Schmulbach v. Caldwell

• Decision Date: 02 March 1912
• Docket Number: 1,032.
• Parties: SCHMULBACH v. CALDWELL et al.
• Court: U.S. Court of Appeals — Fourth Circuit

196 F. 16

SCHMULBACH v. CALDWELL et al.

No. 1,032.

United States Court of Appeals, Fourth Circuit.

March 2, 1912

[Copyrighted Material Omitted]

J. W Ritz and Nelson C. Hubbard (S. M. Noyes, Alfred Caldwell, and Hubbard & Hubbard, on the briefs), for appellant.

John A Howard and John J. Coniff (James W. Ewing, on the brief), for appellees.

Before GOFF and PRITCHARD, Circuit Judges, and CONNOR, District Judge.

CONNOR District Judge.

Plaintiffs, appellees, citizens and residents of the state of Indiana, on the 9th day of February, 1905, entered into a contract with defendant, appellant, a citizen and resident of the state of West Virginia, whereby they contracted to furnish certain material and do certain work in the construction of a 12-story office building, in the city of Wheeling, W. Va., on the land described in the record, of which defendant was the sole owner. Among the provisions material to a determination of the questions presented upon the record are the following: The price to be paid to plaintiffs for the material furnished and work done, contemplated by the contract, was $231,698--

'payments to be made every thirty days on estimates of architects, providing, however, that the work is satisfactory, ten per cent. (10%) of each estimate to be reserved until completion of the contract. The final payment to be made twenty (20) days after the contract is completed and satisfactory to the architects and the owner.'

M. F. Giesey and F. F. Faris were named as the supervising architects 'acting as the agents of the owner. ' The contractors agreed and bound themselves to have all of the work contemplated by the contract finished and ready to turn over to the owner by December 31, 1905--

'and, in case of a failure, in this particular agreed to pay the owner the sum of fifty dollars ($50) per day, as measured damages for each and every day beyond the 31st day of December, 1905, that the said failure exists, provided, however, that said contractors shall have credit for such days as the architect and owner shall certify at the time, as days when the weather forbids work, and credit for each and every day he is delayed by the owner, if such delay is also certified to by the architects and owner at the time it occurs.'

It is further provided:

'No alterations shall be made in the work shown or described by the drawings or specifications except upon a written order of the architects or owner, and when so made, the value of the work added or omitted shall be computed by the architects, and the amount so ascertained shall be added to or deducted from the contract price. In case of dissent from such award by either party hereto, the valuation of the work added or omitted shall be referred to three (3) disinterested parties, one to be appointed by each of the parties to this contract and the third by the two thus chosen; the decision of any two of whom shall be final and binding, and each of the parties hereto shall pay one-half the expense of such reference.'

A large number of alterations were made during the construction of the building. Some of the material and work, called for by the contract, was omitted. For various reasons, not necessary to specify at this time, plaintiffs were delayed in commencing the construction of the building.

Plaintiffs allege that:

'On the 6th day of August, 1907, they ceased to labor on, or furnish material for the said building, having then fully completed the construction of said building in accordance with the said contract.'

On the 17th day of August, 1907, they filed with the clerk of the county court of Ohio county an account of the amount due them and a description of the real estate upon which said building was constructed, as prescribed by the statute, etc. On the 21st day of August, 1907, plaintiffs filed their bill in equity in the Circuit Court of the United States for the Northern District of West Virginia, alleging that there was a balance due them on said building and for extras of $49,725.75. The purpose of the suit is to enforce the lien on said building and lot given by the statute of West Virginia. Attached to the bill is a copy of the contract and exhibits containing an itemized statement of plaintiffs' claim. Defendant, in due course, filed his answer, in which he admits that plaintiffs on August 6, 1907, ceased to labor or furnish material on said building, but denies that they had then fully completed the construction thereof in accordance with the contract. He denies that the amount claimed for extras is correct, alleges that he is entitled to a credit of $6,329.06 for work omitted, also that he has paid on account of the original contract $2,700 more than he is credited with. He alleges that by reason of delay on the part of plaintiffs from December 31, 1905, to August 6, 1907, to complete the building-- being 583 days-- he is entitled to recover, as measured damages, $50 per day, making $29,150. Exhibits, specifications, etc., are attached to the answer. The pleadings disclosed a controversy in respect to: (1) The amount due plaintiffs on original contract. (2) The amount due for extras. (3) The amount due defendant for omitted work. (4) The amount due defendant on account of delay.

