NEESE, District Judge.
This action for the enforcement, under Kentucky law, of a claimed material-man’s lien, resulted in a judgment for the appellee Sandusky Foundry and Machine Company (Sandusky) against the appellants City of Wickliffe (City) and Westvaco Corporation (Westvaco) for $130,054 with interest from December 12, 1969. An appeal was taken by the appellants. We affirm.
The simplified facts are that Sandus-ky contracted with Rice Barton Corporation (R-B) to fabricate for $157,659 elements (rollers) of a 3,300-ton pa-permaking machine, costing about $7,-000,000, which R-B had agreed on September 7, 1967 to manufacture to
specifications and deliver to Westvaeo for its use in a plant to be constructed on realty owned by the City and to be leased for operations to Westvaeo. This was a public improvement project, financed by the issuance and sale by the City, pursuant to a Kentucky statute, of about $80,000,000 in industrial building revenue bonds.
The major part of Sandusky’s contract was completed on November 5, 1968. On July 14, 1969, before the completion by R-B of the prime contract with West-vaco, acting as agent for the City, R-B petitioned for an arrangement under the Bankruptcy Act, chapter XI, in the District Court for Massachusetts. The original contract between R-B and the City and Westvaeo was disaffirmed, but another contract was executed, which called for the same machinery and an additional payment to R-B. By stipulation, Sandusky was permitted to file this action to enforce an inchoate lien which it had to the proceeds of the bonds in the City’s hands. R-B afterward billed the appellants for $609,000 under the new contract.
R-B contended that one of the rollers fabricated and delivered by Sandusky was not to specification and, although the warranty period thereon had expired, Sandusky agreed to substitute a new roller (replacement shell) at no cost to R-B. This replacement part was received by R-B in Wickliffe on November 25, 1969.
Sandusky filed its first notice of a lien claim on July 22, 1969. An amended claim was filed on October 10, 1969. Both of these notices were filed more than 30 days after November 5, 1968. No payment under the contract between Sandusky and R-B was made, and on December 13, 1969 Sandusky filed with the appropriate official a second amended claim of a materialman’s lien against funds in the hands of the City owing to R-B, stating that the last furnishing of materials for the project had been accomplished on November 25, 1969. Attested copies of such amended claim were sent to the City by Sandusky by letter of January 8, 1970. R-B, the prime contractor, did not, within 30 days from December 13, 1969, file with the City a written protest putting in issue the liability of the fund due R-B in the hands of the City.
The appellants contend that the District Court erred in holding that a statement of the lien was filed with the appropriate official within the time required by KRS 376.230.
The District Court properly construed the broad lan
guage of KRS 376.195(2)
as encompassing within the definition of “materials” the rollers supplied by Sandusky for this public improvement. KRS 376.210
clearly gave to Sandusky, for supplying such materials, a lien “ * * * on the funds due the contractor [R-B] from the owner of the property involved [City] * * * ,” which such lien attached only to any unpaid balance due the contractor from the time an attested copy of the lien statement was delivered to the City or its agent. KRS 376.210(3). The City held sufficient funds owing to R-B on January 8, 1970, to satisfy Sandus-ky’s lien. The District Court found factually that Sandusky’s contract with R-B was not completed until November 25, 1969, due to faulty work, citing Akers & Co. v. Weil, 251 Ky. 689, 65 S.W.2d 712 (1933), and City of Ashland v. Ben Williamson & Co., 294 Ky. 446, 171 S.W.2d 968 (1943), and that finding is not clearly erroneous. Rule 52(a), Federal Rules of Civil Procedure.
In
Akers
it was stated with reference to a mechanic’s lien:
* * * In Henry Koehler & Co. v. Hines, 185 Ky. 270, 214 S.W. 906, upon the authority of several other cases, it is declared that the time for giving notice of a lien of this class cannot be prolonged by furnishing labor or material that is trivial and unnecessary for the completion of the contract. That is good law. But the facts of that case are different from
those here, in that it appeared there that the sole purpose for which the material had been furnished was to bring the claim under the statute, as it was not necessary. Here it is clearly shown that the claimant’s work and materials had not been accepted. It realized that its contract had not been complied with, and, upon the demand of the owner, went ahead and completed the job in an acceptable manner. This was necessary in order for the contractor to recover under his contract, and it was all in good faith. It had the effect of extending the time for claiming the lien. * * *
251 Ky. at 690, 65 S.W.2d at 712
Akers
is cited in
City of Ashland
for the proposition that, where a subcontractor supplied, after the expiration of the lien period, materials which were included and specified in the contract but had been overlooked or forgotten and were necessary to complete the contract, a materi-alman’s lien was valid. 294 Ky. at 452-453, 171 S.W.2d 968.
