Enterprise Plumbing Co. v. Bailey Mortg. Co., 44872

• Decision Date: 29 April 1968
• Docket Number: No. 44872,44872
• Citation: 209 So.2d 825
• Parties: ENTERPRISE PLUMBING COMPANY, Inc. v. BAILEY MORTGAGE COMPANY et al.
• Court: Mississippi Supreme Court

Page 825

209 So.2d 825

ENTERPRISE PLUMBING COMPANY, Inc. v. BAILEY MORTGAGE COMPANY et al.

No. 44872.

Supreme Court of Mississippi.

April 29, 1968.

Donald K. Marcus, Teller, Biedenharn & Rogers, Vicksburg, for appellant.

Dent, Ward, Martin & Terry, Wesley Lominick, Jr., Vicksburg, Neal, Houston, Elliott & Barnett, Jackson, for appellees.

RODGERS, Justice:

This case arose on a petition filed in the County Court of Warren County on December 12, 1963 to enforce a materialmen's lien by the appellant, Enterprise Plumbing Company, Inc., on certain property described therein. The petition named as respondents Louis Laughlin, the building contractor; Bailey Mortgage Company, beneficiary under a deed of trust on the property; Sheppard Building Supply Company, Inc., a beneficiary under a deed of trust covering the property; Johnny and Mary Jo Covington, beneficiaries of a deed of trust on the property to secure the purchase price; and two individuals who were occupying the property at the time of filing suit but, having moved, are no longer necessary parties to this suit.

Upon the showing by the respondent Louise Laughlin that she had been discharged in bankruptcy (Including her debt to the appellant) and that she had no interest in the property, the cause against her was dismissed. The county court rendered judgment in favor of the appellant holding that appellant was entitled to a lien on the property as against the remaining respondents in the amount of $889.60. The Circuit Court of Warren County reversed the lower court and rendered a judgment for the appellees denying the claim of appellant and assessing it with costs.

The salient facts involved are as follows. On July 19, 1962 Johnny and Mary Jo Covington, two of the appellees, conveyed Lot 28 of Skywood Subdivision No. 1 in the City of Vicksburg to Louise Laughlin, a building contractor involved in the construction of several houses, one of which was on the lot conveyed.

The appellant, Enterprise Plumbing Company, Inc., hereinafter called 'Enterprise,' furnished materials to Louise Laughlin for use in the house on Lot 28 during a period beginning October 29, 1962 and ending December 20, 1962. On November 8, 1962, Louise Laughlin executed a deed of trust on the subject property in favor of appellee Bailey Mortgage Company, hereinafter called 'Bailey,' to secure a construction loan to be used in building a house on that lot. On December 13, 1962 Louise Laughlin executed the deed of trust in favor of appellees Johnny and Mary Jo Covington to secure the purchase price of the lot. On the same date a deed of trust on five or six lots, one of which is the subject property, was executed by Louise Laughlin in favor of appellee Sheppard Building Supply, hereinafter called 'Sheppard,' to secure a debt of $17,000. This latter deed of trust was made subject to the one in favor of the Covingtons, which in turn was subject to the deed of trust in favor of Bailey.

The amount owed Enterprise by Louise Laughlin for materials delivered to the subject property after the last delivery on December 20, 1962 was $1,576.94. On January 14, 1963 Louise Laughlin paid Enterprise $800, leaving a balance due on this job of $776.94. On March 8, 15, 22, and 29, 1963 notice of foreclosure by Sheppard was published. On March 28, 1963 Enterprise filed its notice of a materialmen's lien with the chancery clerk's office in the Notice of Construction Liens book. On April 1, 1963 the trustee under the deed of trust in favor of Sheppard sold the property at public auction to Sheppard for $600. Louise Laughlin on May 2, 1963 filed a petition in Bankruptcy, listing as claims against her estate the debts owed Enterprise, Bailey and Sheppard. On November 11, 1963 foreclosure on the property under the deed of trust in favor of the Covingtons was had after proper publication and notice. At the public sale the Covingtons bought the property for $2500.

On December 12, 1963 Enterprise filed its petition to enforce its materialmen's lien, along with a lis pendens notice. Sheppard on January 20, 1964 quitclaimed its interest in the property to the Covingtons. The respondent Louise Laughlin was adjudicated a bankrupt, and on September 25, 1964 was discharged of her personal liability for all debts, including those of Enterprise, Bailey and Sheppard.

