W. T. Watts, Inc. v. Sherrer, 44654

• Decision Date: 10 November 1977
• Docket Number: No. 44654,44654
• Citation: 571 P.2d 203,89 Wn.2d 245
• Court: Washington Supreme Court
• Parties: W. T. WATTS, INC., a Washington Corporation, Respondent, v. Robert E. SHERRER and Rita Sherrer, his wife, Appellants, Max C. Borgeson and Jane Doe Borgeson, his wife, Jack Strain and Jane Doe Strain, his wife, S. W. Rentals, a partnership, George C. Smith, d/b/a George Smith Concrete & Masonry Service, Respondents.

Page 245

89 Wn.2d 245

571 P.2d 203

W. T. WATTS, INC., a Washington Corporation, Respondent, v. Robert E. SHERRER and Rita Sherrer, his wife, Appellants Max C. Borgeson and Jane Doe Borgeson, his wife, Jack Strain and Jane Doe Strain, his wife, S. W. Rentals, a partnership, George C. Smith, d/b/a George Smith Concrete &amp Masonry Service, Respondents.

No. 44654.

Supreme Court of Washington, En Banc.

Nov. 10, 1977.

Kenneth D. Beckley, Ellensburg, for appellants.

Reaugh, Hart, Allison, Prescott & Davis, Keith R. Baldwin, Venable & Wing, Robert F. Venable, Keller, Rohrback, Waldo & Hiscock, Melvin F. Buol, Seattle, for respondent.

ROSELLINI, Associate Justice.

This case concerns a commercial building, containing seven rental units, located in the White Center area of Seattle. The respondent Max C. Borgeson and others (referred to herein collectively as Borgeson) purchased the building at a sheriff's sale, paying $59,000, an amount sufficient to cover the debt owed on the first mortgage. The appellants, holders of a third mortgage, redeemed the property 4 months later, pursuant to RCW 6.24.140, by paying the purchase price of $59,000 plus interest.

During the 4-month period when the property was in the possession of Borgeson, he had extensive work done upon the premises. Rents received during the period amounted to approximately $7,000. The "expenses of maintenance" were approximately $12,000. Included in them were certain repairs and alterations performed by the respondents Watts and Smith, at a cost of approximately $4,200, which were not requested nor authorized by the appellants. These respondents had no contact with the appellants; and according to their testimony, they had expected to be paid by Borgeson. Their claims remained unpaid when the property was redeemed by the appellants.

After the redemption, these respondents brought this action to foreclose labor and materialmen's liens which they had filed under RCW 60.04.010. The Superior Court awarded them personal judgments, including attorney fees, against Borgeson and ordered foreclosure of the liens, also including attorney fees.

The court denied the appellants' prayer for judgment over against Borgeson for the amount of the liens.

The court's ruling was based upon its finding that work done upon the premises constituted "desirable or necessary repairs and maintenance, or upkeep of said structure, and did not constitute substantial remodeling or renovation thereof" and that this work "improved the value of the property, and benefited any person who would have purchased (it)." The court held that Borgeson, as holder under the sheriff's certificate of purchase, was an "owner" of the premises in the sense that he could charge the property with the liens of mechanics and materialmen. Error is assigned to this holding, as well as to the finding that none of the work done upon the premises amounted to substantial remodeling or renovation.

We find that the Superior Court erred in ruling that Borgeson, as holder of a sheriff's certificate of purchase, was in a position to subject the interest of the redemptioner to the liens of mechanics and materialmen, without the redemptioner's consent or authorization. Since we hold that the appellants' interest was not subject to the liens and that there was no obligation to pay for labor or materials, the cost of which exceeded the income from the property, it is immaterial whether the work done constituted repairs or renovations, or whether it was necessary to maintain the premises.

RCW 60.04.010 authorizes a lien upon property for labor and materials furnished at the instance of the owner or his agent. In construing this statute, this court, in common with courts in other jurisdictions construing similar statutes, has held that the lien attaches only to the interest of the person who requests the labor or materials, or the person for whom he acts as agent. Nelson v. Bailey, 54 Wash.2d 161, 338 P.2d 757 (1959); Newell v. Vervaeke, 189 Wash. 144, 63 P.2d 488 (1937) (a contract vendee subjects only his interest to the lien, unless the sale contract requires him to improve the premises); Larson v. Duclos, 46 Wash.2d 334, 281 P.2d 458 (1955) (an administrator of an estate cannot subject its assets to a lien); Bengel v. Bates, 29 Wash.2d 779, 189 P.2d 480 (1948) (where a lease permits but does not require the lessee to remodel the premises, only the lessee's interest is subjected to a lien contracted by him). To the same effect are Stetson-Post Mill Co. v. Brown, 21 Wash. 619, 59 P. 507 (1899); Seattle Ass'n of Credit Men v. Daniels, 15 Wash.2d 393, 130 P.2d 892 (1942) and Bunn v. Bates, 31 Wash.2d 315, 196 P.2d 741 (1948). These holdings conform to the general rule. 53 Am.Jur.2d Mechanics' Liens § 122 (1970); 57 C.J.S. Mechanics' Liens § 57 (1948).

