Spengler v. Stiles-Tull Lumber Co.

48 So. 966 | Miss. | 1909

Whitfield, C. J.,

delivered the opinion of the court.

The ease of Peck-Hammond Company v. Williams, 77 Miss. 324, 27 South. 995, controls this case perfectly. The court erred, therefore, in holding the contrary view. The judgment should have awarded the appellants the whole of the value of the amount furnished by them; and the other parties, as correctly held by the court, so far as priority is concerned, would be entitled to the balance in the order in which they served notice upon the owner, as shown by the pleadings and the agreed statement of facts.

Reversed and remanded.

Mayes, J., dissented.

The counsel for appellees filed a suggestion of error, to which the court responded as follows:

Whitfield, C. J.,

delivered tbe opinion of tbe court in response to the suggestion of error.

The case made by the record is briefly this: A. P. Cameron contracted with J. H. Jaffray, who was doing business under the firm name of J. Ii. Jaffray Construction Company, to build him a residence in the city of Canton, Miss. Jaffray proceeded to carry out his contract. When he completed the foundations, he executed the following assignment to appellants, A. & S. Spengler, of Vicksburg, Miss.: “In consideration of the sum of $1,000 heretofore advanced us by A. & S. Spengler, of Vicksburg, Miss., and further consideration that the said A. & S. Spengler have agreed to advance us certain materials in their line' for the construction of the house, or residence, we are building for A. P. Cameron, at Canton, Miss., and the further consideration that they have agreed to extend us a cash credit, not exceeding at any one time, of fifteen hundred dollars, for labor, we, the undersigned, J. H. Jaffray, composing the firm of' J. H. Jaffray Construction Company, do hereby transfer and assign, to secure said sum of $1,000, the amount of said material, and said cash advances, unto the said A. & S. Spengler the balance due us under said contract with the said A. P'. Cameron for the construction of said building as aforesaid, and direct the said Cameron to pay over the said balance to the said A. & 8. Spengler as the payments become due; the duplicate of said contract being herewith attached. Any balance, after paying what may be due the said A. & S. Spengler, shall be paid over tó us. Witness our signature on this the 13th day of December, 1906. [Signed] J. H. Jaffray Construction Company.” . Notice of the assignment was given by appellants to Cameron, the owner, on the day of the assignment. Appellants continued to advance Jaffray material and cash money under said assignment'for use in the construction of said building, and Cameron made payments under his contract from time to time' to appellants. When the residence was completed, appellants claimed there was due them.$3,600 or $3,700, as shown by the pleadings and exhibits.

Appellees, who are various subcontractors or material men, not knowing of the assignment to appellants by Jaffray, furnished material and labor to Jaffray in the construction of said buildings, and, not receiving payment therefor, served “stop” notices on Cameron under Code 1906, § 3074, but long after the assignment. It is agreed, for the purpose of this appeal, that the notices are all in proper form, and served in conformity with the provisions of said section. It is also agreed that Jaffray remained throughout in the possession of the work as contractor, and that all the “stop” notices were served upon Cameron, the owner, by appellees subsequently to the execution of said assignment by Jaffray to appellants, and subsequently to the service upon Cameron by appellants of notice of said assignment. When said building was completed, Cameron owed a balance of $5,210.62 under his said.contract with Jaffray. Appellants claimed $3,600 or $3,700 of this amount under their assignment, and appellees’ claims on said fund aggregate $3,600, so that Jaffray’s total indebtedness to appellants and appellees reached a sum total of about $7,200 or $7,300, not enough to pay all in full. Hence this lawsuit, in which appellants contend that they should first be paid in full.

The Stiles-Tull Lumber Company and others filed their suits in the circuit coiirt of Madison county for the purpose of enforcing their rights under Code 1906, § 3074. A. P. Cameron answered, and paid over into court what he claimed to be due under his contract, $5,210.62, and asked that all parties in interest be brought in as parties to the said proceedings. The cases were thereupon all consolidated, and an issue made up between appellants and appellees. A jury was waived, and thecade heard by the court. It was further agreed that there was more due appellants by Jaffray under said assignment than the difference of w-hat wras due the other appellees and the amount. paid by Cameron into the court. This admission had the effect of removing all question that had theretofore been raised as to the correct amount due appellants under the assignment.

When the appellants sought to introduce said assignment in evidence, appellee's objected to its introduction on the following grounds: (a) Because “said assignment is no more nor less than .a mortgage, which has neyer been acknowledged or filed for record in Madison county, or anywhere else, as required by la-w.” (b) Because “no notice was given to the other parties (appellees) of appellants’ assignment.” (c) Because “it is irrelevant incompetent, and immaterial, so far as it may affect any rights or interests of appellees to the funds in controversy.” (d) Because “no claim can be made thereunder, by virtue of the lien they claim, under the mechanic’s lien law of the state.” (e) Because “it is not signed and acknowledged, and has not been filed for record.” (f) Because “none of the appellees had any knowledge of it.” (g) Because “it is purely and simply a mortgage, and, in order to have been valid should have been recorded, or other actual notice given the other creditors.” (h) Because “the action of appellants in allowing Jaffray to stay in possession of the job and contract bills, after all improvements were made, prevents them from contesting the claims of appellees.”

