Thorson v. Maxwell Hardware Co.

• Court: South Dakota Supreme Court
• Writing for the Court: HANSON
• Citation: Thorson v. Maxwell Hardware Co., 146 N.W.2d 739, 82 S.D. 385 (S.D. 1966)
• Decision Date: 28 November 1966
• Docket Number: No. 10290,10290
• Parties: Theodore E. THORSON, d/b/a Thorson Heating, Plaintiff and Appellant, v. The MAXWELL HARDWARE COMPANY, a Corporation, and Clifford Carnicle, Defendant and Respondent.

Page 739

146 N.W.2d 739

82 S.D. 385

Theodore E. THORSON, d/b/a Thorson Heating, Plaintiff and Appellant, v. The MAXWELL HARDWARE COMPANY, a Corporation, and Clifford Carnicle, Defendant and Respondent.

No. 10290.

Supreme Court of South Dakota.

Nov. 28, 1966.

Dana, Golden, Moore & Rasmussen, Peder K. Ecker, Sioux Falls, for plaintiff and appellant.

May, Boe & Johnson, Paul B. Van Buren, Sioux Falls, for defendant and respondent.

HANSON, Judge.

In this action to foreclose a mechanic's lien the plaintiff, Theodore E. Thorson, appeals from a judgment cancelling the lien but allowing removal of a ventilating system which he had installed on defendant's property.

The property is a one-story commercial building owned by the Maxwell Hardware Company located at 119--121 West 10th Street in Sioux Falls. Griffin Maxwell is president of the defendant corporation. Since 1954 this property has been managed by the trust department of the Northwestern National Bank of Sioux Falls by Ray Reitan, one of its trust officers.

On November 1, 1962 the Bank leased the property to Mrs. Olive Beckett for the purpose of operating an establishment catering to teenagers known as the Marshmallow Lounge. With the approval of the Maxwell Hardware Company the Bank hired Clifford Carnicle, a general contractor, to remove the existing washroom and to install separate facilities for men and women to satisfy municipal code regulations. Mr. Carnicle hired Thorson to do certain duct work in this connection which was completed by December 17, 1962. Plaintiff sent Carnicle a statement for his work who turned it over to the managing Bank. The Bank paid the bill on January 11, 1963.

Neither Carnicle nor plaintiff did any further work on the building at the request of the Bank or the Maxwell Hardware Company. However, from February 25, 1963 to April 24, 1963 plaintiff furnished labor and materials on defendant's building by installing a ventilating system and remodeling the heating system. This work was done at the request of the lessee, Mrs. Olive Beckett. When the work was completed plaintiff sent a statement to Mrs. Beckett. Because of financial difficulties Mrs. Beckett was unable to pay and was evicted from the premises around the middle of May 1963. In subsequent bankruptcy proceedings Mrs. Beckett listed her obligation to plaintiff as a personal debt. On June 1, 1963 plaintiff filed the mechanic's lien against defendant's property which is the subject of this action.

As mechanics' liens are creatures of statute they do not attach to property under our law unless (1) the materials are furnished or the labor performed by the lien claimant under a contract, express or implied, with the owner or his duly authorized agent, representative, contractor or subcontractor, SDC 39.0701, or (2) by the implied consent, ratification, or estoppel of the owner as provided in SDC 39.0706. Plaintiff asserts his lien under both provisions.

Insofar as material SDC 39.0701 provides that 'Whoever shall, at the request of the owner or the duly authorized agent or representative of the owner, or of any contractor or subcontractor, furnish skill, labor, services * * * equipment, or materials for the improvement, development, or operation of property * * * shall have a first lien thereon * * * for the price or value of the same'. Under this law the mere relationship of lessor and lessee of property neither makes the lessee an authorized agent of the owner nor does it create any privity of contract between the owner and a lien claimant who has contracted with the lessee. Smith v. McCoy, 58 S.D. 256, 235 N.W. 661. Of course, a lessee may become an owner's agent by virtue of the lease agreement and other related facts and circumstances. In this respect, where a lease requires or obligates a lessee to make certain improvements the lessee is generally regarded as agent of the owner for that purpose. However, where the lease merely authorized the lessee to make alterations or improvements, the lessee is not ordinarily considered to be the agent of the owner. Union Trust Co. of Philadelphia v. Branch Mint Operating Co., 28 S.D. 549, 134 N.W. 65, and see generally 36 Am.Jur., Mechanics' Liens, § 94, p. 73, Annotations in 79 A.L.R. 962 supplemented in 163 A.L.R. 992, and 57 C.J.S. Mechanics' Liens § 65, p. 562. The lease Agreement in the present case did not obligate or require the lessee to make any specified improvements on defendant's property. It merely authorized her to make such alterations and changes as she found necessary for her purposes. The heating and ventilating unit which plaintiff installed was of this nature. It was designed to ventilate the building, take care of smoke, and to provide a constant flow of fresh heated air. As such it was useful to Mrs. Beckett in the operation of the Marshmallow Lounge. The unit is separate and distinct from the regular heating plant and is now sealed off. In making such improvement Mrs. Beckett was acting for herself and not as an authorized agent or representative of the owner.

Clifford Carnicle, the general contractor also performed work for the lessee on defendant's building during the period of February 25, 1963 to...