Gleissner v. Hughes , 153 La. 133 ( 1922 )

DAWKINS, J.

Plaintiffs became the owners, by the last will and testament of Mrs. P. B. Barlow, deceased, of two mortgage notes, dated May 25 and June 18, 1920, respectively, each for the sum of $10,000, the first being secured by special mortgage upon lots 285 and 286, and the second secured similarly by lots 228 and 229, all situated in the Pinehurst subdivision of the city of Shreveport, La. Neither note was paid by the maker, P. B. Jones; they were duly foreclosed upon, and the property was bid in by plaintiffs at sheriff's sale who sought to have the amounts of their bids credited upon the notes. The sheriff declined to make title to the property, for the reason that it appeared by the mortgage certificate that there were a large number of claims, amounting to several thousand dollars, purporting to be for labor and materials performed and used iu erecting certain improvements, recorded against the property.

Thereupon plaintiffs filed petitions for rules against the sheriff and all of the persons whose names appeared as claimants in the mortgage certificate, demanding that they show cause why said inscriptions should not be canceled and the property conveyed to petitioners free of incumbrance. Defendants (claimants) in rule responded, asserting liens and privileges alleged ,to be superior to plaintiffs’ mortgages; and there were two separate judgments (the two causes having been consolidated below for purposes of trial) ordering plaintiffs to pay over in cash the amounts of their bids, and relegating all claimants to the proceeds. The judgments further ranked the claims, directing that they be paid in the order named, and that thereafter the mortgages, conventional and judicial, be paid according to the priority of their recordation. As between the Shreveport Long Leaf Lumber Company and the American National Bank it was ordered that the latter be paid the sum of $2,150, interest, and attorney’s fees from the proceeds of the lien recognized in the former’s favor. The decree further provided that the contractors, laborers, and materialmen be paid concurrently and pro rata as between themselves. The cases appear in this court in one transcript and under one number as the result of an appeal prosecuted by the plaintiffs.

The errors assigned by appellants are as follows:

“(1) The court erred in not holding that article 3274 of the Civil Code, and Act 229 of 1918, in so far as they attempt to give a preference to after-recorded liens over a prior mortgage, was violative of article 186 of the Constitution of 1898.

“(2) In any event, the court erred in holding that the liens or privileges claimed by the lien-holders could supersede and rank an existing mortgage when the same were not recorded within seven days after the date of the contract for the same.

“(3) The court further erred in holding that Act 229 of 1916 superseded or repealed article 3274 of the Civil Code of the state.

“(4) The court erred in holding that under Act 229 of 1916 persons who furnished material or performed labor on a building are entitled to a lien superior to a prior mortgage recorded against the property.

“(5) The court erred in holding that Act 229 of 1916, by its terms intended to give to lien-holders a superior lien over an existing mortgage on the property.

“(6) The court erred in holding that Act 229 of 1916 gave to laborers and furnishers of supplies on a building a superior lien and privilege over an existing mortgage, and in so holding erred in not holding that Act 229 of 1916 violated article 32 of the Constitution, of 1898, in that it had more than one object, and such object was not expressed in its title.

“(7) In any event the court erred in not holding that the claim of the Shreveport Long Leaf Lumber Company, which was recorded on-July 9, 1920, as against lots 285 and 286, was perempted or prescribed, because it was not reinscribed within 12 months, and the court erred in holding that the registry of the judgment in favor of the Shreveport Long Leaf Lumber Company on December 16, 1920, was a reinscription of its lien.”

Opinion.

1. Plaintiffs’ first assignment is answered by the article of the Constitution (1913) itself (Article 186) upon which they rely. It reads:

“No mortgage or privilege on immovable property shall affect third persons, unless recorded or registered in the parish where the property is situated, in the manner and witlwn, the time as is noio or may be prescribed by law, except privileges for expenses of last illness and privileges for taxes, state, district, parish, ward or municipal; provided, such tax liens, mortgages, and privileges shall lapse in three years from the 31st day of December, in, the year in which the taxes are levied, and whether now or hereafter recorded.” ' (Italics ours). ;

