Olsen v. Smith

146 P. 572, 84 Wash. 228
CourtWashington Supreme Court
DecidedMarch 1, 1915
DocketNo. 12053
StatusPublished
Cited by10 cases

This text of 146 P. 572 (Olsen v. Smith) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Olsen v. Smith, 146 P. 572, 84 Wash. 228 (Wash. 1915).

Opinion

Ellis, J.

This case presents a contest for priority be-

tween labor liens and a tardily recorded chattel mortgage. The labor was performed in the interval between the date of the execution of the mortgage and the date when it was filed for record. The conceded facts are these: On May 29,1912, H. P. F. Smith, doing business as Bitter Lake Lumber Company, executed and delivered to Norwood Lumber Company, a corporation, two promissory notes, each for the sum of $225, and a chattel mortgage to secure the same covering a team of horses, a harness and a wagon. By oversight, the Norwood Lumber Company failed to record its chattel mortgage until November 12, 1912. Prior to that time, the lien claimants had no notice of the mortgage. The Bitter Lake Lumber Company was then hopelessly insolvent. It ceased business about December 15, 1912, and on January 3, 1913, a receiver was appointed at the suit of labor claimants. The period of ninety days had not then elapsed since the last labor performed by any of the claimants. No notice of claim of lien for the labor had been filed prior to the filing of the chattel mortgage, but it is conceded that, under the statute, the appointment of the receiver matured the liens with like effect as if lien claims had been filed as of that date. The receiver took possession of the mortgaged property, sold it for the sum of $250, and now has the money. The two notes and the chattel mortgage were assigned by the Norwood Lumber Company to the petitioner, J. W. Jones, for value, but after the maturity of the notes. On January 30, 1914, Jones, by petition, secured an order directing the receiver to show cause why he should not pay the proceeds [230]*230of the mortgaged property to the petitioner to apply on his notes. Upon the hearing of this show cause order, the trial court held that the mortgagee had lost his priority by failing to file his mortgage within the statutory ten days after execution and delivery (Rem. & Bal. Code, § 3660 [P. C. 349 § 3]), and entered an order to that effect. The petitioner, Jones, appeals.

The record presents this single question: Is the lien of a laborer who performs work in the interval between the execution of a chattel mortgage and the time when it was tardily recorded postponed to the lien of the mortgage because he has filed no claim of lien, though the statutory period for so doing had not elapsed? The question is a new one in this state and must be solved in the main by an analysis of our own statute in the light of our own decisions.

The appellant first contends that the laborer in such a case stands in the same relation to the unrecorded chattel mortgage upon lienable property as that occupied by a general creditor who, in the interim between the making and the recording of the mortgage, extends credit to the property owner but has acquired no specific lien by attachment or otherwise. In order to a clear conception of the difference, if there is a difference, between labor creditors prior to the filing of their liens, and general creditors prior to attachment or judgment, we must consider their relation to the specific property by the statute made subject to liens for labor.

The liens here in question are governed by chapter 4, title 8, Rem. & Bal. Code, to which we shall refer by section numbers. Section 1149 gives a lien for labor upon all the real and personal property of the person, company or corporation used in the operation of the business in and about which the labor was performed, and for labor performed within six months next preceding, the filing of a claim of lien. Section 1150 in effect makes the continued existence of the lien conditioned upon the filing of a notice of claim of lien [231]*231within ninety days after the claimant has ceased to perform the labor, and on the service of a copy of the notice upon the person, company or corporation within thirty days after the claim of lien is filed for record. The clear effect of these sections is to create an inchoate right of hen upon specific property in favor of laborers for ninety days prior to the filing of any hen notice. This marks a clear distinction between debts for labor and other unsecured debts; between labor creditors and general creditors. The latter have no specific hen, inchoate or otherwise, until suit and attachment or judgment. Section 1153 requires the receiver or assignee, appointed for any person, company or corporation, “to pay all claims for which a hen could be filed” under the labor hen law “before the payment of any other debts or claims other than operating expenses.” This section further emphasizes and vitalizes the difference between labor claimants and other creditors in their rights and relations to the specific property. It not only recognizes the inchoate hen of the laborer created by the prior sections, but gives it precedence and makes it effective as against claims of general creditors for the full ninety days accorded for the filing of the hen notice. It is clear, therefore, that the mere definition of rights in given property as between general creditors of the owner and the holder of an unrecorded chattel mortgage thereon, does not necessarily, nor even imphedly, define rights as between the holder of such an unrecorded mortgage and the claimant of a hen for labor, even prior to the filing of the hen notice or the maturity of his hen by the property owner’s insolvency.

The appellant’s argument, based upon our recent decision in Pacific Coast Biscuit Co. v. Perry, 77 Wash. 352, 137 Pac. 483, overruling Willamette Casket Co. v. Cross Undertaking Co., 12 Wash. 190, 40 Pac. 729, is therefore stillborn. It lacks the vitalizing element of analogy in the relation of the parties there and the parties here to the respective subject-matters. In the Perry case, we held that, though [232]*232Rem. & Bal. Code, § 3660 (P. C. 340 § 67), provides that a chattel mortgage is void as against creditors unless recorded, an unrecorded chattel mortgage is valid as between the parties and creditors subsequent to its execution who had acquired no specific lien upon the property up to the time when the mortgage was finally filed for record. This, on the specific ground that the belated filing of the old mortgage had the same effect, as against general creditors, that a new mortgage executed and filed on that day would have had. It therefore took precedence over the claims of general creditors who had acquired no lien upon any specific property, though they had extended a general credit in the interval between the making and the filing of the chattel mortgage. The clear inference from this reasoning is that had these general creditors acquired, in the interim, any sort of lien upon the specific property, they would have been preferred to the lien of the chattel mortgage. In the case here, the laborers had acquired, in the interim, subsisting rights of liens upon the specific property. They do not fall within the statutory nonpreferred class of lienless general creditors.

The case of American Loan & Trust Co. v. Olympia Light & Power Co., 72 Fed. 620, cited by the appellant, announces the same view and goes no further than the decision in the Perry case. The case of Urquhart v. Coss, 60 Wash. 249, 110 Pac. 1001, rests upon the same basis. It merely sustained the right of the holder of an unrecorded chattel mortgage who had taken possession of the mortgaged property as superior to the rights of general creditors who had not, prior to that time, obtained any lien by attachment or otherwise. The case of Heal v. Evans Creek Coal & Coke Co., 71 Wash.

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Cite This Page — Counsel Stack

Bluebook (online)
146 P. 572, 84 Wash. 228, Counsel Stack Legal Research, https://law.counselstack.com/opinion/olsen-v-smith-wash-1915.