Stearns-Roger Manufacturing Co. v. Aztec Gold Mining & Milling Co.

OPINION OP THE COURT. MANN, J. Counsel in this case have filed very able and exhaustive briefs, discussing and presenting every phase and feature of the Mechanics Lien Laws, and indeed nearly every possible question arising under that branch of the law has been raised by the record in this case, making it necessary for the court to examine at some length our Mechanics Lien Laws in order to answer the following main questions presentéd: 1st. Did the Stearns-Boger Company acquire a Mechanics Lien for the materials furnished the Aztec Mining and Milling Company and did McKay acquire such lien for the labor furnished and performed by him for such company? 2nd. If such liens were acquired, what property was subjected thereto? 3rd. Were such liens, if acquired, superior to the Trust Deed from Butterfield to Moore, Trustee, for the benefit of Shelby, Catron and Lynch? 4th. Was the interest of the Maxwell Land Grant Company, subject to such liens ? While the case may be disposed of before all of these questions are disposed of, yet they are all fairly raised and argued by counsel in the briefs that we feel they are entitled to the full consideration of the court, especially as they are of vital interest to a complete understanding of the Mechanics Lien Law of the Territory. 1 Taking them up then, the first question referred to, it is contended by counsel for appellants that the contract having been made in Colorado, and as they contend performed there by delivery of the materials F. O. B. at Pueblo, in Colorado, it, thereupon became the property of the Aztec Gold Mining and Milling Company, in Colorado, and was placed in the mill and tramway as the property of the Aztec Company, and that therefore no lien attaches, the sale and delivery being complete and the property being vested in the Aztec Company, bef ore it entered the Territory where the lien must attach, if at all See. 2217, C. L., provides that “every person performing labor upon, or furnishing materials to be used in the construction, alteration or repair of any mining claim, building, wharf, bridge, ditch, flume, tunnel, fence, machinery, railroad, wagon-road or aqueduct to create hydraulic power or any other structure, or who performs labor in any mining claim, has a lien upon the same for the work or labor done or materials furnished by each respectively, whether done or furnished at the instance of the owner of the building or other improvement, or his agent, and every contractor, sub-contractor, architect, builder, or other person having charge of any mining, or of the construction, alteration or repair, either in whole or in part, of any building or other improvement, as aforesaid, shall be held to be the agent of the owner for the purpose of this Act.” This court passed upon the very question presented upon the furnishing and delivery of materials, outside the Territory, in Genest v. Las Vegas Build’g Ass’n, 11 N. M. 251. In that case Mr. Justice Crumpaclcer delivering the opinion of the court says: (Pp. 269-70). “It is fifthly contended by counsellor for appellants that as the contract between the Newton Lumber Company and the Contractor Kean, was made out of the Territory, and the materials used in the construction of the building were delivered by it to the contractor F. O. B., cars at Pueblo, no lien in the company’s favor can arise under the New Mexico statute. We are of the opinion that under the circumstances presented by the record in this case, the lights of the sub-contractor to enforce the lien claimed are not destroyed or impaired by the tact that by said contract the Newton Lumber Company agreed to and did sell and deliver the goods in another state. It appears from the complaint, the copy of notice of lien therein set forth, and the proofs that the Newton Lumber Company agreed to furnish the materials for use in the construction of the building”,. and that it “agreed to perform certain labor to and. for the Contractor Kean and for use in the construction and completion of said Masonic Temple”, and that it “did so furnish the material, perform certain work in Las Vegas on the building, put up the stair’s, set the front and finished the Montezuma Club”.......... It is the furnishing of materials to be used in the construction and the putting them into the building which entitles the subcontractor to the lien upon the premises to the extent of. the value of that material. The case cited by counsel for Appellants of Birmingham Iron Foundary v. Glencon Starch Mfg. Co., 78 N. Y. 30, is under a statrrte much more restrictive in its terms than ours..............and these cases are therefore not a guide to correct judgment in the present case. The statute of New Mexico is general and does not restrict the right of lien to cases where materials are sold and delivered in this Territory, and we co'n.-clude that the contention of counsel for appellants in this regard is not tenable. Mallory et al. v. Abbatoir Co. (Wis.) 49 N. W. 1071; Campbell v. Coon, (N. Y.) 44 N E. 300; Gatey v. Casey, et al., 15 Ill. 189.” We have quoted extensively from this ease for the reason that it discusses and decides the very point raised by counsel and seems to us sound in principle and fully sustained by authority. 