Stout v. Sower

Lacey, J. It appears from the foregoing statement of the case that there are three main and impoi tant questions pro-sen ted for our determination before we can arrive at the end of this investigation. First, Is the appellants’ claim for mechanics’lien paramount and precedent to that of Anne G-. Paddock created by her trust deed ? Second, Has the appellant any lien on lots 7 and 8 for material furnished and work done on lot 29 ? Thwd, Did the Circuit Court have jurisdiction to try or hold the case ? We will take up the questions in the order above presented, and in so doing first consider the several objections raised by attorneys for appellees to the existence of the claimed lien embodied in the first proposition in the manner therein claimed by appellants. It is first urged by the appellees that by the very terms of the appellants’ contract with Sower Bros, for the remodeling and changing the mill, no lien under the Mechanics’ Lien Act could attach for the following reasons, viz.: The statute under which the lien was created, if at all, provides “ that the time of completing the contract shall not be extended for. a longer period than three years, nor the time of payment beyond the period of one year from the time stipulated for the completion thereof;” that the contract was in writing, dated June 30,1883, and the mill was to be completed and in running order by the 15th of September of the same year; that as to $1,600 of the amount to be paid to appellants, Sower Bros, were to give their three notes in equal amounts due respectively in six, nine and twelve months from the starting of the mill; that the last note by the terms of the contract, which must alone govern in the case, in legal effect would extend the time of payment by means of the three days grace allowed by law in the payment of such instruments, beyond the statutory limit of one year from the time stipulated, September 15, 1883, for the completion of the contract.' It is argued that in legal effect and reality a note is not due until three days after the time fixed by its terms to become due. But it may be answered that by the terms of the contract itself, the last note was to be payable, that is due, twelve months from the time the mill was running. Did not the contracting parties have this matter of the “ days of grace ” in contemplation when the contract was executed, and was it not the intention that the note should be so written that with the days of grace added it would fall due past twelve months from September 15,1883 ? The parties must be presumed to know the law and to contract with reference to it, and when the contract was so written as to require the last note to be payable in twelve months, it meant what its terms expressed and must be considered with reference to the law on the subject of “ days of grace.” If three days of grace are' to be added at the end of twelve” months when the last money is payable, then, of course, the last note would not be payable in twelve months, as the contract declares it shall be. It would be twelve months and three days. It is only by assuming that the true interpretation of the contract is that the expression payable “ in twelve months after the mill is running,” means that the note should he written in terms when given “ due in twelve months ” from such date, that the point contended for by appellees can be maintained in any event. But the contract is not expressly so written and if the words “ payable in twelve months after September 15, 1883,” are to be given an interpretation to make the day of payment fulfill the words of the contract and the rule of law in regard to the days of grace is to operate thereon, the note must in its terms be written for three days shorter time of payment than without the application of such law; otherwise the terms of the contract would not be strictly and logically true. Whether the contract in question should be so construed as to require the note to be written for the full twelve months, and by operation .of the rule of law in regard to “ days of grace,” the time for its falling due would be twelve months and three days, or not, we are clearly of the opinion that the statute ought not to be so construed as to render the contract void as being in violation of'law. The Mechanics’ Lien Act no doubt should be strictly construed, as it has been so held by our Supreme Court, which is binding on this court, yet we do not understand by such holding that the construction should be so illiberal and artificial as to impair the statute or to prevent relief being granted under it freely by the courts. A court of high authority has indeed held that “ the statute giving liens to mechanics and laborers for their work and labor, is to be liberally construed so as to afford the security intended.” Davis v. Alvord, 94 U. S. 545. This contract then, we hold, was capable of having a mechanic’s lien created under it by the furnishing of the material and labor therein mentioned to the contractees, Sower Brothers, on the lot in question. Again, appellees contend that as to Mrs. Anne G. Paddock, the holder of the balance of the unpaid notes secured by her trust deed, amounting to $1,000, the lien claimed by the appellants, if any ever existed, was lost by reason of the contract not having been completed within the time fixed by it, to-wit} by the 15th day of September, 1883, it not having been completed and the mill accepted and set to running till the 15th of October following, and because the notes instead of being given according to contract, bearing date September 15, 1883, and running six, nine and twelve months, they were by agreement between appellants and Sower Brothers dated November 1, 1883, and ran respectively six, nine and twelve months from