subcontractors a subrogation to lien of the contrac- owner, tor who dealt with the regardless lien on funds. We agree.
The matter under review is the proper interpretation portions of article 2 44A chapter of the North Carolina General “Statutory Statutes entitled Liens on Property.” Real The relevant statutory provisions at issue are N.C.G.S. 44A-18 and -23. 44A-18 provides:
N.C.G.S. § lien;
§ 44A-18. Grant of subrogation; perfection. (2) A second tier subcontractor who furnished labor or
materials at the site of the improvement shall be enti- tled to a lien upon which are owed to the first tier whom the second tier subcon- tractor dealt and which arise improvement out of the on which the second tier subcontractor fur- worked or nished materials. A second tier *4 subdivision, extent of his lien in provided this shall also entitled be to be to the lien subrogated first tier subcontractor with whom he provided dealt (1) for in subdivision and shall be entitled to perfect by it notice to the extent of his claim. 44A-18(2) (1989) added). N.C.G.S. (emphasis Since nothing was § owed to the First-tier Subcontractor at or after the time that the claim, that, Second-tier Subcontractor filed its lien it is undisputed here, on the facts the Second-tier Subcontractor has no lien rights upon funds under 44A-18. N.C.G.S. § 44A-23 provides:
N.C.G.S. § lien; § subrogation rights 44A-23. Contractor’s of subcontractor. first, A second or third tier gives who notice Article, claim, may, as in this to the provided extent his of the by lien the contractor created Part of Article enforce of CO. CO. v. SWAIN ELECTRICAL ELECTRIC SUPPLY The of enforcement shall be Chapter. 2 of manner such by perfected 44A-7 44A-16. lien is through provided as G.S. of claim upon filing time forth in G.S. 44A-10 as of the set of the notice Upon filing lien to G.S. 44A-12. pursuant of action, no commencement and claim of lien and the prejudice shall be effective action of without his written consent. of the subcontractor rights added). (1989) 44A-23 (emphasis N.C.G.S. § I. Assembly, [1] carry The first issue that forward N.C.G.S. § in adopting in N.C.G.S. we must 44A-23 the decide is whether the General 44A-17 to previously -23 in well-settled intended lien rights subrogation to a lien
right a subcontractor undisputed it Again, property.2 of the contractor in the lien to the subcontractor right a new granted that N.C.G.S. § right subroga the subcontractor a provided on certain circumstances. See rights specific tion to the of the contractor (6) (1989). (3), 44A-18(2), the entire examining After N.C.G.S. § scheme, was to legislative we hold intent con 44A-23 to separate in N.C.G.S. right tinue subcontractor’s § lien on the real to the contractor’s subrogation lien). (the created N.C.G.S. contractor’s § 1971, essentially following inwas effect: 2. 1880 until statute From etc., subcontractors, subcontrac- given Lien on real estate.—AM 44-6. employed to or who furnish labor tors and laborers who are furnish do building, altering or other im- repairing house or material estate, real estate for provement have a lien on said house and on real furnished, which shall be of such labor done or material amount law, provided preferred when notice thereof to the mechanic’s lien now provided as other given hereinafter enforced shall be 44A, provid- chapter chapter except where it is otherwise in this liens ed; due and materialmen the sum total all the liens subcontractors but original contractor at time exceed the amount due shall not given. notice (effective 1969), (Supp. repealed by Laws ch. 44-6 1971 N.C. Sess. added). 1971) (emphasis 1 October consistently this mandate to allow the This construed Court owner, with the lien of contractor who dealt *5 party whom the subcontractor regardless were with of whether funds owed (1919); 432-33, 372, 426, Denton, Brick 176 97 S.E. 374-75 Powder Co. v. N.C. dealt. Co., 513, (1915); 371, 375, Lumber Pulley, 84 514 Powell v. v. 168 N.C. S.E. Co. 1032, (1915); 632, 638, Lodge, Supply see also Co. v. Motor 84 S.E. 1035 168 N.C. (1970). 392, 312, 316, 177 394 277 N.C. S.E.2d THE 656 IN SUPREME COURT SWAIN ELECTRICAL CO. ELECTRIC SUPPLY CO. v. 651 N.C. construction, statutory In our is to primary matters of task intent, purpose legislature, legislative ensure that of the 274, 288, Facility, Hunt v. Reinsurance 302 N.C. accomplished. is (1981). 399, Legislative purpose 275 S.E.2d 405 is first ascertained Your House Burgess from the words of the statute. See v. plain (1990). 