Title: Thatcher & Sons, Inc. v. Norwest Bank Casper, N.A.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Thatcher & Sons, Inc. v. Norwest Bank Casper, N.A.1988 WY 26750 P.2d 1324Case Number: 87-124Decided: 03/08/1988Supreme Court of Wyoming
THATCHER & SONS, 
INC., A WYOMING CORPORATION, APPELLANT (PLAINTIFF),

v.

NORWEST BANK 
CASPER, N.A., 
APPELLEE (DEFENDANT), GLENROCK DEVELOPMENT CORPORATION AND BLACK HILLS 
BENTONITE, (DEFENDANTS).

Appeal from the 
DistrictCourtofConverseCounty, William A. Taylor, 
J.

Patrick J. 
Murphy of Williams, Porter, Day & Neville, P.C., Casper, for appellant.

William W. 
Harden, Casper, 
for appellee.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT 
and MACY, JJ.

MACY, 
Justice.

[¶1.]     This is an appeal from 
a partial summary judgment giving the mortgage of appellee-defendant Norwest 
Bank Casper, N.A. (the Bank) priority over the lien of appellant-plaintiff 
Thatcher & Sons, Inc. (Thatcher). The issues raised by Thatcher are (1) 
whether the priority of a subcontractor's lien relates back to the commencement 
of construction on a project, and if so (2) whether cessation of construction 
precludes such a relation back. In response to the issues raised by Thatcher, 
the Bank also raised the issue of whether or not Thatcher has a perfected 
lien.

[¶2.]     We reverse in part and 
remand.

[¶3.]     Glenrock Development 
Corporation owns the Indian Hills Subdivision which embraces the Indian Hills 
Golf Course. During the construction of the golf course by Glenrock Development 
Corporation, various subcontracts were let with actual construction beginning in 
the summer of 1983. In November 1984, construction work on the golf course 
ceased when Glenrock Development Corporation was unable to pay some of its 
subcontractors or finance the remaining construction needed for completion of 
the course. Consequently, Glenrock Development Corporation secured a loan of 
$490,000 from the Bank "[t]o pay off some existing debts * * * and to finish the 
construction of the golf course." This loan was secured by a first mortgage on 
the Indian Hills Subdivision, including the golf course, which was properly 
recorded by the Bank.

[¶4.]     Several weeks after the 
Bank recorded its mortgage, Glenrock Development Corporation contracted for the 
first time with Thatcher to provide extensive dirt work on the fairways, greens, 
and tee boxes. This work was performed during the period of April 18, 1985, 
through July 23, 1985. On November 4, 1985, Thatcher filed a lien statement 
claiming a lien against the golf course property for the cost of the dirt 
work.

[¶5.]     On December 24, 1985, 
Thatcher filed a complaint in district court seeking a judgment against Glenrock 
Development Corporation in the amount of $34,428.93 for the dirt work, 
attorney's fees, and costs and asking for a judgment declaring that its lien be 
foreclosed as a valid lien superior to the Bank's mortgage and the lien of 
co-defendant Black Hills Bentonite. Glenrock Development Corporation filed its 
answer generally denying the essential allegations of the complaint and alleging 
the affirmative defenses that (1) Thatcher failed to state a cause of action; 
and (2) Thatcher failed to name an indispensable party. Black Hills Bentonite 
filed its answer to the complaint and a counterclaim against Thatcher, and it 
filed cross-claims against Glenrock Development Corporation and the Bank seeking 
a judgment against Glenrock Development Corporation for payment in the amount of 
$19,827.38 for the bentonite clay which it furnished for lining a reservoir on 
the golf course and asking for a judgment declaring that its lien be foreclosed 
as a valid lien superior to the lien of Thatcher and the mortgage of the 
Bank.

[¶6.]     The Bank filed its 
answer generally denying the essential allegations of Thatcher's complaint and 
alleging the affirmative defenses of failure to state a cause of action and 
failure of Thatcher to timely file its lien or meet all statutory requirements. 
The Bank and Glenrock Development Corporation respectively filed their answers 
generally denying the validity of Black Hills Bentonite's claim and 
lien.

[¶7.]     Thatcher filed a motion 
and supporting documents for summary judgment against the Bank and the 
co-defendants, Glenrock Development Corporation and Black Hills Bentonite. In 
response, the Bank filed a motion opposing the summary judgment stating that 
there were material questions of fact regarding the work done by Thatcher and 
that there was no basis in fact or law regarding priority of Thatcher's lien as 
it related to the Bank's mortgage. The Bank did not file a motion for summary 
judgment.

[¶8.]     On March 27, 1987, the 
court filed its partial summary judgment granting Thatcher judgment against 
Glenrock Development Corporation for $44,440.93 and accruing interest, decreeing 
that the Bank's mortgage has priority over the liens of Thatcher and Black Hills 
Bentonite, and ordering that the matter proceed to trial only upon Black Hills 
Bentonite's claim against Glenrock Development 
Corporation.

