Fremont Foundry & Mach. Co. v. Saunders Cnty., No. 30462.

• Court: Supreme Court of Nebraska
• Writing for the Court: SIMMONS
• Citation: 136 Neb. 101,285 N.W. 115
• Parties: FREMONT FOUNDRY & MACHINE CO. ET AL. v. SAUNDERS COUNTY ET AL.
• Docket Number: No. 30462.
• Decision Date: 07 April 1939

136 Neb. 101
285 N.W. 115

FREMONT FOUNDRY & MACHINE CO. ET AL.
v.
SAUNDERS COUNTY ET AL.

No. 30462.

Supreme Court of Nebraska.

April 7, 1939.

[285 N.W. 116]

Syllabus by the Court.

1. In the absence of a statute granting special protection to materialmen and laborers who furnish materials and labor to contractors doing construction work with agencies of government of this state, such furnishers of labor and materials are general creditors of the contractor.

2. The only special protection that is afforded by statute to materialmen and laborers who furnish material and labor to contractors doing construction work under contract with agencies of government of this state is that provided by the bond required by statute.

Appeal from District Court, Saunders County; Landis, Judge.

Action by the Fremont Foundry & Machine Company, the Omaha Steel Works, and the Nebraska Bridge Supply & Lumber Company, against the County of Saunders, State of Nebraska, the First National Bank of Wahoo, Nebraska, Wachob Bender & Company, and Barton H. Kuhns, trustee for the bankrupt estate of the Central Bridge & Construction Company, to declare and enforce an equitable lien, in favor of the plaintiffs as materialmen on a certain indebtedness of the County of Saunders, State of Nebraska, to the Central Bridge & Construction Company, to which the plaintiffs had furnished labor and materials. From a decree in favor of the defendants, the plaintiffs appeal.

Decree affirmed.

Clarence T. Spier, of Omaha, and Fred H. Richards, Jr., of Fremont, for appellants.

Hendricks & Kokjer, of Wahoo, Paul F. Good, of Lincoln, and Crofoot, Fraser, Connolly & Stryker and Young & Williams, all of Omaha, for appellees.

Heard before SIMMONS, C. J., and ROSE, EBERLY, PAINE, CARTER, MESSMORE, and JOHNSEN, JJ.

SIMMONS, Chief Justice.

In this action the plaintiffs, materialmen, asked the court to declare and enforce an equitable lien upon certain indebtedness of the defendant Saunders county to the Central Bridge & Construction Company. Certain claims of the construction company had been assigned to the defendants, First National Bank of Wahoo, Nebraska, hereinafter called the bank, and Wachob Bender & Company. Plaintiffs claim a lien superior to the assignments. The trial court held against the plaintiffs, and plaintiffs appeal.

The case arises out of the following set of facts, either admitted by, or properly determined from, the pleadings and evidence.

On May 18, 1936, the defendant Saunders county entered into an annual bridge contract with the Central Bridge & Construction Company (hereafter called the construction company) wherein the construction company agreed to furnish all labor and material necessary to erect and complete such bridges, bridge material, and bridge work, for the unit prices set forth in the contract, as the defendant county might require.

The contract is on a standard form prepared by the state of Nebraska. It provided that from time to time the county should pay to the construction company estimates for materials furnished and labor performed, as in the judgment of the county might be right and proper. The contract had attached thereto a bond, wherein the construction company was principal, and one E. G. Risk was surety. Risk appears to have been a managing officer of the construction company. The bond in the sum of $2,000 does not meet the statutory requirements as to sureties. It is conditioned, among other things, to “pay off and settle in full with the person or persons entitled thereto all accounts and claims that may become due by reason of laborers' or mechanics' wages, or for materials furnished, or services rendered.” There is no provision in the contract permitting the retention of any sums which may be due the contractor in order to pay the claims of materialmen or laborers. There is no privity of contract between the county and the plaintiffs, no statute requiring the county to pay the plaintiffs, or to act as trustee of the funds to be paid for the work, and no agreement to

[285 N.W. 117]

pay the plaintiffs if the construction company fails to do so.

The construction company performed work and furnished materials of a value in excess of $58,000. The county was unable to make payments promptly to the construction company due to a lack of funds. The construction company at various times filed claims which were approved by the county engineer, audited by the county clerk, and found correct. Notations were made thereon as to the probable time when warrants would issue.

