First Nat. Bank in Dallas v. Whirlpool Corp.
| Decision Date | 04 December 1974 |
| Docket Number | No. B--4400,B--4400 |
| Citation | 517 S.W.2d 262 |
| Parties | FIRST NATIONAL BANK IN DALLAS et al., Petitioners, v. WHIRLPOOL CORPORATION, Respondent. |
| Court | Texas Supreme Court |
Coke & Coke, Earnest E. Figari, Jr., and Robert M. Roller, Paul H. Stanford, Dallas, for petitioners.
Ungerman, Hill, Ungerman, Angrist, Dolginoff & Teofan, Robert C. McGuire, Dallas, for respondent.
This case concerns the validity and priority of statutory and constitutional materialman's liens sought to be foreclosed by Whirlpool Corporation to satisfy a balance due on electric ranges, electric refrigerators, dishwashers, and garbage disposals which it furnished for installation in the construction of a Dallas apartment complex. Both the validity and priority of Whirlpool's asserted liens are challenged by petitioners, First National Bank in Dallas, the holder of a prior deed of trust, and Jo Anna R. Kaspar, a subsequent purchaser thereunder. In a non-jury trial, the district court found that Whirlpool had superior constitutional and statutory materialman's liens upon the appliances and ordered removal and foreclosure. The court of civil appeals affirmed, basing its judgment solely upon the statutory lien. 502 S.W.2d 185. Although agreeing in part with the opinion of the court of civil appeals, its judgment is reversed and the judgment of the trial court is reformed.
Beckwood, Inc., which proposed to build the Greenock Acres Apartments upon land owned by the corporation, obtained financing from First National Bank in Dallas on a note signed by the company and its owner, Arthur W. Beck, Jr., for a loan commitment in the principal sum of $1,850,000 on July 29, 1969. In conjunction with the note and as security for the bank's loan, Beckwood, Inc. executed a deed of trust covering the realty upon which the apartments were to be built as well as all subsequent improvements to be made upon or added to the property. The deed of trust was recorded July 31, 1969.
Thereafter, when the apartments reached the appropriate stage of construction, The Beck Companies, contractor for Beckwood, Inc., ordered the subject appliances from Whirlpool. The trial court found that the following deliveries were made to the apartment project by Whirlpool during the period from January 1970 through May 1970: 90 garbage disposals, 138 dishwashers with accompanying panels, 86 electric ranges, and 77 electric refrigerators. Before filing its lien, Whirlpool had made deliveries of appliances amounting to $39,079.97, of which $29,144.95 had been paid. The unpaid balance of $9,935.02 is the cause of this litigation. Whirlpool made its last delivery of appliances on May 8, 1970, and on September 3, 1970, filed its affidavit claiming a materialman's lien. It sent two copies of the affidavit to the owner of the property, Beckwood, Inc. We agree with the court of civil appeals that Whirlpool fulfilled the notice requirements of Article 5453 1 for the perfection of a statutory materialman's lien as an original contractor. Although The Beck Companies superficially occupied the role of original contractor for the owner, Beckwood, Inc., and Whirlpool supplied the appliances to The Beck Companies, Whirlpool was entitled to the status of original contractor under the Sham Contractor Statute, Article 5452--1. Beckwood, Inc. was one of the companies owned by The Beck Companies and all were effectively controlled by Arthur W. Beck, Jr. Accordingly, under Article 5452--1, Whirlpool is 'deemed to be in a direct contractual relationship with the owner.' See discussion of this relationship and result in the opinion of the court of civil appeals, 502 S.W.2d 185, 194--195.
As a result of default upon the note by Beckwood, Inc., the bank foreclosed its deed of trust and bought in the property on December 1, 1970. In January of 1971, the bank sold the property to Jo Anna R. Kaspar, once again taking a deed of trust, which it now holds from Kaspar for the purchase price of the property.
We agree with the court of civil appeals that Whirlpool has a valid and superior statutory lien on the dishwashers and disposals, but disagree as to the refriegerators and ranges. On the latter items, Whirlpool also claims, and the trial court granted, a constitutional lien which the court of civil appeals did not pass upon. Therefore, we must examine the contentions of the parties as to both types of liens.
Any statutory lien of Whirlpool, based upon the record in this case, must arise under the Hardeman Act, Article 5452 et seq. Article 5452 provides in part:
'1. Any person or firm . . . who may . . . furnish labor or material: (a) for the construction or repair of any house, building or improvement . . . under or by virtue of a contract with the owner . . . or his . . . contractor . . .; upon complying with the provisions of this Chapter shall have a lien on such house, building, fixtures, improvements . . . and shall have a lien on the lot or lots of land . . . to secure payment: (a) for the labor done or material furnished or both for such construction or repair . . ..
