Millett v. Swift

Opinion op the Court by Judge ITobson Eeversing. On June 5, 1907, P. J. Millett entered into a contract witli the Louisville & Nashville Eailroad Company to construct for it six miles of roadbed in Whitley county. T. J. Swift entered into a contract with Millett, by which he was to construct abont two miles of the road. The panic of 1907 came on. Swift had great difficulty in raising money to carry on Ms work, — 410 — and Millett was also hard run. E. E. Duffield was Swift’s walking boss, and he lent Swift $1,000, which Swift used in carrying on his work. In the spring of 3 008, Swift borrowed from a bank $1,000, and Millett went his security, as Swift was again out of money, and this was the only way that Millett could help him. Swift also owed Duffield over $400 on wages. On July 15th, Swift executed to Duffield the following order on Millett: “Pollyton, Ky., July 15, 1908. Mr. P. J. Millett, Catliff, Ky. — Please pay to E. E. Duffield the following notes to the amount of $1458.42 (fourteen hundred and fifty-eight and 42-100) out of my estimates, and oblige, T. J. Swift, per T. F. McConnell.” Millett accepted the order by the following letter: “Pollyton, Ky., July 16, 1908. Mr. E. E. Duffield, Pollyton, Ky. — Dear Sir: Answering your letter of the 15th inst., can say that I will give you credit for the amount of the order, $1458.42, provided there is anything due Mr. Swift. I have charged the amount to his account subject to a final estimate. Yours very truly, P. J. Millett. J. C. Ryan.” On August 3, 1908, the Jellieo Grocery Company filed in the Whitley Circuit Court an action against Swift to recover $1,161.03 which he owed it, and took out a general order of attachment, which was served on Millett as garnishee. On August 7, 1908, Swift gave to Jellieo Hardware Company an order on Millett directing him to pay it $1,180.05 which he owed it. Millett accepted this order practically in the same way as the Duffield order. On August 28, 1908, the hardware company filed in the office of the clerk of the Whitley county court a statement of the articles furnished Swift, and asserted a lien on the railroad property. After the attachment was taken out, Swift was unable to carry on his work, and Millett had to — 411 — take charge of it and finish np his subcontract. The final estimate did not come in until October, and it was then learned that there was only $1,681.24 due from M.dlett to Swift. He thereupon brought an action in which he set out the above facts, and asked the direction of the court as to how the money should be paid. The suit was consolidated with the other actions which had in the meantime been brought. The circuit court in substance adjudged the hardware company a first lien, and also entered a judgment against Millett in favor of the grocery company for its debt and interest. Prom this judgment P. J. Millett and E. E. Duffield have appealed. The first question is as to the lien of the hardware company. Section 2492, Ky. St. provides: “All per sons who perform or furnish labor, material, supplies or learns, for thtfconstruction or improvement of any canal, railroad, turnpike, or other public improvement in this commonwealth by contract, expressed or : implied, with the owner or owners thereof, or by subcontract thereunder, shall have a lien thereon, and upon all of the property and franchise of the owner or owners thereof, for the full contract price of such labor, material, supplies and teams so furnished or performed, which said lien shall be prior and superior to all other liens thereafter created thereon; but any person'undertaking or expecting to perform or furnish labor, material, supplies or teams, in the manner provided in this section may acquire a lien therefor, as herein provided, by filing in the clerk’s office of each county, wherein he shall have so undertaken to perform or furnish labor, material, supplies or teams, a statement in writing stating that he has so undertaken and expects to perform or furnish labor, materia], supplies, or teams, and the price at — 412 — which the same is to be furnished and the lien for labor performed, material, supplies or teams furnished thereafter shall relate back and take effect from the date of the filing of such statement; provided that as to all original construction such'lien shall be prior to all liens theretofore or thereafter created, on the part so constructed, and on no other part.” The hardware company did not file with the clerk the statement referred to in this section, and its failure to file the statement is fatal to its claim of a lien. The'plain provision of the statute is that the person furnishing the material for the construction ofi a railroad shall have a lien thereon and “may acquire a lien therefor as herein provided by filing' in the clerk’s office” the statement provided for. 