Thorpe Construction Co. v. Irvin & Co.

367 F. Supp. 87, 1973 U.S. Dist. LEXIS 11200
CourtDistrict Court, D. Alaska
DecidedNovember 6, 1973
DocketCiv. No. A-95-73
StatusPublished
Cited by1 cases

This text of 367 F. Supp. 87 (Thorpe Construction Co. v. Irvin & Co.) is published on Counsel Stack Legal Research, covering District Court, D. Alaska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thorpe Construction Co. v. Irvin & Co., 367 F. Supp. 87, 1973 U.S. Dist. LEXIS 11200 (D. Alaska 1973).

Opinion

OPINION

PLUMMER, Senior District Judge.

This case comes before the court on motion by plaintiff Thorpe Construction Company, Inc., (Thorpe) for partial summary judgment on the issue of priority of liens on subject property against Alaska Local Development Corp. (ALDC), Small Business Administration (SBA), and Joseph and Magdalena Wayer, husband and wife. ALDC does not contest the matter. The claim against SBA will be handled first, followed by the claim against the Wayers. This court has jurisdiction under 28 U. S.C. § 1444.

The subject property involved in this case is realty described as Golden Rickshaw and Peanut Farm, Campbell Creek Commercial Tract, Tracts J and K, Anchorage Recording District, Third Judicial District, State of Alaska. Defendant SBA claims an interest in subject property by virtue of a deed of trust executed by defendant Golden Rickshaw, Inc., as trustor to Alaska Title Guaranty Company as trustee for the benefit of ALDC. ALDC assigned this deed of trust to SBA on June 22, 1972; said deed being recorded on July 6, 1972. [89]*89Plaintiff claims a mechanic’s lien by its alleged actions of furnishing labor and materials for an improvement to the property during a period between September 1 and November 4,1972.

Although plaintiff’s lien arose subsequent to SBA’s interest, plaintiff claims its interest should have priority, based on A.S. 34.35.060(c) which establishes priority in favor of mechanic’s liens over pre-existing mortgages when the lien attaches in the performance of original construction. Brand v. First Federal Savings & Loan Association of Fairbanks, 478 P.2d 829 (Alaska 1970). For purposes of this statute, a deed of trust and a mortgage are not differentiated. Brand; Cf. A.S. 34.20.110. For plaintiff’s claim against SBA, the court will assume that plaintiff was performing “original construction” as required by the statute.

Both parties agree that federal law controls when a lien of the United States is involved and that no federal statute controls this situation. The issue is to determine the content of the federal common law. Cf. Clearfield Trust Co v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943). SBA contends first the federal rule in this field is “first in time, first in right” relying upon United States v. City of New Britain, 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520 (1954). This court has rejected the New Britain rule in Ault v. Harris, 317 F.Supp. 373 (D.Alaska 1968), aff’d per curiam (by adoption) 432 F.2d 441 (9th Cir. 1970), and does so again here. SBA suggests secondly that the rule is that established by the Federal Tax Lien Act of 1966, 26 U.S.C. § 6323. Plaintiff contends the federal law adopts completely local law citing Ault.

Ault involved a mechanic’s lien which arose subsequent to the assignment of a deed of trust to the SBA but prior to its recordation. The lien was recorded after the deed of trust was recorded. The instant case involves a mechanic’s lien which arose after the assignment and recordation by the SBA of a deed of trust. Plaintiff asserts such difference is inconsequential because Ault arguably found federal law in such situation to embrace fully local law by which a subsequent mechanic’s lien would have priority over an earlier deed of trust. Brand, supra. SBA, noting the extensive reference to the Tax Lien Act, 26 U.S.C. § 6323 in Ault, asserts such difference is crucial because Ault followed that Act and adopted local law only to the extent allowed by the Act. Under 26 U.S.C. § 6323(h)(2) a mechanic’s lien will not be given priority unless the labor and materials were furnished earlier than the commencement of the federal lien.

In its holding, Ault stated as follows at 376:

“ . . . For the foregoing reasons and the rationale of Bumb v. United States, 276 F.2d 729 (9th Cir. 1960); United States v. Yazell, 382 U.S. 341, 86 S.Ct. 500, 15 L.Ed.2d 404 . , and Hammer v. Chapin, [256 F.Supp. 818 (D.Mont.1966)], the Court adopts as the applicable federal rule in this case that which Congress declared controlling in the Federal Tax Lien Act of 1966, 26 U.S.C.A. § 6323 as amended, namely, local law.”

Bumb, Yazell and Hammer upheld the application of state laws in circumstances invoking federal common law. Bumb concerned a transaction in which SBA claimed it was exempt from the California Bulk Sales Act. The Court recognized that such Act represented a “ . . . well established policy of all the states of the Union, . . . ” Bumb 276 F.2d at 738. In the instant case, however, A.S. 34.35.060(c) represents a distinctly minority codification of mechanic’s lien laws. See 57 C.J.S. Mechanics’ Liens § 200a at 752, 753 (1948); and 1966 U.S.Code Cong. & Admin.News, Federal Tax Lien Act of 1966, pp. 3722, 3734. The facts in Ault lent themselves to the Bumb rationale; that is, the furnishing of labor and materials earlier than the recordation of the deed of trust gave the mechanic lien- [90]*90or priority under the laws of the majority of jurisdictions. The instant facts would require this court to adopt as federal common law the peculiar section of Alaska law by which even a subsequent furnishing of labor and materials would allow the mechanic lienor priority over an earlier recorded deed of trust. Such a conclusion would go beyond the holding of Bumb.1 This court will not construe Ault so broadly.

Movant Thorpe cites two cases supporting its contention that A.S. 34.35.-060(c) should control this case. Hayden v. Prevatte, 327 F.Supp. 635 (D.S.C.1971) and Connecticut Mutual Life Ins. Co. v. Carter, 446 F.2d 136 (5th Cir. 1971). These cases concerned the priority accorded attorneys’ fees in government mortgage situations. Both Courts noted that the non-government parties would prevail in similar tax lien situations under the Federal Tax Lien Act of 1966. See 26 U.S.C. § 6323(b)(8). Thus, the cases are similar to Ault. Neither case upheld state laws granting the non-government parties rights beyond the Tax Lien Act.

The Ault-Prevatte-Carter line has been criticized by the Second and Tenth Circuits and the Court of Claims for deviating from the “first in time, first in right” rule of New Britain absent Congressional authorization. See United States v.

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Bluebook (online)
367 F. Supp. 87, 1973 U.S. Dist. LEXIS 11200, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thorpe-construction-co-v-irvin-co-akd-1973.