There is no doubt but that liens and privileges such as those asserted in this case cannot affect third persons like the plaintiffs unless recorded (McIlvaine v. Legare, 34 La. Ann. 925 ; Gay v. Bovard, 27 La. Ann. 290 ; Bank v. Fortier, 27 La. Ann. 246 ; Berwin v. Weis, 28 La. Ann. 365 ; Bank v. Ferry, 32 La. Ann. 315 ; Adams v. Adams, 27 La. Ann. 275) ; but the article leaves it to the Legislature to determine “the manner and time” within which they shall be so recorded in order to bind such persons. Pursuant to similar provisions in the piiior Constitutions, the Legislature had passed such laws, one of which was the Article 3274 of the Civil Code of 1870, in which it was provided that liens of the character now in question should “confer no preference on the creditor who holds it over creditors who have acquired a mortgage unless the act or other evidence of the debt is recorded within seven days from the date of the act or obligation of indebtedness. * * » ” This article of the Code has been held to give such liens a preference over pri- or mortgages when seasonably recorded. Jacob v. Preston, 31 La. Ann. 518 ; Pedesclaux v. Legare, 32 La. Ann. 385 ; Johnston v. Weinstock, 31 La. Ann. 698 ; Gallaugher v. Congregation, 35 La, Ann. 829 ; Givanovitch v. Congregation, 36 La. Ann. 274 ; Brashear v. Alexandria Cooperage Co., 50 La. Ann. 587, 23 South. 540 ; Brown v. Staples, 138 La. 602, 70 South. 529.

The language of that article (3274) might have been construed differently, inasmuch as it does not expressly say that such liens shall prime pre-existing mortgages, the provision being:

“It shall confer no preference on the creditor who holds it, over creditors who have acquired a mortgage,” etc.

It might have been said, in view of the rule of strict construction applicable to privileges, that the lawmaker meant mortgages which creditors “have acquired” since the filing of the lien; but the jurisprudence of this court seems fairly well settled in favor of a construction which gives to such claims timely recorded, a preference over prior mortgages, and persons such as the claimants in this case are justified in relying upon that interpretation in performing labor and furnishing .materials for improvements to be erected upon property previously mortgaged; and it is now too late to announce a different holding as against rights already acquired.

Of course, if the mortgage had been given before, the law w-as passed, it might be said to come in conflict with constitutional provisions against divesting vested rights and impairing the obligations of contracts; but, where the rights of a mortgagee are acquired after the enactment of such a law, ■ they pass subject to it, and the holder takes knowing that the mortgagee may create such superior rights against the property, and the constitutional provisions referred to have no application. And there is reason for subordinating prior mortgages to such claims, for the labor and material serve to create a greater value or security which would inure to the benefit of the mortgage, and such improvements should not be prevented or discouraged because of existing mortgages. However, the mortgage holder is not without remedy. In most, if not all, of such acts it is stipulated that the mortgagor shall not alienate or incumber the property to the prejudice of the mortgagee, and a vigilant fereditor could doubtless protect himself against violation of such promise.

2. A determination of the second alleged error depends somewhat upon the question as to whether the Act No. 229 of 1916 has extended the period within which such liens must be recorded to affect third persons from 7 to 45 days.- Section 1 declares that claimants of the class now before the court shall have — ■

“a privilege upon, such building, erection or improvements and upon the land belonging to such owner or proprietor on which the same is situated, and upon the proceeds or balance of the contract price in the hands of the owner, due or to become due to the contractor, to secure the payment of such work or labor performed, or materials, machinery or fixtures furnished. Such privilege shall be preferred to all other privileges or -incumbrances which may attach to or upon the said building, erection or improvement and upon the said land, or either of them, and upon the proceeds or balance of the contract price in the hands of the owner, due or to become due to the contractor.” (Italics by the court.)

Section 2 requires that such claims shall be verified by affidavit, giving name of owner, contractor, claimant, description of the property, etc., and that:

“Such statement must be' filed [in the mortgage records] within forty-five (45) days after the acceptance of the worh'by the owner of the land on which work was done or his trustee or agent.”

In view of the declared purpose of this statute (229 of 1916) as expressed in its title— “To provide for the creation, recognition and recordation of the liens and privileges of laborers, contractors, subcontractors, material men, mechanics and furnishers of machinery or fixtures, and to enforce the payment of said liens and privileges, and to repeal all laws in conflict herewith” — we think the intention and result was that it made such liens superior in rank to all other incumbrances upon the property, whether arising prior or subsequent thereto, provided the same were recorded within 45 days “after the acceptance of the work,” meaning, in cases like the one now under consideration, the acceptance of the labor, material, machinery, etc., of each individual claimant, as distinguished from the completed job. In other words, as. to a general contractor, his claim may be filed within 45 days from the date of the acceptance of the building or iim provement undertaken to be constructed; as to a subcontractor, 45 days from the acceptance of such subcontract work by the owner or his agent. Where, however, as in this case, the entire work is done by the owner, superintended by a foreman or agent, the delays begin to run as to labor performed and materials, machinery, furnished, from the time the same are performed or received and accepted. The building in this case was erected by the owner under a verbal agreement by which one L. M. Rudy superintended the work, and was to receive as compensation 10 per cent, of the cost of construction, including labor, materials, etc., and there was therefore, as between the said owner and the laborers and material-men, no other time of acceptance than when the labor and materials were received and accepted upon the building. Rudy’s acceptance was the owner’s acceptance, since the former was nothing more than the latter’s agent. This view of the matter appears to be further accentuated by section 8 of the act, which reads:

“That all privileges under the provisions of this act are in full force and effect from and after the time the labor is performed, or material, machinery,' or fixtures furnished.”

