Oregon Lumber & Fuel Co. v. Nolan ( 1914 )

Mr. Justice Burnett

delivered the opinion of the court.

1. It is declared in Section 7416, L. O. L., thus:

“Every mechanic, artisan, machinist, builder, contractor, lumber merchant, * * and other person performing labor upon or furnishing material * * used in the construction, alteration, or repair, either in whole or in part, of any building, * * shall have a lien upon the same for the work or labor done * * or material furnished at the instance of the owner of the building or other improvement or his agent; and every contractor, subcontractor, architect, builder, or other person having charge of the construction, alteration, or repair in whole or in any part of any building or other improvement as aforesaid, shall be held to be ■agent of the owner for the purposes of this act.”

Sections 7417 and 7419, L. O. L., are here set out in full:

“The land upon which any building or other improvement as aforesaid shall be constructed, together with a convenient space about the same, or so much as may be required for the convenient use and occupation thereof (to be determined by the judgment of the Circuit Court at the time of the foreclosure of such lieu), shall also be subject to the liens created by this act, if, at the time the work was commenced or the materials for the same had been commenced to be furnished, the said land belonged to the person who caused said building or other improvement to be constructed, altered, or repaired; bat if such person owned less than a fee-simple estate in such land, then only his interest therein shall be subject to such lien; and in case such interest shall be a leasehold interest, and the holder thereof shall have forfeited his rights thereto, the purchaser of such building or improvements and leasehold term, or so much thereof as remains unexpired at any sale under the provisions of this act, shall be held to be the assignee of such leasehold term, and as such shall be entitled to pay the lessor all arrears of rent or other money and costs due under said lease, unless the lessor shall have regained possession of the said land and property, or obtained judgment for the possession thereof, prior to the commencement of the construction, alteration, or repair of the building or other improvement thereon; in which event, said purchaser shall have the right only to remove the building or other improvement, within thirty days after he shall have purchased the same; and the owner of the land shall receive the rent due him, payable out of the proceeds of the sale, according to the terms of the lease, down to the time of such removal”: Section 7417, L. O. L.

“Every building, or other improvement mentioned in Section 7416, constructed upon any lands with the knowledge of the owner or the person having or claiming any interest therein shall be held to have been constructed at the instance of such owner or person haAung or claiming any interest therein; and the interest owned or claimed shall be subject to any lien filed in accordance with the provisions of this act, unless such owner or person having or claiming an interest therein shall, within three days after he shall have obtained knowledge of the construction, alteration, or repair, give notice that he mil not be responsible for the same, by posting a notice in writing to that effect in some conspicuous place upon said land, or upon the building or other improvement situated thereon”: Section 7419, L. O. L.

As before stated, the principal defense of Nolan is based upon the effect to be given to his alleged posting of the notice on the premises denying responsibility for the improvement contemplated. We think the weight of the evidence is clearly in favor of his contention that he posted the notice at the time and place mentioned. He is supported in Ms allegation on that subject by the testimony of his brother, of the defendant Blanchard, and of at least two witnesses who are wholly disconnected with any interest in the case who saw the notice in place on the premises, and all that the defendants have in opposition is the testimony of sundry witnesses who were on the premises several weeks later and only state that at that time no notice was to be found.

In the view we take of the question involved, however, it is not material to inquire whether Nolan posted a notice or not. The terms of the contract between himself and Blanchard required the latter without any choice on his part to construct a building. Although this stipulation was coupled with a lease and an oj.>tion to purchase the premises, yet its legal effect is to make Blanchard a contractor for the erection of a building which, by the terms of the contract, was eventually to become the property of Nolan and to increase the value of his holdings. These conditions made Blanchard the statutory agent of Nolan within the scope of Section 7416, L. O. L., so that one furnishing material or labor at the instance of such an agent for the erection of a building would be entitled to a lien on the realty on which it was situated if Nolan owned the fee. Under such circumstances the law imposed upon Nolan’s property certain obligations to those who should furnish materials for the erection of the house at the instance of his statutory agent. Laborers and materialmen, covenanting with Blanchard either directly or through subcontractors, have rights in the premises arising by operation of law which Nolan and Blanchard cannot destroy by contract between themselves. Although each for himself could properly stipulate to waive the provisions of the statute in his own favor, yet without the consent of materialmen who are strangers to that contract, they cannot waive nor impair the rights which the law confers upon such claimants: Hume v. Seattle Dock Co., 68 Or. 477 (137 Pac. 752, 50 L. R. A. (N. S.) 153).

If Blanchard had been only a tenant of the premises, without any obligation on his part to erect a building, and under such circumstances had contracted for the erection of the structure, only his leasehold estate would have been primarily liable, under Section 7417, L. O. L., for the materials and labor furnished. Yet even then the fee owned by Nolan also would have been liable under Section 7419, if he knew of the work, unless he had given the notice mentioned therein, and this because there would then have been no contract to which Nolan was a party contemplating the compulsory erection of the building. This is in accordance with the principle, so often announced by this court, that to support a lien there must be some contractual relation, either directly or indirectly between the lien claimants and the holder of the realty interest sought to be charged. Here, however, Nolan himself has in unmistakable terms directly made an agreement with his contractor Blanchard, to build the house. He holds out Blanchard to the world as the person having charge of the construction of a building on Nolan’s land. He cannot repudiate any of the terms or conditions which the law itself visits upon such a convention for the benefit of persons named in the statute. The distinction between cases where improvements are at the option of a tenant or mere acquiescence of the landlord, entailing no right to a lien when proper notices are given, and the other class of cases where the improvement is compulsory on the part of the tenant making him a contractor with the landlord, with the consequence that liens may be claimed against the fee for materials or labor furnished, is clearly pointed out by Mr. Justice Dunbar in Stetson-Post Mill Co. v. Brown, 21 Wash. 619 (59 Pac. 507, 75 Am. St. Rep. 862). See, also, Hall v. Parker, 94 Pa. 109; Boyer v. Keller, 258 Ill. 106 (101 N. E. 237); Curtin-Clark Hdw. Co. v. Churchill, 126 Mo. App. 462 (104 S. W. 476); Western Lumber & Mill Co. v. Merchants’ Amusement Co., 13 Cal. App. 4 (108 Pac. 891); Arctic Lbr. Co. v. Borden, 211 Fed. 50 (127 C. C. A. 486).

