Merrigan v. English , 9 Mont. 113 ( 1889 )

Bach, J.

The tendency of land-owners to enter into'con tracts at a\figuré so low that the original contractor could make no .profit unless he refused to pay his employees, has led to the enactment of laws for the protection of wage earners. There are two systems generally adopted throughout the United States — one known as the New York sytem; the other as the Pennsylvania system. The former gives to the subcontractor a lien by-way of subrogation, as it is termed by the.text-writers, which is accomplished' by a notice given to the owner by the subcontractor, which notice specifies the probable value of the services to be performed, or of the materials to be furnished, and the owner is thereupon entitled to withhold from the contractor money due to the latter to such an amount as will meet the demand. These are the general features of the New York system,' and such was the system prevailing in /this Territory-prior to March, 1887, as will appear from an inspection of sections 820 to 824, inclusive, of the Revised Statutes. The other, or Pennsylvania system, gives a direct lien to the laborer or subcontractor, either by an agency created by the statute, or by an implied agency vested in the original contractor. An interesting discussion of this subject will be found in the very able opinion of the learned Chief Justice Beatty upon the petition forT’ehearing, in the case of Hunter v. Truckee Lodge, 14 Nev. 24-33, et seq. The case is one which bears directly upon all the points raised by the demurrer in this, action, and especially upon the most prominent distinction between the two systems. The distinction referred to is this: Under the-New York system the subcontractor cannot recover more than is due.from the owner to the contractor; that is to say, he is bound by the original contract; while under the other system the original contract, or payment to the original contractor, is no defense to a claim of a subcontractor.

In order to fully understand the lien law of this Territory in force at this time, and at the time this action was commenced, we must study the law prior to the Act of March, 1887, and the effect and purpose of that act. The old law will be found in sections 820 to 848 of the Revised Statutes of 1879. Section 820 gave to “every mechanic, builder, lumberman, artisan, workman, laborer, or other person who shall do or perform any work or labor upon, or furnish any material, machinery, or fixtures for, any building,” etc., a lien “upon such building,” etc., “to secure the payment of such work or labor done, or material, machinery, or fixtures furnished.” Sections 821 and 822 prescribe certain rules with which a subcontractor must comply in order to avail himself of the lien given to him by section 820; and they refer more particularly to a notice which the subcontractor was required to give to the builder before performing any labor or furnishing any material, and to the manner of filing the notice of lien, and the time within which such filing must be made. Section 823 gave the owner of the building the right to withhold from the contractor sufficient money to meet such claims of subcontractors as had been duly filed; and it made the owner the surety of the contractor to that extent.

Thus it will be seen the New York system, or the system generally known as that of “equitable subrogation,” was the law regulating the liens of mechanics in this Territory prior to the Act of March, 1887. Section 824' is not material to this discussion. It provided that the notices required by sections 821 and 822 might be served by the sheriff or constable. Section 825 contained the law regulating the filing of such notice of lien by any person other than a subcontractor. By the Act of March 9, 1887, section 820 was slightly amended, and as amended will be found in section 1370 of the Compiled Statutes. The amendment referred to is quite immaterial as far as this case is concerned. The same act amended section 821, and then repealed sections 821, 822, 823, and 824; which sections, it will be remembered, were those containing the regulations which applied specifically to subcontractors. Undoubtedly, it was rather inartistic to amend section 821, and then repeal it. The repeal of the old section was effected by the amendment thereof, because the amendment provided that “ section 821 shall read as follows,” etc., and inasmuch as section 821 was a law applying to a particular class, and 825 the rule applying generally, it would have been more logical to repeal 821 without any attempt to make it a general rule, and then so to amend section 825 that it might contain the general provision in terms agreeable to the legislative will. However, there is no difference in the result; for section 821 repealed by implication section 825 as far as that section conflicted with the new law, and the repeal to the extent indicated was accomplished by the Act of March, 1887, which in direct terms repealed all laws and parts of laws in conflict with the provisions of that act. Section 821 will be found in section 1371 of the Compiled Statutes, and section 825 will be found in section 1372 of the same volume. Returning to the law as it existed prior to the amendment of March, 1887, it will be observed that section 820 was intended to give, and did give, to every person performing work and labor, or furnishing materials, etc., a lien for the same. The words of the section are broad enough for that purpose. Sections 821 to 824 further prove it, for they provide what a subcontractor must do to “avail himself of the benefits of this chapter;” and section 845 provides that “ all persons .... shall be considered subcontractors .... except such as have contracts with the owner.” The lien, then, was given to subcontractors, as well as to contractors, by section 820, which was not materially changed by the Act of March, 1887; and that lien still exists, and is found in section 1370 of the Compiled Statutes. And the only effect of the amendment was to relieve the subcontractor of notifying the owner of his intention to furnish the material or labor for which he might thereafter claim alien; and this change was accomplished by the express repeal of those provisions contained in sections 821 to 824, Revised Statutes, both inclusive. The only change made, therefore, by the amendments contained in the Act of March, 1887, was the rejection of the New York system, and the substitution of the Pennsylvania system, or system of direct liens in favor of subcontractors. The Act of March, 1887, contained one more provision of interest, which will be found in section 1387 of the Compiled Statutes, and by force of which “every contractor, architect, subcontractor, .... or other person having charge of the construction, repair, or alteration, in whole or in part, of the aforesaid building, .... shall be deemed the agent of such owner or proprietor.” In the extra session of the legislature in 1887, on September 14th of that year, this power of agency was repealed, owing, no doubt, to the fact that contractors had taken advantage of the law, and had sublet contracts at absurdly high figures under this power of agency. The repeal of section 1387, however, does not repeal the lien given by section 1370. The lien provided for is a general lien, given to all mentioned in the section. It is the same lien as was provided in section 820, which, as we have seen, included subcontractors as well as contractors; and the only change is this, that instead of a direct lien for the contract price, the subcontractor now has a direct lien for the reasonable-value of his services.

