Brooks v. Railway Company
| Decision Date | 01 October 1879 |
| Citation | 101 U.S. 443,25 L.Ed. 1057 |
| Parties | BROOKS v. RAILWAY COMPANY |
| Court | U.S. Supreme Court |
APPEAL from the Circuit Court of the United States for the District of Iowa.
The facts are stated in the opinion of the court.
Mr. James Grant for the appellants.
Mr. N. M. Hubbard and Mr. B. J. Hall, contra.
The appellants, who were complainants below, are trustees in a mortgage made by the Burlington and Southwestern Railway Company on its road and other property to secure $1,800,000 of bonds put on the market and sold. They instituted this foreclosure suit against the company, and brought in, during its progress, other parties who were asserting mechanics' liens on the road. Of these parties only the interest of O'Hara Brothers and Wells, French, & Co., whose liens were by the court held to be paramount to that of complainants, remain to be considered in the appeal of the trustees from that decree.
The company was organized under the laws of Iowa to build a railroad from Burlington, on the Mississippi River, in a southwestern direction to some point on the Missouri River. From the initial point, at Burlington, to Viele, in Lee County, Iowa, they by contract used the track of a road already built between Burlington and Keokuk. From Viele to Bloomfield, in Davis County, they built and paid for their own track. From Bloomfield to Moulton, in Appanoose County, fourteen miles, they used the road of another company, already built, and from Moulton to Unionville, in Missouri, they built their own road. It is for the work and labor done and materials furnished on the latter piece of the road that the lien of the appellees was allowed by the court on the road and right of way, stations, &c., of the company from Viele Junction, in Lee County, to the South Iowa State line, in Appanoose County, in favor of O'Hara Brothers for $39,763.24, and in favor of Wells, French, & Co., for $8,528.83.
It is conceded that the work for which these liens were allowed was done for the company by the parties claiming them, and no question is raised here as to its value, or to the liability of the company to pay for it. The fact is undisputed that before any of it was done, or the contract therefor made, the mortgage to the complainants had been executed and duly recorded.
It was also undisputed that both the appellees, whose claim is now contested, were sub-contractors, and that the only contract which the railway company made for labor and materials was with another organization, known as the Mississippi and Missouri Construction Company.
This purely artificial being, composed of the officers and some of the stockholders of the railway company, was organized for the purpose of building this road. It belongs to a class of corporations which have become well known of late years as instruments to enable the officers of railroad companies to make contracts with themselves to build the roads for their stockholders. In the present case, this construction company having sublet all the contract to one J. W. Barnes, very soon took itself out of the way, and by an agreement between it and the railway company, of which the following extract is found in the record, its existence ceases to be of any further significance in this contest:——
'The railway company assumes all outstanding liabilities of the construction company, except officers' salaries. All previous contracts between the two companies are annulled.
'The railway company assumes the contract of J. W. Barnes for construction of portions of the main line and branch of the B. & S. W. Railway Company, and the payment of all estimates due and to become due thereon.'
This leaves to be considered here the railway company, J. W. Barnes, the principal contractor for construction of the road, O'Hara Brothers, and Wells, French & Co., sub-contractors, and the complainants. It is also to be observed that before the present foreclosure suit was begun O'Hara Brothers and Wells, French & Co. had both commenced legal proceedings in the proper courts of the State, and had, after a contest with the railway company, obtained judgments establishing their l ens. It was after this that they were made defendants to this suit.
To those proceedings, Barnes, the principal contractor, and the railway company were parties, and we take it for granted that as against them the judgments establish the validity of the liens. The judgments do not bind the appellants as they were not parties thereto. The validity of the liens as against them, and if valid, their precedence to that of the mortgage, are the questions for consideration here, and they must be determined by applying the statutes of Iowa to the facts of this case.
By the law in force when these transactions took place a mechanic has, for labor done or things furnished, a lien on the entire land upon which the building, erection, or improvement was made, which had been held to include railroads, and it shall be preferred to all other liens and incumbrances which shall be attached to or upon such building, erection, or other improvement made subsequently to the commencement of said building, erection, or other improvement. Revision of 1860, sect. 1853; Code of 1873, sect. 2139.
This provision, it will be observed, relates to the land on which the improvement is made and gives the mechanic a paramount or preferred lien only as against other liens and incumbrances created subsequently to the beginning of his work. Those made prior to that time are unaffected by it. But sect. 1855 of the Revision, now sect. 2141 of the Code, makes a different provision in regard to his lien on the building, erection, and improvement for which the lien is claimed. It reads thus:——
'The lien for the things aforesaid on work shall attach to the building, erections, or improvements for which they were furnished or done, in preference to any prior lien or incumbrance or mortgage upon the land upon which the same is erected or put, and any person enforcing such lien may have such building, erection, or other improvement sold under execution, and the purchaser may remove the same within a reasonable time thereafter.'
The mechanic, therefore, has a lien upon the land paramount to all rights accruing after the commencement of his work, and upon what he puts upon the land paramount to all other claims, whether created before or after that time. The decisions of the courts of Iowa are to this effect and the proposition is not disputed in argument here.
Have the sub-contractors in this case taken the necessary steps to establish their lien?
What is required to initiate the lien as to all other persons but sub-contractors is to be found in sect. 1851 of the Revision of 1860.
'.
This section was subsequently modified by the following statute:——
'An act to amend sect. 1851 of Revision of 1860, relating to Mechanics' Liens.
'Sect. 1. Be it enacted by the General Assembly of the State of Iowa, that the following words are hereby added to sect. 1851 of Revision of 1860, to wit: 'But the failure to file the claim, account, settlement, or demand, in the time named in this section and in sect. 1847, shall not operate to defeat the claim or demand, nor the lien of the person supplying the labor or material, as against the owner nor the contractor, nor as against any one except purchasers or incumbrancers, without notice, whose rights accrued after the ninety days and before the account, or settlement, or claim, or lien is filed.'
'Approved pril 7, 1862.'
The statute, however, makes provision that a sub-contractor who shall do the work which his principal had contracted to do shall by proper proceeding secure to himself the lien which arises from the work done or materials furnished. In such case there is a more complex affair. There are here the owner of the property, the principal contractor, and the sub-contractor, who, as well as prior and subsequent incumbrancers or lien holders, have rights to be affected. It may generally be supposed that the principal contractor has sublet his contract so as to leave a profit to himself. He is entitled, therefore, to see that his sub-contractor does not take this profit. The owner is not bound for more than he agreed to pay the principal contractor. In view of these interests, sect. 1847 of the Revision, sect. 2131 of the Code of 1873, enacts that every sub-contractor wishing to...
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