Nohrnberg v. Boley , 42 Idaho 48 ( 1925 )

Application for rehearing was made and granted in this cause. Briefs were filed by the respective parties and have been examined, together with a re-examination of the record.

Appellants Day and Moorman in their petition for rehearing urge that a finding in favor of appellant bank is a finding in their favor; that this court has misunderstood the testimony with regard to the deposit made by Day with the bank, and the soundness of the opinion with respect to the status of the farm labor claims is questioned.

We have not misunderstood the record; neither are we of the opinion that a finding in favor of the bank is a finding in favor of appellants Day and Moorman, but quite the contrary. The ordinary duty of a bank receiving paper for collection, as was done in the instant case, is to make a proper demand, and to give notice of nonpayment, protest, etc., as may be necessary to fix the liability of other parties. (7 C. J. 609.) As a general rule, after a bank makes a collection it becomes a simple contract debtor for the amount, less the commission charged. (7 C. J. 616.)

It is clear from the testimony that Day desired to be relieved from the burden of making the proper distribution of the proceeds from the sale of the seed. He made no application of such proceeds upon any claim in particular. His deposit was made with the understanding that the bank should pay the money out to other parties as and when the rights of those parties were ascertained. He made the deposit with the bank for a specific purpose, and his deposit, as to respondent and the lien and mortgage claimants, was in the highest degree conditional. It was not payment of respondent's notes. It is Day's contention that the deposit was made with the bank as Nohrnberg's agent for the purpose of protecting respondent. We may admit that the reason why the deposit was made with the appellant bank was that the bank held the notes for collection, but that is not admitting nor conceding that the evidence shows that the deposit was payment. The undertaking by the bank to ascertain the rights of the claimants to the deposit was gratuitous as to Day; it owed him no duty of that kind. In receiving the money from Day and agreeing to see to its proper disbursement the bank, even though it held respondent's note for collection, was rather an agent of Day than agent of respondent. (Ripley Nat. Bank v. Connecticut Life Ins. Co.,145 Mo. 142, 47 S.W. 1.) Whatever the relation was between the appellant bank and Day, it terminated by Day's consent when he received the money back from the bank, and under such circumstances we do not think it lies in the mouth of that appellant to complain that the bank violated any duty to respondent. (Bradbury v. McClure, 93 Cal. 133, 28 P. 777.) The bank's undertaking to distribute the money was gratuitous as to Day as it was outside the collection contract. As a mere agent to receive payment, the bank could not bind respondent by the proposed distribution. The extent of the bank's authority was known to Day. A deposit with the bank is no discharge unless tendered upon respondent's notes as a payment thereon. The parties for whose benefit the deposit was made or received cannot complain of the return of the money, as they did not show a present right to the payment of any portion of the money while it was in the hands of the bank. None of them changed their legal status upon the faith of the deposit. (Winkley v. Foye, 33 N.H. 171, 66 Am. Dec. 715;McGorray v. Stockton Sav. Loan Soc., 131 Cal. 321,63 P. 479.)

Appellants Day and Moorman protest against the conclusion drawn from the opinion of this court that before a laborer's claim of lien can be safely paid it must be filed, and if not paid, a civil action must be commenced to enforce it. The obvious answer is that the appellants cannot undertake to adjudicate the rights of the respondent without his consent.

The evidence does not show facts sufficient to charge the appellant bank with the conversion of the alfalfa seed or the proceeds thereof. The respondent's complaint is for a conversion and not for a breach of a contractual liability. If it was the duty of the bank to hold the Day deposit for respondent, that duty arose only because of the fact that the bank held the Boley-Nohrnberg notes, and if there was any such duty at all it is clear that it was a contractual duty. Being a contractual duty it does not concern the other appellants. But the breach of that contractual duty, if one existed, is urged by the respondent and the other appellants as a ground why in this action of conversion a judgment should be rendered against the bank for the breach of that contractual duty. There was no conversion by the bank for the reason that it did not sell the seed or convert the proceeds of the sale of the seed, and had no connection with that transaction. Respondent has not a contractual action against the bank for the amount of the deposit, as the same was not made under such circumstances or with such direction as would constitute it payment upon the respondent's note. The most that can be said, so far as the bank is concerned, is that it was a temporary gratuitous stakeholder of the proceeds of the crop, deposited for a specific purpose. It cannot be logically contended that it follows as a consequence that the bank, innocent of any wrongful intent, in the absence of a wrongful conversion and admittedly not having aided or abetted in the unlawful sale of the alfalfa seed, would be guilty of a conversion merely because the proceeds of the sale were deposited with it for a specific purpose and thereafter withdrawn by the depositor, which he had a clear right to do so far as the bank was concerned. The original opinion directed the dismissal of the action as against the bank and will, therefore, stand.