We are of the opinion that the laws of this Territory do give to the subcontractor a lien. But it is urged that the law so construed is unconstitutional, more particularly so because the contractor is no longer the agent of the owner since the repeal of that section which made him the agent. There is very little difference between an agency created by a statute and an implied agency. The owner of real estate, who makes a contract with another for the erection of a building thereon, knows that the contractor cannot do, and does not contemplate doing, the work himself. He knows that others will help to perform the contract. He knows the law which gives to such workmen a lien for their services; and he therefore makes the contract with the full knowledge of the implied agency, and of his liability. He obtains the benefit of the labor, because the improvements increase the value of his land; and by exacting a proper bond from the principal contractor he can fully protect himself from double liability. "We are of the opinion that the law is neither unconstitutional nor unjust. Whether or not such a law is wise, is a question for the legislature. It may be, as was urged in argument, that such a law tends to discourage building, and that it deprives the poor laborer from accepting contracts because of liis inability to furnish such bonds as may be required by the land-owner; but these are matters for legislative wisdom to consider, not for judicial interpretation. Such a law has been sustained as constitutional, either directly or indirectly, in the following cases: Parker v. Bell, 7 Gray, 429; Laird v. Moonan, 32 Minn. 358; Spofford v. True, 33 Me. 283; Atwood v. Williams, 40 Me. 409; Colter v. Frese, 45 Ind. 96-103; White v. Miller, 18 Pa. St. 52, in which case Chief Justice Gibson delivered the opinion of the court.

A few extracts from the authorities will show the theory upon which such a law is sustained. “ The constitutional validity of statutes securing liens to subcontractors, and others furnishing labor or materials, irrespective of the state of the account between the owner and the contractor, is well established, and it is established upon the ground that such statutes annex the lien as an incident to the contract of the owner with the contractor; such contract being the evidence of the authority of the contractor to charge the owner’s property with liabilities incurred by him in performing his contract.” (2 Jones on Liens, § 1304.) “It subjects the property to the payment of debts which the owner has directly or indirectly caused or authorized in its improvement, under a knowledge that the property is so charged. In principle, it in no respect differs from the lien at common law in favor of mechanics who have bestowed labor upon the article to which it attaches. The statute provides for its existence in cases where the possession is not supposed to be in the one to be benefited by the lien.” (Tenney, J., in Spofford v. True, 33 Me. 291, 292.) These citations and authorities dispose of another point raised by the appellants, who claim that the rights of the plaintiff are limited by the rights of the contractor. The authorities cited by the appellants are cases under the New York system, but do not apply to a law where the lien of the subcontractor is a direct lien. In addition to the authorities already cited, see Hunter v. Truckee Lodge, 14 Nev. 24, and more particularly in the opinion upon a petition for a rehearing, page 33.

We are now to consider the claim of the appellants that the answers raised issues of fact. The denial of indebtedness was a conclusion of law. (See Higgins v. Germaine, 1 Mont. 230; Power v. Gum, 6 Mont. 5.) The denial that the plaintiff had any lien was a conclusion of law. It was raised by the demurrer in the court below, and the legality of the lien has been sustained in this opinion. The facts upon which plaintiff bases his claim of lien were not denied. The denial that Crawford was the agent of plaintiff was not material. Such agency was not alleged in the complaint, and under our system of liens was not a necessary allegation. The complaint did allege the contract between Crawford and the defendant English; the subcontract between Crawford and the plaintiff; the performance of the subcontract by the plaintiff; the reasonable value of the services and materials furnished, which value must control (see 2 Jones on Liens, § 1309) the non-payment of a portion of the sum thus due; and the filing of the lien. These are the facts upon which the plaintiff’s lien is based, and the answer does not deny any one of them.

