Moyes v. Kimball

Savage, J. The first case is an action of debt on bond signed by the defendant Kimball as principal and by the other defendants, Bearce & Clifford, George .B. Brooks, C. T. Fitzgerald and George W. Lane, as sureties. The condition of the bond is as follows: “Whereas the said F. H. Kimball has contracted with the said Mrs. J. A. Moyes to furnish or cause to be furnished all labor and materials for the erection and construction of a wooden — 233 — dwelling-house, on the land of said Moyes on the westerly side of Horton street in said Lewiston, in accordance with the plans and specifications made therefor by Coombs, Gibbs & Wilkinson, architects, of said Lewiston, if therefore, the said Kimball do and perform all acts necessary to the complete execution of said contract in accordance with said plans and specifications, and shall turn the same over to the said Mrs. J. A. Moyes, her heirs, executors, administrators and assigns on or before the fifteenth day of December, 1896, completed as aforesaid, with all lien claims arising from contracts made directly or indirectly by said Kimball, fully discharged, legally waived or good and sufficient indemnity therefor given said Moyes, then this obligation shall be void; otherwise shall remain in full force.” The other two cases are bills in equity to enforce liens for materials furnished to Kimball and used in the construction of the house mentioned in the bond. The plaintiffs in the bills in equity are sureties on the bond, and are defendants in the action at law brought by Mrs. Moyes on the bond. The actions are reported together, with the stipulation that if Fitzgerald and Brooks cannot maintain their liens, decrees shall be entered accordingly in the equity suits, and judgment shall be entered for the plaintiff in the suit on the bond for the sum of $214.79 with interest; otherwise judgment shall be for the plaintiff in the bond case for the amount of the three lien claims with costs thereon, less a specified amount due from the plaintiff on the contract; and decrees shall be entered accordingly in the equity suits. ' The vital question is whether the plaintiffs in the bills in equity can enforce liens upon the property of Mrs. Moyes, under the circumstances of this case. The contractor, Kimball, by his bond, agreed with the owner, Moyes, to turn the building over to her “ with all lien claims arising from contracts made directly or indirectly by said Kimball fully discharged, legally waived, or good and sufficient indemnity therefor given said Moyes.” The plaintiffs in the lien suits as sureties of Kimball have also contracted with Mrs. Moyes that Kimball shall turn over the building free from liens. Having contracted that the building shall be turned — 234 — over free from liens, can they themselves enforce liens against it, in spite of their contract? This is the question. It is suggested that the contract in the bond is not that there shall be no liens, but that all liens shall be discharged, or waived, or indemnified against, and that therefore the sureties were not estopped from, creating liens, but were only bound to see them discharged. We do not, however, perceive that this distinction aids in the solution of the problem. If it should be held that one who has contracted that there shall be no liens is himself barred from enforcing one, so likewise ought one to be, who has contracted that all liens shall be discharged, waived or indemnified. For, in the one case as in the other, the object of the contract is'that the owner shall receive the building from the contractor free from any burden or incumbrance in the nature of liens. Liens unless enforceable are harmless and useless. Of what avail is it to a surety in this case that he may create a lien if he cannot enforce it? So if it be said that the language of the condition in the bond contemplates that liens may be created, and only requires the sureties to discharge them, it does not necessarily follow that it also contemplates that the sureties themselves may create liens. A lien is - created by force of law and may exist for the benefit of others than the sureties. The question still remains whether a surety who has agreed that liens shall be discharged may nevertheless enforce one. These lienors agreed that the liens should be discharged, waived, or indemnified against. Instead of discharging or waiving, or indemnifying, they are seeking to enforce, which is precisely the thing that they contracted should not be done. We see no good reason why the doctrine -of estoppel is not as applicable in these cases as it would be if these sureties had contracted against the creation of liens. • It is also suggested that this is virtually a contest between two sets of sureties, those who seek to enforce liens, and those who have none, and that although it would be inequitable to enforce these liens to the injury of the owner of the building, and in violation of the condition of the bond given to her, still in this case, the sureties are all parties in court, and it is not inequitable to — 235 — require the sureties who have no liens to contribute to those who have. The rights of the sureties as to contribution, depend upon what are the implied relations among themselves. There is generally the implied contract between sureties that those who do not pay directly on the principal’s account shall contribute to those who are compelled to pay. But what in this case would any surety be compelled to pay? If the lien of one of the sureties is valid and enforceable, then any one of them can be compelled to pay, and the others to. contribute to him. If not enforceable, there is no liab.ibity to pay in the first instance, and hence, it would seem, no implied contract to contribute. The implied liability to contribute depends upon the nature of the principal contract. If between the obligee and the sureties no lien can be enforced, if there is no valid lien, then between the sureties themselves, how can there be any liability to contribute ? Are not all rights, both • of principal and sureties, to be determined by the construction of the conditions in the bond? The contract which was implied can not be broader than the one which was expressed. It would be a singular result if a surety should, be estopped to enforce a lien as against fhe obligee of the bond on the ground that it would be in violation of his contract, and at the same time be enabled to compel contribution from a co-surety, so as to secure the benefits of the same. lien, created, if at all, in violation of the same contract. The sureties who seek to enforce liens cite German Lutheran Church v. Wehr, 44 Md. 453 ; Atlantic Coast Brewing Co. v. Donnelly, 59 N. J. Law, 48, and Atlantic Coast Brewing Co v. Clement, 59 N. J. Law, 438. In the Maryland case, the. surety on the bond having furnished materials for the building, filed a bill in equity to enforce á lien therefor. The bond was set up as a bar in answer to the bill. The claimants in reply said that there had been extensive changes and additions in the performance of the contract, increasing the liability of the sureties, whereby the sureties had