Butler-Ryan Co. v. Silvey

MITCHELL, J.

This was an action to enforce a mechanic’s lien for work performed and material furnished in the erection of a building pursuant to the provisions of the contract Exhibit 1 of the answers. The appealing defendants acquired their respective interests in the property after the execution of this contract and after the construction of the building had been commenced.

The court made some 13 or more findings of fact. The only assignment of error is tO' the effect that the decision of the court was not justified by the evidence, and was contrary to law. This is insufficient to call in question the correctness of any of the findings of fact. Smith v. Kipp, 49 Minn. 119, 51 N. W. 656; In re Granstrand, 49 Minn. 438, 52 N. W. 41; Moody c. Tschabold, 52 Minn. 51, 53 N. W. 1023; Dallemand v. Swensen, 54 Minn. 32, 55 N. W. 815.

At most, the only question open to appellants under this assignment of error is whether the conclusions of law were justified by the findings of fact. But, as no findings are required of facts not in issue, in determining the sufficiency of the findings they must be considered in connection with the facts admitted in the pleadings. These admit the execution of the contract Exhibit 1, and that the work and material for which a lien is claimed were performed under and in pursuance of it. Hence the question is presented whether the provisions of that contract constituted a waiver of the right to a lien for any part of the work and material performed or furnished under it. The price to be paid for the construction of the building was $82,645, subject to such additions or deductions as were provided for in the contract. This was to be paid in instalments as follows: Until the sum of $58,645 should have been paid, payments were to be made upon estimates to be made by the architects for material furnished and labor performed on the first of each month, or within three days thereafter. The amounts of such monthly estimates, less ten per cent, of the same to be reserved until the completion of the work, were to be paid at the time of the making of such monthly estimates. The remaining $24,000, increased or decreased as elsewhere provided on account of changes in the progress of the work, was to be paid as follows: “Whenever after the payment of the said $58,645 as aforesaid, further payments should become due on statements (estimates) made as aforesaid, the contractor shall receive from the owner his note or notes, payable twelve months from such time of the making of such statement and the delivery of such notes,” — which should be secured by pledges of full paid-up shares of capital stock of the Providence Building Company, and, if required by the contractor, indorsed by one Munger. The whole amount of such notes was to be $14,000. It was expressly stipulated that the taking of any notes or security by the contractor pursuant to the provisions of the contract should not be construed as a waiver of any right which it may have to impose or enforce a statutory lien upon the property on account of its performance of the building contract. After the cash payments had been made and notes to the amount of $14,000 had been given, the final or remaining $10,000 was to be paid in 210 shares of fully paid-up stock of the Providence Building Company. It was stipulated, however, that the owner of the building should have the option, in lieu of giving his notes for $14,000, to pay the amount in cash at a discount of 9 per cent., and, in lieu of the last payment of $10,000 in 210 shares of stock, to pay $7,500 in cash.

The contention of the defendants is that the provision for giving 12-months notes for $14,000 necessarily amounted to waiver of the right to a lien for that sum, for the reason that it would extend the time of payment beyond the time within which, under the statute, an action to enforce a lien must be commenced.

This contention seems to be based upon the false premise that .these notes were to be given after the completion of the building, and upon the final estimate. An examination of the provisions of the contract will show that this is incorrect. The contractor might be entitled to notes for the whole $14,000 long before the building was completed. The only contingency in which the execution of the notes or any of them would be deferred until after the completion of the building and the final estimate, would be where the total amount earned (less the ten per cent, retained) according to the monthly estimate next preceding the completion of the building, did not equal $58,645 plus $14,000. Hence, even under counsel’s theory of the effect of giving 12-months notes, there is nothing in the contract itself necessarily constituting a waiver of the right to a lien.

But we prefer to place our decision on the broader ground that, even if the contract had provided that the 12-months notes should be given after the building was completed, this would not have amounted to a waiver of a lien in view of the express stipulation “that the taking of any notes * * * pursuant to the provisions of this contract shall not be construed as a waiver of any right which it” (the plaintiff) “may have to impose or enforce a statutory lien.” It is not to be presumed that this was intended to be merely a repetition of the statutory provision that the taking of a promissory note shall not discharge a lien unless expressly received in payment, and so specified in the note.

No other meaning or effect can be given to it except that which its language clearly indicates, viz; that the taking of a promissory note according to the contract shall not constitute any waiver of the right either to impose or enforce the statutory lien, but leave the contractor at liberty to enforce it exactly as if no note had been taken. The result would be that, while no personal action on the notes could be maintained until they matured, yet the contractor would have the right at any time to bring his action to enforce his lien on the property.

There is nothing against public policy in this, and it is not without analogies in the law. For example, where a creditor whose debt is secured by a bond with sureties takes a time note from the principal debtor, with a distinct agreement that the taking of the note shall not suspend the remedy on the bond, it is held that the sureties are not released because the creditor may sue on the bond at any time, although the note taken from the principal debtor is not yet due. Brandt, Sur. § 365, and cases cited. In such a case the note would be deemed merely as collateral to the bond. So here, construing the provision for taking the notes in connection with that providing that this shall not be construed as a waiver of the right to enforce the lien, the notes must be deemed as merely collateral to the right to a lien.

The defendants attempt to raise the point that the evidence shows that the parties to the building contract modified it by making the notes payable in 11 instead of 12 months. Even if there was merit in the point, defendants are precluded from raising it, both by their assignments of error and by their pleadings. Their answers set out the building contract, and then allege that the $14,000 was paid in notes, “as provided in said contract.” No modification of the terms of the contract is alleged, or even suggested.

Order affirmed.

An application for a reargument having been made the following opinion was filed January 4, 1898.

PER CURIAM.

Counsel for appellant applies for a reargument for the reasons— First, that the second, and principal, ground on which the decision was based was not argued by counsel; and, second, that it is opposed to Flenniken v. Liscoe, 64 Minn. 269, 66 N. W. 979. As the correctness of the first ground for affirmance stated in the opinion is not questioned, the fact that the second was not suggested or argued by counsel is no ground for a reargument. In Flenniken v. Liscoe there was no reservation, as in this case, of the right to enforce the lien. That reservation impliedly and necessarily included everything necessary to the full exercise of the main right, which was the enforcement of the lien.

Application denied.