Title Guarantee Co. v. Wrenn

56 P. 271, 35 Or. 62, 1899 Ore. LEXIS 184

• Court: Oregon Supreme Court
• Decided: February 27, 1899
• Status: Published

Opinion

Mr. Justice Bean,

after stating the facts in the foregoing language, delivered the opinion.

1. The defendant Pattullo challenges the validity of all the mechanics’ liens involved in this suit on the grounds: (1) That section 3672 of the code, under which it is sought to sustain such liens as against him, is unconstitutional and void ; (2) that this section, when properly construed, is intended as a provision by which property owners otherwise liable to pay mechanics’ liens might relieve themselves from such liability, and, therefore, has no application to a case of this character; and (3) that the evidence fails to show that the buildings in question were constructed with the knowledge of the owners of the property. The section referred to provides that “every building, or other improvement mentioned in section 3669, constructed upon any lands with the knowledge of the owner * * * shall be held to have been constructed at the instance of such owner,” and that his interest shall be subject to any lien filed in accordance with the provisions of the act, unless he “shall, within three days after he shall have obtained knowledge of the construction, * * * give notice that he will not be responsible for the same, by posting a notice in writing to that effect in some conspicuous place upon said land, or upon the building or other improvement situated thereon.” It is claimed that, inasmuch as a lien can only be created upon the land of another by his consent or authority, this1 section is unconstitutional and void, and the cases of Randolph v. Builder's Supply Co. (17 South. 721), and Meyer v. Berlandi, 39 Minn. 438 (40 N. W. 513), are cited in support of this contention ; but neither of these cases is in point, because by the statutes which were there held void the fact that the person performing labor or furnishing material was not enjoined by the owner, or notified in writing not to do so, is made conclusive evidence that such labor was performed or material furnished with or by his consent, without reference to his knowledge thereof; while our statute, assuming that a lien cannot be created without the consent of the owner, express or implied, simply provides a rule of evidence by which such consent can be determined. Similar provisions of mechanic’s lien laws have been sustained and enforced even in the state to whose reports we are referred for counsel’s leading authority. See Wheaton v. Berg, 50 Minn. 525 (52 N. W. 926); West Coast Lumber Co. v. Newkirk, 80 Cal. 275 (22 Pac. 231) ; Harlan v. Stufflebeem, 87 Cal. 508 (25 Pac. 686); Allen v. Rowe, 19 Or. .188 (23 Pac.-901). So that we conclude this section is not open to the constitutional objection urged.

2. Nor do we concur with counsel in the contention that the owner referred to therein is the person who caused the building to be constructed, and not the owner of the legal title. This question was considered and decided against such contention by the Supreme Court of California in the case of West Coast Lumber Co. v. Newkirk, 80 Cal. 275 (22 Pac. 231) , and we think, rightly so.

It is next claimed that there is no evidence showing that the buildings in question were constructed with the knowledge of Pattullo’s predecessors in interest. It is unnecessary for. us to refer at length to the testimony upon this question. Let it suffice to say that, in our opinion, it’is amply sufficient to sustain the finding of . the court below in that regard. Indeed, it seems quite clear that Emil Pohl had full knowledge of the construction of these buildings, and we think his agency fór his mother and sister was of such ■ a character as to bind them by such knowledge, especially since they after-wards ratified his acts by executing a deed to enable him to fulfill the conditions of. his bond, and their subsequent conveyance of the property to him, in order that he might transfer it to Pattullo.

3. Next it is claimed that certain of the liens sought to be foreclosed in this suit are barred by the statute of limitations, because the answers of the defendants were not served upon the owners of the property. The statute provides (section 3675) that “no lien provided for in this act shall bind any building * * * for a longer period than six months after the same shall have been filed unless suit be brought within that time to enforce the same.” But section 3677, a part of the same act, provides that in a suit to foreclose a mechanic’s lien all other lienholders whose claims have been filed shall be made parties, and under this section we take it that a suit to enforce a particular mechanic’s lien is,, in effect, a proceeding to enforce the liens of all lien claimants, parties to the record, and the filing of an answer by a defendant in such proceeding is as much a compliance with the statute as the beginning of the original suit: Mars v. McKay, 14 Cal. 127, and Phillips, Mech. Liens, § 333.