that date, and that this was done without the knowledge or consent of the appellee, Mrs. Anne G. Paddock, or her agent or attorneys. The appellants’ contract with Sower Brothers was dated June 30, 1883, and the trust deed from Sower Brothers to George S. Skinner, trustee for Anne G. Paddock, and the notes to her security by said trust deed, were dated July 2, 1883, and the deed recorded in the proper office July 7, 1883. It is not contended nor could it be successfully argued that Mrs. Paddock could acquire a superior lien on lot 29 to the lien claim of appellants on the same lot by reason of her trust deed having been dated and recorded prior to the time of the furnishing by the appellants of the greater part of the labor and material and placing them on the lot, although she may have accepted such deed without notice of the existence of the latter’s prior contract for changing and altering the mill. The entering into the contract by the lot owner with the material men, fixes the lien from the date of such contract for the material and labor subsequently expended on the lot, superior to any subsequent trust deed or mortgage acquired, even though the material or labor be put on the lot after the ■ trust deed or mortgage be executed and recorded. Although the trustee or mortgagee had no notice of the contract or the furnishing of such material, such contract or claim for the material need not be recorded, nor need the agreement, under the first section of the Act of 1861, be made for any specified amount with the owner of the lot if the material was required for the use in the progress of the building. “ When the contract to perform the labor is entered into the lien attaches. ” This is the clear and obvious meaning of this (the first) section. The court by its decree neither creates nor confers the lien. “ It existed and attached to the lot from the time the contract was made to make the improvement.” It only remains after the contract, to place it on the lot. “ These liens, are secret, attaching simply by furnishing the labor or materials in constructing the building.” Clark et al. v. Moore et al, 64 Ill. 273: Theilman v. Carr, 75 Ill. 385; Brown v. Moore, 26 Ill. 425. From these citations it will be seen that the appellants had a valid lien on said lot 29 for the balance of the unpaid price of their material and labor put into the mill, unless, by the extension of the time of completion of the work, or the extension of time as to the payment of the notes, or some one of them, their lien as against the mortgagee’s (Mrs. Paddock’s) claim, has been forfeited. Whether this has been done, as is contended by appellees’ counsel, will be our next inquiry. The contract provided a less time for the completion of the mill than three years, and also the time added by way of extension to the original time for completion would not make three years from the time of commencement, so the statute was not violated in that particular. But the time to which the last note was extended, to wit, from September 15, 1883, the time, by the provisions of the original contract, the mill was to have been completed, to November 1, 1884, the time to which the payment of the note was extended, was more than one year or even more than one year from October 15, 1883, the time the building was completed, and to which the extension was made by consent of Sower Brothers. It is insisted as to Mrs. Paddock, for whose benefit the trust deed was taken, there could be no change of the original contract that would affect her interest and if one were made the mechanic’s lien as to her would be forfeited. This is no doubt true in a measure, but we think not to the extent claimed. In Simon v. Block, 16 Ill. App. 450, it was held, “ that the remedy to enforce a mechanic’s lien is exclusively the creature of the statute, deriving its existence only from positive enactment and not arising out of, or the issue of, the contract for labor, or dependent on the motives which suggests its being enforced.” It is further said, “that the question of lien or no lien depends on the contract as made originally and not what may happen in the execution of it.” In the case of Cook et al. v. Heald et al., 21 Ill. 425, the court says in regard to the statute above quoted, “this provision absolutely requires that the time for its performance and the payment of the money shall be determined at the time when the contract is entered into and not by alterations and changes which may he made in the agreement after it is entered into.” Where the time for the payment is extended by taking notes on time, the claim for the amount due under mechanic’s lien is extended thereby. Cox v. Keiser, 15 Ill. App. 432. In the case of Nibbe v. Brauhn, 24 Ill. 268, it was held that if the parties deem it necessary further time for the completion of the work be given the contractor, the time may be extended, and by allowing the work to proceed without objection by the owner of the lot it is extended. But in such case only the time of performance is changed, not the contract otherwise. In the above cases the contract was between the original parties to the contract and there were no other creditors or incumbrancers whose rights were affected. As between the original parties there is no limitation as to the time of commencement of the suit, but as to other creditors and incumbrancers the suit must be commenced within six months after the last payment for labor and material shall become due and payable. (See Sec. 24 Mechanics’ Lien Act.) According to the principles above referred to, the character of the lien as between the parties to the original contract and also as between appellants and subsequent incumbrancers, became fixed by the signing of the original contract, and the only