The next point is the claim of homestead exemption. Section 322, page 147, Compiled Statutes, contains the law exempting homesteads from forced sale “ on execution or any other final process from a court.” Section 323 provides that such exemption “ shall not affect any laborer’s or mechanic’s lieu.” It is claimed by the appellant — First, that plaintiff is not a laborer or mechanic ; second, that, even in case he is to be considered a laborer or mechanic, so much of his lien as is for materials cannot be made the subject of a lien upon a homestead. No one can doubt but that a plasterer is a laborer; and scarcely one will hesitate to admit that, in common parlance, a plasterer is a skilled laborer, and that a skilled laborer is a mechanic. Such is the common understanding of the words. The technical definition will lead to the same conclusion. Webster dofiues a mechanic to be “a workman or laborer other than agricultural; . . . . one skilled or employed in shaping and uniting materials, as wood, metal, etc., into any kind of structure, machine, or other object, requiring the use of tools or instruments.” The case of Parker v. Bell, 7 Gray, 429, is directly in point. The Massachusetts law gave a lien to “any person who shall actually perform labor.” The plaintiffs were plasterers. The complaint so alleged, and contained the statement that in the capacity of plasterers they “actually performed labor.” The learned judge says: “If these allegations are true, they [the plaintiffs] become entitled to a lien upon the house; .... for they thus show themselves to have conformed to all the terms of the statute by force of which such a claim is to be established.” Iu this case the complaint alleges that the plaintiff “did and performed said work and labor in plastering said building and the setting of said mantel.” This allegation, being admitted, is by itself sufficient to sustain the plaintiff’s claim that as a laborer he is entitled to a lien. But it is urged as the second point under this question, that the claim is in part for labor, and in part for material, and that the claim for material is not an exception to the homestead exemption. Appellants cite as conclusive authority, Richards v. Shear, 70 Cal. 187, and Walsh v. McMenomy, 74 Cal. 356, claiming that we are bound by those cases. We think not, because it has been decided in this court that the homestead law of this Territory was not taken from California (see Lindley v. Davis, 7 Mont. 206), and because those cases had not been decided when the homestead law was adopted, and because they are not in point. In each of the cases cited the court treated the lien as a lien for material alone. In the case first- cited the lien, as a matter of fact, was for material only. We do not hold that a material-man has such a lien as will be valid against a homestead. That is not the question before us. All that we are called upon to decide is the extent of the lien of a mechanic or laborer; and we think that the terms of section 1370 give to a laborer or mechanic a lien for the materials furnished by him, as well as for his labor, especially when the material is the object of the labor for which he claims his lien. In fact, in this case, it would be impossible to separate the value of the labor from, the value of the material; for the plaster, as well as the mantel, was the result of the plaintiff’s labor, the value of each was almost entirely the result of that labor, and the material composing each was comparatively valueless until it had received the impress of his labor.

The remaining point is the claim of the defendant corporation that plaintiff’s lien upon the land is subsequent to the defendant’s mortgage. It is admitted that the mortgage was filed after Crawford commenced work under the contract to erect the building, and before the plaintiff commenced the work for which the lien is filed. The plaintiff claims that his lien is valid as against any mortgage filed since Crawford commenced his work. This is denied by the appellant. Section 1374 provides that the liens mentioned in section 1370 “shall be prior to and have precedence over any mortgage .... made subsequent to the commencement of work on any contract for the erection of such building.” In California and other States the statutes on this subject read thus: “Subsequent to the commencement of the work.” It is apparent that in such States the lien is not prior to those mortgages which are recorded prior to the commencement of the very work for which the lien is filed. But those authorities are not in point. Davis v. Bilsland, 18 Wall. 659, is a case appealed from ibis court. The work upon the building was commenced May 1, 1869, the mortgage was filed on June 9, 1869, and the work for which the lien was filed was commenced in July, 1869. It was held that the lien dated from. May 1st, the date of the commencement of the building, and was prior to the mortgage. The statute in force at that time differs slightly from section 1374 above quoted. The former reads thus: “Subsequent to the commencement of said building.* But there is no difference in the meaning. When Crawford commenced to erect the building, work was commenced on a. contract for the erection of the building; in other words, that was “the commencement of the building.” Such a construction of the statute as is stated in the case last cited is not unjust. The mortgagee knew the law. He knew, or could have known, that work had been commenced on a contract for the erection of a building. He knew that persons other than the original contractor would perform work and labor which would improve the property upon which, as security, he advanced the money. He knew of the lien which such subcontractor could acquire. To hold otherwise would be to destroy the very purpose of this law, which was to give to the subcontractor a direct lien for the value of his labor; because it is evident, if the contrary was held, such liens would be made worse than a farce by so-called blanket mortgages filed the day after the improvement was commenced.

We find no error in the record. The judgment is affirmed with costs.

De Wolfe, J., and Liddell, J., concur.