Boulia-Gorrell Lumber Co. v. E. Coast Realty

• Decision Date: 03 December 1929
• Parties: BOULIA-GORRELL LUMBER CO. v. EAST COAST REALTY.
• Court: New Hampshire Supreme Court

148 A. 28

BOULIA-GORRELL LUMBER CO.

v. EAST COAST REALTY.

Supreme Court of New Hampshire. Rockingham.

Dec. 3, 1929.

Exceptions from Superior Court, Rockingham County; Seammon, Judge.

Action by the Boulia-Gorrell Lumber Company against the East Coast Realty, wherein the defendant defaulted and surety for defendant on bond to mortgagee moved to intervene. Transferred on exceptions to ruling refusing to set aside default. Exceptions overruled.

Action to enforce a mechanic's lien. The defendant engaged one Benoit to erect a building on its land, and on July 24, 1926, the plaintiff contracted with Benoit to furnish lumber for use in the construction of the building. The lumber was delivered during a period from July 29, 1926, to September 7, 1927. On this latter date the plaintiff gave the defendant notice that it would claim a lien, under Pub. Laws 1926, c. 217, § 16. The defendant then owed Benoit all that Benoit owed the plaintiff.

On March 30, 1927, the defendant mortgaged the premises, and on the same day Benoit gave the mortgagee a waiver and release of any liens he then had or might acquire as the contractor for the erection, of the building.

The defendant defaulted, and later moved that the default be stricken off. The mortgagee moved to be made a party defendant. A surety for the defendant on a bond to the mortgagee, conditioned that the building would be completed free of liens, moved to intervene and be allowed to contest the validity of the lien on the grounds of the defendant's release of liens and of the priority of the mortgage to the notice of the lien. To the ruling that the grounds set forth no legal defense to the action and that the default should stand, the defendant and surety excepted.

Marvin, Peyser & Tucker and Wm. E. Marvin, all of Portsmouth, for plaintiff.

Conrad E. Snow and H. T. Lorimer, both of Rochester, for defendant and surety.

Demond, Woodworth, Sulloway & Rogers and Jonathan Piper, all of Concord, for mortgagee.

ALLEN, J. I. The question of the effect of a subcontractor's knowledge of the contractor's release of liens at the time performance of the former's contract is commenced or under way is not raised. The release was not given until the plaintiff had partly performed its contract, and there is nothing to show that it had any knowledge of the release before its performance was fully completed. And no consideration has been given to the construction of the release. Its fair meaning to prevent and bar all liens arising from the work so far as it could, is assumed.

In this situation the claim that the lien was lost through Benoit's release of his lien is based upon a theory that the plaintiff's lien was derived from and depended upon Benoit's and that whatever Benoit did to invalidate his had a like effect upon the plaintiff's in other words, the plaintiff could not have a lien unless Benoit had one.

In support of this position, stress is laid upon some of the language in Cudworth v. Bostwick, 69 N. H. 536, 45 A. 408, 409, and particularly the following: "The statute gives the subcontractor the same lien that the principal contractor has, and nothing more. Both as to amount and the property to which it attaches, it is limited by what the principal contractor could enforce against the property."

In that case the issue was whether the subcontractor had a lien when the owner owed the principal contractor nothing, and no such situation as is now presented was under discussion or purported to be passed upon. The quoted excerpt from the opinion is to be construed in connection with the facts of the case and in the light of the context. An earlier paragraph of the opinion emphasizes as the only essential thing to mate the subcontractor's lien good, that the owner should be a debtor of the contractor. "* * * The owner is to hold back from the principal contractor the amount due the subcontractor," on notice of the latter's claim of a lien. What was meant by calling the subcontractor's lien the same lien as the contractor's was that it had the same character and standing, and could not be enforced unless the law gave the contractor a lien for what might be due him. It did not mean that, if the contractor saw fit to invalidate his lien, the subcontractor was thereby deprived of his. The law gives the contractor a lien only to the extent of the amount due him, and the subcontractor may not have a lien beyond that amount. The contractor's and subcontractor's liens are put on the same parity, subject to protection to the owner against having to pay more than is due under his contract with the contractor. Thus fairly construed, the opinion in Cud worth v. Bostwick is not even dictum against the plaintiff's lien.

To deny the subcontractor his lien for any other reason than the owner's freedom from debt to the contractor would lead to the singular absurdity that one person might defeat and destroy another person's property interests at his pleasure. That the Legislature undertook to give protection to the subcontractor and at the same time place the protection under the contractor's mercy is not shown by the phraseology of the statute that the subcontractor "shall have the same lien" as is given the contractor. If such a limited lien was intended to be given, language which might not fairly be otherwise construed would he necessary to express it, in view of the departure from the normal incidents of ownership that would be involved.

Whatever may have once been the rule of strict construction of statutes in derogation of common-law principles, courts to-day are more disposed to adopt an attitude of ascertaining fairly and reasonably What statutes mean when their meaning is in doubt. But under the application of strict construction it would appear more in conflict with common law doctrines to allow the contractor to dispose of the subcontractor's lien behind his back, without his knowledge, and regardless of his consent, than to uphold the lien so far as injustice is not done the owner.

The result reached on this point is believed to be supported by the weight of authority, and among the cases which may be cited are Norton v. Clark, 85 Me. 357, 27 A. 252; Miller v. Mead, 127 N. Y. 544, 28 N. E. 387, 13 L. R. A. 701; Friedman v. Hampden County, 204 Mass. 494, 90 N. E. 851; Stewart, etc., Company v. Trenton, etc., Company, 71 N. J. Law, 568, 60 A. 405; Smalley v. Gearing, 121 Mich. 190, 79 N. W. 1114, 80 N. W. 797; Myers v. Joseph A. Strowbridge Estate Company, 82 Or. 29, 160 P. 135; Maddux v. Buchanan, 121 Va. 102, 92 S. E. 830; Jarvis v. State Bank, 22 Colo. 309, 45 P. 505, 55 Am. St. Rep. 129; Gimbert v. Heinsath, 11 Ohio Clr. Ct. R. 339; Cost v. Newport Builders' Supply & Hardware Company, 85 Ark. 407, 108 S. W. 509, 14 Ann. Cas. 142.

II. A contractor furnishing labor upon, and materials for structural use for, the owner's property under a contract with him is given a lien upon the materials thus furnished and upon the property. Pub. Laws 1926, c. 217, § 12.

In Cheshire Provident Inst. v. Stone, 52 N. H. 365, it was held that a builder had a lien...