27 Cyc. 45, citing Great Western Mfg. Co. v. Hunter, 15 Neb. 32; Parker Land etc. Co. v. Reddick, 18 Ind. App. 616; Badger Lumber Co. v. Mayes, 38 Neb. 822; Mallory v. La Crosse Abbatoir Co., 80 Wis. 170; Atkins v. Little, 17 Minn. 342. But counsel contend that the contract between the Aztec Company and the Stearns-Roger Company does not show specifically that the materials were to be used in the construction of the identical stamp mill and tramway in question, the same not being described or mentioned in the written contract -set out in the claim of lien and in the complaint, and that therefore it cannot be -shown by parole that such materials were to be used. We think, however, that as a written contract is wholly unnecessary to entitle appellees to its liens, under the statutes of the Territory, it may show by parole testimony which neither disputes nor alters the terms of the writing, that such material was furnished for use in the construction of the improvement of the property, on which the lien is claimed. The written contract not being the basis of the action, it may be shown by any competent proof, the contract need not describe the land unless the statute requires it. 27 Cyc. Law & Pro. 69, citing Montadon v. Deas, 14 Ala. 33, 48 Am. Dec. 84; Yancy v. Morton, 94 Calif. 558, 29 Pac. 1111; San Diego Lumber Co. v. Woolredge, 90 Cal. 574, 27 Pac. 431; See also Mountain Electric Co. v. Miles, 9 N. M. 512. The bill and notice of lien state specifically that the materials were furnished for the identical mill and tramway in controversy, and this is sustained by the oral evidence of the witness Stearns (P. 51 Record), and other witnesses, including the correspondence between the parties and there seems to be no doubt from the evidence that the materials were duly received by the Aztec Company ;and placed in the mill and tramway. The notices of lien •of. the Stearns-Roger Company were filed within the time required by law, as found by the Trial Court, and we see nothing in the record that would justify a reversal of that finding. As to the McKay lien, the contention of counsel is, that part of the services were for superintendence and part for labor, and that he cannot acquire a lien for superintendence, and further, that as his notice of lien does not disclose what portion was for actual labor performed and what part was for superintendence, therefore he cannot maintain his lien, and in support of their contention counsel cite the case of Boyle v. Mountain Key Mining Co., 9 N. M. 237. We think, however, that the distinction between the nature of the employment between Boyle in that case and McKay in the ease ai bar is clearly distinguishable and that the right of the latter to a lien for his services is clear. In the case of Mining Co. v. Cullins, 104 U. S., 176, cited with approval by this court, in the Boyle case, Mr. Justice Woods uses the following language, which is applicable to this case: “The finding of the District Court makes clear the -character of the services rendered by the defendant in error, lie was not the general agent of the mining business of the plaintiff in error. That office was filed by Patrick. He was not a contractor. His services were not of a professional character such as those of a mining engineer. He was the overseer and foreman of a body of miners who performed manual labor on the mine. He. planned and personally superintended and directed the work, with a view -to develop the mine and make it a successful venture. His duties were similar to those of a foreman of a gang ■of track hands upon a railroad, or of a force of mechanics ■engaged in building a house.” In the Boyle case, the lien claimant was the general superintendent of the mining company on a salary of '$3000 per year, and had general oversight of the company’s business, its mine, mill, boarding house, etc., and was in fact a salaried general agent of the company, not charged with a-special oversight of the improvement of the property itself as the foreman -of certain development work while under this contract McKay was charged by his contract with the erection of this mill by a certain set of drawings furnished him by the Aztec company, thus showing that he was engaged in the personal oversight of building the mill according to plans and specifications furnished him. The difference in the two cases is obvious, and we think there can be no question but McKay was and is entitled to a lien for the services performed by him. 2nd. Having decided that the Steams-Roger Company and McKay were each entitled to Mechanics Liens under the Statute of the Territory, the next question which naturally arises, is, to what property do such liens attach ? 