Henry v. Hinds , 1885 Mo. App. LEXIS 369 ( 1885 )

Opinion by

Philips, P. J.

1. It is insisted by appellant (defendant below) that the court erred in refusing the sixth instruction asked by her. This instruction announced a correct proposition of law, and there was evidence to support it. Livermore v. Wright, 33 Mo. 31; Phillips on Mechanics? Liens, sections 822 and 324. Bnt the difficulty in defendant’s way is that she has not, in my opinion, sufficiently raised this issue by her answer. Instructions must be framed with regard to the issues made in the pleading. Benson v. R. R. Co., 78 Mo. 504. The petition, in conformity with the statutory requirement in such actions, distinctly alleged that the demand became due on the second day of March, 1882, and that within four months thereafter, to-wit, on the eleventh day of May, 1882, they filed the account, etc., for the lien. ' This was a material averment under the statute. Section 3179, Revised Statutes. The statute further provides (section 3545) that, “Every material allegation of the petition not controverted by the answer, shall, for the purposes of the action, be taken as true.”

We fail to find in the answer any denial of this allegation. , Even as to the matters sought to be denied, the plea is bad, as it only avers the want of knowledge on the part of the defendant. Revely v. Skinner, 33 Mo. 98; Watson v. Hawkins, 60 Mo. 550.

It is not correct to say that the matter averred by the petition is a mere conclusion of law. It alleges a distinct fact, that the demand became due on a certain named day, and then sets out the items of the account, which show primes fade a running account, the last date of the items corresponding with the averment of the petition. As the defendant did not deny this allegation, nor plead any new fact in contradiction of it, the allegation stood as if the answer had admitted in express terms, that the demand did become due on that day; which would have been equivalent to saying it did not accrue on any other day.

2. The important question presented by this appeal is, that portion of the defence and proof, which pleaded and established, that under and pursuant to defendant’s contract with the contractor, Hinds, she fully paid him the whole contract price for the building, every dollar of which was applied to the liquidation of claims for work and materials thereabouts; that she did so in good faith, without any knowledge whatever of the existence of plaintiffs’ demand.

This raises a question of great practical importance, and one that ought to be definitely settled, so far as a direct decision can determine it. Counsel for respondent contends that this question was passed upon by the supreme court of this state in Hilliker v. Francis 65 (Mo. 598).

If that be so, and the decision is the latest holding of the court on the subject, we should feel bound by it. But a careful examination of the case satisfies my mind that this question, in its broad and true. significance, was neither in the mind of counsel who argued the case, nor of the learned judge who delivered the opinion. The principal questions at issue there were, whether the proper parties were in court; the settlement interposed as a defence by defendants ; the right of the defendant bank to take an appeal, and sufficiency of the account filed as the basis for the lien.

The phraseology of the instruction numbered four, and the language of Judge Henry in adverting casually to it, plainly indicate that it was intended merely to bear on the question, as to whether the sub-contractor could recover the contract price between the owner and the contractor, or the reasonable value of the materials. So Judge Henry says, as the instruction did not assert that the bank is liable to plaintiff for the price agreed upon by the contractors, without regard to the actual value, and there was no evidence to show that the work, etc., were worth less than the contract price, and the question discussed by counsel is not presented by the instruction, it is not objectionable. This is the whole of it. It would be quite unsatisfactory to regard such a decision as disposing of so grave a question. No such issue in fact was presented by the record.

The first section of the Mechanic’s Lien Law (section 3172 Revised Statutes), gives to every mechanic, or other person, who shall do any work upon, or furnish any material for any building, etc., under or by virtue of any contract with the owner or his agent, contractor or subcontractor, a lien upon such building.

It must be admitted that this language is quite broad. But it should receive such construction as, while upholding its true object and preserving its spirit, yet, would not allow it to become an intolerable oppression, or to impinge upon deep rooted principles of universal justice, or to strike down the inviolability of property rights, against the consent of the owner. No court has as yet exhibited the temerity to assert that the contractor, himself, could enforce a lien for one dollar’s worth of work or material beyond his contract price. By the express provision of the statute, his right to the lien depends and rests upon the existence of a contract between him and the property owner. That his sub-contractor, who never saw nor communicated with the owner, can occupy in this respect a better position than the principal contractor, must strike the judicial mind as violative of every principle of recognized law and every dictate of justice. Such a right cannot stand on the doctrine of principal and agency. Deardorff v. Everhartt, 74 Mo. 37. He who deals with a special agent must take notice of the extent of his authority and the limitations upon his office.

