Consolidated Construction Co. v. Malan Construction Corp.

192 N.E.2d 263, 42 Ill. App. 2d 272, 1963 Ill. App. LEXIS 729
CourtAppellate Court of Illinois
DecidedJuly 17, 1963
DocketGen. 48,769
StatusPublished
Cited by13 cases

This text of 192 N.E.2d 263 (Consolidated Construction Co. v. Malan Construction Corp.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consolidated Construction Co. v. Malan Construction Corp., 192 N.E.2d 263, 42 Ill. App. 2d 272, 1963 Ill. App. LEXIS 729 (Ill. Ct. App. 1963).

Opinion

MR. PRESIDING JUSTICE DEMPSEY

delivered the opinion of the court.

Consolidated Construction Co. was a subcontractor engaged by the defendant, Malan Construction Corp. Malan had an $18,366,000 contract with its codefendant, the City of Chicago, for the erection of terminal buildings at Chicago-O’Hare International Airport. Consolidated claimed it was not fully paid for work done and material furnished and, after serving a lien upon the City for $1,153,330.16, brought this action in the Circuit Court of Cook County against Malan and the City. The defendants Feldman are described in the complaint as the sole stockholders of Malan; no distinction between them and Malan will be made in this opinion.

Consolidated had previously filed a eomplaint against the same defendants in the United States District Court for the Northern District of Hlinois. That complaint was later amended to eliminate the City as a defendant. The eighteen-count complaint in the United States District Court, as amended, and the eighteen-count eomplaint in the Circuit Court, are identical as to Malan, but three counts of the Circuit Court eomplaint include the City as well as Malan. These three counts are 1,10 and 13.

The City moved to dismiss upon the ground that It was neither a necessary nor a proper party. Malan moved to dismiss on the ground that a prior action was pending against it in the Federal Court. The trial court sustained the City’s motion and then, with the City out of the suit, sustained the Malan motion because the action in the Federal Court involved the same parties and the same subject matter.

The principal issue presented is the propriety of the order dismissing the City. There are many reported cases in Illinois of suits by subcontractors against prime contractors in which municipal corporations have been joined as defendants but, as far as we know, this is the first case where the right to do so has been challenged.

The controversy centers around section 23 of the Mechanics’ Lien Act (Ill Rev Stats, 1961, c 82, § 23) which is the only section of the Act providing for liens against municipalities. The lien is upon the public funds due a contractor and is not upon the improvement for which the work and materials were furnished. This is in contrast to other sections of the Act where the lien is upon the improvement and the real estate, not upon the money due the contractor from the owner of the property improved. Standard Oil Co. of Indiana v. Yanderboom, 326 Ill 418, 158 NE 151; Alexander Lumber Co. v. City of Farmer City, 272 Ill 264, Ill NE 1012. Because section 23 is specifically directed to liens upon public funds, cases holding that liens cannot be enforced against a municipal corporation (e. g. attorney liens) have no application. Cf. Brazil v. City of Chicago, 315 Ill App 436, 43 NE2d 212; Marks v. Checker Taxi Co., 21 Ill App2d 124, 157 NE2d 430.

Section 23 provides, in brief, that: anyone who furnishes material or labor to a contractor who has a contract for public improvements, shall have a lien on the money due such contractor, provided, before payment has been made to the contractor, he notifies the municipality of his claim and within sixty days thereafter files a complaint for an accounting making the contractor a party defendant, and serves a copy of the complaint upon the proper public officials. If this procedure is followed, the municipality shall withhold the amount claimed until the final adjudication of the suit, or if it wishes it may turn over the amount of the elaim to the clerk of the court in which the suit is pending. There are like provisions for quasi-municipal corporations, and for the State.

In support of the trial court’s order, Malan — whose brief the City adopted and to whom the City deferred in oral argument in this court — argues that it is the public policy to prevent municipalities from being involved in private litigation and that section 23 refleets the legislative intention to exclude them from this particular type of litigation. Malan points, out that section 23 states that a complaint for an accounting must be filed against the contractor, and says nothing about suing the municipality; that it states that a eopy of the complaint shall be given the municipality and that this provision would be superfluous if it were contemplated that the municipality should be a defendant; that the same procedure is provided for municipal corporations as for the State, and since the State cannot be sued, it was intended that the municipality should not be; that if a lien has been served, the municipality becomes a mere stakeholder whose duty, to disburse the funds in question, is contingent upon the result of the subcontractor’s suit against the contractor and therefore no suit against the municipality is necessary because it is to be presumed that public officers will do their duty. Argued also as indicative of the legislative intent is a ehange made in section 23 by an amendment adopted in 1937. Malan seeks to read into the present statute a prohibition against including the City as a party defendant. It does this by contrasting the statute before and after the 1937 amendment. Prior to 1937 the section provided that “any of the parties interested may institute suit”; the elimination of these words is said to show that the legislature intended the municipality should not be a litigant.

These arguments are persuasive as to why a municipality is not a necessary party to a suit of this kind, but they are not persuasive as to why a municipality is not a proper party. First of all, there is no prohibition in our law against suing a municipal corporation and section 23 does not prohibit this by implication. Although the policy of the law is not to involve governmental bodies in private litigation, the party directly affected by a suit of this kind is the contractor and not the municipality. A suit of this nature does not infringe upon the rights -of a municipality (Gunther v. O’Brien Bros. Const. Co., 369 Ill 362, 16 NE2d 890) and is of little burden to it. Even this slight burden can be avoided by the municipality depositing the liened funds with the clerk of the court. If a municipality could not be made a defendant, there is little reason for the provision that it may turn the liened funds over to the clerk. The only utility of this provision seems to be that it would relieve the municipal-defendant of a further participation in the suit.

A suit in equity against both the contractor and the municipality has been called “the subcontractor’s principal and most common remedy” to enforce his lien (Love, Illinois Mechanics’ Liens, 2d Ed, 1950, p 438) and the changes made in the Liens Aet in 1937 do not indicate a legislative intent to deprive a subcontractor of this traditional remedy. The elimination of the provision that “any of the parties interested may institute suit,” and the present requirement that the subcontractor must bring the action, only places the burden of instituting the suit where it rightly belongs: upon the claimant. Another provision was also eliminated in 1937. Prior to 1937 the statute placed an affirmative duty upon the municipal official who was notified of the lien not only to withhold sufficient money to pay the claim but “to pay the amount so determined to be due such claimant.” The deletion of this latter provision emphasizes the need to preserve the subcontractor’s privilege of including the municipality in his suit.

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Bluebook (online)
192 N.E.2d 263, 42 Ill. App. 2d 272, 1963 Ill. App. LEXIS 729, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consolidated-construction-co-v-malan-construction-corp-illappct-1963.