We call attention to the case of Hill v. Twin Falls etc.Water Co., 22 Idaho 274, 125 P. 204, wherein reference is made to the section of the statute covering mechanics' and materialmen's liens, the provisions of which are analogous to the section concerning farm laborers' liens. The court said:

"Under this statute the legislature evidently intended togrant the right to claim a lien to any person who contributes labor or material for the construction, alteration, or repair of a building or structure upon real property. It will also be observed from the language of this statute that it was clearly the intent of the legislature to grant an absolute lien direct upon the property, to the person who performs labor . . . . without reference to whether such person is an original contractor or a subcontractor, or a laborer or a materialman . . . . Of course this right is limited by requiring the personclaiming the lien to file the claim within the time fixed bythe statute, and otherwise complying with the law."

It will be observed that the court says "of course" (giving the impression that it was a matter over which there could be no controversy and one which was susceptible of no other construction) "this right" (i. e., the right of lien) "is limited by requiring the person claiming the lien to file the claim within the time fixed, by the statute, and otherwise complying with the law." In other words, the filing of the claim within the time and compliance with the law are prerequisite essentials to convert the "right to lien" into a "``lien." C. S., sec. 7373, is supported by the construction given in the above case. That section provides that "any person claiming the benefit of this article" must do certain things. This language itself negatives any construction that the lien exists without any steps being taken on the part of the laborer. He must claim the benefit of the article relating to farm laborers' liens by positive action specified by statute and not by passive silence.

"Laborers upon a farm have no lien for their wages upon the crops produced unless given by statute or by special contract. . . . . These acts, providing as they generally do for a remedy summary in its character and contrary to the course of the common law, must receive a strict construction. Claimants under them must bring themselves strictly within the terms of the acts," (Jones on Liens, 3d ed., vol. 1, sec. 776.)

The laborers "must bring themselves within the terms of the acts" to obtain a lien, and the law does not grant them a lien without action on their part. They are required to file for record a verified claim of lien "within 60 days after the close of said work or labor, with the county recorder of the county in which said work and labor was performed." That was not done within sixty days by the laborers whose claims are sought to be set off as against respondent's mortgage, or at any other time, and may never have been filed. Many of the items were not lienable. This claim is required by C. S., sec. 7373, to contain so much of the facts required to be stated in the form of lien found in C. S., sec. 7362, and includes, among other things, a description of the property upon which the lien is claimed, the name of the owner or reputed owner, the contract for the labor, the performance of the contract, the time of performance, the date of the close of the work, the amount claimed, statement that the same has not been paid, and the amount due. No claim being filed by the laborers in this case, it follows that no such statements were made.

While the statute should be liberally construed, under the rule adopted in this jurisdiction, every material requirement should be complied with. In Bradbury v. Idaho etc. L. I. Co.,2 Idaho 239, 10 P. 620, it was held by this court that "the mechanics' lien law must be strictly construed." See, also,White v. Mullins, 3 Idaho 434, 31 P. 801, wherein it was held that if the name of the owner or reputed owner is not stated in the claim of lien, and the same fails to contain the terms, time given and conditions of the contract, it is fatal to the lien.

In Gem State Lumber Co. v. Witty, 37 Idaho 489, 217 P. 1027, this court held purported liens void because they were not filed within the time prescribed by statute after the completion of the contract.

The claim must comply substantially with all the requirements of the statute, and be sufficient in and of itself without reference to extrinsic proof to supplement deficiencies in it. (27 Cyc. 152.) If it does not do so it is insufficient. (Cox v. Flanagan (N.J.), 2. Atl. 33; 27 Cyc. 155.)

"The statement is ineffectual to perfect a lien if it shows affirmatively on its face that it is filed too late even though the fact be otherwise." (27 Cyc. 156 and cases cited.)