The sub-contractor is, sometimes, designated as a quasi agent. How the quasi agent can have a wider range of powers than the full agent is not apparent. It is to make the prefix greater than that which it qualifies. The only rational basis for the legislation giving the subcontractor a lien against the property owner, is the principle of substitution. By which, it would seem, the party substituted, by operation of law, could occupy no better situation than he for whom he is substituted.

The statute, without the aid or assent of the owner, creates a privity between a sub-contractor and contractor. So it is held, and properly, that the sub-contractor is in law presumed to have notice of the terms of the contract between the owner and the contractor. Stewart v. Wright, 52 Iowa 335; Garnett v. Berry, 3 Mo. App. 205; Scott v. Cook, 8 Mo. App. 193; Jensen v. Brown, 2 Col. 697. “ The material man, or sub-contractor, deriving all his claims from the original contract, must look to its terms for the extent and limits of his capacity to fasten alien, upon the owner’s property.” Garnett v. Berry, supra.

‘ ‘All such persons are presumed to have notice of the existence of such contract, a general knowledge of its terms, and the rights and obligations of' the parties thereto, and to have taken sub-contractor’s contributed labor and furnished materials, in strict subordination to such terms, relative rights and obligations, in respect to the amount which the owner may be required to pay under his contract.” Jensen v. Brown, supra.

So it was held in Bowen v. Aubry, et al. (22 Cal. 566), that where the contract between the owner and contractor for the erection of a building, stipulated that the contractor would not encumber, nor suffer to be encumbered, the said building or lot, by any mechanic’s lien, a subcontractor was held to be affected with notice of the provisions of said contract, and that he was thereby precluded from acquiring a mechanic’s lien upon the building for the work done by him.

It is further held, that the mere fact of knowledge of the existence of the contract in such a case, is sufficient to put the sub-contractor upon inquiry, and he is to. be considered as having notice of the contents and stipulations of contract. “And the owner of the property cannot be held liable or bound to any extent beyond the terms of the original contract. Any other rule would place the owner and his property completely at the mercy of the contractor; would give the contractor power without any authority whatever, to make contracts binding the owner and his property. The owner cannot be held liable upon the contract between the original contractor and sub-contractor, as there is no privity of contract between them.”

Equally well settled is it, that, if the sub-contractor furnishes the material upon the sole credit of the contractor, he would not be entitled to any lien upon the building. Phillips on Mechanics’ Liens, sect. 116; Chapin v. Peran, 30 Conn. 461; Clarke v. Hall, 10 Kans. 40 ; Presbyterian Church v. Allison, 10 Pa. 413; Prescott v. Maxwell, 48 Ill. 82.

It must, therefore, stand to reason, that the very fact that the sub-contractor, as in the case at bar, claims that he did not give the credit solely to the contractor, but looked to the building for his security, is an admission that he knew of the contract relation between the owner and contractor. It is not too much then to say, that common prudence and good faith would require of him that he should inform himself of the dealings between the parties to the contract, and advise the owner of the property that he was furnishing material upon the faith of the property. The St. Louis court of appeals, in the cases supra, hold the sub-contractor to this knowledge, and decide that he cannot bind the property of the owner for a greater sum tbn.ri the contract price between him and the contractor. “ Were it otherwise,” says Lewis, J., “a man might contract for the budding of a house at five thousand dollars, and afterwards find liens for ten thousand dollars' established against it— more, perhaps, than the value of lot and building together. This would, in effect, be transferring to one man the property of another without his consent, directly or indirectly secured. Such a result would be repugnant to the fundamental principles of civil government.”

It is of supreme importance that a stable rule should exist on this subject, common to all the appellate courts of the state. It is no answer to all this to say, that the owner is not injured where more material or work goes into his building than he contracted for, as he gets the benefit of the improvement in the enhanced value of his property. To my mind there is one irrefutable answer to this suggestion: The dominion of the citizen over his private property should be held supreme. It is this sense that makes him independent and self-assertive. It is the rich soil in which a free government strikes deep its roots. For its protection society exists. For its maintenance laws should be made and courts established. Private property cannot be taken for private use against the consent of the owner, with or without compensation. No man has the right to go to the citizen, unbidden, and say: ‘ ‘ I will confer a benefit on you by improving your property and enhancing its value, but you must pay me for the office, or I will take your property away from you.” The owner may be able and willing to have erected on his lot of ground a house worth five thousand dollars, but if one costing ten thousand dollars be placed there, he is unable to pay for it. If a lien be enforced against it for the ten thousand dollars, he may lose his house and .the lot, and thus be made homeless.

