Hughes Brothers v. Hoover

GRAY, P. J. Appeal by the E. K. Wood Lumber Company from a judgment and an order denying a new trial in an action to foreclose a mechanic’s lien. It appears from the record that the contract between the owner and contractor was valid; that one of its provisions gave to the owner the right, should the contractor neglect to supply a sufficient number of skilled workmen, or materials of the proper quality, or to prosecute the work with promptness and diligence, after three days’ notice, to terminate the employment and complete the work; that the contractor *147 making default, the owner gave the notice, and three.days after its service took possession of the building and completed the same; that deducting from the contract price the sum necessarily expended in the completion, and a certain payment made by stipulation, there remained in the owner’s hands on February 1, 1903, the date of completion, $5,953.86. That all of the claims of lien in controversy were filed in time, and actions, either original or by way of cross-complaint to other actions, were commenced within ninety days of the filing thereof, except the claim of appellant, which was commenced ninety-two days after its filing. Appellant’s claim of lien, however, which is stipulated to be true in every respect, disclosed that the materials furnished by appellant were payable in installments during the progress of the work, the last payment to be made within or before thirty-five days from the completion of the building. In one of the original actions brought to foreclose the liens, being case No. 41,412, appellant was not named as a party defendant, but in said action one E. K. Wood, John Doe, and others were named. Appellant answered, alleging that E. K. Wood had no interest in the controversy, but that it had, and set up in proper way its claim of lien. This pleading, denominated a cross-complaint, was served upon plaintiff, service acknowledged, and plaintiff entered an appearance thereto; the same was filed in the action, and subsequently all parties stipulated that they should be deemed as having answered thereto. Subsequently, appellant filed an original action, setting up that it had served the statutory notice upon the owner to withhold money under the contract, and upon this it claimed the right to a personal judgment against the owner and contractor. This case, and all of the other cases involving the question of the rights of the various parties to the unpaid balance on the contract, were consolidated and heard together. Upon the hearing the court found that appellant had never commenced any action upon its claim of lien, and apportioned all of the unpaid balance in the hands of the owner among the lien claimants other than appellant; but rendered a personal judgment in favor of appellant against the contractor. This appeal presents two primary and controlling questions: 1. Was an action commenced by appellant upon its claim of lien when it filed the cross-complaint? 2. Was the same filed in time to avoid the force of the limitation provided in section *148 1190 of the Code of Civil Procedure ? The trial court, apparently with the acquiescence of all parties, proceeded upon the theory that all parties plaintiff and defendant in an action of this character who are served with process and appear thereto and answer are actors; and this seems to find support in Grant v. Murphy, 116 Cal. 431, [58 Am. St. Rep. 188, 48 Pac. 481], wherein it assigned the reasons why in proceedings in partition all parties thereto are actors, such reasons therein applying with equal force to a case of the character under consideration. It is apparent in this case, from the fact that the contract was a valid one and that a fixed balance unexpended of the contract price was the fund from which alone the parties were entitled to base their claims, that all lienholders were entitled to share therein. The cross-complaint of E. K. Wood Lumber Company, appellant herein, was filed, and all parties stipulated, in effect, that its allegations should be deemed to be.denied by each of the several parties. To be sure, the cross-complaint was once stricken out by the court on motion, but it was afterward restored by consent, and was left in the case as if no motion to strike out had ever been made. It was also stipulated that the defense that the ninety-day period for bringing action to foreclose the lien should be deemed to be pleaded to the said cross-complaint. It seems clear from the record, therefore, that no question was made in the court below about appellant’s lien not being properly before the court; but on the contrary, by express stipulations, issues were made up fully involving that lien and every defense that could be urged thereto. The trial court was thus, by the consent of all parties, given jurisdiction of the subject matter of all those issues and of the person of all the parties interested therein. It is too late to urge here for the first time that the appellant and its rights had no place in the trial court. No objection to that effect having been made, or, rather, the objection which was made having been withdrawn and no similar objection thereafter made in the court below, no such objection will be heard here. From these facts we say we must assume for the purposes of this appeal, that an action was commenced upon appellant’s claim of lien when it filed its cross-complaint, and that thereafter the said cross-complainant and its rights of lien and the defenses thereto were properly treated as before the trial court for its adjudication. *149 We are also of opinion that the cross-complaint was filed in time. It appears from such cross-complaint that credit was