Williamson v. Hotel Melrose , 110 S.C. 1 ( 1918 )

March 30, 1918. The opinion of the Court was delivered by Appeal from a decree of the Circuit Court, made in an action to foreclose a mortgage on real estate, to which lienees for labor and material are parties defendant. The prime issue before the Court is one of priority betwixt the mortgage lien of the plaintiff for money loaned to erect the house and statutory liens of the defendants for labor performed or furnished and for material furnished and used towards the same end. The Circuit Court concluded that the lien for labor and material was first in right, and that is the chief issue to be decided. The record makes some other minor issues, and they will be hereinafter stated and decided. The exceptions make the questions we shall decide, but they will not be considered in detail. They should be reported.

The prime issue above stated involves largely the application of two sections of the Code of Laws to the uncontested facts of the case. They are sections 4113 and 3542. So to speak, the statute must be laid down on the facts to ascertain how the one conforms to the other.

The plaintiff's mortgage debt of $35,000 was created July 1, 1914. On that day much of the material for which some of the defendants claim a lien had already been furnished, and much of the labor for which some of the defendants claim a lien had been performed and furnished. But "statements" of material furnished and labor done were only made out and delivered to the register for record after July 1, 1914.

Lord Westbury declared long ago that "there is not a more fruitful source of error in law than the inaccuracy of language." It is so in the instant case; the language of two statutes and the amendments to them was so inapt to express a clear intention as to give rise to the present issue. The statutes are first, that which provides a lien on buildings and lands for parties furnishing labor and material thereon (14 Stats., p. 220 [1869]; section 4113, et seq., Code of Laws); and, second, the statute to provide an uniform registry law for all deeds and other instruments in writing required to be recorded (16 Stats., p. 92 [1876]; section 3542, et seq., Code of Laws). For brevity and convenience we shall refer to the first as the lien statute and to the second as the registry statute.

As first enacted in 1869, the lien statute was confined strictly to the subject of its title — a lien on buildings and lands for labor and material furnished thereon. Historically, a half century before that the legislature had made a like provision by statute. 6 Stat. 32.

It is plain that the lien statute of 1869 gave a lien to "any person to whom a debt is due for labor performed * * * or for materials furnished and actually used * * * by virtue of an agreement," etc. (Italics supplied.)

There is no need for any construction of or any emphasis upon the word "agreement;" for "it is difficult to understand how a lien can be created unless there be some debt to be secured by it, and to create a debt there must be some contract (agreement), either express or implied." Geddesv. Bowden, 19 S.C. 5.

It may, therefore, be assumed, as matter of course, as between the furnisher and the landowner dealing directly with each other, that there can be no lien except there shall first be a contract betwixt him who furnishes and him who receives. So much assumed then, the statute in such a case plainly and by the express words of it, as betwixt the furnisher and furnishee, gives a lien on a lot and building to the person who furnishes labor or material thereon. The instant the labor or material is furnished, that instant the lien is created betwixt the two parties to the transaction.Geddes v. Bowden, 19 S.C. 5; Drewery v. Amusement Co.,87 S.C. 448, 69 S.E. 879, 1094.

The plaintiffs, then, had a confessed lien, and the defendants also had a lien. In the absence of a registry statute, that lien which was first in time would of course be first in right. So reference must now be had to the registry statute as the arbiter of the parties.

The two mentioned statutes at the enactment of each of them moved along parallel lines, to accomplish distinct and differing ends. The lien statute made no sufficient provision for registry to give notice to other persons, nor did any other statute at that time do so. Those parts of the lien statute which provided for filing in the clerk's office a "statement" of the amount due the lienee (section 5, act 1869, 14 Stats. 220, and section 4117, Code of Laws) were on their face intended for part of a procedure to enforce the lien and for no other purpose.

So much of the lien statute (section 4115) as declared that such lien shall not prevail against a mortgage made and recorded prior to the date of the statute lien was intended to protect mortgages already executed and recorded from a possible inference that the statutory lien should take rank against every incumbrance. If that section undertakes to set out a general rule of notice, it is a very insufficient rule and has no relevancy to the facts of the instant controversy.

When the statute of 1869 came to be codified in 1882, the legislature inserted at the end of section 5 the proviso found at the end of section 2354, General Stats. 1882. For convenience we shall refer to that as the amendment of the year 1882. That was the first step towards ingrafting on the lien statute an incongruous provision relevant only to registry statutes. Instead of putting this patch on a garment of like character, which was the registry statute, the legislature put it on a garment of diverse character, which was the lien statute. By amendment of the year 1882 the "statement" had to be delivered to the clerk, and then be recorded within 40 days thereafter, to affect the rights of creditors arising subsequent to the event the statement evidenced. In 1884 the legislature struck out the amendment of the year 1882, and inserted in lieu thereof another amendment, which we shall refer to as the amendment of the year 1884. Let the amendment of the years 1882 and 1884 be reported.

Section 1776 of the Gen. Stats. of the year 1882, referred to in the amendment of the year 1884, is section 3542 of the registry statute of the Code of 1912. The amendment of the year 1884, therefore, instead of prescribing in the lien statute a particular rule of notice, as had the amendment of the year 1882, referred the reader to the registry statute to ascertain rules of notice. The amendment of the year 1884 did not declare what should be the effect of a "delivery" of the "statement" to the register; it merely declared that such "delivery to the register for filing * * * shall constitute the delivery contemplated" in the registry statute.

