Dolder v. Griffin, 81-1254.
| Decision Date | 27 August 1982 |
| Docket Number | No. 81-1254.,81-1254. |
| Citation | 323 NW 2d 773 |
| Parties | William F. DOLDER, etc., Respondent, v. Wayne G. GRIFFIN, et al., Appellants, Guyer's Builders Supply, Inc., Respondent, Zagar Construction Company, Inc., Defendant, M. H. Kerber Masonry, Respondent, Kurt L. Shannon of Shannon's Decorating, Respondent, Mill City Heating & A/C Co., Respondent, Berg Dry Wall, Inc., Respondent, Ronson Door Sales, Inc., Respondent, Bartholomew Baker, etc., Respondent, Woodmaster, Inc., Respondent, Ham Lake Masonry, Inc., Respondent, David P. Kelley, etc., Respondent, Aldo, Inc., Respondent. |
| Court | Minnesota Supreme Court |
Eastlund, Peterson & Solstad, Mark T. Solstad and Jeffrey W. Jacobs, Minneapolis, for appellant.
Malcolm D. Reid, Minnetonka, for Dolder, etc. and Bartholemew Baker.
Vesely, Otto, Miller & Keefe, Hopkins, for Guyer's Builders Supply, Inc.
Penberthy & Larson, Excelsior, for M. H. Kerber Masonry.
Wakefield, Lundberg & Vie, Elk River, for Shannon of Shannon's Decorating.
Sidney L. Brennan, Jr., Minnetonka, for Mill City Heating & A/C Co.
Beitz, Johnson, Forsberg & Galt, Minneapolis, for Berg Dry Wall, Inc.
Tieso & Stevens, St. Paul, for Ronson Door Sales, Inc.
John Rice, Minneapolis, Grathwol, Oberhauser & Randall and Kurt Schuman, Wayzata, for Woodmaster, Inc.
Dobis, Wersal & Wersal, Minneapolis, for Ham Lake Masonry, Inc.
J. L. Bennett, Dunkley & Bennett, Minneapolis, for Kelly.
Stephen J. Poindexter, Minneapolis, for Aldo, Inc.
Considered and decided by the court en banc without oral argument.
Appellants Wayne G. Griffin, Brenda B. Griffin (Griffins) and the First National Bank of Minneapolis (bank) appeal from the order of Hennepin County District Court granting respondents' motion for partial summary judgment and denying appellants' motion for summary judgment, and from the judgment of October 21, 1981. We reverse and remand.
William F. Dolder commenced this action to foreclose his mechanic's lien against Lot 2, Block 3, Beaverwood Addition, City of Minnetonka. Several other mechanics and materialmen also sought to foreclose their mechanic's liens. After discovery, the Griffins and the bank moved for summary judgment dismissing the causes of action of the lien claimants on the ground that the lien claimants had failed to give the Griffins statutory prelien notice as required by Minn.Stat. § 514.011, subd. 2 (1980). Various lien claimants moved for partial summary judgment. The trial court granted the motion of the lien claimants, finding that prelien notice was not required, and denied the motion of the Griffins and the bank. The Griffins and the bank moved the trial court to certify, pursuant to Minn. R.Civ.App.P. 103.03, that its order involved important and doubtful questions and should be immediately appealable. The trial court denied this motion but directed entry of judgment and, pursuant to Minn.R. Civ.P. 54.02, made an express determination that there was no just reason for delay. We accepted the appeal.
On or about August 25, 1979, Wayne G. Griffin executed, as "buyer," a purchase agreement with Zagar Construction Company (Zagar) for the property in question. Zagar owned the land and, by the purchase agreement, agreed to construct a home on the property. The purchase price was $190,000, with the sale conditioned upon the Griffins obtaining financing and selling their home. Wayne's wife, Brenda, did not sign as "buyer" but rather as "agent." Wayne Griffin paid $1,000 earnest money by two checks dated August 18, 1979, and September 24, 1979.
On October 10, 1979, the property was surveyed and staked. The record does not reflect the fee charged for this service. In answer to interrogatories, the Griffins stated that the first item of material or labor was furnished for the beginning of improvements on "approximately October 16, 1979."
On or about October 23, 1979, a second purchase agreement was executed, with both Wayne G. and Brenda B. Griffin signing as "buyers" and Brenda signing also as "agent." This second purchase agreement required additional earnest money, added the conditions that financing be "satisfactory to buyers," made the sale contingent on the Griffins selling their home, extended the closing date, and stated that "one of the buyers is a Licensed Real Estate Agent and is purchasing * * * for personal residential purposes."