extended and the filing thereof was within ninety days after the expiration of such credit. The proposition that this credit should be construed as expiring thirty-five days after abandonment of work by the contractor cannot be maintained; for it affirmatively appears that there was no actual abandonment of work in the sense contemplated by the statute, wherein abandonment is held to be the equivalent of completion. In eases of actual abandonment the right of the owner to complete, after awaiting the thirty-day suspension, is derived from the statute. In this case the right of completion was given by the contract itself, and no cessation of labor for any number of days was a condition precedent to the owner’s right of completion. Whatever, therefore, the owner did in the way of completing the building was as much performance under the contract as were similar acts performed by the contractor, and the completion, therefore, by the owner was a completion under the contract. Section 1190 of the Code of Civil Procedure provides: “No lien provided for in this chapter binds any building, mining claim, improvement, or structure, for a longer period than ninety days after the same has been filed, unless proceedings be commenced in a proper court within that time to enforce the same; or, if a credit be given, then ninety days after the expiration of such credit; but no lien continues in force for a longer time than two years from the time the work is completed, by any agreement to give credit. ’ ’ There is nothing in this section indicating that the credit therein mentioned refers to liens based upon direct contract with the owner. Its language makes it applicable to all liens, and were section 1201 of the Code of Civil Procedure construed as invalidating the terms of credit between owner and original contractor when the same affected or impaired other liens, still section 1190 would apply to liens other than those inhibited by section 1201. Nor are we of opinion that the installments maturing during the progress of the work were barred by the provisions of section 1190. In this state the lien of materialmen is a right given by the constitution, the legislative functions being to provide a system through which such right might be executed and carried into effect; and the language in section 1190, which declares that the lien ceases to *150 exist, may be ignored, as the same exceeds legislative power. Giving to section 1190 the only force which it can possibly have is to interpret it as a statute of limitation which provides the time within which an action may be brought for the enforcement of a right. This constitutional right of lien becomes perfected and enforceable only when a written claim of lien containing certain facts properly verified is filed. It is this written, filed instrument, then, which forms the basis of the action, and it is an action upon this instrument which must be commenced within ninety days. There is no intimation in the section that any items specified in such instrument shall be barred, or when the action is properly commenced, that any part of the claim of lien shall be affected unless the whole thereof is affected in like manner. A different construction has been placed upon a similar section by the supreme court of Oregon in Capital Lumbering Co. v. Ryan et al., 34 Or. 73, [54 Pac. 1093], It must be borne in mind however, that the constitution of Oregon confers no right of lien, and that such right is a statutory privilege. (Brown v. Harper, 4 Or. 89.) This being true, it was entirely competent for the legislature to provide that a lien which exists by virtue of the furnishing of materials, and which attaches as to each item when so furnished, should cease at any time. But a different rule should apply in this state under our constitution, where the legislature may not extinguish a lien at the expiration of the credit, or at any time, but may only legislate with reference to the remedy. The legislature, then, not having attempted to enact a statute of limitations for recovery on account of items entering into the claim of lien, but only as to the right of action upon the lien itself, a cause of action upon the entire claim of lien did not accrue until the expiration of the credit, from which time the ninety days began to run. The contention of appellant that it was entitled to a personal judgment against the owner growing out of the notice to withhold money, is not tenable. The equitable garnishment which is said to be occasioned by such notice, attaches only to such sum as might be payable to the contractor after the extinguishment of the liens, for until such liens are extinguished no sum is payable from the owner to the contractor. It appears from the record that the claims of lien exceeded the amount of money in the hands of the owner; hence, there *151 was nothing upon which the garnishment could operate. We are of opinion, therefore, that the court erred in its judgment and decree, by which it awarded to the lien claimants other than appellant the whole of the fund unexpended, and that, from the stipulations in the record, the appellant is shown to have been entitled to its proportion of such fund. The judgment and order of the court are therefore reversed, with instructions to the court below that the judgment be modified and corrected in this, that the fund in the owner’s hands, found to be the correct and total amount applicable to liens, be divided pro rata among the said lien claimants who are entitled to enforce liens against said property, according to the amounts due them, respectively, and in like proportion including appellant’s claim of lien so stipulated to be correct. Allen, J., and Smith, J., concurred.