Reisterstown Lumber Co. v. Reeder, 167

• Decision Date: 17 March 1961
• Docket Number: No. 167,167
• Citation: 224 Md. 499,168 A.2d 385
• Parties: REISTERSTOWN LUMBER COMPANY v. Clarence E. REEDER et ux.
• Court: Maryland Court of Appeals

Page 499

224 Md. 499

168 A.2d 385

REISTERSTOWN LUMBER COMPANY v. Clarence E. REEDER et ux.

No. 167.

Court of Appeals of Maryland.

March 17, 1961.

W. Lee Harrison, Towson (Richard C. Murray, Towson, and George Barrett Johns, Baltimore, on the brief), for appellants.

Ralph G. Hoffman and Robert J. Cooke, Westminster, for appellees.

Before BRUNE, C. J., and HENDERSON, HAMMOND, HORNEY, and MARBURY, JJ.

MARBURY, Judge.

This is an appeal from a decree of the Circuit Court for Carroll County declaring that a mechanic's lien filed by the Reisterstown Lumber Company was null and void, and dismissing its cross bill for the enforcement of the lien.

This litigation began by the delivery of a notice of intention to claim a mechanic's lien by the appellant to the appellees on September 13, 1958. The notice stated the intention to claim a lien upon the real estate and improvements owned by the appellees, located in Carroll County, for the sum of $8,600.37 for building materials furnished within ninety days last past from that date, having been furnished to C. Myers Green, the contractor or builder. The notice was accompanied by a detailed invoice showing the nature of the materials delivered, the dates of delivery, and the charges therefor.

On January 9, 1959 the appellees filed a 'Bill to Remove Cloud from Title' in the Circuit Court for Carroll County. This bill alleged the appellees' ownership of the property to be affected by the lien, the filing of the lien on the Mechanic's Lien Docket of Carroll County and contained a general allegation that the appellant should not be entitled to assert such a lien 'having failed to comply with the purpose, intent and provisions of Article 63 of the 1957 Annotated Code of Maryland, relating to Mechanic's Lien.' The appellant answered the bill denying the allegation that it was not entitled to assert a lien and simultaneously filed a cross bill seeking enforcement of the lien. The appellees answered the cross bill alleging again that 'the alleged mechanic's lien is of no binding force and effect.' Testimony was taken on both the original and cross bills.

On June 23, 1960, the chancellor filed a written opinion holding that the appellant's lien must fall on the ground of equitable estoppel and entered a decree accordingly. The appellant challenges the correctness of the Court's finding on the issue of equitable estoppel and also raises in this court the issue of timeliness of the lien noted and the question of the amount of the lien. The last two issues were raised below by the appellees, and evidence was taken concerning them, although they were not decided by the chancellor; but in the view we take of the case they require decision by this court under Maryland Rule 885.

We must first consider whether the appellant was estopped from asserting a mechanic's lien by virtue of two alleged conversations with the owners as to the 'integrity' of the builder.

The appellees, Mr. and Mrs. Reeder, entered into a written contract with C. Myers Green for the construction of their residence on December 26, 1957-4 to 6 weeks before they had any conversation with the Reisterstown Lumber Company involving this matter. This contract called for a price on the basis of cost plus ten percent but not to exceed, however, the sum of $18,500. Article II of the contract called for substantial completion within one hundred working days and provided for progress payments, together with a final payment due thirty days after completion. Article IX required the contractor to re-execute any work that failed to conform to the requirements of the contract as well as to 'remedy any defects due to faulty materials or workmanship which occur within a period of one year * * *. The provisions of this article to apply to work done by sub-contractors * * *.' Under Article XII, the owner was entitled to withhold progress payments 'on account of defective work not remedied, liens filed damage by the contractor to others not adjusted, or failure to make payment properly to sub-contractors or for material or labor.' (Emphasis supplied.) This article also provided that the making of final payment would constitute a waiver of all claims by the owners except those arising from unsettled liens or from faulty work. Article XVI provided that the final payment should not be due until a complete release of all liens arising out of the contract was delivered to the owner or receipts in full covering all labor and materials were delivered or a bond had been filed.

The Reeders not only directly negotiated and executed their contract with Green, but in fact Mr. Reeder suggested to Green that he deal with the appellant for his supplies, saying that he preferred that he would got his supplies from Reisterstown Lumber Company. Mr. Reeder first visited the appellant in January or the first week in February, 1958, and after his house had for some time been under construction. In fact the first materials were delivered on the Reeder job November 14, 1957. He stated that there were two reasons for this visit, one relating to a type of window lock with which he was concerned. The other alleged reason was that he had in fact already paid Green $3,000 (this would appear to have been payment No. 1 for the foundation, laying subfloor, etc.). He had not received 'any receipts from any sub-contractors of any kind.' He also expressed his reason for going there by saing that he wanted to discuss Mr. Green's 'integrity', although he never explained what he meant by that phrase, and he admitted that he knew the lumber company would be 'my biggest bill.' He said that he had no serious reason to doubt Mr. Green's 'integrity' but that it was just a matter of 'normal precaution.' In response to this inquiry concerning Green's integrity, Mr. Reeder indicated that Charles Forbes, Jr., an official of the appellant, stated that Green was 'as good as gold' and 'you don't have to worry about him at all. He has an account here, a running account, his balance runs from six to eight thousand dollars all the time and he pays us regularly, and we have no trouble with him and you have nothing to worry about.' He then said that he felt relieved and 'I don't have to worry too much about the lumber company.'

With no further inquiry of or conversation with the appellant the appellees paid a total of $12,500 between February 25, 1958, and May 5, 1958, despite the fact that they never received any bills or invoices from any subcontractors nor did they receive bills or receipts from material suppliers. Mr. Reeder never claimed that he made these payments during the four months period because of reliance upon any statement of Mr. Forbes, Jr. On the contrary, he testified that during this period he spoke with other subcontractors regarding some difficulties he had with Green continuing on the job. Instead of frankly asking about Green's financial status, Mr. Reeder said that he didn't want to give Green a bad name by asking 'Is Greenie O. K.' but merely made general expressions such as 'How are you getting along with Greenie?' When informed by the other subcontractors that they had not billed Green Mr. Reeder seemed to be relieved.

It is clear and uncontradicted from the testimony that Mr. Green, the builder, had a cost of $26,000 for this home despite the contract ceiling of $18,500; that the appellant furnished approximately $8,600 worth of materials, for which it had not been paid. Mr. and Mrs. Reeder failed to withhold sufficient money to pay what they knew to be the largest bill on the job.

In addition to the conversation with Mr. Forbes, Jr. during the latter part of January or first of February, concerning which the younger Forbes testified he had no recollection, the other conversation, which the appellees claim constituted the equitable estoppel in this case, took place on July 12, 1958. On this date the Reeders had paid $15,500 to Green and had received an invoice from Green dated July 8, for payment No. 6 which was due upon substantial completion of the building. An additional sum of $1,500 would have been due under the contract within thirty days from the date of substantial completion (this has never been paid but is still retained by the Reeders) subject to the provisions as to defective work, release of liens, payments of subcontractors, etc. Mr. Reeder testified that he went to the appellant's place of business for the purpose of inquiring about delivery of a roto-lock and that he also carried a screen with him in which the wire had apparently been pushed to one side. He did not say that he went for the purpose of discussing Green's financial...