#### SECURITY HOMESTEAD ASSOCIATION v. Louis F. SCHNELL, Jr.

No. 3789.

Court of Appeal of Louisiana, Fourth Circuit.

March 9, 1970.

*899Edmond G. Miranne and Lee C. Grev-emberg, New Orleans, for plaintiff-appellant.

Bernhardt C. Heebe, Odom B. Heebe, Metairie, and Salvadore T. Mule, New Orleans, for W. H. Ward Lumber Co. Inc., intervenor-appellee.

Arnold & Geipert, New Orleans, for Du-vic Hardware Co. Inc., intervenor-appellee.

Before REDMANN, LeSUEUR and SWIFT, JJ.

SWIFT, Judge.

The plaintiff, Security Homestead Association, has taken this appeal from a judgment on a rule declaring its vendor’s privilege and lien on residential property at 230 Bermuda Street in Algiers inferior to two materialmen’s liens.

The property was acquired by Louis F. Schnell, Jr., from the plaintiff by a vendor’s lien deed containing the usual security clauses on May 10, 1968, but it was not recorded in either the conveyance or mortgage records until May 16 of that year. Its prior owner was William J. Spinella, who had also acquired the property from the plaintiff subject to a vendor’s privilege.

The record does not disclose any relationship at all between Spinella and Schnell. However, during the period from March, 1966, to June, 1968, the latter purchased considerable building materials from intervenors, W. H. Ward Lumber Co., Inc. and Duvic Hardware Company, Inc., and made extensive repairs to the building.

Other than the fact that William J. Spi-nella’s father visited the premises on one occasion and his son lived in the building for short periods from time to time while the remodeling was being done, there is nothing whatsoever in the record which indicates that the owner consented to the repair work or that he eve,, knew it was going on.

Neither Mr. Ward nor Mr. Duvic testified that he thought Schnell owned the property when the materials were first sold. Mr. Duvic thought Mr. Spinella’s *900son was the owner, but later learned this was not the case. However, it is clear that such materials were sold to Schnell and charged to his account. When he failed to pay for same, materialmen’s liens were timely filed by each intervenor.

Mr. Schnell defaulted in his payments on the loan that was secured by plaintiff’s vendor’s lien, and on September 5, 1968, Security Homestead filed this foreclosure proceeding via executiva. Schnell’s whereabouts were unknown, and he was cited and served through an attorney appointed by the court in accordance with law. Ward and Duvic intervened in the foreclosure proceedings prior to the public sale of the property by the civil sheriff on October 24, 1968, asking that their liens be recognized as superior to that of Security Homestead and that they be paid by preference and priority out of the proceeds of the sale.

The trial judge ruled in favor of the in-tervenors and the homestead association has appealed.

The plaintiff acknowledges that since the work was commenced and the materials delivered to the premises prior to and within 30 days from the recordation of its vendor’s lien, the materialmen’s liens would outrank its vendor’s privilege and lien under LSA-R.S. 9:4801 and 4812, except for one thing. Louis F. Schnell, Jr., was not the owner of the property when most of the materials were purchased by him. Nor is there any evidence in the record to show that he was an authorized agent or representative of the owner, or one with whom the latter had contracted for the work, or that the improvements were made and the materials furnished with the consent or at the request of the owner, William J. Spi-nella.

The appellant’s position is correct under the law and circumstances presented here, except insofar as the materialmen’s liens secure the purchases made by Mr. Schnell on and after he became the owner of the property by his deed of May 10,1968.

LSA-R.S. 9:4801 et seq. provide privileges and liens for various parties engaged in construction and repair of immovable property and for the furnishers of material, machinery and fixtures used therein *"with the consent or at the request of the owner thereof, or his authorized agent, or representative, or any person with whom the owner has contracted for such work,** * * (Emphasis supplied.) A mate-rialman’s privilege primes bona fide vendor’s privileges or mortgages unless the latter *‘‘exist*and *have been recorded*before the work or labor has begun or any material has been furnished * * * (Emphasis supplied.)

Lien statutes are stricti juris. Their provisions must be interpreted rigidly and the privileges conferred thereby are not to be extended or enlarged either by implication or the application of equitable considerations. Pringle Associated Mortgage Corporation v. Eanes, La.App., 208 So.2d 346.