Failure to show in the statement what the work was for on which the lien is claimed renders it void. (27 Cyc. 171, note 74.) Failure to include in the claim of lien the time of rendering services is fatally defective. (27 Cyc. 182); also failure to specify the amount due (27 Cyc. 184). Lack of proper verification to a claim of lien defeats a lien. (27 Cyc. 194.)

This court has held that where a claim of lien is greatly in excess of the amount of actual labor performed, and it is not shown that such claim was made in good faith, the lien fails. (Blake v. Crystalline Lime Co., 37 Idaho 637, 221 P. 1100.)

When it is considered that the omission of any single one of the statements required by the statute to be made in the claim of lien is fatally defective and renders the lien void, it must be conceded that the failure to file the claim at all, — in other words, the omission of every requirement of the statute, — wipes out any lien or right to lien which the laborer might have had. It must be remembered that in the instances to which we have referred above, claims of lien had been filed. In the instant case the laborers did not "claim the benefit of " C. S., sec. 7373.

To hold that a laborer has a lien without filing a claim or taking any of the steps which the statute requires is contrary to the rule that lien statutes must be substantially complied with. It eliminates the provision of C. S., sec. 7373, relating to the filing of the claim of lien. If the laborer is not required to file a claim in order to secure a lien he certainly is not required to make any mention of the name of the owner or reputed owner of the property upon which he claims a lien. It must be apparent that the plain purpose of the legislature in enacting C. S., sec. 7373, requiring the laborer to file a verified claim for record, was to give notice to the owner of the crop, holders of mortgages thereon, and any person interested therein, so that they might protect their rights, and also to notify all persons having anything to do with the crop or the proceeds thereof that such laborers had claimed liens thereon. It was enacted to prevent just what took place here. Nohrnberg had a mortgage on this crop. The Twin Falls Bank Trust Company, by assignment from Moorman, had a first mortgage on it. Each had an interest in the crop, a property right, and each had a right to anticipate that the mortgagor and all persons dealing with the crop would take notice of their respective mortgages by virtue of their record, and recognize their interests. The Twin Falls Bank Trust Company received satisfaction of its mortgage; the remainder of the proceeds of the crop, to an exact penny, were paid out by Moorman to the alleged laborers, many of whose claims are conceded to be not lienable. If such dealings receive the sanction of this court respondent has been deprived of his property without due process of law. He has not had an opportunity to question the validity of these alleged liens in a proper action. While it will be conceded that the findings show that Moorman held a first mortgage, a closer examination of the facts show that at the time he disbursed this money he had sold and transferred his mortgage to the Twin Falls Bank Trust Company and had no interest in the matter whatever.

In McCoy v. Cook, 13 Wash. 158, 42 P. 546, in the course of its opinion that court said:

"It is the labor performed upon the property designated in sections 1 and 2 of the statute that creates this lien, not the filing of the claim, or notice. And while the lien will be deemed waived if the written claim be not filed within thetime specified by law, it cannot be divested by any sale by the owner of the property to a third party."

This decision plainly states that the right to lien may be lost by failure to file the claim of lien within time.

Quoting from Weeter Lumber Co. v. Fales, 20 Idaho 255, Ann. Cas. 1913A, 403, 118 P. 289, the opinion in part reads as follows:

"The materialman or laborer is given an absolute lien if hefiles his claim of lien within the time required by law, and the owner is required, in order to protect himself from liens, to see that all claims of such persons are paid before he pays the contract price to the original contractor. That being true, there is nothing in the contention of counsel for appellant that a payment by the owner of the full contract price to the contractor before the lien is filed is a full defense to all claims for labor or material furnished in the construction of such building or improvement.

"It was held in Hunter v. Truckee Lodge, 14 Nev. 24, under the laws of that state, that the legislature intended to give subcontractors and materialmen direct lien upon the premises for the value of their labor and materials, regardless of the payments on the principal contract made prior to the timewithin which the law requires notice of their claims to berecorded, and we are satisfied that under the mechanics' lien law of this state, subcontractors and materialmen have a lien upon the premises for the value of their labor and materials, regardless of any payments made to the original contractor prior to the time within which the law requires the notice oftheir lien to be filed."

The payments last referred to are those made to the original contractors and not to the laborers. To say that laborers are not required to file a claim of lien within the sixty-day period to acquire a valid and enforceable lien, in the face of the italicized portions of the foregoing decision and the decision in Hill v. Twin Falls Canal Co., heretofore referred to, would be an unwarranted and strained construction of C. S., secs. 7372 and 7373, and one that was not contemplated by the legislature or the previous holdings of this court.

