H. N. Francis & Co. v. Hotel Rueger, Inc.

Whittle, P., delivered the opinion of the court. On July 2, 1912, William Rueger, the then owner of certain real estate located at the southeast corner of Ninth and Bank streets, in the city of Richmond, entered into a written agreement with F. T. Nesbit & Co., Inc., builders, for-the construction on the above-mentioned site of a hotel: building, to be known as “Hotel Rueger.” On August 26, 1912, the “Hotel Rueger” was incorporated under the name of “Hotel Rueger, Inc.,” and took over the real estate and the building contract. The building was completed about March 14, 1914. A large number of sub-contracts were let by F. T. Nes-bit & Co., Inc., for parts of the work; and when the building was approaching completion it became financially embarrassed and subsequently went into bankruptcy. — 120 — On February 16, 1914, H. N. Francis & Co., Inc., a subcontractor, instituted a suit in the Chancery Court of the city of Richmond against “Hotel Rueger, Inc.,” and F. T. Nesbit & Co., Inc., to enforce its mechanic’s lien; and on June 1, 1914, a decree of reference was entered therein. On May 6, 1914, Engleby & Bro., Inc., another sub-contractor, filed its original bill in the same court against the same defendants for the enforcement of its claim of lien, and an order of reference was made therein on February 2, 1915. And on June 4, 1914, Hotel Rueger, Inc., filed its bill in the chancery court against F. T. Nesbit & Co., Inc., and all of the sub-contractors who had filed mechanic’s liens, setting up its contract with F,. T. Nesbit & Co., Inc., alleging that there was a certain balance in its hands due to the general contractor, and that various sub-contractors named as defendants had filed mechanic’s liens against the real estate, and praying that all of said lien claimants be convened, the validity of the respective claims of lien be ascertained, and that the amount in the hands of Hotel Rueger, Inc., due to F. T. Nesbit & Co., Inc., be ascertained and applied to the payment of such liens as were found to be valid. On February 2, 1915, the cause was referred to a commissioner (to whom the other two causes, as above mentioned, had already been referred), and the three causes were directed to be thereafter heard together. Among other inquiries, the commissioner was directed to report an account of all liens against the property. The commissioner, on February 15, 1916, returned his report showing that there remained in the hands of the owner due to F. T. Nesbit & Co., Inc., and subject to the valid liens of the sub-contractors, the sum of $4,359.79; and disallowing upon technical grounds the claims of liens of H. N. Francis & Co., Inc., Pittsburg Plate Glass Company, and Standard Engineering Company. With respect to the Warren-Ehret Company’s claim, the commissioner reported that it was barred by the statute of limitations. — 121 — From the decree of August 3, 1917, overruling the exceptions of the above-named parties to the report of the commissioner disallowing their respective claims of liens upon the fund in controversy, and confirming the report, an appeal was taken to this court and the cause is before us for review. [1] An examination of outside authorities shows that there exists a hopeless diversity of opinion as to whether mechanics’ lien statutes should receive a liberal or strict construction. We believe the correct rule deducible from the language and purposes of our statute and the decisions of this court with respect to it is, that there must be a substantial compliance with the requirement of that portion of the statute which relates to the creation of the lien; but that the provisions with respect to its enforcement should be liberally construed. Thus, section 2478 of the Code provides: “No inaccuracy in the account filed, or in the description of the property to be covered by the lien, shall invalidate the lien, if the property can be reasonably identified by the description given and the account conform substantially to the requirements of the two preceding sections, and is not wilfully false.” But it was held in Gilman v. Ryan, 95 Va. 494, 28 S. E. 875, that in order to obtain the Benefit of the above section the provisions of sections 2476 and 2477 must be substantially complied with. See also Clement v. Adams, 113 Va. 547, 75 S. E. 294. [2] It may also be observed that a distinction runs through the authorities in regard to the particularity required in specifying the amount and character of the work done or materials furnished, and the prices charged therefor, where the claim rests upon open account and where the work done or materials furnished were contracted for as an entirety. More particularity of statement is required in the former than in the latter instance. We think, too, that the case of Taylor v. Netherwood, 91 — 122 — Va. 88, 20 S. E. 888, as construed by Furst-Kerber, etc., Co. v. Wells, 116 Va. 95, 81 S. E. 22, and the Virginia case of Breed v. Glasgow Investment Company (C. C.), 92 Fed. 768, establishes the following principles in the construction of the statute: [3] 1. That the statement in the account that certain work was done, or materials furnished, under agreement,» or contract, for a specific sum, is equivalent to saying that it was under an “express contract,” or “was contracted for as an entirety.” And 2. That where the account contains such statement, and the fact that the work or materials were contracted for as an entirety is established by the evidence, a general statement of the fact and the sum charged therefor under the contract will