Upon the foregoing exceptions the court made the following ruling: “The court holds, on the motion to exclude the assignment, that the assignee is entitled to whatever was due on the building to the builder at the time the assignment was made; that after that time the assignee stood in the shoes of the builder, and was only entitled under the assignment to such additional amount as might have been earned by the builder under his contract. The court, however, is of the opinion, further, that the assignment shown to have been served on the owner was sufficient notice of an indebtedness of $1,000, and as to whatever sum the evidence may show was earned by the builder at the time of the execution of the assignment Spengler would be entitled to the amount of the said contractor’s labors or material,, and as to the other money in court it should be paid to the other-parties in the order in which they served notice upon the owner,, as shown by the pleadings and by the agreed statement of facts, and that any balance in the court should be paid to Spengler-under his assignment. For these reasons, the court overrules the motion to exclude the assignment, and allows it to remain in evidence for the purpose above stated.”

Appellants then and there excepted to the ruling of the'court.. Appellants next admitted that there were no profits in said contract at the time of said assignment, or at the completion of the job. Appellees thereupon moved the court for a judgment for the amount of their claims, to be paid in their priority, with six per cent, interest, to the exclusion of the claim of appellants, and admitted, for the purpose of the motion, that the balance-was not sufficient to pay appellants’ claim under said assignment in full. The court, sustained the motion and gave judgment accordingly.

The purpose of both parties in making the agreed statement of facts, which was made in an irregular, sort of way, from time to time, in the course of the trial below, was manifestly that, after such agreed statement of facts had been made further testimony would be adduced by appellants and appellees. But the court’s ruling on the effect of the assignment to the appellants had the practical effect of destroying entirely the contention off ■appellants as to their prior right to the funds in court, and made, of course, the introduction of further testimony unnecessary, especially, when it was admitted that there was more due appellants by Jaffray under said assignment than the difference between what was due the other appellees and the amount paid by Cameron into court. Beally the ruling of the court left nothing to be determined in the case except to settle the correctness-of the ruling in construction of the assignment, and accordingly the appellant’s appeal to this court was taken, the object of the appeal being plainly to have this assignment construed, since,. as must be obvious, the true construction of this assignment is the pivotal point in the case.

If will be noticed, from the objections made by appellants to the introduction of said assignment, that almost their solé ground of objection was that this instrument was not an assignment, but a mortgage; and, indeed, the chief contention made by learned counsel for appellees in this court, in the oral argument and in their briefs, is that the instrument must be held to be a mortgage, and that consequently, since it was not recorded as mortgages must be to affect the rights of third parties, the appellees here must prevail over this so-called unrecorded mortgage, of which the appellees never had any actual or any constructive notice. This is a totally erroneous view of this instrument. It is plainly nothing else than an ordinary simple assignment. Learned counsel for appellees segregate from the assignment one particular clause in it, to wit, “The balance due us under said contract with the said A. P. Cameron for the construction of said building as aforsaid,” without looking to the -other provisions of the assignment. Of course, this is not the proper way in which to construe the assignment. All its provisions must be taken in one view, and the purpose of the assignment worked out from the whole instrument, and not a part of it. Counsel for the appellants well say: “The fact that appellants were to continue furnishing material and money for labor; the fact that Mr. Cameron was directed to pay over to appellants the balance ‘as the payments became due;’ the fact that the balance, after paying what might be due appellants, should be paid over to Mr. Jaffray; the fact that no particular payments were-assigned, and others reserved, and many other features about the assignment might be cited to show that the intention of the parties was not to transfer only what was then due, but what was to become due.”

Again, it is a well-settled canon of construction that the contemporaneous construction placed upon an instrument by the parties thereto is entitled to very great weight in reaching the intent and purpose of the instrument. In the record we find this, an agreed statement of facts: “It is agreed that since the assignment A. & S. Spengler went on furnishing material to the Jaffray Construction Company under said assignment as shown by the record, and that A. P. Cameron,, from time to time after the date of said assignment, paid to A. & S. Spengler the aggregate sum of $14,000.” This demonstrates that Cameron authorized and acted under this construction of the assignment by paying from time to time to appellants said aggregate sum of $14,000, that Mr. Jaffray acquiesced in said payments made-to appellants by Cameron, and that consequently all parties to the instrument put one and the same construction upon the assignment, to wit, that it transferred to the assignees the funds due and to become due. The contention that this instrument, either by its terms alone, or in connection with the contemporaneous construction thus put upon it by all parties to the instrument, constituted a mortgage, is not worthy of serious consideration. It will be further noted that the court below held this instrument to be an assignment, since it overruled all the objections made to its admission on the ground that it was a mortgage, and allowed the assignment to go in evidence. The court below expressly calls it, in its ruling, “an assignment,” and refers to the appellants as the “assignees.” The error of the court below consisted in holding that the assignees were only entitled to the sum due on the building at the time the assignment was made, to wit, as alleged, $1,000, and that the assignment was invalid to transfer to the appellees any sum thereafter to become duo after such assignment. The fact is that the appellants, the assignees, went on furnishing material and money for labor to the extent of $14,000. When the contest arose, the appellants had a just claim for some $3,100, and the appellees had a just claim for some $3,600.

