Taylor v. Dall Lead & Zinc Co.

111 N.W. 490, 131 Wis. 348, 1907 Wisc. LEXIS 214

• Court: Wisconsin Supreme Court
• Decided: April 9, 1907
• Status: Published

Opinion

Dodge, J.

The trial court, as indicated by an opinion filed, found three reasons why the plaintiffs could not maintain a lien against the defendant’s property, although the lumber had been furnished by them as-subcontractors of a principal contractor and in exact accordance with the principal contract. Of these reasons in their order:

1. The trial court, in substance, held that, because the principal contractor did not complete its contract by the construction of buildings and appliances satisfying its guaranty of efficiency, it could itself have maintained no lien; certainly not for any amount in excess of that which had been paid it, which was all that was payable by the terms of the contract until the efficacy of the plant could be tested; and that, since no lien could be maintained by the principal contractor at the time plaintiffs commenced their action, they could have none. Our statute on the subject of subcontractors’ liens, sec. 3315, Stats. (1898), provides substantially as follows: Every person who, as subcontractor of a principal contractor, furnishes any materials to such principal contractor for or in or about the erection, construction, etc., of any building or appurtenances thereto, may have the lien and remedy given by this chapter. Now, it is undisputed that the plaintiffs did exactly those things. They did, as subcontractors, furnish material to the principal contractor for the erection of a building and appurtenances, and such niaterials were wrought into a building and appurtenances now standing on the defendant’s land.

The query at once becomes pertinent why any court can ignore the behest of the statute that the plaintiffs have a lien. Prior to 1889- the statute itself gave one reason whenever the enforcement of a lien would compel the owner to pay more than his original contract required; but that obstacle is now removed. The trial court advances as a reason the fact that tbe principal contractor could not itself have maintained a lien; but tbe statute makes no snob exception. That sncb fact is not universally an obstacle to tbe subcontractor’s right is,, of course, clear, for tbe principal contractor could maintain no action for a lien if it bad been paid all tbat it was entitled to, whether such payment were tbe full contract price or were-some less sum to which tbe principal contractor’s right might be reduced because of some right of deduction, setoff, or counterclaim existing in tbe owner’s favor. Tbe trial court seems to have found authority for an exception to tbe generality of tbe language of the statute in Goodman v. Baerlocher, 88 Wis. 287, 60 N. W. 415, where it was apparently-held that no lien against tbe land could exist for materials furnished: for the erection of a building, unless that building; was in fact so completed as .to come into physical existence. Whether even this doctrine could be extended, as in the present case, to deny the lien where the building came into exact and complete existence according to its specifications, but merely failed to satisfy an ancillary guaranty of complete effectiveness for a given purpose, may well be questioned, for the latter situation would go only to the liability of the owner to pay anything, or anything more than he had paid, which would seem to he deprived of any efficacy to defeat subcontractors’ liens by the amendment to our lien statutes already mentioned, brought in by ch. 333, Laws of 1889. The principle rested on in the Baerlocher Case, which may be called the-Pennsylvania doctrine, even if applicable to the present situation, was simply that, no building coming into physical existence, there never had been any physical substance upon, which the mechanic’s lien could fasten. This doctrine was, however, carefully considered by this court in Halsey v. Waukesha Springs S. Co. 125 Wis. 311, 104 N. W. 94, and entirely repudiated as inconsistent with both the language and the policy of our own statutes, which give a lien on the land upon the furnishing of the materials, provided the work of erection of tbe structure is in fact commenced; sucli view Laving tbe support of Rees v. Ludington, 13 Wis. 276; Jessup v. Stone, 13 Wis. 466; and Fitzgerald v. Walsh, 107 Wis. 92, 82 N. W. 717. We are informed by counsel that tbe Waukesha Case was not called to tbe attention of tbe trial court. Had it been, we cannot think be would bave based any conclusion upon tbe doctrine that tbe mere failure of the principal contractor to complete tbe contracted building in exact compliance with tbe terms of tbe contract was an insuperable obstacle to tbe existence of a subcontractor’s lien.

Another ground of escape from the direct words of tbe statute conferring tbe lien, as stated by tbe trial court and urged by tbe respondent, is a rule declared or suggested in several cases, that 'the right of tbe subcontractor is referable to tbe original contract, and that what would not be “lienable” in favor of tbe principal contractor under bis contract is not lienable in favor of a subcontractor. This rule is in apparent derogation of tbe express words of the statute and therefore is to be very cautiously applied. In Goodman v. Baerlocher, supra, it was said, arguendo:

“If tbe case is such that tbe principal contractor is not entitled to a lien for any other reason than that be has been paid in full, as in case of abandonment of bis contract or of destruction of tbe building before completion, tbe subcontractors under him, and their materialmen and laborers, would not seem to be entitled to any lien.”

