Morris v. Nowlin Lumber Co.

• Decision Date: 17 April 1911
• Parties: MORRIS v. NOWLIN LUMBER COMPANY
• Court: Arkansas Supreme Court

140 S.W. 1

100 Ark. 253

MORRIS v. NOWLIN LUMBER COMPANY

Supreme Court of Arkansas

April 17, 1911

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor reversed.

Judgment reversed and denied.

Rose Hemingway, Cantrell & Loughborough, for appellant Morris Ratcliffe, Fletcher & Ratcliffe, for appellant bonding company.

1. Appellant Morris acquired the funds with which he purchased the land on which the orphanage was built, and the funds with which it was built, as trust funds, in accordance with the discipline and canons of the Catholic Church. In equity, the property belongs to the Catholic Church, notwithstanding the fee is at law in the bishop. Any attempt to divert it from the uses and purposes of the Church would be corrected or restrained by a court of equity. The bishop's title is not different from that of other trustees. 2 L. R. A. 753; Perry on Trusts P 321; Tiedeman, Real Prop. § 440; 1 Pomeroy, Eq. Jur. §§ 151-154; 13 Wall. 679; 79 Ark. 555; 3 Pomeroy, Eq. Jur. §§ 1018-1025. When property is conveyed to a church, not incorporated, the title vests in the head of the church in succession. Here the Catholic Church is unincorporated, and incapable of holding title. By its discipline, canons and usages, the bishop of the diocese is vested with title to the church property in fee.

The grant to Bishop Morris of the fee in this case vests in him nothing more than would be implied if the grant had been direct to the Church. Thompson on Corporations § 8; 74 Ark. 545; 81 Ark. 236; 9 Cranch 292; Id. 327; 6 Cyc. 938; 1 Perry on Trusts §§ 248, 249 et seq.

2. An orphanage is a public charity, and not subject to liens. 79 Ark. 550; 81 Ark. 235; 86 Ark. 213; art. 16 § 5, Const. Ark. 1874; Kirby's Dig. § 6887; 42 Ark. 536; 38 Am. Rep. 298; 43 L. R. A. 498. The objection that appellant having title to the property in fee, as an individual, may change it to any other use as he may choose, and that therefore it is a private charity, is answered by this court in the Fordyce case, 79 Ark. 550, at p. 567. See also 25 O. St. 245; 43 L. R. A. 498; 60 F. 368; 86 Pa. 306.

As to dedication, written proof thereof may be found in appellant's amended complaint, as also in the contract with McLennan to build the orphanage. 98 Ill. 496; 1 Perry on Trusts §§ 82, 84, 85; Warvelle on Real Prop. §§ 399, 400, 401. If the proof is not sufficient to establish an express trust on the part of the bishop, it does show such a state of facts as to create an implied trust. "It is admissible in a court of equity to prove a trust in opposition to a deed or other written instrument." 11 Ark. 82; 39 Ark. 309; 75 Ark. 446; 48 Ark. 175-6; 45 Ark. 472; 77 Ark. 31; 47 Ark. 535; 70 Ark. 145; 142 Mo. 274-5; 70 Ark. 150. See also 107 U.S. 163-173; 79 Ark. 559, 563, 564, 565; 17 Ark. 483.

3. The court erred in holding that the appellees stand in the attitude of bona fide purchasers or lien holders, and, therefore, entitled to liens. Upon the facts developed in this case, they have no standing as bona fide lien holders. Both the contract and specifications state that the building was for an orphanage, and they knew that they were furnishing materials to build an orphanage. Moreover, the inscription on the cornerstone was sufficient to put them on notice. 58 Ark. 84. No claim of bona fides was pleaded by the interveners. 27 Ark. 6; Id. 98; 21 Ark. 22; 30 Ark. 249; 31 Ark. 151; 29 Ark. 563; 31 Ark. 85, 87. The burden was on them to show that they were lien holders, and in good faith. 75 Ark. 228; 80 Ark. 86.

4. They have not complied with the law so as to entitle them to liens. Kirby's Dig. § 4981; Jones on Liens, § 1422.

5. The bond of the American Bonding Company is only a bond of indemnity to Bishop Morris. Its terms are complied with by turning over the "building in an undamaged condition, and free and clear of liens and incumbrances whatever, arising out of said contract. 86 Ark. 213. Neither he nor the bonding company had any privity with or contractual relations with the subcontractors. The cross complaint of the various defendants against the bonding company should not be sustained. 31 Ark. 345, 360; 48 Ark. 167; 65 Ark. 27, 30; 76 F. 130.

Bradshaw, Rhoton & Helm, for appellees.

1. As between the lien holder and the owner of the improved property, there is no necessity for filing a separate account with the clerk, where suit is instituted within ninety days after the materials are furnished, and a proper account thereof accompanies the complaint. 49 Ark. 475; 57 Ark. 284; 58 Ark. 7; 30 Ark. 568; 51 Ark. 302.

