Mallory v. La Crosse Abattoir Co.

49 N.W. 1071, 80 Wis. 170, 1891 Wisc. LEXIS 201

• Court: Wisconsin Supreme Court
• Decided: September 29, 1891
• Status: Published

Opinion

Lyon, J.

We think the testimony sustains the finding of the court to the effect that Nicholas Bros, furnished the boiler and other fixtures for the abattoir of the defendant company as a principal contractor with that company, and that the plaintiffs furnished the materials in question therefor under a subcontract with Nicholas Bros. We also think it quite immaterial that plaintiffs did not know, when they furnished such materials, that they were entitled to a lien for the unpaid price thereof upon the property of the defendant. Being subcontractors under Nicholas Bros., and having furnished the materials to be used (and which were used) in defendant’s building, they may avail themselves of all valid statutory remedies to enforce payment for such materials, whether they knew or did not know the extent of those remedies when they parted with their property. We are further of the opinion that the rights of the plaintiffs'to enforce the lien claimed is not impaired or destroyed by the fact that they sold and delivered such materials in another state. The statute is general, and does not restrict the right of lien to cases where the materials are sold and delivered in this state. The case of Birmingham Iron Foundry v. Glen Gove Starch Mfg. Co. 78 N. Y. 30, which is relied upon to sustain a contrary doctrine, was decided under a statute more restrictive in its terms than ours, and for that reason the case is not a guide to correct judgment in the present case.

The testimony and findings of fact bring the case within the provisions of sec. 3315, R. S., as amended by ch. 333, Laws of 1889 (S. & B. Ann. Stats, sec. 3315). If, therefore, the amended section 3315 is a valid law, the plaintiffs are entitled to the lien which the judgment gives them. Hence the controlling question in the case is whether the amended section is or is not a valid law.

Under the lien laws as they existed before the enactment of ch. 333, Laws of 1889, the property upon which a lien was claimed by a subcontractor could only be held liable to the amount of the owner’s indebtedness to the principal contractor at the time notice of the claim for the lien was served upon such owner, or which might thereafter accrue. There was an exception in the statute to the effect that if the contract price was unreasonably' low the property should be charged in an amount equal to the fair value of the labor and material used in the building or improvement thereon. Sec. 3815, E. S. Such was the statute until the enactment of ch. 333 of 1889. That act attempts to sweep away the restrictions upon the liability of the owner of the property to a subcontractor. As is said in Hall v. Banks, 79 Wis. 229, “ That- chapter repeals the above restriction upon the liability of the owner, and makes him absolutely liable to subcontractors who comply with the requirements thereof, for the amount of their claims, without regard to the contract price for the building, or the sum the owner may be indebted to th'e contractor when notice of the contractor’s claim for a lien is served, or at any other time.” The amended section contains the further, provision that the principal contractor shall, at his own expense, defend any suit brought to enforce a subcontractor’s lien; that the owner of the property may withhold from the principal contractor the amount for which such lien is filed; and that if judgment is recovered enforcing the lien, and the owner shall have settled with the principal contractor in full, such owner “ shall be entitled to recover back from the principal contractor any amount so paid by the owner for which the principal contractor was originally liable.”

The theory of the law giving to laborers and material-men specific liens upon the property upon which their labor was performed or their materials used, seems to be that, because the value of such property has been enhanced thereby, it is just that the property should be specifically charged with the sums expended thereon for those purposes. The reason of the law extends to expenditures on the property by subcontractors as well as by those who contract directly with the owner. The only difference is that in the latter case individual liability of the owner is added.

When the statute restricted the lien of a subcontractor to the amount which the owner of the property owed the principal contractor when the claim for a lien was served upon such owner, and to any indebtedness of the owner to such principal contractor accruing after such service, there was no room to question its perfect fairness and justice to the owner of the property sought to be charged with the lien. But when these restrictions for the protection of the owner were swept away, and his property subjected to a lien charge for the amount of any claim of a subcontractor against the principal contractor for labor or material used in the building or improvement, without regard to the state of the account between such principal contractor and the owner, it must be conceded that there is much room to question the reasonableness and justice of the statute which thus adds to the responsibility of the owner. But statutes which the courts may think are opposed to a sound public policy, or which may operate unjustly in certain cases, may not always be invalid. Before they can be so declared, it must clearly appear that they violate some fundamental principle of constitutional law. Is any such principle violated by the amended sec. 8315 ?