So far as any equities are concerned as to the real merit of these claims, one is just as meritorious, in all respects, as the other, and all that is so earnestly insisted on by - the learned counsel for appellees, to the effect that the appellants, the assignees, ought not to be allowed to prevail here under their as- ■ signment, because of some supposed higher right, moral or equitable, on the part of appellees to said fund, is entirely without foundation. Let it be specially noted that the appellants were not the assignees of the contract as held by the learned judge below. This assignment was not an assignment of the contract of Jaffray, but an assignment of the funds due and to become due under that contract. The language of the instrument places this beyond controversy. It says that in consideration of $1,000 heretofore advanced, etc., and the further consideration that appellants have agreed to* advance certain materials, etc., and the further consideration that appellants have agreed to extend a cash credit, not exceeding at any one time $1,500, for labor, therefore Jaffray transferred and assigned, to secure all these things what? Ilis obligation as contractor, with its.rights and liabilities ? Not at all; but “the balance due us under said contract with the said Cameron, as the, payments become due,” etc. A plain, manifest transfer of the funds due under the assignment, but no assignment of the contract in any legal sense. All therefore, that is said in the brief of counsel for appellees about the Spenglers not having any higher right than Jaffray, on the notion that the appellants stood in the same relation to the subcontractors and material men, and the appellees, that Jaffray stood in to them, is obviously beside the mark. The assignees had nothing on earth to do with J affray’s contract to build the house, nor his duties *and obligations arising out of that contract; and hence they occupied no relation towards these appellees such as Jaffray the contractor did. They assert a claim under this assignment to the funds due and to become du'e, and that is the whole extent of this assignment. What, then, is our mechanic’s lien law, and what are the respectivo rights of the appellees and this assignee under that law, and our decisions interpreting that law ?

First of all, let it be noted that, in determining any question as to tlie rights growing out of the mechanic’s lien, the court is to be critically careful to notice the various statutes of the different states, and the wide differences between them; indeed, the wide differences, at different times, existing between the statutes of the same state on this subject. It is said in 2.7 Cyc. pp. 89, 90, on this subject: “The protection of the subcontractor and material man, with a just regard to the rights of the owner of the property, has been the subject of much solicitude with most of the legislatures. Two systems seem principally to have been adopted—one known as the ‘New York system,’ the other as the ‘Pennsylvania system.’ The one in Pennsylvania, which was the first, where the mechanic who did the work and the material man who supplied the articles used were deemed entitled to protection, rather than a mere builder or undertaker of contracts, made provision that the subcontractor and material man should have a lien for whatever sum might be due to him directly on the building and land upon which it stood, and subordinated the lien of the contractor thereto. The other was the plan adopted in New York, which did not secure to any one, except the original contractor, an absolute lien on the property for the whole sum due, but by a species of equitable subrogation allowed the subcontractor and material man to give written notice to the owner of his unpaid claim, requiring the owner thereupon to retain such funds -as were in his hands, belonging' to the contractor, to answer the suit of the subcontractor, and securing the same either by lien upon the interest of the owner in the property or a right of action against him; the payment of this sum to operate as a valid set-off against any demand of the contractor. The prominent distinction between the two systems is this: Tinder the New York system the subcontractor cannot recover more than is due from the owher to the contractor; while under the other system the original contract, or payment to the original contractor, is no defense to a claim of a subcontractor. A clear conception of the distinction between these two systems is necessary to an understanding of the cases, for not only have different systems prevailed in different states, but in some instances the legislative history of a single state shows that each of the two systems mentioned has prevailed therein at some period; and many propositions of law laid down with reference to one system are totally inapplicable (or would even be incorrect) where the other system prevails. It seems, however, that the plan of conferring on subcontractors and material men a right of lien for all sums which may be due them, irrespective of payments already made by the owner to the contractor, is passing out of favor, and the tendency in later legislation is to confine their right to- what may be owing by the owner to the contractor at the time of notice to him of their claims.”

