Evans-Lee Co. v. Hoton , 190 Wis. 207 ( 1926 )

Eschweilee, J.

If, by the contract of September 23d with Hoton, Knudtson changed his relationship to the real estate and the building then started and to be erected thereon from that of owner to that of principal contractor, thereby making the respective lien claimants subcontractors rather than principal contractors, the judgment is right. If he, however, is to be considered as continuing the enterprise as owner, then it must be reversed and the respective appellants allowed their claims as liens on the real estate subject only to the mortgage of $2,500.

By the land contract the Knudtsons and Hotons expressly agreed that the Knudtsons are to hold the legal title until the agreed payment had been completed. They agreed that insurance was to be taken out and carried in the name of Knudtson as owner, with the policy to expressly recite that the Hotons had a land-contract interest only. The oral arrangement, concededly made, between Knudtson and the Hotons that Knudtson was to erect the building in no wise altered such provisions of the written agreement.

There was no express agreement, either oral or written, that Knudtson was to become a principal contractor as distinguished from owner, nor do we find any rule of law which makes such a change for parties who have so explicitly agreed as to their relationship as was done here by the written contract.

The trial court stressed the point, that the lien claimants were early informed of the purchase and put upon inquiry; but if they had pursued such an inquiry they would have found the facts as above stated, and these facts, as we have just ruled, did not create the relationship between Hoton and Knudtson of owner and principal contractor respectively. Knudtson did not in form or substance agree to sell the lot and then build the house; he agreed to sell the improved lot when the house was completed and full purchase price paid.

The exact legal status of vendor and vendee under land contracts presents at times troublesome questions, and, as is pointed out in the case of In re Catfish River D. Dist. 176 Wis. 607 (187 N. W. 673), at p. 613, in reviewing many cases, there may be a measure of ownership in each; the vendor having the legal, the vendee the equitable, title. But in this case, by the express language of the written agreement, Knudtson and Hoton unequivocally fixed the status of Knudtson towards this property during the building period and prior to payment in full of the agreed price to be that of the owner, and such relationship was not thereafter changed by any action on the part of either.

We consider the situation here a stronger one in favor of the lien claimants than was presented where the right to liens was upheld (Edwards & McCulloch L. Co. v. Mosher, 88 Wis. 672, 60 N. W. 264), where under a land contract, nothing being then paid down, but the vendee being required to erect a building, the title to both building and land was to remain in the vendor until full payment. The vendor in that case had the whole benefit of the improvement made and his interest was held subject to the lien (p. 679). And it should be noted that in that case, as here, the peculiar conditions of the contract of sale were entitled to great weight (p. 679).

Furthermore, all of the materials contracted for or furnished after September 23d, the date of the land contract, being for a building then already commenced, were under sec. 289.01 (formerly sec. 3314), Stats., all referable back, for lien purposes, to the time of the commencement of the building rather than to the time that the particular orders or contracts for any such materials were given or entered into or the times when any particular materials were furnished.

This statute giving a lien for work, labor, or materials, etc., for, in, or about the erection or construction of any dwelling house, etc., provides that:

“Such lien shall be prior to any other lien which originates subsequent to the commencement of the construction," etc., “upon such dwelling house," etc.

This language has been repeatedly construed as above stated, even though the labor may be done or the material furnished subsequent to the creation of some other lien or incumbrance. Rees v. Ludington, 13 Wis. 276, 281; Chapman v. Wadleigh, 33 Wis. 267, 273; Lampson v. Bowen, 41 Wis. 484, 489; Vilas v. McDonough Mfg. Co. 91 Wis. 607, 614, 65 N. W. 488; Hewett v. Currier, 63 Wis. 386, 392, 23 N. W. 884; Andersen Yard Co. v. Citizens State Bank, 187 Wis. 60, 63, 203 N. W. 921.

Some contention is made that under sub. (3) of said sec. 289.01, providing that no lien is intended to be given upon the interests of an owner of land where the work or labor is done or furnished at the request of any person holding such land under any contract for the sale thereof unless there be an express agreement between such owner and the person doing such work, and that such lien shall affect the interests only of the person holding the land under such contract of sale, prevents these from being held liens. There is no application of such statute to the facts here, however, for it is Knudtson, as owner, who orders and uses the materials, not Hoton, claiming to act under a land contract or through whom the lien claimants attempt to assert their rights.

The lien claimants are therefore entitled to have the full amount of their respective claims for materials furnished in the construction of this dwelling house adjudged liens upon the premises prior to the interest of the defendants Hoton, subject, however, to the mortgage of $2,500, conceded to be valid and prior.

By the Court. — Judgment reversed, and cause remanded with directions to enter judgment in accordance with this opinion.

RosenbeRry, J., dissents.