Southern Erectors, Inc. v. Olga Coal Co.

• Decision Date: 09 March 1976
• Docket Number: No. 13479,13479
• Citation: 223 S.E.2d 46,159 W.Va. 385
• Parties: SOUTHERN ERECTORS, INC. v. OLGA COAL CO. et al. OLGA COAL CO. v. AMERICAN AIR FILTER CO., INC.
• Court: West Virginia Supreme Court

Page 46

223 S.E.2d 46

159 W.Va. 385

SOUTHERN ERECTORS, INC. v. OLGA COAL CO. et al.

OLGA COAL CO. v. AMERICAN AIR FILTER CO., INC.

No. 13479.

Supreme Court of Appeals of West Virginia.

March 9, 1976.

Syllabus by the Court

1. Where the liability of a third-party defendant derives directly from an adjudication against a defendant/third-party plaintiff and where the third-party defendant has unsuccessfully asserted defenses available to the defendant/third-party plaintiff against the plaintiff, the third-party defendant has standing to appeal a judgment rendered against a defendant/third-party plaintiff on grounds raised by such defenses.

2. In addition to the filing requirements, it is essential for the perfection of a mechanic's lien under Code, 38--2--2, for a subcontractor to give the owner of the property or his authorized agent a written notice of lien within sixty days after the completion of the work done by the subcontractor.

3. Where a mechanic's lien is claimed under the provisions of Code, 38--2--31, As amended, for work or labor performed under a contract with a corporate owner or his authorized agent, or with a general contractor of the corporate owner, all that is required to perfect a lien is to file notice of lien within ninety days with the clerk of the county court of the county in which the labor was performed or the property of such corporate owner is situated, and it is not necessary to serve notice of such lien upon the corporate owner.

4. Where a court acts with great caution, assuring itself that the parties to be bound by its judgment have had an adequate opportunity to develop all of the probative facts which relate to their respective claims, the court may grant summary judgment under Rule 56, W.Va. R.C.P., Sua sponte.

5. Where a contractor agrees to provide all work and materials in connection with a contract at a specified and firm price, in the absence of any express contractual agreement to the contrary, the contractor is responsible to the owner for any costs sustained by the owner which are occasioned by the acts of the contractor's irresponsible subcontractor.

Harry G. Camper, Jr., Wade T. Watson, Camper & Watson, Welch, William D. Lambert, Ogden, Robertson & Marshall, Louisville, Ky., for American Air Filter Co.

Charles A. Tutwiler, Tutwiler, Crockett & LaCaria, Welch, for Olga Coal Co.

W. H. Ballard, II, Welch, Sterl F. Shinaberry, Hostler & Shinaberry, Charleston, for Southern Erectors.

PER CURIAM:

On this appeal, the Court is called upon to examine the rights and responsibilities of a contractor in an action brought by a subcontractor claiming a mechanic's lien against a property owner for improvements made to the owner's property under a general or 'turn-key' contract between the contractor and the owner.

During the period relevant to this litigation, the Olga Coal Company, a corporate defendant below, owned and operated a coal tipple at Caretta, McDowell County, West Virginia. The tipple was situated on land owned by Youngstown Mines Corporation, Interlake Steel Corporation and Steelco Coal Company, all of which, including Olga, were subsidiaries of Youngstown Sheet and Tube Company. In 1969 and 1970, Olga contracted with American Air Filter Company to construct a dust control system on the tipple located at Caretta. Subsequently, American Air Filter Company entered into a subcontract with Associated Craftsmen to provide some of the labor and materials on the improvements. In turn, Associated Craftsmen entered into an agreement of subcontract with Southern Erectors, Inc., by which Southern Erectors agreed to furnish labor and incidental materials for Associated Craftsmen in connection with the installation of the dust control system.

Southern Erectors performed its obligations completely under the terms of its contract and billed Associated Craftsmen for the work done. After making partial payment, Associated Craftsmen defaulted, leaving a balance due to Southern Erectors of $20,369.63. To secure its payment, on November 23, 1970, Southern Erectors contemporaneously served on Olga Coal Company and filed its notice of mechanic's lien upon Olga's interest in the coal tipple at Caretta and in the land upon which it was located.