There then follows in this text a very careful consideration of the laws of the different states and the changes made, it being pointed out that in California the Pennsylvania system was first adopted in 1858, but that in 1862 that system was repealed and the New York system adopted, and that this New York system was in turn repealed in 1868,.'and the Pennsylvania system restored, and that finally the present California statute (Code Civ. Proc. § 1188 et seq.) restored again the salient features of the New York system. It will thus be seen that this court must determine this case, not by the statutes of other states, but by the statutes of its own state. Now, what is that statute ? It is contained in Code 1906, § 3014, so far as this'ease is concerned, which is as follows: “When any contractor or master workman shall not pay any person who may have furnished materials used in the erection, construction, alteration, or repairing of any house, building, structure, fixture, boat, watercraft, • railroad, railroad embankment, or the amount due by him to any subcontractor therein, or the wages of any journeyman or laborer employed by him therein, such person, subcontractor, journeyman or laborer may give notice, in writing, to the owner thereof of the amount due; and thereupon the amount that may be due by such owner to the contractor or master workman shall be bound and liable in the hands of such owner for the payment of the sum so claimed; and if, after notice, the contractor or master workman shall bring suit against the owner, the latter may pay into court the amount due on the contract; and the person giving notice shall be summoned to contest the demand of such contractor or master workman; and the court may cause an issue to be made up and tried, and direct payment of the amount claimed by the person giving notice out of the money so paid into court; or, in case the person giving the notice shall sue the contractor or master workman he shall make the owner a party to the suit, and thereupon the owner may pay into court the amount due on the contract, or sufficient to pay the sum claimed, and costs, and the court shall award the same to the person who may he entitled thereto; and in neither case shall the owner be liable to pay costs; but if the owner, when sued with the contractor or master workman, shall deny any indebtedness sufficient to satisfy the sum claimed, and all costs, the court, at the instance of the plaintiff, may cause an issue to be made up to ascertain the true amount of such indebtedness, and shall give judgment and award costs according to the justice of the case. In case judgment shall be given in favor of the person giving the notice, as hereinbefore provided for, against the owner, such judgment shall be a lien from the date of such notice, on the building, house, structure, fixture, boat, watercraft, railroad or railroad embankment in or upon which the material or labor mentioned, in such notice was used or done and may be enforced as in case of liens in other cases provided for in this chapter.”

The mere reading of this statute shows that the New York system, and not the Pennsylvania system, is the one which this state has adopted, and which is now in force in this state. See 27 Cyc. p. 101, upon the New York system. The courts of New York have made their .system perfectly clear. Under that system it is only the original contractor who has any absolute lien. The subcontractor and the material men have no lien, except from the date on which they give written notices of their claims to the owner, from which date the owner is required to retain such funds as were in his hands belonging to the contractor at that time. Under the Pennsylvania system, subcontractors and material men were entitled to a direct lien in all respects equal to the lien of the contractor. The difference between the two systems, is as wide as the distance between the poles, on this vital point. In New York, in Stevens v. Ogden et al., 130 N. Y. 182, 29 N. E. 229, that court said on this subject: “The order drawn by the contractor on the owner in favor of E. II. Ogden- & Co. for $909.94, being by its terms payable out of a particular fund specified in the order, operated as an assignment, pro tanto, of that fund. Brill v. Tuttle, 81 N. Y. 454, 37 Am. Rep. 515; Conselyea v. Blanchard, 103 N. Y. 222, 8 N. E. 490; Lauer v. Dunn, 115 N. Y. 405, 22 N. E. 270. In McCorkle v. Herrman, 52 Hun, 610, 5 N. Y. Supp. 881, reversed 117 N. Y. 297, 22 N. E. 948, several persons had performed labor and furnished materials for a building erected by a contractor for the owner. After the work had been done and the material supplied, but before any lien was 'filed, a judgment creditor of the contractor began supplementary proceedings to collect his judgment, which did not arise out of, and had no eonnection with, the building contract, and procured the appointment of a receiver. Subsequently the laborers and material men duly filed their liens, and the question arose whether they or the receiver had the prior right to the sum due from the owner to the contractor. It was held at the general term that the lienors had the prior right. In discussing this question the-court said: ‘The statute gives a creditor a lien against a particular fund upon his doing certain things, and that lien is superior to the claim of any other creditor who has not taken the steps designated by the statutes to secure a lien. The plaintiff, by his appointment as receiver,-undoubtedly became vested with all the right, title, and interest of his judgment debtor br- and to this fund as of the time when the preliminary order was served. But he gets no greater right than he would have had if his judgment debtor had assigned the same to him on that day,, and. he cannot enforce any other or greater rights than his judgment debtor could enforce. His creditors, by the permission of the statute have been enabled to assert a claim upon his debt due to the judgment debtor, and by reason of the statute, having taken those steps, they have a superior claim upon this debt due to him; and by the transfer of this debt to another person, whether by operation of law, or by a voluntary assignment, the plaintiff’s debtor could not deprive the creditors of the right which the law conferred upon them.’ The court of appeals reversed the judgment, and in discussing 'the question, said: ‘The real question presented by the demurrer relates to the priority of lien between a judgment creditor of a contractor, who has duly commenced supplementary proceedings on his judgment, terminating in the appointment of a receiver, and laborers and materialmen, who, subsequent to the commencement of the supplementary proceedings and within the time allowed by the law, filed notices of lien to reach the debt owing to the contractor under a contract with the owner of a building for its construction. The section of the lien law (eh. 342, p. 585, Laws 1885) which govern the rights of the lienors in this case prescribed that upon “filing the notice of lien” a lien shall be acquired, etc. The filing of the notice orginates the lien. Anterior to this act the laborer or materialman has no preferential right to be paid for his labor or material out of the sum which is due from the owner of the building to the contractor, but stands in the same position as other creditors. He may subject the debt to a lien in his favor on filing the notice and taking the proceeding prescribed by the act. But if, before this has been done, other creditors, pursuing the usual remedies for the collection of debts, have acquired a legal or equitable right to have the debt applied in satisfaction of their claims the lfights is not overreached by liens •subsequently filed under the act, unless priority is given by the provisions of the act itself. . . . Which of the claimants have the prior right? We think the plaintiff, as receiver, has the superior claim. He stands as the assignee of the claim of tire contractor against the defendant, by a title which antedates the filing of the notices of lien. When the liens were filed there was a debt owing by the defendant. If the proceeding institt].ted by the creditor, whom the plaintiff represents, has been abandoned, the lien would have had priority. But not having been abandoned, and the equitable lien existing when the liens were filed having been converted into a legal title as of a time anterior to the filing of the liens, the right to the debt, as between the plaintiff and the lienors, vested in the former. The plaintiff, we think, stands in as good a position, at least, as if, prior to the filing of the liens, the contractor had in good faith assigned his claim against the defendant to the creditor in the supplementary proceedings as security for his debt. The assignee under such an assignment, according to the general current of authorities, would take precedence over lienors under liens subsequently filed.’ The case cited, like the one at bar, arose under chapter 342, page 585, Laws 1885, and is decisive of the question persented. There is no provision in the statute forbidding a contractor to pay his creditors out of the money due or to become due him from the owner, to the exclusion of laborers and materialmen who have not filed liens. This may be an omission; but, if so, it can only be supplied by the legislature, for the courts cannot extend these purely statutory rights beyond the terms of the statute by which they are created. The judgment of the general term should be reversed, and the judgment entered on the decision of the special term, with costs.”

