Huntington National Bank of Columbus v. Treasurer of Franklin County

469 N.E.2d 535, 13 Ohio App. 3d 408, 13 Ohio B. 493, 1983 Ohio App. LEXIS 11428

• Court: Ohio Court of Appeals
• Decided: December 1, 1983
• Docket: 82AP-1042 and -1050
• Status: Published

Opinions

Norris, J.

Plaintiff Huntington National Bank of Columbus (“Huntington”) appeals from the decisions of the trial court finding certain mechanic’s liens valid and granting them priority over its mortgages in a distribution of proceeds in foreclosure actions. These cases have been consolidated for the purpose of argument and disposition.

This controversy arose out of the construction of a warehouse and office building for So-Rich Sales & Services. In September 1975, So-Rich contracted with Luburgh Construction Company to perform demolition, clearing, earth moving, and grading work on the building site. Luburgh began its work on September 15, 1975, and finished on October 9.

So-Rich obtained a loan from Huntington to finance construction of the building. As security for the loan, So-Rich executed two mortgages, one filed on October 17, 1975, and the other on October 22.

Subsequent to the filing of the mortgages, So-Rich entered into contracts with various companies for materials and labor related to the construction of the warehouse. The contractors and material-men performed work and supplied materials, and attempted to perfect mechanic’s liens after they failed to receive payment from So-Rich.

Huntington foreclosed its mortgages. At trial, the mechanic’s liens of eight of the lienors were rejected as not being properly perfected. The trial court found that six of the liens were valid and had priority over Huntington’s mortgages because the work done by Luburgh prior to October 17, 1975 constituted “commencement of construction” within the meaning of R.C. 1311.13(B).

Huntington raises six assignments of error:

“1. The trial court erred in holding that commencement of construction took place prior to recordation of Huntington National Bank’s mortgages so as to give appellees’ alleged mechanic’s liens priority over the mortgages.

In its first assignment of error, Huntington quarrels with the trial court’s application of only one portion of R.C. 1311.13 — its interpretation of the meaning of the term “commencement of * * * construction” within the context of the circumstances of this case. The relevant portion of the statute reads as follows:

“(B) Such liens shall be preferred to all other * * * liens * * * which shall either be given or recorded subsequent to the commencement of said construction, excavation, or improvement.”

Because Ohio courts have assumed that one of the purposes of the “commencement” provision of the statute is to give notice of potential lien rights to those who would do business with the landowner, the question to be resolved under the circumstances of this case is whether Luburgh’s work had progressed to the point that a person examining the premises would have been placed on notice that he was observing the beginning of a structure. This might well be denominated a “visibility” test — whether the work performed had produced visible results which were sufficient to make it reasonably apparent to a person examining the site that the construction, excavation, or improvement had actually commenced. See Rider v. Crobaugh (1919), 100 Ohio St. 88; Ohio Savings Assn. v. Bell (1926), 25 Ohio App. 84. In order for the work to be deemed the commencement of construction, it must form a part of the work necessary for the construction and be of a nature that can afterward be considered a component part of the structure. North Shaker Boulevard Co. v. Harriman Natl. Bank (1924), 22 Ohio App. 487; see, also, Fryman v. McGhee (1958), 108 Ohio App. 501 [9 O.O.2d 488].

The trial court and the parties have all cited our decision in Sears, Roebuck & Co. v. J-Z Realty Co. (Dec. 28, 1978), Franklin App. No. 78AP-356, unreported, as sup porting their positions. In that case, we applied the test mentioned above and noted that the work needs to have progressed to a point beyond that indicating that a building might be placed on the site in the near future. In Sears, the land had been cleared of brush and surveying stakes had been driven, and we concluded that this work amounted only to preparation of the site for construction and fell short of the evidence needed to establish that construction had commenced.

In this case, the trial court stated its view of the evidence as follows:

“* * * [I]t must be decided at what point, if at all, the work of earth-moving performed by the Luburgh Construction Company changed from preparation to construction.

“It is the Court’s opinion, from the evidence in this case, that the work of removal of the house and other buildings on the site, removal of trees and brush, filling of swale and low areas and construction of a sound barrier ridge were all site preparation and not construction.

“* * * [A dirt pad] was constructed by the Luburgh Company, according to several witnesses; one which supports the concrete slab floor of the building and is incorporated into the completed structure. There is some discussion * * * concerning compaction testing of the area of the dirt pad. The fact of such testing neither proves nor disproves the existence of such a pad, but lends credibility to the assertion by defendants that the area tested was most certainly that upon which the stability of the eventual building was to depend. Such tests would be irrelevant to the state of the ground before the work of the Luburgh Company was performed. The Court therefore finds that a dirt pad was constructed, that it was done before plaintiffs mortgage lien accrued and that, under Section 1311.13(B) of the Ohio Revised Code, the mechanic’s liens herein found to be valid are entitled to priority over plaintiff’s mortgage lien.”

The trial court’s factual findings, concerning the work performed on the site, are supported by evidence in the record. Those facts are distinguishable from those in Sears. According to the trial court’s findings, the site had been cleared, the ground had been graded by high points being cut down and depressions filled, and a “pad” to receive the concrete slab upon which the buildings would stand had been constructed above grade from compacted earth. The trial court carefully followed our decision in Sears, separating out work which amounted to site preparation from that which constituted commencement of construction. Because there was evidence that the pad was tailored to and formed an essential part of the building’s foundation, and that upon completion of Luburgh’s work it was in appearance slightly larger than the rectangular building it was to receive and was raised to a height substantially above the adjoining highway and the areas planned for parking in the front and truck loading in the rear, the trial court was warranted in concluding that the work constituted the commencement of construction of the building. This is not to say that there was not evidence which would have warranted the drawing of a contrary conclusion by the trial court — only that an appellate court will not reverse where the trial court’s conclusion is supported by some competent, credible evidence. C. E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St. 2d 279 [8 O.O.3d 261].

Accordingly, the first assignment of error is overruled.

Judgment accordingly.

Moyer, J., concurs. Whiteside, P.J., dissents.