Foster & Kleiser, Inc. v. Coe & Payne Co.

• Decision Date: 01 December 1987
• Docket Number: No. 74448,74448
• Citation: 363 S.E.2d 818,185 Ga.App. 284
• Parties: FOSTER & KLEISER, INC. v. COE & PAYNE COMPANY.
• Court: Georgia Court of Appeals

Page 818

363 S.E.2d 818

185 Ga.App. 284

FOSTER & KLEISER, INC. v. COE & PAYNE COMPANY.

No. 74448.

Court of Appeals of Georgia.

Dec. 1, 1987.

Rehearing Denied Dec. 15, 1987.

Certiorari Granted Jan. 21, 1988.

Stanley E. Foster, Atlanta, for appellant.

D. Michael Sweetnam, Eugene R. Simons, Atlanta, for appellee.

BEASLEY, Judge.

Foster & Kleiser, Inc. (Foster) was granted interlocutory review from the denial of its motion for judgment on the pleadings, based on the alleged failure of Coe and Payne Company (Coe) to initiate suit on a lien within the twelve-month period after the debt became due as provided by OCGA § 44-14-361.1. Appellant and its affiliate, Foster and Kleiser, Corporation are both wholly owned subsidiaries of Metromedia, Inc., which entered into a contract for the construction of an office and plant facility with S & G Planning and Construction Company. Coe, a flooring company, was a subcontractor for S & G. Its contract with S & G listed the property owner as Foster and Kleiser, Corporation, but in fact appellant was the actual owner. Coe filed a lien listing appellant as the owner within three months from performance of the last work or the furnishing of the materials as required by OCGA § 44-14-361.1(a)(2).

Prior to bringing an action on its lien, Coe's attorney inquired of the Secretary of State's office as to the correct corporate name for Foster and was told there was no "Foster and Kleiser, Inc." (as named in the lien), only a Foster and Kleiser, Corporation. Thus when suit was filed, the latter was named as defendant. When Coe subsequently a few months later examined the records in the Secretary of State's office and confirmed its error, it amended the complaint pursuant to OCGA § 9-11-15(c) to name the correct defendant, the appellant. Although the original suit was filed within 12 months as required by the Code, the amendment was not offered until after the expiration of that time period.

Coe brought this action because its contractor S & G had been adjudicated a bankrupt. OCGA § 44-14-361.1(a)(4) provides that where there has been an adjudication of bankruptcy the materialman need not sue his contractor, but the person furnishing the material may enforce the lien directly against the property in an action against the owner "if filed within 12 months from the time the lien becomes due." The twelve-month limitation for foreclosing the lien against the owner arises directly only where no judgment need be obtained against the contractor. Adair Mtg. Co. v. Allied Concrete Enterprises, 144 Ga.App. 354, 358, 241 S.E.2d 267 (1977), affirmed 241 Ga. 121, 243 S.E.2d 888 (1978). When the time limitation applies, failure to meet it results in dismissal of the case, Dodson v. Earley, 161 Ga.App. 666, 667(1), 290 S.E.2d 105 (1982); the lien becomes "not ... effective or enforceable." OCGA § 44-14-361.1(a).

On the hearing of the motion for judgment on the pleadings and before this Court, Coe contends that the "relation back" provision of OCGA § 9-11-15(c) insures that its amendment was timely and satisfies OCGA § 44-14-361.1. Foster's position is that because the lien statute must be strictly construed, suit against it was not commenced within 12 months as mandated by the Code. The trial court applied OCGA § 9-11-15(c), found that Coe's amendment met the conditions of that section and denied Foster's motion for judgment on the pleadings.

The question presented is whether OCGA § 9-11-15(c) (Rule 15) which permits amendments to relate back to the time of the original pleading is applicable to an action to enforce a lien under OCGA 44-14-361.1 (Lien Law).

