Kelley v. Bluff Creek Oil Co.

• Decision Date: 08 January 1958
• Docket Number: No. A-6230,A-6230
• Citation: 158 Tex. 180,309 S.W.2d 208
• Parties: Kork KELLEY, d/b/a Korkele Engineering Production Company, Petitioner, v. BLUFF CREEK OIL COMPANY et al., Respondents.
• Court: Texas Supreme Court

Page 208

309 S.W.2d 208

158 Tex. 180

Kork KELLEY, d/b/a Korkele Engineering Production Company, Petitioner, v. BLUFF CREEK OIL COMPANY et al., Respondents.

No. A-6230.

Supreme Court of Texas.

Jan. 8, 1958.

Rehearing Denied Feb. 19, 1958.

W. E. Fitzgerald, Wichita Falls, for petitioner.

Donald & Donald, Bowie, for respondents.

GARWOOD, Justice.

Our petitioner Kelley brought this action in his own behalf to recover primarily upon a release bond executed pursuant to Art. 5472c, Vernon's Tex.Civ.Stats., by the respondents-defendant Bluff Creek Oil Company as principal and Commercial Standard Insurance Company as surety for the release of the petitioner's alleged mechanic's and materialman's lien against three Montague County oil leases. Said Art. 5472c prescribes a limitation period of one year for the bringing of such suits, and this suit was filed within the year. However, during all of the year a bank held the lien under a collateral assignment from the petitioner to secure a debt of the latter in an amount somewhat smaller than that of his lien claim, the bank not ever having been made a party to this suit and having reassigned to the petitioner only well after expiration of the year in question. Our principal holding is that, notwithstanding these latter facts, the action is not barred. Other matters decided relate to the contentions of the respondents-defendant, Bluff Creek and Commercial Standard, that under a further provision of Art. 5472c, supra, action upon the bond was precluded by the petitioner's failure to bring suit within thirty days following his receipt of notice of the bond, as well as by the invalidity of his claimed lien itself; and the contention of Bluff Creek alone (as a petitioner in this Court to that extent) that the Court of Civil Appeals erred in recognizing a personal right of action of Kelley against Bluff Creek, apart from the bond and lien, for the price of the same materials and services which are the basis of the alleged lien and were allegedly furnished by Kelley to Bluff Creek as operator of the leases in question.

For the opinion of the Court of Civil Appeals, see 298 S.W.2d 263.

The case arose as follows:

On January 5, 1951, the petitioner-plaintiff, seeking a mechanic's and materialman's lien against the leases in question, filed an affidavit and annexed account for some $2,500 with the county clerk. He thereafter assigned the claim to Wichita National Bank of Wichita Falls by written instrument of March 29th, 1951, reciting a consideration of 'Ten ($10.00) Dollars, and other good and valuable considerations' and otherwise purporting to be a complete transfer of ownership 'with full power and authority to collect and receipt therefor', although, as above indicated and as shown without contradiction upon the hereinafter mentioned hearing, its purpose was to secure a debt of the petitioner-assignor to the bank in the sum of some $1,900. On May 3, 1951, the bond for release of the lien was filed, and notice thereof given the petitioner-plaintiff on the following June 12th, all pursuant to Art. 5472c, supra.

Of the latter statute, the portion bearing most importantly on the case reads:

'Sec. 4. No action shall be brought or maintained in any court to establish, enforce or foreclose any lien or claim of lien referred to in such bond unless same shall be brought within thirty days after the service of notice thereof as herein provided. After such 30 days and at any time within one year from the date of such service, the party making or holding such claim of lien may sue upon such bond but no action shall be brought upon such bond after the expiration of such period. * * *'

Kelley has never brought any action concerning his claim except the present suit which he filed on Arpil 24, 1952 (about ten months after being served with notice of the bond) seeking judgment for the amount of his claim primarily upon the bond and alternatively, and apart from the bond and the lien, a simple money judgment against Bluff Creek alone for the amount of his claim. The mentioned date of suit was, of course, within the one-year limitation period for action on the bond, but some nine months after expiration of the thirty-day period for suits 'to establish, enforce or foreclose any lien * * *.' At the time Kelley filed suit, moreover, and until long after passage of the remaining two months of the statutory one-year period, his assignment to the bank remained in effect; nor did his original petition, nor other pleading filed by him refer to the assignment; nor was the bank ever made a party to the suit.