205, 209, 134, Moreover, 326 388 S.E.2d 136 Raleigh, N.C. guided we are the structure of the statute and certain canons See, Media, Inc. v. statutory e.g., construction. McDowell Coun (1981)(“statutes 427, 430-31, 457, 284 461 ty, 304 N.C. S.E.2d dealing materia"); in subject pari with the same matter must be construed Winston-Salem, Builders, 550, 556, Inc. v. 302 City N.C. 276 (1981)(“It 443, S.E.2d 447 that the presumed legislature intended full portion given each to be effect and did not intend provision to be mere surplusage”). legislative Courts also ascertain intent policy objectives from the behind a statute’s “and the passage consequences way which would follow from a construction one or Church, 476, 484, 558, v. Campbell another.” 298 259 S.E.2d N.C. (1979). “A 564 construction which operates impair defeat object of the if reasonably statute must be avoided that can be Hart, done without violence to the v. legislative language.” State (1975). 76, 80, 291, analysis 287 213 295 An N.C. S.E.2d utilizing plain of the statute and the language canons construction must done in a manner harmonizes with the underlying reason and purpose Hardy, of the statute. See re 294 N.C. (1978). 90, 96, 367, 240 S.E.2d
When, text, structure, after analyzing policy of the statute, intent, we in are still doubt as to we also ex legislative history amine the in legislation question. See Cab Co. Charlotte, 572, 576, Changes legislature made structure language are indicative of a change legislative provide intent and therefore AGC, Inc., analysis. some in our Id. Amicus weight for Carolinas urges this Court to consider an attachment to the minutes of a Judiciary House Committee on III meeting held on June as evidence of the intent Bill legislature’s 1971. House refer, Clarify to which the minutes is entitled “An Filing Act to Requirements Statutory for a Claim of Lien a Subcontractor Dealing Property.” One Other than Owner of the memorandum, 702. A attorney N.C. Sess. Laws ch. written who drafted the 1985 amendments to the statute contained in the bill,
was attached to minutes and have been discussed *6 657 IN THE SUPREME COURT v. SWAIN ELECTRICAL CO. ELECTRIC SUPPLY CO. (1991)] 651 N.C.
[328 The memorandum purports of meeting in the the House Committee. 44A-17 statutory scheme of N.C.G.S. complete describe the consistent with amicus' legislative -23 a intent suggests and argument.
[2] determining legislative intent, Court does not look of of committees of to the record the internal deliberations Indeed, we declared considering have legislature proposed legislation. legislature who statutes adopted affidavits of members of the question purpose not to be evidence of and intended competent of the legislation. construction
While construction is principle the cardinal of meaning which given of the must be that words statute intent must carry Legislature, will out the intent of the that act, history from the its language legislative be found of its which throw adoption the circumstances surrounding Testimony, even sought the evil to be remedied. light upon statute, adopted of the which Legislature members intended to be given as to its and the construction purpose terms, to its is not evidence Legislature competent make its determination as upon the court can statutory provision. of the meaning 323, 332-33, Stores, 154 S.E.2d Milk v. Food N.C. Commission (1967). 548, 555 with the North General printed Even the commentaries Carolina Statutes, Assembly, by the General which were not enacted into law State v. authority by this Court. See binding are not treated as 805, (1986); 330, n.2, n.2 337-38 348 S.E.2d 809-10 Hosey, 318 N.C. 347, n.3, Kim, 351 n.3 State v. legislative we were to consider the attachment willing Even if not, we we would be are proceedings question, committee memorandum, nearly years fourteen that the submitted unpersuaded review, sufficiently would the statute under passage of after what, a was well-settled persuasive prior to overturn the contractor’s lien. plain language argues reading Plaintiff tiered on subcontractors separate creates language focus on the by way One must subrogation. “may, that the tiered subcontractor of the statute which indicates claim, the lien the contractor created to the extent his enforce ELECTRIC SUPPLY CO. SWAIN ELECTRICAL CO. (1989) Chapter.” Part of Article of this N.C.G.S. § added). (emphasis AGC, Inc., and amicus Defendants Carolinas contend that *7 language “to extent of his claim” does not create an alternate lien on the real in of the favor tiered but rather, “the extent of claim” means the extent [the subcontractor’s] funds, by of subcontractor’s lien for provided as N.C.G.S. essentially 44A-18. Defendants argue that had the legislature § 44A-23, separate by subrogation intended a lien in N.C.G.S. it § would have said so explicitly.
