S. G. Purvis & Co. v. Assigned Estate of Brumbaugh

Opinion by Rice, P. J., The appellants who had furnished materials for the building erected on the land by the sale of which, under an assignment for the .benefit of creditors, the fund for distribution was created, had filed their mechanic’s lien therefor, and claimed to be lien creditors as of May 13, 1896, the date of filing. The effect of the allowance of this claim in full would have been to supplant a mortgage in favor of another party, recorded June 18, 1896. The claim ivas disallowed by the auditor and the court below, because the contractor' for the building had, for himself and subcontractors, waived the right to file liens. No question is, or can be, raised as to the sufficiency of the waiver as expressed in the contract, but the appellants sought [301] to avoid its effect upon three grounds, which we state in the language of their counsel. “1. It was fraudulently obtained from the contractor. “ 2. The contractor for the building was not a contractor so far as appellants were concerned, but as to them, occupied the position of an agent for the owner, and the waiver of right to file liens, being secret, could not affect appellants. “ 3. The owner had agreed to pay the subcontractors eighty per cent as they furnished their materials and the agreement waiving the right to file liens was dependent upon the performance of the owner’s contract so to pay. He failed therein and the contract of waiver was therefore inoperative.” 1. The facts pertinent to the first proposition are, that the land was bought with money furnished by Agnes T. Harley, but for some unexplained reason the title was taken in the name of Dr. S. O. Brumbaugh, who executed to her a declaration of •trust, which was put on record in November, 1894; subsequently these parties married; and a few days later (January 7, 1895) Dr. Brumbaugh entered into a contract with one B. K. Waughter for the erection of the house, in which the latter covenanted for himself and subcontractors that no liens should be filed. It is claimed that he so covenanted under the belief, and upon the faith of the representation, that Dr. Brumbaugh owned the property. The only ground he had for this belief was, that in the typewritten paper prepared for their signatures the parties were described as “B. K. Waughter, contractor and builder, party of the first part (hereinafter designated the contractor) and Dr. S. Oscar Brumbaugh (hereinafter designated the owner) party of the second part,” and that in subsequent portions of the instrument the word “ owner ” was used instead of the ordinary legal verbiage. No representations whatever were made as to the nature of his title; nor was any inquiry made concerning it. Nothing appears to have been said upon the subject, and the record of the declaration of trust was constructive notice to all the world. If Dr. Brumbaugh had done or said anything to lead the contractor to omit to search the records the case might be different. But he did nothing of the kind, and the auditor’s finding that there was no intention on his part to mislead or deceive any one was fully warranted. It is true the honesty of his intentions might not excuse, if he [302] recklessly asserted as true what he ought to have known was false. But that is not this case. In a restricted sense he was an “ owner ” — not the sole and beneficial owner it is true — but an owner. See Schott v. Harvey, 105 Pa. 222, 228. And it is a significant fact that the appellants aver in their mechanics’ lien that “ the name of the owner or reputed owner is S. Oscar Brumbaugh, trustee for Agnes T. Brumbaugh, formerly Agnes T. Harley,” thus showing by their own confession that the use of the word “ owner ” for convenience of designation of the second party to the contract was not wholly inappropriate. When it is remembered further, that they knew nothing of the terms employed in the contract to designate the parties, and made no inquiries as to the ownership of the property, it is plain that they, at any rate, were not misled. We put our decision, however, upon the broader ground that the mere -use of the word “ owner ” in the manner above described was not, without more, such a fraudulent misrepresentation as would debar Mrs. Brumbaugh or her lien creditors from insisting on the covenant against liens, either as against the contractor or the subcontractor. It is well-settled, that where under a contract with the husband, and in his name, materials are furnished for the improvement of the wife’s land, and the land is so improved with her knowledge, approbation and consent, the contractors have a right to file a lien against her land and make her a party defendant : Bodey v. Thackara, 143 Pa. 171; Bevan v. Thackara, 143 Pa. 182; Jobe v. Hunter, 165 Pa. 5. This principle, however, is subject to the qualification that “ there was no agreement that her property should not be liable therefor: ” Einstein v. Jamison, 95 Pa. 403. In the present' case, the wife must be presumed to have assented to the improvement of her estate upon the terms expressed in the contract, among which was the covenant that no liens should be filed. Having put her deed on record, she had done all that the law required of her to give the world notice of her title. The facts of the case do not bring it within the principles upon which McCollum v. Messenger, 163 Pa. 603, Ballman v. Heron, 160 Pa. 377, and Ballman v. Heron, 169 Pa. 510, were decided. 