Enterprise contended on appeal (1) that it did all that was required of it by section 356 Mississippi Code 1942 Annotated (Supp.1966) within the time set out in the Code; (2) that Sheppard alleged as an affirmative defense that its trust deed was superior to the statutory lien held by Enterprise, but that it offered no proof to establish this claim; and (3) that the statutory materialmen's lien of Enterprise is superior to the prior lien of the Covingtons on the building, but not on the lot of land on which the building was constructed.

We discuss the contentions of the appellant in chronological order.

(1) We agree that the appellant established without contradiction that it delivered the building materials to the contractor within the twelve months before its action began and that they came within the statutory lien in accordance with section 356, Mississippi Code 1942 Annotated (Supp.1966).

(2) Appellant's second contention is more complicated. The record reveals that the appellees filed an answer to the petition of the appellant, Enterprise, in which they alleged an affirmative defense as follows:

'9. By way of affirmative defense Respondents allege that the claim, if any, of Petitioners arose after the creation of the deeds of trust in favor of Johnny Covington and Mary Jo Covington, Bailey Mortgage Company and Sheppard Building Supply Company, Inc., and the foreclosure of the deeds of trust by Sheppard Building Supply, Inc., and the Covington's (sic) operated to cancel the lien, if any, that the Petitioner may have had, or claimed to have had, against the premises.'

During the trial the appellant, Enterprise, introduced the contractor, Mrs. Louise Laughlin, and after having been shown the trust deed in favor of Sheppard, she was asked the following questions and gave the following replies:

'Q. It secures the sum here of $17,000.00, is that not correct?

'A. That's what it says.

'Q. Mrs. Laughlin, was that particular money * * * due and owing to Sheppard, at the time you executed this deed of trust?

'A. Yes, it was.'

This trust deed was dated and recorded the 13th day of December 1962, which was prior to the notice of materialmen's lien filed March 28, 1963. We are therefore squarely confronted with the question: Does the mere fact that a trust deed is filed of record prior to the date when a mechanic or materialman files his notice of the statutory lien give priority to the recorded trust deed over the materialmen's lien?

The pertinent part of section 356, Mississippi Code 1942 Annotated (Supp.1966) is as follows:

'(a) Every house * * * shall be liable for the debt contracted and owing, for labor done or materials furnished * * * about the erection, construction, alteration, or repairs thereof; and debt for such * * * construction shall be a lien thereon. * * * Such lien shall take effect as to purchasers or encumbrancers for a valuable consideration without notice thereof, only from the time of commencing suit to enforce the lien, or from the time of filing the contract under which the lien arose, or notice thereof, in the office of the clerk of the chancery court, as hereinafter stated * * *.

'(b) Each of the several chancery clerks of this State shall provide in his office, as a part of the land records of his county, a book entitled 'Notice of Construction Liens' wherein notices under this act shall be filed and recorded, and such liens, as provided hereunder, shall not take effect unless and until some notation thereof shall be filed and recorded in said book showing a description of the property involved, the name of the lienor or lienors, the date of filing, if and where suit is filed, and if and where contract is filed or recorded.'

The foregoing section gives the laborers and materialmen a lien upon the house constructed. It is equally clear that the lien is effective against all claims and liens from the 'time of commencing suit to enforce the lien, or from the time of filing the contract under which the lien arose or notice thereof, in the office of the clerk of the chancery court'-except 'purchasers or encumbrancers for a valuable consideration without notice thereof.' See First National Bank of Greenville v. Virden, 208 Miss. 679, 45 So.2d 268 (1950); Weiss, Dreyfous & Seiferth, Inc. v. Natchez Inv. Co., 166 Miss. 253, 140 So. 736 (1932).

Section (b) of the statute, supra, must be read and construed in the light of the meaning of section (a). Where section (b) provides that, 'such liens, as provided hereunder, shall not take effect unless and until some notation thereof shall be filed and recorded in said book * * *,' it refers to 'purchasers or encumbrancers for a valuable consideration without notice thereof.'

Although the appellees set out, in their answer to appellant's petition to establish a lien, an affirmative defense, they did not allege that they were 'purchasers or encumbrancers for a valuable consideration without notice.' They rested their affirmative defense upon the proposition that their trust deeds were recorded prior to the time Enterprise filed notices of its lien in the office of the chancery clerk. They cited as authority to sustain their position section 869, Mississippi Code 1942 Annotated (1956).

It is then argued by appellees that the mere filing of a prior trust deed is sufficient to establish superiority of lien over a materialmen's lien. The appellees point out that the mechanics and materialmen's lien was not recognized by the common law, and argued that before the lien can be valid under the present law the mechanics or materialmen must have taken the steps set out in the Code in order to make...