'We had this précise question before us in the case of Trust Company v. Casey, 115 S. W. 780. In that case, referring to the act of 1896, which introduced into the statute the words referred to, we said: “Under the amendment the lien is superior to all liens theretofore or thereafter created; but it does not relieve the claimant of the necessity of filing a statement of his intentions to erect the improvement, in order that he may have priority over liens thereafter created.” The case of Central Trust Company v. R. N. & I. R. R. Co., 68 Fed. 90, 15 C. C. A. 273, 41 L. R. A. 458, was decided in the year 1895, and before the act of 1896 was passed. The original act provided how a Jien might be acquired in such cases, and the purpose of the amendment was manifestly to modify the existing statute as to how the lien' might be acquired. The language used shows that the act was drawn for this purpose' and no other matter is referred to. By the act of 1896, sections 2463 and 2492 of the Kentucky Statutes were both amended so as to read as — 413 — they do now, and the difference in the language used is conclusive that a difference in meaning was intended. We therefore conclude that the hardware company acquired no lien here by filing its statement in the clerk’s office on August 28th after the other liens had attached. ' To adjudge a lien on the railroad which Millett or his' subcontractor, Swift, had constructed, was to adjudge a lien on his work. To adjudge a lien on his work was to adjudge it against him, for he would have to remove the lien as between him and the railroad company. So the judgment in effect holds him liable beyond the amount due by him to Swift. This under the record cannot be done. He is not liable beyond the amount due Swift, $1,681.24. The purpose of the amendment was to protect the contractor in the case of a subcontract. The circuit court probably credited Millett by the $1,000 note which he had paid to the bank. He had assumed this debt. It had become his debt, and was past due when the attachment issued. The order to Duffield, having been accepted by Millett, operated as a transfer 6f the fund from Swift to Duffield, and a promise on the part of Millett to pay Duffield according to the acceptance. It is entirely immaterial that there had been previous estimates. The order of Swift covered all estimates, and the acceptance by Millett bound him to pay Duffield his debt, if there was that much coming to Swift on a final estimate. The reason that this was done is very clear under the proof. Millett had been paying Swift’s pay roll since May or June. He was at the same time carrying the $1,000 note for Ifim. On July 15th Swift was indebted to Millett $140.80, and, in addition, whatever pay roll he had. While a check appears on July 25th for $1,706.10 — 414 — charged to Swift, he is credited by this check on the next page-,as not used. Swift knew how Millett had accepted the order to Duffield, and knew it was to be paid out of his final estimate; for there was no other way for it to be paid in the condition of things. The railroad company was holding back ten per cent, on all his work, and he conld not expect Millett to pay Duffield unless in his final estimate there was that much coming to him. To give the order and acceptance any other construction would be to ignore the facts. If Swift did not do his work, Millett had it to do. Therefore he was trying to pull Swift through, and he could not know how he would stand with Swift until the final estimates were made. The whole transaction was in good faith, and Duffield, holding the older equity, must prevail over the subsequent attachment of the grocery company. The grocery company acquired by its attachment only such rights as Swift had against Millett at the date of the attachment. Swift had given the order to Duffield on Millett, and he knew the situation of affairs. He had no cause of action which he could have asserted against Millett to the prejudice of Duffield, and the grocery company, simply standing in his shoes, cannot recover to the prejudice of Duffield. The circuit court erred in adjudging Millett to pay to the receiver $1,681.24, with interest, and in also giving a personal judgment against him in favor of the Jellico Grocery Company for its debt and cost. Two judgments were thus entered against him for the same money. Millett did not pay the money in his hands into court. When ordered to pay it to the receiver, he did not obey the order. He has kept and used the money, or has had the use of it. Under the circumstances he should pay interest on it. On — 415 — the return of the ease, a judgment will be entered requiring him to pay to the court’s receiver $1,681.24, with interest from October 23,1908. A judgment will also be entered directing the receiver to pay out of the fund when collected the claim of E. E. Duffield with interest and cost'and to pay the balance of the fund to the Jellico Grocery Company on its attachment, after the payment of the laborers, J. L. Jones, etc., as adjudged by the court in the judgment appealed from. The judgments directing Millett to pay the money to the receiver and in- favor of the Jellico Grocery Company, and the Jellico Hardware Company, and i ejecting the claim of E. E. Duffield, are reversed and cause remanded for a judgment, and further proceedings as above indicated.