Fidelity & Casualty Co. of New York v. D.N. Morrison Const. Co. of Virginia

• Decision Date: 13 February 1930
• Citation: 99 Fla. 309,126 So. 151
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. D. N. MORRISON CONST. CO., INC., OF VIRGINIA.
• Court: Florida Supreme Court

126 So. 151

99 Fla. 309

FIDELITY & CASUALTY CO. OF NEW YORK v. D. N. MORRISON CONST. CO., INC., OF VIRGINIA.

Florida Supreme Court, Division B.

February 13, 1930

Suit by the D. N. Morrison Construction Company, Inc., of Virginia against the Fidelity & Casualty Company of New York, and others. From an adverse decree, named defendant appeals.

Reversed and remanded.

Brown J., dissenting.

Syllabus by the Court

SYLLABUS

Question of liability on mechanic's lien bond, is purely of commonlaw cognizance; equity court cannot enforce penalty of statutory mechanic's lien bond, unless there is ground of equitable cognizance to which recovery on bond is incidental (Comp. Gen. Laws 1927, § 5396). The question of liability upon a bond given by an owner pursuant to section 5396, C. G L. 1927, for the purpose of releasing his lands from a statutory lien for labor or materials furnished, is purely a matter of common-law cognizance. A court of equity cannot acquire jurisdiction to enforce the penalty of such a bond unless the bond is accompanied by some extraneous circumstance which would inject into the matter a ground of equitable cognizance to which a recovery upon the bond would be incidental.

Bond given by owner to release land from statutory lien for materials or labor substitutes indemnity contract for land, and releases land from liens (Comp. Gen. Laws 1927, § 5396). When a valid bond is given by an owner pursuant to section 5396, C. G. L. 1927, for the purpose of releasing his land from a statutory lien for materials or labor furnished, the effect of the bond is to release the land from the lien, substituting for the land a contract of indemnity.

Statutory mechanic's lien bond is not substituted for land in sense that equity may proceed against bond as it could against land; where surety denies execution of mechanic's lien bond, question is raised on which Constitution preserves right to trial by jury; that lien discharged by mechanic's lien bond might have been enforced in equity against land does not bring enforcement of bond within field of equitable cognizance (Comp. Gen. Laws 1927, § 5396). A bond given by an owner of land pursuant to section 5396, C. G. L. 1927, is not substituted for the land in the sense that equity may proceed against the bond as it could against the land. The bond is not in the nature of a recognizance or forthcoming bond for the land. It is a contract of indemnity. When the surety on such a bond denies the execution of the bond, such action raises an issue upon which our Constitution preserves the right to trial by jury. The mere fact that the lien which is discharged by the bond might have been enforced in equity against the land does not bring the enforcement of the bond within the field of equitable cognizance, when the surety denies the execution of the bond and insists upon its right to trial of that issue by jury.

Demarcation between courts of equity and of law is strictly observed in Florida. The practice of this state strictly preserves the demarcation between courts of equity and of law and the respective fields of operation of such courts.

Mechanic's lien bond differs essentially from forthcoming bond in attachment, replevin, or execution, on which judgment may be entered against sureties in principal suit (Comp. Gen. Laws 1927, § 5396). A bond given by a lienee pursuant to section 5396, C. G. L. 1927, differs essentially in nature and purpose from a forthcoming bond in attachment, replevin, or on execution, upon which, by the terms of applicable statutes, judgment may be entered against the sureties in the principal suit without bringing another suit on the bond.

When mechanic's lien bond has been filed to release land from lien, lienor may nevertheless sue in equity and obtain decree in personam against lienee (Comp. Gen. Laws 1927, § 5396). When a bond to release land has been filed by a lienee pursuant to section 5396, C. G. L. 1927, thereby releasing the land from the lien, the lienor may nevertheless maintain a suit in equity in which a decree in personam may be rendered against the lienee.

