Horst v. Kalamazoo Apartments Corp.

• Decision Date: 29 July 1927
• Docket Number: No. 81.,81.
• Citation: 215 N.W. 57,239 Mich. 593
• Parties: VANDER HORST v. KALAMAZOO APARTMENTS CORPORATION et al.
• Court: Michigan Supreme Court

239 Mich. 593

215 N.W. 57

VANDER HORST

v.KALAMAZOO APARTMENTS CORPORATION et al.

No. 81.

Supreme Court of Michigan.

July 29, 1927.

Appeal from Circuit Court, Kalamazoo County, in Chancery; Orien S. Cross, Judge.

Suit by Henry L. Vander Horst against the Kalamazoo Apartments Corporation and others, in which Henry M. Desenberg, doing business as the Columbian Electric Company, intervened as defendant, and some defendants filed cross-bills. From a decree allowing the mechanics' liens, the Guaranty Trust Company and another, trustees, and Howard C. Wade and another, trustees, appeal. Reversed in part, and affirmed in part.

Argued before the Entire Bench, except SHARPE, C. J., and SNOW, J. John P. Neudorfer, of Detroit (Harold A. Jones, of Cleveland, Ohio, of counsel), for appellants Guaranty Trust Co., of Detroit, Wade, and Hoffman.

Fred G. Stanley and Don B. Sharpe, both of Kalamazoo, for appellee American Metal Weather Strip Co.Harry C. Howard, of Kalamazoo, for appellees Edwards & Chamberlin Hardware Co., Gilmore Bros., and E. T. Burrowes Co.

FELLOWS, J.

The Marlborough Apartments, an apartment house with 72 apartments, was erected in Kalamazoo by the Kalamazoo Apartments Corporation. A considerable amount of money was put in by the stockholders and there were two bond issues secured by mortgages on the premises, one for $225,000 in which the defendants Guaranty Trust Company and Howard C. Wade were trustees, and a second one for $75,000 in which defendants Wade and Edward A. Hoffman were trustees. Mr. Wade and Mr. Hoffman were officers of the United States Mortgage Bond Company, Limited, and that company sold the bonds, and the money received therefrom together with that of the stockholders was expended in the construction of the building. These sums proved inadequate to pay for the building, and liens aggregating around $100,000 were filed by some 15 lien claimants. The apartments corporation defaulted in its interest on the second mortgage and that mortgage was foreclosed. The premises were bid in by the trustees of that mortgage; the equity of redemption expired without payment, and Wade and Hoffman after this suit was instituted deeded the premises to the Mortgage Bond Company. That company settled with most of the lien claimants, leaving only 5 claims outstanding at the time of the hearing of the case in the trial court. One of these has been adjusted since the appeal to this court. The questions involved in the claims of these 4 appellees and cross-plaintiffs are not identical and necessitate separate consideration.

Before taking them up, however, a question common to all should be disposed of. There was parol proof in the case and a notice appearing in a newspaper tending to show that a few days before the hearing the Kalamazoo Apartments Corporation had been adjudged a bankrupt and it was insisted that it was necessary to make the trustee, when selected, a party. Passing the question of the competency of this proof, we think the point not well taken. When the adjudication was made, the corporation had no interest in the property. The mortgage had been foreclosed and the equity of redemption had then expired. The trustee in bankruptcy therefore had and could have no interest in the property and was not a necessary party.

1. Gilmore Bros. This is a corporation operating a department store in the city of Kalamazoo. It furnished and installed in the building the linoleum, the shades, the ozite, and curtain rods under an agreement so to do for a lump sum of $3,000. The linoleum used largely in the kitchens was laid in cement; in the main, it was cut in the store, but was cut and laid by the employees of Gilmore Bros., some trimming being found necessary as it was laid. The shades and curtain rods for 1,100 windows were likewise installed by such employees, some work getting the rollers and shades ready for installing was done in the Gilmore Bros.' workshop. The ozite, a heavy pad, was laid under the carpets in the halls; it was held not to be a lienable article. This cross-plaintiff did not furnish to the owner the affidavit, required of contractors by section 14799, C. L. 1915, which section after providing for the sworn statement, provides:

‘Until the statement provided for in this section is made, in manner and form as herein provided, the contractor shall have no right of action or lien against the owner, part owner or lessee on account of such contract. * * *’

It is insisted by counsel for this cross-plaintiff that it was not a contractor within the meaning of the act; that it was a materialman; that the amount of labor was small compared with the value of the material furnished; that it was but a tradesman selling goods, which in this case it delivered in place, and that it was not necessary for it to furnish the sworn statement.