As these cases make clear, the mere fact that an owner's interest is benefited by labor performed or materials furnished will not make the interest lienable.

This court has recognized long ago that a sheriff's certificate of purchase does not pass title but is only evidence of an inchoate interest which may or may not ripen into title. Carroll v. Hill Tract Improvement Co., 44 Wash. 569, 87 P. 835 (1906). Gray v. C. A. Harris & Son, Inc., 200 Wash. 181, 93 P.2d 385 (1939), is in accord, and, while the principle is not expressly stated in Berkheimers, Inc. v. Sprinkle, 66 Wash.2d 354, 402 P.2d 502 (1965), it is implicitly recognized therein.

RCW 6.24.210 gives the purchaser the right to possession during the period of redemption; RCW 6.24.140 gives him the right to receive, upon redemption, the purchase price which he paid, plus interest, and plus the amount of any prior lien which he may hold by judgment, decree, or mortgage (other than the judgment under which the purchase was made), and any assessments or taxes which he has paid, plus interest; and RCW 6.24.160 gives him the right to a conveyance at the expiration of the redemption period.

We need not decide whether a lien for labor or materials contracted for by the purchaser will attach to all of these rights. There should be no question that it will attach to the right to receive the purchase price, if the property is redeemed, and to the fee if the purchaser's interest ripens into ownership.

Did it attach also to the interest of the appellants when they redeemed the property? From the cases we have cited, it will be seen that, where the contracting party does not own the fee, another's interest in the property will be subject to a mechanics' or materialmen's lien only if the contracting party acts as his agent. Thus, where a lease or contract of sale requires the construction of a building on the premises, the lessee or vendee will be deemed to be the agent of the lessor or vendor in contracting for labor and materials to fulfill this obligation.

Here there is no suggestion that Borgeson, the contracting party, acted as an agent of the appellants, or that the appellants consented to or authorized the repairs or renovations in any manner. On the contrary, the evidence was that, 2 weeks after the foreclosure sale, the appellants, through their attorney, notified Borgeson that they intended to redeem the property and to insist upon their rights under the redemption statutes.

The theory appears to be that Borgeson, as purchaser at the sheriff's sale, was obliged to repair and maintain the property, and that it must have been the legislative intent that any lien for work and materials furnished for this purpose would attach to the fee and become a burden upon the interest of any statutory redemptioner.

Such an interpretation does not accord with our reading of the statute regulating judicial sales. Nowhere is the purchaser expressly required to make repairs. He is permitted to do so under RCW 6.24.200, ¹ a section which authorizes the court, during the redemption period, to restrain the commission of waste on the property. And if an accounting is requested by a redemptioner, the purchaser is allowed to offset the "expenses paid for operating, caring for, protecting and insuring the property," against the rents or profits received from such property. RCW 6.24.190. ² He is not, however, given the right to an affirmative judgment for expenses incurred over and above the amount of the rents and profits, and under RCW 6.24.140, ³ the redemptioner is not required to reimburse him for expenses incurred for repairs and maintenance.

This court so held in State ex rel. Bryant v. Starwich, 131 Wash. 101, 229 P. 12 (1924). Construing RCW 6.24.190 (which was then Rem.Comp.Stat. § 600), we said that this section does not entitle the purchaser to receive from the redemptioner the amount of expenses in excess of rents and profits; and such section cannot be invoked by a purchaser whose expenses exceeded the rents and profits received. It was said that if the redemptioner were required to pay the purchaser for expenditures in excess of the income produced by the property, the purchaser could make the right to redeem so burdensome as to amount to a denial of the right. The redemptioner is required to pay only what the statute specifies, we said, and this does not include reimbursement for expenditures.

To hold that a purchaser may nevertheless subject the redemptioner's interest to a lien for repairs and maintenance, without the redemptioner's consent or authorization, wo ld be to permit him to accomplish indirectly that which the statute will not allow him to do directly. This would thwart the expressed legislative intent, which was to give the debtor or lien holder an opportunity to redeem the property upon the least onerous terms which justice would allow. In line with this intent, the statute does not purport to encourage the making of repairs or renovations which would enhance the value of the property for subsequent owners. If such repairs or renovations are contracted for, they must be deemed to have been...