The plain reading dispositive, of the statute is not we and therefore to analysis turn an of the structure of the statute ascertain legislative intent. Plaintiff notes that N.C.G.S. §§ and 44A-23 were both grouped legislature under article Mechanics, part 2 chapter of 44A. is “Liens Part entitled of Laborers and Materialmen Dealing One Other Than Owner.” Plaintiff that argues such a structure evinces a legislative intent separate that N.C.G.S. 44A-18 and 44A-23 create liens available to certain tiered subcontractors. materia, in pari
In construing statutory provisions defend- ants and amicus make a number of compelling arguments. Essen- tially, position defendants’ is the legislature that intended the “to the extent of his claim” language N.C.G.S. 44A-23 to be depend- § ent upon the existence of on in a created N.C.G.S. First, they point 44A-18. a subroga- out that subcontractor’s § only tion is expressly articulated in N.C.G.S. and note § 44A-18(6) that N.C.G.S. refers N.C.G.S. 44A-23 when pro- it § § second, first, vides: “The subrogation rights a or third tier sub- lien of to the the contractor Part 1 created of Article 2 of this Chapter perfected provided are in G.S. 44A-23.” Defend- and amicus’ ants’ argument that 44A-23 only is N.C.G.S. estab- § lished a means to perfect in created N.C.G.S. 44A-18. § significance Defendants infer from the legislature’s use of the 44A-18(2) in language to a lien” section and contrast “entitle[ment] it with the language “to the extent of his claim” section 44A-23. We note further that the legislature phrase used the “extent 44A-18(2) (3) his claim” in N.C.G.S. and describe subcontrac- tor’s lien rights In parties ahead of it. context, that consistent with defendants’ interpretation 44A-23, the extent of the was claim restricted subcontrac- CO. ELECTRICAL
ELECTRIC SUPPLY CO. v. SWAIN not are persuasive, arguments on funds. However tor’s lien here, analysis objectives. we of policy now turn to an decisive sought objectives legislators considering policy statute, we note that a constitutional enacting to achieve states: point. The North Carolina Constitution directly mandate is on Assembly provide proper legislation The General shall lien on adequate and laborers an giving mechanics of their labor. subject-matter Const, X, foster An lien is intended to adequate art. 3. Sup largely on credit. industry, operates
the construction others, many pro surveyors, among architects and pliers, including who vide to contractors and subcontractors labor materials work Since the contractor project. their on perform portion or job, portion until generally paid not *8 (and turn, it, it, until in pay unable to completed probably is is to on extend materials them is their labor and paid), suppliers ex necessary encourage responsible lien is adequate credit. An credit, necessary to health of the construc which are the tensions See, Howard-Veasey v. e.g., Corp. Builders Carolina industry. tion denied, Inc., 626, 629, Homes, 224, 229, cert. 324 72 S.E.2d App. N.C. Inn, 597, (1985); Tree Miller Lemon 606 330 S.E.2d N.C. (1978). 133, 140, 836, 841 249 S.E.2d App. 39 N.C. of the statute defendants’ construction argues Plaintiff that requiring of the constitutional mandate abrogate would the purpose specifical We that constitutional mandate lien.” note the “adequate an “subject-matter ly to a lien on the refers subcontractor’s] [the added) interpreta it with defendants’ (emphasis labor” and contrast intent, system largely based which creates a legislative tion of Moreover, Assembly the plaintiff contends that General on funds. additional to sub provide protection 44A-18 to enacted N.C.G.S. § by a lien on funds establishing contractors the owner not with specifically agreed even the contractor had if on the owner’s thereby circumventing place any property, See, Co. v. Wilson e.g., Con 44A-23. by the lien created 633, 635, 663, cert. 661, Acres N.C. 289 S.E.2d Apts., App. (1982); denied, v. Construction Mace N.C. (1980). 297, 303-04, 269 194-95 Corp., S.E.2d App. 48 N.C. prop- while owner’s and amicus out point that Defendants under N.C.G.S. in a lien erty subject to sale enforcement is IN THE SUPREME COURT ELECTRIC SUPPLY v. SWAIN CO. CO. ELECTRICAL 44A-23, contracts, practice, as a construction standard call for § the directly indemnify
