Case Name: Bell et al. v. Hiner
Court: Appellate Court of Indiana
Jurisdiction: Indiana
Decision Date: 1896-06-18
Citations: 16 Ind. App. 184
Docket Number: No. 1,908
Parties: Bell et al. v. Hiner.
Judges: 
Reporter: Indiana Court of Appeals Reports
Volume: 16
Pages: 184–205

Head Matter:
Bell et al. v. Hiner.
[No. 1,908.
Filed June 18, 1896.
Rehearing denied Oct. 14, 1896.]
Laborer’s Lien. — Superior to a Prior Chattel Mortgage. — Statute Construed. — Under section 7051, Burns’ R. S. 1894 (5206, R. S. 1881), providing that when the business of any person shall be suspended by the action of creditors, the debts owing to laborers, not exceeding 850.00 to each laborer, for work performed within the next preceding six months, shall be preferred and first paid in full, a transfer by an employer of all his property to a chattel mortgagee creates a superior lien in favor of such laborers. — Reinhard and Ross, JJ. Dissenting, pp. 185-190.
Same. — Statute Liberally Construed. — Statutes providing that laborers shall be preferred creditors when the business of their employer shall be suspended by the action of creditors, are remedial in their nature, and are liberally construed, p. 190.
Pleading.— Action to Enforce Laborer’s Lien.— Estoppel. — In an action by a laborer to enforce his lien under section 5206, Burns’ R. S. 1894, an answer of estoppel counting upon plaintiff's failure to make known his claim is bad, when defendant’s want of knowledge of its existence is nowhere alleged, p. 191. ■■
Same. — Demurrer.—Harmless Error.— Sustaining a demurrer to a bad pleading is a harmless error, although the demurrer is insufficient to test the pleading, p. 191.
Labor Liens. — Statutes.—The Act of March 3,1885, which makes no provision for, and does not cover, the subject of labor liens except where the property has passed into the hands of an assignee or receiver does not cover the whole subject matter and repeal by implication the Act of 1879 (section 5206, R. S. 1881). p. 192.
From the Allen Circuit Court.
Affirmed.
P. A. Randall and N. D. Doughman, for appellants.
J. M. Robinson, for appellee.

Opinion:
Gavin, J.
-On October 25,1894, one Jasper was engaged in keeping a livery stable at Ft. Wayne. At this time and prior thereto, one Bell held a mortgage on the property used by Jasper in said business, viz: certain horses, carriages, etc., "and all other chattels belonging to the said Jasper in said barn" to secure $1,000.00, this being more than the value of the property. Jasper being upon that day insolvent, threatened with suit and pressed for payment by Bell and unable to meet his liabilities, at his request conveyed to Bell all of said property in payment of said debt, and his business was on said day and thenceforth continuously suspended by the actions of. said Bell, who afterward sold the property to one Martin, who had knowledge of appellee's claim. Appellee was a laborer employed in the stable, to whom seven weeks' wages was due for work performed within that period last preceding the sale, and subsequent to the execution of the mortgage and the due recording thereof.
Section 7051, Burns' E, S. 1894 (5206, E. S. 1881), provides that when the property of any person engaged in business "shall be seized, upon any mesne or final process of any court of this state, or where their business shall be suspended by the action of creditors or put into the hands of any assignee, receiver or trustee, then in all such cases the debts owing to laborers or employes, which have accrued by reason of their labor or employment, to an amount not exceeding $50.00 to each employe, for work and labor performed within six months next preceding the seizure of such property, shall be considered and treated as preferred debts, and such laborers or employes shall be preferred creditors and shall be first paid in full, and if there be not sufficient to pay them in full, then the' same shall be paid to them pro rata, after paying costs."
Under this section appellee sought to enforce a lien for $50.00 against the property in Martin's hands.
Appellants assert, 1st, That by the statute no lien is created nor any charge made against the property unless it shall come into the hands of some officer, assignee, or other trustee under the court, to be administered upon according to law; 2d, That even if a lien is created it is junior to the lien of the mortgage:
Under our authorities neither position is tenable.
The statute it is true does not in terms create any express lien eo nomine, but the Supreme Court in Bass v. Doorman, 112 Ind. 390, decided that by this statute a lien was given to the laborer superior to the rights of, and enforceable against, one to whom the property of the insolvent debtor was sold in payment of debts due the purchaser, where the business of the debtor was by such action of the creditor thereby suspended. The court's liberal construction of this statue has been approved in subsequent cases. Farmers', etc., Co. v. Canada, etc., R. W. Co., 127 Ind. 250, 11 L. R. A. 740; Aurora, etc., Bank v. Black, 129 Ind. 595; Pendergast v. Yandes, 124 Ind. 159. Counsel rely upon Wilkinson v. Patton, 162 Pa. St. 12, 29 Atl. 293, as establishing a different and better doctrine. There is some difference in the statutes by which the cases may perhaps be distinguished. In any event, however, we are satisfied to follow the adjudications of our own court.