Counsel also makes a strong appeal for the equities of this cross-plaintiff. This appeal is not without force, and we approach this claim not indifferent to it. But it must be borne in mind that we are here dealing with a statutory remedy. The language of Mr. Justice Steere, speaking for the court in J. W. McCausey & Co. v. Gittleman, 201 Mich. 8, 166 N. W. 896, is applicable. He there said:

‘We do not conceive that the plainly expressed provisions of the lien law are less imperative because by the statute a chancery court is made the forum in which the attached liens may be enforced. While equity courts are said to be given special jurisdiction to deal with and correct that wherein the law is deficient because of its universality, they do not rise above or have power to change the law, either statute or common. The lien law is not deficient or uncertain as to these lienors' rights. As it reads it afforded them all the protection they now appeal for on claimed equitable grounds had they timely availed themselves of its provisions.’

The record discloses that about 10 per cent. of this lien is made up of labor and the balance is for material, and it is insisted that the labor item is so inconsequential that it should not characterize the status of the parties. Bennett v. Davis, 113 Cal. 337, 45 P. 684,54 Am. St. Rep. 354, sustains this contention. This case was cited in Pugh v. Moxley, 164 Cal. 374, 128 P. 1037. It was likewise cited in Hihn-Hammond Lumber Co. v. Elsom, 171 Cal. 570, 154 P. 12, Ann. Cas. 1917C, 798; but in this case it was said:

‘We think something more than a mere comparison of the cost of the labor of attaching material to the building with the total price of the work and materials is necessary in many cases to a determination of the question whether a claimant is a subcontractor or a materialman.’

There is also some language in Terry v. Klein, 133 Ark. 366, 201 S. W. 801, which sustains counsel's contention. But this court has definitely held that where one contracts to furnish both labor and material-where one contracts to furnish the material and install it in the structure-he is a contractor, and not a materialman. In the recent case of Stephens Lumber Co. v. Townsend-Stark Corporation, 228 Mich. 182, 199 N. W. 706,201 N. W. 213, Mr. Justice McDonald thus tersely stated the rule:

‘If one combines labor on the premises in connection with the furnishing of material, he is a contractor and not a materialman.’

This is in consonance with an unbroken line of decisions of this court. Among them see Sterner v. Haas, 108 Mich. 488, 66 N.W. 348;Martin v. Warren, 109 Mich. 584, 67 N. W. 897;Kerr-Murray Mfg. Co. v. Power Co., 124 Mich. 111, 82 N. W. 801;McMonegal v. Wilson, 103 Mich. 264, 61 N. W. 495.

These cases and others which might be cited settle the rule in this state. The things to be done rather than the relative costs of doing them characterize the relations of the parties. Under these holdings, this cross-plaintiff was a contractor within the meaning of the act and, having failed to serve the requisite sworn statement, was not entitled to a lien. The decree giving him a lien must be reversed.

2. E. T. Burrowes Company. This is a Maine corporation which had not been authorized to do business in this state. Its failure to become domesticated, pursuant to Act 84, Public Acts 1921 (special reference being made to part 5, c. 1, §§ 1 and 3), is urged as the principal objection to its lien. The contract which was for the screens for the building was executed at Kalamazoo. It recited that the company agreed to furnish, and George E. Stickney agreed to install, the screens for a lump sum. But it also provided that all payments were to be made to the company, and it was to settle with Stickney. The proof shows that Mr. Stickney was the representative of the company at Grand Rapids, and the stationery of the company shows that it there maintains an office at 418 Houseman building. The provision as to the installation by Stickney, in view of the fact that the price of the screens and the cost of installation were both to be paid to the company, was evidently inserted to circumvent the provisions of the act. This is accentuated by the fact that Stickney personally took no part in the installation of the screens, and the further fact that this cross-plaintiff produced none of its officers or agents as witnesses so that they might be cross-examined, but made its case by cross-examination of one of the defendants.

In its cross-bill the company alleges that it is ‘doing business in the state of Michigan.’ In a supplemental brief filed after the argument of the case its present counsel asks to amend the cross-bill by striking out this allegation. This should not be done at this late day. This was an admission against interest and, having once been made, its retraction or withdrawal should have been more seasonably made. Appellants had a right to rely on this admission in the pleadings and were not...