Reid v. Harbin Lumber Co.

323 S.E.2d 845, 172 Ga. App. 615, 1984 Ga. App. LEXIS 2607
CourtCourt of Appeals of Georgia
DecidedNovember 6, 1984
Docket68718
StatusPublished
Cited by6 cases

This text of 323 S.E.2d 845 (Reid v. Harbin Lumber Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reid v. Harbin Lumber Co., 323 S.E.2d 845, 172 Ga. App. 615, 1984 Ga. App. LEXIS 2607 (Ga. Ct. App. 1984).

Opinion

McMurray, Chief Judge.

Plaintiff Harbin Lumber Company of Royston, Inc., brought suit against defendants, James E. Reid and Velma Faye Reid, in the Superior Court of Franklin County on February 25,1982. The complaint alleged that plaintiff contracted with a building contractor, Mike Elli *616 son, to furnish materials and supplies to improve the property of the defendants; that within three months of the last day on which any labor and materials were furnished on the real property, plaintiff recorded its claim of lien; that plaintiff was relieved from obtaining a judgment against Mike Ellison because he had filed a bankruptcy petition; that plaintiff was owed the sum of $9,911 for the materials and supplies; that plaintiff fully performed its contract by furnishing the materials and supplies to improve the defendants’ real estate; and that the action was commenced against defendants within 12 months from the time the debt became due. Plaintiff sought a general judgment against defendants establishing the amount due and a special lien on the real property of the defendants. In their answer, defendants denied the material allegations of the complaint.

The case proceeded to trial and, following the return of a $9,000 verdict in favor of the plaintiff, a judgment was entered establishing a special lien upon the defendants’ real property in the amount of $9,000. Thereafter, defendants filed a motion for new trial and a motion for judgment notwithstanding the verdict. The motions were overruled and defendants appealed. Held:

In their enumeration of errors, defendants assert the trial court erred by (1) failing to grant their motion for new trial and motion for judgment notwithstanding the verdict, (2) overruling their motion for a mistrial, and (3) striking certain testimony from the record.

1. With regard to the first enumeration of errors, defendants contend they are entitled to prevail in this action because plaintiff was not relieved from obtaining a judgment against Mike Ellison, the contractor. Ellison filed a Chapter 7 bankruptcy petition on November 23, 1981. Thereafter, several of Ellison’s creditors, including the plaintiff, objected to Ellison’s discharge in bankruptcy. Following a hearing, the bankruptcy court entered an order, on February 18, 1983, decreeing “that the discharge in bankruptcy of Mike Ellison, d/b/a Ellison Builders, a/k/a Mike Ellison Construction, ... be and hereby is denied.” Defendants contend that since Ellison was not discharged in bankruptcy, he was not adjudicated a bankrupt and that, therefore, it was incumbent upon plaintiff to obtain a judgment against Ellison in order to enforce the materialman’s lien. We disagree.

Former OCGA § 44-14-362 (4), effective November 1, 1982, now OCGA § 44-14-361.1 (a) (4), effective July 1, 1983, provides, in pertinent part: “[I]f the contractor or subcontractor shall be adjudicated a bankrupt, or if, after the filing of an action, no final judgment can be obtained against him for the value of such material, services, labor or supplies because of his death or adjudication in bankruptcy, then and in any of these events, the person or persons furnishing material, services, labor, and supplies shall be relieved of the necessity of filing an action or obtaining judgment against the contractor or subcontractor *617 as a prerequisite to enforcing a lien against the property improved by the contractor or subcontractor.” (Similar language was contained in former Code Ann. § 67-2002.) Thus, pursuant to former OCGA § 44-14-362 (4), now OCGA § 44-14-361.1 (a) (4), a materialman is excused from obtaining a judgment against a contractor who has been adjudicated a bankrupt. Was the materialman excused from obtaining a judgment against the contractor in the case sub judice?

Section 301 of the Bankruptcy Code (11 USCA § 301) sets forth the procedure for initiating a voluntary case under the operative chapters of the Code, including Chapter 7. It provides that the filing of a petition constitutes an “order for relief’ under the chapter pursuant to which the petition was filed. Previously, the Bankruptcy Act provided that the filing of a petition constituted an automatic “adjudication” of bankruptcy. Section 18 (f) of the Bankruptcy Act (73 Stat. 109 (1959)). The term “order for relief” was inserted into the new bankruptcy code, however, in lieu of the word “adjudication.” Thus, the word “adjudication” no longer appears in bankruptcy law. Collier on Bankruptcy, ¶ 102.07 (15th ed.). But it must be observed that: “This change in the language in itself creates no change in the rights of the parties. Section 1 (2) of the prior Act defined ‘adjudication’ to mean ‘a determination, whether by decree or by operation of law, that a person is a bankrupt.’ Section 18 (f) of the Act adopted a plan of automatic adjudication by providing that the filing of a voluntary petition in ordinary bankruptcy operated as an adjudication with the same effect as a decree of adjudication. The same result is carried over under the Code.” Collier on Bankruptcy, ¶ 301.07 (15th ed.). Thus, “Although section 301 of the Code substitutes ‘order for relief in place of ‘adjudication,’ the order for relief has the same far-reaching effect.” Collier on Bankruptcy, ¶ 301.08 (15th ed.).

One such effect of the order for relief is that it operates as a stay of “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title ...” 11 USCA § 362 (a) (6). Thus, we observe that at the time of the commencement of this action against defendants, Ellison’s bankruptcy petition operated to stay the filing of a lawsuit by the plaintiff against the contractor.

In construing a statute, “[t]he legislative intent prevails over literal import of words. The general scheme and purpose of legislation is the criterion for the proper construction thereof.” Drake v. Thyer Mfg. Corp., 105 Ga. App. 20, 22 (3) (123 SE2d 457). The history of the materialman’s lien statute “evinces a legislative intent to avoid the harsh result of a materialman being deprived of his lien through no fault of his own by virtue of the bankruptcy of the contractor.” Melton v. Pacific Sou. Mtg. Trust, 241 Ga. 589, 591 (247 SE2d 76). We hold, therefore, that under the facts of this case, the contractor *618 was “adjudicated a bankrupt” within the meaning of former OCGA § 44-14-362 (4), now OCGA § 44-14-361.1 (a) (4) and that, therefore, the materialman was relieved from obtaining a judgment against the contractor. The trial court did not err in failing to grant defendants’ motion for new trial and motion for judgment notwithstanding the verdict.

2.

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Bluebook (online)
323 S.E.2d 845, 172 Ga. App. 615, 1984 Ga. App. LEXIS 2607, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reid-v-harbin-lumber-co-gactapp-1984.