contractor who deals with the owner matter, that, the owner. This a practical means such contractor essentially burden when bears economic that arises the first- tier project subcontractor while owing abandons monies to They if lower-tiered subcontractors. further that such con- argue tractors their required post payment first-tier subcontractors bonds, the costs construction would rise and small subcontractors industry. would be driven from the Association, Inc., and amicus Plaintiff American Subcontractors respond that burden of a defaulting first-tier Moreover, better borne who contractor hired it. exer- cising greater supervisory over the first-tier responsibility subcon- tractor, directly the contractor who dealt owner can avert or at minimize such requires least losses. If additional assurances, he can require payment bonds. See N.C.G.S. (1989). amicus Together, plaintiff and note better supervision by such relatively contractors and the infrequent occurrence of a first-tier subcontractor becoming during insolvent construction bonds, will minimize need for payment concededly in- addition, crease the costs of we construction. note that waivers, use of lien in used other than anticipation con- contract, sideration for awarding liability of a also minimize 44A-12(f) who contractors deal with owner. See N.C.G.S. that, We light plain hold language structure, provisions, their more importantly, policy sought first-, to be achieved *9 the legislature, provides N.C.G.S. 44A-23 § second-, and third-tier separate right subcontractors a of subroga- owner, tion to the lien of the who contractor deals with the distinct from the contained in N.C.G.S. rights 44A-18. §
II. [3] Having established that the subcontractor separate has a lien of right way the lien subrogation to contractor’s on the real estate, we must next the lien examine extent of the that plaintiff 44A-8, asserts. The contractor’s lien is described in N.C.G.S. § 2, Mechanics, found in of part article entitled “Liens of Laborers added.) and (Emphasis Materialmen with Owner.” Dealing It provides: CO. SWAIN ELECTRICAL
ELECTRIC SUPPLY CO. v. N.C. lien; Mechanics’, persons and materialmen’s 44A-8. laborers’ lien.
entitled to profes- or furnishes labor or who Any person performs pur- or furnishes materials surveying or services design sional contract, with the owner implied, either or express suant to a thereon improvement an making of real for the of property Article, shall, of have provisions with the complying upon all debts payment a lien on such real secure property of serv- design surveying or or owing professional labor done for such contract. or material pursuant ices furnished added). (1989) (emphasis N.C.G.S. § subrogated the interest construing In subcontractor’s lien, that, policy of the behind light we first hold contractor’s 44A-23, may assert passage of N.C.G.S. subcontractor the owner has lien that the contractor who dealt with whatever Powell project. See property relating the owner’s real (1915).Therefore, Co., 632, 638, 1032, 1035 84 S.E. v. Lumber N.C. the labor the contractor for specifically paid even if the owner has who unpaid subcontractor supplied specific or materials subroga retains claiming is tion, that subcontractor claim, the contrac rights the extent of his to whatever However, 44A-23 also project. has in the tor otherwise that: provides com- of lien of the and claim filing notice
Upon subcontractor], no action of [by the mencement of the action rights effective to prejudice the contractor shall be his written consent. without (1989). result, com- until the subcontractor As N.C.G.S. § action, language indicates the clear mences waiver rights through the subcontractor’s prejudice See Mace Construction payment. acceptance or 191, 195; generally see Corp., App. Miles, Real Improvement Liens Mechanics’ Urban & Perfection, Developments Recent Property: Enforcement 283, 376 L. Rev. Priority, Wake Forest conclusion, a lien not established we note that has plaintiff A lien on the paid the Owner the Contractor. on funds exist, may may depending not way final to the Contractor payment the Owner’s timing upon *10 ELECTRIC SUPPLY CO. v. SWAIN ELECTRICAL CO. action. The relative to commencement of this record is unclear final We affirm timing payment. this therefore Appeals decision of Court of and remand to that court for Court, County, Superior further remand to the Durham for a deter- full mination of this issue and a determination of this case consist- ent opinion. with this
Affirmed.