PRIORITY OF A 
SUBCONTRACTOR'S LIEN

[¶9.]     Section 29-1-305(b) and 
(c), W.S. 1977, pertaining to the priority of a subcontractor's lien, 
states:

"(b) Any lien perfected 
as provided by this title attaches to the materials, machinery or supplies 
furnished and improvements made in preference to any subsequent lien, security 
interest or mortgage under any other provision of law which has been perfected 
upon real or personal property, including a leasehold interest, against which 
the lien is claimed.

"(c) Any lien, security 
interest or mortgage which has been perfected upon real or personal property or 
upon a leasehold interest prior to the commencement of any construction work or 
repair of the premises or property except as provided by chapter 7 of this title 
shall have priority."

[¶10.]  The court stated in its decision letter 
that:

"Section 29-1-305(b) * * 
* provides in essence that any lien properly filed will attach `in preference to 
any subsequent lien, security interest or mortgage.' This [i]mplies a `first in 
time first in right' to the [attachment] of liens after construction has 
commenced. The Bank's lien was subsequent in time even if the construction 
taking place after the loan was made was considered to be 
ongoing."

[¶11.]  The Bank asserts that the court made the 
proper decision but that it is subsection (c) and not subsection (b) which gives 
its mortgage priority over Thatcher's lien. The Bank contends that, in the 
context of this case, the language "any construction work" must refer to a 
particular contract in privity with Thatcher, and, since the Bank's mortgage was 
prior to Thatcher's subcontract, the Bank's mortgage has 
priority.

[¶12.]  This interpretation assumes language 
which is not found in § 29-1-305(c). There is nothing in this subsection which 
requires that the construction be performed pursuant to a particular contract in 
privity with a subcontractor. The Supreme Court will not read into laws what is 
not there. Department of Revenue and Taxation of State of Wyoming v. Hamilton, Wyo., 743 P.2d 877 (1987). This subsection 
merely makes it clear that a mortgage perfected prior to the commencement of any 
construction on a project has priority over a subcontractor's 
lien.

[¶13.]  It is fundamental that statutes be viewed 
in the light of the objects and purposes to be accomplished. Hurst v. State, Wyo., 698 P.2d 1130 (1985). It is clear to 
this Court that one of the purposes of the lien statutes is to provide a method 
by which a subcontractor can be assured he will receive payment for work and 
materials furnished on a project. Construing § 29-1-305(b) as being a "`first in 
time first in right'" statute obviates the purpose of the statute. The effect in 
most instances, as in this case, would be that the subcontractor would not have 
a meaningful lien. A lien on only the dirt work involved in the construction of 
a golf course is of no value.

[¶14.]  We disagree with the finding of the 
district court that § 29-1-305(b) is a first-in-time, first-in-right statute. 
Although § 29-1-305(b) is not a model of clarity, the import of this subsection 
is that the priority of a perfected lien relates back and attaches to the 
improvements made from commencement of the project over any subsequent lien 
perfected under any other statute.

[¶15.]  This Court is not unmindful of the 
district court's equitable concerns. The legislature, by the passage of our lien 
statutes as we construe them, has balanced the equities between a subcontractor 
and an intervening mortgagee by giving the subcontractor a superior lien. We do 
not deny that the lien statutes work a hardship, but we concede that it is not 
our prerogative to question whether the legislature correctly balanced these 
equities.

CESSATION OF 
CONSTRUCTION

[¶16.]  The court also stated in its decision 
letter that:

"On a purely equitable 
consideration, Norwest gave a loan to pay off all lien creditors, this enabled 
Glenrock Development to rejuvenate a project which was obviously dead in the 
water. It would strain credulity to believe that anyone would furnish material, 
labor, supplies or construct anything for the Development Company, broke and 
saddled with numerous liens for unpaid bills. The project as a practical matter 
was starting anew."

[¶17.]  The Bank urges this Court to conclude 
from the above finding that the golf course project was abandoned when 
construction ceased in November 1984 and that such is equivalent to completion 
for purposes of our subcontractor's lien statutes. The Bank reasons that 
Thatcher's subcontract was thus a new beginning, giving the Bank's mortgage 
priority pursuant to § 29-1-305(c), because its mortgage was perfected prior to 
commencement of the dirt work.

[¶18.]  We decline to hold that the mere 
cessation of construction is tantamount to abandonment. This Court has taken the 
position that a delay in completion of construction is not fatal to the 
maintenance of a subcontractor's lien unless the delay is the result of bad 
faith or the delay is unnecessary. Sawyer v. Sawyer, 79 Wyo. 489, 335 P.2d 794 
(1959). We see no compelling reason why we should change our position in this 
case and journey through the mine field of problems associated with the law of 
abandonment.

[¶19.]  Our examination of the record, including 
the affidavits of the Bank opposing Thatcher's motion for summary judgment, 
fails to disclose that the delay in the completion of the golf course 
construction was unnecessary or the result of bad faith.