This language has already been criticised, if not repudiated, in Seeman v. Biemann, 108 Wis. 365, 84 N. W. 490, and properly so, for tbe statute does not limit the right of tbe subcontractor to cases where tbe principal contractor could bave a lien, and did not do so even when it contained tbe express limitation protecting tbe owner against payment of more iban tbe contract price.

Tbe two most important cases in which has been declared the dependency of the subcontractor’s lien upon the original contract are Siebrecht v. Hogan, 99 Wis. 437, 75 N. W. 71, and Seeman v. Biemann, 108 Wis. 365, 84 N. W. 490, and they well illustrate the scope of that rule. In the first of these a lien was denied to a subcontractor for damages and additional expense caused by wrongful acts of the principal contractor and not called for by the contract. There the court, construing the words of the statute, said:

“Manifestly, such right of lien is confined to work, labor, and material required by the principal contract. To that extent, by force of the statute, the owner malees the principal contractor his agent to bind his property, but no further. . . . The whole theory of it is that the owner consents to what is required to carry out the principal contract, ánd makes his property liable therefor in accordance with the statute, which is made a part of the contract.”

The logic of this case is that labor or materials expended by a subcontractor by reason of the wrongful acts of the principal contractor, not within his original contract, are not performed by the plaintiff “as a subcontractor,” for he cannot be a subcontractor where there is no principal contract contemplating such service; hence he would not fall within the words of the statute conferring a lien merely for work done “as a subcontractor.”’

In Seaman v. Biemann the holding was that a subcontractor can have no lien for work or materials where the principal contract expressly provides that no liens shall be demanded. This is upon the principle, of course, that the subcontractor, by becoming such under the principal contract, agrees to abide by such terms, and therefore by express agreement waives his lien. It is reiterated in that case that his right against the property depends upon the agency of the principal contractor created by that contract to bind the property of the owner, and that a stipulation therein against the claiming of liens for any work or materials is an express limitation upon that agency, to which the subcontractor assents by acting thereunder. In that case it was expressly declared:

“Of course, where a claim is not lienable in favor of tbe principal contractor, it is not lienable in favor of the subcontractor; but, the lienabilitj of a claim being established, a subcontractor’s right to enforce it is not dependent upon whether the owner of the building might defeat it if the claim were made bj the principal contractor.”

In both of these cases we find aptly defined the true relation under our statutes between the subcontractor and the owner of the land in the declaration that within the scope of the contract the principal contractor is created the agent of the owner to subject his property to a lien in favor of the subcontractor for labor or materials. Applying that rule here, there can be, of course, no hesitation in holding that every foot of lumber, supplied by the plaintiffs upon the order of the principal contractor and used by it in constructing the buildings and their appurtenances in exact compliance with the specifications of the principal contract, was within the scope of the agency created by that document, and that the plaintiffs’ right to lien therefor cannot be affected by any consideration whether the principal contractor might be debarred of a lien by reason of the fact that nothing was owing it upon its principal contract.

2. Another ground which the trial court seems to have considered sufficient to deny plaintiffs their lien, and which respondent now urges, is somewhat indefinitely described as waiver, estoppel, or extension of time to the principal contractor. This is wholly predicated upon the fact that, when a certain payment of $1,375 was about to be made in accordance with the contract, the plaintiffs’ agent ashed the owner that it be paid to them upon the lumber bill, to which the owner responded that he could accede only upon a written order from the principal contractor. This the principal contractor refused to give, and plaintiffs’ agent so reported'to the owner. The acts of the plaintiffs’ agent are thus described by the trial court in its opinion:

“Mr. Martin did not obtain such order, desisting from pressing the foundry company for it upon representations made to him by the latter, deciding to wait until the next payment was due. He so informed the president of the mining company before the company made said second payment.”

We can find in this nothing to indicate waiver, or to arouse an estoppel, or to show any extension of time of payment to the principal contractor. The plaintiffs, at most, refrained from taking legal proceedings to intercept the payment of this money by defendant to the principal contractor. They had no contract right to intercept it, and therefore could neither effectively object nor consent to its payment. They had done all they could to enable the defendant to protect itself, for they had given notice that the lumber bill had not been paid and that they wished the money to be paid to them.