True, that section may operate to charge a lien upon property for the claim of a subcontractor which the owner of the property never agreed to pay, and which is in excess of the sum which he agreed to pay the principal contractor for the improvement which is the basis of the lien. "Were this all of the statute, its injustice would be obvious. But the statute contains the further provisions above mentioned, the effect of which is to make the owner merely the surety of the principal contractor for the payment of his indebtedness to a subcontractor for work performed upon or materials furnished for the improvement. If a subcontractor’s lien is enforced by judgment under the statute, and 'the judgment is collected by a sale of the property, or paid by the owner to save his property, the statute gives such owner a remedy by action against the principal contractor for all sums so paid by the owner in excess of the amount unpaid the principal contractor on the contract price for the improvement.

It was entirely competent, n~ doubt, for the defendant company, in the absence of any statute on the subject, to bind itself, not only to pay Nicholas Eros, a stipulated price for the fixtures purchased of that firm, but also to bind itself to stand as surety of the firm for the payment of its indebtedness to a subcontractor for materials furnished'to be used in the manufacture of the purchased articles. Instead of contracting in that form, the defendant agreed to pay Nicholas Eros, a certain sum for those articles; and the statute adds to the contract the incident — writes in it, so to speak, the stipulation — that the defendant shall thereby become such surety, but at the same time giving it a remedy by action against Nicholas Eros, to recover any sum it has been compelled to pay beyond its indebtedness to that firm.

It was said by Dixon, C. J., in Streubel v. Mil. & Miss. R. Co., 12 Wis. 67, that “ the power of the legislature, as to all future transactions, to regulate and control contracts by prescribing the manner in which they shall be made, , . . by declaring what future voluntary acts of parties in relation to a particular subject-matter shall be deemed a contract, and, if it pleases, by creating implications from such acts from which certain declared obligations shall flow, cannot be denied or doubted.” The learned counsel for defendant, in his very able and discriminating argument, challenges tbe soundness of this proposition. It may be conceded for the purposes of this appeal that, as claimed by counsel, the language of the chief justice above quoted is too broad, and that the power of the legislature to attach binding incidents and obligations to certain contracts is limited to cases wherein the statute which attaches the obligation at the same time gives to the party upon whom it is laid adequate means of protection against the consequences of it. Still, it does not follow that the amended section 3315 is invalid. The defendant entered into the contract with Nicholas Bros, voluntarily, and with knowledge that its property thereby became liable (if the statute is valid), to be charged with liens for demands of subcontractors. If so charged, the same statute protected the defendant by giving it an action against Nicholas Bros, for any sum it might be compelled to pay to release its property from such lien beyond its indebtedness to that firm. The defendant might have required security of Nicholas Bros, against claims of subcontractors, or it was free to trust to the pecuniary responsibility of the firm. The statute says to the defendant : “ By contracting with Nicholas Bros, to manufacture the fixtures for your abattoir, you gave credit to that firm, the same as though you had made it your partner or agent; and you ought to protect persons who deal with the firm on the faith of its contract with you, and whose labor and materials go to enhance the value of your property, and you must protect them, by standing as surety for your principal contractor to the extent of the value of such property. . At the same time, if you are required to pay more to protect your property than you owe Nicholas Bros., you may recover it of that firm by action.” It seems to us that the statute gives adequate means of protection against the obligation which it imposes on defendant; that it is based upon a recognized equitable principle; and hence that it is not justly liable to the criticisms of counsel upon it.