Therefore, these materialmen acquired no privilege or lien against the land and improvements on which they were used when the purchases were made by Mr. Schnell prior to becoming owner thereof on May 10, 1968, because it was not proved that he fell within one of the classifications of persons to whom such a privilege is granted by the statute or that the materials were used in the improvement with the consent or at the request of the owner of the property at that time. Boutte & Courrege v. Derokay, La.App., 168 So. 39; Yellow Pine Lumber Co. v. Maniscalco, La.App., 9 So.2d 320; Berg v. Schneider, La.App., 12 So.2d 501; and Fruge v. Muffoletto, 242 La. 569, 137 So.2d 336.

No lien or privilege was created under LSA-R.S. 9:4811, because it was not shown that Mr. Schnell was a lessee of the property at the times the materials were obtained by him. Jackson Homestead Ass’n. v. Zimmer, 16 La.App. 647, 134 So. 126; and Berg v. Schneider, supra.

*901A contrary ruling must be made with respect to those purchases of materials made by Mr. Schnell on and after he became the owner of the property on May 10, 1968. The vendor’s privilege was created by Schnell’s deed of acquisition and existed *at that time.*However, the materialmen’s privileges also attached to the property upon his acquisition thereof even though the deed was not recorded. Heirs of Gal-laugher v. Hebrew Congregation, 1883, 35 La.Ann. 829. Since the work was going on and these materials were delivered to the premises prior to *recordation*of the homestead association’s privilege and lien on May 16, 1968, intervenor’s liens are superior *to the*plaintiff’s insofar as these later purchases are concerned.

The words of the lien statute are clear and unambiguous with respect to the situation before the court and we are bound to interpret them literally. The equities of the parties, of course, are of no consideration in these lien cases. However, we must point out for the unpaid materialmen that their sales were made to Mr. Schnell, not to the owner of this property. Certainly, justice would not be served by subjecting the owner’s property to a lien and requiring him to pay for remodelling that was done without his knowledge and consent.

The lower court relied heavily on Capital Bank & Trust Co. v. Broussard Paint & Wallpaper Co., La.App., 198 So.2d 204. We do not believe that decision is applicable in this situation. There the land was owned by Jesse D. White Enterprises, Inc. and the construction was done at the request of Jesse D. White, who was the president and sole stockholder of the corporation. The court correctly held that the improvements were made with the knowledge and consent of the owner of the property. No relationship of any nature between the owner and party causing the work to be done was established in the present case.

Like the Court of Appeal, First Circuit, we do not share the trial judge’s concern about the possibility of depriving a materialman of his lien by transferring ownership of the property from one purchaser to another after delivery of all materials and before recordation of his lien within the 60 day period. Where the materials have been used in the improvement of the property with the consent or at the request of the then owner of his authorized representative or contractor, the statute confers a privilege to the materialman and the right to subsequently perfect his lien. These rights cannot be affected by subsequent changes in ownership, and will be eliminated only through failure to timely record the materialman’s lien. Capital Bank & Trust Co. v. Broussard Paint & Wallpaper Co., supra, page 210, paragraphs 10 and 11.

For these reasons the judgment rendered below must be amended so as to recognize the superiority of intervenors’ liens and privileges only to the extent that they secure the cost of materials purchased and delivered to the premises on and after May 10, 1968.

Accordingly, such judgment is amended to order the civil sheriff to make payment, out of the proceeds of the sale of the property seized and sold herein, of the sum of $60.11 to intervenor, W. H. Ward Lumber Co., Inc., and the sum of $156.96 to inter-venor, Duvic Hardware Company, Inc., otherwise it is affirmed.

The costs of these proceedings, including this appeal, are to be shared in the proportions of one-half by appellant and one-half by appellees.

Amended and affirmed.

REDMANN, Judge

(dissenting in part).

> “No notarial act concerning immovable property shall have any effect *against*third persons, until the same shall have been deposited in the office of the parish recorder, or register of conveyances of the parish where such immovable property is situated.” LSA-C.C. art. 2264 (emphasis supplied).

