Frank H. Conner Co. v. Spanish Inns Charlotte, Ltd.

• Decision Date: 17 April 1978
• Docket Number: No. 19,19
• Citation: 242 S.E.2d 785,294 N.C. 661
• Court: North Carolina Supreme Court
• Parties: FRANK H. CONNER COMPANY v. SPANISH INNS CHARLOTTE, LIMITED, a North Carolina limited partnership, Emil Ball, Jerry M. Whipperfurth, Richard R. Holchek, and R. C. Benson, Individually and as general partners, Archie C. Walker, as Trustee and Wachovia Realty Investments, an unincorporated business trust, William W. Tennent, III, Trustee, and United Leasing Corporation, and Wachovia Mortgage Company.

Page 785

242 S.E.2d 785

294 N.C. 661

FRANK H. CONNER COMPANY v. SPANISH INNS CHARLOTTE, LIMITED, a North Carolina limited partnership, Emil Ball, Jerry M. Whipperfurth, Richard R Holchek, and R. C. Benson, Individually and as general partners, Archie C. Walker, as Trustee and Wachovia Realty Investments, an unincorporated business trust, William W Tennent, III, Trustee, and United Leasing Corporation, and Wachovia Mortgage Company.

No. 19.

Supreme Court of North Carolina.

April 17, 1978.

Connor, Lee, Connor, Reece & Bunn by David M. Connor and Cyrus F. Lee, Wilson, Wade & Carmichael by J. J. Wade, Jr., Charlotte, for plaintiff appellee.

Berry, Bledsoe & Hogewood by Louis A. Bledsoe, Jr. and Dean Gibson, Charlotte, Womble, Carlyle, Sandridge & Rice by Kenneth A. Moser and Donald A. Donadio, Winston-Salem, for defendant appellants.

MOORE, Justice.

The primary issue on this appeal is whether a contractor's lien for the construction of a motel, arising under Article 2, Part 1, N.C.G.S. 44A-7 through -13, prior to its 1975 amendment, may relate back to and take effect from the date of the furnishing of services for the partial clearing and the on-site surveying and staking of the boundary lines of the building to be constructed by the contractor. The trial judge answered this question in the affirmative when he adjudged that plaintiff's lien was superior to the deed of trust executed for the benefit of Wachovia Realty Investments. The Court of Appeals affirmed his ruling. We affirm the decision of the Court of Appeals.

G.S. 44A-8, prior to its 1975 amendment, granted a contractor dealing directly with the owner of real property a lien upon that real property to which the contractor furnished "labor" or "materials" for purposes of construction on the real property. Prior to 1 July 1975, the effective date of the amendment, G.S. 44A-8 said, in defining those persons entitled to a lien:

"Any person who performs or furnishes labor or furnishes materials pursuant to a contract, either express or implied, with the owner of real property, for the making of an improvement thereon shall, upon complying with the provisions of this article, have a lien on such real property to secure payment of all debts owing for labor done or material furnished pursuant to such contract."

G.S. 44A-7(2) defines "improvement" as follows: " 'Improvement' means all or any part of any building, structure, erection, alteration, demolition, excavation, clearing, grading, filling, or landscaping . . . on real property."

The lien provided for by G.S. 44A-8 is inchoate until perfected by compliance with G.S. 44A-11 and -12, and is lost if the steps required for its perfection are not taken in the manner and within the time prescribed by law. See Assurance Society v. Basnight, 234 N.C. 347, 67 S.E.2d 390 (1951). However, when a lien is validly perfected, and is subsequently enforced by bringing an action within the statutory period set forth in G.S. 44A-13(a), the lien will be held to relate back and become effective from the date of the first furnishing of labor or materials under the contract, and will be deemed perfected as of that time. G.S. 44A-10 (1969) codifies the established North Carolina case law doctrine of "relation back" as applied to mechanics', laborers' and materialmen's liens. That statute says:

"Effective date of liens. Liens granted by this Article shall relate to and take effect from the time of the first furnishing of labor or materials at the site of the improvement by the person claiming the lien."

By virtue of this statute, a contractor's lien for all labor and materials furnished pursuant to a contract is deemed prior to any liens or encumbrances attaching to the property subsequent to the date of the contractor's first furnishing of labor or materials to the construction site. See Heating Co. v. Realty Co., 263 N.C. 641, 140 S.E.2d 330 (1965); Assurance Society v. Basnight, supra.

