Case Name: Ark. Foundry Co. v. Farrell
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1964-12-07
Citations: 238 Ark. 757
Docket Number: 5-3230
Parties: Ark. Foundry Co. v. Farrell.
Judges: McF addin, J., dissents.
Reporter: Arkansas Reports
Volume: 238
Pages: 757–768

Head Matter:
Ark. Foundry Co. v. Farrell.
5-3230
385 S. W. 2d 26
Opinion delivered December 7, 1964.
[Rehearing denied January 11, 1965.]
Barber, Henry, Thurman & McCashill, House, Holmes, Butler & Jewell, John B. Moore, Jr., Owens, McHaney & McHaney, for appellant.
Sharp & Sharp, By James B. Sharp and John D. Thiueatt, for appellee.

Opinion:
- George Bose Smith, J.
This is a suit by the appellants to enforce laborers' and materialmen's liens arising from the partial construction of a warehouse building in the city of Brinkley. The only serious question is whether the lienors are entitled to enforce their claims against the land as well " as against the building. The chancellor held that the claimants have no lien against the land.
The trial extended over several days, producing a record comprising eleven volumes of pleadings, testimony, and exhibits. We find it unnecessary to set out the conflicting evidence in detail; for even if it should be conceded that the proof establishes the fact situation relied upon by the appellants in their brief they are still not entitled to a reversal of the decree.
The -unfinished warehouse was built by Charles Malham and. his brother upon vacant lots owned by Paul M. Farrell as trustee. Farrell (and the members of his family for whom he acted as trustee) owned a number of substantial business enterprises. Over a period of years Charles Malham had been employed by the Farrell interests as a laborer and in other positions of neglible responsiblity. Malham and Paul M. Farrell were personal friends and fellow church members. On many occasions Farrell had befriended Malham, as, by advancing funds (which were not repaid). Some two years before the building in controversy was begum Farrell had assisted Malham in entering the business of buying and selling soybeans. In this venture Farrell provided much of the needed equipment and allowed Malham to occup3r some vacant land rent-free.
In the fall of 1958 Malham proposed that he expand his operations by constructing a $45,000 grain warehouse having a storage capacity of 341,000 bushels. Malham and Farrell discussed the proposal several times. Malham planned to finance the venture, at least in part, by collecting advance storage charges from farmers who would be patrons of the warehouse. Ultimately Malham succeeded in raising more than $20,000 in this fashion and used the money in the construction.
Malham testified that Farrell agreed to help him in the project and to permit him to use the land now in dispute either rent-free or under a long-term lease that would be agreed upon later on. Farrell contradicts Malham's testimony to some extent, but in deciding this appeal we may take Malham's version to be correct.
In October of 1958 Malham employed a contractor and began to erect the warehouse upon the Farrell land. Farrell insisted at the trial that Malham's entry upon the land was an out-and-out trespass, but we think it plain that Farrell consented to Malham's occupancy of the property. There is, however, no suggestion that Farrell made any affirmative statement or took any affirmative action that might lead the laborers and materialmen to think he meant to subject the land itself to their liens. All that can be said is that Farrell stood by and allowed the construction to proceed. Eventually Malham came to the end of his resources and had to abandon the venture before the building was complete. There is evidence that Malham succeeded in finding sufficient financial .backing to enable him to offer to buy the land, but Farrell refused to sell the property "at any price." "Within apt time the appellants sought to enforce their liens against the land as well as against the improvement.
It is recognized by the appellants that, under the statute, they must show that their labor and materials were furnished pursuant to a contract with the owner of the land or with his agent. Ark. Stat. Ann. § 51-601 (1947). In contending that this burden has been met counsel rely upon a line of cases involving leases that required the tenant to make improvements upon the premises. In that, situation the tenant is held to be the landowner's agent.
The landmark case is Whitcomb v. Gans, 90 Ark. 469, 119 S.W. 676. There the written lease obligated the tenant to make improvements and repairs costing not less than $400. In holding that under such a lease the tenant acted as the landlord's agent in contracting for the construction work we left open the question whether the same rule would apply if the landlord had merely consented that the tenant might, at his option, improve the property: "We need not .go so far as to hold that a lessor may make his property subject to lien merely by consenting for the lessee to make improvements. The lessor, in the present case, did more than that. She not only consented to the making of the improvements, but she bound the lessee to do so."
The issue left open in the Whitcomb case was squarely presented in Hawkins v. Faubel, 182 Ark. 304, 31 S.W. 2d 401, where the lease did not obligate the tenant to make the contemplated improvements. In holding that in this situation the land itself was not subject to a materialman's lien we said: "We now decide the question reserved in the case of Whitcomb v. Gans, supra, and we hold that the lessor does not make his property subject to lien merely by consenting for the lessee to make improvements."
'That case governs this one. Counsel for the lienors candidly concede that the terms of Malham's supposed oral agreement with Farrell were "nebulous." Not even' under the most favorable view that might be taken of Malham's testimony can it be said that he assumed a duty to build the warehouse. At most he had Farrell's oral permission to enter the land and erect the warehouse if he chose to do so. The essential element of a binding obligation is wholly lacking.
It is equally plain that, under our decisions, Farrell's conduct did not create an estoppel. In considering a similar situation in Gunter v. Ludlam, 155 Ark. 201, 244 S.W. 348, we held: "There is no element of estoppel in the present case which would bar appellants from asserting the superiority of their [vendor's] lien. Mere knowledge on their part that labor and material were furnished for the construction of the building, or even their consent thereto, in the absence of some affirmative act which indicated a willingness to subordinate their claim to that of the subsequent lienors was not sufficient to operate as an estoppel." Accord: Fine v. Dyke Bros., 175 Ark. 672, 300 S.W. 375, 58 A.L.R. 907.
Counsel also cite McGehee Realty & Lbr. Co. v. Kennedy, 200 Ark. 926, 141 S.W. 2d 524. There we allowed the liens because we found that the owner of the lot had given it to his son, who contracted for the construction of a house upon the property. Thus the land was lienable, for the son had ownership rather than mere possession. See Mansfield Lbr. Co. v. Gravette, 177 Ark. 31, 5 S.W. 2d 726. In the case at bar Malham's vague testimony did include an assertion that in the preliminary discussions Farrell promised to give him the lots, but a finding that a gift actually took place would be contrary not only to Malham's own testimony but also to many convincing-facts and circumstances in the record.
It is with reluctance that we affirm this decree. Farrell, as the owner of the lots, is alone in being in a position to bid in the property without having to substantially destroy the value of the warehouse by removing it from the land. It appears that he is using his advantage to reap a windfall at the expense of the appellants. All that can be said is that his conduct is within his strict legal rights.
There are two motions for costs. The appellants designated an abbreviated record and submitted a short printed abstract. The appellees required that the whole record be brought up and a filed a supplemental abstract of 418 printed pages. The appellants ask reimbursement for the additional record. The appellees counter with a similar request for the cost of the supplemental abstract. We grant the appellants' motion to the extent that unnecessary pleadings were designated at a cost of $284.40. In other respects both motions are meritorious in part only. Neither side attempts to point out the exact extent to which the added expense was unnecessary. We do not consider it to be our duty to sift the complete record and the supplemental abstract to determine just what additional costs might be allowed to each side.
Affirmed.
McF addin, J., dissents.