The same doctrine precisely is laid down in the case of Bates v. Salt Springs National Bank of Syracuse, 157 N. Y. 322, 51 N. E. 1033, in which case the facts are in all respects practically the same as in this case, with the additional fact that there was a clause in the contract by, which the contractor was required to obtain a certificate from the county clex’L that no liens were unsatisfied of record, etc. The supreme court held that this clause was a protection to the subcontractors, and defeated the assignment. The appellate court reversed this finding of the supreme court, and held as follows: “The opinion held that under the mechanic’s lien law (Laws 1885, p. 585, c. 342) the laborer or materialman has no preferential right to, be paid out of the sum due the contractor until he files notice of lien. In the absence of anything to the contrary in the contract, and before any notice is filed, the contractor may assign to his creditor, in payment of his debt, the whole or any portion of the moneys due or to become due under the contract, and the assignee acquires a preference over a subsequent lienor. This view was based on abundant authority, and is indisputable. Brill v. Tuttle, 81 N. Y. 454, 37 Am. Rep. 515; Lauer v. Dunn, 115 N. Y. 405, 22 N. E. 270; McCorkle v. Herrman, 117 N. Y. 297, 22 N. E. 948; Stevens v. Ogden, 130 N. Y. 182, 29 N. E. 229; Beardsley v. Cook, 143 N. Y. 143, 38 N. E. 109. The principle to be extracted from the cases is that a lienor obtains no greater right to the moneys payable by the owner than the contractor has, and if the latter has assigned to a. creditor pro tanto the assignee gains a preference over subsequent liens. . . Under the doctrine of equitable assignments, it is of no consequence to the relative rights of assignees and lienors that the money may not be immediately payable. Concluding, therefore, as I think we are bound to do under the authority of Lauer v. Dunn, that this clause in the contract was for the benefit of the trustees only, it follows that the assignment by the contractor to the Salt Springs Lank of the last payment upon the contract, executed upon the making of the contract, operated as an equitable assignment of the moneys remaining unpaid upon the contract when notice of it was given to the trustees, and gave to the assignee a preference over liens subsequently filed.. There is no question as to there being an indebtedness from the contractors to the bank, and, upon notice of the assignment to tire trustees, the effect was to bind the moneys remaining unpaid upon the last installment, in favor of the bank’s claim. There had been an equitable assignment of the moneys, which only required for its enforcement a fund to fasten upon and a notice to the holder of the fund. The .bank acquired the' right of the contractors, who lost their interest in and dominion over the fund, and its assignment was subject to no other equities than such as the trustees may have had against the contractors at the time they had notice of the assignment. It follows, from the view expressed, that the judgment appealed from should’bo reversed, and a new trial ordered, with costs to abide the event.”