2 It will be observed that the stamp mill which McKay built for the Aztec Company and the materials for which, in the way of machinery,were furnished by the Stearns-Roger Company, was located -about one thousand feet from the mouth of the tunnel or working shaft of the Aztec mine. It is described in the latter’s claim for lien as being “situated at a point 1350 feet S., 53° 30' west from the southeast corner No. 1 of the Aztec Mining .Claim or lode”, and as that lode ran 3000 feet in an easterly and westerly direction the mill was not located between the side lines of the lode claim, if indeed there were any yell established surface lines. There was however a tramway from the mouth of the tunnel or workings on the Aztec mine from which the ores were taken to the mill, and as the materials for this tramway were furnished by the Stearns-Roger Company, and as both the Stearns-Roger Co., and McKay claim that the Aztec mine is “required for the convenient use and occupation” of the mill they claim that their liens attach to the mine as well as to the mill site. The master to whom the case was submitted found as one of his findings of fact as follows: “Eighteenth. That said forty stamp mill, mill buildings, tramway, tracks and all other of -said buildings, erections and improvements, were made, constructed, and erec-ted under one general design and plan, and all to be used solely for' the purpose of altering, constructing and repair-' ing said mining claim and for Working and developing the-same, ■ and extracting the ores from said" Aztec mine and for transporting the same' to said- mill, and for treating-such ores and extracting the gold therefrom, in-and by said forty stamp mill, -and that said mine and mill are of very-little value or practical utility separate and apart from each, other, and that therefore said Aztec lode or mining claim and said -mill site or tract of land adjacent to-said Aztec lode, and on which said mill 'is located, together with said mill, mill building, tramway, track, and other improvements constitute- and are “one-mining ’claim”, and that all of the said Aztec lode or milling claim, and all of said mill site or tract of land adjacent thereto, on which said mill or other erections and tramway-are located, are necessary for the convenient- use, occupation, -operation and enjoyment of said mining claim or Aztec lode, and also are necessary for the convenient use, occupation and operation o-f said tramway and forty stamp-mill.” 1 The ■ amount of land upon which the building, improvement or structure is constructed, and which is to1 be-included in the lien, is to be “so much as may be required for the convenient use and occupation thereof, to be determinated by the court on rendering judgment.” Sec. 2219¿ C. L. 1897. Under the pleadings and proofs in this ease it appears-quite clearly that the fee to all this land, including the mill site and Aztec mine or lode, was in either the' Maxwell Land Grant Company or the Aztec Gold Mining and Milling company, and that that portion to which the former-company held the fee the latter company held and occupied under lease or contract at the time the improvements were-made. It was perfectly competent for the Trial Court to determine the amount of land to which the liens shall attach in rendering judgment, and it did do so by adopting and confirming the master’s report. 'As is said in Springer Land Association v. Ford, 168 U. S. 5l3, (at p. 530) '“The truth is that what'area of land is subject to-' •liqn in a gijven case depends upon the character of the improvement.” . . . ., ■ The-.Supreme Court of the United States was, then .construing, the-very statute here under, consideration, and it ;held that' the lien for building and constructing the. ditch system there -involved covered the entire amount of lands irrigated by the system, saying of the 'land' and ditches: “Each was dependent upon the other, and both were.bound -together in the accomplishment of a common purpose”, viz: The irrigation of the lands susceptible of irrigation from the system of ditches which were the improvements on which the lien claimants there contended for a lien. . In the case at bar the findings of the master, which were adopted and confirmed by the court, are to the same effect, and we cannot say that from the pleadings and record before us such finding was not justified. If the record showed that these properties, the mill-site and the mine, were in every sense separate and distinct and owned by different parties as appellant’s counsel contend in their brief, we might be confronted by a revj different question, but it seems certain that the mine and mill were operated by the same company and for the sole pur•pose of treating the ores taken from the Aztec mine,, and there is at least no -evidence that it was a custom mill - or used for any other purpose than the treatment of: its own .ores, taken from this one certain mine. 3rd. The next question is a far more serious one, that is, whether or not the Mechanics Liens of the Steams-Boger Company and McKay are superior to .and take prece•dence over the Trust Deed from Butterfield to Moore, for the benefit of Shelby, Lynch and Catron. ■3 See. 2220 C, L., reads-as follows-: “The liens provided for in this act are preferred to any lien, mortgage or other incumbrance which may have attached subsequent to the time when the building, improvement or stucture was commenced, work done, or materials were commenced to be furnished; also to any .lien, -mortgage or other incumbrance of which the lien holder had. no notice, and which was unrecorded