In 1973, plaintiff Melton contracted with National Community Builders, Inc. (NCB), a California construction and land development corporation, to furnish labor and materials to NCB to improve certain property in Fulton County owned and being improved by NCB. When NCB ceased work on its property, Melton placed a materialman’s lien on it in February of 1974, in the amount of $32,407.61. Unbeknownst to Melton, on March 1,1974, NCB transferred the property to another California corporation, U. S. Guaranty Capitol Corporation. U. S. Guaranty and NCB then each filed Chapter XI bankruptcy proceedings in the U. S. District Court for the Southern District of California, on August 2, 1974, and September 24, 1974, respectively.
Melton filed a claim in the NCB bankruptcy in December, 1974; because he was not notified that this claim had been received, he filed a duplicate claim in January, 1975. The first claim was disallowed as duplicative; the second was allowed as an unsecured claim, the property subject to the lien having been *590 transferred to U. S. Guaranty. Subsequently, in the U. S. Guaranty bankruptcy, the court authorized the transfer of the property from U. S. Guaranty to Pacific Southern Mortgage Trust on May 9, 1975. Since Melton’s lien was recorded, Pacific Southern had at least constructive notice of the recording when it acquired the property. On June 22,1976, Melton filed this action seeking a personal judgment against Pacific Southern as owner of the property and seeking to foreclose the lien against the property. The trial court granted a motion to dismiss or in the alternative for summary judgment on the ground that the complaint was not timely filed. The Court of Appeals affirmed.
Melton takes no issue in this appeal with the Court of Appeals’ affirmance of the trial court’s determination that the attempt to secure an in personam judgment against Pacific Southern was improper.
Bennett Iron Works, Inc. v. Underground Atlanta, Inc.,
Since its appearance in the Code of 1863, § 1975 (3), the section now denominated Code Ann. § 67-2002 (3) has required as a prerequisite to foreclosure of a materialman’s lien "The commencement of an action for the recovery of the amount of his claim within 12 months from the time the same shall become due.” This provision has been construed to require not only that the materialman commence a timely action against the contractor but that he also thereafter obtain a judgment against the contractor; this is to be done before proceeding against the property
(Baldwin v. Shields,
Prior to the 1941 amendment to Code Ann. § 67-2002 (3), if the contractor was adjudicated a bankrupt before the materialman had obtained a judgment against him, the materialman’s lien was defeated for lack of the requisite judgment against the contractor.
Pike Bros. Lumber Co. v. Mitchell,
This history of Code Ann. § 67-2002 (3) evinces a legislative intent to avoid the harsh result of a materialman being deprived of his lien through no fault of his own by virtue of the bankruptcy of the contractor. Now we are presented with the argument that this legislative solution was intended to be exclusive; that is, that where the contractor is adjudicated a bankrupt within the 12 month period following the date that the claim became *592 due, the materialman is relegated to foreclosure against the property in an action against the owner commenced within the twelve months. We cannot agree; it strains logic to presume that by creating a new solution to the dilemma a materialman is placed in by the bankruptcy of a contractor, i. e., by allowing the materialman to bypass the requirement of commencing an action against the contractor when such an action is not feasible and to proceed directly to foreclosure of the lien, the legislature intended to deprive the materialman of the right to proceed under the basic statutory provision to perfect his lien by commencing an action against the contractor within twelve months.
The issue, then, is whether Melton "commenced an action” within the meaning of Code Ann. § 67-2002 (3) when he filed his clainTin the NCB bankruptcy. We find that he did. As the Court of Appeals noted in
Brewer v. Chapman,
We are aware of the rule that materialmen’s liens are to be strictly construed against the lienholder. But as noted in
Athens Lumber Co. v. Burton,
Judgment reversed.
Notes
There is no dispute in this appeal as to Melton’s compliance with § 67-2002 (1) (2); i.e., as to Melton’s substantial compliance with the contract and having timely filed for record his claim of lien.
There are other statutory exceptions, in addition to bankruptcy, to the usual requirement of commencement of an action against the contractor, but those are not dealt with here because they are not in issue.
Melton’s attorney stated at oral argument of this appeal that his client had received several thousand dollars as an unsecured creditor in the NCB bankruptcy.