Wahl v. Southwest Savings and Loan Association

476 P.2d 836, 106 Ariz. 381, 1970 Ariz. LEXIS 434
CourtArizona Supreme Court
DecidedNovember 20, 1970
Docket10074-PR
StatusPublished
Cited by17 cases

This text of 476 P.2d 836 (Wahl v. Southwest Savings and Loan Association) is published on Counsel Stack Legal Research, covering Arizona Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wahl v. Southwest Savings and Loan Association, 476 P.2d 836, 106 Ariz. 381, 1970 Ariz. LEXIS 434 (Ark. 1970).

Opinion

McFarland, Justice

This case comes before us on a petition to review a decision of the Court of Appeals, Department B, Division I, which affirmed in part and reversed in part a decision of the Superior Court. Wahl v. Southwest Savings and Loan Association, 12 Ariz.App. 90, 467 P.2d 930. The Southwest Savings and Loan Association, hereinafter referred to as Southwest, brought an action to foreclose 24 separate mortgages, each covering different parcels of real property. The appellants claimed a materialmens lien upon all 24 tracts, together with the buildings constructed thereon. They are hereinafter referred to as Claimants. All of the claims involve the same principles of law with the exception of Ray Lumber Company, (Ray), which had a different statement of facts and presented additional questions. Eighteen of the mortgages were recorded before the construction commenced. While the Claimants originally claimed a materialmens lien against all 24 they abandoned the lien as to the 18 on which mortgages were recorded prior to the commencement of construction. The other six present a different fact situation. The materialmen, including Ray, contend that construction commenced before the recording of the remaining six mortgages. All 24 mortgages including the six were executed and delivered to Southwest in August of 1963. The 18 were recorded September 9, 1963, however, the remaining six were not recorded until October 30, 1963. It is the contention of the materialmen that their liens were established prior to that date. Ray presented an additional question in the courts below, *383 namely, as to whether the recording of his lien was timely made, and his right to a lien on certain undisbursed mortgage loan proceeds. We accept the decision of the Court of Appeals that Southwest had a prior mortgage on the 18 buildings; also their decision that Ray timely recorded his materialmens lien, and that Ray has no interest in the undisbursed funds. We accepted jurisdiction for the limited purpose of determining the remaining questions involved in the priority between the six mortgages and liens which are: (1) Whether the materialmen had actual or constructive notice of the Southwest mortgage before their liens attached; (2) Whether the materialmens liens relate back to the period before the mortgages were recorded, and (3) As to the proper method of establishing the amount of each of the liens.

In the court below, the appellants herein relied on a “one project” theory of construction. Their argument is that, since the project was built by one contractor under one contract with the owner, it was one project. They argue therefore that the materialmens liens should relate back to the time that the general contractor did any labor or furnished any material for the first building. While they abandoned their claim on the 18 recorded before labor or material was furnished they use the same argument as to the remaining six. There remains the three questions presented as to the remaining six buildings.

The first question must be determined under § 33-992, A.R.S.:

“The liens provided for in this article are also preferred to all liens, mortgages and other encumbrances of which the lienholder had no actual or constructive notice at the time he commenced labor or commenced to furnish materials.”

The argument of Southwest that the materialmen had constructive notice of the six mortgages for the reason that 18 had already been recorded is without foundation. It could be just as forcefully argued that the failure to record the six at the time the 18 were recorded was notice to the materialmen that the six were not covered by mortgages. Section 33-992 specifically provides that the liens are to be preferred “to all liens, mortgages and other encumbrances of which the lienholder had no actual or constructive notice at the time he commenced labor or commenced to furnish materials.” In Leeson v. Bartol, 55 Ariz. 160, 168, 99 P.2d 485, 489, we held: “Lien laws are remedial and are to be liberally construed.” Under the facts of the instant case there was neither actual nor constructive notice.

This brings us to the second question as to the date the materialmens liens were established for the remaining six houses. This question likewise requires liberal construction as provided in Leeson v. Bartol, supra.

In the stipulation of facts it is shown that three of the six apartment buildings, namely Al, A8 and B1 had footings actually dug prior to the recording of the mortgages October 30, 1963. The footings for the remaining three were dug some time subsequent to October 30th. The stipulation further shows that each of the materialmen, with the exception of Ray Lumber, delivered materials to a common site to be used in the construction of some or all of the apartment buildings on the 24 parcels prior to October 30, 1963. In construing Sec. 2032 of the Arizona Revised Code of 1928, which is substantially the same as § 33-992, A.R.S., in Wylie v. Douglas Lumber Co., 39 Ariz. 511, 8 P.2d 256, 83 A.L.R. 918, we said:

“When a claim and notice of lien is made out and filed according to the statute, it relates back to some act of the contractor or to some act of the lienor himself — to which one of these is the crucial point here. In other words, does the lien claimant’s right to a lien under the facts of this case date from the time *384 the contractor commenced the labor on the property, or from the time each one of the lien claimants commenced to furnish material or labor to the contractor? If the former is the correct date, then the liens here attached first; but, if the latter is the correct date, the mortgage first attached to the property, and should have preference. The present section of our statute fixing preference is 2032, Revised Code of 1928, reading as follows:
‘2032. Preference over Subsequent Encumbrances. The liens provided for in this article, unless otherwise herein provided, arc preferred to all liens, mortgages or other encumbrances which have attached upon the property, subsequent to the time when the labor was commenced or the materials commenced to be furnished, also, to all liens, mortgages and other encumbrances of which the lienholder had no notice, actual or constructive, at the time he commenced the labor or commenced to furnish the materials.’
“This first found a place in our laws as section 2908, Revised Statutes of 1901. It was amended by section 20, Act No. 90, Laws of 1903, and as amended was carried forward as paragraph 3658 of the Revised Code of 1913. In its present form it is to all intents and purposes the same as it was after the amendment of 1903 and as in the 1913 Code. While it is not verbatim the statute of California (section 1186, Kerr’s Code Civ.Proc. 1920), we take it that it was probably borrowed from California and has the same meaning. The latter statute reads as follows:
“ ‘1186. Effect of Liens.

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Bluebook (online)
476 P.2d 836, 106 Ariz. 381, 1970 Ariz. LEXIS 434, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wahl-v-southwest-savings-and-loan-association-ariz-1970.