at the time the building, ,improvement or structure was commenced, work done; or the materials were commenced to be furnished.” See. 2226, reads: “Every .building or other improvement mentioned in section two thousand two hundred and seventeen, constructed upon any lands 'with the knowledge of the owner or the person having or claiming any interest therein, shall be held to have been constructed at the instance of such owner or person having or claiming any interest therein, and the interest owned or claimed shall be subject to any lien filed in accordance with the provisions of this act unless such owner or persons having or claiming an interest therein shall within three days after he shall have obtained knowledge of the construction, alteration or repair, or the intended construction, alteration or repair, give notice' that he will not be responsible for the same, by posting a notice in writing to the effect, in some conspicuous place upon said land, or upon the building or other improvement situated thereon.” These sections of the Mechanics Lien Law of the Territory are both parts of the same Act, the former appearing as Sec. 4 and the latter as section 10, of the laws of 1880, when the present Mechanics Lien statutes were enacted, and were therefore passed by the same legislature and at the same time. It is the contention of Appellees, that Sec. 2226 makes it obligatory upon the mortgagee of a prior recorded mortgage, in order to maintain the priority of his lien, to give the notice therein provided, and that a failure to do so, within the three days, as prescribed in that section, a subsequently accrued Mechanics Lien takes precedence over the mortgage. They contend that the term “having or claiming any interest” in the land upon which the improvement is erected, is broad enough and was intended to cover the lien of a mortgagee upon the property. But- wé cannot concur in this contention, nor do we think the Mechanics Lien Law of 1880, is susceptible of such a construction. The fact that See. 2220 (See. 4 of the Act in question) explicitly made the liens provided for in the act preferred “to any lien, mortgage or other incum-brance which may have attached subsequent to the time when the building, improvement or structure was commenced, work done or materials commenced to be furnished : Also to any lien, mortgage or other incumbrance of which the lien holder had no notice, and which was unrecorded at the time”, just as effectually prefers the liens and encumbrances not coming within the class enumerated as though so enacted in express terms, under, a well settled rule of statutory construction. Southerland on Stat. Con. See. 326-7-8. We think the legislature clearly intended to and did make, a distinction between mortgagees, lien-holders and those having an encumbrance, duly recorded and accrued prior to the accruing of the Mechanics Lien, and those having or claiming any interest in the lands upon which the lien is claimed. This court in Cleland v. Alexander, 86 Pac. 425; speaking through Chief Justice Mills, makes use of the following language: “However created, a lien (and a mortgage is a lien) is not an interest in land, but merely a security for the payment of a debt.” Citing numerous authorities in support of that statement, and while the court did not then have this statute under consideration, yet the principle is the same and is sustained by the great weight 'of authority in the United States, and may be said to be the modern doctrine and generally accepted as the true one in this country. 27 Cyc. 961 and authorities cited. 1 Jones on Mortgages (2 Ed.) Sec. 58. This has always been the doctrine held to by the courts of equity and “the equitable view has largely encroached upon and sometimes quite 'superseded, the legal, even in courts-of law.” 1 Jones on Mtgs. See. 8. The mortgagee has no interest in the land described in his mortgage until default in the terms of the mortgage. He cannot taire the possession, nor interfere in its management or control, unless his security may be diminished. A transfer of the indebtedness, as the endorsement and delivery of the note secured, carries with it the mortgage, which is only an incident to the debt, and unless the mortgage carries with it a power of sale, he must foreclose by a suit in equity before he can apply the proceeds to the payment of his debt when due. The legislature evidently had in mind the difference between the mortgagee or other lien holder and those having or claiming an interest when the two sections (2220 and 2226) were both included in the act. The first was evidently intended to secure a preference to prior recorded mortgages and liens and.to give the benefit of the statutes against unrecorded mortgages and liens, of which the lien claimant had no knowledge, while the latter section (2226) referred to lessees, vendees under contract of sale and like persons who claim the fee or some estate or interest in the land itself. The trust deed from Butterfield to Moore was in effect a mortgage. “A deed of trust to real estate executed for the purpose of securing a debt conditioned to be void upon payment of the debt, and containing a power of sale upon default, is essentially a mortgage, and does not differ in its legal operation and effect from an ordinary mortgage with power of sale. Like a mortgage such a deed is a mere security for a debt, or for the performance of certain undertaking by the grantor. It is a mere incident to the debt which it secures, upon which it depends, and which it follows and will pass with an assignment of the debt to the holder.” 