Walker Process Equipment, a Div. of McNish Corp. v. Advance Mechanical Systems, Inc.

• Decision Date: 28 June 1996
• Docket Number: No. 1-95-1359,1-95-1359
• Citation: 282 Ill.App.3d 452,668 N.E.2d 132,217 Ill.Dec. 947
• Parties: , 217 Ill.Dec. 947 WALKER PROCESS EQUIPMENT, a Division of McNish Corporation, an Ohio Corporation, et al., Plaintiffs-Appellants, v. ADVANCE MECHANICAL SYSTEMS, INC., an Illinois Corporation, and Federal Insurance Company, a New Jersey Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 132

668 N.E.2d 132

282 Ill.App.3d 452, 217 Ill.Dec. 947

WALKER PROCESS EQUIPMENT, a Division of McNish Corporation an Ohio Corporation, et al., Plaintiffs-Appellants, v. ADVANCE MECHANICAL SYSTEMS, INC., an Illinois Corporation and Federal Insurance Company, a New Jersey Corporation, Defendants-Appellees.

No. 1-95-1359.

Appellate Court of Illinois First District, Fifth Division.

June 28, 1996.

Howard B. Levy, Law Offices of Howard B. Levy, Chicago, for appellant.

Roger L. Price, Andrew M. Slobodien, D'Ancona & Pflaum, Chicago, for appellees.

Justice COUSINS delivered the opinion of the court:

Plaintiff, Walker Process Equipment (Walker), filed a complaint against Advance Mechanical Systems, Inc. (Advance), seeking: (1) an accounting pursuant to section 23 of the Mechanics Lien Act (770 ILCS 60/23 (West 1992)); (2) relief pursuant to the Public Construction Bond Act (30 ILCS 550/1 et seq. (West 1992)); and (3) relief for a breach of contract. Advance filed a motion to dismiss count I of the complaint, which the trial court granted on March 15, 1995. On appeal, Walker contends that the trial court erred in granting Advance's motion because count I stated a cause of action under the Mechanics Lien Act.

BACKGROUND

On October 28, 1992, Advance entered into a contract with the Metropolitan Water Reclamation District of Greater Chicago (Metropolitan Water Reclamation District) to furnish all labor, materials, tools and equipment necessary to construct the water gas burners' improvements at the Stickney Water Reclamation Plant in Stickney, Illinois. Subsequently, Advance issued to Walker a purchase order for $69,000 for four collector arms to be incorporated into the water gas burners' improvements. Walker furnished the collector arms and Advance paid Walker $31,050, leaving a balance of $37,950.

On September 1, 1993, Walker served a verified notice, entitled "Affidavit of Claim" on the Metropolitan Water Reclamation District, Federal Insurance Company, and Advance. The notice set forth that "this affidavit is made to induce the Federal Insurance Company, as Surety, on a bond covering the above mentioned contract, to settle the claim herein set forth."

On June 29, 1994, Walker personally served the clerk of finance of the Metropolitan Water Reclamation District and Advance a notice entitled "Notice of Mechanic's [sic ] Lien Claim Pursuant to 770 ILCS 60/23." This notice set forth a mechanics lien claim on all money, bonds and warrants due, or to become due, under the contract between Advance and the Metropolitan Water Reclamation District. On September 27, 1994, Walker filed a three-count complaint. Count I sought an accounting pursuant to section 23 of the Mechanics Lien Act. Count II sought relief pursuant to the Public Construction Bond Act, and count III sought relief for breach of contract.

On December 20, 1994, Advance filed a motion to dismiss count I of Walker's complaint pursuant to section 2-615 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-615 (West 1992). After a hearing, the trial court granted Advance's motion to dismiss. Walker appealed. We reverse and remand.

ANALYSIS

Walker's sole contention is that the trial court erred in dismissing count I of the complaint because the complaint stated a cause of action under the Mechanics Lien Act. 770 ILCS 60/1 et seq. (West 1992). At issue in this case is section 23(b) of the Mechanics Lien Act, which states in part:

"(b) Any person who shall furnish material, apparatus, fixtures, machinery or labor to any contractor having a contract for public improvement for any * * * city, municipality or municipal corporation in this State, shall have a lien for the value thereof on the money, bonds, or warrants due or to become due the contractor having a contract with such * * * municipality or municipal corporation in this State under such contract. Provided, such person shall, before payment or delivery thereof is made to such contractor, notify the clerk or secretary * * * of the * * * city, municipality or municipal corporation of his claim by a written notice and furnish a copy of said notice at once to said contractor. The person claiming such lien may cause notification and written notice thereof to be given either by sending the written notice (by registered or certified mail, return receipt requested, with delivery limited to addressee only) to, or by delivering the written notice to the clerk or secretary * * * of the * * * city, municipality, or municipal corporation; and the copy of the written notice which the person claiming the lien is to furnish to the contractor may be sent to, or delivered to such contractor in like manner. * * * Failure to commence proceedings within 90 days after giving notice of lien pursuant to this subsection shall terminate the lien * * *." 770 ILCS 60/23(b) (West 1992)

We note that the lien created by this section is not on the improvements for which the work and materials were furnished but, rather, upon the public funds due and owing the contractor at the time the lien is perfected. Board of Library Trustees v. Cinco Construction, Inc., 276 Ill.App.3d 417, 421-22, 213 Ill.Dec. 3, 658 N.E.2d 473 (1995); McMillan v. Joseph P. Casey Co., 311 Ill. 584, 587-88, 143 N.E. 468 (1924).