PERFECTION OF 
LIEN

[¶20.]  Without cross appealing and by way of its 
answering brief, the Bank contends for the first time that Thatcher's lien is 
null and void because the lien statement was not verified and filed by Thatcher 
and because statutory notices were not given. The Bank contends that it has not 
waived or admitted that the lien requirements have been met since this issue was 
raised in its answer to Thatcher's complaint. We disagree.

[¶21.]  The Bank's answer alleged an affirmative 
defense that Thatcher "has not timely filed [its] lien pursuant to Wyoming 
Statutes or met all statutory requirements." However, in response to Thatcher's 
motion for summary judgment, the Bank filed a motion opposing the summary 
judgment, stating:

"1. There are material 
questions of fact regarding work done on Lot 
110.

"2. [Thatcher's] Motion 
for Summary Judgment and allegations regarding priority as it relates to [the 
Bank] has no basis in law or fact."

The Bank failed 
to file anything in opposition to the motion for summary judgment which 
indicated in any way that Thatcher did not have a valid lien or that the lien 
was not perfected. A review of the record of the hearing on the motion for 
summary judgment reveals that the Bank did not contend or argue that Thatcher's 
lien was not valid or perfected. To the contrary, the Bank's attorney 
stated:

"So I would state to the 
court that as far as priority, if the court would wish to grant summary 
judgment, that is fine, but they should grant Norwest summary judgment stating 
that they have priority."

[¶22.]  During the hearing on the motion for 
summary judgment, the attorneys for Glenrock Development Corporation and Black 
Hills Bentonite did question whether Thatcher submitted documentation to show 
that the statutory pre- and post-lien notices were given. The court granted 
Thatcher's request for time to supplement the record so Thatcher could show that 
these notices were given. Thatcher did supplement the record by filing an 
affidavit reciting that the notices had been mailed to Glenrock Development 
Corporation. At no time during the period that the motion for summary judgment 
was under advisement did anyone raise any question concerning the manner in 
which the notices were given.

[¶23.]  Issues not raised or argued to the trial 
court will not be considered for the first time on appeal. Dennis v. Dennis, Wyo., 675 P.2d 265 (1984). In this case, the 
Bank failed to raise or argue to the court below the lien perfection issues 
presented to this Court. In addition, the Bank affirmatively limited its theory 
to the issue of priority of Thatcher's lien when it filed its motion opposing 
the summary judgment. Parties are bound by the theories which they advanced 
below. Ricci v. New Hampshire Insurance Company, Wyo., 721 P.2d 1081 (1986), 
quoting Williams v. Public Service Commission of Wyoming, Wyo., 626 P.2d 564, 
cert. denied 454 U.S. 896, 102 S. Ct. 394, 70 L. Ed. 2d 211 (1981). Under the 
doctrine of invited error, if a party induces action by a court, the party 
cannot argue error because the court took such action. Id. The Bank invited the 
court to look at only the priority issue. The Bank cannot now complain that the 
court erred in not determining whether or not Thatcher's lien was perfected. 
This simply was not an issue properly preserved below, and we decline to make 
that determination on appeal.

SUMMARY

[¶24.]  We hold as a matter of law that 
Thatcher's subcontractor's lien has priority over the Bank's mortgage and that 
the court erred by entering partial summary judgment for the Bank giving its 
mortgage a lien superior to that of Thatcher's.

[¶25.]  Remanded with directions to enter partial 
summary judgment consistent with this opinion.

THOMAS, J., filed an opinion 
concurring in part and dissenting in part.

CARDINE, J., filed a dissenting 
opinion.

THOMAS, Justice, concurring in 
part and dissenting in part.

[¶26.]  I am in complete accord with the holding 
of the majority that the priority of a perfected subcontractor's lien relates 
back to the commencement of the project. I also am satisfied that cessation of 
construction does not demonstrate abandonment of the 
project.

[¶27.]  I dissent from the final result proposed 
by the majority opinion, as I understand it. It appears to direct the trial 
court to enter a partial summary judgment in favor of Thatcher & Sons, Inc., 
the appellant. I am satisfied that there remain some genuine issues of material 
fact with respect to the question of abandonment. Certainly, cessation of work 
on the project does not, in and of itself, constitute abandonment of the 
construction project. In connection with other facts, however, it may satisfy a 
finder of fact that the project had been abandoned. I perceive this as an issue 
to be tried in this case, and therefore I cannot agree with any suggestion that, 
at this stage of the proceedings, a partial summary judgment should be entered 
affording lien priority to Thatcher & Sons, Inc. I agree it is entitled to 
relief with respect to the summary judgment entered favoring Norwest Bank of 
Casper, 
N.A.

CARDINE, Justice, 
dissenting.

[¶28.]  I dissent. The result reached in this 
case is entry of summary judgment by the supreme court for the unsuccessful 
appealing party, and this upon disputed questions of fact from which different 
inferences may be drawn. Those questions are for determination by the trial 
court and not an appellate court. I would reverse and remand for resolution of 
factual issues by the trial court.