#### HORNE-WILSON, Incorporated (Formerly MOTT SOUTHERN COMPANY), v. WIGGINS BROTHERS, Incorporated, G. T. CARSWELL, Trustee, T. D. KELLY, and FIDELITY AND DEPOSIT COMPANY OF MARYLAND.

(Filed 15 June, 1932.)

1. Assignments A a — Statutory lien of laborer or materialman is assignable.

The statutory lien of a laborer or materialman under the provisions of C. S., 2440, is assignable as in case of ordinary business contracts, C. S., 446, and where the debt has been assigned it establishes the relation of debtor and creditor between the owner of the building and the assignee of the debt, and the assignment of the debt carries with it the security therefor, and the assignee may enforce the statutory lien in an action brought in his own name.

2. Mortgages H 1 — Complaint not alleging that notice of lien was given trustee prior to disbursement does not state cause against him.

In an action to enforce the statutory lien of a materialman on property which had been sold under a deed of trust executed prior to the date on which the materialman had begun furnishing material, the complaint states no cause of action against the trustee in the deed of trust when there is no allegation that notice of the claim of lien had been given the trustee prior to the disbursement of the proceeds of the sale.

3. Laborer’s and Materialmen’s lien D a — Laborer’s lien relates back to commencement of work and is superior to liens created thereafter.

The notice given the owner of a building for material furnished therefor and labor done thereon is alone sufficient for the creation of the statutory lien, and when the lien has been perfected under the statutory provisions the lien relates back to the time of the beginning of the furnishing the material or doing the work upon the building, and is superior to the lien or a mortgage executed thereafter.

4. Laborers’ and Materialmen’s Liens D c — Independent action on lien will lie to reach surplus after foreclosure of prior mortgage.

The assignee of a valid laborer’s or materialman’s lien on property which has been sold under a superior lien of a deed of trust thereon may in his own name bring an independent action to reach the surplus proceeds brought by the sale under the mortgage.

Civil actioN, before *Finley, J.,*at February Term, 1932, of Mbok-LENBURG.

The plaintiff alleged that T. D. Kelly was the owner of certain real estate, and that on 24 October, 1928, he executed and delivered to G. T. Carswell, trustee, a certain deed of trust securing a note for $3,000, payable to Wiggins Brothers. Thereafter the said Kelly, owner of said lands, duly made a contract with H. B. Carrigan to furnish certain labor and materials for improvements upon said property for the fixed sum of *86$1,400. Oarrigan began work and furnishing materials on 24 November, 1928. The last work and materials were furnished and performed during the month of January, 1929. After Oarrigan had begun work and furnishing materials to the project, to wit, 26 December, 1928, Kelly, the owner, executed and delivered a second deed of trust to said Carswell, trustee, to secure a note of $1,250 due Wiggins Brothers. Thereafter, in June, 1929, Carswell, trustee, sold the property under the first deed of trust and T. J. Wiggins became the purchaser thereof for the sum of $4,520. After paying the expenses of sale and the note secured by the first deed of trust, it is alleged that there remained in the hands of the trustee, Carswell, the sum of $1,384.20. It was further alleged that the said trustee, after requiring an indemnity bond executed by the Fidelity and Deposit Company of Maryland, paid the said Wiggins Brothers the surplus of $1,384.20. It was further alleged that the defendant, Wiggins Brothers, at the time of obtaining the said sum of $1,384.20 to be credited upon the second deed of trust, represented to the trustee that the said second deed of trust was “prior and superior to the claim of plaintiff, and that the said deed of trust had been executed and duly filed prior to the doing of the work or the furnishing of materials mentioned in the aforesaid judgment and complaint.” The plaintiff instituted an action entitled Mott Southern Company and H. B. Oarrigan *v.*T. D. Kelly to recover the sum of $1,400 for labor and materials furnished upon the property of said Kelly, and thereafter on 20 September, 1929, a judgment was duly entered by the clerk of the Superior Court of Mecklenburg County decreeing that the plaintiffs had a lien upon the property of said Kelly for the sum of $1,400 “effective on and from 28 November, 1928.” The judgment of the clerk was attached as an exhibit to the complaint. Thereafter on 7 January, 1932, the plaintiff by motion and order duly made the Fidelity and Deposit Company of Maryland a party to this suit.