After taking testimony, the judge proceeded to consider 'the matters of principal dispute, involving legal propositions,' and thereupon referred the cause to the master with specific directions in respect to the manner in which, and the principles upon which, the account should be stated. In the opinion of the judge defendant was not entitled to recover any amount for delay. To this ruling defendant excepted. The master filed his report showing the amount due plaintiffs on the original contract and for extras, and amount due defendant for work omitted. The report discloses a most careful and intelligent consideration of the questions referred to the master. Each item of extra and omitted work and material is considered separately, following strictly the direction of the court. The amount found to be due on the original contract was $21,309.50, for extra work $11,520.89. This amount is found to be subject to a credit, for omitted work, of $3,281.37. A number of exceptions were filed by defendant. They were considered by the court, and a decree made declaring a balance due plaintiffs of $35,739.49. From this decree defendant prosecutes this appeal based upon 39 assignments of error. The cause was submitted in this court upon briefs and oral argument upon certain propositions of law. It is first insisted that the Circuit Court did not have jurisdiction of the suit.

This contention is based upon the language of the West Virginia statute respecting the enforcement of mechanics' liens. Section 10, c. 75, Code of West Virginia, provides that:

'Any person having a lien, under or by virtue of this chapter, may enforce the same by filing a bill in chancery in the circuit court of the county in which his account is filed as aforesaid, etc.'

It is earnestly insisted that, because the mechanic's lien is the creature of the state statute, it can be enforced only in the court prescribed by the statute. It is unquestionably true that, when the Legislature of a state creates a right it may prescribe in which of its courts the right may be enforced, and may make, within the limitation of its own Constitution, such jurisdiction either exclusive or concurrent. Usually mechanics' liens are enforced in those courts having jurisdiction of the causa litis, the enforcement of the contract; the lien being regarded as ancillary to the principal remedy. This generally carries actions for the recovery of money claimed to be due on contracts for material furnished or work and labor performed into the courts of law, where the claimant has an adequate remedy for the establishment of his debt. It frequently occurs, however, that questions of priority or conflicting liens are presented in which cases the law court has not the machinery for bringing into the record all interested in the proceeds of sale of the property and so moulding its decrees that the rights of all persons in interest may be protected, their liens transferred to the proceeds of the property, thus enabling the court to bring it to sale under such conditions that the purchaser will acquire a perfect title and the owners and lienors receive its full value. That the Legislature of West Virginia had this purpose in view is indicated by the provision in the section of the statute which requires the plaintiff to make all other persons having liens parties and permitting any other person acquiring a lien before a decree shall be passed to make himself a party. The statute further provides that, if the original plaintiff fails to establish his claim, the suit shall not be dismissed, but may be prosecuted by any other party, etc. Whether it was the purpose of the Legislature to confer exclusive jurisdiction upon the court of chancery or only to permit the claimant to file his bill in chancery, thereby giving that court concurrent jurisdiction with the law court, it is not necessary for us to inquire. It is significant that the terms used in conferring the right is permissive, and not mandatory. In neither view can we suppose that it was the purpose of the Legislature to divest the jurisdiction of the federal court when the elements of diverse citizenship and the amount prescribed by the statute existed. This jurisdiction is of constitutional origin, and cannot be divested by state legislation. It is elementary learning that in cases such as this the jurisdiction is based not upon the character of the right to be enforced, but the diverse citizenship of the parties. The federal court, in such cases, administers the state law, as found in the...