> *902“All sales, contracts and judgments affecting immovable property, which shall not he so recorded, shall be *utterly null and void,*except between the parties thereto. The recording may be made at any time, but shall only *affect*third persons from the time of the recording.

> “The recording shall have effect from the time when the act is deposited in the proper office, and indorsed by the proper officer.” LSA-C.C. art. 2266 (emphasis supplied).

The majority’s theory is that an unrecorded purchase is effective *in favor*of third persons, but not “against” them, so construing C.C. art. 2264. But the language of art. 2266 is that unrecorded acts “are utterly null and void” and only *“affect”*third parties from recordation.

The only way of construing these articles in pari materia together, as commanded by C.C. art. 17, so as to give effect to both articles, is by interpreting each literally, and restricting each to what it says. Art. 2264 only says unrecorded acts are not effective “against” third persons; it *does not*say such acts are effective “in favor of” third persons, and art. 2266 says they are “utterly null and void, except between the parties”.

The harm in holding that unrecorded instruments can, in spite of art. 2266, “affect” third parties in their favor may be shown by an example. O sells to A by credit sale with vendor’s privilege and mortgage. A few hours or a day later, but before recordation of this instrument in conveyance or mortgage records, A sells to B (and this purchase is immediately recorded). If A’s unrecorded purchase is effective *in favor*of third party B, but the unrecorded vendor’s privilege and mortgage are not effective “against” B, then B has acquired title effective against the vendor (and the world) free and clear of the vendor’s privilege and mortgage. (The same would be true under the doctrine of after-acquired title, see Stokes v. Shackleford, 12 La. 170 (1838), if A had sold to B *before*A acquired from O.)

Since the whole concept of vendor’s privilege does provide a *preference*for vendors, I am unable to imagine any social or economic purpose which would justify the result of so superlatively easy a defeat of the vendor’s privilege.

Such a result is avoidable by a literal application of art. 2266, holding A’s unrecorded purchase “utterly null and void”, unable to “affect” third persons until re-cordation. In all parishes except Orleans, filing for registry in conveyance and for recordation in mortgage records is done with the clerk of court and both filings might be accomplished simultaneously. In Orleans, where the register and the recorder are separate offices, and in any parish where in fact the clerk of court may have separate filing stations in his office for conveyances and mortgages, perhaps the vendor should file first for recordation in the mortgage records. At least the vendor has the possibility of thus preventing the purchaser from having recorded title (effective as to third persons) prior to the effectiveness of the vendor’s privilege and mortgage. But there is *no way*the vendor can prevent *unrecorded*title prior to recor-dation, whether recordation occurs six minutes, six hours or, as here, six days later. Thus it appears to me indispensable to apply art. 2266 literally.

In Heirs of Gallaugher v. Hebrew Congregation, 3S La.Ann. 829 (1883), the assertion that an earlier recorded judicial mortgage attaches from the time of unrecorded purchase to an immovable purchased by the judgment debtor was unnecessary to the decision. The judgment debtor’s purchase was in fact recorded at the time the case arose. The only question in the case was whether the judicial mortgage might be enforced against the property in the hands of a third possessor, who had purchased *from the judgment debtor,*prior to recordation of the judgment debt- or’s purchase. Since the third possessor it*903self was not a party to the judgment debt- or’s purchase of the property, that purchase was “utterly null and void” as to it, until recorded. Only after the judgment debtor’s acquisition was recorded could the third possessor acquire title; but from the moment of that indispensable recordation the earlier-recorded judicial mortgage first attached, LSA-C.C. arts. 3304 and 3328, and the third possessor’s title was from its effective inception burdened with the mortgage.

The judgment debtor’s vendor, in Giva-novitch v. Hebrew Congregation of Baton Rouge, 36 La.Ann. 272 (1884), unsuccessfully sought to assert his vendor’s privilege as superior to the judicial mortgage.

The facts recited in these two cases are:

> (1) July 18, 1872, judgment recorded creating judicial mortgage against Delacroix.

> (2) October 1, 1875, credit sale by Giva-novitch to Delacroix.

> (3) September 12, 1876, sale by Delacroix to Hebrew Congregation with assumption of “Delacroix’s debt” to Givanovitch.