The defendants demurred to the complaint upon the ground that as it appeared that materials and labor for the project had been furnished by Oarrigan “that the alleged claim of lien is personal to said H. B. Oarrigan and is statutory and is not the subject of assignment, and that said plaintiff has not legal capacity to institute said action.” The defendant further demurred upon the ground of misjoinder of parties and causes of action asserting that the Fidelity and Deposit Company of Maryland was an unnecessary and improper party, and also upon the ground that the cause of action attempted to be set up against said Deposit Company of Maryland was not connected with any cause of action alleged against the other defendants.

*87At tbe bearing, tbe plaintiff took a voluntary nonsuit as to tbe Fidelity and Deposit Company of Maryland, and thereupon the trial judge overruled tbe demurrers of tbe other defendants, from which judgment said defendants appealed to tbe Supreme Court.

*G. U. Cover and William T. Covington, Jr., for plaintiff.*

*II. L. Taylor and J. W. Shannonhouse for defendants, other than T. D. Kelly.*

Brogden, J.

1. Can the assignee of a valid claim of a laborer and materialman file, perfect and enforce a lien upon the land upon which said labor and material was performed and furnished?

2. Does tbe complaint state a cause of action against tbe trustee in tbe deed of trust and tbe purchaser at tbe sale thereunder?

C. S., 2440, provides that any laborer or materialman may furnish to tbe owner “an itemized statement of amount owing to such laborer . . . and any person may furnish to such owner ... an itemized statement of tbe amount due him for materials furnished for such purposes. Upon tbe delivery of such notice to such owner or bis agent tbe person giving such notice is entitled to all tbe liens and benefits conferred by law,” etc. C. S., 2441, provides that all sums due to a laborer or materialman, “as shown in tbe itemized statement rendered to tbe owner, shall be a lien on tbe building . . . without any lien being filed before a justice of tbe peace or tbe Superior Court.”

In tbe ease at bar tbe complaint and tbe exhibit declares that Oarri-gan, tbe materialman bad an entire contract for tbe fixed sum of $1,400 for work and labor, and that “said claim was duly assigned to tbe plaintiff.” Tbe demurrer, of course, admits this allegation, but challenges tbe legal sufficiency of tbe assignment upon tbe ground that only Carri-gan, tbe materialman, could perfect tbe lien upon tbe premises, as tbe lien was personal to tbe laborer or materialman. and could not be perfected or enforced by bis assignee.

Tbe general trend and policy of tbe law, as interpreted and pronounced in this State, has recognized and sanctioned tbe assignments of all ordinary business contracts. Tbe legislative sanction for such assignments is contained in C. S., 446. Commenting upon said statute, McIntosh, North Carolina Practice & Procedure, p. 199, says: “As a general rule, all ordinary business contracts are assignable, and actions for tbe breach may be in tbe name of tbe assignee, unless such assignment is prohibited by law, or would be in contravention of some principle of public policy, or tbe performance of tbe contract involved tbe element of personal skill or credit. Tbe general test of assignability has been giyen, as to whether tbe claim would survive to or against tbe personal *88representative of the decedent.” *Casket Co. v. Wheeler,*182 N. C., 459, 109 S. E., 378. Manifestly, the contract between Carrigan and Kelly or the valid claim that Carrigan held against Kelly for labor and material was assignable, and by virtue thereof, the relationship of debtor and creditor was established between the plaintiff and Kelly. The recent decisions of this Court interpret a lien for labor and material as a sort of statutory security for the payment of a debt. Thus in *Trust Co. v. Porter,*191 N. C., 672, 132 S. E., 806, the Court said: “The general rule is that the assignment of a debt carries with it the security.” That case was dealing with rights of the assignee of the claims of laborers and materialmen to recover upon a surety bond. The Court said: “Undoubtedly, the laborers, had they not assigned their claims, would have been entitled to maintain an action on said bond, and we think it must be held, in keeping with the general trend of authorities on the subject, that the claiips of laborers and materialmen may be assigned without losing the protection of the bond given and intended for their benefit.” In like manner a statutory lien is designed and intended for the benefit of laborers and materialmen, and hence it is hardly conceivable that the law would penalize the right of assignment by withdrawing the security and protection set up and established for the payment of the debt so assigned.

