Breed v. Glasgow Inv. Co.

• Decision Date: 17 February 1899
• Citation: 92 F. 760
• Parties: BREED v. GLASGOW INV. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

92 F. 760

BREED v. GLASGOW INV. CO.

United States Circuit Court, W.D. Virginia.

February 17, 1899

M. M Martin and O. B. Roller & Martz, for A. F. Smith.

Winfield Liggett, William Leigh, and H. C. Riley, for Withrow Lumber Co.

John Selden and G. D. Letcher, for bondholders.

PAUL District Judge.

This cause comes on to be heard on the report of the master in pursuance of a decree entered herein on the 28th of February 1896, by which the cause was recommitted. The master had made a report, January 28, 1896, to which exceptions had been filed by Henry Strong, a holder of part of the first mortgage bonds of the Glasgow Investment Company, and by others. By a decree of the 13th of June, 1896, the master was directed 'to take testimony upon the matters alleged in the petition of A. F Smith filed in this cause on the 1st day of March, 1895, and make report thereon, with all other matters which he had heretofore been directed to investigate and inquire into.'

The questions arising on the petition of A. F. Smith were before this court at a special term thereof, July 11, 1895. They were presented by a demurrer filed by Henry Strong and others to the petition. On the hearing, this court sustained the demurrer, and dismissed the petition. 71 F. 903. From this action of the court, Smith appealed to the circuit court of appeals, Fourth circuit. This court held that the demurrer to the petition put the whole record in issue, and that, admitting all that the petition alleged, it could not be sustained. The court of appeals reversed the decree of this court, and remanded the case for testimony to be taken on the petition. 20 C.C.A. 432, 74 F. 332. The master, in pursuance of the reference, took testimony in support of, and in opposition of, the allegations in the petition of said A. F. Smith.

The contention of the petitioner Smith is that the deed of trust executed by the Glasgow Investment Company to S. H. Letcher, trustee, of date June 1, 1891, the purpose of which was to secure to the Natural Bridge Forest Company the payment of the amount due it from the Natural Bridge Park Association, was in violation of section 1149 of the Code of Virginia of 1887. This section provides:

'Sec. 1149 (applying to chartered companies). And if any such company create any lien or incumbrance on its works or property for the purpose of giving a preference to one or more creditors of the company over any other creditor or creditors, except to secure a debt contracted, or money borrowed, at the time of the creation of the lien or incumbrance, the same shall inure to the benefit, ratably, of all the creditors of the company existing at the time such lien or incumbrance was created.'

The master, after carefully reviewing and discussing the testimony before him, says:

'In view of the foregoing findings of fact, and the law applicable thereto, your commissioner is of opinion that the deed of trust from the Glasgow Investment Company to S. H. Letcher, trustee, dated June 1, 1891, is not in violation of the provisions of section 1149 of the Code of Virginia, and that the bonds secured under said deed of trust constitute a lien upon the estate conveyed in said deed of trust superior to the claim of the petitioner A. F. Smith.'

The court sustains this finding of the master. It will not discuss the facts and the law upon which it rests. The reasons given by the court for sustaining the demurrer to the petition of A. F. Smith (71 F. 903) are applicable in sustaining the conclusion of the master. It is not necessary to repeat them.

The questions which have elicited the most elaborate and earnest argument are those raised by the exceptions taken to the master's report in allowing a mechanic's lien in favor of the Withrow Lumber Company, hereafter styled the 'Withrow Company.' This claim of a mechanic's lien by the Withrow Company arises as follows: On the 21st of October, 1891, the Forest Inn, situated on the mortgaged premises, was destroyed by fire. On the 15th day of May, 1892, the Glasgow Investment Company entered into a contract with the Withrow Company to erect an hotel building to replace the one destroyed, and to repair another hotel, known as the 'Appledore.' The price agreed to be paid for the work was $17,945.42. The receiver in this cause was appointed June 27, 1892. The Withrow Company commenced work on the building on the 15th day of May, 1892, and continued work until the 27th day of August, 1892. It then ceased work, and filed its claim for a mechanic's lien. Following is the statement: 'To labor performed and materials furnished in the construction of a new hotel at Natural Bridge, Va., and labor performed and materials furnished in repairing and improving the building known as 'Appledore Hotel,' as per contract, $12,000.'