Identically the same doctrine is announced with great clearness in the case of Binns v. Slingerland, 55 N. J. Eq. 55, 36 Atl. 277. In that case the contractor gave orders or assignments to the various creditors, and the owner did not accept them. Slingerland, a subcontractor, afterwards served “stop” notices upon the owners, and the court said. “It was not seriously contended but that the drawing of the orders worked an equitable assignment of so much of the last payment as they covered,/ and that they thereby gained, in equity, a priority over the notice served by the defendant herein. Superintendent, etc., v. Heath, 15 N. J. Eq. 22; Lanigan’s Adm’r v. Bradley, 50 N. J. Eq. 201, 24 Atl. 505. And it is equally dear that the rights of such equitable assignees could have been enforced in this court. And if the complainants herein had, as soon as the building was completed and the payment of $1,400 became due 'from them, deposited the same in this court, and filed a bill of interpleader against the several parties, the holders of those orders would have prevailed over the defendant, Slingerland, claiming under his stop notice of September 12th. They were first in time, and therefore prior in right. . ■. . The practice of contractors making such preferences by giving orders to materialmen has become so thoroughly familiar to everybody, and has been so frequently before the courts, and their right so to do so thoroughly established, that I must conclude that if the legislature had intended to restrict this right on the part of contractors, they would have done so by qxpress language.” So in Tollheis v. James, Wkly. Law Bul. (Ohio) 277; Hall v. Banks, 79 Wis. 299, 48 N. W. 385; Copeland v. Manton, 22 Ohio, St., 398; Board of Education v. Duparquet, 50 N. J. Eq. 234, 24 Atl. 922.

Indeed, this view is announced by 27 Cyc. p. 231, as the generally accepted doctrine. At page 231 of 27 Cyc. it is said: '■'It has been held that if, before the notice or claim of lien is served on the owmer or filed, the contractor assigns his claim •against the owner, the assignee has the prior right to the fund, and an order given by the contractor on the owner, payable out of what is due or to become due under the contract, operates as an assignment pro ianto of the fund, even without any acceptance of the order by the owner.” Authorities are cited in support of this view from California, Iow7a, New Jersey, New York, Ohio, and Wisconsin, an overwhelming array of authorities. We will not burden this opinion by citing .them in detail, as they are set out in 27 Cyc. p. 231, note 98. We have verified these citations, and they fully support the text. On page 232, at the end of this citation of authorities, the editors of Cyc. cite as contra, Carter v. Brady, 51 Fla. 404, 41 South. 539; Beardsley v. Brown, 71 Ill. App. 199; Simpson v. New Orleans, 109 La. 897, 33 South. 912, and Bourget v. Donaldson, 83 Mich. 478, 47 N. W. 326; and we remark, in passing, that these authorities cited as contra on this page 232 of Cyc. are the very cases cited by learned counsel for appellees, and on which they rely chiefly for support of their view.

Let us look carefully at these authoifities a moment. In the case in 83 Mich. 478, 47 N. W. 326, it very clearly appears that the materialmen under that law had a lien equal to the contract- or’s lien, and it is expressly set out on page 482, 83 Mich., and page 328, 47 N. W., that the statute provided that the material-man or subcontractor had to file his written lien for record in the office of the register of deeds. That case of course, has no application here, where the materialman has no lien, and where the claim for the lien is not required to be recorded. In the case in 71 Ill. App., at page 201, it is expressly stated that sec-24 of the lien law provided that any materialman should have the lien, and on page 202 the court says: “The section provides:- (1) That any person furnishing material or labor to the contractor shall have a lien upon the money, bonds, or warrants duo or to become due the contractor for the improvement, provided the proper notice is given. (2) There shall be no priority between persons serving such notices. Comparison of this section with others of the act will show a clear purpose to give the subcontractor a lien equal to that of the contractor in all respects.” This last sentence disposes entirely of this last case as having no sort of application in this state. In the case of Simpson v. City of New Orleans, 109 La. 897, 33 South. 912, it also clearly appears that the materialman was given a lien under the statute, and that Kent, who furnished the materials and had this lien, recorded his claim under the statute. This case, also, has no application to our statute. In the ease of Carter v. Brady, 51 Fla. 404, 41 South. 540, it appears that Brady, the owner of the land, accepted an order in favor of one W. C. Spencer, on account of the contract of building the house for Lrady, on condition, however, that Spencer should complete the building; Brady agreeing, on this condition alone, that he' would then pay to Spencer the balance then unpaid on the contract. ' By section 5 of lien law of the state of Florida (Laws 1903, p. 78, c. 5143), set out plainly in the opinion, it is expressly provided that liens should exist in favor of “any person who shall furnish any building material used in construction,”' etc. The court said, toward the close of the opinion: “Our statute cannot be subject to the construction that the contractor can at any time during the progress of the building under his contract assign the balance due for such building to a third party and upon the acceptance of such assignment by the owner, a materialman, to whom a lion is given under the statute, will be deprived of all the benefits which the statute has intended to confer upon him.” It is too obvious for discussion that, the Florida statute giving the materialman the direct lien, the decision of the Florida court was eminently correct on its statute, but is wholly inapplicable to our statute, which gives no such lien.

