Statser v. Chickasaw Lumber Co.

• Citation: 327 P.2d 686
• Decision Date: 08 July 1958
• Docket Number: No. 37279,37279
• Parties: Adrian F. STATSER and Dicie Statser, his wife, Plaintiffs in Error, v. CHICKASAW LUMBER COMPANY, H. G. Singley, et al., Defendants in Error.
• Court: Oklahoma Supreme Court

Page 686

327 P.2d 686

1958 OK 177

Adrian F. STATSER and Dicie Statser, his wife, Plaintiffs in Error, v. CHICKASAW LUMBER COMPANY, H. G. Singley, et al., Defendants in Error.

No. 37279.

Supreme Court of Oklahoma.

July 8, 1958.

Syllabus by the Court.

1. A mechanics' and materialmen's lien cannot be successfully asserted against real estate absent a contract with the owner of the real estate or his agent.

2. The doctrine of ratification in the law of principal and agent is applicable only where the act alleged to have been ratified by another purported to have been for or on behalf of such other.

3. Where an executory vendee enters into possession of the real estate with the consent of the vendor and commences the erection of improvements thereon, with knowledge of the vendor, the failure of the vendor to object to such construction and/or advise those furnishing labor and material that the vendee is not the legal owner of the property will not estop the vendor from denying that the vendee had authority to subject the real estate to liens for such labor and material, when the vendor's ownership of the legal title at all times appeared of record.

4. The provision of 42 O.S.1951 § 141, allowing liens against the improvements separate from the real estate, is limited to new improvements placed upon the property, but where an existing structure loses its identity by reason of being merged into a completely different structure, of far greater value than the original structure, the finished structure becomes a 'new improvement' so that liens for labor and material will attach, and whether the finished structure is a 'new improvement' is a question of fact.

Appeal from the District Court of Oklahoma County; Albert C. Hunt, Judge.

Action to foreclose mechanics' and materialmen's liens. From a judgment fixing and foreclosing such liens upon real estate owned by the defendants Adrian F. Statser and Dicie Statser, they appeal. Affirmed in part and reversed in part with directions on remand.

John B. Ogden, Oklahoma City, for plaintiffs in error.

Justin Hinshaw, Norman, Felix, Douglass & Griffin, by Kenneth J. Wilson, Oklahoma City, Luttrell & Luttrell, Norman, Paul W. Updegraff, Norman, for defendants in error.

JACKSON, Justice.

Defendants Adrian F. Statser and Dicie Statser appeal from a judgment establishing liens for labor and material against certain real property of which they are and were at all times involved the record owners. The labor was performed and the material furnished pursuant to contracts with the defendants H. G. Singley and Berneice L. Singley, which contracts were made while the Singleys were in possession of the real property under an executory contract of exchange.

The contract of exchange was entered into April 24, 1953. The contract provided that defendants Statsers, who owned the property involved in this action located in Oklahoma County, would exchange it for property owned by defendants Singleys in Norman, Oklahoma and $8,200 difference. The contract was to be closed by exchange of deeds on June 1, 1953, unless the time was extended to permit perfecting of title.

On April 25, the day following the execution of the contract, the Statsers permitted the Singleys to go into possession of the property. The Singleys immediately began the construction of a drive-in restaurant, contracting with the present lien claimants for the necessary labor and material. The Statsers were fully aware of the construction operations and made no objections during the course of construction, nor did they advise any of the lien claimants that the Singleys were not the owners of the property. On the other hand, although the Statsers' legal title appeared of record, none of the lien claimants contacted them. The Singleys contracted with the various lien claimants in their own name and their individual capacities, and all but one of the lien claimants named the Singleys as owners of the property in their lien statements. One claimant named Statsers and Singleys both as owners, but testified that it was assumed at the time the material was furnished that Singleys owned the property.

The Singleys failed to perform, the exchange was never consummated, and the contract has been rescinded by judgment of the District Court.