Rule 15's primary purpose is to ameliorate the impact of the statute of limitation, Samples v. Barnes Group, 175 Ga.App. 253, 255, 333 S.E.2d 147 (1985), but it is not confined only to those cases. A.H. Robins Co. v. Sullivan, 136 Ga.App. 533, 535, 221 S.E.2d 697 (1975). It appears in a variety of contexts. See Rothstein v. L.F. Still & Co., 181 Ga.App. 113, 116(3), 351 S.E.2d 513 (1986); Fujii v. Dulles, 224 F.2d 906 (9th Cir., 1955). As to bringing in a party after the running of the statute of limitation, it imposes certain conditions which must be met. Dover Place Apts. v. A & M Plumbing & c. Co., 167 Ga.App. 732, 733, 307 S.E.2d 530 (1983); Sam Finley, Inc. v. Interstate Fire Ins. Co., 135 Ga.App. 14, 15(2), 217 S.E.2d 358 (1975); Rich's v. Snyder, 134 Ga.App. 889, 216 S.E.2d 648 (1975); Thomas v. Home Credit Co., 133 Ga.App. 602, 606(4),211 S.E.2d 626 (1974). When they are fulfilled, the amendment adding or changing a party defendant relates back to the time of the original filing and the limitation defense falls. The Rule 15 relation-back feature has also been applied where a condition precedent to the suit has been omitted, such as notice to a municipality, lack of service of process, and allegations as to venue. City of Atlanta v. Fuller, 118 Ga.App. 563, 164 S.E.2d 364 (1968); Middlebrooks v. Daniels, 129 Ga.App. 790, 201 S.E.2d 338 (1973); Leniston v. Bonfiglio, 138 Ga.App. 151, 226 S.E.2d 1 (1976).

The Lien Law, being a creature of statute and in derogation of the common law, must be strictly construed. White v. Aiken, 197 Ga. 29, 33, 28 S.E.2d 263 (1943). Jackson's Mill & Lumber Co. v. Holliday, 108 Ga.App. 663, 664(5), 134 S.E.2d 563 (1963). Imperative to the enforcement of a lien are two requirements: 1) plaintiff must have filed for record his claim of lien within three months after the materials were furnished and 2) an action for recovery of the claim must be commenced within twelve months from the time it becomes due. Allied Asphalt Co. v. Cumbie, 134 Ga.App. 960, 961(1), 216 S.E.2d 659 (1975). Commencement means more than mere filing of the action. Ferguson v. New Manchester Mfg. Co., 51 Ga. 609 (1874). There must also be service upon the proper defendant, Cherry v. North & South R., 65 Ga. 633, 634(1) (1880), and the correct debtor (the one for whom the work was performed or the materials furnished) must be sued. Ben Hill Ready Mix & c. v. Prather, 160 Ga.App. 149, 150(1), 286 S.E.2d 481 (1981).

The necessity of suit being brought within twelve months has been stressed in numerous cases. See, e.g., Young v. Landers 31 Ga.App. 59, 119 S.E. 464 (1923); David v. Marbut-Williams Lumber Co., 32 Ga.App. 157(1), 122 S.E.906 (1924); McCluskey v. Still, 32 Ga.App. 641(1 & 3), 124 S.E. 548 (1924); Jordan Co. v. Adkins, 105 Ga.App. 157(1), 123 S.E.2d 731 (1961); Newton Lumber, Etc., v. Crumbley, 161 Ga.App. 741(1), 290 S.E.2d 114 (1982). An excellent exposition of the prerequisites is found in Chamlee Lumber Co. v. Crichton, 136 Ga. 391, 71 S.E. 673 (1911), and repeated in Kwilecki v. Young, 180 Ga. 602, 606, 180 S.E. 137 (1935): "The lien comes into potential existence only when the statute is satisfied. Its vitality as an enforceable lien depends upon the concurrence in fact of three things, viz., the furnishing of the materials, the record of the claim of lien within three months, and the institution of foreclosure suit in twelve months; if there is a failure in either, the lien is inoperative."

The requirement of filing within twelve months is more than a statute of limitation. In a case dealing with this time requirement, Lee v. Stokes, 135 Ga.App. 642, 644, 218 S.E.2d 654 (1975), this Court held, quoting from Gulden v. Berman, 82 Ga.App. 580, 581, 61 S.E.2d 692 (1950): "A statute which in itself creates a new liability, gives an action to enforce it unknown to the common law, and fixes the time within which that action may be commenced, is not a statute of limitation. It is a statute of creation, and the commencement of the action within the time it fixes is an indispensable condition of the liability and of the action which it permits."

In Chamlee Lumber Co. v. Crichton, supra, our Supreme Court determined whether what is now OCGA § 9-2-61, which permits the refiling of a suit within six months of its dismissal even though the statute of limitations intervened, could function in a lien case. The court found the code section inapposite based upon the reasoning that: " 'The proviso to this act is a condition precedent upon which the suit must be brought; the right of action is given provided the same is brought within twelve months from the time the same accrued. If the same be not brought within twelve months, then there is no right of action under this statute....' Adhering to the rule of strict construction, we interpret the statute to mean, that, in creating the lien, the statute demanded as one of its constituent elements that suit to foreclose be begun within twelve months from the maturity of the claim; and this requirement appertains not merely to the remedy, but constitutes one of the essential things which enter into the creation of the lien." Accord G & B Contractors v. Coronet Developers, 134 Ga.App. 916, 216 S.E.2d 705 (1975).

It is clear then...