The appellants urge also that, after the filing by R-B of the aforementioned arrangement in bankruptcy, no funds remained in the City’s hands due R-B against which Sandusky could enforce a lien because such funds had theretofore passed into the hands of the receivers in bankruptcy. The language of the Bankruptcy Act, 67(c), (1)(B), 11 U.S.C. § 107(c)(1)(B), reveals that there is no merit to this argument. The statute provides:
§ 107.
Liens and fraudulent transfers
* * * -X- -x- *
(e)(1) The following liens shall be invalid against the trustee:
•X- -X- -X- -X- -X- -X-
(B) every statutory lien which is not perfected or enforceable at the date of bankruptcy against one acquiring the rights of a bona fide purchaser from the debtor on that date, whether or not such purchaser exists:
Free access — add to your briefcase to read the full text and ask questions with AI
NEESE, District Judge.
This action for the enforcement, under Kentucky law, of a claimed material-man’s lien, resulted in a judgment for the appellee Sandusky Foundry and Machine Company (Sandusky) against the appellants City of Wickliffe (City) and Westvaco Corporation (Westvaco) for $130,054 with interest from December 12, 1969. An appeal was taken by the appellants. We affirm.
The simplified facts are that Sandus-ky contracted with Rice Barton Corporation (R-B) to fabricate for $157,659 elements (rollers) of a 3,300-ton pa-permaking machine, costing about $7,-000,000, which R-B had agreed on September 7, 1967 to manufacture to
specifications and deliver to Westvaeo for its use in a plant to be constructed on realty owned by the City and to be leased for operations to Westvaeo. This was a public improvement project, financed by the issuance and sale by the City, pursuant to a Kentucky statute, of about $80,000,000 in industrial building revenue bonds.
The major part of Sandusky’s contract was completed on November 5, 1968. On July 14, 1969, before the completion by R-B of the prime contract with West-vaco, acting as agent for the City, R-B petitioned for an arrangement under the Bankruptcy Act, chapter XI, in the District Court for Massachusetts. The original contract between R-B and the City and Westvaeo was disaffirmed, but another contract was executed, which called for the same machinery and an additional payment to R-B. By stipulation, Sandusky was permitted to file this action to enforce an inchoate lien which it had to the proceeds of the bonds in the City’s hands. R-B afterward billed the appellants for $609,000 under the new contract.
R-B contended that one of the rollers fabricated and delivered by Sandusky was not to specification and, although the warranty period thereon had expired, Sandusky agreed to substitute a new roller (replacement shell) at no cost to R-B. This replacement part was received by R-B in Wickliffe on November 25, 1969.
Sandusky filed its first notice of a lien claim on July 22, 1969. An amended claim was filed on October 10, 1969. Both of these notices were filed more than 30 days after November 5, 1968. No payment under the contract between Sandusky and R-B was made, and on December 13, 1969 Sandusky filed with the appropriate official a second amended claim of a materialman’s lien against funds in the hands of the City owing to R-B, stating that the last furnishing of materials for the project had been accomplished on November 25, 1969. Attested copies of such amended claim were sent to the City by Sandusky by letter of January 8, 1970. R-B, the prime contractor, did not, within 30 days from December 13, 1969, file with the City a written protest putting in issue the liability of the fund due R-B in the hands of the City.
The appellants contend that the District Court erred in holding that a statement of the lien was filed with the appropriate official within the time required by KRS 376.230.
The District Court properly construed the broad lan
guage of KRS 376.195(2)
as encompassing within the definition of “materials” the rollers supplied by Sandusky for this public improvement. KRS 376.210
clearly gave to Sandusky, for supplying such materials, a lien “ * * * on the funds due the contractor [R-B] from the owner of the property involved [City] * * * ,” which such lien attached only to any unpaid balance due the contractor from the time an attested copy of the lien statement was delivered to the City or its agent. KRS 376.210(3). The City held sufficient funds owing to R-B on January 8, 1970, to satisfy Sandus-ky’s lien. The District Court found factually that Sandusky’s contract with R-B was not completed until November 25, 1969, due to faulty work, citing Akers & Co. v. Weil, 251 Ky. 689, 65 S.W.2d 712 (1933), and City of Ashland v. Ben Williamson & Co., 294 Ky. 446, 171 S.W.2d 968 (1943), and that finding is not clearly erroneous. Rule 52(a), Federal Rules of Civil Procedure.
