Canvasser Custom Builders, Inc. v. Seskin, Docket No. 11376

• Decision Date: 24 February 1972
• Docket Number: No. 2,Docket No. 11376,2
• Parties: CANVASSER CUSTOM BUILDERS, INC., Plaintiff-Appellee, v. Alex SESKIN and Service Investment Company, Defendants-Appellants
• Court: Court of Appeal of Michigan — District of US

Page 859

196 N.W.2d 859

38 Mich.App. 643

CANVASSER CUSTOM BUILDERS, INC., Plaintiff-Appellee, v. Alex SESKIN and Service Investment Company, Defendants-Appellants.

Docket No. 11376.

Court of Appeals of Michigan, Division No. 2.

Feb. 24, 1972.

Released for Publication May 4, 1972.

Leave to Appeal Denied May 9, 1972.

A. Albert Sugar, Sugar, Schwartz, Silver, Schwartz & Tyler, Detroit, for defendants-appellants.

Felix S. Kubik, Detroit, for plaintiff-appellee.

Before LEVIN, P.J., and R. B. BURNS and J. H. GILLIS, JJ.

J. H. GILLIS, Judge.

Plaintiff, Canvasser Custom Builders, Inc., previously brought an equitable action to foreclose a mechanic's lien arising from services rendered as a general contractor for the construction of a nursing home owned by defendant Service Investment Company. Alex Seskin, sole stockholder of said company, and Muriel Seskin, his wife, were joined as defendants as plaintiff believed that the Seskins had some interest in the real estate upon which the lien was sought. The trial court concluded that the written notations made on July 27, 1962, were not intended by the parties to represent their total agreement, but, instead, an oral agreement made on the same date embodied the entire contract. Though proofs established that defendants were indebted to plaintiff in the sum of $32,677.51, since the judgment of lien could not exceed the amount stated in the 'statement of account and lien,' plaintiff was allowed a security only in the sum of $23,585. ¹ Defendant's motion for a new trial was denied.

On appeal to this Court we sustained the trial judge's ruling regarding the parol evidence issue but reduced the amount of lien to $21,085. Canvasser Custom Builders, Inc. v. Seskin, 18 Mich.App. 606, 171 N.W.2d 654 (1969). Defendant's motion for rehearing in this Court was denied as was its application for leave to appeal to the Supreme Court.

Defendant then filed a motion with the trial court to be relieved from judgment and to correct judgment by reducing the amount of the lien to $7,000. This motion was denied and an order was entered releasing to plaintiff garnisheed funds, which had been deposited with the county clerk, in the amount of $21,085 plus interest, costs and attorney fees. From this denial defendant filed an application for leave to appeal to this Court, which was denied on July 19, 1971. ²

While that application was still pending, plaintiff commenced this present cause of action against Alex Seskin ³ and Service Investment Company as codefendant in order to collect the amount of the principal obligation over and above the satisfied lien judgment. ⁴ Defendants made a motion for accelerated judgment of dismissal on the basis that the prior lien judgment barred the present cause of action by the doctrine of Res judicata. This motion was denied on September 13, 1968. An application for leave to appeal from the denial was filed with this Court and the application was denied. Plaintiff then filed a motion for summary judgment in this contract action while defendants filed a motion for summary judgment of dismissal. The lower court granted plaintiff's motion and gave judgment in the amount of $11,409.36 against both Alex Seskin and Service Investment Company (thereby denying defendants' motion by implication). Defendants now appeal from this summary judgment.

Two issues are raised on appeal: (1) Whether the prior judgment on the mechanic's lien action bars the plaintiff from pursuing this present contract action through the application of the doctrine of Res judicata; (2) Whether plaintiff by his amended complaint in the equitable suit waived his right to bring a contract action on any sum above the amount for which the lien was sought.

A mechanic's lien is a security for the underlying indebtedness. It gives the lienor an interest, In rem, in the property that he has participated in improving to the extent of the enhancing value of his material and labor. Its essential purpose is to protect those who have the right to assert the personal claim for indebtedness by giving them an additional remedy. In giving this statutory remedy, the law does not deprive one of the fundamental right it was developed to aid--an action on the contract.

M.C.L.A. § 570.22; M.S.A. § 26.302 provides:

'Except as herein otherwise expressly provided, nothing in this act contained shall be construed to prevent any creditor in any such contract from maintaining an action thereon at common law in like manner as if he had no lien for the security of his debt.'

In F. M. Sibley Lumber Co. v. Wayne Circuit Judge, 243 Mich. 483, 485, 220 N.W. 746, 747 (1928), the Court adopted the following rule:

'A mechanic's lien is separate and distinct from the debt on which the lien is based, and, while it is recognized that the lienor cannot have more than one satisfaction for the debt due him, the weight of authority is that the lienor may proceed to enforce his lien and simultaneously bring an action to recover a personal judgment for the amount due. The enforcement of the lien is a cumulative remedy provided by statute, and an incidental accompaniment of the contract, which may be pursued in connection with ordinary remedies.' (See also 57 C.J.S. Mechanics' Liens § 266, p. 874.)

The mechanic's lien proceeding is one essentially In rem, F. M. Sibley Lumber Co. v. Wayne Circuit Judge, Supra; Prather Engineering Co v. Detroit, Flint & Saginaw Railway, 152 Mich. 582, 116 N.W. 376 (1908). Foreclosure is against property which has been enhanced by the value of the mechanic's services. The action, of course, stems from the contract but is directed primarily at property rather than the person who contracted for the services. ⁵

If there had been no satisfaction of the lien judgment, plaintiff could have brought an action on the contract and obtained a personal judgment for the same amount for which he was given a security interest. Cavalluzzo v. Diamond, 119 Misc. 645, 197 N.Y.S. 855 (1922). However, in this case a judgment was rendered on the mechanic's lien foreclosure which only partially satisfied the total contract debt. This action is merely for the excess over the mechanic's lien judgment to the limit of the contract obligation. The real question presented is whether, when the authorities speak of a plaintiff being entitled to but 'one satisfaction', this means only a satisfaction of the entire contract obligation or may it also mean a satisfaction of a partial lien judgment.

The problem was discussed in 50 C.J.S. Judgments § 680, p. 126, which stated:

'The creditor can have only one satisfaction, whether he obtains it in proceedings on the debt or on the mortgage security, although a decree of foreclosure satisfied by payment has been held to be no bar to a suit on the mortgage securities to recover a sum not included in such decree. So where, in replevin to recover mortgaged personalty, the amount of the debt was found, the fact that defenda...