3. The most serious difficulty we have had is upon the decision of the trial court that about $190 worth of lumber ordered from time to time without any specific agreement was upon independent and separate contract from the principal item in the account, which was delivered in pursuance of an accepted bid made about June 13th, and therefore that the lumber included in the original bill was not furnished within sixty days of the service of the notice for claim of subcontractors’ lien. This involves so much of a question of fact that, if there be any fair dispute in the evidence, we should probably feel concluded thereby. The statute, of course, requires that a subcontractor furnishing materials, in order to have a lien therefor, must give the notice within sixty days after such material is furnished. This, however, has always been construed as not requiring a separate notice for each service or delivery where all were so connected as to constitute substantially one transaction. In such case the furnishing has been considered as continuing throughout the whole period, so that it is not completed until the last delivery. Phillips, Mech. Liens (3d ed.) § 229; Jones, Liens (2d ed.) § 1435; Spruhen v. Stout, 52 Wis. 517, 9 N. W. 277; Dorestan v. Krieg, 66 Wis. 504, 29 N. W. 576; Wis. P. M. Co. v. Grams, 72 Wis. 275, 39 N. W. ; Williams v. Lane, 87 Wis. 152, 58 N. W. 77; Skyrme v. O. M. & M. Co. 8 Nev. 219; Helena S. H. & S. Co. v. Wells, 16 Mont. 65, 40 Pac. 78; Nye & S. Co. v. Berger, 52 Neb. 758, 73 N. W. 274; Frankoviz v. Smith, 34 Minn. 403, 26 N. W. 227. That tbns is opened the door for attempts at abuse is apparent, and many sucb attempts appear in tbe books, where one who has fully completed the service or the furnishing of materials that was in original contemplation, and has neglected to claim his lien therefor, has later, upon the rendition or delivery of some service or material in some degree connected with the same enterprise or property, attempted thereby to revive his right to a lien for the former. Such attempts were met and defeated in E. M. Fish Co. v. Young, 127 Wis. 149, 103 N. W. 795; Brown & H. Co. v. Trane, 98 Wis. 1, 73 N. W. 561; Brown v. Edward P. Allis Co. 98 Wis. 120, 73 N. W. 656; Berry v. Turner, 45 Wis. 105.

We think it may safely be stated, as the result of experience and authority, that where one having in hand a general undertaking, such as' the erection of a building, orders and receives material to be worked into that building from time to time as construction progresses, there is generally an understanding that such purchases have relation to each other, and constitute but one transaction for the purposes of the lien statute, although there may be no express contract or agreement in advance that the owner or principal contractor will purchase, or the materialmen will furnish, all that may be called for in such construction; and that it is the custom of materialmen to keep a running account of the several deliveries as such a single transaction. Many of the above authorities sustain this view and the conclusion that a presumption to that effect is to be indulged by courts. Where, however, the continuity of such deliveries is broken by long and unusual periods of time, a presumption against the unity of the transaction doubtless arises, unless such interruption and severance in time be clearly explained. In some cases of even such, interruption, however, the courts have sustained the unity of the transaction upon the ground that the last items of service or material were expressly required by a general contract under which the whole was performed. Striking illustrations are Fowler v. Bailley, 14 Wis. 125, 130, and Hutchins v. Bautch, 123 Wis. 394, 101 N. W. 671. That the existence of such unity of contract is not essential, however, to the unity of the transaction when the latter appears from the continuity of the services, their application to a single enterprise, and the attitude of the parties toward it, is decided in many cases. Chapman v. Wadleigh, 33 Wis. 267; Spruhen v. Stout, 52 Wis. 517, 9 N. W. 277; Kerrick v. Ruggles, 78 Wis. 274, 277, 47 N. W. 437; Miller v. Batchelder, 117 Mass. 179; Frankoviz v. Smith, 34 Minn. 403, 26 N. W. 227; State S. & D. Mfg. Co. v. Norwegian-Danish Sem. 45 Minn. 254, 47 N. W. 796; St. Paul & M. P. B. Co. v. Stout, 45 Minn. 327, 47 N. W. 974; Jones & M. L. Co. v. Murphy, 64 Iowa, 165, 19 N. W. 898; Rush v. Able, 90 Pa. St. 153; Skyrme v. O. M. & M. Co. 8 Nev. 219; Albright v. Smith, 2 S. Dak. 577, 51 N. W. 590.