become discharged. The court said: “It would be against equity and justice to allow the claimants to- proceed with the enforcement of — 236 — their lien, even to the sale of the church, regardless and in the face of their bond that no such lien should exist. There is no reason or justice in requiring the church to pay off the lien, or allow the church edifice to be sold for its payment, and then be compelled to sue on the bond to recover the money back from the same parties receiving it under the lien. A court of equity should rather stay than enforce such a proceeding.” But the court also held that the bills should be retained, to give the church a reasonable opportunity to bring an action on the bond, to have tried and determined the questions whether the sureties on the bond had been discharged as contended by them, and if not, to what extent they were liable for the default of their principals, the contractors. The court said: “ If the sureties are discharged, then the lien can be enforced. But if it be determined otherwise, and. there should be a recovery on the bond, that judgment may be made a set-off to the claim of the present plaintiffs. Such application of the doctrine of set-off or compensation is well established in courts in equity, and the ordinary principles of justice would require it in this case.” It seems to be assumed (though the question is not discussed) that a surety on a contractor’s'indemnifying bond is not estopped from setting up a lien. But the doctrine of equitable set-off was invoked to prevent the surety from enforcing his lien against the building. And this doctrine was invoked for the benefit of • the owner, and not for the benefit of the lienor. The bill by the surety to enforce his lien was retained so that the owner could get. judgment against the surety, and then set off the judgment against the lien — a fruitless enforcement of the lien. It will' be observed that the logic of this decision is to the effect that a surety’s lien will not be enforced against the equities of the owner of the building. ■ The two New Jersey cases (in reality but one case at two different stages) follow the Maryland, case, and go further. They sustain the right'of the surety to maintain an action expressly on the ground that otherwise he would lose the power to enforce contribution from-co-sureties. We can perceive no other practical reason for sustaining these — 237 — bills, than to permit these sureties to lay the foundation for a supposed right of contribution from their co-sureties, which we have already discussed. ■ By the doctrine of equitable set-off, it is clear that the full amount of the sureties’ liens would have to be set off against the judgment on the bond; otherwise the result would be inequitable to Mrs. Moyes, the obligee. For if less than the full amount of the liens be set off, her property would be holden for the balánce, in spite ‘of the sureties’ agreement that the building should be turned over free from liens. Thus, it is clear that the sureties would gain nothing by their suits. So, even if it were conceded that co-sureties are liable to contribute, we have no power to compel contribution in these proceedings. In the common law action on the bond, we can only render judgment at law. In the bills in equity, the co-sureties are not parties. In no aspect of the case, can we now adjust the equities among the sureties. But dismissing these considerations as arguméntative rather than decisive, we prefer to rest our decision upon the broader ground that the sureties should be held to do precisely what they agreed to do, and that having agreed that the building should be turned over to the owner free from liens, they are estopped from enforcing any. This would seem to be good law on general principles, without the citation of authorities. But we find the same view has been entertained by other courts. In a similar case in Pennsylvania, it was said, “ If the plaintiff can recover upon a mechanic’s lien against this building, the condition of the bond would be violated, and he would thereupon become bound upon a breach of condition to reimburse to the defendant whatever the defendant was obliged to pay him as a mechanic’s lien creditor. He voluntarily made himself surety for the original contractors that he would indemnify the defendant against all charges, claims, liens, mechanic’s liens, or any incumbrance or debt in the nature of a lien or charge, of any kind whatsoever. This is not a mere undertaking not to file a lien, but a contract by this particular plaintiff that the building shall be delivered to the defendant free of all charges, claims, liens..... To perform this contract, there — 238 — must be no debt, charge or lien of any kind at the time of delivery. How then can the plaintiff have a lien himself without being bound to remove it just as much as if it were held by a stranger ? . But if he is bound to remove it, he certainly cannot be permitted to. enforce it..... When the necessary legal effect of his contract as a surety is that he would be bound to discharge a lien in his own favor the moment it was obtained, he must be held to have waived all right' to file such a lien.” Rynd v. Pittsburg Natatorium, 173 Pa. St. 237. Again, “It is inconsistent that one who guarantees that there shall be no- lawful claim for’work or materials furnished to the original contractor shall himself be permitted to occupy such a position. He cannot be permitted to recover without violating his contract of suretyship.” Gannon Exr. v. Central Presbyterian Church, 173 Pa. St. 242. So in Washington. “It is clear to us,” the court said, “from the face of the bond that it was the intention of all .parties thereto that the owner of the building should thereby be secured from the enforcement of any liens against the property, or from being held liable on any account growing out of .the, contract with Jordan. This appearing from the face of the bond, it must ’be presumed that the sureties intended to bind themselves to that end when they- signed it, and the respondent Morse having been one of the sureties, he-could not in the face of this agreement to protect against liens under the contract, file and enforce one himself. Morse v. Mansfield, 10 Wash. 373. “It would be inequitable to allow a person to enter into a solemn agreement to protect another- from certain- contingencies, and thereafter, and while such agreement was in full force, to himself seek to enforce the special liability which he had obligated himself to protect against.” Spears v. Lawrence, 10 Wash. 368. We think the ■ reasoning in these cases is sound. We think it must be held that all the parties to the bond, principal and sureties, intended what they said, that no liens should be enforced against the building. The sureties expressly so agreed with the owner, and such, we think, was their implied contract inter sese. — 239 — In accordance with the stipulations in the report, the entries will be, In Moyes v. Kimball et als., Judgment for plaintiff for $21J/..19, with interest. In Fitzgerald, in Eq., v. Kimball et als., Bill dismissed. In Brooks, in Eq., v. Kimball et als., Bill dismissed.