At all times between August 25, 1979, and April 25, 1980, the date of closing, Zagar was the record owner of the property. Zagar acted as the general contractor for the construction of the Griffins' home. All earnest money ($22,000) was paid to Zagar by November 3, 1979. As to the 12 lien claimants, 10 stated in their lien statements and affidavits that they contracted with John Zagar and Zagar Construction Company. Two lien claimants said that they contracted with the Griffins in addition to contracting with Zagar. While the Griffins had contact with several of the lien claimants, it is unclear whether that contract ever ripened into a contract between the Griffins and any of the lien claimants. According to the lien statements and affidavits, the first contribution to the improvement by any of the lien claimants was made by Dolder Plumbing and Heating Company on November 23, 1979. On subsequent dates the other lien claimants performed their work and provided their materials.
On April 25, 1980, a closing was held at the Universal Title Insurance Company (Universal). The mortgagee, First National Bank of Minneapolis, was insured by and represented by Universal. The Griffins did not purchase title insurance and were represented by their attorney. At closing, the balance of the purchase price was paid to Zagar, at which time Zagar, by its president, John P. Zagar, presented a sworn construction statement and supporting mechanic's lien waivers. The lien waivers had been forged, and the lien claimants, who are parties to this action, timely filed mechanic's lien statements. This foreclosure action followed.
It is undisputed that no prelien notices, as provided by Minn.Stat. § 514.011, subd. 2, were sent to the Griffins. Although the Griffins' interest was not of record, they stated by affidavit that the property in question was posted with a sign indicating that the home was being built for the Griffins.
The following issues are presented on appeal:
1. Where the first visible beginning of improvement by one mechanic is commenced prior to an owner's obtaining an equitable interest in the property, does Minn.Stat. § 514.011, subd. 2 require mechanics and materialmen who have started work after the owner has obtained his interest to give that owner a prelien notice?
2. Did the Griffins obtain an interest enforceable by specific performance upon the execution of the October 3, 1979, purchase agreement?
3. Did the trial court err in ruling that mechanics need not provide statutory prelien notice to owners such as the Griffins, who are "sophisticated" because of Mrs. Griffin's status as a licensed real estate agent?
Minnesota Statutes § 514.011, subd. 2 requires potential lien claimants to give all "owners" a prelien notice that the owner's property may be subjected to a mechanic's lien. That section states, in pertinent part:
Every person who contributes to the improvement of real property so as to be entitled to a lien pursuant to section 514.01 except a party under direct contract with the owner must, as a necessary prerequisite to the validity of any claim or lien, cause to be given to the owner or his authorized agent, either by personal delivery or by certified mail, not later than 45 days after the lien claimant has first furnished labor, skill or materials for the improvement, a written notice * * *.
Minn.Stat. § 514.011, subd. 2. For the purpose of this notice requirement, "`owner' means the owner of any legal or equitable interest in real property who enters into a contract for the improvement of the real property." Minn.Stat. § 514.011, subd. 5 (1980).
Respondent lien claimants argue that no prelien notice need be given to the Griffins because the Griffins acquired their interest after the first improvements had been made by one mechanic; that the Griffins do not have an interest which can be enforced by specific performance and are, therefore, not "owners" to whom prelien notice need be given; and that, even if the letter of the statute required prelien notice, the Griffins are "sophisticated" vendees to whom prelien notice need not be given.
Appellants argue that the Griffins are "owners" within the meaning of the notice statute and that the trial court erred in declaring that the equities of the case require a finding that no prelien notice need be given to vendors who are "sophisticated," because one of the vendors was a licensed real estate agent on the date the first purchase agreement was signed.
1. Whether the lien claimants need give prelien notice to any owner acquiring an interest in the property being improved subsequent to the date of the first visible improvement by one mechanic is a question of first impression for this court.
The lien claimants cite two recent cases to support their argument that no prelien notice need be given. We held in C. W. Stark Lumber Co. v. Sether, 257 N.W.2d 556 (Minn.1977) (Sether), that prelien notice had to be given to the vendee of an unrecorded executory contract for the sale of real property where the contractor had forged lien waivers. As in the present case, both the vendee and materialmen were innocent parties. In Sether, the vendee's interest arose prior to the first delivery of materials. The lien claimants rely on the following footnote:
We do not imply by this opinion that materialmen dealing with contractor-owners must give notice to persons acquiring an unrecorded interest in the property subsequent to the first delivery of goods by the materialmen. Notice under the statute need not be given by the materialmen to such subsequently acquired interest.
Id. at 560,...
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