Surely it ought to be accepted after this citation of authorities, and this analysis of those cited as holding contra, which do not hold contra, but only hold that, where a lien is given the materialman by the statute, such materialman would prevail over an assignee, that under our statute, which does not give any such lien, the assignee must of necessity prevail over the materialman, who has acquired no lien until after the assignment has been executed and delivered. Out of great deference to the very learned counsel for appellees, and their extreme earnestness in urging their view, an examination will be -made now, wholly unnecessary, however, of other authorities cited by them. One of these cases is Newport Wharf & Lumber Co. v. Drew, 125 Cal. 585, 58 Pac. 187. What was held there? Just this: “If the contractor is still entitled to demand payment of installments already matured at the time of the notice (that is, notice by the materialman), payment to him is intercepted by the notice; but, if he has already assigned them to a third party,' the notice will be inoperative to prevent their payment to such party.” - This is a direct authority for the appellants. Another case cited by appellees is Board of Education v. Duparquet, 50 N. J. Eq. 234, 24 Atl. 922. What does that case hold ? “An assignment, in language operating in pressenti, of money due and to grow due from a third person, effects, an immediate and present transfer to the assignee of a right to demand and receive the money assigned without notice to the debtor; and after such assignment the debtor no longer owes the assignor, but does owe and will owe to the assignee what he would otherwise owe to the assignor.” Another direct authority for appellants, and, let it be noted, holding that these appellees were not entitled to any notice of this assignment, a thoroughly well settled proposition. Learned counsel for appellees say that in this case, and in several other cases, the building was completed before the assignment was made. But what earthly effect that fact could have upon the validity of this plain common-law assignment, we are unable to see; nor in this ease is that fact •counted on in the least.

In several cases cited by learned counsel for appellees, to wit, to group them and dismiss them, Wimberly v. Mayberry, 94 Ala. 240, 10 South. 157, 14 L. R. A. 305; Glass v. Freeborg, 50 Minn. 386, 52 N. W. 900, 16 L. R. A. 335, and Farmers’ Loan & Trust Company v. Canada R. R. Co., 127 Ind. 250, 26 N. E. 784, 11 L. R. A. (O. S.) 740, the common principle is announced—all these cases being mortgage cases, and not cases of an assignment at all—that where no railroad is in existence, •or where no house is in existence, and a mortgage is given on the railroad or on the land, and the labor, materials, and money of the materialmen and subcontractors gave all there was of value to the property claimed under the mortgage, the mortgagee ought to show a clear and strong superior right in order to defeat the claims of those who in reality brought the claims into existence; the principle being that the mortgage on the railroad in one case, and the mortgage on the land in the other, could not prevail over mechanics and materialmen whose money created in one case the railroad, and in the other the house on the land. In the case of Bohn Mfg. Co. v. Kountze, 12 L. R. A. 33 (30 Neb. 719, 46 N. W. 1123), the holding was, as set out at page 36, bottom of second column: “Where a vendee, owing the equitable title, contracts for the erection of a building, upon the express authority of the owner of the legal title, it is but just that the lien of the mechanic should attach to the interest of both vendor and vendee in the premises and be paramount to (he lien of the vendor.” That is obviously correct, because of ihe agreelment of the owner of the legal title, the vendor. But, besides, the case is from the state of Nebraska, in which as shown in this very opinion, section 1 of the mechanic’s lien law provides that the materiahnan should have a lien—another case,, therefore, wholly inapplicable under our statute.

Apjly to the situation our Code 1906, § 3074, and the general principle of law as to the right to make a common-law assignment, and what do we have ? Why, manifestly the assignees here, and appellees, were, prior to the assignment, mere creditors at large, without any lien under this statute given to either.. That being the situation, and our statute giving the materiahnan a lien only»from the service of the stop notices, as expressly held in Herrin v. Warren & Mobley, 61 Miss. 509, what was therein the law to prevent the contractor from assigning the balance due and to become due to him to the appellants? Why, most manifestly, he had the common-law right to make the assignment, and, if that assignment was duly executed and delivered to the appellants prior' to the time when these appellees secured' any lien by the service of the stop notices, it is too clear for ¿rgument that the assignees must prevail over these appellees, because of the universal equitable doctrine that he who is first in time is first in right. That is this whole case, stripped of all the confusion which has been thrown around it, growing out of the misconception that in some way, or somehow, or somehow else, these materialmen should be preferred to these assignees— exactly why, no one can tell. They had no lien until they served the stop notices. Long prior to that the appellants had the assignment. Both were general creditors, and he who, in the race of diligence to secure himself, first got a claim by their assignment, being first in. time, is first in right. That absolutely is this whole case, stripped of all the clouds and darkness, which have been thrown about it.