Warren v. Olson, 46 N.D. 203, 180 N.W. 529, is relied upon by appellants, where the following language is used: "The (threshing) lien, however, exists from the commencement of the threshing, and a person who purchases the grain within the 30-day period takes it subject to the lien, although the statement was not filed at the time of the purchase," citingMitchell v. Monarch Elevator Co., 15 N.D. 495, 11 Ann. Cas. 1001, 107 N.W. 1085, wherein it is held that a "statement for a thresher's lien must contain everything required by the statute to be stated therein," and "Chapter 83 of the Revised Civil Code of 1899 gives to threshers of grain an enforceable lien thereon upon filing a statement within 30 days from thethreshing and such lien exists from the commencement of the threshing," thus negativing the idea that no claim of lien is required, and holding in effect that though the lien might exist it would be lost upon failure to file the claim within time.

In Hahn v. Sleepy Eye Milling Co., 21 S.D. 324, 112 N.W. 843, the facts show that "the threshing was done and a lien filed within the time claimed," and it is stated:

"Conformable to the doctrine recognized and applied by this court in the recent case of Johnson v. Barry, 20 S.D. 133,104 N.W. 1114, 1 L.R.A., N.S., 1159, this action could not be maintained under any circumstances without a valid claim for threshing the grain alleged to have been converted by appellant."

Our attention has been called to the case of People v.Moxley, 17 Cal. App. 466, 120 P. 43. This case does not hold that the lien exists, but merely that the right to a lien exists, and this is all that is granted by C. S., sec. 7372 — the right to the lien and nothing more — and the lien itself does not come into existence or become binding upon the property or take preference over other liens until the laborer has complied with the requirements of C. S., sec. 7373, as to the filing of the lien. In this same case (People v. Moxley,supra), the court said:

"And whether we say that the right of lien is personal, or inchoate, or otherwise, it is nevertheless, a vested, constitutionally guaranteed and existing right, and when, as in this case, the constitutional right is rendered enforceablethrough the observance of statutory provisions, it is an enforceable right."

In Provident Mut. Bldg. Loan Assn. v. Shaffer, 2 Cal. App. 216,83 P. 274, it is held that "The inchoate right of lien which arises by furnishing lumber used in the construction of a house ceases to exist after the expiration of 60 days from the completion of the house."

In Acme Lumber Co. v. Modern Construction Co., 214 Mich. 357,183 N.W. 192, it is held that "Materialman's lien proceedings are statutory, and a statute prescribing requirements, leading up to the attaching of the lien must be strictly construed, and the essential requirements must be complied with."

In Mills v. LaVerne Land Co., 97 Cal. 254, 33 Am. St. 168, 32 P. 169, it was held that prior to the filing of the claim of lien the laborer had but a personal right which was not assignable, but that upon the filing of the claim of lien the laborer could assign it. From this decision no other conclusion can be reached but that prior to the filing of the claim no lien existed, but merely an inchoate right to a lien.

In Boise Payette Lumber Co. v. Dominican Sisters, 102 Or. 314,202 P. 554, it is said:

"The right to assert and perfect a mechanic's lien is a statutory privilege. Brown v. Harper, 4 Or. 89. This privilege may be exercised or waived, as the lienor may prefer. Hughes v.Lansing, 34 Or. 118, 75 Am. St. 574, 55 P. 95. The right to a lien being purely of statutory creation, whatever the statute makes necessary to its existence must be done, and one claiming the benefit of that statute must bring himself clearly within its terms."

Jones on Liens, 3d ed., vol. 2, secs. 1389, 1390, contains the following:

"A lien can be secured only by compliance with the statute in filing a notice, claim or statement of lien in the manner and within the time prescribed. No other notice or claim of lien, though brought to the knowledge of the owner, or of a purchaser from him, has any effect. The filing of the account or claim of lien is a prerequisite to the enforcement of the lien. It does not bring the lien into existence, for the lien exists inchoately from the time of the making of the contract, or from the time the building was commenced, or the work upon it was commenced, whichever the particular statute prescribes as the beginning of the lien. The lien exists by virtue of statutory provisions and the requirements prescribed for securing the benefits of this remedy must be observed. . . . .