In State, ex rel, v. Aetna Life Ins. Co., 117 Ind. 251, it is said by Elliott, J., when considering the question of superiority of a statutory lien over a prior mortgage lien: "The statute must determine the character and extent of the lien. It is not necessary that it should in express terms, declare that the lien shall be a paramount one, for if the intentioh can be gathered from the general words and purposes of the statute, the courts will give it effect." This is in harmony with the principle asserted by the Supreme Court of Massachusetts, which says, in Dunklee v. Crane, 103 Mass. 470, "The statute contains no express provisions that the lien shall attach and have priority over mortgages and other incumbrances created after the contract, but such is the necessary implication." It also accords with City of Paterson v. O'Neill, 32 N. J. Eq. 386.
It is true, as urged by appellants' counsel, that the Bass ease does not decide that the labor lien is superior to a prior mortgage, that question not being involved; but it does decide that the debt is a charge against the property in the hands of a purchaser for value. The word lien "includes every case in which personal or real property is charged with the payment of a debt" Anderson's Law Diet., 623.
In Warren v. Sohn, 112 Ind. 213, it was claimed that mortgage liens were superior to subsequent miners' labor liens, although the statute declared that such labor liens should be paramount to, and have priority over,all other liens except taxes; yet the court decided that the statutes must be given effect and the mortgages yield to the labor liens. Here the statute directs that the labor claim shall be preferred, and shall be "first paid in full." It being established, as it is by the Bass case, that the statute gives a lien for the labor claim, then it seems to us the intent that it shall be a paramount lien is clearly expressed. If it is to be "first" paid in full we do not well see how the mortgage can come in before it.
When the mortgagee accepted his mortgage, he must be deemed to have done so with knowledge that if the business was continued, and the contingency contemplated by the statute should occur, then the labor debts would be preferred and must be first paid. The law entered into the mortgage contract as a silent but potent factor, and the mortgagee accepted it subject to such rights as might accrue to others under the law. Warren v. Sohn, supra; Farmers' etc., Co., v. Canada, etc., R. W. Co., supra, p. 264; Hancock v. Yaden, 121 Ind. 366, 6 L. R. A. 576.
As said in some of the cases it is wholly voluntary upon the part of the mortgagee whether he will accept a mortgage with the limitations by law incorporated therein.
In Provident Institution v. Jersey City, 113 U. S. 506 it was decided that a statutory lien for water rent was superior to mortgages executed prior to the attaching of the supply pipes to the mains. It is said, "when the complainant took its mortgages, it knew what the law was; it knew that by the law if the mortgaged lot should be supplied with Passaic water by the city authorities, the rent of that water as regulated and exacted by them, would be a first lien on the lot. It chose to take its mortgage subject to this law." To the same effect are Vreeland v. O'Neil, 36 N. J. Eq. 399, and Vreeland v. Jersey City, 37 N. J. Eq. 574.
There the statute made the water rent assessment a "lien thereon from the time of the confirmation thereof until paid, notwithstanding any devise, descent, alienation, mortgage or other encumbrance thereon." This language was adjudged to make the water rent paramount to prior mortgages, although it was not so expressly declared in the statute.
The principle upon which a mortgage is subordinated to a statutory lien authorized and made superior by a statute in force when the mortgage is executed is not by any means new or novel. Nor does Indiana stand alone in thus providing security for the wage earners who depend upon their daily toil for support. For many centuries, in admiralty, the rights of seamen to their wages have been held superior to the mortgagees of the vessel. 'The J. A. Brown, 2 Lowell 464; 2 Jones on Liens, section T775.
In Mississippi the liens of agricultural laborers are made superior to prior mortgages. Buck v. Payne, 52 Miss. 271; Bruck v. Paine, 50 Miss. 648.
In Michigan the wages of miners are given liens paramount to all others. McLaren v. Byrnes, 80 Mich. 275, 45 N. W. 143.
In that state, as in ours, no notice of lien need be given, but the court says: "All persons are bound to take notice that unpaid laborers for a mining corporation in the Upper Peninsula have' a lien for their labor upon all the real and personal property of the corporation in that portion of the state."
In Iowa we find the decisions exactly in harmony with our own. There is a statute similar to ours, substantially identical in terms, so far as it relates to the matters herein involved. It does not in terms create a lien nor declare it paramount to prior mortgages, but provides as does ours that the debts owing to laborers "shall be considered and treated as preferred debts and such laborers and employes shall be preferred creditors, and shall first be paid in full; and if there be not sufficient to pay them in full, then the same shall be paid to them pro rata after paying costs." In Reynolds v. Black, 91 Ia. 1, 58 N. W. 922, the question was presented as to whether, when the property had been taken by mortgagees, the laborers had any lien, and, if so, whether it was superior to the mortgages.
