Massachusetts Bonding & Ins. Co. v. Realty Trust Co.
| Decision Date | 29 September 1914 |
| Docket Number | 602. |
| Citation | 83 S.E. 210,142 Ga. 499 |
| Parties | MASSACHUSETTS BONDING & INS. CO. v. REALTY TRUST CO. ET AL. REALTY TRUST CO. v. MASSACHUSETTS BONDING & INS. CO. ET AL. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
Where an exception to an auditor's report involves a consideration of the evidence introduced before the auditor and the evidence is not brought up, and there are in the pleadings no admissions sufficient to dispense with the evidence, the question sought to be brought under review by the exception cannot be determined.
The provisions of Civ. Code 1910, § 3352, that, under conditions therein specified persons furnishing material to a contractor for the improvement of real estate shall, as against the true owner, have a lien upon the property on which the materials were used, unless the true owner produces a sworn statement of the contractor that the agreed price or reasonable value of the material has been paid, contemplates the production of only one sworn statement by the contractor after completion of the work and before final settlement. Where the owner disregards the provisions of the statute and contracts to pay for the improvement in installments, pending the construction, he does so at his peril; and the fact that he may take sworn statements after each payment is made that the money has been applied to various expenses of the contractor in constructing the building, will not protect him from liens on account of material furnished which was not paid for.
Payments by the owner, which are not applied to the payment of claims for labor upon the employment of the contractor, or for material furnished to him in constructing the building, will not affect the liens of subcontractors who have furnished material.
A contract between materialmen and a contractor, to the effect that the former will not allow any mechanic's lien for materials furnished, but will satisfy, as they mature, each and every claim incurred by the materialmen in furnishing the material and labor, holding such contractor harmless against all demands and liens asserted by any person furnishing materials at their instance, and that in the event suits are filed because of materials furnished in connection with the construction of the building the materialmen will satisfy the same, and that the amounts due them for material shall not be paid until the contractor shall have received his money from the owner, is not a waiver of their lien under the statute.
(a) It does not appear that the contract above mentioned was known to the owner of the premises, or that it acted to its injury in reliance thereon so as to raise any question of estoppel.
It is necessary to the foreclosure of the lien for materials furnished upon the employment of a contractor that the materialman should previously have judgment against the contractor, or sue him concurrently in the suit to foreclose his lien. Where, however, the owner of the premises, before the time for foreclosing the lien has expired, brings an equitable suit against the contractor and various materialmen who have recorded their liens in terms of the statute praying that they be enjoined from foreclosing their liens in an independent action, and that all the rights of the respective parties be settled in the action brought by the owner; and, where the materialmen are thereupon enjoined from proceeding with their foreclosure suits, and they file an answer claiming that their liens be asserted in that suit the plaintiff cannot defeat the foreclosure of such liens on the ground of failure to procure such service on the nonresident contractor as would authorize a judgment in personam. A surety on a building bond of the contractor, who is also a party to this proceeding, will be bound by the judgment.
The mere fact that the building was incomplete at the time of filing the suit just referred to is no reason why the materialman's lien could not be foreclosed in that suit.
The obligation of the surety's bond was sufficiently broad to guarantee the construction of the building according to its contract, and would render the surety company liable for any amount which the owner of the building was required to pay to materialmen on their liens for material furnished in the construction of the building.
Other matters pleaded in discharge of the surety, and referred to in the eighth, ninth, and tenth divisions of this opinion were insufficient to release the surety from its contract.
Under the facts of this case, there was no error in the award of auditor's fee.
Error from Superior Court, Fulton County; W. D. Ellis, Judge.
Action by the Realty Trust Company against H. L. Stevens and others. Judgment for plaintiff, and the defendant Massachusetts Bonding & Insurance Company brings error, and plaintiff files a cross-bill of exceptions. Affirmed on both bills of exceptions.
See, also, 137 Ga. 693, 73 S.E. 1053; 139 Ga. 180, 77 S.E. 86.