It is settled law that the rights created by the Mechanics Lien Act are in derogation of the common law and are to be strictly construed. Norman A. Koglin Associates. v. Valenz Oro, Inc., 277 Ill.App.3d 142, 146-47, 213 Ill.Dec. 625, 629, 659 N.E.2d 971, 975 (1995); Board of Education of School District No. 108 v. Collom, 77 Ill.App.2d 479, 483, 222 N.E.2d 804 (1966). Strict compliance with the provisions of the Act upon which the right to a lien is based is therefore necessary. Board of Library Trustees, 276 Ill.App.3d at 425, 213 Ill.Dec. 3, 658 N.E.2d 473. However, notwithstanding the strict construction generally given to all sections of the Mechanics Lien Act, there is authority that favors some flexibility in applying the general rules, so that the statute's provisions are not construed so technically that its remedial purpose is undermined and all but lost in the process. Thus, Illinois courts have considered "substantial compliance" arguments when deciding filing questions. Aluma Systems, Inc. v. Frederick Quinn Corp., 206 Ill.App.3d 828, 840, 151 Ill.Dec. 618, 564 N.E.2d 1280 (1990).

An instructive case is Mass Transfer Inc. v. Vincent Construction Co., 223 Ill.App.3d 746, 166 Ill.Dec. 264, 585 N.E.2d 1286 (1992). There, the plaintiff-subcontractor filed a claim for a public lien against the general contractor and the municipality of Anna, Illinois, pursuant to section 23. Plaintiff's initial notice of claim for lien was not in compliance with section 23 because the notice was sent by regular mail and the statute requires that the notice be delivered by means other than regular mail. Subsequently, plaintiff sent another notice by certified mail. Plaintiff's case was dismissed, and on appeal, the general contractor argued that because the initial notice of lien was improper, the subsequent notice was void. The appellate court disagreed. The court noted that the prohibition against filing subsequent notices of lien comes into play where one fails to commence proceedings within 90 days after giving notice of lien pursuant to section 23. The court concluded that because the initial notice of lien was not given pursuant to the statute, the effect of the statutory provision did not come into play. Furthermore, the court held that because the complaint was filed within 90 days after the notices were sent by certified mail, plaintiff complied with the statutory time limitation. The general contractor also argued that the notice of claim for the lien was defective because it was not given to the city official whose duty it was to pay the contractor. Instead, plaintiff sent the notice to the city treasurer. However, the court stated that plaintiff had acted in good faith in serving notice upon the city treasurer, especially since that office was one of four with authority to execute checks. Thus, the court held that plaintiff had substantially complied with the statutory notice requirements. See also Board of Library Trustees v. Cinco Construction, Inc., 276 Ill.App.3d 417, 213 Ill.Dec. 3, 658 N.E.2d 473 (1995); Moseman Construction Co. v. Shappert Engineering Co., 780 F.Supp. 1218 (C.D.Ill.1992).

In its motion to dismiss, Advance argued that Walker's September notice substantially complied with the Mechanics Lien Act and Walker's failure to commence proceedings within 90 days after the notice terminated the lien. Walker served an "Affidavit of Claim" on Advance and the Metropolitan Water Reclamation District of Greater Chicago on September 1, 1993. Walker's affidavit of claim names Advance as the debtor, lists Metropolitan as the project where services were provided, and set forth that this affidavit is made to "induce the Federal Insurance Company, as Surety, on a bond covering the above mentioned contract, to settle the claim herein set forth." The affidavit describes the materials, but omits the dates when the materials were delivered. The affidavit indicates that on September 1, 1993, notices were given to the surety, owner, and principal. The affidavit of claim itself does not refer to the clerk of the Metropolitan Water Reclamation District. However, section 23 requires that a notice be sent to the clerk of the municipality.

Walker argues that the 1993 affidavit was not drawn to provide notice under the Mechanics Lien Act, but was clearly drawn for the purpose of complying with the Public Construction Bond Act (Bond Act). 30 ILCS 550/1 et seq. (West 1992), (formerly "An Act in relation to bonds of contractors entering into contracts for public works," Ill.Rev.Stat.1985, ch. 29, par. 15 et seq.) We agree. The Bond Act provides in relevant part:

" § 1. All Officials, boards, commissions or agents of...