The defendants rely upon *Zachary v. Perry,*130 N. C., 289, 41 S. E., 533. The Court said: “Only Robinson, the original contractor, could file the notice of lien, and then only after he had completed the work and completed his contract, and within the time provided by law. But he abandoned his contract, and therefore himself could file no lien.” In arriving at the meaning of the *Zachary case*it must be observed that it involved transactions occurring prior to the enactment of the statute authorizing the filing of liens upon the property of a married woman. The point in the case is that the acceptance of the order by the *feme covert*did not bind her land, and hence no lien could be asserted or enforced. Consequently, as the married woman had contracted no valid debt, the lien was not available. Moreover, the intimation that the lien was wholly and exclusively personal to the contractor, was not pertinent to the proposition of law upon which the decision rested.

The decision in *Trust Co. v. Porter, supra,*to the effect that a lien is security for a debt, and that the assignment thereof carries the security with it, is supported by the overwhelming weight of authority in other jurisdictions, notably: Minnesota, Michigan, South Dakota, New Jersey and Massachusetts. See *Kinney v. Duluth Ore Co.,*60 N. *W.,*23; *Sanduskey Grain Co. v. Borden Condensed Milk Co.,*183 N. *W.,*218; *Hill v. Alliance Building Co.,*60 N. *W.,*752; *West Jersey Homopathic*
      *89
      *Hospital v. Gibbs,*143 Atl., 316; *Wiley v. Connelly,*60 N. E., 784. The contrary view is asserted by the Nebraska Court in *Noll v. Kennedy,*56 N. *W.,*722, and *West v. Detroit Fidelity & Surety Co.,*225 N. W, 673. It is to be observed, however, that in Nebraska tbe statute requires tbe claimant to file bis claim in tbe office of tbe register of deeds and until and unless tbis is done tbe “right to a lien is lost.” Our statute confers tbe lien immediately upon tbe filing of notice of claim with tbe owner. Hence tbe difference in statutory regulation perhaps explains tbe divergence of judicial ruling.

Manifestly, no cause of action is stated in the complaint against Carswell, trustee. There is no allegation in the complaint that notice was given to him before the fund was disbursed. *Norman v. Hallsey,*132 N. C., 6, 43 S. E., 473; *Harris v. Cheshire,*189 N. C., 219, 126 S. E., 593. However, a cause of action is stated against the defendant, Wiggins Brothers, Incorporated. Oarrigan began furnishing labor and material before the second deed of trust was registered. Therefore, when bis assignee, in apt time, duly filed a lien, as the court says, the “lien relates back to the time the work was commenced or the materials were furnished and does not impair or affect encumbrances existing prior to that time, but only those subsequently created.” *Burr v. Maultsby,*99 N. C., 263; *McAdams v. Trust Co.,*167 N. C., 494, 83 S. E., 623; *Harris v. Cheshire,*189 N. C., 219, 126 S. E., 593. Consequently the plaintiff under approved principles of procedure was entitled to bring an independent action in the Superior Court to reach the surplus proceeds arising from the sale of property under power contained in the first deed of trust. *Skinner v. Coward,*197 N. C., 466, 149 S. E., 682.

Tbe other questions raised by the demurrer are not sustained, and tbe judgment as rendered is

Affirmed.