White's Lumber & Supply Co. v. Rea

• Decision Date: 08 December 1930
• Docket Number: 28987
• Citation: 131 So. 259,158 Miss. 695
• Parties: WHITE'S LUMBER & SUPPLY CO. v. REA et al
• Court: Mississippi Supreme Court

131 So. 259

158 Miss. 695

WHITE'S LUMBER & SUPPLY CO. v. REA et al

No. 28987

Supreme Court of Mississippi

December 8, 1930

Division A

1. MECHANICS' LIENS.

Laborers and materialmen, before completion of contract and payment of contract price, could protect claims by giving statutory notice (Code 1930, section 2274).

2. MECHANICS' LIENS. Payment to principal materialman held not, in absence of notice, impressed with trust for other laborers and materialmen (Code 1930, section 2274).

Contractor to finance construction of dwelling house, made arrangement whereby principal materialman was to furnish materials and necessary funds. Owner to secure materialman for such advances executed notes and deed of trust securing note for contract price. Upon completion of contract, owner paid contract price to materialman pursuant to agreement and materialman applied same in payment of materials furnished contractor and funds advanced, amount of which exceeded contract price. Laborers and other materialmen did not protect their claims against the contractor by giving statutory notice.

HON. F F. MIZE, Chancellor.

APPEAL from chancery court of Lauderdale county, HON. F. F. MIZE Chancellor.

Suit by A. S. Rea, trading as the City Plumbing Company, and others, against White's Lumber & Supply Company and another. From the decree rendered, defendant named appeals. Reversed as against the defendant named, and bill dismissed.

Decree reversed and bill dismissed.

Victor W. Gilbert, of Meridian, and Ford & McGehee, of Columbia, for appellant.

An agreement between the owner of the building to become liable as surety for material furnished the contractor is within the Statute of Frauds.

United States Fidelity & Guaranty Co. v. Parsons, 122 So. 544; Vicksburg Mfg. & Supply Co. v. Gaffray, 49 So. 116.

The methods by which subcontractors may protect themselves is laid down by section 1 of chapter 128 of Acts of 1918, section 2596, Hemingway's Code of 1927.

Dickson v. U. S. F. & G. Co., 150 Miss. 864, 117 So. 245; McLendon v. Indianola Lbr. Co., 128 Miss. 265, 90 So. 885.

The lumber company expended the money as the agent of Jones. The lumber company also furnished supplies and materials on the job and had the clear right to pay itself in full as there is no contribution between laborers or materialmen in the absence of written notice required by statute.

Enochs v. Garber, 116 Miss. 229, 76 So. 730; Citizens Lbr. Co. v. Netterville, 137 Miss. 310, 102 So. 178.

To do a lawful thing will not create a trust for other parties in the absence of an express intention and agreement.

Amis, Dunn & Snow, of Meridian, for appellee.

Covert by his declarations and acts constituted and made the appellant his trustee, for the purpose of handling the funds involved in the construction of the Jones' house and the appellant by its acts and declarations accepted the trust. After accepting the trusteeship and receiving the funds from Jones the trustee mishandled said funds and a large portion of the same was appropriated to appellant's private uses and without any written order from the settlor.

Ladner v. Ladner, 90 So. 593.

Equity exacts fidelity and loyalty to their principals from agents and fiduciaries and will strip from them every advantage obtained from a breach of trust, and will turn over to the principal upon just terms the fruit of any transaction involving a breach of good faith.

Gillenwater v. Miller, 49 Miss. 150; Pressly v. Ellis, 48 Miss. 574.

S. M. Graham, of Meridian, for appellee.

Under chapter 128, Laws of 1917, and in the absence of a contractor's bond the proceeds of the building contract constituted a trust fund in which all persons furnishing labor and material in the construction have an equity, and all the parties hereto are charged with a knowledge of the law and when the appellant took possession of the entire proceeds of this building contract under the note and deed of trust given that appellant could only do so as trustee of the party to whom the money belonged, subject to the equity of the appellees.

OPINION

Cook, J.

This is an appeal from a decree of the chancery court of Lauderdale county in favor of A. S. Rea, trading as City Plumbing Company, Ryan J. Faulk and Walter D. Lindeman, appellees, against White's Lumber & Supply Company, appellant, and its codefendant, Frank S. Covert. The bill of complaint filed in the cause alleged, in substance, that J. C. Jones and his wife entered into a contract with Frank S. Covert to erect for them a house for the stipulated sum of five thousand four hundred fifty dollars; that, in addition to the said contract between these parties whereby the said Covert agreed to furnish the material and construct the house, the said Covert, desiring to secure unto himself the full and prompt payment of the said contract price, further procured the said Jones and wife to execute a deed of trust on the lot on which the house was to be constructed in favor of the White's Lumber & Supply Company, securing the payment of the sum of five thousand four hundred fifty dollars, by the said Jones and wife; that it was the intent and purpose of this arrangement that Jones and wife would pay the said sum, being the contract price for furnishing the material and labor and constructing the house, and that the said White's Lumber & Supply Company would pay the said sum of money so paid to it to the said Covert and any and all other persons entitled thereto, who might perform labor upon, or furnish material for, the construction of the building and the performance of the contract by Covert.

The bill of complaint further averred that the White's Lumber & Supply Company accepted the deed of trust with the stated intent and purpose, and thereafter the said Jones paid to it the said sum of five thousand four hundred fifty dollars, the full amount due and owing by them to Covert under the contract; that in taking the deed of trust and accepting the payment from Jones and wife the said White's Lumber &amp Supply Company was acting as trustee for and on behalf of the said Covert and any and all other persons entitled to said sum of money, or any part thereof, for labor performed, or material furnished, in the construction of the building; that in recognition of its trusteeship it did use a portion of said money in making said payments, and that it retained a large portion of said sum so placed in its possession, and withheld the same from the payment of labor performed, and material furnished, in constructing the building, and then held, as such trustee, a sum of money largely in excess of the several and separate amounts due and owing to the complainants, appellees herein; and that the said White's Lumber & Supply Company had converted said money to its own use and benefit, and neglected and refused to carry out the intent and purpose of the trusteeship by applying it to the payment of the claims due and owing to the appellees. The bill of complaint then sets forth in detail the amount of labor performed, and material furnished, by each of the appellees in the construction of the building, and the amount owing them by Covert therefor, and alleged that the building had been fully completed and had been accepted by Jones, and that the full contract price had beer paid to the said White's Lumber & Supply Company, and the deed of trust cancelled. It was further charged that by reason of the arrangement between the parties, it devolved upon the White's Lumber & Supply Company to pay the labor and material bills incurred in the erection of the house to the extent of five thousand four hundred fifty dollars, and, if said amount was insufficient to pay all of the labor and material bills, to pay each laborer and materialman a pro...