Justice MARTIN dissenting.
I majority dissent from the The respectfully opinion. question to be is a decided whether second tier subcontractor is entitled to lien the owner perfect property a of real under N.C.G.S. contractor, 44A-23 when owner general both the and the prior receiving the second tier subcontractor’s notice claim of fully have of their discharged all to the first tier obligations subcon- tractor, including payment of debts due labor and materials by the majority furnished second tier subcontractor. The has al- lien; lowed a doing, majority such in so has erred. property Mechanics’ liens on real are governed State Article 44A Chapter of the General Statutes. There are two The categories. arising first concerns those liens from claims based direct upon dealing between the owner of the lien. party claiming the The second concerns claims of parties directly who not did deal with the owner of the property. appeal instant is concerned with the rights tier a second directly subcontractor who did not deal with the owner, solely but contracted first tier a subcontractor.
Fundamental to a subcontractor’s to a lien is whether he has given timely written notice a directly claim of lien contractor, owner real property, general superior him in the chain of construction. 44A-18, -20, -19, and -23 This actual written notice is the cornerstone of a rights. subcontractor’s Until subcontractor, the owner receives notice of a claim lien from a is owner free to disburse funds to the general contractor. Likewise, until the general receives notice of a claim tier, of lien from subcontractor of a he given is free to disburse higher funds to If tiered subcontractors. a notice of claim of lien owner, contractor, provided by and the or higher
IN THE SUPREME COURT SWAIN ELECTRICAL CO. ELECTRIC SUPPLY CO. v. (1991)] N.C. 651
[328 obligor the notice of claim of ignores subcontractor tiered labor, to the party once twice for the same material or pay must again to the notice paid receiving whom he funds after to lien claimant. the unpaid Thus, adoption Chapter the purpose is the it clear that system a lien to tiered 44A Statutes was establish of the General subcontractors, thereby rights a lien subcontractor’s limiting If, receives him. at the time the owner parties to those above no the owner lien claim notice the second tier subcontractor’s contractor, no funds then funds to the general owes longer to which such subcontractor’s of the owner possession are limited to the are rights lien can The subcontractor’s attach. Corp., Mace v. him. See Construction rights parties of the above Bedros, (1980); Supply Builders 48 N.C. 269 S.E.2d App. (1977). 32 N.C. App. However, funds upon has a lien if a tier subcontractor second contractor, tier sub- second by general the owner to the owed property the owner’s real upon entitled to a lien contractor is also contractor general If owner pays extent of his lien. notice second tier subcontractor’s after the owner receives the funds, to may required also the owner of claim against (1989). the subcontractor. N.C.G.S. pay § second, circumstances, first, third subcontrac- tier In some against property a lien the real entitled to tor also be pay for the if the owner refuses the owner N.C.G.S. by the subcontractor. labor and materials furnished may by subrogation 44A-23 instructs how such subcontractor the owner’s against of the rights general the lien perfect refuse to pay insolvent or an owner become property real should against such a lien perfect contractor. order general must have established of the owner the subcontractor property contractor. general owed the owner a lien the funds upon (a) Then, owner’s against his subrogated he must perfect above him in the construc- upon persons all serving (b) funds, file against of lien tion chain his notice of claim of lien court a claim superior of the appropriate with the clerk his of lien notice of claim property along against the real (c) funds, lien enforcement lawsuit. commence a against Part Like liens created all See N.C.G.S. 44A, subrogation 2 of the subcontractor’s Chapter of Article ELECTRIC SUPPLY CO. v. SWAIN CO. ELECTRICAL the general rights contractor’s lien land owner the existence dependent upon of an claim of lien underlying upon the owed the party above him and with he whom plain contracted. This is from the apparent meaning first, 44A-23 wherein it is stated that second or tier third “[a] Article, provided who gives notice as *12 claim, may, to extent of his enforce lien of the contractor . . . .” N.C.G.S. The manner of such enforcement § in key is detailed the section. The to establishing claim is case, phrase “to the extent his of claim.” Id. the instant the second tier any subcontractor was unable to establish claim upon the of funds the first tier subcontractor because there were no funds available for that purpose. Even if it is assumed that N.C.G.S. on its face clear,
