Barr Lumber Co. v. Shaffer

• Decision Date: 04 December 1951
• Citation: 108 Cal.App.2d 14,238 P.2d 99
• Court: California Court of Appeals
• Parties: BARR LUMBER CO. v. SHAFFER et al. Civ. 4200.

Page 99

238 P.2d 99

108 Cal.App.2d 14

BARR LUMBER CO. v. SHAFFER et al.

Civ. 4200.

District Court of Appeal, Fourth District, California.

Dec. 4, 1951.

Hearing Denied Jan. 31, 1952.

Forgy, Reinhaus & Forgy, Santa Ana, for appellant.

C. Arthur Nisson, Jr., Harvey, Rimel & Johnston and Wellington & Sprague, Santa Ana, for respondents.

O'Melveny & Myers, Louis W. Myers and Pierce Works, Los Angeles, amicus curiae for California Land Title Assn.

GRIFFIN, Justice.

Plaintiff and appellant Barr Lumber Company, a corporation, brought this action against defendants to foreclose a mechanic's or materialman's lien for $2,590.60, for materials furnished and used in constructing a house being built by defendants Earl and Ann Shaffer. Plaintiff alleged in its second amended complaint that the Shaffers were the owners of a parcel of land in Orange County containing about 4.89 acres; that about February 9, 1948, defendants William C. Labahn and wife, and defendants Charles a Rockwell and wife, loaned $12,000 to the Shaffers and that as security for said loan the Shaffers executed a note and trust deed dated February 9, 1948, and recorded May 14, 1948, in that amount covering the real property described; that under the deed of trust the real property was conveyed to defendant Reliance Title Company, a corporation, as trustee. The lenders were named as beneficiaries thereunder. It is further alleged that at the time the loan was made there was no dwelling house on the real property; that thereafter about September 1, 1948, defendant Mr. Shaffer, with the knowledge and consent of the remaining defendants, commenced building thereon; that between September 24, 1948, and October 29, 1948 (which period was prior to its completion), at the request of defendant Mr. Shaffer, plaintiff furnished him material to be used in the construction of the building, and that a mechanic's lien was duly recorded. It is then alleged that the construction of the dwelling house was commenced and completed after the real property was conveyed to the trustee, and that after its completion the value of the entire property was approximately $18,000; that on September 1, 1949, the trustee conveyed the property to defendants C. A. Nisson and wife (purchasers of the property) following a foreclosure sale of it under the trust deed for the sum of $10,700. By the amended complaint plaintiff seeks judgment against each defendant for $2,590 damages and costs. In a second cause of action it is alleged that it would be grossly unjust and inequitable for these defendants to retain this property without payment to plaintiff of the reasonable value of said materials used in the construction of the improvements, and plaintiff seeks the right to the establishment of a lien against the dwelling house in that sum and asks that it be adjudged a superior or prior lien to the trust deed, and that the building be sold and the proceeds be applied in payment of plaintiff's claim. Defendants Nisson filed a motion to strike the whole of the second amended complaint and also certain paragraphs thereof as containing irrelevant and redundant matter, and also filed a general demurrer claiming that the amended complaint stated no cause of action against these defendants, and asked that the demurrer be sustained without leave to amend. A similar demurrer and motion to strike was filed by the other defendant, Reliance Title Company, as trustee, as well as the defendants Rockwell and Labahn. The motions to strike were granted and the demurrers were sustained without leave to amend. Judgment was entered in favor of these demurring defendants. The court decreed that plaintiff take nothing by this action as against them. Plaintiff appealed from the judgment.

The principal question presented on this appeal is whether or not the charge or lien of a trust deed, mortgage or other encumbrance recorded prior to the commencement of the work of improvement is superior to the lien upon the improvement (as distinguished from the land) of a mechanic or materialman for work done or materials furnished in connection with such work.

It is appellant's theory of the law of mechanics' liens in California that laborers and materialmen are entitled to compensation; that to secure payment to those furnishing labor and materials such persons are granted an implied right to proceed against a structure for which labor and materials have been furnished; and that therefore a mechanic's lien may exist upon a building for which labor and materials have been furnished and that a lien upon the structure is not incompatible with the prior encumbrance upon the land itself. In support of the argument appellant cites art. XX, sec. 15, Constitution of California, which states: 'Mechanics, material men, artisans, and laborers of every class, shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor done and material furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens.'

