Dabney, Admr. v. Rose Brothers Co. ( 1933 )

This is a proceeding in error from the Court of Common Pleas of Hamilton county, wherein a decree was entered adjudging the priorities of certain lien claimants.

Charles R. Taylor filed suit in the Court of Common Pleas of Hamilton county to foreclose a mortgage, and plaintiff in error, Wendell P. Dabney, administrator, was substituted as plaintiff upon Taylor's death.

The property was sold under order of court free and clear of all liens and incumbrances, and the proceeds of the sale were paid into court. All questions of the validity and priority of liens were reserved for further determination. At a subsequent hearing these matters were determined, and in the matter of the mortgage of plaintiff in error were determined adversely to the claim of decedent.

An assignment of error is addressed to the matter of the reservation of the validity and priorities of liens, it being asserted by plaintiff in error that the court having determined the mortgage to be a valid and subsisting lien upon the premises sold such finding precludes a later consideration of any liens as prior to it.

It is perfectly obvious that the court properly permitted the property to go to sale for the benefit of all concerned, and took the necessary steps to defer the consideration of priorities and the validity of liens, providing that the same attached to the funds realized in the same order and to the same extent they would have been recognized against the property sold. We find no merit in this assignment.

The plaintiff in error asserts error in the allowance of the liens of two claimants based upon their failure to prove their legal authority to do business in Ohio. It is admitted by counsel for defendants in error that the trial commenced upon November 18, 1932, and that on that date plaintiff in error filed a reply denying all matters not admitted true in the petition. Certainly the right to do business was put in issue. The record showing no proof of this right requires a reversal for prejudicial error as to these claimants.

As to these claimants it is also asserted that their liens are invalid by reason of the fact that the lien affidavits were notarized by the general manager of such companies. The pertinent part of Section 8314, General Code, is as follows: "Such affidavit may be verified before any person authorized to administer oaths, whether attorney for the owner, lien claimant, or other party interested or not * * *."

It is stated for the plaintiff in error that this language is limited to extending the privileges of notarization to an attorney, and yet we are cited to Conroy Brothers, Inc., v. J.J.Duggan Brother, 17 Ohio App. 429, which holds that an affidavit provided for in Section 8324, General Code, taken before an attorney for a lien claimant, is void. This case would now be in conflict with the reasoning of Evans v. Lawyer,123 Ohio St. 62, 173 N.E. 735, which applies the enabling provisions of Section 8314 to the entire act. We find it unnecessary to go beyond the plain words used in Section 8314, General Code. The succeeding clauses to the words, such affidavit may be verified before any person authorized to administer oaths", are merely emphatic in including a certain class or classes of persons within the general provisions. They cannot extend the general inclusiveness of the phrase — they certainly do not limit it. Their only purpose is particular definition and emphasis. The affidavits were not void because they were sworn to before the general manager of the lien claimant, if the person acting as notary was such.

A further question was raised by the plaintiff in error involving the allowance of fees to the attorney for the lien claimant.

If the fund was exhausted by the lien claimants, so that the fee if not allowed would still not create a fund in which the holder of the mortgage or owner would participate, the plaintiff in error as junior claimant and the owner could not be prejudiced, as the fees would be paid out of funds in which the claimants alone were interested. If, however, one of these latter should object, the fee would necessarily be disallowed, as the fund was manifestly brought into court by the mortgagee. An objection to be valid, however, can naturally only be made by one having a participating interest in the fund.

The most serious defect in the proceedings noted by plaintiff in error is that no proof was offered showing a principal contract or contracts with the owner.

It is asserted for the defendants in error that in the opening statements these were admitted. This is strenuously denied by the plaintiff in error. We are cited by the defendants in error to the record, where it is claimed the court stated that these were "admitted". The record shows that a witness was asked if a contractor, designated as a principal contractor, had a contract with the owner. He answered: "No. He said" — and was interrupted there by the court saying: "Well, that is admitted in the case". A reading of the record does not disclose whether or not there was more than one principal contractor — nor does it disclose the terms, and the amounts involved in such contract or contracts, if such existed. The very essence of priority is involved here. If there was one main contract, then work commenced by any subcontractor would inure to the benefit of all subcontractors, materialmen, and the head contractor in determining priority as against a mortgage filed subsequently to the commencement of work by any one of these.

There is evidence that work was commenced by one subcontractor before the filing of the mortgage. If there were more than one principal contract, then only those covered by the contract under which work was commenced would profit by the priority gained.

Again, the total sum of the liens of contractors and materialmen cannot exceed the principal contract or contracts. The record is wholly silent as to the amount involved in these. In this matter the mortgage holder, considered by the court to be a junior lien claimant, is vitally interested, for the amount of the principal contract or contracts under which work was commenced prior to the filing of the mortgage might not equal the proceeds of the sale, in which case the mortgage holder would participate to the extent of such surplus, though junior to the lienholders.

For the reasons given, it is our conclusion that the case must be remanded to the Court of Common Pleas for a new trial upon the questions of the validity and priority of the liens involved.

What has been stated here may be taken as the law of the case as far as the same may be applicable to the alternative situations considered, if such develop.

The judgment of the Court of Common Pleas is reversed to the extent indicated, and the case is remanded for a new trial upon the issues mentioned.

Judgment reversed and cause remanded.

HAMILTON, P.J., and CUSHING, J., concur.