George Haw & Co. v. Burch Bros. , 110 Iowa 234 ( 1900 )

Deemer, J.

A firm known as Burch Bros, originally •owned a mine in Wapello county, and on September 15, 1S9G. it made a general assignment of all its property to one Coll, as assignee. On the following day apnellants filed their mechanics’ liens against the property. On January 2, 1S97, the Burch Coal Company was incorporated, and on February 8th the assignee of Burch Bros, sold and conveyed the. mining property to this corporation. The corporation took possession of the property, and continued to ■operate it until the eighth day of March, 1897. During the time that the corporation owned the property, appellees performed labor in and about the mine. On March 8, 1897., plaintiffs and others commenced attachment suits against the corporation, and levied on the property thereof; and a few days thereafter certain of the mechanics’ lien holders commenced suits to foreclose their liens. On the twelfth day of March the labor claimants gave notice, accompanied by .affidavits, of their claims, and on the next day filed the same with the clerk of the district court of Wapello county. On .April 3, 1897, one Sumnour was appointed receiver of the Burch Goal Company, and was' ordered to sell its property. 'The labor claimants then filed petitions of intervention in ■the receivership proceedings, setting forth the claims held by them. Thereafter the receiver sold all the property of the •corporation, rceiving therefor the -sum of two thousand one hundred and fifteen dollars. The trial court directed that "the labor claims be first paid, and it is from this order that ■the appeal is taken.

Claim is made that holders of mechanics’ liens against the property of Burch Bros, are entitled to preference over the labor claimants who performed labor for the Burch Coal Company. Section 1, chapter 48, Acts Twenty-third General Assembly, provides that when the property of any corporation or firm shall he seized by any process of any court-of this state, or when their business shall he suspended by the action of creditors, or he pnt in the hands of a receiver,, the debts owing to laborers or servants'which have accrued by reason of their labor to an amount not exceeding one hundred dollars to each employe, for work and labor performed within ninety days next preceding the seizure or transfer of such property, shall he considered and treated as preferred debts,and such laborers or employes shall he preferred creditors, and shall he first paid in 'full. The contention is that as the mechanics’ lien holders are. creditors of Burch Bros., and as their claims antedate the claims for labor, they are entitled to preference, and that the property of Burch Bros, cannot he taken to pay the debts of the Burch Coal Company. It is argued that, unless the parties are claimants of a common debtor, the statute does not apply, and that, as the mechanics’ lien holders obtained their liens prior to the sale of the property to the corporation, the proceeds thereof in the hands of the receiver must first be subjected to the payment of the mechanics’ liens. The fault in this argument lies in the fact that mechanic’s lien holders are simply lien claimants. The property was transferred to the corporation by the assignee of Burch Bros.A subject, it is true, to their claims; but they allowed the corporation to take possession thereof, and to create charges against it, and the sole question relates to the priority of liens on the proceeds of that property, growing out of a sale by the receiver. When the laborers did their work,, they were given preference, by statute, over all other lien holders, and the receiver was directed to pay their claims in full. The statute does not say that they shall he creditors of a common debtor before being entitled to- this preference, and we can see no- reason 'for importing that exception into tlie plain language of the act. . Appellants have nothing more than a lien upon the property, created, it is true, by Burch Bros.; but appellees also have a lien or preference, and the statute says, without exception or qualification, that their claims must be preferred and paid in full. Not the property of Burch Bros., nor the property of tírese appellants, is taken, but the property of the Burch Coal Company, on which each of the contestants have a lien. And the simple question is, which claims are to be preferred? The statute furnishes no uncertain answer. That appellants’ liens antedate the claims held by appellees is not controlling. Reynolds v. Black, 91 Iowa, 1.

While appellants had no enforceable contract against the coal company, they did hold an enforceable lien against its property, and in the enforcement of that lien they are subject to all statutory preferences. The case is not different' from one where a mortgage is given covering property with or upon which laborers afterwards perform work. In such case, there is- no doubt but that the laborers are entitled to precedence. The whole fault with appellants’ argument rests on the assumption that the Burch Coal Company never owned the property. It did own it in virtue of its purchase from the assignee. This ownership was subject to the mechanics’ liens placed upon it by the creditors of Burch Bros, before the sale by the assignee, and this is all the basis there is for appellants’ contention. If appellants- desired to protect themselves as against the labor claims, they should have commenced their action to foreclose, or taken some other steps to preserve their rights. Having stood by, and seen these laborers at work with property on which they held a lien, they cannot now be- heard to- say, in the face of this statute, that their property is being taken to pay another’s debt. Had Burch- Bros, remained the owners and employed these laborers, there is no doubt that the claims for labor would have been preferred, even if they entirely defeated appellants’ claims-for mechanics’ liens. And we can see no reason for applying a different rule simply because there was a change in ownership. Our conclusions find support in the following; cases additional to the one already cited: Mitchell v. Burwell, 110 Iowa, 10; St. Paul Title Insurance & Trust Co. v. Diagonal Coal Co. 95 Iowa, 551; Bell v. Hiner, 16 Ind. App. 184 (44 N. E. Rep. 576). The judgment is affirmed.

Granger, O. J., not sitting.