Great Western Sugar Co. v. F.H. Gilcrest Lumber Co.

• Decision Date: 10 November 1913
• Citation: 25 Colo.App. 1,136 P. 553
• Parties: GREAT WESTERN SUGAR CO. v. F.H. GILCREST LUMBER CO.
• Court: Colorado Court of Appeals

136 P. 553

25 Colo.App. 1

GREAT WESTERN SUGAR CO. v. F.H. GILCREST LUMBER CO.

Court of Appeals of Colorado

November 10, 1913

Error to District Court, Weld County; Harry P. Gamble, Judge.

Action by the F.H. Gilcrest Lumber Company against the Great Western Sugar Company. Judgment for plaintiff, and defendant brings error. Affirmed.

H.N. Haynes, of Greeley (Charles W. Waterman, of Denver, of counsel), for plaintiff in error.

R.G Strong and C.E. Southard, both of Greeley, for defendant in error.

On rehearing, former opinion withdrawn and the following substituted; MORGAN, J., delivering the opinion of the court:

Writ of error to reverse a judgment of the Weld district court in an action against the sugar company hereinafter called the owner, and its principal contractor, Eggleston, to foreclose a mechanics' lien upon a building which the contractor agreed orally to construct for the owner, purchasing his material from the lumber company, hereinafter called the claimant, and which filed its lien statement and began this action within the required time thereafter. The lien law of 1899 is involved. No evidence was abstracted. There is some controversy over service by publication on the principal contractor and default thereupon, but the principal contention is over the court's ruling on two general demurrers: One to the complaint overruled, one to the answer sustained.

The owner contends that in case of a contract between the owner and contractor, regardless of the amount of the contract price, subcontractors and materialmen, in order to maintain a lien for any more than may be owing to the contractor when the lien statement is filed for record must serve on the owner a written notice that they have performed labor or furnished material, etc., independent of the service on the owner of a copy of the lien statement, and claims the right to pay the contractor, in the absence of such notice, or until such notice is served, at such times as the contract may provide, and in full, at the expiration of 35 days after the completion of the contract, if no such notice has been served prior thereto. The claimant contends that no such notice is required, in any case, if the contract price is $500 or less, and, as a broader contention, not in any case unless the contract or a memorandum thereof is filed with the county recorder. These contentions must be determined from the lien act of 1899, and particularly from sections 1 and 2, being sections 4025 and 4026 of the Revised Statutes 1908.

Section 4025, after providing generally that mechanics subcontractors, and materialmen, although dealing with the contractor alone, have a lien upon the property of the owner benefited, states: "In case of a contract for the work, between the reputed owner and a contractor, the lien shall extend to the entire contract price and such contract shall operate as a lien in favor of all persons performing labor or services or furnishing materials as herein provided under contract, express or implied, with said contractor, to the extent of the whole contract price; and after all such liens are satisfied, then as a lien for any balance of such contract price in favor of the contractor. All such contracts shall be in writing when the amount to be paid thereunder exceeds five hundred dollars, and shall be subscribed by the parties thereto, and the said contract, or a memorandum thereof, setting forth the names of all the parties to the contract, a description of the property to be affected thereby, together with a statement of the general character of the work to be done, the total amount to be paid thereunder, together with the times or stages of the work for making payments, shall, before the work is commenced, by the owner or reputed owner be filed in the office of the county recorder of the county where the property, or the principal portion thereof, is situated; and in case such contract is not filed, as above provided, the labor done and materials furnished by all persons aforesaid before such contract or memorandum is filed, shall be deemed to have been done and furnished at the personal instance of the owner, and they shall have a lien for the value thereof."