But, were the question of the validity of the statute under consideration a more doubtful one than we regard it, we should still be compelled to uphold its validity on the ground that statutes involving the same principles, and subject to the same objections urged against the validity of the amended section 3315, have frequently been upheld by this court. Such was the statute (ch. 154, Laws of 1862), the validity of which was adjudged in Hunger v. Lenroot, 32 Wis. 541. This statute gave an absolute lien on logs for the value of labor performed upon them, although the owner of the logs was not a party to the contract for such labor, and the procedure prescribed to enforce the lien did not require any notice of the claim therefor to be given such owner, or that he be made a party to the action to enforce the lien. Chiefly because of such defects in the procedure, Chief Justice DixoN dissented from the judgment of the court. But those defects are remedied by the present lien laws. It is safe to say that every ground of ob-. jection which can reasonably be urged against the validity of the amended section 3315 existed to the statute the validity of which was upheld in Hunger v. Lenroot. That case was decided in 1813. Two years later in Winslow v. Urquhart, 39 Wis. 260, the decision in Hunger v. Lenroot was adhered to and expressly reaffirmed by the unanimous judgment of this court. Moreover, in Streubel v. Mil. & Miss. R. Co. 12 Wis. 67, above referred to, the same rules were'held, and. a statute making railroad companies absolutely liable for the wages'of all persons performing labor upon the roads of such companies, no matter by whom such persons were employed, was held valid. That statute also is subject.to every objection which can reasonably be urged, against the amended section 3315. The latter case was decided in 1860. The rule of the above cases has since been applied in numerous cases without challenge, and has long been firmly established in this state.

Were we now to bold the amended section 3315 invalid, we should practically overrule all the above cases. This should not be done except for most persuasive reasons,— perhaps should not be done under any circumstances; for it is highly probable that rights of property have been acquired on the faith of those decisions, in which case the maxim stare decisis ought to be applied.

Many decisions of courts elsewhere for and against the validity of statutes somewhat similar to the statute under consideration have been cited and much discussed by the respective counsel. These decisions seem to be in conflict, although perhaps a critical examination of the statutes upon which they are founded might suggest a method of reconciling them with each other. Lien statutes of the different states differ greatly in their provisions. Our statute in many particulars is quite unlike that of any other state. Hence the adjudications in other states upon the statutes of those states are not controlling — frequently not valuable — in determining the validity of our statute. Eor these reasons, and because our judgment herein is based largely upon former adjudications of this court which we are not at liberty to overrule or disturb, we deem it unnecessary to discuss the cases in other states cited by counsel.

By the Court — The judgment of the circuit court must be affirmed.

Cassoday, J.

The question presented is whether the defendant, after having fully paid Nicholas Bros, the whole of the contract price, without any notice of any claim against them by the plaintiffs or any one else, is still bound to pay to the plaintiffs, as subcontractors, the sum of $917.38 and interest. If such claim can be maintained, then upon the same principle the defendant would have been bound to pay such claim even had the contract required the defendant to pay in advance, and the amount bad been so paid in full; or, even after snob payment in advance, bad Nicholas Bros, sublet tbe whole job, then tbe defendant would have been obliged to pay over again for all material and labor that went into tbe job, even though it greatly exceeded tbe contract price. If such a claim can be maintained, then upon the same principle the legislature could mate every purchaser of goods from a retail dealer, even for cash down, liable for any balance due thereon to tbe wholesale dealer. It is in effect conceded that no one ■ can defend any such claim upon ethical grounds. The contention seems to be that the legislature had the power to disregard all ethical considerations, and make the defendant and every other land-owner absolutely liable for all material and labor going into any structure upon his land, regardless of whether he pays the contract price in advance, or subsequently and before notice of any claim in favor of any subcontractor, and that the legislature has done so by ch. 333, Laws of 1889, which only requires notice to the owner or his agent “ within sixty days after performing such work or labor or furnishing such materials.”

