American Type Founders Co. v. Nichols , 110 Tex. 4 ( 1919 )

Question certified from the Court of Civil Appeals of the Second Supreme Judicial District of Texas, in an appeal from the County Court of Wise County.

The Certificate of the Honorable Court of Civil Appeals is as follows:

"TO THE HONORABLE SUPREME COURT OF TEXAS. The above styled suit was instituted in the Justice's Court of Wise County by J.M. Nichols against R.B. Walker and the American Type Founders Company to recover the sum of one hundred and eleven dollars and fifteen cents with a foreclosure of lien claimed by plaintiff on one Chandler Price Job Printing Press and one Fairbanks Morse gasoline engine of the alleged value of one hundred and ninety dollars. The indebtedness claimed was for labor performed by the plaintiff for the defendant R.B. Walker as a printer and compositor and the printing press and engine were used by the plaintiff in the performance of such services. A judgment was rendered in the Justice Court in favor of the plaintiff for one hundred and six dollars and fifty cents with a foreclosure of lien claimed by him, from which judgment an appeal was prosecuted by the Type Founders Company to the County Court of Wise County where the suit was again tried, and from a judgment there rendered in favor of the plaintiff for the same relief awarded in the Justice Court an appeal has been duly perfected and prosecuted to this court by the American Type Founders Company.

The following facts were proven beyond controversy upon the trial. The plaintiff Nichols performed services as printer and compositor for defendant R.B. Walker who was engaged in operating a printing establishment doing job printing work and printing a newspaper in the town of Bridgeport and who had bought the printing press and engine from the defendant American Type Founders Company. The services so performed by plaintiff Nichols were reasonably worth the amount for which he recovered judgment. He took the necessary steps required by Article 5645, Revised Statutes 1911, to fix the lien upon the printing press and engine provided for in Article 5644 of said Statute. Prior to the employment of Nichols by Walker the latter purchased the printing press and engine from the American Type Founders Company. As a part of the consideration for said sale Walker executed his several promissory notes aggregating the sum of eleven hundred and eighty dollars and ninety-six cents and secured the same by a chattel mortgage upon the press and engine, which mortgage was forthwith duly filed for registration in the county clerk's office of Wise County. This mortgage was filed prior to the time Nichols began to work for Walker and the purchase money notes given by Walker have never been paid. The trial court held that the statutory lien fixed by the plaintiff upon the press and engine was superior to the appellant's mortgage lien and to this finding the appellant has assigned error. We have been cited to no decision by Your Honorable Court and have been unable to find any decisive of the question presented by this assignment and in view of the importance of that question, and of the further fact that the amount in controversy in this suit is not sufficient to give Your Honorable Court jurisdiction by writ of error, we have deemed it advisable to submit for Your Honors' determination whether or not the decision of the trial court upon the question above noted was correct."

We answer that the decision of the trial court was not correct.

The decision of the trial court can only be sustained by construing the act approved May 27, 1897 (10 Gammel's Laws of Texas, page 1272), as giving priority to the employes' liens specified in the act, over liens previously created, save in the single instance of the lien of the farm hand, in so far as it is subordinated to the lien of the landlord.

The act does not purport to give priority to the employers' liens, but merely provides for a first lien upon property created by the labor of the employees or necessarily connected with the performance thereof.

In 16 Ruling Case Law, at page 507, it is stated: "To protect the wages of employees, a variety of constitutional provisions and statutes have been adopted. . . . The liens given by such statutes are subordinate to prior liens, such as chattel mortgages, unless a different rule of priority is expressly prescribed."

We might rest our answer on the proposition that there is no express legislative declaration of priority for the employees' liens, in the absence of which there can be no displacement of existing and registered liens. Hedeman v. Newnom, 109 Tex. 472.

There is nothing in the statute, which could be held to confer express priority on the employees, save that the lien given to each of them is described as "a first lien." These words lose what might otherwise be their significance as implying priority over other liens, when we consider the words of similar Texas statutes, where no priority was given, and the words of similar Texas Statutes where priority was given.

Articles 5475 and 5490 of the Revised Statutes each give "a preference lien" on certain property to landlords. Yet, nothing is better settled in Texas than that this preferred lien is subordinate to pre-existing mortgages. Brackenridge v. Milam,81 Tex. 17; Assn. v. Cochran, 60 Tex. 625; Oakes v. Freeman, 204 S.W. 360; Burgher v. Barry, 211, S.W., 457.

Article 5664 of the Revised Statutes gives "a special lien" on certain animals and vehicles, for the charges against same, in favor of proprietors, owners and lessees of livery stables and pastures. Such special liens attach, however, subject to subsisting mortgages. Masterson v. Pelz, 86 S.W. 56.

A comparison of the Act of May 27, 1897, with the Act of February 18, 1879, amended March 10, 1887, providing liens for railroad employees (8 Gammel's Laws of Texas, pp. 1308, 1309; Gammel's Laws of Texas, p. 815), leaves little room for doubt that there was no intention by the Legislature to make the employees' liens, conferred by the Act of 1897, "prior to all others." For, the Acts of February, 18, 1879, and March 10, 1887, dealt with a part of the same general subject-matter as the Act of May 27, 1897, that is, giving security for the payment of wages to employees, and the first two acts declare the liens therein specified "prior to all others," while the later act omits the words "prior to all others," as it omits any words of like plain and direct import, with respect to lien priorities. It is because the Act of February 18, 1879, as amended March 10, 1887, does contain the words "prior to all others" that railroad employees' liens have been adjudged superior to prior liens. Hubbell v. Texas Southern Ry. Co., 126 S.W. 317.

