Six Carpenters, Inc. v. Beach Carpenters Corp.

• Decision Date: 16 November 1976
• Court: Connecticut Supreme Court
• Parties: SIX CARPENTERS, INC., et al. v. BEACH CARPENTERS CORPORATION.

Page 123

372 A.2d 123

172 Conn. 1

SIX CARPENTERS, INC., et al. v. BEACH CARPENTERS CORPORATION.

Supreme Court of Connecticut.

Nov. 16, 1976.

R. Cornelius Danaher, Jr., West Hartford, for appellant (defendant).

Richard B. Cramer, New Haven, with whom, on the brief, was Sheila Taub, New Haven, for appellees (plaintiffs).

Before HOUSE, C.J., and LOISELLE, BOGDANSKI, BARBER and MacDONALD, JJ.

BOGDANSKI, Associate Justice.

This appeal involves an interpretation of portions of Public Acts 1975, No. 75-418, to determine whether the trial court had jurisdiction to rule on an application to determine whether the mechanic's lien for which a bond had been substituted should be declared invalid or reduced in amount when the bond was substituted by agreement of the parties rather than pursuant to the provisions of § 8(a) of the act.

The facts are not in dispute: On April 15, 1974, the defendant caused a mechanic's lien to be placed on the land records of the town of Hartford against property owned by the B.C. Development Corporation, Inc. By agreement of the parties, the lien was released upon the substitution of a bond for claimed indebtedness amounting to $31,525, for which the named plaintiff acted as principal, and the plaintiff Aetna Casualty and Surety Company as surety. The principal and surety thereafter applied to the Superior Court for the discharge or reduction of the bond, pursuant to Public Acts 1975, No. 75-418, § 8(b). On September 9, 1975, the Superior Court ordered a reduction of the bond to $10,000. From that order the defendant has appealed to this court.

The defendant claims that because the bond was substituted for the mechanic's lien by private agreement of the parties, rather than in accordance with the provisions of General Statutes § 49-37 (the predecessor of Public Acts 1975, No. 75-418, § 8(a)), the court was without jurisdiction to rule on the application.

A review of the events which led to the enactment of Public Acts 1975, No. 75-418, § 8, is in order. In 1975, following a line of cases decided by the United States Supreme Court, including Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556, rehearing denied, 409 U.S. 902, 93 S.Ct. 177, 34 L.Ed.2d 165; Lynch v. Household Finance Corporation, 405 U.S. 538, 92 S.Ct. 1113, 31 L.Ed.2d 424, rehearing denied, 406 U.S. 911, 92 S.Ct. 1611, 31 L.Ed.2d 822; and Sniadach v. Family Finance Corporation, 394 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349, which greatly expanded the requirements of due process of law in creditor proceedings, the constitutionality of Connecticut's mechanic's lien statutes was raised before this court. See Roundhouse Construction Corporation v. Telesco Masons Supplies Co., 168 Conn. 371, 374, 362 A.2d 778, cert. denied, 429 U.S. 889, 97 S.Ct. 246, 50 L.Ed.2d 172 (1976). In Roundhouse, this court, after reviewing the history of mechanic's liens in Connecticut, dating back to the Public Acts of 1836, chapter 76, concluded (p. 385, 362 A.2d p. 785) 'that the absence of a statutory provision for a hearing for the . . . (alleged debtors) 'at a meaningful time and in a meaningful manner'; Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 14 L.Ed.2d 62; has deprived them of their constitutional rights to due process of law as those rights have been recently enunciated by the United States Supreme Court.'

Included among the statutes found constitutionally deficient was General Statutes § 49-37, which permitted the owner of any real estate against which a mechanic's lien was placed, or any person interested therein, to apply to the Superior Court or Court of Common Pleas for dissolution of the lien upon substitution of a bond with surety. The court in Roundhouse (168 Conn. pp. 383-84, 362 A.2d 778) concluded that the statute did not afford the property owner adequate due process protection, since the authority of the court was limited solely to the issuance of an order dissolving the lien upon substitution of a bond.

The General Assembly, responding to the Roundhouse decision, enacted remedial legislation. See 18 Conn.H.Proc., pt. 10, 1975 Sess., p. 4922. Although Public Acts 1975, No. 75-418, significantly reformed a number of our mechanic's lien statutes, we are concerned only with § 8 of the act, ¹ and its application to the facts of this case. Section 8(a) is a verbatim reenactment of General Statutes § 49-37, with the exception that the period in which an action must be brought on a substituted bond was reduced from two years to one year from the date of recording the certificate of lien.

Section 8(b) of the act, however, is entirely new and 'allows for an application for a hearing to determine whether the lien for which a bond was substituted, should be declared invalid or reduced in amount.' 18 Conn.H.Proc., pt. 10, 1975 Sess., p. 4925. In relevant part, it provides: 'Whenever a bond has been substituted for any lien pursuant to this section: (1) The principal or surety on such bond . . . may make application . . . to the superior court or the court of common pleas . . . or to any judge thereof, that a hearing be held to determine whether the lien for which such bond was substituted should be declared invalid or reduced in amount.' (Emphasis added.) Public Acts 1975, No. 75-418, § 8(b).

The defendant claims that the language, '(w)henever a bond has been substituted for any lien pursuant to this section,' sets forth an absolute condition precedent to the assertion of jurisdiction by a court over a § 8(b) application. Thus, it is claimed that unless the bond was substituted in accordance with the provisions of either § 8(a) of Public Acts 1975, No. 75-418, or General Statutes § 49-37, its predecessor, the court had no jurisdiction to act.

We do not agree. In our view, the phrase 'any lien pursuant to this section' refers to mechanic's liens as distinguished from other types of liens on real estate. Every presumption must be indulged which favors the jurisdiction of the court. Brewster v. Brewster, 152 Conn. 228, 233, 206 A.2d 106. A reading of the pertinent statutes reveals that the legislative intent in enacting both § 8(a) and its predecessor § 49-37 was to enable the owner or other person having an interest in the property to obtain release of the mechanic's lien so long as the lienor's rights are not thereby prejudiced. The lienor's rights are considered adequately protected if the landowner demonstrates a good-faith intention to contest the lien and substitutes a bond with surety in its place. Thus, while the statutory provisions are designed to facilitate the transfer of the property by dissolution of the lien, they are also intended to ensure the continued existence of assets out of which the lienor may satisfy his claim if he should later prevail and obtain a judgment on the merits of the mechanic's lien. See, generally, 53 Am.Jur.2d, Mechanics' Liens, § 19.

On the facts of this case, all objectives of the statutes were met. After the defendant placed a lien against the property of the B.C. Development Corporation, an agreement was reached to offer a bond with surety in exchange for a release of the lien. In an arm's length transaction, the defendant agreed to...