4. It is also claimed that the answers of the respondents Jackson and others are insufficient to support the decree because the name of the owner or reputed owner of the property at the time the buildings were being constructed is not stated therein. The allegations of the pleadings do not seem very clear upon this question, but we deem them sufficient after decree. The lien notices, which are atta'ched to and made a part of each of the pleadings, name every person who seems to have had or claimed any interest whatever in the property, or who was an owner or reputed owner; and the allegations of the pleadings setting out these notices are quite full and complete. There is an evident attempt to set out in the answers the names of the owners of the property, and we are not prepared to hold the answers fatally defective on that ground.

The court below, in sustaining the liens of the respondents Jackson and others, allowed $250 for attorney’s fees in foreclosing the same, and $350 to the attorneys for the Title Guarantee & Trust Company for services in foreclosing its liens. It is claimed by Pattullo that these amounts are grossly excessive, but the findings of the court are amply sustained by the testimony, and we are not disposed to disturb its conclusions.

5. Patullo also insists that the court erred in allowing any attorney’s fee. The statute provides (section 3677) that “in all suits under this act the court shall, upon entering judgment for the plaintiff, allow as a part of the costs all moneys paid for the filing and recording of the lien, and also a reasonable amount as attorney’s fees and it is contended that this provision of the statute is unconstitutional and void, because it grants to one litigant a privilege not granted to the other, and therefore denies the owner in a suit of this character equal protection of the laws. There are many cases holding that the legislature cannot make unjust distinctions between suitors without violating the spirit or letter of the constitution. But it will be observed that the attorney’s fees provided for in the mechanic’s lien act are not fixed and determined by the act, nor imposed strictly as a penalty, but rather in the nature of costs, of which the amount is to be.determined by the court; and it is therefore, in our opinion, not obnoxious to the constitution : See Griffith v. Maxwell, 19 Wash. 614 (55 Pac. 571); Wortman v. Kleinschmidt, 12 Mont. 316, 330 (30 Pac. 280); Jewell v. McKay, 82 Cal. 144, 152 (23 Pac. 139); Helena Supply Co. v. Wells, 16 Mont. 65, 69 (40 Pac. 78).

It is next claimed that the Jackson lien is invalid because the materials were not furnished for the four buildings indiscriminately under an entire contract, but under an agreement to furnish certain specified material for each building, and for a price fixed and agreed upon. But this contention is not sustained by the testimony. Jackson himself is the only witness who seems to have testified upon the subject, and his evidence is to the effect that the materials were furnished under one entire contract for all lour buildings indiscriminately. The manner in which he arrived at the contract price is immaterial.

6. It is next claimed that the Inman, Poulsen & Co. lien is invalid, because among the items going to make up the amount thereof is a small item for material furnished and used in the construction of a fence around the property upon which the building sought to be affected by the lien is situated. Upon this question the evidence shows that the material was furnished from time to time, as ordered by the persons in charge of the construction of the buildings, at the ordinary and customary price for each separate article ; and under these circumstances the fact that the claim filed included by mistake an item not lienable does not invalidate the lien. This question has been considered in Harrisburg Lumber Co. v. Washburn, 29 Or. 150 (44 Pac. 390) ; Getty v. Ames, 30 Or. 573 (60 Am. St. Rep. 835, 48 Pac. 355); and Allen v. Elwert, 29 Or. 428 (44 Pac. 823, and 48 Pac. 54); and the rule announced in the last case cited is that “Where lienable and nonlienable items are included in one contract for a specific sum, or are made the basis of a lumping charge, so that it cannot be perceived from the contract or account what proportion is chargeable to each, the benefit of the mechanic’s lien law is lost. In such cases the court cannot, by extrinsic evidence, apportion the amount of the entire charge or contract price between the lienable and nonlienable items. But where the claimant’s demand, made in good faith, consists of several different items, separately charged, some of which are by law a lien upon the property, and others do not come within the scope of the statute, he may enforce his lien so far as given by law, and it is not vitiated because he has included therein nonlienable items.” Within this rule it is apparent that the lien of Inman, Poulsen & Co. is not vitiated because by mistake they included therein certain material for which they were not entitled to a lien. At the time the claim of lien was verified the claimants honestly believed that all the material furnished by them had actually been used in the construction of the buildings. It turns out by the evidence, however, that without any negligence or willfulness on their part they had made a mistake, and included $15.40 worth of material which they did not intend to include, and for which they were not entitled to a lieu. There is a clear distinction to be made between such a state of facts and a case where the notice of the lien included in one lump charge lienable and nonlienable materials.