In present case, there is no question that, in constructing the motel, plaintiff furnished "labor" and "materials" to the Spanish Inns property, and thereby was entitled to a lien thereon under G.S. 44A-8. Nor is there any dispute as to whether plaintiff duly and timely filed and perfected the lien under G.S. 44A-12, within 120 days after the last furnishing of labor and materials at the site of the improvement. Finally, there is no question regarding the validity of plaintiff's action to enforce the lien under G.S. 44A-13, brought within 180 days after the last furnishing of labor or materials to the site. It is, rather, the defendant's contention that, under G.S. 44A-10, the plaintiff's statutory lien rights did not attach and take effect until some date after the recordation on 29 October 1973 of Wachovia Realty Investments' construction deed of trust on the Spanish Inns property.

Defendants argue that former G.S. 44A-8 does not purport to secure payment of all debts owing for all work done pursuant to the construction contract between the owner and the contractor. Rather, defendants insist, the statute only provides for a lien securing payment of all debts owing for "labor" or "materials"; and, that surveying services are not lienable under the former statute. Therefore, G.S. 44A-10 must be read to relate back only to that date when the contractor first provided "labor" or "materials" of the type protected by G.S. 44A-8 to the site. Since the only work furnished by plaintiff prior to 29 October 1973 (the date of defendants' recordation of the deed of trust) was, as defendants contend, "surveying services", plaintiff's lien cannot relate back to a date prior to 29 October and must therefore be subordinate to defendants' deed of trust.

Defendants base their argument on a comparison of former G.S. 44A-8, the controlling statute in this case, and amended G.S. 44A-8, effective 1 July 1975. The amended statute reads as follows:

"Mechanics', laborers' and materialmen's lien; persons entitled to lien. Any person who performs or furnishes labor or professional design or surveying services or furnishes materials pursuant to a contract, either express or implied, with the owner of real property for the making of an improvement thereon shall, upon complying with the provisions of this Article, have a lien on such real property to secure payment of all debts owing for labor done or professional design or surveying services or material furnished pursuant to such contract."

Defendants cogently argue that, since the amended G.S. 44A-8 specifically provides for a lien for the furnishing of "surveying services", former G.S. 44A-8 did not contemplate that such work be lienable under its terms. Instead, defendants insist, former G.S. 44A-8 provided a person with a lien only if he performed "labor" or furnished "materials" to the improvement. Defendants further contend that "labor" under the former statute has been defined as "manual, unskilled work of an inferior and toilsome nature," accord, Stephens v. Hicks, 156 N.C. 239, 72 S.E. 313 (1911), and that the work performed by General Surveyors, Inc., for the plaintiff on 17, 18 and 22 October was not of this sort; therefore plaintiff's lien cannot relate back to those dates.

Central to defendants' arguments is the assumption that prior to 1 July 1975 "labor" did not include the clearing, surveying and staking of the lines of a building prior to its construction. Assuming defendants' contention that surveying services were nonlienable under Article 2, Part 1, of G.S. 44A, prior to 1 July 1975 (and without deciding whether the 1975 additions amended or merely clarified the former provision), we must look to the actual nature of the work performed by General Surveyors, rather than to any title, to determine whether the work in this case was labor performed under the former statute.

The nature of the work performed by General Surveyors, Inc., for plaintiff on 17, 18 and 22 October is undisputed. The parties stipulated that " . . . General Surveyors, Inc., in performing the work cleared a portion of the building site and partially roughstaked the building site which consisted of locating and installing building corner stakes at the west end of the building, plus building line stakes on the south side of the building. . . . "

Plaintiff contends that this work performed by General Surveyors, Inc., and furnished by plaintiff, was "labor" under former G.S. 44A-8 and -10. Defendants contend that it was not "labor", but rather was nonlienable professional "surveying services".

The contract dated 4 October 1973 between the plaintiff, as general contractor, and Spanish Inns, as owner, was a construction contract and not a contract for the rendering of professional design or surveying services. The partial clearing and staking of the building on the site is the first overt essential on-site task in the actual construction of the improvement called for in the construction contract. Such work goes beyond the stage of the mere planning or preparation for the "making of the improvement." Rather, it is an integral part of the construction of the building itself, and thus is "labor" performed for the "making of an improvement."

It should be noted here that General Surveyors was not employed by the contractor to perform traditional surveying work unrelated to the construction contract. In fact, General Surveyors had already surveyed the property lines for Spanish Inns, Wachovia Realty Investments and Lawyers Title in August of 1973.

We cannot accept defendants' argument that "labor" in the statute must be construed to read "manual, unskilled work of an inferior and toilsome nature."

In Stephens v. Hicks, supra, this Court defined a mechanic or laborer as "a person skilled in the practical use of tools; a workman who shapes and applies material in the building of houses or other structures mentioned in the law; 'one actually employed with his own hands in constructive work' . . . ." From this case it...