We will, however, because we desire as far as possible to satisfy the learned counsel for appellees of their erroneous view, notice a few other of their contentions. It is complained that the assignees gave these appellees no notice of their assignment. None was necessary. The doctrine is stated thus in Hall v. Banks, 79 Wis. 229, 48 N. W. 385: “The lien of a subcontractor is defeated by an assignment of the claim due from the owner of a building’ erected under contract to the original contractor, made in good faith before the notice of the lien is served, although the owner knew when he paid the assignee that the subcontractor held unpaid claims.” So in Copeland v. Manton, 22 Ohio St. 398, and in Board of Education v. Duparquet, 50 N. J. Eq. 234, 24 Atl. 922. The truth is, the case of Herrin v. Warren, 61 Miss. 509, is absolutely decisive of this case in favor of appellants under our statutes. If, as said by the New York court of appeals, the legislature intended to forbid assignments in cases of this sort, or to prohibit their obtaining priority as in this case, nothing was easier than for the legislature to put in the mechanic’s lien law that sort of prohibitive provision. There is nothing like that in our section 3074, and until the legislature does put it there the contractor has the common-law right to make the assignment, such as was made in this case, and it will be enforced by this court according to the principles governing same.

There are a great many inaccuracies, inadvertent, of course, in the statement of facts by learned counsel for appellees. Eor example, to run hastily over them, the amount for extras was not $2,300, but $1,463.85; the $9,000 paid by Cameron before any notices were served was paid directly to the Spenglers, not by Jaffray, and by him to the Spenglers. Cameron was notified of this assignment the very day it was made. There is no dear evidence in this record that appellees furnished material with the knowledge and consent of appellants. This is sought to be worked at in a very vague way, from certain checks; but, if it had been clearly proven, it would make no sort of difference as'to the rights of appellants. It was the business of the appellees to give notice themselves to Cameron, and not negligently and supinely furnish these materials without the exercise of any sort of diligence on their part. They have only themselves to blame for what they may lose. There is nothing that we can find in the record to show that $2,020 were paid to the assignees on an old account. We do not know how this is worked out. It seems pretty clear to us, from the record, that about $55 was the only amount paid on such old account, and that the balance was for material furnished for this very building. What is shown in the record seems to malee this pretty clear; but what difference could it make if it were true ? Learned counsel for appellees seem to be of the opinion that an assignment would not have been good as against appellees for a debt due the assignee by the assignor, if that debt did not grow out of the construction of this building. This is a wholly erroneous view; and there are other minor inaccuracies which we will not protract this opinion by setting out.

Another proposition of learned counsel for appellees is that Cameron did not assent to this assignment. We think the fact is shown otherwise by the record; it is agreed that Cameron had paid appellants, since the assignment and under the assignment, $14,000. This $14,000 was for money and materials; but what if Cameron had not assented to the assignment by Jaffray to the appellants? Such assent of the debtor, Cameron, was not necessary to give effect to the assignment executed and delivered by Jaffray to the appellants. Knapp v. Eldridge, 33 Kan. 106, 5 Pac. 372; Newbry v. Hill, 59 Ky. 530; Roger Williams Ins. Co. v. Carrington, 43 Mich. 525, 5 N. W. 303; Garland v. Harrington, 51 N. H. 409; Mourton v. Robertson, 3 La. 439.

We have thus most patiently, carefully, and in detail gone over this case, both as to the facts and law applicable thereto. Out of the very great deference we feel for all the very learned counsel for appellees, it certainly ought to be dear to them, after this review, that they have fallen into what is, perhaps, a popular misconception of the effect of section 3074 of our Code, under our decisions. This section might have provided, if the legislature had preferred the Pennsylvania system, that no assignment should be made by the contractor which would be good against the materialmen; but it did not so provide. It might have expressly given the materialmen and the subcontractors, as the Pennsylvania system does, direct liens, equal in all respects to the lien of the original contractor; but it expressly refused to do that. There is nothing in the contract between Jaffray and Cameron stipulating that any such assignment-should not be made. In short, this whole case is completely and perfectly disposed of under the‘statute, by the decision in this state of Herrin v. Warren & Mobley, 61 Miss. 509; which has stood from that day till this as the unquestioned law of this state, in construction of our mechanic’s lien laws. The learned counsel for appellees certainly did not overlook this ease; but it is equally certain that they have wholly failed to give it its full effect and force. To hold any other view than we have in this opinion, on our particular statute, would be to squarely overrule that ease. It is idle to indulge in the loose view, in which counsel for appellees seem to indulge, that there is some sort of general spirit or purpose pervading this statute which gives to the appellees a prior right under the statute, under the facts of this case. We apprehend that the legislature, in this carefully drawn section 3074, have fully and explicitly and plainly enacted just the law they wanted—the New York system; and to do what appellees ask us to do in this case would be to read into the section, by judicial legislation, something not only not in it, but something which is. in difect conflict with its express provisions, and its declared policy. This, of course, we decline to do.

It follows that the judgment of the court below was erroneous, and the suggestion of error is overruled.

Case Details

Case Name: Spengler v. Stiles-Tull Lumber Co.

Court Name: Mississippi Supreme Court

Date Published: Mar 15, 1909

Citation: 48 So. 966

Court Abbreviation: Miss.