2. A church or orphanage is subject to a mechanic's lien. The case of Eureka Stone Co. v. First Christian Church, 86 Ark. 212, should be overruled. The statute is broad enough to include a church or orphanage as much so as if the words church or orphanage were in terms mentioned in the statute. Kirby's Dig. § 4970; 30 La.Ann. 711; 29 Ore. 150; 10 Pa.St. 413; Matthew, 22: 21; Romans, 13: 7-8; 32 Ark. 406; 56 Ark. 217. The deed of conveyance to John B. Morris, by its terms, conveys an estate in fee simple "unto him, and unto his heirs and assigns forever," and is not chargeable with a trust. While it is true that the legal title may be held by one and still be held in trust, yet that is a question of fact in a contest between claimants, and can be proved only by a writing, unless the money is furnished by the claimant. Unless there was a written declaration by John B. Morris, there could be neither an implied nor a resulting trust nor express trust in favor of the church because the property did not come from the church. Kirby's Dig. § 3666; 42 Ark. 500; 45 Ark. 481; 67 Ark. 526.

There can be no trust for a charitable use in this building because there is no person to demand and no court to compel its use as such. Pingrey on Real Estate, § 1521; 95 N.Y. 76; 125 N.Y. 560; 130 N.Y. 29; 2 Powell on Devises, 11; 2 How. (U. S.) 127, 11 Law. Ed. 205; 6 Cyc. 899; Id. 945, note 24; Id. 946; 67 Am. Dec. 160; Eaton, Equity, 385; Id. 387, note 8, 388; note 12, 389; 26 Mich. 153; 55 N.J.Eq. 204; 161 Mass. 400; 14 L. R. A. 33; 27 Barb. 260; 91 F. 827.

If it should be admitted, contrary to the instruments of conveyance, the testimony of appellant and the practice, customs and inclination of the Catholic Church as shown by its history and traditions, that there is lodged in the church, or its members, or any part of them, an expectation or wish that appellant, the bishop, should make no disposition of any of his property, or of the property he holds, except for the use of the church or for some charitable purpose connected with it, the absolute discretion of disposition vested in him places it beyond the power of the court to do anything in furtherance of any such expectation or wish. 14 L. R. A. (N. S.) 49; Id. 68, 75, 80, 87; 28 Mich. 153; 9 Ves. Jr. 401; 10 Ves. Jr. 522; 7 Heisk. 683; 54 N.J.Eq. 205. This absolute power of disposition and control carries with it the power to create liens. 57 Ark. 445.

The material furnishers are innocent purchasers without notice of a secret trust, if any; and the court correctly held that appellees were each bona fide purchasers as lien holders, and entitled to liens because they had furnished materials and done work on the building without notice that appellant held the property as bishop. Where one of two innocent persons must suffer by the act of a third person, he must suffer who enabled the third to occasion the loss. 39 Ark. 50; 42 Ark. 478; 49 Ark. 44; 55 Ark. 49.

The bonding company contracted to pay for all labor and materials used in the erection of the building. The undertaking in the bond that "the said contractor shall faithfully execute the contract for the erection of said building, and that he shall pay off and discharge all claims for labor and material of whatever kind used in the construction of said building," is a clear and explicit promise to pay for labor and materials used therein; and the additional statement that "the contractor shall turn over the building free and clear of all liens and incumbrances," is but a cumulative provision, making complete sense within itself. 9 L. R. A. (N. S.) 889.

WOOD, J. McCULLOCH, C. J., dissenting.

OPINION

WOOD, J.

Appellant John B. Morris entered into a contract with Hugh McLennan to erect a building to be used as an orphanage. Appellees furnished to McLennan material which was used in the construction of the building. McLennan did not pay for the material. McLennan executed a bond to Morris with appellant bonding company as surety in which it undertakes that the contractor "shall pay off and discharge all claims for labor and material of whatever kind used in the construction of said building, * * * and shall turn over said building free and clear of all liens and incumbrances whatever, of mechanics or material men, that may arise out of said contract."

The questions presented on this appeal are:

First. Did appellees have a lien on the building for the amounts due them?

Second. Is the bonding company liable for such amounts?

Third. Can appellees recover of appellant Morris, and have a lien on the building for the amounts due them on the theory that they stand in the attitude of innocent purchasers for value?

1. Appellant Morris contends that the building is dedicated to a public charity, and is therefore not subject to the liens claimed. Appellees, on the other hand, contend that Morris owns the building in his individual right, in fee simple, and that it is not chargeable in his hands with any trust, that there has been no irrevocable dedication of the building by Morris to a public charity, no specific charity designated and declared, and therefore that it is subject to the liens.

John B Morris is bishop of the Catholic...