I frankly concede that, if the enactment was within the power of the legislature, then the courts are bound to enforce it, regardless of their notions of its wisdom. It is, moreover, very obvious that the act did not impair the obligations of the defendant’s contract, since the contract was made subsequent to the time when the act went into effect. To my mind the act is repugnant to that provision of the constitution .of the United States which declares that “ no state shall . . . deprive any person of life, liberty, or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.” Sec. 1, art. XIY, Amendm. That provision was ordained and established for the very purpose of taking away from every state and its legislature every one of the powers thus prohibited. Streubel v. Mil. & Miss. R. Co. 12 Wis. 67, cited in the opinion of the majority of the court, was decided long before that constitutional provision was adopted, and of course has no bearing upon the binding force of that provision. The case of Hunger v. lenroot, 32 Wis. 541, was decided subsequently to the adoption of that provision, but neither the opinion of the court nor the dissenting opinion therein make any reference to it, and hence it must be assumed that it was not considered. The same is true in regard to Winslow v. Urguhart, 39 Wis. 260, and other cases referred to in the majority opinion. Those cases are entitled to be regarded as authority upon the questions of construction therein determined, but it seems to me they are not entitled to such weight as against the provision of the federal constitution quoted, which after all must be regarded as the supreme law of the land, anything in any state constitution or statute, or the decision of any state court, to the contrary notwithstanding. Art. VI, Const, of U. S. Besides, the question whether such legislation is repugnant to the constitutional provision quoted is one upon which the supreme court of the United States is the final arbiter, and hence, until determined by that court, the question would seem to be open to the expression of opinion. That court has never passed upon the precise question here presented.

The act enables the contractor to limit his own duties, obligations, and liabilities by contract, and at the same time enables him, through the agency of a subcontractor, to bind the owner, without limitation, for all materials and labor that go into the structure. The subcontractor is not even limited to the specifications contained in the original contract, for by the terms of the act he may compel the owner to pay for what he never contracted for. It not only makes the owner, without his consent, responsible for the contractor’s contracts with subcontractors, but also for his frauds. It authorizes the subcontractor to com pel the owner to pay the contractor’s debts after be has, without notice of any adverse claim, paid to the contractor the whole contract price to enable him to pay his own debts. It does not in terms prohibit the owner from paying in advance or paying without notice, but precludes him, as against a subcontractor, from the benefit of such payment. It authorizes the contractor, after the making of the contract, to do what the legislature could not then do; that is, to change the terms of his contract without the consent of the owner, and hence to impair its obligations.

Such legislation is a recent invention. It seems to belong to that class which Herbert Spencer had in mind when, according to a recent interview, he said: “ Since' I began to write, there has been a clear reaction against individual liberty. "We are certainly tending towards state socialism, which will be a worse form of tyranny than that of any government now recognized in civilization.” If we have no constitutional barriers against such legislation, then Mr. Spencer’s opinion, that such reaction and tendency endanger the American states as well as the European, would seem to rest upon a solid basis, instead of being mere speculation, as might otherwise be supposed.

It seems to me that a man cannot reasonably be' said to have due process of law, and equal protection of the laws, under an act which enables his contractor to.bind him con.clusively without his consent or knowledge arid contrary to the express terms of their written contract, and merely permits him, when sued thereon, to answer' to the effect that by the terms of the act he has become so bound and was unable to prevent it. • On the contrary, before any conclusive statutory liability should be imposed upon any person, he should be guilty of some tort, or give his consent, or be in default, or have such notice as would enable him to' protect himself against gross injustice, otherwise the creation of such liability is an arbitrary and unjustifiable imposition.

By this provision of the constitution it was “ undoubtedly intended,” said Justices Field and Beadlev, each speaking for the whole court, “ not only that there should be no arbitrary deprivation of life or liberty, or arbitrary spoliation of property, but that equal protection and security should be given to all, under like circumstances, in the enjoyment of their personal and civil rights; that all persons should be equally entitled to pursue their happiness and acquire and enjoy property; that they should have like access to the courts of the country for the protection of their persons and property, the preservation and redress of wrongs, and the enforcement of contracts; that no impediment should be interposed to the pursuits of any one, except as applied to the same pursuits by others under like circumstances ; that .no greater burdens should be laid upon one than are laid upon others in the • same calling and condition.” Barbier v. Connolby, 113 U. S. 31; Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 238. “Clear and hostile discrimination against particular persons and classes, especially such as are of an unusual character, unknown to the practice of our governments, might be obnoxious to the constitutional prohibition.” 134 U. S. 237.

