Weaver v. Harland Corporation

• Decision Date: 05 September 1940
• Docket Number: Record No. 2242.
• Citation: 176 Va. 224
• Parties: MARY B. WEAVER, EXECUTRIX, ETC. v. HARLAND CORPORATION, ET AL.
• Court: Virginia Supreme Court

Page 224

176 Va. 224

MARY B. WEAVER, EXECUTRIX, ETC. v. HARLAND CORPORATION, ET AL.

Record No. 2242.

Supreme Court of Virginia, Staunton.

September 5, 1940.

Present, All the Justices.

1. MECHANICS' LIENS — Release — Effect of Release of Part of Property — Where Interest of Other Lien Creditors Affected — Case at Bar. — In the instant case, a suit to enforce a mechanic's lien, the lienors furnished labor and materials for the construction of twenty houses to be erected upon twenty lots. The lienors charged that their contracts were to furnish materials and labor for the entire number of houses which was regarded by the parties as one building project, but admitted that upon payments made to them they had released certain of the houses and lots from their liens. Nothing was alleged to indicate the quantity, value or character of materials which went into the construction of any particular house or houses, and some of the petitions contained the statement that it was impossible to segregate them. There were separate deeds of trust on each house and lot securing a loan to the development company and also a separate deed of trust securing the unpaid balance of the purchase price of each lot which was due the predecessor in title of the development company. Upon the insolvency of the development company a receiver was appointed to take charge of the assets and business for the purpose of settlement.

Held: That the release of a portion of the properties, embraced by the lien, precluded its successful assertion against the remainder, since the interests of other lien creditors were affected.

2. MECHANICS' LIENS — Creation — Created by Use of Materials Furnished. — It is not the contract for erecting a building which creates a lien under section 6426 of the Code of 1936, but it is the use of the materials furnished and expended by the contractor which gives the materialman his lien.

3. MECHANICS' LIENS — Enforcement — Against Less Than Whole Number of Buildings or Lots for Which Labor or Material Furnished. — Generally a lien for the entire amount due for work done on, or materials furnished for, several buildings or lots cannot attach to, or be enforced against, part of the buildings or lots, and where it is sought to enforce the lien on less than the whole number of buildings or lots, each building is subject to the lien only to the extent of what was done or furnished therefor, and each lot only to the extent of what was done or furnished for the building or improvement thereon. The lien is properly confined to the building upon which the work was done, although the original contract embraced other buildings.

4. MECHANICS' LIENS — Release — Effect of Release of Part of Property — Claim Cannot Be Included in Lien on Remainder. — The release of a mechanic's lien as to part of the property covered thereby does not destroy the lien on the rest of the property; but where one building is released, an item for work or materials therein cannot be included in a lien on the remaining buildings.

Appeal from decrees of the Circuit Court of Arlington county. Hon. Walter T. McCarthy, judge presiding.

The opinion states the case.

Jesse, Phillips & Klinge, Caldwell C. Kendrick and Joseph M. Pancoast, for the appellants.

Clarence R. Ahalt, James H. Simmonds, Leo P. Harlow and Marshall H. Lynn, for the appellees.

BROWNING, J., delivered the opinion of the court.

The appellant, Mary Britt Weaver, Executrix, filed her bill and amended bill in this case to enforce a mechanic's lien, which she claimed to have upon twelve houses and lots in the bill and proceedings mentioned. The other appellants, to wit, Hajoca Corporation, Rosslyn Steel and Cement Corporation, Capital Materials Co., Inc., and Washington Brick Company, each a corporation, intervened by petitions filed in the suit, asserting similar liens against eight of the above twelve houses and lots. Demurrers to the bills and petitions were sustained by the trial court, and the proceedings were dismissed.

It seems well to state the events which brought about the situation with which we are concerned.

