Washington v. Houston Lumber Company
| Decision Date | 01 November 1962 |
| Docket Number | No. 6997.,6997. |
| Citation | 310 F.2d 881 |
| Parties | Harry M. WASHINGTON, Trustee in Bankruptcy, Appellant, v. HOUSTON LUMBER COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Wm. I. Robinson, Wichita, Kan. (Wm. F. Pielsticker, Wichita, Kan., with him on the brief), for appellant.
Robert T. Cornwell, Wichita, Kan. (Wayne Coulson, Paul R. Kitch, Dale M. Stucky, Donald R. Newkirk, Robert J. Hill and Gerritt H. Wormhoudt, Wichita, Kan., and Hugo T. Wedell and Homer V. Gooing, Wichita, Kan., of counsel, with him on the brief), for appellee.
Before LEWIS, BREITENSTEIN and SETH, Circuit Judges.
In these bankruptcy proceedings appellee, Houston Lumber Company (Houston), claims a lien for materials furnished for the construction of houses. The Referee denied the claim on the ground that Houston was a subcontractor of the second degree and had no lien under Kansas law. On review the district court reversed, holding that Houston was a subcontractor of the first degree and hence had a lien. The Trustee has appealed.
Elmdale Developing Company, Inc., and its wholly owned subsidiary, Karen Homes, Inc., herein referred to jointly as Bankrupts, were in the business of prefabricating and building houses and were adjudged bankrupt on a creditors' petition. The plan of Bankrupts was to operate in communities through sponsors who would purchase the prefabricated homes, build and sell them. Reeves, an employee of Bankrupts, interested a group of prospective buyers at Ulysses, Kansas, in Bankrupts' products. Oliver, a man with no experience in the construction business but with good credit, was obtained as Bankrupts' sponsor at Ulysses. Oliver contracted with four of the buyers to sell them homes and then contracted with Bankrupts for the construction of the homes by Bankrupts. The procedure thus followed deviated from the basic operational plan of Bankrupts. Houston supplied material to Bankrupts for the construction of the homes.
At the time of bankruptcy the homes were not completed. Appellant Trustee completed the construction and petitioned the Referee for an order requiring Oliver to turn over the balance due on the construction cost, for the determination of the validity of the lien claims of Houston and others, and for the transfer of the valid lien claims from the properties to the fund due from Oliver. The Trustee admits that $3,516.46 is due to Houston and the question is whether Houston has a lien against the fund for that amount.
Under Kansas law a subcontractor of a subcontractor has no lien rights.1 The Trustee contends that Oliver was the prime contractor, Bankrupts the subcontractor, and Houston a subcontractor under Bankrupts. Houston claims that Bankrupts were the prime contractor and hence Houston was a subcontractor of the first degree and had a valid lien. No question is raised concerning the sufficiency of compliance with the Kansas lien law if Houston was a subcontractor of the first degree. The Trustee admits that Oliver did no construction work on the houses and that the houses were built by Bankrupts.
Contracts between Oliver and the buyers and between Oliver and Bankrupts were received in evidence. At the hearing before the Referee neither Reeves nor Oliver was called as a witness. Two buyers, and the wife of one of them, testified that they thought they were doing business with Bankrupts, that they considered Oliver a representative of Bankrupts, and that they knew Oliver was not in the construction business. Joan Bilson, a stockholder and officer of Bankrupts, appeared as a witness for another lien claimant who has not appealed. Houston contends that, as Bilson testified after Houston had rested its case, her testimony may not be considered in connection with its claim. In view of the state of the record and the manner in which both the Referee and the district court treated the case, we believe that her testimony must be considered.
The Referee, after commenting that the testimony of the buyers was...
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In re Tech Consolidated, Inc.
...98 N.H. 163, 96 A. 2d 200 (1953). The Referee's findings of fact are binding unless they are clearly erroneous. Washington v. Houston Lumber Co., 310 F.2d 881 (10th Cir. 1962). Although Randy had no salesman in the state, made no sales in the state, and was not licensed to do business in th......
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Moran Bros., Inc. v. Yinger, 7297.
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