Mechanic's lienor, electing to proceed in equity, may take personal decree only against lienee, and must sue at law on bond against sureties; where surety denies execution or validity, of mechanic's lien bond chancellor may retain jurisdiction to subject land to lien, in event bond should be held invalid (Comp. Gen. Laws 1927, § 5396). Where a bond is filed by a lienee pursuant to section 5396, C. G. L. 1927, to release the land from the lien, if the lienor elects to proceed in equity, he may take a personal decree only against the lienee, and must bring an action at law to enforce the bond against the sureties. When it appears in the chancery suit that the surety denies execution of the bond, or otherwise denies its validity, or in cases where such a contention by the surety may be reasonably anticipated, the chancellor may retain jurisdiction of the equity cause for the purpose of subjecting the land itself to the lien, in the event the bond should be held invalid, or the surety thereafter discharged from liability by judgment of a court of competent jurisdiction, and may make such other orders or decrees appropriate to the circumstances as may be necessary to protect complainant's lien ad interim by restraining alienation or incumbrance of the land by the owner pending a determination of the validity of the bond.

Appeal from Circuit Court, Dade County; A. J. Rose, Judge.

COUNSEL

Sam. J. Barco, of Miami, for appellant.

Hudson & Cason, of Miami, for appellee.

OPINION

STRUM J.

This is a suit in equity to enforce a statutory lien against real property for materials furnished and labor performed by the complainant in the erection of a building upon said lands.

The appellee, D. N. Morrison Construction Company, was complainant below. Defendants below were the former owner of the lands who contracted with complainant for the erection of the building; the present owner who took with notice of complainant's rights; certain creditors holding mortgage and other liens against the land; and the appellant, the Fidelity & Casualty Company of New York, who is alleged to be the surety on a release bond executed by the present owner, which will be referred to hereafter.

The bill of complaint, as amended, alleges, in substance, that the complainant, pursuant to a contract with the then owner, furnished material and performed labor in the erection of a building on said land, and completed the work according to said contract, for which there was due to the complainant, and unpaid, a stated sum of money. The bill further alleges that, prior to the commencement of this suit, the present owner of said land, as principal, and the Fidelity & Casualty Company of New York, as surety, executed and filed in the clerk's office a bond in double the sum due complainant conditioned in the language of the statute to 'pay any judgment which may be recovered on said lien with costs,' which bond was given for the purpose of releasing the land in question from complainant's lien. See section 3532, R. G. S. 1920; section 5396, C. G. L. 1927.

By amendment, the bill further alleges, in substance, that said bond was filed without the knowledge of complainant, and that complainant had no opportunity to inquire into or question the validity or proper execution thereof; that the surety has denied liability under said bond, and has so notified the complainant in writing, the ground upon which liability is denied being that the execution of said bond was not authorized by said surety.

The bill prays for a decree against the owner for the amount due complainant and for a foreclosure of complainant's lien and a sale of the property in the event said decree against the owner be not paid, or, in the alternative, that, if the court shall determine that complainant's recourse for the indebtedness aforesaid must be against the principal and surety who executed said bond, complainant in such event might have judgment for the amount of such lien against the owner and against the Fidelity & Casualty Company, surety on said bond. The bill also prays that, in the event it be determined that an action at law is necessary to determine the question of the surety's liability, the owner be enjoined from selling or incumbering the property, and that the creditors above mentioned, whose claims are alleged to be subordinate to that of complainant, be enjoined from attempting to foreclose against the land.

The surety, the Fidelity & Casualty Company, demurred generally to the bill as amended, and urges in support thereof that it is an improper party to said bill, and that the bill is without equity as to said demurrant, because the complainant has a full, adequate, and complete remedy at law against it upon said bond; and that it is entitled to a jury trial to determine the question of its liability on said bond.

The demurrer was overruled, and from that order this appeal was taken.

The determinative question presented on this appeal therefore is whether or not, when an owner has executed and filed a bond pursuant to section 5396, C. G. L. 1927, for the purpose of releasing his property from a mechanic's or laborer's lien accruing under the statutes, the lienor may join the surety upon such bond in a suit in equity against the owner to enforce the lien and secure a decree in personam against the owner, and also against the surety on said bond in the equity cause. The complainant has followed the procedure just stated, and contends that such procedure is permissible while the surety, the appellant here, contends that, where such a bond is given and the lienor elects to proceed in equity to enforce his lien, the lienor must...