On September 11, 1936, and November 28, 1936, the construction company assigned claims, so audited and certified, to the defendant, First National Bank, of Wahoo, and that bank paid the construction company value therefor, subject to a discount for interest. The defendant, Wachob Bender & Company, likewise purchased claims on January 11, 1937.

The three plaintiffs in this action filed claims with the county for unpaid balances due from the construction company for materials furnished. The Nebraska Bridge Supply & Lumber Company filed its claim February 20, 1937, for lumber sold and delivered to the construction company. The plaintiff, Omaha Steel Works, filed its claim February 27, 1937, for the sale price of a bridge in the sum of $1,063.21. The Fremont Foundry & Machine Company filed its claim March 6, 1937, for material furnished in the sum of $1,542.30. The construction company was declared bankrupt on March 9, 1937.

As a result of the filing of these claims by the materialmen, the defendant county refused to issue warrants for two of the assigned claims, one being to the bank in the sum of $8,004.01, and the other being to Wachob Bender & Company in the sum of $4,339.30.

The construction company had purchased materials from the three plaintiffs at different times. Charges on their records were made against the construction company, and it was not until the construction company became slow in its payments, and apparently insolvent, that the plaintiffs filed these claims with the county. The plaintiffs sold the materials to the construction company upon the faith and credit of the construction company, and not upon the credit of the county, or in reliance upon payment from the county.

Of the claim of the Fremont Foundry & Machine Company for approximately $1,540, not to exceed $963 of the materials so sold to the construction company went to the county under its annual contract, and the remainder of the materials involved in that claim appear to have been on hand as a part of the assets of the construction company at the time it went into bankruptcy.

The material furnished by the Omaha Steel Works appears to have been used by the construction company under its annual contract with the county. Of the lumber furnished by the Nebraska Bridge Supply & Lumber Company, approximately 50 per cent. of the amount claimed was for material furnished either prior to the date of the annual contract, or sold subsequently to the construction company, and not traced to any county work under the annual contract.

There was also one car load of lumber sold by the plaintiff, Nebraska Bridge Supply & Lumber Company, to the construction company, which was in turn sold to the county, for which no claim had been filed or assignment made, and which, under the holding of the district court, is a claim that vested in the trustee in bankruptcy of the construction company.

Plaintiffs do not claim that they had a contract with the county, and do not assert a claim against the county, but rather assert an equitable lien against the funds due from the county; that their lien “attaches by operation and application of the law and rules of equity;” and that, as materialmen, they have an original and continuing equitable priority to any funds “now in or to be in the hands of the county” for payment to the contractor; and that such funds are impressed with a prior and equitable lien in their favor as unpaid materialmen.

There is no evidence in the record that the county has a fund available for the payment of the two assigned claims. Hence, the plaintiffs' claim is not a claim upon a certain existing fund, but a claim upon an indebtedness of the county to the contractor, which has been assigned to certain of the defendants.

[1] Does the law give a lien to the materialmen upon the debt owing by the county where the law does not give a lien upon the property itself because of which the debt of the county arose?

The answer to plaintiffs' contention is found in the statutes of this state as construed by this court.

In 1872, this court in the case of People v. Butler, 2 Neb. 5, had before it an original

[285 N.W. 118]

application for a writ of mandamus to compel commissioners who were charged with the erection of a state building to draw a warrant upon the state treasurer for money due a subcontractor from the contractor.

The subcontractor insisted that he had a lien upon the funds set apart by the legislature for the construction of the building, and that the agents of the state were obliged to recognize his claim and draw a warrant therefor. This court held that the mechanics' lien law did not apply, and that “The commissioners are not bound to recognize the demands of any person other than the one with whom the contract was made.” (Italics ours.) This court then stated: “To adopt any other rule would be productive of infinite mischief, and lead to inextricable confusion, in the prosecution of work upon our public buildings.” While the reason there given, to wit, that the state could not be brought into court without its consent, might not be applicable to the case at bar, yet the fact remains that in that action this court refused to order money paid to a subcontractor from funds set apart for the construction of a public building.

This court in 1874, in the case of Ripley v. Gage County, 3 Neb. 397, held that the mechanics' lien law of the state did not apply to the erection of public buildings...