J.K. & W.H. Gilcrest Co. v. A. & R. Concrete Co.

• Decision Date: 12 December 1961
• Docket Number: No. 50465,50465
• Citation: 112 N.W.2d 366,253 Iowa 332
• Parties: , 9 A.F.T.R.2d 960, 62-1 USTC P 9341 J. K. & W. H. GILCREST COMPANY, Appellee, v. A. & R. CONCRETE COMPANY, United States of America et al., Appellant.
• Court: Iowa Supreme Court

Page 366

112 N.W.2d 366

253 Iowa 332, 9 A.F.T.R.2d 960, 62-1 USTC P 9341

J. K. & W. H. GILCREST COMPANY, Appellee, v. A. & R. CONCRETE COMPANY, United States of America et al., Appellant.

No. 50465.

Supreme Court of Iowa.

Dec. 12, 1961.

Roy W. Meadows, U. S. Atty., Des Moines, Louis F. Oberdorfer, Asst. Atty. Gen., John B. Jones, Jr., Meyer Rothwacks, and George F. Lynch, Attorneys, Department of Justice, Washington, D. C., for appellant.

Neiman, Neiman & Stone, Des Moines, for appellee.

THOMPSON, Justice.

Plaintiff's action alleged its right to a subcontractor's mechanic's lien against certain real estate and prayed foreclosure as against all defendants. These included the principal contractor, the realty owners, the United States, and certain others. Rights as between the principal contractor and the owners of the real estate were previously determined in A. & R. Concrete & Construction Company v. Braklow, 251 Iowa 1067, 103 N.W.2d 89. It was there adjudged that the owners were indebted to the contractor in the total sum of $3,933.07. This sum was paid unto the clerk of the district court. In the instant case a partial decree of the trial court entered on November 12, 1960, to which no exception is taken, granted certain defendants other than the United States rights to part of the money on hand, leaving a remainder of $1,814.18. The cause was continued solely on the issues as to the priority of the claims of the plaintiff and the United States to this sum. By answer, the United States denied the priority of plaintiff's claim and prayed that its tax liens against the principal contractor be held to be prior and superior to any rights of the plaintiff to the fund in the hands of the clerk. The trial court found this issue with the plaintiff in the total amount of its claim, with interest, $1,681.04; directed payment of court costs in the amount of $52.00; and awarded the remainder of $81.14 to the United States. The United States appeals.

I. No question is made that the money in the hands of the clerk stands in the place of the real estate which was improved or that the liens attach to it in whatever order of priority may eventually be determined. The United States states in the record that its appeal is limited to the following point on which it relies: 'The Court erred in granting priority to the claims of (the plaintiff) over the tax lien of the United States of America. The abstract above contains all matters necessary to review such point.'

The facts were stipulated and the case tried solely on the stipulation. We think it omits one vitally important fact, which we shall later point out. Otherwise, after reciting the agreement between the principal contractors and the owner, it stipulates that the plaintiff herein furnished certain materials used in and upon the premises of the reasonable value of $1,541.92, the last item being supplied on November 20, 1958. Further facts stipulated are that the plaintiff's claim for a mechanic's lien as a subcontractor was filed on September 3, 1959, and notice of such filing served on the owners on September 5, 1959.

That the United States assessed taxes for withholding and social security against the principal contractor on March 27, 1959, in the sum of $3,029.10; and on May 22, 1959, assessed further taxes of $999.03, making a total of $4,028.13. On September 14, 1960, a notice of levy of taxes was served on the building owners; and on September 29, 1959, a notice of the federal tax lien was filed in the office of the county recorder of Polk County. It is further stipulated that the funds in the hands of the clerk stand in lieu of the real estate and the liens of the contending parties attach to such funds in the same manner as they would have to the realty; and that the parties are entitled to foreclosure of their liens against said moneys in such order of priority as the court may determine. The stipulation is silent as to the date on which the work on the real estate was completed by the principal contractor.

II. Each party to the contention here asks that its lien be established as prior and superior. We think, because of the absence of an essential fact in the record, that no adjudication in favor of either can be made.

This fact is the above noted absence of the date on which the principal contractor completed its work. We shall attempt to make clear our reasons for so holding.

Section 572.13, so far as material, is quoted:

'Liability of owner to original contractor

'No owner of any building, land, or improvement upon which a mechanic's lien of a subcontractor may be filed, shall be required to pay the original contractor for compensation for work done or material furnished for said building, land, or improvement until the expiration of sixty days from the completion of said building, or improvement * * *.'

The section further provides that the first paragraph does not apply if receipts or waivers of subcontractors claims are furnished, or a performance bond is given by the principal contractor. Neither of these exceptions, however, appears in the present case and we give them no further attention. It will be noted the quoted and material part of the section makes sixty days from the completion of the work by the principal contractor the time when he will be entitled to receive payment from the owner, absent any filed claims for subcontractors' liens.

III. The United States relies upon Sections 6321 and 6322 of 26 U.S.C., 1958 edition. We quote them. 'Lien for taxes.

'If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

'Period of lien.

'Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed is satisfied or becomes unenforceable by reason of lapse of time.'

A following section says that 'the lien * * * shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the Secretary or his delegate--* * * in the office * * * for the filing of such notice [is authorized by the law of the State] * * * in which the property subject to the lien is situated.' A mechanic's lien is obviously not within any of the four classes named, and we give this section no further consideration.

In Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 374, 375, 376, 67 S.Ct. 340, 347, 91 L.Ed. 348, 357, it is said: 'The long established rule requires that the lien must be definite, and not merely ascertainable in the future by taking further steps, in at least three respects as of the crucial time. These are: (1) the identity of the lienor * * *; (2) the amount of the lien * * *; and (3) the property to which it attaches * * *. It is not enough that the lienor has power to bring these elements, or any of them, down from broad generality to the earth of specific identity.' We quoted this with approval in In re Estate of Lane, 244 Iowa 1076, 1079, 1080, 59 N.W.2d 593, 595. It is evident that plaintiff's lien here meets the first and third tests. The identity of the lienor is established, and likewise the specific property to which it attaches. But it fails as to (2), because the amount is unliquidated and uncertain. It is not enough that a specific amount be named in the lien claim; if further proceedings are required to establish it in a definite amount against the property, as by foreclosure, it is not specific and perfected within the meaning of the law. Evans v. Stewart, 245 Iowa 1268, 1274, 1275, 66 N.W.2d 442, 445; In re Estate of Lane, supra, loc. cit., 244 Iowa 1080, 59 N.W.2d 595; United States v. Texas, 314 U.S. 480, 62 S.Ct. 350, 86 L.Ed. 356. So at the time the taxes against the principal contractor were assessed by the United States in the instant case, the plaintiff's lien was not specific and perfected and the government's lien was prior.

IV. However, there is another consideration which arises...