Dunlap v. Hinkle, 15929

• Decision Date: 13 June 1984
• Docket Number: No. 15929,15929
• Citation: 173 W.Va. 423,317 S.E.2d 508
• Parties: Gary A. DUNLAP, Ernest L. Isenhart, Jr., et al. v. Robert E. HINKLE.
• Court: West Virginia Supreme Court

Page 508

317 S.E.2d 508

173 W.Va. 423

Gary A. DUNLAP, Ernest L. Isenhart, Jr., et al. v. Robert E. HINKLE.

No. 15929.

Supreme Court of Appeals of West Virginia.

June 13, 1984.

Syllabus by the Court

1. "A mechanic's lien for supplies and labor used and employed in the improvement of real estate, to bind the interest of the owner of such real estate, or any interest therein, must be based on contract for such improvement with such owner, of said real estate or interest therein, or his duly authorized agent." Syl. pt. 1, Lilly v. Munsey, 135 W.Va. 247, 63 S.E.2d 519 (1951).

2. "The trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Syl. pt. 3, Chapman v. Kane Transfer Co., Inc., 160 W.Va. 530, 236 S.E.2d 207 (1977), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84 (1957).

William C. Garrett, Garrett, Whittier & Garrett, Webster Springs, William C. Thurman, Buckhannon, for appellants.

Thomas H. Keadle, Buckhannon, for appellee.

McHUGH, Chief Justice:

This action is before this Court upon the appeal of Gary A. Dunlap, Ernest L. Isenhart, Jr., Daniel T. Christian and John M. Butcher, the appellants, from an order of the Circuit Court of Upshur County wherein that court dismissed a civil action filed by the appellants against Robert E. Hinkle, the appellee. The appellants had commenced the civil action against the appellee in an effort to enforce a mechanic's lien they had filed against the appellee's real estate. This Court has before it the petition for appeal, all matters of record and the briefs of counsel.

In October, 1981, the appellee leased to Raymond Arington a piece of real estate located in Upshur County, West Virginia, commonly known as the Raina or Dixie Plaza. The lease agreement executed between the parties contained a clause that reads as follows: "Any improvements made to the leased premises shall, upon termination of this lease or the termination of any extension thereof, become the property of the Lessor." Arington hired the appellants to do certain electrical and carpentry work to a building located on the leased premises, however, Arington went out of business shortly thereafter owing the appellants various wages and the costs of materials.

On March 3, 1982, the appellants filed a mechanic's lien against the respective property interests of the appellee and Arington in the leased property. On the same day, the appellants also commenced a civil action against the appellee and Arington in the Circuit Court of Upshur County to enforce the mechanic's lien against the property and praying for various damages. Arington was thereafter adjudicated bankrupt and immune from liability.

In his answer, the appellee moved the trial court to dismiss the action pursuant to Rule 12(b)(6) of the West Virginia Rules of Civil Procedure, alleging, inter alia, that the action should be dismissed because of a lack of contractual privity between the appellants and the appellee with respect to the improvements to the property. In an order entered April 22, 1983, the trial court granted the appellee's motion to dismiss the action based upon this Court's holding in Lilly v. Munsey, 135 W.Va. 247, 63 S.E.2d 519 (1951), and further released the mechanic's lien against the appellee's real estate. In dismissing the action, the trial court held that the appellants' complaint failed to allege that a contract, "express or implied," existed between the appellants and the appellee. ¹

The issue in the case before us revolves around the interpretation of W.Va.Code, 38-2-1 [1931]. That statute provides as follows:

Every person, firm or corporation, which shall erect, build, construct, alter, remove or repair any building or other structure, or other improvement appurtenant to any such building or other structure, under and by virtue of a contract with the owner for such erection, building, construction, alteration, removal or repair, either for an agreed lump sum or upon any other basis of settlement and payment, shall have a lien upon such building or other structure or improvement appurtenant thereto, and upon the interest of the owner thereof in the lot of land whereon the same stands, or to which it may have been removed, to secure the payment of such contract price or other compensation therefor.

Lilly v. Munsey, supra, involved a lease wherein the owners of a certain parcel of real estate leased such real estate to the lessee for the purpose of constructing and operating a race track "and it was provided that the said lessee was authorized to erect all buildings necessary to the operation of the said race track, or for any other lawful purpose, on the land owned by ... [one of the lessors] ... and included in said leased premises." 135 W.Va. at 248, 63 S.E.2d at 520. The lessee hired the plaintiff to construct the racetrack which included grading work. The plaintiff was not paid for the grading work and he filed a mechanic's lien against the property interest of the lessors and sought to enforce it in the circuit court.

