Beach v. Wakefield

• Decision Date: 11 October 1898
• Parties: BEACH ET AL. v. WAKEFIELD ET AL.
• Court: Iowa Supreme Court

107 Iowa 567

76 N.W. 688

BEACH ET AL.

v.WAKEFIELD ET AL.

Supreme Court of Iowa.

Oct. 11, 1898.

Appeal from district court, Woodbury county; F. R. Gaynor, Judge.

These proceedings had their inception in an action by plaintiff firm to establish and foreclose a mechanic's lien. The claim is that defendant Wakefield was the principal contractor for the erection of a depot building for the Sioux City Terminal Railroad & Warehouse Company, and that plaintiff, as a subcontractor, furnished material for such building; and the prayer is that a lien be established upon the real estate whereon said depot is located, and that a decree be given foreclosing the same. Wakefield filed an answer and cross petition. He denies the amount of plaintiff's claim, but admits the sum of $2,187.47 is due. He also seeks to establish a mechanic's lien, and avers that his lien, which he claims upon much other real estate besides that upon which the depot is located, is superior to that of any of the other parties hereto. Continuing, Wakefield alleges his contract with the Terminal Company for the erection of a depot building. He claims there is due him under said contract, and for extras, and by agreement and final settlement, the sum of $51,010.84; and for this amount with interest he prays his lien be established. This cross petition was amended in certain particulars, which need not be here set out. It is well, perhaps, to state that the various parties hereto were made defendants in this pleading. There were many parties who filed answers and cross petitions. We need concern ourselves here with but two of them,--the Terminal Company and the Trust Company of North America. There are some special issues, which we shall set out in the course of the opinion; but most of the other parties are subcontractors, who are seeking to enforce their liens, and there is nothing of particular importance in the pleadings they have filed. The substituted answer of the Terminal Company is a general denial of the allegations of the petition and of all cross petitions. The Trust Company of North America (which we shall hereafter designate the “Trust Company”) puts in issue, by a denial, the various affirmative allegations made against it in the pleadings of the other parties, and sets up a mortgage for the sum of $1,250,000, which it seeks to have declared a first lien on the Terminal property. This, perhaps, is sufficient as a statement of the case. When it is said that the pleadings and exhibits fill 100 closely-printed pages of the abstract, it will be seen that some condensation is necessary. The decree of the district court established the lien of Wakefield in the sum of $59,682.68, with interest at 6 per cent. from August 3, 1896, for the benefit of himself and his subcontractors, the amount and order of whose liens are fixed in the decree, including the Gillette-Herzog Company in the amount of $15,406.89. The Trust Company is given a lien under its mortgage for $1,250,000, with interest, but it is expressly made subordinate to the mechanics' liens. Hubbard, trustee, is also found entitled to a lien in the sum of $718,000 and interest. The Hubbard lien is, however, postponed to that of Wakefield, and also to that of the Trust Company. The Trust Company appeals from the decree in so far as it fixes the amount of the mechanics' liens, and establishes the mortgage lien as inferior thereto. Wakefield, Hubbard (as trustee and as assignee), Hough (receiver), the Terminal Company, the Credits Commutation Company, Spalding, and others appeal. The details of their respective complaints will be stated in the opinion; that is, so far as they have been urged in this court. Affirmed.A. F. Call, for appellant Trust Co. of North America.

Wright & Hubbard, for appellant Warwick Hough.

Swan, Lawrence & Swan, for appellees Beach & Weld.

Taylor & Burgess, Argo, McDuffie & Argo, Carter & Brown, J. O'Donovan Rossa, Strong & Owen, Lynn & Foley, Marsh & Henderson, Marks & Mould, F. E. Gill, T. P. Murphy, Henderson, Hurd & Kiesel, and Chase & Dickson, for appellees E. C. Wakefield and others.

WATERMAN, J.