thing remaining to complete it was the furnishing of the labor and materials on the lot by appellants, which was done. The extension of the time for completion could not affect the lien thus created, neither could the extension of the time of payment, at least as between appellants and Sower Brothers. The question now arising is, could such extension be made as against the appellee, Mrs. Paddock? The only light we have by any decision of our Supreme Court in a case like this, is obtained from the opinion in the case of Brown v. Moore, 26 Ill. 481. By the contract in that case the work was to be completed by June 1, 1857, and the last payment was to be made by December 1, 1857. But the work was not completed till April 23, 1858. The rights of mortgagees were involved the same as here. The court had grave doubts whether the six months Statute of Limitations did not commence to run from December 1, 1857, the time when the last money was due. It was unnecessary to decide that point in the case, but it decided that the debt was due and the statute began to run in favor of the mortgagees on April 23, 1858, and an extension given by agreement between the contractor and owner of the building and mortgagor for the payment due under the lien from April 29, 1858, for one year and four- months, could not be made to stop the running of the statute which, at least, commenced to run from April 23,1858, six days before the extension was given. By this extension the six months limitation expired before the suit was or could be brought, counting even from April 23, 1858, saying nothing of December 1, 1857, the time fixed in the contract for the last payment. In reference to the question the court say: “ As between themselves the parties to the contract could modify as they chose, but not in such a way as to affect the rights of others. Other parties had a right to take security on this land with reference to this lien and the'time when it should expire, and these could not he cut out by any agreement between other parties which would have the effect to extend the time when the lien should expire.” In the case at bar, the giving the appellee, Mrs. Paddock, the benefit of all she.could claim with reference to the Statute of Limitations as fixed by the last payment, she could not complain. By the original contract the work was to be completed September 15, 1885, and in twelve months from that time the last note was to be paid, which carried it to September 15, 1884, and six months from that time would be March 15,1885, and March 18th, if days of grace be added; but the petition in this case was filed March 13, 1885, in apt time to save the Statute of Limitations the same as if everything had been carried out according to the terms of the original contract. If it be conceded that the change of the time for the payment of the notes might be an injury to appellee, Mrs. Paddock, it may be answered that if they were changed without her consent and such consent were necessary and she so desired, she might redeem the property by paying the amounts due, according to the original contract on the lien at any time when so due, notwithstanding the extension of time, she not being bound by such extension. As the case is presented, we can see no substantial injury done to appe.llee, Mrs. Paddock, by the change in the payments of the amount due under the original contract. So holding, the appellants had a valid lien for the amount of their claim on the lot 29 and the mill at the time it burned down, and the lien continued to the scales and mill remains after they were sever ed by the fife. Gaty v. Casey, 15 Ill. 189. The next question raised, and as above stated is, have the appellants any lien on lots 7 and 8 for material furnished and labor done on lots 29? We think clearly they have none. Lots 7 and 8 were separated from lot 29 by a street thirty feet wide, and no part of the mill structure or any of its appurtenances were on or touched lots 7 and 8. The mere fact that the Sower Brothers had corn-cribs on these lots out of which they took corn to grind in the mill, or that they had a horse-shed on them under which they hitched their horses and'put their buggies that conveyed them to the mill while they were operating it, and other like circumstances, could have no effect to make those lots a part of lot 29 within the. meaning of the statute. Parmelee v. Hamilton, 19 Ill. 615; Tracy v. Rogers, 69 Ill. 662. Bayard v. McGrraw, 1 Ill. App. 134; see also Sec. 1, Chap. 82, R. S. 1874. We will now consider the third and remaining question, did the Circuit Court have jurisdiction to try or to hold this case under its control ? The court below dismissed the petition, as the record states, for want of jurisdiction, and may not have considered the merits of the case. We have considered all the questions in the case, however, as the decree should not be reversed unless the petition has merits and the appellant a right of recovery and.all the questions have been fully argued by counsel on other side. It appears that the ground relied on to justify the action of the Circuit Court in dismissing the petition is that Sower Brothers had become insolvent and had made an assignment for the benefit of their creditors to Eugene 0. Bates, of all their property and effects, under the act entitled, “An Act Concerning Voluntary Assignments and Conferring Jurisdiction therein on County Courts;” in force July 1, 1877. And that the assignee, Bates, had qualified, accepted the trust and had taken possession of the property of said insolvents and was proceeding to administrate the estate under the said assignment and the said act before the County Court. It is insisted by appellees, that under the law the appellants had no right to file their petition in