Equitable Savings & Loan Ass'n v. Hewitt

Mr. Justice Slater delivered the opinion of the court. 1. The first question presented for consideration relates to the sufficiency of the complaint in respect to the averments thereof intended to show the existence and validity of the several liens. The complaint contains no averment of default in the payment of the monthly installments then due upon the note, but expressly states that such payments were made up to and including August 20, 1907. As the suit was commenced on September 13th, before the next installment became due, plaintiff must rely upon the placing of a valid lien upon the property by another and the payment thereof by it, not only to anticipate the maturity of the obligation, to secure which the mortgage was given, but also to recover amounts paid in settlement of the alleged liens. The covenants of the mortgage, alleged to have been violated, constitute an indemnity contract, under which plaintiff seeks to recover the amounts paid by it on account of the alleged liens. But it is only liens which had legally attached to the property, and which might have been enforced against the building, that plaintiff had a right to pay and tack the amount thereof on to his mortgage. It was necessary therefore, in order to show a right to recover the several sums paid, that it be made to appear in the complaint that each claimant had a valid lien. In this the complaint is defective. To establish the existence of a valid lien, it must affirmatively appear from the complaint that the notice filed contained all the essential provisions required by statute; that it is proper in form, verified as required, and filed within time (Pilz v. Killingsworth; 20 Or. 432: 26 Pac. 305) ; and also the existence of all the material facts precedent, essential to the right to file a lien (13 Ency. PI. & Pr. 970, 978). The filing of a “mechanic’s lien” is stated, but there is no averment as to what it contained, nor is there a sufficient statement of facts, showing a right to file a lien. [336] It is stated, as mere conclusion of law, that all of the claims paid “were at said times valid liens upon said premises.” The complaint in this respect is insufficient. Price v. Doyle, 34 Minn. 400 (26 N. W. 14) ; Standiford v. Shideler, 26 Ind. App. 496 (60 N. E. 168). 2. Plaintiff, however, attempted to make proof of the right of each claimant to file a lien, and the evidence offered for that purpose was received without objection; but the'liens, as filed, were first offered, to which defendants objected, because no evidence had been offered, showing the work, for which the liens were claimed, had been done, nor that any contractual relation between Mary G. Wright and the claimants existed. The lien notices were received in evidence, subject to the objection and defendants excepted. The lien notices filed by the Oregon Planing Mills, J. R. Davis, L. Olsen, and one lien of E. A. Stanton, Kelly, Thorsen & Co., North Pacific Lumber Company, A. E. Kautz, and M. J. Murphy state that the material and labor, for which the liens are claimed, were furnished upon a contract with John D. Hewitt, as a subcontractor under C. C. Shay, the original contractor, and that Mary G. Wright was the owner and reputed owner of the property. The evidence shows that Shay contracted with the owner to construct the building; but there is no evidence of any contractural relation between Hewitt and Shay, respecting such construction. The liens filed by J. A. Smith, C. K. Claggett, Nordby Lumber Company, and the Portland Hardwood Floor Company state that .the material and labor, for which the liens are claimed, were furnished to Hewitt as the agent of Mary G. Wright, with her knowledge and consent. Here, also, there is an entire absence of evidence, showing any special agency of Hewitt, or any knowledge or consent of the owner respecting his alleged acts, or the furnishing to him by any of the claimants the material or labor for which the liens are filed. [337] It is claimed by plaintiff’s counsel that no evidence was necessary to establish that Hewitt was in fact Mrs. Wright’s agent, because, it is said, such relation is shown by defendant’s answer. After having stated in the answer the legal effect of the contract between defendants Mary G. Wright and C. C. Shay, it is further alleged, in effect, that, pursuant to the agreement, Mrs. Wright purchased the lot and caused it to be conveyed to Hewitt, who negotiated the loan in question, with full knowledge by plaintiff that the loan was negotiated for her benefit, and was to be retained and disbursed by plaintiff in payment of the costs of the erection of the building; and that plaintiff knew that Hewitt was acting as the agent of these defendants, Mrs. Wright and Shay, in negotiating said loan, and knew that they were relying upon plaintiff to disburse the amount of the loan. The agency