We conclude that the Act 229 of 1916 had the effect of extending the period within which such liens may be filed from 7 to 45 days, and, instead of this delay beginning from “the date of the act or obligation of indebtedness,” it was made to run from “the acceptance by the owner of the work,” in the sense above indicated.

With regard to the language of section 1 of said.act, and its purpose to make such liens prime prior mortgages, we think what we have said in regard to article 3274 of the Code is equally applicable, and that liens timely recorded, as required by section' 2, acquire a preference over such mortgages.

3, 4, and 5. Assignments Nos. 3, 4, and 5 have been covered by what has been said with respect to No. 2.

6. As to assignment No. 6, to the effect that the act violates article 32 of the Constitution of 1913, in that it has “more than one object and such object is not expressed in its title,” we are unable to agree with the contention of plaintiffs’ counsel. We think

that when the title declares its purpose to “provide for the creation, recognition and recordation” of such liens and privileges “and to enforce the payment” thereof, it has hut one end in view, and that is to protect those classes of persons by providing a higher form of security for the payment of their claims. We are also of the opinion that, inasmuch as the very object of creating a lien or privilege is to give it preference over other classes of debts, the use of the words “To provide for the creation, recognition and recordation * * * ,and to enforce the payment of said liens and privileges, and to repeal all laws in conflict herewith,” was sufficient to indicate a purpose to make them prime a prior existing mortgage.

7. As to the point that the lien and privilege in the case of the Long Leaf Lumber Company had to be reinscribéd within 12 months after its recordation' on July 9, 1920, notwithstanding suit had been brought thereon before the end of the year, such is not the requirement of section 6 of the act relied upon. The section declares that such privileges may be enforced by a civil action within one year from recordation, “and such right of action shall prescribe within one year from the date or recordation of the privilege * * * unless renewed in accordance with law.” What is meant is that the right of action will be lost if not commenced within one year from the first recordation, unless the inscription is renewed within that time, and not that the privilege itself shall expire; so that, when a suit is once brought, the requirement of the section has been met, and the prescription interrupted. The authorities cited by counsel holding that the failure to reinscribe a mortgage causes it to perempt are inapplicable, because the Code specifically requires the reinscription in order to preserve the mortgage itself, and not the right of action thereon. R. O. O. 3369.

We find that materials were furnished and work performed, and the claims of appellees were recorded as follows:

Date of Delivery

and Acceptance. Recorded.

Shreveport Long Leaf Dumber Co...............July 6, 1920 July 9, 1920

Central Lumber Company .....................May 1, 1920 Oot. 22, 1920

C. C. Hardeman Company .....................Aug. 8, 1920 Oct. 26, 1920

Builders Supply Company. June 16, 1920, Oct. 26, 1920 L. M. Rudy (work ceased) ...................T. ..Aug. 26, 1920 Nov. 2, 1920

Witt Lumber Company... June 12, 1920 Nov. 27, 1920 Shreveport Brick Company ......................Apr. 8, 1920 Dec. 12, 1920

Buckelew Hdw. Company ..................'...Aug. 7, 1920 Jan. 5, 1921

E. W. Hamiter...........Does not appearMay 20, 1921 United Trading Company.. July 2, 1920 July 2, 1921

It is thus seen that none of the liens were filed within the 45 days from the date of furnishing materials and performing of the labor, except that of Shreveport Long Leaf \Lumber Company, and hence, with this one exception, no lien was acquired which can prime the mortgage of plaintiffs. As to the claim of Rudy, the superintendent, he testifies that he ceased work on August 26th, and never returned, and his claim was not recorded until November 2d following. The work, as far as completed, had been accepted, for it is shown that tenants of the owner had commenced to move in before he stopped work.

For the reasons assigned, the judgments appealed from are amended by ranking the claims ■ of plaintiff against the proceeds of the property as superior to those of all other claimants except that of Shreveport Long Leaf Lumber Company-, and as thus amended, they are affirmed, at the costs of the appellees.