There as here it was "contended that no lien is given to the laborer, that to give him preference over existing liens is to displace such liens, and that the preference only applies to what is left after satisfying existing liens;" but the court said: "To so construe this statute would largely defeat its manifest purpose;" and adjudged that there was a lien superior to the mortgages. The doctrines of this case are reaffirmed by St. Paul, etc., Co. v. Diagonal Goal Co. (Ia.), 64 N. W. 606.
We are not able to perceive that any general disaster will be brought upon the business interests of the community by our holding. The lien does not attach save in those cases where there has been a seizure by an officer or a collapse of the business; and it is, under this statute, in the absence of fraud, limited to the property then belonging to the debtor. Thus the ordinary everyday transfer and sale of property in the usual course of a going business will not be affected. The smallness of the amount of the liens also serves to lessen our apprehension as to the evil results to follow from the application to this case of the ordinary rules of law, and the giving effect to the plain letter of the statute as to the order of precedence. A result which affords to the day laborer protection to the amount of $50.00 does not appear to us so highly inequitable as to call for any strained or fanciful construction of the statute.
That he "shall be a preferred creditor and shall first be paid in full" seems to us simple, plain English, easily understood, the meaning of which would not ordinarily be mistaken by the average man. Neither is the statute to receive a strict construction as being in derogation of the common law. It is remedial in its nature. As was said by the Supreme Court in speaking of a statute similar in character and enacted for a similar purpose, viz: "to secure to employes of corporations an efficient remedy for the collection of money due them for wages." "Such statutes are not only constitutional, but they are to be liberally construed with a view of rendering effectual the purpose of the statute." In any event the law is plain and if not wise the remedy is by legislative repeal rather than by judicial nullification.
Assuming without deciding that the complaint must show a transfer of all the property used in the business, we are of opinion that this fact sufficiently appears. The averment in substance is that Bell, on October 25, 1894, had a mortgage on all the chattels in the barn and that this property was turned over to him.
The answer of estoppel was clearly bad. It counted upon appellee's failure to make known his claim; appellants' want of knowledge of its existence is nowhere alleged. This was essential to enable him to obtain the benefit of appellee's silence as an estoppel. Roberts v. Abbott, 127 Ind. 83; First National Bank v. Williams, 126 Ind. 423.
Earlier cases held that it was reversible error to sustain a defective demurrer to an answer without reference to its sufficiency. Gordon v. Swift, 39 Ind. 212; Dugdale v. Culbertson, 7 Ind. 664. Later and better considered decisions, however, declare the law to be that although the demurrer be insufficient to test the pleading and might be overruled without error, yet if it is in fact sustained and the pleading is really bad, then no harmful error occurs. Wade v. Huber, 10 Ind. App. 417; Foster v. Dailey, 3 Ind. App. 530: Firestone v. Werner, 1 Ind. App. 293; Board v. Gruver, 115 Ind. 224; Palmer v. Hayes, 112 Ind. 289; Hildebrand v. McCrum, 101 Ind. 61.
We are unable to see that the degree of insufficiency or informality of the demurrer affects the application of the principle thus established.
It is argued that upon the principle declared in Eversole v. Chase, 127 Ind. 297, section 7051, Burns' R. S. 1894, is not in force, because it was an amendment of a statute, section 5206, R. S. 1881, passed in 1879, which had been repealed by implication by the passage of the act of March 3,1885, E. S., section 1598, being section 7058, Burns' R. S. 1894.
"Repeals by implication are not favored in the construction of the statute;" yet "it is ordinarily true that the enactment of a new statute covering the whole subject-matter of an older statute and containing provisions that cannot be reconciled with it, operates as an implied repeal of the older one. Robinson v. Ripey, 111 Ind. 112."
This is the rule declared by this court through Davis, J., in Allen v. Town of Salem, 10 Ind. App. 650. It was further said in the same case, "In order to effect such repeal by implication, it must appear that the subsequent statute revised the whole subject-matter of the former one, and was intended as a substitute for it, or that it was repugnant to the old law."
The act of March 3, 1885, makes no provision for, and does not cover, the subject of labor liens where the property has not passed into the hands of an assignee or receiver, but is confined to those cases where it does come into the hands of an assignee or receiver. It falls far short of covering the whole subject-matter of the act of 1879; nor is there any good reason why both should not stand together. Upon the principles of law announced in the Town of Salem case, supra, and the authorities therein cited, we are of opinion that the act of March 3,1885, did not repeal the law of 1879.
Judgment affirmed.