The Realty Trust Company contracted with H. L. Stevens to build a theater and office building. The contractor gave a bond, with the Massachusetts Bonding & Insurance Company as his surety, conditioned for the faithful performance of his contract. Before the building was completed the Realty Trust Company brought its equitable petition against Stevens, the surety on his bond, and various lien claimants, alleging that Stevens had not completed the building and had abandoned the work, and that it would take large sums of money to complete it, and that various parties named as defendants were claiming liens against the property. It was prayed that these claimants of liens be restrained from prosecuting their claims at law, and be required to intervene and set up any action they might have against the realty company or its property. The claimants of liens filed a cross-petition, alleging that Stevens had properly performed his contract, and that they had furnished him with labor and materials which were used in the construction of the building, for which they had duly filed their claims of lien; and they prayed for judgment against Stevens and for the foreclosure of their liens against the realty company's property, and further asked for an injunction and other equitable relief. The court granted the injunction as prayed, and provided for its dissolution by the realty company giving bond, which was done. At the appearance term the surety on Stevens' bond filed a demurrer, general and special, which was overruled; and this judgment was affirmed here. See Massachusetts Bonding & Insurance Co. v. Realty Trust Co., 137 Ga. 693, 73 S.E. 1053, where the petition is stated more in detail. While the case was pending in the Supreme Court on the exceptions to the overruling of demurrers of the surety, the trial court, by consent of the realty company, appointed an auditor with authority to pass upon all issues of law and fact involved in the case. The case was tried before the auditor, who filed his report. To this report exceptions of law were filed by the Realty Company and by the surety. The exceptions were overruled, and those filed by the surety were dismissed, and final judgment was rendered. Exceptions were taken to this court, and the decree was reversed, with direction that the order overruling the exceptions of the realty company be set aside, and that the case be again heard upon the exceptions of both that company and the surety. 139 Ga. 180, 77 S.E. 86. Upon the return of the remittitur the court overruled all exceptions of law, disapproved the exceptions of fact, and approved the report and findings of the auditor. Certain issues arising directly between the realty company and the surety were heard upon an agreed statement of facts, and upon these the court directed a verdict in favor of the realty company. The auditor's report was made the judgment of the court, final decree was rendered in favor of the various claimants of liens, and judgment was rendered in favor of the realty company against the surety. The surety sued out a bill of exceptions, assigning error upon the overruling of its exceptions to the auditor's report, on the direction of the verdict, and on the decree. The realty company, by cross-bill, assigned error upon the overruling of its exceptions to the auditor's report, and on the final judgment.
Dodd & Dodd and Little, Powell, Hooper & Goldstein, all of Atlanta, for plaintiff in error.
Wimbish & Ellis, of Atlanta, for cross-plaintiff in error.
Leonard Haas, Moore & Pomeroy, V. B. Moore, J. S. Slicer, Payne & Jones, M. A. Hale, C. W. Smith, Smith, Hammond & Smith, J. A. Boykin, G. C. Middlebrooks, and E A. Neely, all of Atlanta, for defendants in error.
ATKINSON, J. (after stating the facts as above).
1. It was contended that the finding of the auditor that the subcontractors were entitled to liens for the several amounts reported by him was erroneous for a number of reasons; among them, because the material furnished by the subcontractors was furnished after March 1, 1910, and that up to that time all materials purchased or used by the contractor in the construction of the building had been paid for. Several arguments were presented in support of this contention, but the evidence introduced before the auditor does not appear in the record before the Supreme Court, and there is nothing to show the dates upon which the materials were furnished, which constituted the basis for the several liens which were sought to be set up. In the absence of evidence introduced before the auditor, or admissions in the pleadings on the subject, we cannot say that, for the reason mentioned, the auditor erred in his finding.
2. Another contention was because, inasmuch as the owner, the Realty Trust Company, procured an affidavit from the contractor upon the...
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