"All the particulars required to be stated in the notice creating the lien are material. They are provided for in order that a proper record or index or docket may be made of the claim, and thereby notice of the claim given to the owner, and protection afforded to purchasers and mortgagees. The omission of any of the particulars required by statute to be stated is fatal to the lien. The facts required in the notice must be averred in the complaint, in order to show a cause of action; and if the notice is defective by reason of the omission of the name of the owner, or of anything which the statute requires, the defect cannot be amended or corrected in the complaint.

C. S., secs. 7372 and 7373, must be construed in parimateria. C. S., sec. 7372, provides that "Any person who does any labor on a farm or land in tilling the same, or in cultivating, harvesting, threshing, or housing any crop or crops raised thereon, has a lien on such crop or crops for such labor."

If these laborers were entitled to a lien they never took the essential and requisite steps provided by C. S., sec. 7373, to perfect their liens.

C. S., sec. 7373, provides in part that "Any person claiming the benefit of this article must, within 60 days after the close of said work or labor, file for record with the county recorder of the county in which said work and labor was performed, a claim which shall be in substance in accordance with the provisions of section 7362, so far as the same may be applicable, which said claim shall be verified as in said section provided, and said liens may be enforced in civil actions, in the same manner, as near as may be, as provided in section 7366." Such steps are made a condition of the lien, and the court cannot declare purposeless and useless that which the legislature has made a condition of the lien. (Interurban Const. Co. v. Central State Bank, 76 Okl. 281,184 P. 905.) To hold that the farm laborers had a lien without complying with the requirements of C. S., sec. 7373, eliminates said section from the statute.

It is conceded by counsel for appellant Moorman that at the time he made the payments to the laborers he was not a lienholder. He had no claim either to the seed or to the money. The mortgage he had held was then owned by the Twin Falls Bank Trust Company. As he had no lien he had no interest in the property or its proceeds, and therefore was without authority to receive or distribute the proceeds. Being a mere interloper he cannot escape liability by urging the payment of the debt of some other party to which he was a stranger. It is further apparent that Day was an aider and abettor in the distribution of this fund and that he withdrew the money for the express purpose that it might be distributed by Moorman to the payment of claims that were not superior at the time of distribution and never became prior to the lien of the respondent. Both had knowledge of the existence of respondent's mortgage.

In the former opinion upon the question of the sufficiency of the findings of fact made by the trial court we were of the opinion that the findings were insufficient, and particularly in that the court failed to find specifically that respondent had or had not waived his chattel mortgage lien by consent to the sale of the seed by the mortgagor. From a further examination of the record we are constrained to hold now, and particularly in view of the fact that the action against the bank has been dismissed, that the findings of fact are sufficient.

Respondent alleged in his complaint that the appellants "``without the knowledge and consent of the plaintiff (respondent here) took and carried away the said alfalfa seed and unlawfully converted and disposed of the same and the proceeds thereof to their own use . . . . then and there knowing that the plaintiff (respondent here) was lawfully entitled to the possession of the said alfalfa seed and the proceeds thereof." Appellant Moorman in his answer denied the foregoing allegation. Appellant Day questioned the validity of respondent's mortgage and also denied the foregoing allegation, and upon the trial there was a sharp conflict in the evidence, respondent testifying in support of his allegation above stated, while the testimony of Day and Boley is equally positive that the sale of the alfalfa seed was made with the consent of the respondent. Upon this conflicting evidence the trial court, in its finding of fact No. 6, found that appellants, including Day and Moorman, without the knowledge and consent of the respondent, took and carried away the said alfalfa seed and unlawfully converted and disposed of the same and the proceeds thereof to their own use, the said appellants and each of them then and there well knowing that the respondent was entitled to the possession of the said alfalfa seed and the proceeds; and further found, in finding No. 7, as follows: "The court further finds that all of the allegations and affirmative defenses contained in the answers of the several defendants herein are untrue and not supported by the evidence, except as in these findings hereinabove mentioned and set forth."

Since we have now reached the conclusion that the findings were sufficient upon this phase of the case, nothing further remains than to affirm the judgment against appellants Day and Moorman, and it is so ordered. Costs awarded to respondent as against appellants Day and Moorman, and to appellant First National Bank as against respondent.

William A. Lee, C.J., and Givens, J., concur.