Reeves v. York Engineering & Supply Co.

• Decision Date: 25 March 1918
• Docket Number: 3066.
• Citation: 249 F. 513
• Parties: REEVES v. YORK ENGINEERING & SUPPLY CO. [1]
• Court: U.S. Court of Appeals — Fifth Circuit

249 F. 513

REEVES v. YORK ENGINEERING & SUPPLY CO. ^[1]

No. 3066.

United States Court of Appeals, Fifth Circuit.

March 25, 1918

Cecil H. Smith, of Sherman, Tex. (J. D. Williamson, of Waco, Tex J. A. L. Wolfe and Head, Dillard, Smith, Maxey & Head, all of Sherman, Tex., and Thompson, Knight, Baker & Harris, of Dallas, Tex., on the brief), for appellant.

N.C. Abbott of Houston, Tex., for appellee.

Before WALKER and BATTS, Circuit Judges, and FOSTER, District Judge.

BATTS Circuit Judge.

The Alliance Milling Company was adjudged a bankrupt on April 5 1916. May 23, 1916, the York Engineering & Supply Company appellee, filed proof of claim in the sum of $2,411.25, alleging a constitutional and statutory lien for material and machinery furnished and placed on the property of the bankrupt; and, on the same day, filed a petition setting up the facts of the transaction out of which the claim arose. The trustee filed a protest. The referee allowed the claim and lien. The trustee excepting, the matter was certified to the United States District Court, where the judgment of the referee was affirmed. The judgment is before this court for review.

On January 15, 1916, the bankrupt entered into a contract with the appellee, by which it agreed to purchase certain ice and refrigerating machinery, as follows: Eleven sections of Shipley double-pipe flooded ammonia condensers, each section to be 8 pipes high, 18 feet 2 inches long, the condensers to be of 2-inch and 3-inch ammonia pipe, together with the necessary stands and header connections for both water and ammonia; each section to have inlet, outlet, pump-out and purging connections; also one purge drum, 10 by 6 long, with connections; one ammonia receiver, 24 in diameter by 16 long, to be of welded pipe, with all necessary pipe connections; one gauge glass, with automatic ball check valves.

Payments were to be 25 per cent. cash on arrival of material, 25 per cent. cash when material was erected, and 50 per cent. in four months' note, bearing 8 per cent. interest, dated and delivered at the time of the second payment. The bankrupt received the material, and, prior to the adjudication, placed the same in its ice plant by connecting it with its ice machinery then operated by the company. The erection was outside of the old ice plant on a concrete base especially prepared for it, its own weight holding it in place. The machinery was complete in itself and could be disconnected, without injury, from the plant as it had theretofore existed, by unbolting four connections. An employe of the selling company, under the arrangement made at the time of the sale, was sent to see that it was properly erected. The contract was made with J. N. Rayzor, as president of the purchasing corporation. Delivery was made early in March, 1916.

The report of the referee, supporting the claim of the appellee, both as to the amount and the lien, was excepted to, the exceptions presenting the following points: (1) That the president of the bankrupt corporation did not have authority to bind the corporation by a contract and create a mechanic's lien, either upon the condenser or real property of the corporation, by its installation upon the premises; (2) that, having no authority from the board of directors, the president could not create a mechanic's lien as against this property; (3) that, the condenser being a fixture, the trustee's taking possession thereof (he being an attaching creditor under section 47a of the Bankruptcy Act) was not a ratification so as to create a mechanic's lien; (4) that title to the condenser, it being a fixture, passed by sale of all properties of the bankrupt to the purchaser, and no mechanic's lien existed on the condenser as against the purchaser; (5) the property being sold without any contract reservation of title, no contract lien has since been placed upon the property; (6) the mechanics' and materialmen's statutes made no provision for the retention of lien upon the specific machinery, sold without reservation of title; (7) that the property involved was not of a character to become attached to and made a component part of the realty, so as to give rise to any character of lien; (8) that claimant sold the property pursuant to a written order, and reserved no title, and the property was simply set into the plant, connected with other machinery by removable connections, and its character is such that it constitutes no integral part of the realty, nor such a fixture or addition thereto or improvement thereon as gives rise to a lien under the statutes.