Section 4026, after providing that the contract must provide for payments in installments after work is begun, that 15 per cent. must be held for 35 days after the completion, that any payments made prior to dates set shall not affect liens of subcontractors and materialmen, that as to them the amount of the contract shall be paid in money and shall not be affected by any indebtedness of the contractor to the owner, states: "In case such contracts and alterations thereof do not conform substantially to the provisions of this section, the labor done and materials furnished by all persons other than the principal contractor shall be deemed to have been done and furnished at the personal instance and request of the person who contracted with the principal contractor, and they shall have a lien for the value thereof. Any of the persons mentioned in section 1, except a principal contractor, may at any time give to the owner or reputed owner or to his superintendent of construction, agent or architect, a written notice that they have performed labor or furnished materials or both to or for a principal contractor, or any person acting by authority of the owner or reputed owner, or that they have agreed to and will do so, stating in general terms the kind of labor or materials and the name of the person to or for whom the same was or is to be done or performed, or both, and the estimated or agreed amount in value, as near as may be, of that already done or furnished or both, and also of the whole agreed to be done or furnished, or both. Such notice may be given by delivering the same to the owner or reputed owner personally, or by leaving at his residence or place of business with some person in charge; or by delivering it either to his superintendent of construction, agent or architect, or by leaving it either at his residence or place of business with some person in charge; no such notice shall be invalid or insufficient by reason of any defect of form, provided it is sufficient to inform the owner or reputed owner of the substantial matters herein provided for, or to put him upon inquiry as to such matters. Upon such notice being given, it shall be the duty of the person who contracted with the principal contractor, to, and he shall, withhold from such principal contractor, or from any other person acting under such owner or reputed owner, and to whom, by said notice, the said labor or materials, or both, have been furnished or agreed to be furnished, sufficient money due or that may become due, to said principal contractor, or other persons, to satisfy such claim, and any lien that may be filed therefor for record under this chapter, including reasonable costs provided for in this act; and the payment of any such lien, which shall have been acknowledged by such principal contractor, or other person acting under such owner or reputed owner, in writing to be correct, or which shall have been established by judicial determination, shall be taken and allowed as an offset against any moneys which may be due from the owner, or reputed owner to such principal contractor, or the person for whom such work and labor was performed."

Section 4033 provides that a lien statement must be filed for record, and that subcontractors and materialmen must file such statement within two months after completion of the building and serve a copy of the same upon the owner at or before the time of filing.

The provisions for filing the contract, service of notice, etc., were added to the law of 1889 by the act of 1893 and retained in 1899 to enable the owner to limit his liability to subcontractors and materialmen and to protect himself from the broad provisions of the law of 1889 and, with few changes, retained in the law of 1893 and 1899, which gave them a direct lien, regardless of the state of the account, except the limitation to the contract price, between the owner and his contractor. By filing his contract or a memorandum, as the law of 1893 and 1899 provides he may do, the owner may pay the contractor, in installments by the terms and provisions thereof, without fear of liens, unless the subcontractor give him written notice of intention or, as the statute says, written notice that he has "performed labor or furnished material *** or agreed to and will do so."

If the owner fail to file the contract or memorandum as the law provides he may do, or if the law does not require it to be filed, as in instances where the contract price is $500 or less, then, in either instance, there is no way for the owner to so limit his liability. The owner, in order to profit by these provisions in his behalf, must have a written contract, provide in it that payments will be made in installments at times named, that nothing shall be paid in advance of the work, that at least 15 per cent. of the price shall be made payable at least 35 days after completion of the contract, and then file it, or a memorandum thereof, so that subcontractors and materialmen may know that he intends to avail himself of the privilege given.

It has been held in the case of Willamette Co. v. Los Angeles Co., 94 Cal. 229, 237, 29 P. 629, 632, that: "Where the owner does not choose to avail himself of the mode of limiting his liabilities provided in this section, labor done and materials furnished shall be deemed to have been done and furnished at his personal instance."

In Small v. Foley, 8 Colo.App. 435, 451, 47 P. 64, 70, the court said: "It seems manifest that the provision [as to notice] was intended for the owner's personal benefit."

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