Lewis v. Midway Lumber, Inc.

• Decision Date: 03 January 1977
• Docket Number: No. 2,CA-CIV,2
• Citation: 114 Ariz. 426,561 P.2d 750
• Parties: Donald P. LEWIS and Eleanor A. Lewis, husband and wife, First State Service Corporation, Trustee, and Tucson Federal Savings and Loan Association, a corporation, Appellants, v. MIDWAY LUMBER, INC., an Arizona Corporation, John Klassen and Company, a corporation, D & N Construction Company, a corporation, A. L. McCune Drywall Co., Inc., a corporation, and Preston's Insulation and Roofing Service of Tucson, Inc., an Arizona Corporation, Appellees. 2141.
• Court: Arizona Court of Appeals

Page 750

561 P.2d 750

114 Ariz. 426

Donald P. LEWIS and Eleanor A. Lewis, husband and wife, First State Service Corporation, Trustee, and Tucson Federal Savings and Loan Association, a corporation, Appellants, v. MIDWAY LUMBER, INC., an Arizona Corporation, John Klassen and Company, a corporation, D & N Construction Company, a corporation, A. L. McCune Drywall Co., Inc., a corporation, and Preston's Insulation and Roofing Service of Tucson, Inc., an Arizona Corporation, Appellees.

No. 2 CA-CIV 2141.

Court of Appeals of Arizona, Division 2.

Jan. 3, 1977.

Rehearing Denied Feb. 8, 1977.

Review Denied March 8, 1977.

Robertson, Molloy, Fickett & Jones, P.C. by Russell E. Jones, Tucson, for appellants

Charles F. Sullivan, Tucson, for appellees Midway Lumber, Inc., John Klassen and Co., and D & N Construction Co.

Law Offices of Charles J. Rondelli by Michael Hornisher, Tucson, for appellee A. L. McCune Drywall Co., Inc.

Vincent E. Odgers, Tucson, for appellee Preston's Insulation and Roofing Service of Tucson, Inc.

OPINION

HOWARD, Chief Judge.

This is an action to foreclose materialmen's and mechanics' liens and the only question is whether the liens were perfected within the time and in the manner provided by the statutes. The case was tried to the court sitting without a jury which made findings of fact and conclusions of law and rendered a judgment providing that the deed of trust of First State and Tucson Federal had priority as a lien on the subject property to the extent of $27,700 and the liens of the appellees Midway, Klassen, D & N Construction Company, McCune and Preston were valid liens on the subject property and had a second priority. The lien of the deed of trust of Fist State and Tucson Federal to the extent that it was not granted first priority was granted third priority. The liens of the appellees were directed by the judgment to be foreclosed in the manner provided by law.

The facts show that on June 20, 1972, King Construction Company purchased and became the record titleholder of Lot 299 of Bel Air Ranch Estates, a subdivision of Pima County. King Construction Company, immediately after acquiring record title executed a realty mortgage in favor of Tucson Federal as mortgagee to secure a promissory note executed by King in favor of Tucson Federal in the sum of $27,700, the amount of the construction loan from Tucson Federal to King Construction. This mortgage was recorded immediately after recording the deed vesting title in King Construction. At the time the construction mortgage was recorded, no work had been done on the subject property which was entirely vacant.

King Construction then entered into separate oral contracts with each of the lien claimants. These contracts all concern the construction of a residence on Lot 299.

Midway Lumber furnished building materials to King which were utilized in the construction of the residence. These materials were furnished between September 16, 1972 and December 21, 1972.

Klassen furnished labor and materials for the installation of kitchen cabinets, bathroom vanities and countertops to the property. This labor and materials were furnished on December 20th and 21st, 1972.

McCune furnished drywall and acoustical labor to the residence during the period November 18th through November 27th, 1972.

Preston furnished the labor and materials for the insulation of the residence on October 24, 1972.

D & N Construction constructed a septic system which was actually incorporated on the property. The date on which it was completed was a trial issue and the court found as a fact that the work on the septic system was completed on January 18, 1973.

On February 1, 1973, King Construction deeded the property to the Lewises. This deed was recorded the same day as was a deed of trust executed by the Lewises as trustors in favor of First State as trustee and Tucson Federal as beneficiary. The deed of trust and the promissory note executed in connection therewith was for the sum of $36,900. $27,700 of this loan was used to satisfy the construction loan.

King Construction Company failed to pay the total sum due the appellees. On March 30, 1973, Midway Lumber recorded its notice and claim of lien and on April 19th the other appellees did likewise.