suffice. [4] Approaching, then, the consideration of the liens which have been disallowed by the commissioner in the light of these principles, we find the first item in the account of the petitioner in error, H. N. Francis & Co., Inc. (unquestionably the most general in statement of the series) : “By contract, $10,000.00.” It may well be that this item standing alone would be insufficient to entitle the claimant, to relief under the mechanic’s lien statute (and upon that theory it was rejected by the commissioner) ; but, as we. have seen, it does not have to stand alone, and whether it shall stand or fall depends upon its sufficiency aided by the evidence adduced in support of it. It should be noted, also, that the account on its face bears evidence of the character of work in which the claimant was engaged and the materials it was furnishing; and the principle is elementary that the entire paper must be looked to and read together-in giving it effect. Diebold v. Tatterson, 115 Va. 766, 771, 80 S. E. 585. The evidence aliunde shows that the contract, referred to was a standard contract covering several pages, of closely printed matter, and abundantly establishes every — 123 — thing with respect to the item that reasonably could be required. As to the remaining items of the account, without discussing them in detail, it is sufficient to say that the “extras” called for appear to have been furnished upon orders, and the account shows the amount and character of materials supplied and prices charged for each. The same may be affirmed in regard to the account for work done; the nature and character of the work and the price charged therefor is specifically set out as to each item. Moreover, the account shows payments made, and the balance due, and is verified by the oath of the claimant or its agent, with a statement attached declaring its intention to claim the benefit of the lien, and giving a sufficient brief description of the property upon which the lien is to operate. The entire account is in substantial conformity to the statute, and ought to have been upheld. What has been said of H. N. Francis & Co.’s account applies with more force to the claims asserted by the Pittsburg Plate Glass Company and the Standard Engineering Company, whose accounts afford illustrations of, perhaps, a stricter compliance with the statute (invoking where needed the aid of ample admissible extrinsic evidence) than the first-mentioned account. Let it be observed of all these accounts that no question is raised as to their bona fides. They were disallowed upon technical grounds, based largely, we conceive, upon a too literal adherence to some of the language used in the opinion in Taylor v. Netherwood. The court there was dealing with the facts of the particular case, and held the account sufficient; but it neither decided, nor intended to decide, that the sufficiency of all other accounts was to be measured by the account filed in that case. The reporter will set out all three of these accounts in reporting the case, and it would serve no good purpose and uselessly add to the length of the opinion, to notice in detail the various items of the last-mentioned claims. Both should have been allowed. — 124 — [5] Upon the case as a whole, our conclusions may be summarized as follows: 1. That there is no personal liability upon the Hotel Rue-ger, Inc., for any of the liens set out in this record. When notified of the H. N. Francis & Co. claim of lien, it set apart a fund sufficient to discharge it; which fund was after-wards paid into court, and is now the subject of controversy. 2. That the commissioner was in error in rejecting the liens of H. N. Francis & Co., the Standard Engineering Company and the Pittsburg Plate Glass Company on the ground of deficiency of statement. [6] 3. That the claim of Warren-Ehret Company was rightly disallowed because barred by the six-months’ limitation. Section 2481 of the Code provides that no suit shall be brought or petition filed to enforce a mechanic’s lien after six months from the time when the whole amount covered by the lien has become payable. By contract the whole amount sought to be covered by the Warren-Ehret lien became payable November 15, 1913, and the six-months’ limitation expired May 15, 1914. The suit by Hotel Rueger to which this claimant was a party was not brought until June 4, 1914, too late to stop the running of the statute of limitations as to that lien. Warren-Ehret Company was not a party to either of the other two suits, and the account of liens ordered in each was not made until after the lien was barred. 4. That the Engleby & Bro. Co.’s claim, to the extent to. which it was allowed, is sufficiently definite within the meaning of the statute. [7] 5. That the liens allowed must share ratably in the fund on deposit to the order of the court, after first deducting therefrom the cost of litigation with respect to the allowed claims. — 125 — For these reasons, the decree of the Chancery Court of the city of Richmond, appealed from, will be affirmed, in so far as it denied personal liability on Hotel Rueger for any of the liens asserted in this case, and disallowed the claim of Warren-Ehret Company, and allowed, in part, the claim of Engleby & Bro. Co. And the decree will be reversed for the disallowance of the liens of H. N. Francis & Co., Inc., Pittsburg Plate Glass Company and the Standard Engineering Company. And the cause will be remanded to the chancery court for further proceedings to be had therein not in conflict with the views expressed in this opinion. Affirmed in part; reversed in part.