Rothwick, J., in Stewart v. Wright, supra, with much reason, questioned the power of the legislature to.require that the citizen should be liable to pay for his building twice, by paying off the claims of sub-contractors who assert liens after he has paid the contract price to the contractor; in accordance with his bond. In the above case the court hold that the owner, who, in good faith, without notice of any outstanding claims, pays off the contractor according to the terms of the contract, cannot have his property subjected thereafter to the sub-contractor’s lien. The court say: “Any other rule, followed to its logical conclusion, would effectually prevent a person from complying with the contract, which all the world must admit, he has the right to make and perform.”

In McAlpin v. Duncan (16 Cal. 126), under a statute differing in no material respect from ours, the court say :

“If it were designed to give to the sub-contractor a lien upon the property of the owner for the entire amount of the sub-contract, without any regard to the amount of the principal contract, a very curious anomaly would exist and the whole property of the owner might be placed at the discretion of the contractor to be encumbered by him as he chose. We think all that can be gathered from this act is, that sub-contractors have a lien upon the property to the extent of the contract price of the principal contractor; these persons must give notice of their claims to the owner, or the mere existence of such claims will not prevent the owner from paying the contractor, and thereby discharging himself from the debt,. Unless this view is correct the grossest absurdities appear.

“We have in the first place, a valid contract, with nothing appearing against it, which yet can be enforced, a clear right of action on the part of the contractor, with no defence by the defendant, and yet which cannot be enforced ; or, which the plaintiff may enforce at law, and yet, if the defendant pays the money, with or without suit, he must pay it again. Innumerable liens must be created without the knowledge of the owner, for which he might be held liable, while the owner could never pay anything until after long delays, whatever the terms of the contract, or the contractors necessity for money, unless payment were made at the expense or at the risk of the payer.

“These sub-contractors have only to notify their claims to the owner in order to secure them. •

“If they, by their own laches, suffer the owner to pay over the money according to the terms of his contract, they ought not to complain, for it was by their own neglect of a very simple duty that the loss accrued; and it would be unjust to make the owner pay the second time because of that neglect.”

The same doctrine is re-asserted in Renton v. Conley (49 Cal. 185.) It is also maintained by the supreme court of Colorado in Jensen et al. v. Brown, supra.

So in Greenway v. Turner (4 Md. 296), it is held that the party furnishing material to the builder is bound to see that he is dealing with a person who is an actual contractor at the time the materials are furnished." The owner is not required to give public notice through the papers of the termination of his contract with the builder, nor personal notice to the sub-contractor, in order to protect himself against the acts of the builder.

In some of the states, as in Illinois (67 Ill. 467), the statutes prescribe that the sub-contractor has twenty days after completion of the work, etc., in which to give the owner notice of his claim. In such case, of course, if the owner paid the contractor before the expiration of the twenty days, he would do so at his own.peril. In some other states it is provided by statute that the contractor cannot maintain action against the owner until after the time limited for giving the notice has expired.

But we have no such provisions in our statute. The sub-contractor is only required to give the owner ten days’ notice before filing his account. While, perhaps, such notice might operate, sub specie, as an equitable garnishment of the funds in the hands of the owner, its main object, I apprehend, is to afford the owner an opportunity to pay the sub-contractor’s debt before his property is libeled by the filing of the lien.

The conclusion reached, and what I hold, under the state of facts disclosed by this record, is, that if the defendant paid the contractor, Hinds, in full the contract price, in good faith, without knowledge of the plaintiffs’ demand, and that the money so paid went to the satisfaction of claims for work done and materials furnished on the building, it is, in legal effect, the same as if the defendant had paid the contract money directly for the work and materials to the subordinates, and that her property cannot be subjected to the plaintiffs’ demand for the excess.

It follows that the judgment of the circuit court must be reversed, and the cause remanded for further proceedings in conformity with this opinion.

All concur.