The Harland Corporation, one of the appellees, acquired by purchase a body of land in Brandon Village, in Arlington county, Virginia, which it subdivided into lots for the purpose of building houses thereon and disposing of them. It borrowed money, for the construction of the houses, from the Investors Syndicate, Inc., a loan company, which it secured by a first deed of trust on the properties. It was what is known as a construction loan. The money was furnished to the owner as the work on the buildings and lots progressed. There was a separate deed of trust on each house and lot securing the loan and also a separate deed of trust on each one securing the unpaid balance of the purchase price of each lot which was due to Eakin Properties, Inc., the seller and predecessor in title, to Harland Corporation. These latter were second trusts. These deeds of trust were all properly recorded.

Each of the mechanic's lien lienors, under contracts, some verbal and some written, with Harland Corporation, furnished labor and materials, of the character suggested by their firm names, in and about the construction of twenty houses to be erected upon as many lots by the Harland Corporation. The enterprise went along for awhile. The construction of the houses was in progress and the materialmen, the appellants, furnished the materials, as they were wanted, and were paid for them in part. Harland Corporation met with reverses. It could not meet its obligations. The mechanic's liens, referred to, were filed. The bills and petitions, already mentioned, were filed and a receiver was asked for and appointed by the court to take charge of its assets and business for the purpose of settlement. The receiver's report showed a balance of about $6,422.00 as assets, derived from the construction loans. This was reported as its only asset over and above any equity it might have in the houses and lots.

The appellants charged that their contracts were to furnish materials and labor for a stipulated price for the entire number of houses which was regarded by the parties as one building project. Each filed one lien on a certain number of houses and lots, in one case twelve in number, and in each of the others eight, for materials which they had furnished for the entire number of twenty lots. Only a few of the houses were completed. They admitted, either by averment of the petitions, or by necessary inference, that upon payments made to them they had released certain of the houses and lots from their liens. In one case eight were released and in each of the other cases twelve were released. Nothing was alleged to indicate the quantity, value or character of materials which went into the construction of any particular house or houses. Indeed, some of the petitions contained the statement that it was impossible to segregate them. The mechanic's liens in each case were filed for the balance due the particular lienor.

A variety of interesting questions, some not without difficulty, growing out of the circumstances, were discussed in the written and oral arguments of counsel upon the hearing, but in the view we have of the case it is only necessary to consider one of them, and that is the effect of the releases of portions of the houses and lots upon the validity of the liens against the others for the balances alleged to be due.

We are aware of the fact that the authorities are not agreed as to this, but, we think, the weight of authority and the force of reason sustain the view that the release of a portion of the properties, under the circumstances of this case, embraced by the lien, precludes its successful assertion against the remainder. This is only true where the interests of other lien creditors are affected. It would not be so in the case of the owner and the lienor. It will be readily seen that if it were not so the mechanics lien lienors could so shift their liens as to unduly burden some of the lien subjects and relieve others, to the extent of imperiling the interests of other lien creditors which would not be consonant with the intent and spirit of the statute and would be offensive to good conscience and equity. This becomes obvious and the effect is accentuated in the very case of one of the appellants here. The original price charged by the Hajoca Corporation and its ally, the Apex Engineering Company, was $7,000.00, or an average of $350.00 per house, and that company, in this case, claims now a balance of $4,655.00 or an average of approximately $580.00 per house. It will be noted that the original price quoted was for twenty houses and the balance quoted is claimed as a lien against eight houses and lots. The brief of the appellees makes this apt statement of this circumstance: "* * * which clearly demonstrates the injustice that might result to the owner and other meritious creditors interested in the property which is the subject of the lien, if the law permitted a release of part of the security where a single contract is contended for, and permitted the lien creditor to fall back upon what remained, or what he might select for the payment of his claim."

In the case of McGrew et al. McCarty et al., 78 Ind. 496, 498, involving a point in a mechanics lien case similar to that which we are considering, this is said:

"The theory of the law is that credit is given to the identical building for which the materials are furnished or upon which the work is done. Each building represents a distinct and separate security. One building can not be made to stand as the security for another. In truth, each building stands as a several debtor, and one can no more be made to discharge the debt of another...