Midway, in its notice and claim of lien, stated that King Construction Company and the Lewises were the reputed owners of the property. Klassen, D & N Construction and McCune each stated that King was the owner or reputed owner of the property. The notice and claim of lien recorded by Preston did not set forth who was the owner or reputed owner of the property.

The Lewises were the true owners and owners of record at all times from February 1, 1973 to the date of trial. They both lived on the property continuously from February 1, 1973 until August 1974 when Mr. Lewis obtained work elsewhere. Mrs. Lewis however, resided continuously on the property from February 1, 1973 to the date of trial.

Midway served its notice and claim of lien on both the Lewises and King Construction Company. All the rest of the lien claimants served their notices and claims of lien on King Construction Company alone.

Appellants first attack the court's finding of fact that D & N Construction Company completed its work on the septic system on January 18, 1973. The rule on review is that findings of fact are sustained unless they are clearly erroneous. Olson v. State, 12 Ariz.App. 105, 467 P.2d 945 (1970). The evidence as to when the work on the septic system was completed is conflicting. A finding of fact cannot be clearly erroneous if there is substantial evidence to support it, even though there also might be substantial conflicting evidence. Resolution of any conflict in the evidence is for the trier of fact. Reliable Electric Co. v. Clinton Campbell Contractor, Inc., 10 Ariz.App. 371, 459 P.2d 98 (1969). We therefore shall not disturb the trial court's finding of fact on this issue.

The next question to be decided is whether the appellees timely recorded their notices and claims of lien. The applicable statute A.R.S. § 33--993(A) provides in part:

'In order to impress and secure the lien provided for in this article, every original contractor, within ninety days, and every other person claiming the benefits of this article, within sixty days after the completion of a building, structure or improvement, or any alteration or repair thereof, shall make duplicate copies of a notice and claim of lien and record one copy with the county recorder of the county in which the property or some part thereof is located, and within a reasonable time thereafter serve the remaining copy upon the owner of the building, structure or improvement, if he can be found within the county. The notice and claim of lien shall be made under oath by the claimant or someone with knowledge of the facts, and shall contain:

1. The legal description of the lands and improvements to be charged with the lien.

2. The name of the owner or reputed owner of the property concerned, if known, and the name of the person by whom the lienor was employed or to whom he furnished materials. . . .'

Subsection B of the foregoing statute states:

'For the purposes of subsection A, 'completion' means actual completion of the work. Completion shall also be deemed to have occurred upon cessation of labor for a period of sixty consecutive days on the property upon which a lien is claimed. . . .'

Appellants do not question whether the notice and claim of lien of D & N Construction Company was timely recorded, but do claim that the other appellees failed in this respect. Appellants contend that each of the lien claimants was an original contractor under A.R.S. § 33--993. Appellees do not dispute this contention. They differ, however, with appellants as to the meaning of subsection A. The dispute centers on the word 'improvement'. Appellants contend that when McCune Drywall, installed the drywall in the house under construction, it created an 'improvement'. Therefore, the ninety-day period began to run when it completed the drywall installation. Appellants urge the same theory as to the other appellees.

Appellees maintain appellants' version of the statute is incorrect and that the ninety-day period did not begin to run until the house was completed, to wit, when D & N Construction completed its work on the septic system.

We believe appellees are correct. The time period begins to run after the completion of the subject of the construction. For example, if the subject of the construction is a 'building', which has been defined as an edifice constructed for use or convenience as a house, church, shop, etc., attached to and becoming part of the land, ¹ the time begins to run when the work on the building is completed. If the subject of the construction is not a building but is a 'structure' such as a fence or billboard, the time begins to run upon completion of the work on that structure.

Sometimes there may be a doubt as to whether the subject of the work and labor is technically a 'building' or a 'structure'. The legislature has provided for this situation by use of the word 'improvement' which means a valuable addition or betterment to real estate such as a building, clearing, drain, fence, etc. Interstate Lumber Company v. Rider, 93 Mont. 489, 19 P.2d 644 (1933). Clearing, grading and excavation of land is an 'improvement' under a mechanic's lien statute. Mazel v. Bain, 272 Ala. 640, 133 So.2d 44 (1961). Thus, if the subject of the construction is a fence the time would begin to run after completion of the work on the fence. Here, the subject of the construction was a residence and the statutory period did not begin to run until the work on the residence was completed. Our view that the word 'improvement' was meant as a 'catch-all' is fortified by that part of A.R.S. § 33--993 which requires a duplicate copy of the notice and claim of lien to be served '. . . upon the owner...