Section 2475 of the Code of Virginia of 1887 provides:

'Sec. 2475. Lien for Work Done and Materials Furnished by Artizans, Mechanics, Lumber Dealers and Others. All artizans, builders, mechanics, lumber dealers, and other persons performing labor about, or furnishing materials for, the construction, repair, or improvement of any building or structure, permanently annexed to the freehold, whether they be general contractors or subcontractors, shall have a lien, if perfected as hereinafter provided, upon such building or structure, and so much land therewith as shall be necessary for the convenient use and enjoyment of the premises, for the work done and materials furnished. But where the claim is for repairs only, no lien shall attach to the property repaired unless the said repairs were ordered by the owner of the property or his agent.'

Section 2476 is as follows:

'Sec. 2476. Perfection of Lien by General Contractor-- Mechanic's Lien Record-- Notice of Lien. A general contractor, in order to perfect the lien given him by the preceding section, shall at any time after the work done, or materials furnished by him, and before the expiration of thirty days from the time such building or structure is completed, or the work thereon otherwise terminated, file in the clerk's office of the county or corporation court of each county or corporation in which the building or structure, or any part thereof is, or in the clerk's office of the chancery court of the city of Richmond, if the said building or structure is within the corporate limits of the said city, an account showing the amount and character of the work done or materials furnished, the prices charged therefor, the payments made, if any, and the balance due, verified by the oath of the claimant or his agent, with a statement attached declaring his intention to claim the benefit of said lien, and giving a brief description of the property on which he claims the lien. It shall be the duty of the clerk, in whose office such account and statement shall be filed as hereinbefore provided, to record the same in a book to be kept by him for that purpose, called the 'Mechanic's Lien Record,' and to index the same in the name as well of the claimant of the lien as of the owner of the property, and from the time of such filing all persons shall be deemed to have notice thereof.'

Section 2477 provides for perfection of lien by subcontractor.

Section 2478 provides:

'Sec. 2478. What Inaccuracies not to Affect Lien. No inaccuracy in the account filed, or in the description of the property to be covered by the lien, shall invalidate the lien, if the property can be substantially to the requirements of the two preceding sections, and is not willfully false.'

The statute gives a lien upon the building or structure, and so much land therewith as shall be necessary for the convenient use and enjoyment of the premises.

It is not contended that the mechanic's lien claimed by the Withrow Company is a lien on the land embraced in the deed of trust executed June 1, 1891, by the Glasgow Company to S. H. Letcher, trustee, to secure the holders of the bonds of the Glasgow Company. But it is insisted that there is a reservation clause in that deed which eliminates from its operation the hotel site and so much land as may be necessary for the convenient use and enjoyment of the premises. This contention is based on this reservation in the deed of trust:

'It is furthermore to be understood that there are to be reserved from the operation of this deed all the drives, streets, and alleys on said land now laid off, or that may hereafter be indicated, on any plot, for the improvement of said property, and such lands as may be occupied by, and used in connection with, such hotel as may be built thereon, together with all approaches thereto.'

The evidence shows that, at the time the deed of trust was executed, the Glasgow Company contemplated the erection of a new hotel, to cost $50,000. This was several months before the Forest Inn was destroyed by fire, and to replace with the Withrow Company contracted to erect a new building. To understand the intention of the contracting parties, we must place ourselves in the position they occupied when the deed of trust was executed. It was in contemplation of the grantor, the Glasgow Company, to erect a new hotel on the premises conveyed, and it desired to have under its exclusive control such hotel, and the lands occupied and used in connection therewith, and the approaches thereto. The parties were dealing with the property as it existed at the time of the contract, when the Forest Inn was one of the standing hotels. Men in the ordinary business affairs of everyday life do not contract with reference to unforeseen, unexpected, and unthought of occurrences, which we term 'accidents.'

In James v. Insurance Co., 4 Cliff. 278, Fed. Cas. No. 7,182, 8 Myers, Fed. Dec. Sec. 828, the court says:

'Parties may make their own

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