So the inquiry is, What "delivery is contemplated" by the registry statute? Irrelevant words omitted, that statute declares: (1) All statutory liens on buildings and lands, for material or labor furnished on them, delivered or executed on or after January 1, 1877, (2) shall be valid, so as to affect, from the time of such delivery or execution, the right of subsequent creditors * * * for valuable consideration without notice, (3) only when recorded within ten days from the time of such delivery or execution in the office of the register. Section 3542, Code of Laws.

The statute meant, of course, all evidences of statutory liens, because only such can be delivered and filed and recorded. By the amendment of the year 1882 these evidences were required to be recorded only within 40 days after delivery to the register; but by the registry statute such evidence must be recorded within 10 days from the time of its delivery — that is to say, practically on delivery. The office of the registry statute was, therefore, from the circumstances of the case, to make priorities depend on notice, actual or constructive, and, therefore, for the purpose of constructive notice, to make the recorded statement the evidence of the statute lien.

The registry statute, then, by necessary inference, declares that the statutory lien, good betwixt the contracting parties before any "statement" of it is made in writing, shall not affect mortgage liens acquired by third persons (without notice and for valuable consideration) subsequent to the statutory liens, unless the evidences of the statutory liens had been reduced to a "statement" and recorded before the mortgage liens took effect. The statutory lienee, with no recorded statement, is thus in like plight as a mortgagee who, though his unrecorded lien shall be valid against the mortgagor, yet it shall not be good against another mortgagee of later date, who had no notice of the unrecorded mortgage. The testimony leaves no room to suggest that the plaintiff had actual notice of the statutory liens.

The appellants cite section 3543 of the Code, and suggest that such section requires that actual notice shall be deemed sufficient to supply constructive notice, only when such actual notice is of the "stated" statutory lien instrument itself, and they say there was no such actual notice. The respondents suggest, in answer, that their contract was not "required by law to be recorded," and, therefore, the cited section has no reference to them. But a "statement" of the statutory lien was required to be recorded, and, therefore, in writing, for purposes of notice. We, however, are of the opinion that the cited section has no relevancy to the case, for the statutory lienees were not "in possession of the real property" in issue.

Attention was called by the respondents to a paragraph in plaintiff's instrument of mortgage which reads thus: "The mortgagor further covenants and agrees that it will not create or suffer any mechanics', laborers', or other similar liens to be created upon said premises whereby the lien of this indenture might or could be impaired until the notes hereby secured, with all accrued interest thereon, shall have been fully paid and satisfied."

And the suggestion was made by the respondents that the mortgage creditors thereby gave evidence that they realized the peril of these statutory liens. We think the paragraph was the child of overcaution alone. Besides that, the mortgagors could not "create" a statutory lien, nor could they prevent the creation of such; the statute gives the lien when others than the mortgagee furnish labor or material on the premises.

The construction of our statutes does not depend upon what other Courts have concluded about the statutes of other States; and we have, therefore, not considered those matters. We are altogether satisfied that the Circuit Court has not announced the law of the case, and its judgment thereabout is reversed. The mortgage lien of the plaintiff is prior in right to those liens of the defendants.

It is possible that this conclusion renders academic the other issues which were argued, as the property may not bring more than the mortgage debt. Notwithstanding that reflection, we shall decide the issues made about the right of Witcover, the "architect," and Lawton, the "contractor," to claim a lien at all. The defendant, Witcover, furnished the plans for the building, and supervised the construction, and the defendant, Lawton, furnished oversight with respect to the purchase of material and the employment of laborers. For this service they claim such a lien as the statute prescribes. It is elementary that statutory liens may not be extended by Courts to include the claims of persons not specified by the statute. He who sets up such a lien must bring himself fairly within the expressed intention of the lawmakers. The statute, then, is arbiter of the issue. On this issue the Court decided with the two named defendants, and the mortgage creditors have appealed. The hotel company has not contested the judgment of the Court.

The appellants say the lien is given only to a person who labors, and the architect and contractor did not labor. If they did not labor, what word will characterize the service they furnished? When the architect idealized the structure and put it upon paper, what was his effort if not labor? When the Master sent out "other seventy" to do his work, he called them laborers. But a critical examination of the words of the statute reveals that it gives the lien to any person to whom a debt is due for labor performed or furnished. The word "furnished" is not synonymous with performed. One person may perform labor with his trowel; another may furnish labor with his mind. It is also manifest from the statute that the lawmakers did not have in mind to protect only the person who works with his hands; the statute gives a like lien to the company which supplies marble mantels and tile floors and mahogany newels to the building. We think the case is not concluded by Isbell v. Dunlap,17 S.C. 581. The statute there construed was expressed in language which limited the lien to those "who assist in making the crop" for a price. And it was enacted in the historical setting that in this State crops are tilled by only one class of persons. The decisions in other jurisdictions sustain the views of both the appellants and respondents. On this issue the judgment of the Circuit Court is affirmed.

Some question was made by the plaintiffs and by Mr. Lawton about how much debt Mr. Lawton's lien secured. He claimed $901.45; the Court allowed a prior and preferred lien for $267.15, and a lien second to the mortgages for $498.68, or a total lien debt of $765.83, and disallowed any lien for $135.62. The plaintiffs have not seriously contested the allowance of a lien; the main attack was against its priority.

The Court held that an item of $135.62 was not secured by lien because it was not expended for material or for labor, but for railroad mileage, for the rental of an engine, and for freight. The judgment of the Court thereabout is affirmed.

Our opinion, therefore, is that on the main issue the decree of the Circuit Court is reversed, and on the subsidiary issue the decree is affirmed.

MESSRS. JUSTICES HYDRICK and WATTS concur.

MR. CHIEF JUSTICE GARY. I dissent for the reasons stated in the decree of the Circuit Court.

MR. JUSTICE FRASER disqualified and did not sit.