here spoken of is, by its terms, limited to the procurement of the loan, and does not extend to the erection, or procurement of the erection, of the building. Moreover, it is averred in the complaint, and admitted by the answer that on January 29, 1907, Hewitt and his wife conveyed the premises to Mrs. Wright. Thereupon, by his performance of all acts contemplated to be done by him, the limited agency, alleged in the answer as having been created by the contract, was terminated, so far as Hewitt was concerned. Now, the lien notices, offered in evidence, show that the transaction between the claimant and Hewitt, on which the alleged liens are based, occurred after the date of the conveyance by Hewitt to Mrs. Wright; hence the averments of the answer aré not an admission of any contractural relation with Hewitt, respecting the construction of the building, nor of any special agency to procure for the owner material or labor therefor. 3. To establish a mechanic’s lien upon a lot or building, the claimant must connect himself with the owner, [338] either by showing that the claimant contracted with the owner or his agent, or that he furnished the material or performed the work for one who was erecting the building with the owners’ consent. Litherland v. Cohn Real Est. & Inv. Co., 54 Or. 71 (100 Pac. 1) ; Smith v. Wilcox, 44 Or. 323 (74 Pac. 708: 75 Pac. 710). 4. This disposes of all the liens, but the one of E. A. Stanton for the sum of $45. It is stated in this lien that claimant, by a contract with Mary G. Wright, the owner, furnished material and performed labor of the reasonable value of $45, to be used, and which was used, in the construction of the building, no part of which has been paid. The defendants claimed that they had paid Stanton, at the time, $50, on account of the work performed and the material furnished, which forms the basis of his lien, and that the-statement of account therein is false, and therefore that the lien is, on that account, vitiated. Stanton testified that, at the request of Mrs. Wright, he did some extra work, which he thinks amounted to “something like” $70; but he is not able to give a full statement of the items or value. He admitted that he was paid $25, on account of this work, by F. F. Wright, a son of Mary G. Wright, and was positive that the amount paid was not greater than that sum. Mr. Wright testified that he paid Stanton $50, for his mother, on this work, by a check on the Hibernia Savings Bank of Portland, which check is in evidence, bearing the date of May 1, 1907. It appears to have been indorsed by Stanton, and was paid May 4, 1907. No explanation of this discrepancy was made by Stanton. 5. The statute requires a lien claimant to file with the county clerk of the county “a claim containing a true statement of his demand, after deducting all just credits and offsets.” If, in filing'such claim, he puts on record a statement of the account which he knows to be untrue, or which, by the exercise of reasonable diligence, he could [339] have known to be untrue, he loses his lien. Nicolai v. Van Fridagh, 23 Or. 149 (31 Pac. 288) ; Lewis v. Beeman, 46 Or. 311 (80 Pac. 417). 6. The receipt of payment is a fact which is particularly within the claimant’s knowledge, and he is bound to state it truly. Lynch v. Cronan, 6 Gray (Mass.) 531. There is no room here to entertain the supposition that the inaccuracy of the statement of account in the lien notice was the result of an honest difference of opinion as to the amount of the payment, such as appeared in the cases of Rowland v. Harmon, 24 Or. 529 (34 Pac. 357) and Cooper Mfg. Co. v. Delahunt, 36 Or. 402 (51 Pac. 649: 60 Pac. 1). The statement of the account in the lien notice not being true, the lien did not attach. 7. Another objection, equally fatal to the validity of the lien, is that Stanton, by the averment of the lien notice, contracted with the owner. He is therefore the original contractor, and the time within which he must file his notice of lien is 60 days after the completion of his contract, and not 30 days from the completion of the building. 8. The statement in the notice is that 30 days had not elapsed since the completion of the building. This might be true, and still more than 60 days may have transpired since the completion of the claimant’s contract to do particular work on the building. Coffey v. Smith, 52 Or. 538 (97 Pac. 1079). Many other objections, touching the validity of these alleged liens, have been presented, some of which possess merit; but, as those considered are fatal to the maintenance of the suit, it is unnecessary to consider them here. For the reasons stated, the decree, so far as it affects the rights of Mary G. Wright, will be reversed, and the suit dismissed; but that part of the decree foreclosing the lien of T. C. Thronson upon his cross-bill will not be disturbed. Reversed in Part : Affirmed in Part.