Williams & Works, Inc. v. Springfield Corp., Docket No. 28027

• Citation: 76 Mich.App. 541,257 N.W.2d 160
• Decision Date: 06 July 1977
• Docket Number: Docket No. 28027
• Parties: WILLIAMS & WORKS, INC., Plaintiff-Appellee, v. SPRINGFIELD CORPORATION et al., Defendants, and Westinghouse Electric Corporation et al., Defendants-Appellees, and Kelly Mortgage and Investment Company, Defendant-Appellant. 76 Mich.App. 541, 257 N.W.2d 160
• Court: Court of Appeal of Michigan (US)

Page 160

257 N.W.2d 160

WILLIAMS & WORKS, INC., Plaintiff-Appellee, v. SPRINGFIELD CORPORATION et al., Defendants, and Westinghouse Electric Corporation et al.,

Defendants-Appellees,

and

Kelly Mortgage and Investment Company, Defendant-Appellant.

Docket No. 28027.

76 Mich.App. 541, 257 N.W.2d 160

Court of Appeals of Michigan.

July 6, 1977.

Released for Publication Sept. 1, 1977.

[76 MICHAPP 543] Russell, Ward, Hodgkins by Paul A. Ward, Grand Rapids, for defendant-appellant; John A. Porter, Grand Rapids, Gilbert Y. Rubenstein, Walter G. Krapohl, Flint, of counsel.

McShane & Bowie by Thomas C. Shearer, Grand Rapids, for Williams & works, inc.

Lawrence D. Heitsch, Detroit, for Westinghouse.

James G. Halverson, East Lansing, for Springfield & Foote Hills.

J. Stephen Marshall, Grand Rapids, for Shurlow Tile & Carpet.

Rosemary Scott, Grand Rapids, for Koning & Bandstra.

Robert G. Quinn, Jr., Grand Rapids, for Veneklasen.

Marvin Kramer, Southfield, for Tucker.

Richard J. Quist, Grand Rapids, for Johnson & Friedrich.

Before R. B. BURNS, P. J., and D. E. HOLBROOK and BREIGHNER, ^* JJ.

D. E. HOLBROOK, Judge.

On March 12, 1976, the trial court ordered judgments of foreclosure of the mechanics' liens of Williams & Works, Inc., Westinghouse Electric Corporation, Koning & Bandstra, Inc., Johnson & Friedrich Drywall, Inc., Veneklasen Concrete Construction Company, Inc., Shurlow Tile & Carpet, Inc., and Tucker, Inc. The trial court held that each claimant had complied with [76 MICHAPP 544] the requirements of the Michigan Mechanics' Lien Statute, M.C.L.A. § 570.1, et seq.; M.S.A. § 26.281, et seq. with regard to an apartment project known as Foote Hills, located in Kent County, Michigan. Defendant Kelly Mortgage appeals maintaining that the Mechanics' Lien Statute is unconstitutional, that the various claimants did not comply with the statute and that the trial court erred in failing to add a necessary party. In addition, claimant Tucker cross-appeals seeking a modification of the judgment. Claimants Johnson & Friedrich Drywall, Inc., and Veneklasen Concrete Construction Company, Inc., cross-appeal seeking modification of an award of attorney's fees. The record herein is indeed substantial, consisting of the transcript and numerous briefs, depositions, exhibits, pleadings, etc. Defendant Kelly Mortgage & Investment Company's initial brief alone contains two volumes consisting of over 170 pages of text, plus hundreds of additional pages of exhibits, affidavits and various other items. In addition, Kelly has filed two additional briefs with this Court. We will not disclose our initial reaction to this mountainous record. We find that the complexity of this case fortunately does not correspond with the sheer volume of the record.

Initially, defendant Kelly Mortgage Company challenges the Mechanics' Lien Act as being unconstitutional as a violation of the Due Process Clause, U.S.Const. Am. XIV and Const.1963, art. 1, § 17. Defendant maintains that the Mechanics' Lien Statute constitutes a cloud on the title to the detriment of the titleholder without the necessity of proper notice and judicial determination as to the validity of the lien which, when filed, constitutes a cloud or encumbrance upon the title.

In Michigan the Mechanics' Lien Statute has [76 MICHAPP 545] existed for nearly 80 years. ¹ It was established by 1891 P.A. 179. The Act withstood early challenges and has been rarely challenged since. Smalley v. Gearing, 121 Mich. 190, 79 N.W. 1114 (1899); Smalley v. Northwestern Terra-Cotta Co., 113 Mich. 141, 71 N.W. 466 (1897). A similar Mechanics' Lien Statute was upheld as against a due process challenge by the United States Supreme Court, Great Southern Fire Proof Hotel Co. v. Jones, 193 U.S. 532, 24 S.Ct. 576, 48 L.Ed. 778 (1904). In an early decision our Supreme Court stated the following principle: "The statute was intended to protect subcontractors, material men, and laborers, and its benefits should not be frittered away by construction, unless clearly unconstitutional." Smalley v. Gearing, supra, 121 Mich. at 198, 79 N.W. at 1118.