This Court reversed the circuit court's judgment in favor of the plaintiff and held in syllabus point 1 as follows:

A mechanic's lien for supplies and labor used and employed in the improvement of real estate, to bind the interest of the owner of such real estate, or any interest therein, must be based on contract for such improvement with such owner, of said real estate or interest therein, or his duly authorized agent.

This Court's holding in Lilly v. Munsey is in accord with the general view that:

In the absence of some special provision creating a lessee as an agent for the lessor, the mere relation of lessor and lessee does not make the lessee the agent of the lessor to contract for work on leased premises, although the interest of the lessee in the land, created by the lease, may be made the subject of a mechanic's lien.

135 W.Va. at 252-53, 63 S.E.2d at 522. See generally 57 C.J.S. Mechanic's Liens §§ 65 & 195 (Supp.1983); Annot., 163 A.L.R. 992 at § IV(b) (Supp.1983); Annot., 79 A.L.R. 962 at § IV(b) (Supp.1983).

Where the terms of a lease simply authorize a lessee to make improvements to the leased premises, although the improvements become the property of the lessor upon termination of the lease, a party with whom the lessee has contracted to make the improvements may not assert a mechanic's lien against the property interest of the lessor in the leased premises. See Hayward Lumber & Investment Co. v. Graham, 104 Ariz. 103, 449 P.2d 31 (1968); Budget Electric Co. v. Strauss, 417 So.2d 1143 (Fla.Dist.Ct.App.1982); Heflin v. W.D.M. Corp., 391 So.2d 357 (Fla.Dist.Ct.App.1980); Indianapolis Raceway Park, Inc. v. Curtiss, 179 Ind.App. 557, 386 N.E.2d 724 (1979); Miles Homes of Indiana, Inc. v. Harrah Plumbing and Heating Service Co., Inc., Ind.App., 408 N.E.2d 597 (1980); Landas Fertilizer Co. v. Hargreaves, 206 N.W.2d 675 (Iowa 1973); Abbeville Lumber Co. v. Richard, 350 So.2d 1292 (La.Ct.App.1977); Messina Brothers Construction Co. v. Williford, 630 S.W.2d 201 (Mo.Ct.App.1982); Met Painting Co., Inc. v. Dana, 90 Misc.2d 289 394 N.Y.S.2d 392 (1977); Kazmier v. Thom, 63 Ohio App.2d 29, 408 N.E.2d 694 (1978); Commercial Fixtures and Furnishings, Inc. v. Adams, 564 P.2d 773 (Utah 1977); McCombs Construction, Inc. v. Barnes, 32 Wash.App. 70, 645 P.2d 1131 (1982). There must be some other evidence that the lessee was acting as the agent of the lessor in making improvements to the leased premises, however, mere acquiescence or inactive consent by the lessor of the leased premises to the improvements by the lessee is not sufficient to constitute a finding of agency between the lessor and lessee for the purpose of asserting a mechanic's lien against the property interest of the lessor. See Miles Homes of Indiana, Inc. v. Harrah Plumbing and Heating Service Co., Inc., Ind.App. 408 N.E.2d at 600; McCombs Construction, Inc. v. Barnes, 32 Wash.App. at 74-75, 645 P.2d at 1134.

Usually, a mechanic's lien will arise against the property interest of the lessor if the improvements made to the property by the lessee are performed pursuant to an express agreement between the lessor and lessee or where the terms of the lease impliedly obligate the lessee to make the improvements. See generally 57 C.J.S. Mechanic's Liens § 65(c) (Supp.1983). However, when such conditions do not exist, as in the case before us, it has been noted that "[i]n determining whether an agency should be implied the courts have often, perhaps of necessity, gone beyond the agreement and into the whole circumstances of the letting in order to find the answer." Utley v. Wear, 333 S.W.2d 787, 793 (Mo.Ct.App.1960). See also Cassaday v. DeJarnette, 251 Iowa 391, 101 N.W.2d 21 (1960). ²

This Court has held in numerous cases that "[t]he trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Syl. pt. 3, Chapman v. Kane Transfer Co., Inc., 160 W.Va. 530, 236 S.E.2d 207 (1977), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84 (1957). See Sticklen v. Kittle, W.Va., 287 S.E.2d 148, 156 (1981) (collecting cases).

As this Court further stated in John W. Lodge Distributing Co., Inc. v. Texaco, Inc., W.Va., 245 S.E.2d 157, 158-59 (1978):

The purpose of a motion under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure is to test the formal sufficiency of the complaint. For purposes of the motion to dismiss, the complaint is construed in the light most favorable to plaintiff, and its allegations are to be taken as true. Since common law demurrers have been abolished,...