The Sioux City Terminal Railroad & Warehouse Company was organized and duly incorporated under the laws of this state. The purpose of its organization, as stated in the articles of incorporation, was “to construct, operate, and maintain one or more lines of railway within the corporate limits of Sioux City, Iowa, with all needed side tracks, depot yards, warehouses, storage houses, elevators, and all other needed terminal facilities; and shall have power to acquire by purchase or condemnation all neededgrounds for right of way, depot purposes, and side tracks, wood and water stations, and to hold, use, and control the same; and shall have power to construct, operate, and control one or more lines of railway from the depot and yards of said company in Sioux City,--one to run in an easterly direction to the east line of Woodbury County, Iowa, one to run in a westerly direction to the Big Sioux river, and one in a northerly direction to the Iowa state line; and shall have power to lease grounds and buildings, to purchase and hold all needed grounds for the use and purpose of said company, and to mortgage, lease, or sell the said grounds and improvements thereon.” Proceeding to carry out this plan, a contract was made with Wakefield to erect for it a passenger station and train sheds, and the various controversies here grow out of that undertaking.

1. The Gillette-Herzog Company was a subcontractor under Wakefield. It filed a cross petition in this action, claiming to be a creditor of Wakefield, and asked a judgment against him for the sum of $12,845.91 and interest, and for the establishment and foreclosure of a mechanic's lien against a part of the Terminal property. This relief was granted, and complaint is made by Wakefield of this action of the trial court. It seems that in April, 1893, Wakefield gave said company the following written order on the Terminal Company, the amount named therein being the full sum due on its contract:

“April 1, 1893. Messrs. The Sioux City Terminal Railroad & Warehouse Company, Sioux City, Iowa--Gentlemen: Please pay to the order of the Gillette-Herzog Manufacturing Company $23,190 36/100 (twenty-three thousand one hundred and ninety and 36/100 dollars), in full settlement of my note for $10,000.00, and of their account for material furnished and labor performed in connection with the structure ironwork for your depot and train shed. E. C. Wakefield.

This order accepted April 1. George Walter Oakley, Treasurer.”

As appears upon its face, this order was accepted by the drawee. Shortly after this transaction the Terminal Company paid the sum of $10,000 on this order, and later gave the Gillette Company a check for $5,722.94, the same being drawn on the Trust Company of North America. This check was not honored. A certain reduction in the amount of the Gillette Company's claim was afterwards made on account of freight charges paid by Wakefield. We do not discover that the amount found due on this claim is questioned, but it is said that the order on the Terminal Company was given by Wakefield and accepted by the Gillette Company in full satisfaction and payment of the latter's account. The rule is that the giving of an order on a third person will operate as payment of a precedent debt, if there is an express agreement to that effect. Farwell v. Salpaugh, 32 Iowa, 582;Huse v. McDaniel, 33 Iowa, 406; 2 Daniel, Neg. Inst. 1262. There is evidence showing that at the time this order was given the parties spoke of it as being in settlement and full satisfaction of the account, and that the Gillette Company afterwards asserted that it had no claim against Wakefield. This evidence is uncontradicted. Indeed, counsel for the Gillette Company does not seriously contend that this was not a payment. His main effort to sustain the finding of the lower court is grounded upon the claim that the order operated as an assignment of the fund, and that a right to a lien passed by the assignment. Under our finding of fact that the acceptance of the order was a payment of the claim as far as Wakefield is concerned, it is manifest that the Gillette Company is not entitled to a personal judgment against him, and it is insisted by counsel who resist this claim that it has no right to a mechanic's lien. The claim of an equitable assignment of Wakefield's right is met with the assertion that it is only the perfected lien that is assignable, and not a mere inchoate right to a lien. We have quite lately held that the right to a lien is assignable before the statement therefor is filed, if the parties so intend. Peatman v. Power Co. (Iowa) 74 N. W. 689. But, as we see this case, that question is not involved. The Gillette Company is not claiming Wakefield's right to a lien through an assignment, but its own right based on its claim as a subcontractor. The real question is, has it lost the right which it admittedly once had? Wakefield has paid it, so far as he is concerned, by giving an order on the owner; that is, he has canceled his personal liability. But we hardly think this transaction can stand in the way of an enforcement of the subcontractor's rights against the property. A subcontractor, it is true, cannot enforce his lien against the owner until his account against the principal contractor has been established or adjudicated. Simonson Bros. Mfg. Co. v. Citizens' State Bank (Iowa) 74 N. W. 905;Vreeland v. Ellsworth, 71 Iowa, 347, 32 N. W. 374. And it has been held that the right of a laborer or subcontractor must be enforced through his employer or principal. Utter v. Crane, 37 Iowa, 631. This last case is thought to be decisive against the claim of the Gillette Company to a lien. All that was decided in the Utter Case was that a laborer had no right against the principal contractor when the subcontractor by whom such laborer was employed had...