On May 20, 1952, the respondent-defendant surety filed an 'answer', alleging, so far as presently relevant, that the suit as against it 'should be abated and not further considered because', the claimed lien was invalid under the lien statutes and was not owned by the petitioner 'at this time' (by reason of the petitioner having assigned it) and because no foreclosure suit had been commenced within the statutory thirty-day period provided therefor.

On July 15, 1953, prior to any hearing upon the pleas in the case, the bank reassigned to the petitioner-plaintiff his alleged claim and lien by instrument acknowledging the collateral character of the original assignment and full payment of the debt secured.

On May 11, 1954, the respondent-defendant, Bluff Creek, filed two pleas, the presently relevant grounds of which were substantially the same as the above-mentioned earlier pleas of the respondent-defendant surety.

In March, 1959, the trial court heard the above-described pleas, with evidence thereon, and dismissed the entire suit, including the alternative count against Bluff Creek alone and apart from the bond and lien. The dismissal was expressly and exclusively based on the alleged failure of the petitioner-plaintiff (a) to begin a suit 'to establish, enforce or foreclose' his lien within the thirty-day period and (b) to sue, as and while owner of the claim, within the one-year period. The Court of Civil Appeals affirmed as to the primary count (on the bond) sustaining ground (b) of the trial court in this behalf, but reversed and ordered a trial on the merits as to the alternative count against Bluff Creek alone. 298 S.W.2d 263. We granted writ of error on application of the petitioner-plaintiff, Kelley, to review the affirmance and, because of this action, granted also the application of Bluff Creek questioning the reversal.

Our earlier statement, that the above holding (b) presents the principal question in the case, means that holding (a) of the trial court appears to us rather clearly without merit, as, indeed, it evidently did also to the Court of Civil Appeals. Art. 5472c was enacted in 1929 (Chap. 211, 41st Leg., Reg.Sess.). Its provisions plainly reflect, without benefit of the emergency clause, and even more plainly with it, that its object is to free land from liens by substitution of a surety on an indemnity bond for the security otherwise afforded the unpaid mechanic, contractor or materialman by his lien claimed under Chap. 2 of Title 90, R.S.1925. Its declared motives include that of enabling landowners, in need of loans upon their lands, to avoid delays from prior claims of liens, as well as that of easing the pressure of foreclosure threats of lien claimants. The statute deals altogether with liens and in nowise purports to affect claims asserted otherwise than as liens.

While we later refer further to the alternative count of the petitioner for a mere money judgment against the respondent, Bluff Creek, alone and apart from the bond or claimed lien, it should doubtless be noted now that this count cannot conceivably be affected by the thirty-day limitation period (or, for that matter, the one-year period) of the statute. The latter simply has no connection with in personam claims, whether we look at its specific provisions or its objects or motives. Indeed, the thirty-day provision above quoted affirmatively excludes in personam suits under the expressio unius rule of statutory construction. And, of course, the one-year period, referring, as it does, only to suits 'upon such bond', cannot be taken to include an alternative count or suit, which is expressly not a suit 'on such bond'.

But also as to the petitioner's count on the bond is the thirty-day limitation irrelevant. Immediately following that provision (see Sec. 4 above quoted) the statute provides that 'After such 30 days and at any time within one year' the lien claimant 'may sue upon such bond but no action shall be brought upon such bond after the expiration of such period'. The latter language affirmatively, as well as unambiguously, permits action on the bond within the year, and neither it nor any other provision of the statute, unless it be the the thirty-day provision itself, purports to attach a condition that a previous action of some kind shall be brought before action on the bond can be maintained. Indeed, such a condition, if made would be somewhat extraordinary. By the terms of Sec. 1 of the statute, liability on the bond is conditioned upon proof of the validity of the lien in question, and obviously that question could be as well litigated in a suit on the bond as by a separate suit to be filed within the thirty-day period. So why should there have to be two separate suits-one limited to thirty days and the other (on the bond) to a year-in order to reach a judgment in the latter?

The only argument of principle or authority made, or that could be made, toward implying such a strange qualification of an otherwise unqualified permission to sue on the bond within a year, is the single word 'establish' in the context 'No action shall be brought * * * to establish, enforce or foreclose any lien * * * unless * * * within thirty days * * *.' Obviously the words 'enforce or foreclose' mean merely that, if the lien claimant insists on an actual foreclosure or its equivalent, rejecting the...