'2. For the purposes of this Act, the following definitions shall apply:
'b. The words 'material,' 'furnish material,' or 'material furnished' as used in this Act are to be construed to mean any part or all of the following:
'(1) Material, machinery, fixtures or tools incorporated in the work, or consumed in the direct prosecution of the work, or ordered and delivered for such incorporation or such consumption.' 2
From the very nature of the Hardeman Act, as indicated by its definition of terms, it is intended to encompass realty and such personal property as has been incorporated in or consumed in the construction or repair thereof or delivered for such purposes.
The refrigerators furnished by Whirlpool are connected with the realty only by electrical cords which are plugged into 110 volt electrical outlets. Likewise, the ranges are associated with the realty only by electrical cords which are plugged into 220 volt electrical outlets. On the other hand the disposals are installed under the kitchen sinks by screwing the top of the disposal into the drain outlet of the sink, screwing the bottom of the disposal into the drain pipe, and connecting the disposal to an electrical power source. Each of the dishwashers (with the accompanying dishwasher panel) is installed in a place provided under the kitchen cabinet by connecting the dishwasher to the underside of the cabinet top with several screws, connecting it to a water pipe and a drain pipe, and plugging it into an electrical outlet. There was evidence that the dishwashers and disposals were intended to remain permanently as a part of the building until they wore out. They were fixtures incorporated into the structure of the building and were thus subject to the Hardeman Act lien. We think the test applicable to this type of property was properly stated in McConnell v. Frost, 45 S.W.2d 777, 780 (Tex.Civ.App.1937, writ ref.), as follows:
The refrigerators and ranges, which were not built into or in any other manner affixed or incorporated in the work (construction of the building), fall in the same category as floor lamps, irons, television sets and other chattels which are connected by cords and plugs into an electrical outlet. One of Whirlpool's witnesses compared them to television sets. Merely plugging in an electrical cord is simply not the 'incorporation' or 'consumption' envisioned in the Act. Such items have not lost their identity as chattels. This was the holding of the Oregon Supreme Court in a case involving the legal character of similar electric ranges and refrigerators. Elliott v. Talmadge, Trustee, 207 Or. 428, 297 P.2d 310. The annotations under this case in 57 A.L.R.2d 1099 (1956), indicate that this is the majority rule in other jurisdictions.
As to dishwashers and disposals attached to the realty as in the present case, the Oregon Supreme Court drew the same distinction which we have adopted between them and plugged-in electrical ranges and refrigerators, holding that the dishwashers and disposals were sufficiently annexed to be subject to a materialman's lien. Builders Appliance Supply Company v. A. R. John Construction Company, 253 Or. 582, 455 P.2d 615 (1969).
This is not to say that there is no statutory lien available to the supplier of chattels, such as the ranges and refrigerators, whose status as personalty has not been altered. Chapter 9 of the Texas Business and Commerce Code, V.T.C.A., provides a procedure for perfecting liens on this type of personal property.
Having held that the electric refrigerators and ranges are not subject to the statutory lien, the question remains as to whether Whirlpool has a constitutional lien on these chattels as held by the trial court. Article XVI, § 37 of the Texas Constitution, Vernon's Ann.St., provides:
'Mechanics, artisans and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.'
It is well settled that the above...
To continue reading
Request your trial
-
GSL of Ill, LLC v. McCaffety Elec. Co. (In re Demay Int'l LLC), Bankruptcy Case No. 09–35759–H4–11.
...wire, and electrical wire, all of which are viewed as “removables” under Texas case law.20First Nat'l Bank in Dallas v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex.1974) (disposals and dishwashers) (recognizing long-standing rule that a mechanic's and materialman's statutory lien upon improve......
-
In re Lp
...laborers and materialmen. See Page v. Structural Wood Components, Inc., 102 S.W.3d 720, 723 (Tex.2003); First Nat'l Bank in Dall. v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex.1974).1. Statutory Liens Under the Texas Property Code, an individual has a valid statutory mechanic's and materialm......
-
Apex Fin. Corp. v. Brown
...mechanic's liens are self-executing as between the original contractor and the owner. First Nat'l Bank in Dallas v. Whirlpool Corp., 517 S.W.2d 262, 267 (Tex. 1974). However, constitutional liens will not be enforced against a third-party purchaser who has neither actual nor constructive no......
-
In Re Cornerstone E & P Company
...788, 791 (5th Cir.1990) (citing RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex.1985), First Nat'l Bank v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex.1974), and Hayek v. Western Steel Co., 478 S.W.2d 786, 795 (Tex.1972)); see also Sun Coast Plumbing Co., Inc. v. Shell O......
-
Chapter 16-2 Payment
...-------- Notes:[1] BMG Direct Mktg., Inc. v. Peake, 178 S.W.3d 763, 768 (Tex. 2005).[2] First Nat'l Bank in Dallas v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex. 1974).[3] First Nat'l Bank in Dallas v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex. 1974).[4] BMG Direct Mktg., Inc. v. Peake, 178 ......