Following the service and filing of its notice of mechanic's lien, Southern Erectors initiated a timely action in the Circuit Court of McDowell County against Olga Coal Company and Associated Craftsmen for enforcement of the mechanic's lien. After the initiation of the action, Olga sought and obtained leave to file a third-party complaint against American Air Filter Company. By its third-party complaint, Olga contended that American Air Filter Company, under its contract, had agreed to indemnify and save harmless Olga Coal Company against any and all claims or demands that might be made against it by any subcontractor or others relating to the contract activities. In its answer to the third-party complaint, American conceded the existence of the contract with Olga but denied that the contract contained any hold harmless provision. In addition, American asserted a counter-claim against Olga for payment of $24,476.00 which Olga had retained under the terms of the contract between it and American.

After the preliminary proceedings described but before American Air Filter filed its answer to the third-party complaint, Southern Erectors filed a motion under Rule 56 of the Rules of Civil Procedure for summary judgment against Olga Coal Company. Although the motion sought judgment on the mechanic's lien only against Olga, notice of the motion was served upon counsel for American Air Filter Company as well. Several depositions, exhibits and affidavits were submitted to the court for its consideration in connection with the motion for summary judgment. On August 11, 1972, the Circuit Court below entered summary judgment, the particular terms of which are critical to the disposition of this case and are set out here:

'It is, accordingly, ADJUDGED and ORDERED that the plaintiff, Southern Erectors, Inc., recover of and from the defendant, Olga Coal Company, the sum of Twenty Thousand Three Hundred Sixty-Nine & 63/100 Dollars ($20,369.63), with interest thereon . . ..

'It is further ADJUDGED and ORDERED that upon said payment by said Olga Coal Company to said Southern Erectors, Inc., that the Mechanic's Lien filed by said plaintiff in said County Clerk's Office November 23, 1970, shall be satisfied, discharged, released and held for naught and that any amount owing by said Olga Coal Company to said American Air Filter Company shall be credited with the amount that Olga Coal Company pays to the plaintiffs, Southern Erectors, Inc., by virtue of this Order.'

American Air Filter Company excepted and objected to all of the provisions of the court's order. Subsequently, American timely filed broad alternative motions under Rules 52 and 59 of the Rules of Civil Procedure, including a motion to alter or amend the judgments and findings and a motion to set aside those judgments and to grant a new hearing or trial. These motions were denied by the trial court below by an order entered December 5, 1972.

Although the appellant has designated numerous errors on this appeal, these can be condensed to two basic questions which this Court must examine: first, whether Southern Erectors had a valid and subsisting mechanic's lien which could be enforced against Olga Coal Company; and, second, whether Olga Coal Company was entitled to a set-off in an amount equal to its liability to Southern Erectors against its obligation to American Air Filter.

I

Initially, we are confronted with a threshold question which must be resolved before reaching the merits of the challenge to the validity of the mechanic's lien in the action below. The appellee, Southern Erectors, contends that American Air Filter Company has no standing in this appeal to attack the judgment against Olga.

The appellee's argument ignores American's status as the third-party defendant below. During the entire proceedings before the trial court the defendant Olga maintained an essentially neutral position, contending primarily that it was simply a stakeholder which stood ready and willing to pay retained proceeds in accordance with the directions of the court. On the other hand, American, as third-party defendant, contested the validity of the mechanic's lien through its answer to the third-party complaint and by depositions, exhibits and affidavits filed in opposition to the motion by Southern Erectors for summary judgment.

Rule 14(a), W.Va.R.C.P., provides in relevant part: 'The third-party defendant may assert against the plaintiff any defenses which the third-party plaintiff has to the plaintiff's claim.' The object of the language quoted is to permit the impleaded third-party defendant to protect itself in the instance of a failure or neglect by the defendant/third-party plaintiff to assert a proper defense to the plaintiff's action. Lugar & Silverstein, W.Va. Rules 127--128 (1960). Under this rule, then, for the purposes of defending against the plaintiff's complaint, the third-party defendant is just as much an adverse party as is the defendant. F & D Property Company v. Alkire, 385 F.2d 97 (10th Cir. 1967). Thus, we conclude that where, as here, the liability of a third-party defendant derives directly from an adjudication against the defendant/third-party plaintiff, and where the third-party defendant has unsuccessfully asserted defenses available to the defendant/third-party plaintiff against the plaintiff, the third-party defendant has standing to appeal a judgment rendered against the defendant/third-party plaintiff on grounds raised by such defenses.

II

The appellant challenges two aspects of the mechanic's lien which it contends render that lien invalid, or which at least raise such genuine issues of material fact as to preclude the entry of summary judgment.

Initially,...