7. This brings us to the question in controversy between the Title Guarantee & Trust Company and the respondents Jackson and others. On behalf of the latter it is contended;that all the mechanics’ liens acquired by the guarantee company, as well as the Rust mortgage, were purchased by it as the agent and representative of Pattullo, and with his money, and consequently were merged in the legal title, and extinguished as against these respondents. But we do not think this contention is sustained by the record. The manager of the guarantee company and Pattullo both testified -that the liens were purchased by the company with its own money, on its own behalf, and not as the agent of Pattullo. But, however this may be, it is indisputable that it was the intention of the parties to preserve all these liens intact as against the respondents, and to proceed with the suit then pending for their foreclosure; and under these circumstances a court of equity will not suffer them to merge into the legal title, and be extinguished. Merger, in equity, takes place when the owner of the fee becomes entitled in his own right to a charge or incumbrance on the land, and no intention to prevent it- bas been expressed, and none is implied from the circumstances and interests of the party : 2 Pomeroy, Eq. Jur. § 790. And where the legal ownership of the land and absolute ownership of the incumbrance become vested in the same person, the intention, as a general rule, governs the question Off merger. Pomeroy says : “The question is upon the intention, actual or presumed, of the person in whom the interests are united. Sir George Jessel says : ‘In a court of equity it has always been held that the mere fact of a charge having been paid off does not decide the question whether it is extinguished. * * * If there is no reason for keeping it alive, then equity will, in the absence of any declaration of his intention, destroy it; but, if there is any reason for keeping it alive — such as the existence of another incumbrance — equity will not destroy it.’ In short, where the legal ownership of the land and the absolute ownership of the incumbrance become vested in the same person, the intention governs the merger in equity. If this intention has been expressed, it controls. In the absence of such an expression, the intention will be presumed from what appear to be the best interests of the party, as shown by all the circumstances.' If his interests require the incumbrance to be kept alive, his intention to do so will be inferred and followed. If, on the contrary, his best interests are not opposed to a merger, then a merger will take place, according to his supposed intention Id. § 791. And, as said in Watson v. Dundee Mortgage Co., 12 Or. 483 (8 Pac. 552): “In equity, mergers are considered odious, and are much less favored than at law, and are made to depend upon the intention and interest of the party. It is only in those cases where it is perfectly indifferent to the party in whom the interests had united whether the charge or term should or should not subsist that in equity the term is merged. But if the owner has an interest in keeping them distinct, or there is an intervening right, there will he mo merger.” Within this rule it is clear that the mechanics’ liens sold and assigned to the Title Guarantee & Trust Company did not merge in the legal title, even if it was acting as the agent of Pattullo, because there was an evident intention to keep them alive; and for the further reason that a merger would be against the interests of Pattullo, and therefore inequitable and unjust.

8. It appears from the testimony that the guarantee company purchased the mechanics’ liens now claimed by it for very much less than their face, and it is insisted by the respondents Jackson and others that in some way they ought to be entitled to the benefit of such discount; or, in other words, that the company ought not to be permitted to enforce the liens for any other or greater amount than the cost thereof. But upon what ground this contention is to be sustained we are at a loss to understand. There was certainly no fiduciary relation between the company and Jackson and others which would entitle the latter to the benefit of any discount which the company may have received in the purchase of these liens, and, so far as they are concerned, it is a matter of no consequence whether the liens are enforced in the name of the Title Guarantee & Trust Company or in the name of the original parties. The result would be the same. In either event, they will simply share pro rata with the other lien claimants in the common fund.

9. Nor is there any merit in the contention that the several mechanics’ liens take precedence over the Bust mortgage on account of the renewal thereof. It appears from the testimony that before any of the liens in question had been filed the note and mortgage were renewed in ignorance of any intervening liens or right to a lien, and within the doctrine of Pearce v. Buell, 22 Or. 29 (29 Pac. 78), Kern v. Hotaling, 27 Or. 205 (40 Pac. 168), and. Capital Lumbering Co. v. Ryan, 34 Or. 73 (54 Pac. 1093), the new mortgage will occupy the same place, so far as the priorities are concerned, as the one it superseded. This, we believe, disposes of all the questions presented by this complicated record', and results in a modification of the decree of the court below, and a decree will be entered here in accordance with this opinion.

Modified .