189 Tenn. 562 | Tenn. | 1949
Lead Opinion
The only question involved in this appeal is the priority of liens as between a garnisheeing creditor (Hamilton National Bank) of a contractor (Long) and material men (Scott) furnishing materials and work to the con
We granted certiorari because, even though the two lower courts arrived at the same conclusion, their method of arriving at this conclusion was based on different legal principles. And, too, insofar as we can find, this identical question has never been decided in this State before. No question of fact or law which was not presented to the Court of Appeals, was presented to us. We have heard argument, carefully considered the very able briefs, the record and have made an independent investigation of the question involved. Our conclusion is that the Court of Appeals has fully and correctly answered all questions presented. It would serve no useful purpose for us to rewrite the opinion which has been so ably done by Judge McAmis, speaking for the Eastern Section of the Court of Appeals. We, therefore, adopt the opinion of that court as the opinion of this Court. Boillin-Harrison Co. v. Lewis & Co., 182 Tenn. 342, 345, 187 S. W. 2d 17.
“This appeal by Hamilton National Bank, judgment creditor of C. C. Long, presents a contest between the Bank as garnishor and the E. P. Scott Contracting Company, subcontractor under Long. In its present posture the case is proceeding as one in the nature of an inter-pleader, the owner of the improved property, Stop Eust Company, having paid into court the balance of $1,857.45 due under its contract with Long. The question is whether, under the facts to be outlined, the subcontractor’s lien is superior to the rights of the garnishor.
“Code Section 7927 provides that a subcontractor shall have a lien for his work and for materials furnished provided notice is given the owner of the property upon which the improvement is being made, the lien to continue for a period of ninety days from the date of the notice and until the final termination of any suit brought to enforce it within that period. Code Section 7929 provides that the lien of the subcontractor shall have precedence over all other subsequent liens or conveyances dur
“We have found no reported case in this State directly ruling the question. In Hardison [& Co.] v. Yeaman, 115 Tenn. 639 [91 S. W. 1111], the rights of the garnishor were held superior to the claim of fur-nishers of materials which went into the construction of a courthouse for Jackson County. The bond furnished by the contractor was held not to cover furnishers of materials and, the claim being against a public building, no lien rights were involved. Gray v. Houch, 167 Tenn. 233 [68 S. W. 2d 117], holds generally that a creditor can occupy no higher ground than his debtor in asserting rights against a garnishee. It was also held in that case that garnishment process can reach only debts absolutely existing and those not subject to the happening of a future event, rendering it uncertain whether the garnishee will or will not be indebted to the judgment debtor. In the present case the learned Special Chancellor held against the Bank as garnishor and in favor of the subcontractor largely on the theory that the subcontractor has an equitable lien entitling it to the fund in court.
“It is not questioned that the subcontractor had a lien when the garnishment notice was served. His lien had existed from the date of the visible commencement of the work. Brown v. Brown & Co. 25 Tenn. App.
“In Brown v. Brown & Co., supra, and Henderson v. Watson et al., 25 Tenn. [App.] 506, 160 S. W. 2d 429, both decided the same day, these principles were applied to bar the lien of the furnishers as against the rights of subsequent purchasers and mortgagees without notice. But in both cases the persons resisting the lien stood in the shoes of the owner as his assignee in relation to the res against which the furnishers and laborers sought to enforce their claims without having pursued the course required by statute. The claim of each of the contesting parties was to a lien on the property while in this case the contest is between the Bank which can succeed only to the rights of the debtor, Long, and the subcontractor who had a valid, subsisting lien when the garnishment notice was served. As between the two claimants we hold the rights of the subcontractor superior.