> (4) September 12, 1876, filing for registry in *conveyance*book of credit sale from Givanovitch to Delacroix (with actual inscription September 15, 1876).

> (5) September 16, 1876, actual inscription in conveyance book (? — 35 La.Ann. at 830) and mortgage and privilege book (36 La.Ann. at 273) of sale from Delacroix to Congregation (date of filing not shown by majority opinions; dissenter says September 12, 1876; 35 La.Ann. at 873).

> (6) September 21, 1876, (actual?) recording in *mortgage and privilege*book of credit sale from Givanovitch to Delacroix.

Thus Givanovitch’s vendor’s privilege was not recorded in the mortgage book until nearly a year after the date of the act of credit sale. So even if Delacroix had not sold the property his judgment creditor’s mortgage would have outranked Giva-novitch’s vendor’s privilege, since a privilege “ * * * shall confer no preference on the creditor who holds it, over creditors who have acquired a mortgage, unless the act or other evidence of the debt is recorded within seven days from the date of the act or obligation of indebtedness. * * * ” LSA-C.C. art. 3274.

And, except for Congregation’s assumption of Delacroix’s debt, Congregation would have taken title clear of Givanov-itch’s unrecorded vendor’s privilege and conventional mortgage (although Givanov-itch might still have rescinded his credit sale to Delacroix; C.C. art. 2561; Louis Werner Saw Mill Co. v. White, 205 La. 242, 17 So.2d 264 (1944); see also Porche v. Le Blanc, 12 La.Ann. 778, 781 (1857)).

In the matter before us, the act importing vendor’s privilege was recorded within the delay allowed by C.C. art. 3274 (and the contesting preference is not a mortgage) ; thus the holding of Givanovitch v. Hebrew Congregation does not control.

Since, however, art. 3274 purports to protect privileged creditors only against any intervening “mortgage”, it does not protect against other privileges.

The question thus appears to me to be whether a vendor’s privilege outranks a materialman’s privilege which (being dependent on the vendor’s act of sale to make the materialman’s debtor the owner of the property before he can subject it to the privilege) cannot attach to the property until the otherwise “utterly null and void” act of sale to the debtor is registered in the conveyance records. In our case, that registry and the recordation of the vendor’s privilege both occur on the same day.

The ranking of materialmen’s privileges with a vendor’s privilege, where no building contract has been recorded as and when required, is fixed by R.S. 9:4812. *904That statute stipulates that the building contract privilege “shall be superior to all other claims against the land and improvements except * * * a bona fide vendor’s privilege * * * if the vendor’s privilege * * * exists and has been duly recorded before the work or labor is begun or any material is furnished.

The burden of proof lies upon the vendor’s privilege (or mortgage) claimant to show that his recordation precedes any work or furnishing of material, since the vendor’s claim is that he comes within an exception to the statute’s general rule; Hortman-Salmen Co. v. White, 168 La. 1049, 123 So. 709 (1929).

In a case like ours, where it appears work is in continuous progress prior to the time the party contracting as owner actually becomes owner, then from the moment registry of his purchase in the conveyance records makes him owner quoad third persons, work is being done and material supplied for the owner, and a vendor’s privilege (or mortgage) which is not recorded in the mortgage records “before” the moment of registry in the conveyance records is outranked by the materialman.

Thus, under the provisions of R.S. 9:4812, the materialmen here have a privilege for materials supplied to the owner. The only materials supplied to Schnell as owner were those supplied on and after May 16, the date Schnell’s purchase was registered in the conveyance records and he became the owner as to persons not parties to the purchase. Security Homestead has not shown that its sale with vendor’s privilege was recorded in the mortgage records before it was registered in the conveyance records. Perhaps it could not; R.S. 9:5141 requires a record of the hour and minute only of mortgage office recordation, and conveyance office records would presumably not show whether registry there occurred before or after a mortgage recordation on the same day.

Because of the importance of the principles involved, I cannot assent entirely to the majority’s opinion and therefore dissent from recognition of the materialmen’s privileges prior to May 16, the date Schnell became the owner insofar as the materialmen are concerned.