Rupp v. Earl H. Cline & Sons, Inc.

• Decision Date: 07 February 1963
• Docket Number: No. 155,155
• Citation: Rupp v. Earl H. Cline & Sons, Inc., 188 A.2d 146, 230 Md. 573, 1 A.L.R.3d 815 (Md. 1963)
• Parties: , 1 A.L.R.3d 815 Christopher A. RUPP et al., Trustees, etc., et al. v. EARL H. CLINE & SONS, INC., et al.
• Court: Maryland Court of Appeals

Page 573

230 Md. 573

188 A.2d 146, 1 A.L.R.3d 815

Christopher A. RUPP et al., Trustees, etc., et al. v. EARL H. CLINE & SONS, INC., et al.

No. 155.

Court of Appeals of Maryland.

Feb. 7, 1963.

Walter C. Mylander, Jr., and Charles C. W. Atwater, Baltimore (Carlyle Barton, Jr., Baltimore, and Herbert L. Rollins, Frederick, on the brief), for appellants.

Robert E. Clapp, Jr., and Benjamin B. Rosenstock, Frederick (H. Reese Shoemaker, Jr., Frederick, on the brief), for appellees.

Before HENDERSON, HAMMOND, PRESCOTT, HORNEY and SYBERT, JJ.

HORNEY, Judge.

This appeal is from an order allowing the mechanics' lien claims of the claimants-appellees (Earl H. Cline and Sons, Inc., et al.) priority in the distribution of proceeds of a foreclosure sale under a deed of trust held by the trustees-appellants (Christopher A. Rupp and Sidney H. Tinley, Jr., trustees under deed of trust from James T. Galloway Company, a body corporate). Subsequent to the filing of the foreclosure proceedings by the trustees, the claimants filed a petition alleging that work done on the foreclosed premises had begun prior to the recording of the deed of trust and prayed that the lien of the trustees be subordinated to those of the claimants.

James T. Galloway and Alfred F. Flynn were the sole stockholders in equal shares of two corporations: The K. & G. Construction Company (K & G) and the James T. Galloway Company (Galloway).

In December of 1958, K & G purchased a fifty-acre tract of land in Frederick (from Frederick Homes, Inc.) to be developed for cottages and apartments. Preliminary subdivision plans for the whole development were prepared in March of 1959 and filed with the planning commission in April of that year. But, although the owners contemplated erecting apartment units for one hundred and twenty families on a part of the tract, they did not furnish detailed plans for the apartments at that time and the commission reserved its decision as to the apartments for further consideration.

Construction of the cottages was begun as soon as the deed for the tract from the seller to K & G was recorded in June of 1959. At or about the same time, the then owner applied to a mortgage broker for a loan to construct the apartments, but the formal application for financing the project was not submitted by the broker to the lender on behalf of Galloway (not K & G) as borrower until September 10, 1959.

During the summer of 1959, when K & G needed fill for the area around the cottages then under construction, some was moved in June and July (by whom it is not clear) from an area that was not a part of the apartment site. But on September 5, 7, 8 and 9, K & G directed a contractor (Earl H. Cline and Sons, Inc.) to 'borrow' additional fill from the site on which apartments were subsequently built for the cottage site. Before proceeding, Cline advised the owners that soil ought not to be moved from one area to another if houses were to be built on the former, and was informed that since apartments were to be constructed thereon, it would not be necessary to replace it. At this time Cline, who was operating under a contract with K & G relating to the cottage project, was not given any grading instructions but was told not to cut below the curb line of the nearby shopping center. Cline was paid for removing the soil as a party of the cottage project: the contract under which Cline later worked on the apartment project was not submitted until December 31, 1959. Pursuant to instructions, Cline, in removing some 2000 cubic yards of soil to a depth of from four to six feet in some places, leveled the apartment site to the approximate grade needed. And when the excavation work for the slab ground floor of the apartment project was begun five months later, little grading was required with respect to two of the apartment buildings, although some soil had to be returned to the apartment site from another part of the tract.

The proposed planning that had been filed in April, and was still pending before the planning commission, was abandoned in mid-September of 1959, and a new plan was filed seeking approval of the contemplated 120-unit apartment project on the same site. When the project and plan were approved by the commission, K & G sought rezoning of the 4 1/2 acre apartment site from Residential C to Residential B. This was necessary in order to construct 120-unit apartments. Due notice having been given of the application for rezoning, the Mayor and Aldermen of Frederick held a public hearing as advertised, but reserved their decision on the matter.

When rezoning had not been granted after the expiration of more than forty days--and the lender in the meantime had given its commitment for the financing of a 48-unit apartment project--the request for rezoning was withdrawn, the withdrawal was approved by the city, and, in November of 1959, Galloway, as owner, and K & G, as builder, applied for permission to proceed with building a 48-unit apartment project which did not require rezoning. The permit was finally issued on December 21, 1959, and about two weeks later a utility contract with the city was also approved, but a formal contract was never executed.

A deed from K & G conveying the apartment site to Galloway was executed on December 29, 1959, and was recorded on the 31st. On the same day Cline submitted its proposal (never formally accepted by either K & G or Galloway) for grading and excavating work at the apartment site, ¹ but it was not until after traverse lines had been run and two apartment buildings were staked out early in February of 1960 that Cline began excavating for the foundations.

The construction loan was finally approved on January 12, 1960, the deed of trust and note were executed on January 25, and the deed of trust was recorded on January 27. In the afternoon of the same day an agent of the title insurance company and a salesman for K & G went to the premises and took photographs, which clearly showed that soil had been removed from the site sometime before, but did not show any stakes, trenches, excavations for foundations or other evidence of the commencement of a building.

The discovery on August 15, 1960, of the absence of utilities for the project, brought about foreclosure of the deed of trust and a sale of the apartment premises.

The chancellor, being of the opinion that limiting the commencement of a building to the digging of the foundation was to ignore modern building practices, found a continuing intention on the part of K & G and Galloway to erect apartments as soon as they acquired the necessary financing and authority to proceed and that the excavation work done in February of 1960 was a continuation of the grading work done in September of 1959, and decided that the claimants were entitled to priority over the trustees in the distribution of the net proceeds from the foreclosure sale.

While numerous primary and secondary questions are presented by the appeal, it is not necessary to consider all of them. The principal question is what constitutes the commencement of a building within the meaning of the mechanics' lien law.

It is clear that if any lienable work was done for or about the...