“The owner-garnishee during all of the 90 day period within which subcontractor was required by statute to institute suit was making no resistance to the claim of a lien on its property. On the contrary, it was during this period that it filed an answer to the garnishment taking the position that it desired to pay the subcontractor out of the amount owing the general contractor. In the absence of fraud or collusion, sound policy would counsel against requiring the lien claimant
“ The rule to be deduced from the uniform holdings in other jurisdictions is that where a lien has attached to the garnishee’s property, he has a right to pay outstanding claims for labor and materials out of the fund due the debtor-contractor. Pettus v. Dudley Bar Co., 218 Ala. 163, 118 So. 153; First National Bank [of Thomasville] v. MacDougald Const. Co., 45 Ga. App. 853, 166 S. E. 256; Raithel v. Hamilton-Schmidt Surgical Co., Mo. App., 48 S. W. 2d 79; Drake v. Harrison, 69 Wis. 99, 33 N. W. 81, 2 Am. St. Rep. 717. For text statements, see 38 C.J.S. [Garnishment, Section 186, p.] 419; 5 Am. Jur. 18. Raithel v. Hamilton-Schmidt Surgical Co., supra, expressly holds that the fact that the lien may he lost due to the failure of the claimant to sue within the statutory period does not affect the garnishee’s right to pay the claim. The rule applies with special force where, as here, the contractor agrees to furnish evidence of payment of all hills before receiving final payment. Drake v. Harrison, supra.
“Though we base our holding upon somewhat different grounds, we find no error in the decree. All assignments are overruled and the decree affirmed with costs.”
In addition to the authorities cited in the opinion above adopted we refer counsel to 38 C.J.S., Garnishment, Section 183, at page 410 and to the case of New Haven Orphan Asylum v. James A. Haggerty Co., 108 Conn.
For the reasons assigned by the Court of Appeals in their opinion as adopted as onr opinion, the judgment of the Chancellor must he affirmed.
Rehearing
On Petition To Rehear
The appellants have filed a courteous and dignified petition to rehear. Two insistences are made; (1) “that even if Scott had a lien at the time the garnishment was served for labor and material, he would not have a lien for that part of his claim which represents profit and supervision”; and (2) whether or not the letter written by Scott on July 31, 1947, to the Stop Rust people was a sufficient notice to give him a lien under the Statute, Code, Section 7927, even though no lien was claimed in the letter.
The basis and gravamen of the decision of the Court of Appeals, which we adopted, is well stated in language as follows: ‘ ‘ The garnishee can be held only to the extent of the defendant’s claim against him. Hence plaintiff can enforce no right against the garnishee that defendant himself could not enforce, or reach assets in possession of the garnishee which defendant could not recover from the garnishee.” 38 C.J.S., Garnishment, page 396, Section 176.
As authority for this statement, our case of Dickson v. Simpson, 172 Tenn. 680, 113 S. W. 2d 1190, 1193, 116 A.L.R. 380, is cited. Upon examining this case it will
It, therefore, seems to ns that question (1) presented by the petition to rehear is resolved by the holding in the opinion because this question revolves around and hinges upon whether or not the garnishee had any property or funds or other assets in its hands or under its control belonging to C. C. Long at the time of the service of the writ of garnishment. The record and the finding of the two lower courts is to the contrary, that is, that at the time of the service of garnishment the Stop Bust Company did not owe Long anything. Prior to the service of this garnishment, Long had denuded himself of any claim against Stop Bust by subcontracting the entire job to the claimant Scott. Scott had begun his work prior to the service of garnishment herein and had assumed the responsibility of doing the work and furnishing the labor on this building. The two lower courts have found, and we think under the record properly so, that there was no fraud or collusion shown herein between Long and Scott whereby they could be said to have connived in this matter to defeat the claim of the bank. There must be some proof to substantiate a situation of the kind — connivance or fraud — between these parties before we can infer any such and thus defeat the claim of Scott herein.
Aside from the proposition, which is decisive of this matter as above indicated, and merely as an academic proposition we have- made some investigation of the authorities, including those cited in the brief of the appellant, and find that the general rule is that: “Profits and commissions ordinarily are not lienable items unless included in the contract price ... or ... in the
We are in accord with this reasoning. The contract herein provided for a stipulated sum plus a percentage for doing this work. We feel that it would be a lienable item providing it was necessary to assert the lien. This though should only arise as between the owner Stop Rust and the claimant Scott.
We think the very heart of this decision, as set out in the outset of this opinion, is an answer to the second proposition raised on the petition to rehear. In the opinion adopted by us it was held that: “His lien had existed from the date of the visible commencement of the work. ’ ’ Citing authorities. It is not necessary under the holding of this case for us to determine whether or not the letter referred to in this assignment was sufficient
For the reasons stated above. the petition to rehear must be denied. ■