In support of the contention that the agreement between Nolan and Blanchard is not a building contract, the defendant Nolan has cited the following authorities which we here consider:

Dierks & Son Lbr. Co. v. Morris, 170 Mo. App. 212 (156 S. W. 75), depends upon the Missouri statute which does not contain a provision like ours, making-out of the contractor a statutory agent of the owner. That element is entirely absent from the law of that state under which the decision was rendered, and the agency is there made to depend upon the agreement between the owner and his lessee. The following language of that opinion is significant:

“Now can it be said that merely by reason of the fact that a lessee covenants with a lessor to make certain repairs and improvements which will become the property of the lessor at the end of the term, this necessarily makes the lessee an agent of the lessor so as to bind the latter’s freehold interest with a lien for the materials used in the improvement? If so, then no matter what is the character and extent of the improvements, nor how strong the language of the lease denying to the lessee the authority to bind the lessor’s interest with a lien,'the latter will nevertheless be bound because the lien is a creature of the statute; and whenever the lessee, in contracting for improvements, acts as the ‘agent’ of the lessor, within the meaning of that word as used in the statute, the freehold is hound hy the lien regardless of the inhibitory terms of the lease.”

In Marty v. Hippodrome Amusement Co., 173 Mo. App. 707 (160 S. W. 26), it appears that the lessee intended, but was not bound to make, the contemplated improvements. This also was a Missouri case, and the court used this language:

“In order to hold the freehold it devolved on plaintiff to show that the lessor had constituted the lessee its agent to contract on its behalf for improvements of substantial and present benefit to the freehold. Such agency would be implied from stipulations in the lease which compelled the lessee to make certain specified improvements of apparent value to the freehold, and which provided that such improvements should pass to the lessor at the end of the term” — citing authorities.

In both these Missouri cases the law of agency is made to depend upon the agreement of the parties; but our statute, in Section 7416, L. O. L. has supplied this element of agency which is wanting in the laws of that state, and imputes it to anyone who is bound by the terms of his contract with the owner of the fee to erect a building. In Albaugh v. Litho-Marble Dec. Co., 14 App. D. C. 113, the matter of statutory agency is not involved. In Rothe v. Bellingham, 71 Ala. 55, and North Dakota Lbr. Co. v. Haney, 23 N. D. 504 (137 N. W. 411), the lessee was merely permitted, but was not bound, to make improvements. In Northwest Bridge Co. v. Tacoma Shipbuilding Co., 36 Wash. 333 (78 Pac. 996), the owner of the fee was the State of Washington, and did not contract in its agreement to sell, that any building should be erected. The statutory agency created by our code is not found in the New York statutes under which Cornell v. Barney, 94 N. Y. 394, was decided. Fisher v. McPhee, 24 Colo. App. 420 (135 Pac. 132), is a case from Colorado, and merely bolds that a tenant wbo is not bound to erect a building is not an agent for the landlord. Under our statute the principle seems to be that if the owner of tbe fee contracts with Ms tenant or would be purchaser, compelling the latter to erect a building, an agency is created as against the owner of the fee by force of the statute, with the result that one who furnishes material or labor at the instance of the agent is entitled to a lien on the fee for the labor or materials furnished. Such is the situation presented in this case, and the same is controlled by the provisions of Section 7416, L. O. L. We conclude that the court was right in holding the fee-simple estate of Nolan liable for materials and labor furnished for the erection of .the apartment house on his premises.

2. Some question is made about the accuracy of the description in the claims filed on behalf of the plaintiff and its assignor, chiefly on account of the beginning point mentioned in the metes and bounds. The lien notices fixed it at 50 feet north of the southeast corner of Manning’s Addition, while the answer of Nolan states that the house was built on land the description of which began 35 feet north of the southeast corner of Manning’s Addition, and he contends that 15 feet of the building rests upon land not included within the notice of lien. No attention was given to this issue at the hearing in the Circuit Court. The claims in question, however, contain the statement that the building is “ a three-story concrete apartment house fronting west on Ash Street, all of said property being situated in the City of Portland, county of Multnomah, State of Oregon.” And it is said of the tract itself that it is “inclosed by the east line of Ash Street on the west, Manning’s Addition on the north and south, and Mayor Grates’ Addition on the east,” so that, under the liberal construction given to lien notices, this is sufficient for identification of the property involved. Other contentions, technical and unimportant, are urged, but deeming them without merit, they will not be discussed.

The decree of the Circuit Court is affirmed.

Affirmed. Sustained on Behearing.

Mr. Chief Justice McBride, Mr. Justice Moore and Mr. Justice Bamset concur.