Hulinsky v. Parriott
| Decision Date | 30 June 1989 |
| Docket Number | No. 87-049,87-049 |
| Citation | 441 N.W.2d 883,232 Neb. 670 |
| Court | Nebraska Supreme Court |
| Parties | Ernest HULINSKY, d/b/a Hulinsky Construction, Appellee, v. James B. PARRIOTT and Virginia L. Parriott, Husband and Wife, Appellees, and The Bank of Brule, now known as Adams Bank & Trust of Brule, Appellant. |
Syllabus by the Court
1. Equity: Mechanics' Liens: Foreclosure. An action to foreclose a mechanic's or construction lien is one grounded in equity.
2. Equity: Appeal and Error. In an appeal of an equity action, the Supreme Court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the Supreme Court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.
3. Construction Contracts: Mechanics' Liens: Mortgages. The construction lien for materials and labor furnished for a building will begin when the furnishing of labor or materials begins. If that is before the recording of a mortgage or trust deed, such construction lien will be superior, but if it is after the filing of the mortgage or trust deed, the lien of the mortgage or trust deed is superior.
4. Construction Contracts: Mortgages. Where a materialman furnishes materials under a construction contract for a building before the mortgage of a bank is filed, the bank is not entitled to parity to the extent that the mortgage money it loaned is used to pay the materialmen or laborers.
Neil E. Williams and Rita C. Grimm of McGinley, Lane, Mueller, O'Donnell & Williams, P.C., Ogallala, for appellant.
Gary J. Krajewski of McQuillan & Spady, P.C., Ogallala, for appellee, Hulinsky.
This action was brought by Ernest Hulinsky, appellee, against James B. and Virginia L. Parriott to foreclose upon a construction lien. The Bank of Brule (Bank), now known as the Adams Bank & Trust of Brule, was joined as a defendant because it has a trust deed and security interest in the Parriotts' real estate involved in the action. The trial court granted foreclosure and ordered the proceeds generated from the sale to be applied to satisfy the liens of Hulinsky and the Bank, in that order of priority. The Bank appeals from the decision of the trial court, claiming the trial court erred in granting Hulinsky's construction lien priority over the lien of the Bank under its trust deed.
An action to foreclose a mechanic's or construction lien is one grounded in equity. In an appeal of an equity action, the Supreme Court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the Supreme Court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Hughes v. Enterprise Irrigation Dist., 226 Neb. 230, 410 N.W.2d 494 (1987).
A review of the record, which contains a stipulation entered into at the commencement of the trial, finds that on July 25, 1983, Hulinsky and the Parriotts entered into a memorandum construction contract, wherein Hulinsky agreed to construct a house on lots owned by the Parriotts in Brule, Nebraska. Hulinsky agreed to furnish all material and labor in consideration of Parriotts paying $53,000.
On September 12, 1983, Hulinsky commenced construction, furnishing materials and labor under the agreement. During the construction period, a number of changes were made in the plans and construction, which the evidence shows were agreed to by both Hulinsky and the Parriotts. These changes included: additional plumbing, the addition of a fireplace, foundation and wall relocations, structural changes to effect different room arrangements, additional windows and doors, electrical system modification, increased heating and air-conditioning, upgrades of the roof covering and cabinets, and a change of floor coverings.
On February 10, 1984, before the construction was completed, the Parriotts requested that Hulinsky stop work. Hulinsky performed no further construction work on the dwelling after the request. On March 22, 1984, Hulinsky filed a mechanic's lien for labor and materials in the amount of $60,592.78, the net amount he claimed was due for labor and materials after allowing the Parriotts credit for a $30,000 payment that was received by Hulinsky.
The Parriotts had executed a trust deed on September 16, 1983, to the property involved in this action. The trust deed secured a master note in the amount of $53,000 to the Bank and was recorded the same day. The Bank concedes Hulinsky had visibly commenced work on the property before the trust deed was filed. During the construction period, one payment of $30,000 was made to Hulinsky under the construction contract by the Parriotts. Hulinsky knew the funds had come from the Bank. The Bank had charged other advances to the Parriotts during the period of construction, as evidenced by the loan disbursement sheet, but none of these funds were received by Hulinsky.
On November 13, 1986, the date of trial, Hulinsky and the Bank stipulated that the sum due the Bank was $53,094.38, which included interest to that date.
The Parriotts caused a petition in bankruptcy to be filed on July 11, 1985, and on December 27, 1985, they were discharged. The trustee in bankruptcy abandoned the property involved.
The Parriotts did not appear in the action, and the only witness at the trial was the plaintiff.
The trial court found the original contract had been amended to include the items added and claimed by Hulinsky, and awarded him the contract balance of $23,000, together with the added materials furnished in the amount of $11,134.13. The court found there was not sufficient evidence to award the amount claimed for additional labor. It awarded interest at 12 percent on the original contract balance and at 6 percent on the amount due on additional materials furnished up to the date of judgment, and thereafter at the rate of 14 percent on the entire amount.
The trial court found the Bank was entitled to judgment for the amount claimed with interest from date of judgment at $14.5128 per diem.
The Bank, to sustain its priority over the lien of Hulinsky, relies upon the fact that the money paid to Hulinsky came from funds received by the Parriotts from the Bank and that Hulinsky had knowledge of that fact. The Bank claims that in the interest of justice it should be entitled to priority over the Hulinsky lien, at least to the extent of the $11,134.13 awarded for material furnished under the amendment to the original construction contract. The Bank makes no claim on appeal that the contract was not modified or that additional materials were not furnished. Its assignment of error goes to but one issue, and that is as to the priority of the Bank's lien. This court will not consider errors not properly assigned and discussed. Neb.Ct.R. of Prac. 9 D(1) (rev. 1989); State ex rel. Hilt Truck Line v. Jensen, 218 Neb. 591, 357 N.W.2d 455 (1984).
Under the Nebraska Construction Lien Act, Neb.Rev.Stat. §§ 52-125 to 52-159 (Reissue 1988), adopted in 1981, a person who furnishes services or materials pursuant to a real estate construction improvement contract has a lien to secure the payment of his contract price. § 52-131. Hulinsky clearly has a lien under the act. The right to such lien is statutory in nature and did not exist in common law or in equity. Krotter & Sailors v. Pease, 161 Neb. 774, 74 N.W.2d 538 (1956). A claimant of such a lien must in the first instance bring himself within the statute providing for such procedure to perfect the same. Ideal Basic Industries, Inc. v. Juniata Farmers Coop. Assn., 205 Neb. 611, 289 N.W.2d 192 (1980).
The Bank concedes Hulinsky had a valid lien which attached prior to the recording of its trust deed under ...
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