not any interpretation reasonable of the statute discloses necessary that it is for the tier second subcontractor to establish its on claim he before can establish a on owner’s subrogation. accepted
It is an method of determining the intent of legislature to examine legislative history concerning available See, the legislation question. in v. e.g., Burgess Your House of Inc., (1990) 205, 209, 134, 136-37 Raleigh, 326 N.C. 388 (Meyer, S.E.2d J.); 274, 295, Hunt Reinsurance Facility, 302 N.C. (1981) (“We 399, 409-10 especially find pertinent, in considering the intent of Legislature, our this statement the North Carolina [of Legislative Research Commission Report 1979 General Carolina, Laws, Assembly North Insurance at 12-13] Assembly General on the 1977 commenting insurance law amend .”); Valdese, 79, 83-84, ments: . . Greene v. Town 306 N.C. (1982) S.E.2d (relying upon Report Municipal Govern ment Study Commission to determine legislative intent behind statutory scheme recommended the Report and subsequently Stafford, adopted by the Legislature). generally “North Carolina Cf. (Winter 1991). Legislative History,” 38 N.C. State Bar Quarterly The legislative history of N.C.G.S. 44A-23 discloses in Assembly the General ratified an amendment to the lien law in contained House Bill 1144. An Act Clarify Filing Requirements Statutory Claim Lien aBy Subcontractor Dealing With One Other than the Owner the Property, 1985 Sess. Laws codified, ch. 702. This session law was later pertinent part, ELECTRIC SUPPLY CO. v. SWAIN ELECTRICAL CO. Judiciary 44A-23. In a on this hearing bill before Committee, III Representative Boyd explained that the bill clarified the method of filing a notice claim of for a Harris, attorney and then Martha recognized staff for the North Office, bill, Legislative Carolina Services who had drafted the Minutes, present who was the bill further. explain North Carolina House Committee on III Judiciary Boyd dated June 1985 (“Rep. Martha recognized Harris who had drafted Bill [House 1144] attached.”). explain it further. A of this copy explanation is Ms. spoke Harris to the committee and filed with explana- it a written tion of the bill. The pertinent parts of this memo read:
RE: Bill 1144 House
Note: This discussion focuses on three parties: land- owner, dealt, the contractor with whom he and the subcon- tractor who dealt with the contractor. rules that apply will apply, with some com- procedural plications, to second and third tier subcontractors as well. *13 Bill 1144 House clarifies the effect of a subcontractor’s filing a notice of against a claim of lien owner property with whom law, he directly. has not dealt Under current a subcontractor can perfect against any the owner’s property at time, even before the work has been done or after the owner that, the paid provides has debt full. The bill like a contrac- owner, directly tor who has dealt with the property a subcon- may tractor not a lien perfect against property unless money owner owes for the performed. work Part of Article 44A Chapter creates several different of liens in types favor of subcontractors who have not dealt First, property. the owner of the a subcontractor has a lien on funds owed the contractor with he whom dealt for the on which the improvement subcontractor worked. This perfected by lien is the lien giving notice of to the landowner who owes will or owe the funds to the contractor with whom may any the subcontractor dealt. This notice filed time be at payment yet whether or not of the funds is due.
The subcontractor enforce this lien on enforcing the lien directly of the contractor who dealt with the owner Thus, the lien against property. against subcontractor - ELECTRIC SUPPLY CO. v. SWAIN ELECTRICAL CO. funds owed to the contractor creates a second against contractor, lien in property. owner’s Unlike the favor of the however, any this lien can perfected at time whether or not the work has been performed and whether or not the By owner owes for the work. anything filing notice of lien, the subcontractor can create a cloud on the owner’s title at time. In practice, many subcontractors file this notice they whenever begin project. work on a new Bill 1144 provide House would the notice filed by the perfects subcontractor’s lien against any funds owed to the contractor but does not perfect a lien against the landowner’s A property. only subcontractor could the lien perfect way the owner’s in the same as a filing contractor: a claim of lien after the owner’s obligation to the contractor become mature. lien would then relate back to time the subcontractor first furnished labor materials at the site. dated May
Memorandum 1985 To Representative Boyd from Harris, Martha Re: House Attorney Bill Ukk. Staff It is to be noted that legislative history above is related 44A-19, -20, -18(b), to the 1985 amendments to N.C.G.S. -23. The amendment to section reads:
Sec. 4.
