Olsen v. Smith

• Decision Date: 01 March 1915
• Docket Number: 12053.
• Parties: OLSEN v. SMITH et al. JONES v. MEARES.
• Court: Washington Supreme Court

146 P. 572

84 Wash. 228

OLSEN v. SMITH et al.

JONES v. MEARES.

No. 12053.

Supreme Court of Washington

March 1, 1915

Department 2. Appeal from Superior Court, King County; R. B. Albertson Judge.

Action by F. W. Olsen against, H. P. F. Smith, doing business as the Bitter Lake Lumber Company, and others, in which J. W. Jones petitioned for relief against Frank L. Meares, as receiver of the Bitter Lake Lumber Company. From a judgment against petitioner, he appeals. Affirmed.

Chauncey L. Baxter and J. Will Jones, both of Seattle, for appellant.

Frank A. Paul, of Seattle, for respondent.

ELLIS J.

This case presents a contest for priority between labor liens and a tardily recorded chattel mortgage. The labor was performed in the interval between the date of the execution of the mortgage and the date when it was filed for record. The conceded facts are these: On May 29, 1912, H. P. F. Smith doing business as Bitter Lake Lumber Company, executed and delivered to Norwood Lumber Company, a corporation, two promissory notes, each for the sum of $225, and a chattel mortgage to secure the same covering a team of horses, a harness, and a wagon. By oversight, the Norwood Company failed to record its chattel mortgage until November 12 1912. Prior to that time the lien claimants had no notice of the mortgage. The Bitter Lake Company was then hopelessly insolvent. It ceased business about December 15, 1912, and on January 3, 1913, a receiver was appointed at the suit of labor claimants. The period of 90 days had not then elapsed since the last labor performed by any of the claimants. No notice of claim of lien for the labor had been filed prior to the filing of the chattel mortgage, but it is conceded that under the statute the appointment of the receiver matured the liens with like effect as if lien claims had been filed as of that date. The receiver took possession of the mortgaged property, sold it for the sum of $250, and now has the money. The two notes and the chattel mortgage were assigned by the Norwood Lumber Company to the petitioner, J. W. Jones, for value, but after the maturity of the notes. On January 30, 1914, Jones, by petition, secured an order directing the receiver to show cause why he should not pay the proceeds of the mortgaged property to the petitioner to apply on his notes. Upon the hearing of this show cause order, the trial court held that the mortgagee had lost his priority by failing to file his mortgage within the statutory 10 days after execution and delivery (Rem. & Bal. Code, § 3660), and entered an order to that effect. The petitioner Jones appeals.

The record presents this single question: Is the lien of a laborer who performs work in the interval between the execution of a chattel mortgage and the time when it was tardily recorded postponed to the lien of the mortgage because he has filed no claim of lien, though the statutory period for so doing had not elapsed? The question is a new one in this state and must be solved in the main by an analysis of our own statute in the light of our own decisions.

The appellant first contends that the laborer in such a case stands in the same relation to the unrecorded chattel mortgage upon lienable property as that occupied by a general creditor who, in the interim between the making and the recording of the mortgage, extends credit to the property owner but has acquired no specific lien by attachment or otherwise. In order to a clear conception of the difference, if there is a difference, between labor creditors, prior to the filing of their liens, and general creditors, prior to attachment or judgment, we must consider their relation to the specific property by the statute made subject to liens for labor.

The liens here in question are governed by chapter 4, tiele 8, Rem. & Bal. Code, to which we shall refer by section numbers. Section 1149 gives a lien for labor upon all the real and personal property of the person, company, or corporation used in the operation of the business in and about which the labor was performed and for labor performed within six months next preceding the filing of a claim of lien. Section 1150 in effect makes the continued existence of the lien conditioned upon the filing of a notice of claim of lien within 90 days after the claimant has ceased to perform the labor, and on the service of a copy of the notice upon the person, company, or corporation within 30 days after the claim of lien is filed for record. The clear effect of these sections is to create an inchoate right of lien upon specific property in favor of laborers for 90 days prior to the filing of any lien notice. This marks a clear distinction between debts for labor and other unsecured debts; between labor creditors and general creditors. The latter have no specific lien, inchoate or otherwise, until suit and attachment or judgment. Section 1153 requires the receiver or assignee, appointed for any person, company, or corporation, 'to pay all claims for which a lien could be filed' under the labor lien law 'before the payment of any other debts or claims, other than operating expenses.' This section further emphasizes and vitalizes the difference between labor claimants and other creditors in their rights and relations to the specific property. It not only recognizes the inchoate lien of the laborer created by the prior sections, but gives it precedence and makes it effective as against claims of general creditors for the full 90 days accorded for the filing of the lien notice. It is clear therefore that the mere definition of rights in given property as between general creditors of the owner, and the holder of an unrecorded chattel mortgage thereon, does not necessarily, nor even impliedly, define rights as between the holder of such an unrecorded mortgage and the claimant of a lien for labor, even prior to the filing of the lien notice or the maturity of his lien by the property owner's insolvency. The appellant's argument, based upon our recent decision in Pacific Coast Biscuit Co. v. Perry, 77 Wash. 352, 137 P. 483, overruling Willamette Casket Co. v. Cross Undertaking Co., 12 Wash. 190,

40 P 729, is therefore stillborn. It lacks the vitalizing element of analogy in the relation of the parties there and the parties here to the respective subject-matters. In the Perry Case we held that, though Rem. & Bal. Code, § 3660, provides that a chattel mortgage is void as against creditors unless recorded, an unrecorded chattel mortgage is valid as between the parties and creditors subsequent to its execution who had acquired no specific lien upon the property up to the time when the mortgage was finally filed for record. This, on the specific ground that the belated filing of the old mortgage had the same effect, as against general creditors, that a new mortgage executed and filed on that day would have had. It therefore took precedence over the claims of general...