In the light of these rules and the distinctions illustrated by the several decisions, let us examine the evidence in this-case, in which there is really very little conflict. The principal contractor, having taken the contract to build this mill and its appurtenances, submitted to tlie plaintiffs a long list of various sizes and dimensions of lumber to be supplied for that work. The agent conducting the business testifies that it was intended to include all the lumber necessary for the buildings, but that, almost uniformly, such attempts to specify in advance are only approximately correct, and that in almost all cases it is found that some things have been omitted. Hence,, of course, both parties, being experienced in their business, dealt with such probability in mind. Plaintiffs’ agent testifies; to the understanding that if their price on this original estimate was accepted they would be expected to furnish such, lumber as was wanted, for tbe whole building contract. This was somewhat ambiguously denied by the representative of the principal contractor, who testified merely that it was not his understanding of the agreement “that the plaintiffs were to furnish all our lumber and building supplies as needed as the work progressed.” This, however, is explained by his further statement that he did nót intend to buy of them all the building material, and illustrates that the principal contractor furnished its own galvanized roofing, cement, and other building material. Again, on cross-examination, in' response to the direct question, he says, “No, I would not say that that was the understanding; but I would not dispute that we have — we might have.” After the plaintiffs’ bid was made they commenced delivering the lumber specified in the original invoice, which they mainly ordered specially and had shipped in cars direct to the Dali mine. These carload shipments continued until nearly the 1st of August, and some omitted items of the original invoice were delivered from time to time thereafter up to about August 19 th. Meanwhile, as early as August 5 th, the principal contractor, discovering certain other lumber, not included in these specifications to be needed, apparently as a matter of course ordered the same from the plaintiffs; and so, from time to time, thereafter, at short intervals, namely, August'5th, 15th, and 19th, and September 10th, 14th, 19th, and 23d; to which orders the plaintiffs, equally as matter of course and without question, responded by delivering all said articles and charging them upon the same account which they had opened with the principal contractor under heading, “Eor Dali Mine.” The first bill rendered by plaintiffs to the principal contractor was September 7th, and included, first, the contract price of the original invoice, $2,335, and also the several other items which had been delivered up to that time. That bill was received, checked up, and certain trifling corrections made, with no comment indicating surprise at the joining of these various items in one account and in one bill.

Against this state of facts and testimony is the evidence of tbe representative of tbe principal contractor: “This bill of lumber [tbe original] purchased of Taylor Bros, was a distinct and independent transaction. Our subsequent purchases were all extras over and above that contract.” This be explained upon cross-examination by declaring: “Each order I gave for that mill was independent of every other order in tbe same sense that tbe first was independent of tbe rest.” This seems to make it quite clear that tbe testimony of this witness as to tbe independence of the several orders was, as of course it must have been, bis own conclusion, and based upon bis own conception of what constituted independence and severance; and it also indicates that bis conception of that distinction was very different from that which tbe courts recognize, for they, with almost complete unanimity, treat a series of successive orders for material for a single undertaking, thus closely connected in time, as not independent in tbe sense that they did not together constitute a single furnishing of materials.

After careful examination and consideration of all this Evidence we are forced to tbe conclusion that, practically without dispute, it establishes both an understanding, tacit perhaps, that plaintiffs were to be called on and would respond to furnish such other lumber as might, in accordance with usual experience, have been omitted from tbe specifications upon which they originally bid, and that both parties fully understood that all the subsequent deliveries were in pursuance of such original understanding. It is too plain for controversy that they were all so closely connected in time, and so in response to the continuous and uninterrupted construction of tbe building, .that no doubt is. cast upon tbe entire good faith of both parties so as to bring the situation within the condemnation of some of the cases above cited. We have no doubt that the ordinary dealer in building materials would consider, under similar circumstances, that he had not completed the furnishing of materials for the construction of this mill so long as the principal contractor was continuing with construction and needing and ordering materials in- so doing. Any rule of law which would declare a severance and render necessary repeated notices, and perhaps repeated suits, as each such delivery was made, would do violence to'the common understanding of people engaged in such transactions, would accomplish no good purpose in the way of protecting reasonably diligent owners, and would only serve as a trap to defeat materialmen and laborers who have merely postponed efforts of enforced collection to the final completion of their undertakings in good-faith expectation that payment would then be provided. Such is not the policy of our lien statutes, whose spirit, we are well convinced, will be best effected by holding that the transactions here disclosed constituted but a single ■furnishing of materials for this single enterprise of constructing this building.- So holding, of course the conclusion is irresistible that plaintiffs are entitled to judgment establishing their lien as claimed.

By the Court. — Judgment reversed, and cause remanded with directions to enter judgment in accordance with the prayer of the complaint.

Cassoday, C. J., took no part.