2. The second proposition is inconsistent with the averments of the lien as the above quoted clause has shown. It is also [303] inconsistent with the actual facts of the case. Waughter was clearly a “ contractor ” within the meaning of the mechanic’s lien laws and not a mere agent of Dr. Brumbaugh or his wife. He had authority to bind the subcontractors by a covenant against liens, notwithstanding the stipulations of the contract that he should “file with the owner a list containing the names and amounts of the respective bids of all sub-contractors and material-men before any payments are made; ” that such subcontractors should be “ paid on orders issued by the party of the first part .... and presented to the owner for payment; ” and that the amount paid should not “at any time exceed eighty per cent of the value of the work done and the materials furnished.” None of the cases called to our attention is authority for the proposition that such stipulations as to the mode of payment affect the covenant under consideration as related to subcontractors. They are chargeable with notice of the covenant, and the principle that a third party is not affected with notice of secret directions given by the principal to a general agent is not applicable. 3. Tn Long v. Caffrey, 93 Pa. 526, it appeared, that the contract price was to be paid in instalments as the work progressed,' and that the owner covenanted to insure the building for $1,000 and assign the policy to the contractor as collateral security for the payment of the last instalment. The trial court was asked to instruct the jury: “ That if the jury believe that said Caffrey. failed to pay at the time agreed upon and also failed to insure the property as agreed upon, then he cannot set up the defense that the contractor agreed not to file a lien.” The refusal of this point was assigned for error, and it was urged with much earnestness, that the covenants were dependent, the counsel citing McCrelish v. Churchman, 4 R. 26, and Wright v. Smyth, 4 W. & S. 527, in support of their position. The Supreme Court overruled the assignment and said: “ The different parts of the contract are separate and independent covenants, and we see no reason why the one not to file a lien shall not be enforced.” We are of opinion that this ruling governs in the present case and renders further discussion of the appellant’s third proposition unnecessary. 4. Under the facts found by the auditor, and recapitulated in his third conclusion of law, the claims referred to in the fourth, [304] fifth, ninth, tenth, thirteenth and fourteenth assignments of error were entitled to participate in the pro rata distribution upon the ground that the work and materials were done and furnished either upon the personal order of Mrs. Brumbaugh or that of her husband acting as her agent. We cannot add anything profitably to what the auditor has said upon this subject, and overrule these assignments for the reasons given by him in his third conclusion of law. See Jobe v. Hunter, 165 Pa. 5. 5. The claim referred to in the eleventh assignment of error was for labor and carpenter work done on the house, and stands on the same plane as that of the appellants, which was for mill-work. The equity of the assignee who in good faith paid this claim is equal to that of the appellants, and we see no good reason for giving the latter a preference in the distribution. 6. The claim referred to in the twelfth assignment of error was for groceries and provisions. The only evidence adduced relating to it shows, that it was a personal debt of Dr. Brumbaugh. This assignment must be sustained. The twelfth assignment of error is sustained and the claim of William Ender is disallowed. All the other assignments of error are overruled, and subject to the above modification, the decree is affirmed and the record is remitted to the court below with directions to carry the same into effect. It is further ordered that one half of the costs of this appeal be paid out of the fund for distribution and the other half by the appellants.