P. H. I. Const. Co. v. Riverview Commons Associates

• Decision Date: 04 January 1978
• Docket Number: Docket No. 31480
• Citation: 264 N.W.2d 50,80 Mich.App. 518
• Parties: P. H. I. CONSTRUCTION COMPANY, a Delaware Corporation, Plaintiff-Appellant, v. RIVERVIEW COMMONS ASSOCIATES, a Michigan co-partnership, Ajax Paving Industries, Inc., a Michigan Corporation, Haskell Greenfield & Associates, the Great Atlantic & Pacific Tea Company, a Maryland Corporation, Schreiber Corporation, a Michigan Corporation and National Bank of Detroit, a National Banking Association, Defendants-Appellees. 80 Mich.App. 518, 264 N.W.2d 50
• Court: Court of Appeal of Michigan — District of US

Page 50

264 N.W.2d 50

P. H. I. CONSTRUCTION COMPANY, a Delaware Corporation Plaintiff-Appellant, v. RIVERVIEW COMMONS ASSOCIATES, a Michigan co-partnership Ajax Paving Industries, Inc., a Michigan Corporation Haskell Greenfield & Associates, the Great Atlantic &amp Pacific Tea Company, a Maryland Corporation, Schreiber Corporation, a Michigan Corporation and National Bank of Detroit, a National Banking Association, Defendants-Appellees.

Docket No. 31480.

80 Mich.App. 518, 264 N.W.2d 50

Court of Appeals of Michigan.

Jan. 4, 1978.

Released for Publication April 6, 1978.

[80 MICHAPP 519] Fraser, Trebilcock, Davis & Foster by Douglas J. Austin, Lansing, for plaintiff-appellant.

Klein, Bloom & Gale by Gary M. Bloom, Southfield, for Riverview Commons.

Paul A. Tisdale, Detroit, for National Bank of Detroit.

Before T. M. BURNS, P. J., and R. B. BURNS and BROWN, ^* JJ.

T. M. BURNS, Presiding Judge.

This case requires yet another venture into the abyss of the Mechanics' Lien Statute, M.C.L.A. § 570.1 et seq.; M.S.A. § 26.281 et seq., for a determination of when and what a general contractor dealing directly with the owner must do before being allowed to foreclose a statutory lien. The circuit court found that plaintiff was required to file a notice of intent to claim a lien within 90 days after the project was begun, M.C.L.A. § 570.1; M.S.A. § 26.281, and to file the contractor's sworn statement of account, M.C.L.A. § 570.4; M.S.A. § 26.284, within 90 days of completion of the project. Since P.H.I. Construction Company failed to do either within the time mentioned, the circuit court granted summary judgment to Riverview Commons Associates and other defendants.

I

P.H.I. entered into a contract as the general contractor with Riverview Commons for the construction of a shopping center on January 5, 1973. The first labor or materials were furnished pursuant to the contract on February 7, 1973. The last labor or materials were furnished on March 31, 1975. Within 90 days of this last date, June 20, 1975, the contractor recorded its lien statement with the Wayne County Register of Deeds. M.C.L.A. § 570.5; M.S.A. § 26.285. Immediately before the complaint[80 MICHAPP 520] was filed in this case, June 14, 1976, P.H.I. served a sworn statement of account on Riverview Commons. No notice of intent to claim a lien was ever served on the owner.

II

The trial court found that P.H.I.'s failure to serve notice of intent to claim a lien within 90 days of furnishing the first labor or materials pursuant to the contract invalidated P.H.I.'s claim to a lien. The trial court apparently relied upon this court's split panel decision in Burton Drywall, Inc. v. Kaufman, 69 Mich.App. 85, 244 N.W.2d 367 (1976), lv. granted, 399 Mich. 875 (1977). P.H.I. asked that Burton Drywall not be followed or, alternatively, that it be applied only to projects begun after its release date.

We do not believe that Burton Drywall is controlling. Rightly or wrongly, the Supreme Court has stated that a contractor dealing directly with the owner is not required to file notice of intent to claim a lien, even after the amendment to the statute by 1929 P.A. 264. Mielis v. Everts, 264 Mich. 363, 364, 249 N.W. 875 (1933); Wallich Lumber Co. v. Golds, 375 Mich. 323, 328, 134 N.W.2d 722 (1965). Members of the construction industry have understandably relied upon these pronouncements.

Nor should the lien be defeated by the contractor's failure to give this notice. The purpose of the notice is to protect the owner from possibly unknown claims of those who have not dealt directly with him. The owner has notice of the claim of one with whom he has contracted. Wallich Lumber Co., supra. The owner should not be allowed to use a statute designed for his protection to defeat a lien where the purpose of the statute, notice, is fulfilled by direct dealing.

[80 MICHAPP 521] It is also clear that the panel in Burton Drywall was not required to address the direct dealing exception. Burton Drywall was a subcontractor dealing with the general contractor, not the owner. The general contractor had an interest in the ownership of the realty, but they were not the same entity. The owner of the general contractor was only one of the three partners in the ownership of the realty. Rather than attempting to strike down the direct dealing exception, the panel should have found it inapplicable. Cf. J. Altman Co.'s, Inc. v. Saginaw Plumbing and Heating Supply Co., 42 Mich.App. 747, 202 N.W.2d 707 (1972).

The trial court erred in granting summary judgment because P.H.I. failed to serve notice of intent to claim a lien within 90 days after the furnishing of the first labor or materials. Notice of intent to claim a lien was unnecessary because P.H.I. dealt directly with the owners of the realty.

III

The circuit court also found that P.H.I.'s claimed lien must fall because it had failed to timely serve the statement of account required by M.C.L.A. § 570.4; M.S.A. § 26.284, on the owner. P.H.I. argues that it may serve this statement on the owner within the one year allowed to foreclose liens, M.C.L.A. § 570.9; M.S.A. § 26.289, if it has timely recorded its statement of lien with the register of deeds, M.C.L.A. § 570.5; M.S.A. § 26.285. Riverview Commons agrees that service of the § 4 statement may occur after the statement of lien, § 5, is recorded, but argues that it must occur within the same 90 days allowed for recording the statement of lien.

Unlike the other sections of the statute, § 4 does [80 MICHAPP 522] not contain its own time limit within which the statement of account required therein must be filed or the lien lost. In relevant part, the statute provides:

"The original contractor shall, whenever any payment of money shall become due from the owner * * * or whenever he desires to draw any money from the owner, * * * on such contract, make out and give to the owner, * * * a statement under oath of the number and names of every subcontractor or laborer in his employ, and of every person furnishing materials, giving the amount, if anything, which is due or to become due to them, or any of them, for work done or materials furnished, * * *. Until the statement...