Kreusler v. Glukoff Co.

Opinion bt Mr. Justice Elkin, The claim filed in this case so far as is disclosed' by the record [178] is regular in form and a valid lien. The amount claimed represents a balance due the contractor on a building contract. As we understand the contention of the parties, there is no substantial dispute as to the amount involved, nor as to the validity of the lien, unless the claimant has been estopped from asserting his right to enforce it by securing a general release from the subcontractors, laborers and material men who furnished labor or materials in the erection and construction of the building or for the additions, alterations and repairs thereto. All questions of fact raised by the pleadings were submitted to the jury by the learned trial judge in a charge which accurately stated the issues of fact to be decided and the law applicable to the same. The jury returned a verdict for appellant, which means that the disputed facts were found in his favor. Upon motion filed, the learned court below directed judgment for defendant to be entered non obstante veredicto upon the whole record. The ground upon which the court rested its judgment was that if Burchinal, before purchasing at the bankrupt sale, had gone to Kreusler and asked him about the mechanic’s lien, he would have been informed that it was invalid because of an outstanding release, or if he had gone to the Mercantile Trust Company, its trust officer, who received the release from Stoner, would have informed him that he had no recollection of any statement made at the time the release was deposited with the trust company limiting its effect or indicating that it was given for the specific purpose of protecting the trust company on its bond of indemnity and under the circumstances not to be considered a general release for the protection of the owner or subsequent purchasers. In this there was error in two respects. In the first place, it was error to assume as a fact what information Burchinal would have received had he made inquiry of Kreusler or of the Mercantile Trust Company prior to his purchase at the bankrupt sale. Under the facts and circumstances developed at the trial, it was for the jury, and not the court, to pass upon and determine this exact question. It may also be added, that Burchinal did not make inquiry of any person about the outstanding release, but purchased the property with record notice of the lien and subject to its payment, being satisfied no doubt to accept the property at the price bid and to pay in [179] addition the liens to which the property was made subject in his deed of conveyance. Again, it was error to hold as a matter of law, that the purchaser at the bankrupt sale, would have exercised the ordinary diligence required of him by limiting his inquiry'to the two parties hereinbefore mentioned. The original building contract contained no covenant against the filing of liens, nor did the first supplemental contract. The second supplemental agreement, and the only one of the three agreements entered into between the parties in which mention is made of mechanics’ liens, contains a covenant, not against the filing of liens, which right had attached before this agreement was made, but providing that the contractor should furnish a release of liens before final payment. It should be borne in mind that this supplemental agreement was not entered into until the building was largely completed and was intended as an amicable adjustment of the disputes which had arisen between the parties. It cannot, therefore, be understood as an agreement providing against filing of liens in the first instance, but rather as a protection to the owner when the building should be completed and final settlement made against liens the right to file which had already attached. Stoner, the secretary of the Franklin Savings and Trust Company, was agreed upon as the custodian of the fund necessary to protect the owner from liens in the event of final settlement being made before the completion of the building. This covenant was evidently inserted at the instance of the owner, who was desirous of placing a mortgage upon the property to raise the money with which to pay the contractor. In the negotiations for the mortgage the owner requested the contractor to secure the release of liens and deposit it with Stoner, all of which was done. Under the terms of the agreement Stoner was to hold the release in the nature of an escrow to be delivered when a sufficient amount of money was deposited with him to pay Kreusler the entire balance due on the building contract. This condition was never fully met, and the release was not delivered to the owner or to the mortgagee. It was deposited with the Mercantile Trust Company for a special purpose, as the testimony of Stoner cleariy sets forth. Inquiry should have been made of Stoner, the party named by the contracting parties who was to be the custodian of the [180] fund to protect against liens, and who did receive the release of liens to be handed over when the contractor was paid the amount due him under the contract, and who knew all of the facts better than any other person. Under these circumstances, it was clearly for the jury, under proper instructions by the court which were given, to determine whether inquiry had been made of the proper parties and with the diligence the law requires. Again, it must not be overlooked that the purchaser at the bankrupt sale, and the corporation to which he subsequently conveyed the property, as well as the present holder of the title, all took deeds of conveyance made subject in express terms to the payment of certain mortgages and the mechanic’s lien which is the subject of this controversy. It is true the purchase of the property subject to the lien placed no greater burden upon the purchaser than the lien itself, and if it was not a valid lien against the owner of the building it would not be binding upon the subsequent purchaser. It did, however, give the purchaser notice upon its face that there was an apparent valid subsisting lien of record against the property purchased, and put upon him the burden of diligent inquiry if he desired to be relieved from its payment because of an outstanding release, not of record, and not intended for his protection, as the testimony shows and the jury has found. After a careful consideration of the whole record, we have concluded that the questions involved here were for the jury and that the case was properly submitted in .the first instance. Judgment reversed and is here entered for appellant upon the verdict.