Fenton v. Fenton Bldg. Co.

• Decision Date: 17 December 1915
• Citation: Fenton v. Fenton Bldg. Co., 96 A. 145, 90 Conn. 7 (Conn. 1915)
• Parties: FENTON et al. v. FENTON BLDG. CO.
• Court: Connecticut Supreme Court

96 A. 145

90 Conn. 7

FENTON et al.

v. FENTON BLDG. CO.

Supreme Court of Errors of Connecticut.

Dec. 17, 1915.

Appeal from Superior Court, New London County; Milton A. Shumway, Judge.

Receivership proceedings by James E. Fenton and others against the Fenton Building Company. From the decision that their claims were not preferred over those of other creditors, the Berlin Construction Company, Hillhouse & Taylor,' and Moriarty & Rafferty appeal. Casper K. Bailey appeals from a decision that his lien was void. Judgment as to the first-named appellants affirmed, and set aside as to the last.

Upon proceedings brought by some of its stockholders against the Fenton Building Company, a corporation then engaged in the business of building and contracting, John A. Moran was appointed receiver to wind up its affairs, and to continue its business so far as it might be necessary to complete all contracts theretofore entered into by it. It was at that time engaged in constructing an armory and auditorium for the state of Connecticut at the Connecticut Agricultural College in the town of Mansfield, a high school for the town of Windham and a convent building for the St. Joseph's Polish Roman Catholic Church at Norwich, all under written contracts. The appellant the Berlin Construction Company under two written contracts with the Fenton Company had, prior to the receivership, furnished structural steel and other material and labor used in the construction of the auditorium and armory for the State Agricultural College of the value of $7,654, and to complete the balance of its contracts with the Fenton Company would cost $1,200 more. Within 60 days after the appointment of the receiver the Berlin Construction Company filed in the office of the town clerk of the town of Mansfield a notice that it claimed a mechanic's lien upon the armory and auditorium and the lot whereon it stands. The contract between the state and the Fenton Company contained an article, which reads as follows:

"Art. IX. It is hereby mutually agreed between the parties hereto that the sum to be paid by the owners to the contractors for said work and materials shall be fifty one thousand, five hundred dollars ($51,500.00) subject to additions and deductions as hereinbefore provided, and that such sum shall be paid by the owners to the contractors, in current funds, and only upon certificates of the architects, as follows:

"Eighty five per cent. (85%) of the cost of labor and materials used in the construction of the building or delivered on the premises at the first of each month. Contractor shall give the superintendent an itemized statement of the same on said date for approval before payment is made.

"The final payment shall be made within fifteen (15) days after the completion of the work included in this contract, and all payments shall be due when certificates for the same are issued.

"If at any time there shall be evidence of any lien or claim for which, if established, the owners of the said premises might become liable, and which is chargeable to the contractors, the owners shall have the right to retain out of any payment then due or thereafter to become due an amount sufficient to completely indemnify them against such lien or claim. Should there prove to be any such claim after all payments are made, the contractors shall refund to the owners all moneys that the latter may be compelled to pay in discharging any lien on said premises made obligatory in consequence of the contractors' default."

At the time the receiver was appointed there was withheld from the Fenton Company by the trustees of the Connecticut Agricultural College under the terms of this article $6, 199.97. The contract between the Fenton Company and the town of Windham contained an article IX like the one in the contract with the state. The appellants Hillhouse & Taylor and Moriarty & Rafferty furnished materials and labor used in the construction of the Windham high school house under this contract. A large sum was due to each of these firms when the receiver was appointed. Each within 60 days after the receiver's appointment filed a certificate of lien upon the high school building and the lot on which it stands. The appellant Casper K. Bailey, under a contract with the Fenton Company, furnished labor and materials used in the construction of the convent building by the Fenton Company under its contract with the St. Joseph's Polish Roman Catholic Church until the receiver's appointment and in completing his contract after such appointment of the receiver, the latter having continued the business of the Fenton company and completed its contract with the church. Within 60 days after Bailey completed his contract he gave notice of his intention to claim a lien on the convent building and the lot on which it stands, and filed a certificate of lien for the amount of his claim $707.11 upon the lot and building within 60 days after he finished the work thus claimed to have been done under his contract. This was more than 60 days after the appointment of the receiver. The receiver asked the superior court to set aside as void all of these liens, and the court after a hearing had thereon held the liens void and set them aside, but without prejudice to the appellants' claims that the moneys withheld under article IX of the contracts were held in trust for the payment of these claims, and that as to that money these claims were preferred. At a later hearing upon this latter claim the court held that, none of the appellants' claims had any preference. The appellants the Berlin Construction Company, Hillhouse & Taylor, and Moriarty & Rafferty appeal from the last-named ruling. Casper K. Bailey appeals from the ruling holding his lien to be void.

Arthur L. Shipman, of Hartford, and William A. King, of Willimantic, for appellant Berlin Const. Co. William A. King, of Willimantic, for appellant Hillhouse & Taylor. Samuel B. Harvey, of Willimantic, for appellant Moriarty & Rafferty. William H. Shields and William H. Shields, Jr., both of Norwich, for appellant Casper K. Bailey. Charles V. James, of Norwich, for appellee receiver of defendant.

THAYER, J. (after stating the facts as above). The appellants the Berlin Construction Company, Hillhouse & Taylor, and Moriarty & Rafferty have not appealed from the decision of the superior court which held that their claimed liens against the state and the town of Windham were void. The state and town were made parties to the receiver's application, and they make no question as to the correctness of that decision, so that no question touching it is before us. These appellants, however, by their answer to the receiver's application raised the question whether the money which is withheld by the state and town under article IX of their respective contracts with the Fenton Company is held in trust by them for the payment of subcontractors under the Fenton Company, and from the court's decision holding that it is not they have appealed. The method of procedure to raise the question was irregular, but as all the parties in interest are before the court and desire a decision of the question, we are not adverse to deciding it.

The appellant Bailey has appealed from the decision of the court declaring his lien to be void. His case thus presents a different question than that which is raised by the other appellants, and must be treated by itself.

Article IX of the contracts of the Fenton Company with the state and with the town of Windham provides in its first paragraph the amount which is to be paid for the work and materials to be furnished...