the Circuit Court, and had no right to any relief therein; but that they must seek their remedy in the County Court, wÉich it is claimed has ample authority to adjust- all questions concerning the mechanics’ lien claim of the appellants and to give them the priority which they claim if they are entitled to it under the law. In fact that in all cases the jurisdiction of the County Court under the act is exclusive after it once acquires jurisdiction of the insolvent’s estate. Appellees rely principally upon the decision of the Supreme Court in the two cases of Freydendall v. Baldwin, 103 Ill. 325, and Hanchett v. Waterbury, 115 Ill. 220. The court in Freydendall v. Baldwin, 103 Ill. 325, hsed the following language in regard to the jurisdiction of the County Court in such case : “ Thus it is seen that- the whole management of the estate of insolvent debtors under voluntary assignments is committed to the jurisdiction of the County Court, and by Sec. 14, full authority and jurisdiction are given to such courts in regard to such matters. How the trust funds in the hands of the assignee are to be paid over and distributed are matters for the determination of the County Court where such proceedings are pending, and its judgments and orders in that respect can only be 'reviewed as the judgments and decrees cf others of competent and original jurisdiction are reviewed, by the Appellate Courts.” “ A court of chancery will not assume jurisdiction on a bill to interfere and direct how a County Court shall distribute a trust fund over which it has complete jurisdiction, by positive statute, unless under special circumstances.” These observations were made with reference to the facts in that case, which were, in substance, that the complainants in the bill, while recognizing the validity of the assignment," were asking the Circuit Court to declare certain confessed judgments by the debtor prior to the assignment, and execution levies on the property of the debtor also' prior- to the assignment, void as against the personal goods in the control of the assignee. This relief could be obtained in the County Court, especially under the 5th section, which gives one creditor the right to contest the claim of another, the County Court having the power to consider equitable rights, and the assignee himself might contest the question, under the 7th and 14th sections. In the case of Hanchett against Waterbury, 115 Ill. 220, the assignee having in possession certain personal estate of the insolvent, it was sought to be replevied out of his hands by writ issued from the Circuit Court by one claiming title to the property. The County Court, as held, properly enjoined the Sheriff from the execution of the writ. The plaintiff should have gone to the County Court to contest the title. The authority of the County Court is plain enough, as above shown. The court, in passing on the case, calls the act in question, essentially in its framework and detail, a “ general insolvent law.” The court says: To permit interference with the assignee in his duties after the County Court’s jurisdiction had attached would defeat the object of the law.” It is held that third parties, having real or pretended claims upon the trust estate within the jurisdiction of the County Court, cannot be allowed to sue in other courts for it. “ The County Court has jurisdiction, and is possessed of all the property and estate of the debtor by means of the assignment, subject to all prior liens and just claims of third parties; and that the legal title is in the assignee, acquired by the voluntary act of the debtor, can make no difference, as a valid assignment can only be made under the statute, and it is but little matter where the legal title is, in so far as it affects the jurisdiction of the court. The possession is in the court, not the assignee. The position of the assignee in relation to the estate is analogous, in some respects, to that of a receiver or assignee in bankruptcy.” In the per curiam opinion filed, on overruling the petition for rehearing, the court hold that while the Circuit Court has general chancery powers, it can not be permitted to interfere in respect to the property assigned after the jurisdiction of the County Court has attached, except under special circumstances; a court of equity may interfere to prevent a failure of justice. The facts and circumstances of the case before us are widely different from the facts in the above two cases cited, and we think must come within the exception of the rule as above announced. We will consider them for a moment. The value of lot 29 is not to exceed §500. The unpaid claim due Mrs. Paddock, secured by the trust deed, is §1,000. The claim of appellants is' over §1,600. What title has the assignee in lot 29 ? Evidently only the equity of redemption; and the County Court only has possession of the same,'and that is nothing, and would still he nothing even if the lot were worth §1,000. It is evident that the assignee has no assets in this equity of redemption, and could not have under any circumstances. If the County Court had jurisdiction at the suit or application of the assignee to summon the trustee of the trust deed-, and Mrs. Paddock and appellants before it, and having full jurisdiction, should order the sale of the lot free from all incumbrances, it would have to hand the money arising from the sale to the appellants or Mrs. Paddock, and no money would be available for the general estate, and this would be a pure expense for no beneficial purpose. But does the County Court have any such chancery jurisdiction?