Tice v. Moore , 82 Conn. 244 ( 1909 )

The principal questions in this case are whether the subcontractors, who claim liens upon the plaintiff's real estate for labor and materials furnished under contracts with the original contractor in the construction of her building, are entitled to such liens, and if so, whether those liens have priority over the mortgage of the defendant the W. T. Fields Company. The Superior Court held that they are entitled to such liens and that the liens have priority over the mortgage.

Statutes allowing liens in such cases are of two classes. In one, the lien is allowed upon the ground that the subcontractor is equitably entitled to a lien which would otherwise attach in favor of the original contractor; in the other, upon the ground that the labor or materials furnished have so enhanced the value of the real estate that it would be inequitable to allow the owner to be enriched at the expense of the subcontractor. Waterbury Lumber Coal Co. v. Coogan, 73 Conn. 519, 521, 48 A. 204. Under statutes of the latter class the subcontractor has an independent right of lien and is not simply subrogated to the rights of the contractor. Under such statutes it is held that the subcontractor's right of lien cannot be defeated by the default, misconduct, or even the fraud of the original contractor. Berger v. Turnblad, 98 Minn. 163, 167,107 N.W. 543. Under statutes of the former class the subcontractor is simply subrogated to the rights of the original contractor. If, had he paid the subcontractor, the original contractor would not under the statute be entitled to file a lien for the amount so paid, the latter is entitled to no lien. So under such statutes, where a unless he completed the house. Hall, if the court's finding is to stand, is in the same position that Moore would be if he continued to hold the note. The house being unfinished and the contract abandoned, the note is without consideration and void in his hands. It does not appear that any money of his went to the plaintiff's benefit in respect to than the balance of the contract price for the entire work remaining unpaid. Larkin v. McMullin, 120 N.Y. 206,209, 24 N.E. 447; Hollister v. Mott, 132 N.Y. 18, 21,29 N.E. 1103. Our statute is of this class. Waterbury Lumber Coal Co. v. Coogan, 73 Conn. 519, 48 A. 204. In the present case, Moore, the original contractor, abandoned his contract wrongfully and without fault on the part of the plaintiff, and left her building incomplete, requiring an expenditure of at least $2,200 to complete it. The court has found that nothing is due him. Under these circumstances he could be entitled to no lien under the statute upon the plaintiff's property, and it follows that the subcontractors are not entitled to any. The plaintiff has, apparently, been enriched by labor and materials which they furnished; but they did not furnish them to her. To her they came into no contractual relations on which to found an equity for a reimbursement due to them from Moore.

The payment of $1,000 to Moore before he abandoned the contract, was made in good faith, when it was due, and before the plaintiff had knowledge that these subcontractors were furnishing labor and materials for the work. No claim is or can be made that under such circumstances the subcontractors can claim liens to the amount of that payment by reason of § 4138 of the General Statutes, which treats payments not made in good faith, or made before due without giving notice of the intended payment to subcontractors known to be furnishing materials and labor, as void against such subcontractors.

The subcontractors' liens being void, there is no question of priority between them and the Fields Company mortgage.

The court found due to the W. T. Fields Company, upon its mortgage note, $1,000 and interest, thus allowing the commission of $60 and the amounts paid for insurance and expenses of the conveyancers, which the plaintiff claims should not have been allowed, and disallowing the $100 paid by the W. T. Fields Company to Moore on August 23d, which it claims should have been allowed.

The plaintiff's claim as to the commission and payments for insurance and expenses is answered by the finding, which is that the commission was retained with her knowledge and consent, and that she gave an order for the payment of $940, the balance of the $1,000 payment, and knew at the time that the insurance and expenses were to be paid out of it. All of these items were chargeable by her to Moore as a part of the first payment, and were understood manifestly by all parties to be such. These items were properly treated as a part of the first payment on the mortgage note.

It was the understanding of all the parties that after the first payment by the W. T. Fields Company no further payments should be made to Moore by it until the house should be plastered. Having made the payment of $100 to him before it was due, and without the knowledge or assent of the plaintiff, it was properly disallowed as a part of the mortgage debt.

The defendant Hall holds the note for $945 and the second mortgage given to secure it. The court has found that he is not an innocent purchaser for value and that he took them subject to the equities affecting Moore. Moore knew that unless he fulfilled his contract and completed the house there was no consideration for the note. He knew that the plaintiff so understood and believed, and that she understood that she would not be liable to pay the note unless and until the house was completed. He could not in good conscience call upon the plaintiff to pay the note unless he completed the house. Hall, if the court's finding is to stand, is in the same position that Moore would be if he continued to hold the note. The house being unfinished and the contract abandoned, the note is without consideration and void in his hands. It does not appear that any money of his went to the plaintiff's benefit in respect to her house. She has not, therefore, been enriched at his expense, and he has no equity against her by reason of having added to the value of her property.

He excepts to and assigns as error the court's refusal to make certain changes in and additions to the finding, as requested by him. We cannot say, from the evidence which has been certified in support of the exceptions, that the court erred in refusing to make any of the changes or additions which, if made, would be material to his claim.

His demurrer to the complaint was properly overruled. It was based upon a wrong conception of the cause of action stated. The complaint is not a model pleading, but its purpose clearly was to bring the parties all into court, have them state their claims upon the plaintiff's property, interplead as to their priority of lien, and have the court determine what liens existed upon the property, what liens had priority, and decree their cancellation upon payment of the amount due. The demurrer treats it, so far as it regards Hall, simply as an action for the cancellation of the $945 note and mortgage, upon the ground that they were given through mistake or fraud. The suit might result in determining that he had no lien, or it might result in a judgment that he cancel the note and mortgage upon the plaintiff's redeeming them. His demurrer was not adapted to this latter aspect of the complaint.

The fact that the plaintiff's husband signed the note and mortgage, is no reason why her property should not be discharged and the note and mortgage given up when paid, or if void. That fact, which appeared in the complaint, therefore, afforded no ground for demurrer.

There is error in the judgment of the Superior Court, and it is set aside and the cause is remanded for the entry of a judgment in conformity with the views above expressed.

In this opinion the other judges concurred.