27 Cyc. 967; citing numerous authorities, including-Arkansas, California, Connecticut, District of Columbia, Georgia, Idaho, Illinois, Massachusetts, Nebraska, North Carolina, Oregon, Pennsylvania, Texas, Utah and Wisconsin. Shillaber v. Robinson, 97 U. S. 68; 2 Jones on Mortgages, Sec. 1769. It is contended that this Trust Deed is a grant coupled with an inteiest and is not in the nature -of a mortgage, but a -scrutiny of the instrument, which is set out in the statement of facts, must convince one of its nature. There appears on its face no other intention of the parties, than that of security for the debt named therein, and the court will always look at -the substance rather than the form. The legislature in thus securing to the bona fide mortgagee who had complied with the recording acts, a préf-.erenee over the person performing labor or -furnishing materials for improvements on the land, acted justly and in accordance with equity and common sense. The laborer or material man lias notice of the prior lien, or‘may have ■by searching the records, before his labor is performed or his material furnished, and it is only just that he use the.ordinary caution or ascertaining as to prior liens beforehand, while on the other hand if the mortgagee has filed his mortgage for record and thus given notice of it to the world, it would be absurd to compel him to watch his security lest some laborer or material man enter the premises and “improve” him out of it. Indeed to compel a mortgagee living more than a three day’s journey from his security to post a notice thereon within three days of his obtaining knowledge of such improvement, would be very near to confiscation of it. 4th. The Maxwell Land Grant Company, in its answer, admits its interest in the property upon which the Mechanics Liens of the Stearns-Eoger Company and McKay are sought to be enforced, but denies any knowledge of the improvements being made, so that the only 'question as to whether or not its interests ate subject to these liens is the question of notice. 4 The evidence offered by appellees on this point is to the effect that Mr. M. P. Pels, the General Manager of the Maxwell Land Grant Company, knew of the improvements at the time they were being constructed and so informed Mr. Stearns, and that said Pels told hiim personally that he knew of no notice being posted. There also appears in the record a contract between the Aztec Company, and the Maxwell Land Grant Company, which is signed by Mr. Pels as General Manager on behalf of the last named Company. Nowhere in the record is there any denial by, the Maxwell Company of the fact that Pels was its General Manager during that time. . “The general rule is that notice of a fact acquired by, an agent while transacting the business of his ’ principal, operates constructively as notice to his principal. As corporations from their-nature can never act except through the instrumentality of their agents and can never be acted upon except through the instrumentality of th'eir agents ox their property, this principle applies with peculiar force to them.” 10 Cyc. 1053, and eases cited. The General Manager of a corporation is defined in Vol. 4, Words and Phrases Judicially Defined, p. 3073, as “The person who really has the most general control over the afiiairs of a corporation, and who has knowledge of all its business and property, and who can act in emergencies on his own responsibility, and who may be considered the principal officer.” Citing Robert Lee Silver Min. Co. v. Omaha & G. S. Co., 16 Colo. 118; 26 Pac. 326-7; Kansas City v. Cullinan, 65 Kan. 68; 68 Pac. 1099-1102. We think in the' absence of any evidence tending to dispute Pels’ authority as General Manager and of his knowledge of the improvements being made and the materials furnished as shown by appellees, the trial court was justified in finding that the Maxwell Land Grant Company had due notice, and as it is not claimed that it posted any notice under Sec. 2226, C. L., it follows that its interests in the property are subject to the liens of the appellees. Numerous questions are discussed in the briefs of counsel, such as the reasonableness of the amount of attorney’s fees by the Trial Court which we have not commented upon, but suffice it to. say that with the exception of the questions of priority of the liens created by the Deed of Trust from Butterfield to Moore and the Mechanics Liens of the appellees, we think the Trial Court was fully justified in its findings of fact and conclusions of law as finally adopted and that there is no error in its decree, except in that respect. For the reasons given the decree of the Trial Court is réversed and a decree will be rendered in this Court in accordance with the views expressed herein, and it is so ordered.