In
Akers
it was stated with reference to a mechanic’s lien:
* * * In Henry Koehler & Co. v. Hines, 185 Ky. 270, 214 S.W. 906, upon the authority of several other cases, it is declared that the time for giving notice of a lien of this class cannot be prolonged by furnishing labor or material that is trivial and unnecessary for the completion of the contract. That is good law. But the facts of that case are different from
those here, in that it appeared there that the sole purpose for which the material had been furnished was to bring the claim under the statute, as it was not necessary. Here it is clearly shown that the claimant’s work and materials had not been accepted. It realized that its contract had not been complied with, and, upon the demand of the owner, went ahead and completed the job in an acceptable manner. This was necessary in order for the contractor to recover under his contract, and it was all in good faith. It had the effect of extending the time for claiming the lien. * * *
251 Ky. at 690, 65 S.W.2d at 712
Akers
is cited in
City of Ashland
for the proposition that, where a subcontractor supplied, after the expiration of the lien period, materials which were included and specified in the contract but had been overlooked or forgotten and were necessary to complete the contract, a materi-alman’s lien was valid. 294 Ky. at 452-453, 171 S.W.2d 968.
The appellants urge also that, after the filing by R-B of the aforementioned arrangement in bankruptcy, no funds remained in the City’s hands due R-B against which Sandusky could enforce a lien because such funds had theretofore passed into the hands of the receivers in bankruptcy. The language of the Bankruptcy Act, 67(c), (1)(B), 11 U.S.C. § 107(c)(1)(B), reveals that there is no merit to this argument. The statute provides:
§ 107.
Liens and fraudulent transfers
* * * -X- -x- *
(e)(1) The following liens shall be invalid against the trustee:
•X- -X- -X- -X- -X- -X-
(B) every statutory lien which is not perfected or enforceable at the date of bankruptcy against one acquiring the rights of a bona fide purchaser from the debtor on that date, whether or not such purchaser exists:
Provided, That where a statutory lien is not invalid at the date of bankruptcy against the trustee under subdivision (c) of this Act
[11 U.S.C. § 110(c)]
and is required by applicable lien law to be perfected in order to be valid against a subsequent bona fide purchaser, such a lien may nevertheless be valid under this subsection if perfected within the time permitted by and in accordance with the requirements of such law
* * *. (Emphasis supplied.)
Under the Kentucky Public Improvement Lien Law, KRS 376.195 et seq.,'no judgment creditor, unsatisfied execution creditor or contract lien creditor is given any right against the public authority. Therefore, under the first proviso of 11 U.S.C. § 107(c)(1)(B), Sandusky’s statutory lien was not invalidated by the existence of any superior creditors at the date of bankruptcy under 11 U.S.C. § 110(c). Under the Kentucky Public Improvement Lien Law,
supra,
the perfected materialman’s lien of Sandusky was superior to all other claimants except earlier perfected claims of other materialmen, of which there were none. Under the factual finding of the District Court, Sandusky’s lien was perfected within the time permitted by and in accordance with the requirements of such law. For such reasons, Sandusky’s lien is valid against the receivers, notwithstanding other provisions of 11 U.S.C. § 107(c)(1)(B). Further, the City and Westvaco had no standing to raise this defense herein, because R-B failed, within 30 days from the delivery of an attested copy of the statement of Sandusky’s lien, as required by KRS 376.230, to file with the City a written protest putting in issue the liability of the fund in the City’s hands for payment of Sandusky’s lien. KRS 376.250(2).
Finally, there was no error in the District Court’s denying the appellants’ motion to reopen the proof for the introduction of an additional exhibit. Reopening the case for further proof is a matter which addresses itself to the wide discretion of the District Court, Kitchen v. United States, 95 U.S.App.D. C. 277, 221 F.(2d) 832, 835[5] (1955), and we find no abuse of discretion here.
The judgment of the District Court is affirmed.