Zions First Nat. Bank v. Carlson, 11636

• Decision Date: 19 January 1970
• Docket Number: No. 11636,11636
• Citation: 23 Utah 2d 395,464 P.2d 387
• Parties: d 395 ZIONS FIRST NATIONAL BANK, Plaintiff, v. Harold A. CARLSON and M. E. Harris, Jr., Defendants. M. E. HARRIS, Jr., Third-Party Plaintiff and Respondent, v. ZIONS SECURITIES CORP., a Utah corporation, and Artcol Corporation, Third-Party Defendants and Appellant.
• Court: Utah Supreme Court

Page 387

464 P.2d 387

23 Utah 2d 395

ZIONS FIRST NATIONAL BANK, Plaintiff, v. Harold A. CARLSON and M. E. Harris, Jr., Defendants.

M. E. HARRIS, Jr., Third-Party Plaintiff and Respondent, v. ZIONS SECURITIES CORP., a Utah corporation, and Artcol

Corporation, Third-Party Defendants and

Appellant.

No. 11636.

Supreme Court of Utah.

Jan. 19, 1970.

McKay & Burton, Paul E. Reimann, Leonard S. Ralph, Salt Lake City, for appellant.

Cannon, Greene, Nebeker & Horsley, Salt Lake City, for plaintiff Zions First Nat. Bank.

Draper, Sundack & Saperstein, Salt Lake City, for respondent.

CALLISTER, Justice.

The appellant, Zions Securities Corporation, the onwer in fee of certain land, executed a ground lease, as landlord, with Artcol Corporation, as tenant, for a term of 85 years. The respondent, an architect, was engaged by Artcol to draw plans and specifications and render other architectural services for a proposed highrise apartment building. Artcol went defunct and consequently no building was constructed. The unpaid architect filed a mechanic's lien and sued to foreclose the interests of both the lessor, Zions, and lessee, Artcol.

At the conclusion of the trial, the court made findings of fact and concluded as a matter of law that the interest of Zions became lienable under Section 38--1--3, U.C.A., 1953, by reason of its conduct during the time the architectural services were performed; work was commenced within the meaning of the statute by the clearing of the ground and the digging of soil test holes; and the lien attached and was not defeated by later abandonment of the work. The court rendered a judgment of foreclosure of respondent's lien.

Appellant contends that since no building was constructed, the architect's lien could not attach to its interest in the land.

Section 38--1--3, U.S.A., 1953, provides:

Contractors, subcontractors and all persons performing labor upon, or furnishing materials to be used in, the construction or alteration of, or addition to, or repair of, any building, structure or improvement upon land; all foundry men and boilermakers; all persons performing labor or furnishing materials for the construction, repairing or carrying on of any mill, manufactory or hoisting works; all persons who shall do work or furnish materials for the prospecting, development, preservation or working of any mining claim, mine, quarry, oil or gas well, or deposit; and licensed architects and engineers and artisans, who have furnished designs, plats, plans, maps, specifications, drawings, estimates of cost, surveys or superintendence, or who have rendered other like professional service, or bestowed labor, shall have a lien upon the property upon or concerning which they have rendered service, performed labor or furnished materials, for the value of the service, rendered, labor performed or materials furnished by each respectively, whether at the instance of the owner or of any other person acting by his authority as agent, contractor, or otherwise. * * *

(Emphasis added to relevant provisions.)

The trial court properly construed Section 38--1--3, U.C.A., 1953, insofar as it held that an architect may file a lien upon the property concerning which he has rendered professional service, although his plans may not be brought to fruition by erection of a building. However, the judgment of the district court may not be sustained, since under the facts and circumstances there is no basis to conclude that Zions Securities Corporation impliedly authorized its lessee, Artcol, to engage an architect so as to bind the lessor's interest in respect to the services rendered.

