Union Terminal Co. v. Turner Const. Co.

• Citation: 247 F. 727
• Decision Date: 25 January 1918
• Docket Number: 3104.
• Parties: UNION TERMINAL CO. et al. v. TURNER CONST. CO.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

247 F. 727

UNION TERMINAL CO. et al. v. TURNER CONST. CO.

No. 3104.

United States Court of Appeals, Fifth Circuit.

January 25, 1918

J. T G. Crawford, of Jacksonville, Fla. (H. B. Hurd, of Chicago Ill., on the brief), for appellants.

Sam R Marks, of Jacksonville, Fla. (Marks, Marks & Holt, of Jacksonville, Fla., on the brief), for appellee.

Before WALKER and BATTS, Circuit Judges, and EVANS, District Judge.

BATTS Circuit Judge.

The Union Terminal Company negotiated with the Central Trust Company of Illinois, for funds with which to construct warehouses and other improvements at Jacksonville, and, contemporaneously, with the Turner Construction Company of New York, to construct the buildings. The latter company knew of the negotiations with the Trust Company, and had notice of the fact that the Trust Company was to furnish the money, or most of the money, required for the construction, and that the amount was to be secured by a lien upon the buildings. It was agreed that $205,000 of the amount to be furnished by the Trust Company was to be paid over to the Construction Company. As the work progressed, payments were made of 85 per cent. of the estimates. The balance was put in the Barnett Bank, and at the time of the institution of the suit this deposit amounted to $20,219.98. A part of the contract price for the construction not having been paid, suit was instituted by the Turner Construction Company against the Union Terminal Company for the balance due. The Central Trust Company, having been made a party, set up its mortgage. The Construction Company asserted a materialman's lien, claiming that, by the making of the contract, the furnishing of material, and the beginning of work prior to the record of the mortgage of the Central Trust Company, it fixed a lien superior to that of the mortgage.

The Construction Company had knowledge of the mortgage, and of the arrangement made by the Warehouse Company for financing the building, and participated in its benefits. It was to have received the sum of $205,000 from the fund to be provided by the Trust Company, and actually received $140,695.89, and is to get the benefit of $20,219.98 deposited in the Barnett Bank, as the retained 15 per cent. on estimates. A judgment was given the Construction Company against the Union Terminal Company for $78,370.45, with interest at 8 per cent. per annum from August 15, 1913, and 10 per cent. attorney's fees. Of this amount $44,084.13, with interest and attorney's fees, was adjudged a first lien on the property, and $34,286.32 thereof, with interest and attorney's fees, a lien subject to the mortgage of the Central Trust Company. The $44,084.13 was the difference between the amount to have been received by the Turner Construction Company from the Central Trust Company and the amount actually paid by the latter. With interest and attorney's fees the aggregate is $60,767.36.

The Construction Company now contends that all of its debt should have been given a first lien, upon the ground that its rights were fixed prior to the record of the mortgage of the Trust Company. It also insists that to the judgment should be added an amount equal to the deposit in the Barnett Bank. The Central Trust Company objects to the judgment, upon the ground that interest and attorney's fees ought not to have been included in the amount for which a preferential lien was given.

The contention of the Turner Construction Company, based on the record of the mortgage after the beginning of the work, is without merit. This concern knew that the Trust Company was to furnish the money, and looked to it for $205,000 of the contract price. It must have known that the intention was to secure the advances made by the Trust Company to the Warehouse Company by the mortgage on the property of the latter company. With this notice it accepted more than $140,000 of the money furnished by the Central Trust Company, and judgment has been given it for the difference between the amount paid for its benefit and the $205,000 it was to have received from the Trust Company. It has no cause to complain of this part of the judgment. As to the amount in the Barnett Bank, the Construction Company is entitled to its receipt, and the judgment herein in should be so reformed as to require its payment to the Construction Company. The bank is not a party to this suit, but an order may be issued to the Warehouse Company to join the Construction Company in the execution of a joint check to cover the amount.

The objection of the Central Trust Company to the allowance of interest in the preference lien will be held without merit inasmuch as the money was in possession of the bank during the period for which interest is charged, and it was held under conditions which did not preclude the Trust Company from receiving interest on it, and was not paid to...