McGonigle v. Foutch

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: VAN VALKENBURGH and BOOTH, Circuit , and MUNGER
• Citation: McGonigle v. Foutch, 51 F.2d 455 (8th Cir. 1931)
• Decision Date: 08 June 1931
• Docket Number: 9092,9011,9093.,No. 9010,9010
• Parties: McGONIGLE v. FOUTCH (two cases). A. Y. McDONALD MFG. CO. et al. v. SAME (two cases).

51 F.2d 455 (1931)

McGONIGLE v. FOUTCH (two cases).

A. Y. McDONALD MFG. CO. et al. v. SAME (two cases).

Nos. 9010, 9011, 9092, 9093.

Circuit Court of Appeals, Eighth Circuit.

June 8, 1931.

Arthur N. Adams, of Kansas City, Mo., for appellant D. S. McGonigle.

Goodwin Creason, of Kansas City, Mo. (W. S. McClintock, Arthur L. Quant, F. K. Ferguson, James A. Reed, F. A. Fratcher, George K. Brasher, Joseph F. Keirnan, John S. Wright, Whitson Rogers, John T. Harding, David A. Murphy, R. C. Tucker, August F. Behrendt, Frank P. Walsh, James P. Aylward, C. A. Capron, John M. Cleary, Raymond G. Barnett, and Maurice O'Sullivan, all of Kansas City, Mo., on the brief), for appellants A. Y. McDonald Mfg. Co. et al.

James B. Nourse, of Kansas City, Mo. (Glen C. Weatherby, of Kansas City, Mo., for petitioning creditors, and Milford W. Rider, of Kansas City, Mo., on the brief), for appellee.

Arthur Miller, of Kansas City, Mo., for bankrupt.

Charles W. German, of Kansas City, Mo., for creditors.

Before VAN VALKENBURGH and BOOTH, Circuit Judges, and MUNGER, District Judge.

VAN VALKENBURGH, Circuit Judge.

These four cases are appeals from the order of the District Court for the Western District of Missouri overruling exceptions to orders of the referee in the matter of Kelley Development Company, a corporation, bankrupt. The orders in question are of date June 4, 1930. So far as a determination of the issues presented by these appeals are concerned, the orders complained of may be deemed to have arisen upon the following state of facts:

On or about May 1, 1929, the Kelley Development Company, as owner, began the erection of an eleven-story structure on lots 1, 2, 3, 4, 20, 21, and 22, all in block No. 7 of Hyde Park, an addition to Kansas City, Jackson county, Mo. The building in question, a twin apartment or hotel building, called the Chief, was to be erected in part by the owners and in part under one entire general contract by the Fleming-Gilchrist Construction Company, a corporation. One G. A. Oxler was a general contractor for the furnishing of all the plumbing and heating materials to be used in the building, and appellant A. Y. McDonald Manufacturing Company is a subcontractor under Oxler, and furnished plumbing and heating material at his special instance and request. It is unnecessary for the purposes of this opinion to name other mechanic's lien-claimants. Work on the Chief began May 1, 1929, and labor was performed and materials were furnished beginning on that date. Work ceased on or about October 17, 1929. The lien claim of Fleming-Gilchrist Construction Company states that the last work performed and the last materials furnished by it was performed and were furnished on that date.

Section 3161 of the Missouri mechanic's lien law (Rev. St. Mo. 1929) provides as follows: "It shall be the duty of every original contractor within six months, and every journeyman and day laborer within sixty days, and every other person seeking to obtain the benefit of the provisions of this article within four months, after the indebtedness shall have accrued, to file with the clerk of the circuit court of the proper county a just and true account of the demand due him or them after all just credits have been given, which is to be a lien upon such building or other improvements," etc.

The lien account of appellant McDonald Manufacturing Company was filed November 13, 1929; that of another lien claimant, on December 13, 1929. The remaining accounts were filed on various dates up to and including April 4, 1930. The claim of Fleming-Gilchrist Construction Company was filed January 20, 1930; the petition in bankruptcy, April 7, 1930. All actions to enforce liens shall be commenced within ninety days after the filing of the lien account. Rev. St. Mo. 1929, § 3172. The nature of the action, such as that under consideration, and the procedure in the courts of the state, are thus described in the latest revision of the Statutes of Missouri, R. S. Mo. 1929:

"Sec. 3180. Liens may be adjudicated, how. — Any and all liens in this article provided for may be adjudicated and determined and the rights of all parties interested in the same and in the property and any of the property against which the same is claimed may be adjudicated, determined and enforced in one action which may be brought by any such lien claimant after the statement for such lien is filed in the office of the clerk of court, as herein provided, or such action may be brought by any owner or lessee of the property or any of it to be affected, or mortgagee or holder of any other encumbrance thereon. Such action shall be an equitable action for the purpose of determining the various rights, interests and liens of the various mechanics' lien claimants and claimants of other liens and owner of any interest in or leasehold upon said property and for enforcing the rights of any and all such persons in, to or against the property, being the lands and buildings and either of the same and for sale of such property, land and buildings or either of the same and for marshalling and distribution of the proceeds thereof among the parties according to their respective legal and equitable rights therein. Such action shall be an equitable action for the purpose of determining, establishing and enforcing the various and respective rights of the parties thereto and for the purpose of marshalling, applying and distributing the proceeds of the sale of such property that may be ordered and decreed in said action.

"Sec. 3181. Who may be made party to action. — All persons claiming any lien or encumbrance upon, and all persons having any rights in or against and all owners and lessees of said property to be affected and any of it, all as may be disclosed by the proper public records, shall be made parties to said action and parties whose interests are divers may join as plaintiffs therein, but if they do not join as plaintiffs, then they shall be made defendants. Any person, lien claimant or other having any rights in, to, against or upon said property and any of it whose rights are not disclosed at the time of bringing said action by the proper record, shall be bound by the proceedings, orders and judgments in said actions, but any such person shall be entitled upon application to the court to be made a party to said action at any time before final disposition by the final judgment of the court therein of the proceeds of said property and shall be entitled according to their respective rights to participate in the proceeds of the sale of such property and any of it, as the same may be thereafter received or then remain under the jurisdiction of the court. If at the commencement of said action any person whose rights are disclosed by the record is omitted as a party, he may thereafter be made party to said action either upon his own application or upon the application of any other party to said action or by the court of its own motion. If any party to said action shall die or cease to exist during the pendency of said action before the judgment or order of sale therein of said property, then the proper representatives, either administrator or other proper successor in right, shall be substituted by order of the court upon motion and notice of motion without formal revivor of said action."

This equitable action shall not apply when there is only one mechanic's lien claimed against the property (section 3182); but after the action is commenced, in cases in which it does apply, it is exclusive of other remedies for enforcement (section 3186), "and all other suits that may have been brought on any mechanic's lien claim or demand shall be stayed and no further prosecuted, and the parties in any such other suit shall be made parties to such equitable action as in the foregoing sections provided, and any costs rightfully accrued in behalf of any lien claimant in any such other action shall be and become a part of the lien claim of such party. After the institution of such equitable action no separate suit shall be brought upon any mechanic's lien or claim against said property, or any of it, but the rights of all persons shall be adjusted, adjudicated and enforced in such equitable suit." Section 3183.

January 23, 1930, Fleming-Gilchrist Construction Company filed in the circuit court of Jackson county, Mo., at Kansas City, the equitable action provided for the foreclosure of mechanic's liens. All the other lien claimants were made parties, and all duly became impleaded as by law provided. Appellant McGonigle, mortgagee, was also made a party and served. This appellant is the owner of a note in the sum of $150,000, and of the deed of trust securing the same. This deed of trust was executed November 17, 1925, and filed for record November 20, 1925, and covers all the property hereinabove described. In this proceeding, no attack is made upon the validity of this deed, nor of the indebtedness thereby secured. It was in default under its terms on and before March 20, 1930. On that date, McGonigle filed his answer in the Fleming-Gilchrist case in the state court, asserting the priority of his mortgage lien, and asking to be dismissed with his costs. March 21, 1930, McGonigle began advertising the property for sale under the provisions of his deed of trust. That sale was fixed for April 17, 1930, and on that date was enjoined by the bankruptcy court at the instance of the petitioning creditors. May 23, 1930, appellant McGonigle filed an amended answer and cross-petition in the state court, wherein he prayed the foreclosure of his mortgage lien in that jurisdiction, and for all equitable relief. The hearing of the Fleming-Gilchrist Construction Company's equitable suit for enforcement of the mechanic's liens in the state court was set for May 23, 1930. The trial proceeded on that date, and, being unfinished, was adjourned until the following day. Meantime, appellee had been duly appointed and had...