The instant foreclosure action was filed by the plaintiff Chickasaw Lumber Co. Numerous other lien claimants were joined as defendants and each cross-petitioned for foreclosure of their respective liens.

The trial court found that the improvements were made with the full knowledge, consent and approval of the defendants Statsers, and made specific conclusions of law substantially as follows: (1) That the contracts between the Singleys and the lien claimants were adopted, accepted and ratified by the Statsers as and for their own contracts with the lien claimants; (2) That the Statsers were estopped to deny that the Singleys had actual authority to make contracts with the lien claimants, and were estopped to deny that the Singleys had authority to subject the real property and improvements thereon to the liens; (3) That the lien claimants were entitled to an equitable lien on the realty.

The trial court then entered judgment against the Singleys and the Statsers for the full amount of their respective claims and established same as liens on both the real estate and the improvements. Two issues are presented:

First Issue: Are the lien claimants entitled to a lien on the real estate including the improvements?

Second Issue: If the claimants are not entitled to a lien on the real estate, are they entitled to a lien on the improvements separate from the real estate?

As to the first issue we are of the opinion that the lien claimants failed to establish their right to liens on the real estate. The lien granted mechanics and materialmen is of statutory creation and in derogation of the common law. In Pace v. National Bank of Commerce of Tulsa, 190 Okl. 503, 125 P.2d 178, 179, we said:

'Liens for material and labor are entirely of statutory creation, and the right to claim the same is not to be extended beyond the plain statutory provisions.'

In American Tank & Equipment Co. v. T. E. Wiggins, 170 Okl. 504, 42 P.2d 115, 117, it is held:

'* * * The statute in question, being a remedial one, would be entitled to liberal construction, but the rule in such cases seems to be that liberality should be given to the enforcement of the lien, after the lien has clearly attached, and not in determining the question as to whether or not a lien exists.'

We must, therefore, turn to the statutes in order to determine the prerequisites to the creation of a mechanics' and materialmen's lien. Title 42 O.S.1951 § 141, specifically requires a contract with the owner of the realty as a condition to the creation of a mechanics' and materialmen's lien against the realty. In Deka Development Co. v. Fox, 170 Okl. 228, 39 P.2d 143, it is held in the first paragraph of the syllabus as follows:

'The right of a materialman to a lien depends upon contract. Such contract may be either oral or written. If a lien is asserted against real estate, the contract must be made by the owner or his duly authorized agent.' (Emphasis supplied.)

It is clear that plaintiff and the other lien claimants did not contract directly with the Statsers who owned the real estate; therefore, they did not acquire a lien on the real estate unless it can be said that the Singleys' contracts became the contracts of the Statsers under some theory of agency.

The trial court apparently found the necessary agency under two theories--first, that the Statsers had ratified Singleys' contract--second, that the Statsers were estopped to deny that Singleys had the necessary authority.

With reference to ratification we first observe that the doctrine of ratification in the law of principal and agent is applicable only to situations wherein one assumes or purports to act as an agent. In Madill State Bank v. Weaver, 56 Okl. 183, 154 P. 478, it is held in the second paragraph of the syllabus as follows:

'The rule as to 'ratification' is applicable only where the act alleged to have been ratified by another purported to have been for or in behalf of such other.'

In the case at bar there is a complete absence of facts to indicate that Singleys assumed to act as the agents of the Statsers. On the contrary they purported to act solely on their own behalf and none of the claimants were led to believe otherwise.

One of the principal requirements of ratification is that the alleged principal have knowledge of all material facts. Franco-American Securities v. Guillot, 186 Okl. 302, 97 P.2d 756. It is clear that one such material fact would be the fact that the alleged agent purported to bind the alleged principal. Otherwise, there would be no occasion for the alleged principal to ever consider ratification. Since Singleys did not purport to act as Statsers' agent it is certain there was nothing to ratify. The above reasoning points up the controlling distinction between the instant case and Williamson v. Winningham, 199 Okl. 393, 186 P.2d 644, relied upon by plaintiff and the other lien claimants. In that case the contracting party purported to act as the agent of his son. The...