Upon judgment by the District Court in favor of claimants, assignments of error were made to a like effect.

Section 37, art. 16, of the Constitution of Texas, provides:

'Mechanics, artisans and materialmen of every class, shall have a lien upon the buildings and articles made or repaired by them, for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.'

Article 5621 of the statutes of Texas provides:

'Any person, or firm, lumber dealer, or corporation, artisan, laborer, mechanic, or sub-contractor, who may labor or furnish material, * * * fixtures or tools to erect any house or improvement, or to repair any building or improvement whatever, * * * upon complying with the provisions of this chapter, shall have a lien on such house, building, fixtures, improvements * * * and shall also have a lien on the lot or lots of land necessarily connected therewith, to secure payment for the labor done, lumber, material, machinery or fixtures * * * furnished for construction or repair.' Article 5622:

'In order to fix and secure the lien herein provided for, it shall be the duty of every original contractor, within four months * * * to file his * * * contract in the office of the county clerk of the county in which such property is situated, and cause the same to be recorded in a book to be kept * * * for that purpose. * * * '

Article 5623 is with reference to persons furnishing material, etc., to any contractor.

Article 5624 makes provision for the filing and recording of a sworn account, when there is no written contract, and a form of affidavit is given which provides for a description of the improvement and of the lot or tract of land upon which it is placed. It concludes with a proviso to the effect that 'a substantial compliance with the above form shall be deemed sufficient to fix and secure the lien.'

Article 5626 provides:

'In case the contract is filed and recorded as provided for in article 5527 (5622), a like description of the house, building or improvement, and the lot or tract of land shall accompany the same, as is required in the foregoing forms, except that the same is not required to be under oath.'

On the 24th of April, 1916, the York Engineering & Supply Company filed for record the contract between that company and the bankrupt in the form of a letter, dated January 15, 1916, submitting a proposition, and an acceptance in writing of the same date by the 'Alliance Milling Company, per J. N. Rayzor, president.'

The primary question presented is whether Rayzor, the president of the corporation, could, by his act in buying the property, create a lien upon the thing bought and the realty of the corporation. Rayzor was president of the corporation, and had charge of its buying and selling, and the purchase was made by him. The machinery was installed by the company, and a part of the purchase price was paid by it in accordance with the terms of the contract. Whether or not the president primarily had authority to make the purchase, that which followed constituted a ratification.

If he had not the authority, and if there had been no ratification, the property belongs to appellee. If he had the authority to make the purchase, the legal consequences which follow from such a purchase resulted.

Appellant claims that a lien under the Texas law, on this character of property, is acquired only through: (a) A chattel mortgage; (b) a reservation of title in the sale contract; (c) a mechanic's lien under the Constitution; (d) a mechanic's lien under the statutes. He insists properly that no chattel mortgage was taken, and that there was no reservation of title. His contention that the facts do not bring the claim under the constitutional provision, and that the claimants have failed to comply with the statutory requirements, presents the points to be determined.

The courts of Texas hold that a lien is created by the Constitution of the state in favor of 'materialmen of every class' upon 'the buildings and articles made or repaired,' for 'material furnished therefor.' The existence of this lien is not dependent upon any action taken under the terms of the statute. Bassett v. Mills, 89 Tex. 167, 34 S.W. 93; Strang v. Pray, 89 Tex. 525, 35 S.W. 1054; National Bank v. Taylor, 91 Tex. 78, 40 S.W. 876, 966; De Bruin v. Land & Irrigation Co. (Tex. Civ. App.) 194 S.W. 655. If the terms of the Constitution are applicable to the instant case, all the objections of appellant are lacking in merit.

'This provision (of the Constitution), ' says the court in Bassett v. Mills, supra, 'in so far as it gives a lien, is as broad as language can make it. ' In Strang v. Pray, supra, the Supreme Court of Texas uses this language:

'It was the intention of the members of the convention which framed and adopted this section of the Constitution to give full and ample security to all mechanics, artisans, and materialmen for labor performed and material furnished for the erection of all buildings and other improvements, and the courts must give such construction to this language as will carry out that

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