We do recognize the longstanding validity of this statute. ² In recent years, however, Mechanics' Lien [76 MICHAPP 546] Statutes have been subject to challenge. Numerous decisions have upheld the validity of such statutes. Spielman-Fond, Inc. v. Hanson's, Inc., 379 F.Supp. 997 (D.Ariz. 1973), aff'd memorandum 417 U.S. 901, 94 S.Ct. 2596, 41 L.Ed.2d 208 (1974); Cook v. Carlson, 364 F.Supp. 24 (D.S.D. 1973); Ruocco v. Brinker, 380 F.Supp. 432 (S.D.Fla. 1974). Apparently relying on recent Supreme Court decisions in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), and Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), reh. den. 409 U.S. 902, 93 S.Ct. 177, 34 L.Ed.2d 165 (1972), several courts have found Mechanics' Lien Statutes invalid. Barry Properties, Inc. v. Fick Brothers Roofing Co., 277 Md. 15, 353 A.2d 222 (1976); Roundhouse Construction Corp. v. Telesco Masons Supplies Co., Inc., 168 Conn. 371, 362 A.2d 778 (1975), cert. granted 423 U.S. 809, 96 S.Ct. 20, 46 L.Ed.2d 29 (1975). The determination as to the constitutionality of this statute is an involved and complex question. Fortunately we need not decide this question. We find that defendant lacks standing to challenge the constitutionality of this statute. ³

Defendant states his challenge on due process grounds as follows:

"Specifically, the Michigan Mechanics' Lien Statute violates the due process clause of the Fourteenth Amendment by failing to provide for:

"1. Prior notice before perfection of the lien.

"2. Affidavits to establish the validity of the claim or the necessity of invoking the extraordinary remedy.

[76 MICHAPP 547] "3. A bond by the claimant to protect the owner.

"4. Judicial supervision.

"5. A burden on the claimant to establish validity at an early stage of the proceedings."

Defendant also states that the property interest which is affected is the "restraint on the free alienation of real property." We need not decide whether this is a sufficient property interest to invoke protection of due process. ⁴ It is apparent that this is an interest in the owner, not this subsequent mortgagee. Each of the items cited as interests of the owner do not constitute rights of the mortgagee.

The mortgagee is well aware of the priority interest which exists by virtue of the Mechanics' Lien Statute and, furthermore, is in a position to avoid being subordinate to the mechanics' lien rights involved. Defendant maintains that various procedural aspects of the statute serve to invalidate it. However, all these asserted rights are designed to protect the interest of the owner, not other financing parties. Defendant does not challenge the basic foundation or substance of the act itself, i. e., the protection of contractors, subcontractors, material men, etc. One cannot attack this statute on the ground that its application denies constitutional protection to others. Department of Public Health v. Tompkins, on rehearing, 34 Mich.App.[76 MICHAPP 548] 114, 119, 190 N.W.2d 796 (1971); United States v. Raines, 362 U.S. 17, 80 S.Ct. 519, 4 L.Ed.2d 524 (1960); American Power & Light Co. v. Securities & Exchange Commission, 329 U.S. 90, 67 S.Ct. 133, 91 L.Ed. 103 (1946). See also, Shavers v. Attorney General, 65 Mich.App. 355, 237 N.W.2d 325 (1975).

Defendant herein knew of the mortgagor's building plans and was aware of the details contained therein. Defendant obviously knew of the Mechanics' Lien provisions justifiably granting priority to the claimants. Defendant then proceeded to provide the money for the project. Defendant cannot now assert these procedural constitutional challenges to this statute which admittedly would serve to protect only the owner. Neither the past nor the present owners of the property have joined in this procedural challenge to the Mechanics' Lien Statute. Defendant has no standing to complain of procedural deficiencies of which only the owner of the property can complain. We express no opinion as to the merits of defendant's constitutional arguments.

The next question with which we are faced is whether claimants have in fact properly asserted their rights under the Mechanics' Lien Statute. The trial court concluded that they had and we agree.

The Mechanics' Lien Statute has been described as: "designed to create confusion and frustrate anyone who attempts to meet all of its requirements". Spartan Asphalt Paving Co. v. Grand Ledge Mobile Home Park,71 Mich.App. 177, 181, 247 N.W.2d 589, 592 (1976), rev'd, 400 Mich. 184, 253 N.W.2d 646 (1977). The statute itself clearly announces its remedial purpose and indicates that it is to be liberally construed to achieve that purpose. M.C.L.A. § 570.27; M.S.A. § 26.307, Spartan Asphalt Paving Co. v. Grand Ledge Mobile Home Park, supra. Recent [76 MICHAPP 549] decisions have indicated that substantial compliance with the requirements of the Mechanics' Lien Statute shall be sufficient to establish claims. Spartan Asphalt v. Grand Ledge Mobile Home Park, supra; Georgia-Pacific Corp. v. Central Park North Co., 394 Mich. 59, 228 N.W.2d 380 (1975). Furthermore, herein much of the problem was due to the reorganization of Foote, ⁵ effectively precluding proper notification. Such change in organization should not preclude the claimants from asserting their statutory remedies. William Moors, Inc. v. Pine Lake Shopping Center, Inc., # 1, 74 Mich.App. 12, 253 N.W.2d 658 (1977). Furthermore, the owner never requested statements of the amount of work and materials and, therefore, this should not upset the valid lien. M.C.L.A. § 570.8; M.S.A. § 26.288. Notice was, in effect, given to the owners and substantial compliance with M.C.L.A. § 570.1, et seq; M.S.A. § 26.281, et seq. was achieved.

Defendant also maintains that the trial court erred in finding that several of the plaintiffs did not give waivers of their...