In Stanton Transportation Company v. Davis, ¹ this court observed:

The statute under which plaintiffs claim these liens is unique, and we are not aware of any precedent to look to for guidance in the problem here presented. * * *

In the Stanton case, this court examined the history and background of Section 38--1--3, U.C.A., 1953. Prior to the compilation of the Utah statutes in 1933, the liens provided in this section were in four separate sections. The Code Commission in consolidating the statutes for that compilation fused all of those sections into one. The former section relating to architects and engineers provided:

Architects, engineers, and artisans who have furnished designs, plats, plans, maps, specifications, drawings, estimates of costs, surveys, or superintendence, or who have rendered other like professional service or bestowed labor in whole or in part, describing, illustrating, or superintending such structure of work done or to be done, or in any part connected therewith, shall have a lien upon the property upon which they have rendered service, or performed labor, or furnished materials, for the value of such service rendered, labor done, or materials furnished, * * *. 3722 C.L.U., 1917.

This court stated:

Under the above statute the emphasized language related to those who 'bestowed labor,' and was purposely broad in order to give a lien for the drawing of plats, plans, maps or specifications which is not done directly upon the property. In the consolidation with other sections the cumbersome emphasized language was deleted and the more general term 'or concerning' was inserted as a shorter substitute. * * *

* * * From the history and purpose of the statute it appears that the words 'upon or concerning which' were simply intended to be generally descriptive of the manner in which certain work and services are performed. For example, work done by contractors or laborers upon an oil well or building is done upon the property, whereas, the services of architects and engineers is work which may be regarded as done 'with respect to' or 'concerning' the property. ²

Under this unique statutory enactment, an architect is entitled to a 'lien upon the property upon or concerning which' he has rendered his professional services.

As was observed in 1966 Utah Law Review, 181, 188, 'Architects and surveyors are specifically entitled to mechanics' liens under the Utah statute. Their liens create a priority problem, however, since their services are usually performed before the 'visible to the eye' commencement of construction * * *.'

In the instant action, there was no priority pboblem involved. However, if there were, the problem would be to resolve the priorities and not to reconstruct the specific language of Section 38--1--3, so as to deprive an architect, who has rendered services concerning a specific res, of his lien. This interpretation is reinforced by the language of the prior statute which granted an architect a lien for 'describing, illustrating * * * such structure of work * * * to be done, or in any part connected therewith, * * *' The Stanton case clearly established that there was no intention to change the unique nature of the lien granted to architects, and the Code Commission merely substituted some of the cumbersome language with more general terms.

The critical issue of the instant action is whether Zions impliedly authorized the architectural services and thus impliedly granted its lessee authority to bind its fee interest. The trial court found as a matter of fact that the lessee had been granted implied authority to bind the lessor's interest by the following: (a) The provisions of the option to lease and the lease; (b) Approval of preliminary skecthes; (c) Execution of zoning variance applications and appearances and participation in zoning hearings; (d) Approval of architectural services (Exhibit 22).

Exhibit 22 is a letter from Zions to the Planning and Zoning Board of Adjustment, requesting an extension of a variance order. In the letter it is stated:

* * * Since that time, the developers to whom we have leased the property, have been working through their architect, Mr. M. E. Harris, to complete the plans and also to work out the building and development program.

The facts to support findings (b) and (d) were merely expressions of knowledge of the lessor that the lessee was proceeding with the development of the property and do not constitute an implied authorization. Zion's participation in the zoning hearings was in compliance with specific provisions of the lease, which cannot be distorted into an agency agreement, wherein Zions agreed:

* * * it will join in any and all applications for permits, licenses or other authorizations required by any governmental or other body claiming jurisdiction in connection with any work which the TENANT may do hereunder, * * *.

The sixteen-page lease agreement, which superseded the option to lease, contains numerous provisions, which, if any structure or improvement be erected, grant substantial benefits which will inure to the lessor's reversionary interest. However, there is no agreement that the lessee make any improvement or engage in any business upon the property nor could Zions compel its lessee to build or forfeit the lease. Provision 7 specifies:

ARTCOL, at its own cost and expense, may at its option, erect and construct a building or buildings, structure or structures, or other improvements on the demised premises which shall conform with all rules, regulations and ordinances of Salt Lake County, State of Utah. * * * (Emphasis added.)

In Utley v. Wear ³ the court in scholarly opinion conceptualized the implied agency issue as follows:

The subjection of the premises to a lien for improvements made by a tenant cannot arise from the mere relationship of landlord and tenant. It must come from the fact (if such is the fact) that the tenant is the agent for the landlord. This agency can, of course, be expressly granted by the contract. However, * * * the agency sufficient to incur the lien is often found to arise by implication.

It is frequently stated that the mere permission or...