So it has been said by Justices Beadlev and Matthews, each speaking for the whole court, that, “ in judging what is due process of law, respect must be had to the cause and object of the taking,— whether under the taxing power, the power of eminent domain, or the power of assessment for local improvements, or none of these; and, if found to be suitable or admissible in the special case, it will be adjudged to be ‘due process of law;’ but if found to be arbitrary, oppressive, and unjust, it may b& declared to be not ‘ due process of law.’ ” Davidson v. New Orleans, 96 U. S. 107; Kentucky Railroad Tax Cases, 115 U. S. 331. In Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 418, the act of the legislature gave to the commission therein prescribed the final and exclusive authority to determine and fix what should be regarded as equal and reasonable rates of charges for the transportation of property, and the act was held to deprive the company of its property without due process of law, and to deprive it of the equal protection of the laws, and accordingly reversed the supreme court of Minnesota, holding to the contrary. State ex rel. R. & W. Comm. v. C., M. & St. P. R. Co. 38 Minn. 281. To the same effect is Minneapolis & E. R. Co. v. Minnesota, 134 U. S. 467. Such imposition, through the agency of a public commission and fixed and public rates, upon any railway company entering into a contract for such transportation, was far less objectionable than to authorize a contractor, through the agency of a stranger and in secret, to impose such an arbitrary, unjust, and absolute liability upon the land-owiier without his knowledge or consent or any certain means of ascertaining the fact until sixty days after the completion of the work or the furnishing of the materials.

A statute similar to the one in question was held void in Spry Lumber Co. v. Sault Sav. Bank Loan & Trust Co. 77 Mich. 199. In the opinion of the court in that case, by the late and learned Chief Justice Campbell, it is said: “ It strikes at the foundations of all property in land. There is no constitutional way for divesting a man’s title except by his own act or default. Here his own act is not required, and his freedom from default is no defense. He may pay in full, in advance or otherwise, for all he has contracted for. He may contract for a house built in a certain way and of certain materials, and may have to pay for what he never bargained for and what his building contractor had no right to put off upon him. The original contract plays no part in the matter, except as a fact which binds no one and has no significance. Such a gross perversion of all the essential rights of property is so plain that no explanation' can make it plainer.” In a recent case in Pennsylvania it has been held that a subcontractor is chargeable with notice of all the terms and stipulations of the contract between the owner and the principal contractor, and is bound thereby, since his only connection with such owner is through and by means of such contract. Sohroeder v. Oal-Imd, 134 Pa. St. 277. To authorize A., through the agency of a subcontractor, to impose an arbitrary, unjust, and absolute liability upon B., without his default, and contrary to the express stipulations in the written agreement between them, and without any notice that will enable him to protect himself against such liability, and without his violating any statute or any law, or committing any tort or wrong, is, certainly, to deprive B. of his property or rights of property without due process of law, and to deprive him of the equal protection of the laws. King v. Kayes, 80 Me. 206; TJlmcm v. Mayor, 72 Md. 587; Gcurvin v. JDaussmwn, 114 Ind. 429; Oreqon JR. & K. Co. v. Smalley, 1 Wash. 206.

It is true the opinion of the majority of the court is supported, not only by the decisions of this court therein cited, but also of other state courts of high standing, the latest of which is by the supreme court of Tennessee, in a case not cited by counsel. Cole Mfg. Co. v. Falls, 16 S. W. Rep. (Tenn.), 1045. But such cases either fail to meet the objection upon which this dissent is based, or, meeting it, fail to give any satisfactory reason for excluding such statutes from the prohibitions mentioned. It may be that the supreme court of the United States will eventually sanction such legislation, but until they do so I am forced to withhold my assent.