Just as the Legislature used plain and positive language when it was intended to make prior liens subordinate to statutory liens, before the passage of the act under consideration, so it has since used equally plain and positive language to accomplish that purpose.

The 33rd Legislature enacted the last amendment to the act under consideration, continuing to omit any words declaring the liens thereby protected superior to others. Acts Regular Session, 33rd Leg. 151. At the same session, the Legislature, by statute, gave persons furnishing water for purposes of irrigation a preference lien, on crops raised on irrigated lands, but, intending other liens to be subordinated, expressly declared that the statutory lien should be "superior to every other lien." Act approved April 9, 1913, Regular Session 33rd Leg., p. 377, Sec. 87; Bank Trust Co. v. Smith, 108 Tex. 272. It cannot be lightly concluded that the Legislature, in the one instance, had in mind the necessity of plain and positive language to override subsisting rights, and, in the other instance, overlooked such necessity.

It is contended that the proviso in the statute that the lien given a farm hand shall be subordinate to the landlord's lien evidences the intent of the Legislature that all other liens shall be subordinate to the liens given farm hands and the other beneficiaries of the statute.

In our opinion, the proviso supports our construction of the statute. For, under the case of Brackenridge v. Milam, 1 Tex. 17 [1 Tex. 17], it cannot be doubted that if a farm hand of a tenant were to use in the performance of the labor of his employment an implement in the possession of the tenant, furnished by the landlord, and previously mortgaged by the landlord, that if we declared the farm hand's lien superior to all others, save the landlord's, then the priorities of liens on the farm implement, as between the farm hand, landlord and mortgagee, would be as follows:

1st: The farm hand's lien would be superior to the mortgagee's

2nd: The mortgagee's lien would be superior to the landlord's.

3rd. The landlord's lien would be superior to the farm hand's.

Under such a condition, no foreclosure would be possible, on the farm implement, in a controversy between all three of the named lien-holders. For, the proceeds of sale of the implement could not be ordered paid first to the mortgagee, because the farm hand's lien would be superior to the mortgagee's. Nor could such proceeds be ordered paid first to the landlord, because the mortgagee's lien would be superior to the landlord's. Nor could such proceeds be ordered paid first to the farm hand, because the landlord's lien would be superior to the farm hand's. It thus appears that unless the construction be given the statute, which we have placed upon it, the proviso thereof could not be enforced in practice. Any conclusion, which cannot be applied in practice, is necessarily erroneous.

Article 3190 of the Revised Statutes of 1879, being article 5671 of the Revised Statutes of 1911, provides that nothing contained in the title "Liens," shall in any manner impair or affect the right of parties to create liens by special contract or agreement, nor to affect or impair other liens. The Act of 1897 has always been carried in the Revised Statutes under the title of "Liens."

The article just mentioned reflects the long established public policy of the State that in the creation of statutory liens, other existing liens shall not be impaired, which, in our opinion, forbids that we impair subsisting and duly registered contract liens, by mere inference from such words as are found in the Act of 1897 and its amendments.

In California, it was provided by statute — not outright that contract liens should not be impaired as here — but that different liens should have priority according to the time of their creation, "other things being equal." In refusing to give a laborer's lien priority, under this statute, over a pre-existing chattel mortgage on a crop, the Supreme Court of California said: "The chattel mortgagee gave full value for her right of lien, and was first in point of time. She notified all the world of her rights, and warned the world to deal with the property at their peril. She made a contract expressly authorized by the law, and did all that the law demanded of her in order to preserve the fruits of her contract. No court of equity can suggest a single defect in her conduct. Upon the other hand, this appellant, with full knowledge of the existence of the chattel mortgage, contracted to harvest the crops. He did this voluntarily, and if he suffers loss by such conduct it is his own fault. It was a matter of choice upon his part to do the work, and he assumed the risk of losing his hire when he entered into the contract." Wilson v. Donaldson, 121 Cal. 8, 66 Am. St. Rep., 18, 19.

While reasons can be assigned which might have induced the Legislature to give employees' liens priority over other existing liens, there are equally cogent reasons to sustain the failure to do so. Thus, in a case like this, save that there the laborer's claim was stronger than here because for labor in repairing the property sought to be subjected to the laborer's lien, the Supreme Court of Michigan said: "The mortgage was on file and defendants were therefore affected with notice. On general principles, it would seem that the lien so carefully reserved by the vendor, the person furnishing the entire original machine, ought to have priority over the subsequent repairers. The engine itself included all the labor and all the material necessary for its production, and when the plaintiff sold it he virtually furnished to his vendees that labor and those materials and preserved an express lien. The repairers did less. Their expenditure was comparatively small and they acted in making it under circumstances which charged them with notice of the plaintiff's prior lien. Why should their claim be preferred?" Denison v. Shuler, 47 Mich. 598, 41 Am. Rep., 735.

The final conclusion of the Michigan Supreme Court was the same as that we have announced, and it was embodied in the sentence: "Had it been intended that the kind of lien in question should operate retrospectively and override prior securities executed to secure purchase-money, it is not to be supposed that the Legislature would have left the purpose in any doubt." 41 Am. Rep., 736.

The effect of our decision is to subject to the employees' lien the property created by or necessarily connected with the performance of his labor, as that property stood at the time of his employment. But, we decline, in the absence of clear language requiring it, as have most of the courts of last resort in the United States, to extend the employees' lien so as to attach to, and diminish or destroy, the interest or right of an innocent lien-holder, which had vested prior to the employment, and of which the employee was chargeable with notice. Note L.R.A., 1918C, 1024; Note L.R.A., 1915D, 1154; Wilson v. Donaldson, 66 Am. St. Rep., 18.