Appellant claims that this provision of the Constitution gives a direct lien upon the property to which persons have furnished labor or material, and that in providing for the enforcement of such liens under the Constitutional mandate, the legislature adopted about the same provisions in section 1183 of the Code of Civil Procedure; that this section provides only for a lien upon the property into which labor and materials have gone, and does not give a lien upon the land; that this interpretation is given force by the adoption of section 1185 of the Code of Civil Procedure, which provides for a lien upon the land in addition to a lien upon the building to the extent of the contracting owners' interest, citing McDowell v. Perry, 9 Cal.App.2d 555, at page 564, 51 P.2d 117. It is further argued that to distinguish between the ownership of improvements made on land and the ownership of the real property itself, the legislature enacted section 1192 of the Code of Civil Procedure which provides that a landowner may protect his interest in land as distinguished from the building by giving a notice of nonresponsibility. Secondly, it is argued that the mechanic's lien upon the building or structure is a primary thing and that the land is merely incident to it and that a prior recorded encumbrance, mortgage, or trust deed upon the land itself is junior to a mechanic's lien accruing from work or materials supplied to an improvement commenced subsequent to the date of recordation, citing such cases as Bottomly v. Rector, Wardens and Vestry of Grace Church, 2 Cal. 90; Houghton v. Blake, 5 Cal. 240; Holmes v. Richet, 56 Cal. 307; McGreary v. Osborne, 9 Cal. 119; Humboldt Lumber Mill Co. v. Crisp, 146 Cal. 686, 81 P. 30; Linck v. Meikeljohn, 2 Cal.App. 506, 84 P. 309; Western Electric Company, Inc., v. Colley, 79 Cal.App. 770, 251 P. 331; English v. Olympic Auditorium, Inc., 217 Cal. 631, 20 P.2d 946, 87 A.L.R. 1281; and 22 Cal.Law Review 312.

As to the first contention respondents have no particular quarrel with appellant's theory as applied to the interests of the owner, particularly where the transaction resulted in an unjust enrichment to such owner. The English case and the Linck case sufficiently dispose of this question. As to the second point, respondents, as well as counsel for amicus curiae California Land Title Association, most earnestly disagree.

Respondents cite Basham v. Goodholm & Sparrow Inv. Co., 52 Okl. 536, 152 P. 416, 420, where the court held a mechanic's lien inferior to the lien of a recorded mortgage and then said: '* * * there are many states which permit materialmen and mechanics, who furnish material and labor to improve land upon which there is a prior recorded mortgage, to obtain a lien on the improvements so constructed superior to the mortgage lien, but such priority operates only upon the improvements, the mortgage holder still retaining his priority as to the land; but, as this rule contravenes the common law, it cannot be done in the absence of an expressed statute which plainly authorizes it. It will be noted that statutes that authorize it are clear and explicit, and leave nothing to conjecture.' Citing the Statute of Texas (Sayles Supp.Rev.St. Art. 3171 [Vernon's Ann.Civ.St. art. 5459]. See, also, Stats. of Iowa, subd. 4, Sec. 3317, McClain's Code.

In Kentucky Lumber & Mill Work Co. v. Kentucky Title Sav. Bank & T. Co., 184 Ky. 244, 211 S.W. 765, at page 769, 5 A.L.R. 391, the court said: 'The contention of appellants that the Bank & Trust Company's mortgage does not attach to the house, because it was not in existence when the mortgage was executed, cannot be sustained. Where a lien is created upon land, and buildings are thereafter erected upon it, the lien attaches to the buildings, as they are constructed, and has priority over the liens of materialmen and laborers for constructing the buildings. (Citing cases.) In the absence of a statute to that effect, a prior lien cannot be restricted to the land itself, when a building is thereafter erected upon it * * *.'

It is apparent that the constitutional and statutory provisions for mechanics' liens in the State of California did not, as in the states referred to, specifically provide that mechanics' liens shall be superior to a mortgage lien or deed of trust previously recorded. It was stated in McGreary v. Osborne, 9 Cal. 119, at page 122, that 'The object of the act was to give the mechanic a lien upon whatever interest the person had who caused the superstructure to be made.' (Italics ours.) To the same effect is Allis-Chalmers Co. v. Central Trust Co., 1 Cir., 190 F. 700, 704, 39 L.R.A.,N.S., 84, where it is said:

'One who contracts with the owner of land to furnish labor and materials, * * * is assumed to know, if a mortgage is recorded, that the consent of the mortgagor as owner can give a lien only to the extent of the mortgagor's...