G.S.
is amended
after the
adding
second
sentence of that section a new sentence to read: “The lien
time
perfected as
set forth in G.S. 44A-10 upon filing
of claim of lien
pursuant
G.S. 44A-12.”
Sess. Laws ch.
4.
So it is
legislative history
clear that
above
explained
*14
23,
intent as to the
legislative
meaning of section
and other parts
statute,
of the lien
as amended
the 1985 legislature, not the
meaning
argued
majority.
section
as of
The
44A-23,
statute under review is not the 1971 version of N.C.G.S. §
history
but the 1985 amended statute. The legislative
above stated
is most relevant
in
determining
legislature.
intent of the
Milk
Stores,
323,
v. Food
Commission
270 N.C.
This demonstrates that N.C.G.S. 44A-23 that a subcontractor requires perfect his claim of lien § against
the funds due the he person whom contracted before ELECTRIC SUPPLY CO. v. SWAIN ELECTRICAL CO.
he can a lien subrogation against property establish of the owner. If the majority’s interpretation of N.C.G.S. § correct, were there would no need for the tiered lien logical system in contained 44A. Chapter interpretation correct of N.C.G.S. is also sup- §
ported by case law since the reported adoption present Bedros, lien in tiered scheme 1971. In Builders v. Supply N.C. 209, 199, 231 S.E.2d if App. Appeals Court of held that general contractor had been or had its lien paid released claim of before its subcontractor asserted a lien on funds owed the general to contractor on, there was for the to lien nothing place subcontractor a against
and no could be established the land of the owner by the Corp., App. subcontractor. Mace Construction holds that where general a contractor had expressly right waived its to claim a the subcontractor had no to a lien on the real pursuant of the owner 44A-12(f) (1989). to 44A-23. But N.C.G.S. cf. policy party ability
Public dictates that who has the to so, himself from if protect loss should do he fails to so act in his own behalf it is not appropriate require to an innocent party here, in pay to twice order to make the negligent party whole. So where the second tier subcontractor fails to file properly his claim of lien against funds owed to the first tier subcontractor or the contractor it general inequitable require would be to the owner or the general again pay contractor the amount claimed the plaintiff, already paid that sum been having defaulting months, delayed first tier subcontractor. Plaintiff here some five May, from December until giving unpaid before notice of its claim. The law as well as contractor and equity protects general in owner this instance and does not either require again pay in negligent order to benefit second tier subcontractor. reasons, majority
For these erred in opinion allowing the second tier perfect the owner when the second tier complied subcontractor had not with N.C.G.S. 44A-18 and had failed to file notice of its claim against short, in timely fashion to its own interest. In protect majority simply has amended the statute to allow the plaintiff recover law, in this instance. This creates both confusion and error inequity upon works an the landowner and general
state v. mckinnon case, injurious will rule of law that and establishes industry North Carolina. generally and the construction contractors dissenting opinion. joins in this Justice WEBB v. DANIEL McKINNON STATE OF NORTH CAROLINA No. 327A90 1991) (Filed May — (NCI3d)— offense evidence of another Law 34.4 1. Criminal purposes” for “other relevancy rebuttal —admissible details of de- Testimony by giving defendant’s girlfriend was morning August her assault on on fendant’s murder rape defendant for a prosecution relevant in a inference or contradict the August of 18 to rebut night on with his to the altercation referring that defendant was the victim rape and murder of rather than to girlfriend he had August that night when he told a witness Therefore, only testimony did not show this girl.” “beat toward women but propensity a violent that defendant had purposes” for “other under N.C.G.S. admitted properly was 404(b). 8C-1, Rule 2d, § 298. Am Jur Evidence (NCI3d)— in favor of law potential juror Jury § 2. 7.9 —bias cause challenge for officers — in denying discretion did not abuse its The trial court on the potential juror for cause of a challenge defendant’s credibility to law enforcement he more might assign basis juror’s responses witnesses where the than to other officers automatically he would not dire indicated that voir during testimony by any class particular enhanced credence give background, factors a witness’s but that certain of witnesses credibility affect the would training experience, such witness. of that 2d, Jury 285.
Am Jur