- Jurisdiction to remove clouds on title to real estate, to issue summons to all parties interested, including mortgagees ? Can it order notice to be given' to non-residents by publication ? Mrs. Paddock is a non-resident. We find no express warrant in the act for such proceedings, and we.can not see in the not very comprehensive language of the statute any implied power. The 5th section allows one claimant to contest the claim of another, but here Mrs. Paddock has not brought mortgage into question before the County Court. There is no question concerning it except with the appellants, and the holder of the note secured by the trust deed is not an adverse claimant before the County Court as to any property in which the assignee has any interest. The 7th section has no reference to a question like this. The 11th section authorizes the assignee to dispose of the estate the same as the assigning debtor could have done. The assignee could sell the equity of redemption, but he would receive nothing therefor. The 14th section only gives the County Court full power to carry out the provisions of the act, but none of the provisions of the act covers a case like this. As we understand the practice in bankrupt courts, where the court has full jurisdiction over all equitable claims and liens on real estate including mortgaged premises, it is, where the mortgage exceeds the value of the real estate, to never undertake to sell the mortgaged' property divested of the lien, but to refer the mortagee to his remedy on the mortgage in some other court; and the Bankrupt Court has largely more power than the County Court. See Sec. 5075, Bump on Law of Bankruptcy (9th Ed.). In this case the only possible contest that can arise is between the appellants and Mrs. Paddock, claiming under the trust deed. Whatever the appellants may recover in the case it will be taken from Mrs. Paddock and not from Bates or the estate of Sower Brothers. The assignee is the mere nominal holder of the equity of redemption, not worth one cent to him or the estate. He could not possibly be impeded or interfered with in his duties as assignee in any degree by this suit. This suit was by the court below dismissed, and if that decree stands the appellants lose their lien because the six months limitation has run against it. We are of opinion that whatever may be decided about the right of the appellants to proceed in the Circuit Court to final judgment and sale of the-lot before the assignee had settled the estate of Sower Brothers, the court should have held the case in court, simply staying proceedings till the County Court acted. The statute, Sec. 4, Chap. 82, provides “ That the lieu given by this act may be enforced by bill or petition in any court of record of competent jurisdiction in the county in which the land or lot or some part thereof lies.” By another section the suit must be commenced within six months as against other incumbrancers. How as the County Court has no jurisdiction to foreclose a mechanic’s lien as against a cestui que trust, and a trustee making no claim in the County Court to the property, the fee title to which is already in the trustee, how is the lien holder to preserve his rights except by bringing his petition in the Circuit Court? The trustee and Mrs. Paddock might rely wholly on their security and make no claim in the County Court and if they made any it might only be after exhausting the lot security. It might be years before the trustee foreclosed the trust deed and long after the bankrupt estate was settled up by the assignee. “ A mechanic’s lien, which derives its existence wholly from a State statute, and the continuance of which is by such statute made dependent on the commencement of a suit within a prescribed period, is not preserved as a valid incumbrance on the property when no suit is commenced in the State Court, and no step taken in the Bankrupt Court equivalent to such suit, within the time limited by the statute for the preservation and enforcement of the lien, although proceedings in bankruptcy are commenced in that period.” In re Williams, 14 Bankr. Reg. “Such lien claims may be filed in the State Court after the commencement of the proceedings in bankruptcy. These steps are necessary to keep the lien alive, and can not be deemed an encroachment upon the authority of the Bankrupt Court. Bo sale can be made during the pendency of the proceedings in bankruptcy. The State Court will order the suit to stand continued to await the result of the action in the Bankrupt Court.” Clifton et al. v. Foster et al., 3 Bankr. Reg. 656; S. C., 103 Mass. 333; In re Coulter, B. R. 64; Keller v. Demmond, 68 Penn. 449; see notes to Sec. 5075, and notes on page 599 Bump’s L. and P. of Bankruptcy, 9th Ed. So, at all events, if the same rule applies, and we see no reason why it should not, in the County Court as it does in the Bankrupt Court, it could not have been any infringement on the jurisdiction of the County Court by filing this petition in the Circuit Court, as the statute expressly requires. The statute in this respect has certainly not been repealed or changed by the insolvent act in question. At all events, the petition should not have been dismissed. But we think the court should have proceeded to final decree in the case. The $265.75 received for the scales and other remains of mill irons, etc., should be allowed appellants in the final decree, although this part might come under the rule of the above cases of Freydendall v. Baldwin, 103 Ill. 325, and the other as to the control of the County Court, yet as the assignee agreed to hold it subject to this decree, and as the Circuit Court holds jurisdiction on other grounds, it may go on and do complete justice and settle the entire matter. For the above reasons the decree of the Circuit Court is reversed and the cause remanded with directions to grant the relief as indicated by this opinion. Decree reversed cmd ccmse remanded.