Title: Bedford v. Sussex Electrical Const. Co.
Citation: 382 A.2d 246
Docket Number: N/A
State: Delaware
Issuer: Delaware Supreme Court
Date: January 18, 1978

382 A.2d 246 (1978)
Boyce H. BEDFORD and Florence S. Bedford, his wife, Defendants below, Appellants,
v.
SUSSEX ELECTRICAL CONSTRUCTION COMPANY, Plaintiff below, Appellee.
Boyce H. BEDFORD and Florence S. Bedford, his wife, Defendants below, appellants,
v.
MASTEN LUMBER &amp; SUPPLY COMPANY, INC., Plaintiff below, Appellee.
Boyce H. BEDFORD and Florence S. Bedford, his wife, Defendants below, Appellants,
v.
McGEE PLUMBING &amp; HEATING CO., INC., Plaintiff below, Appellee.

Supreme Court of Delaware.
Submitted November 21, 1977.
Decided January 18, 1978.
John E. Henriksen, of Maull &amp; Maull, P. A., Georgetown, for all defendants-appellants.
Harold E. Dukes, Jr., of Dunlap, Holland &amp; Eberly, Georgetown, for plaintiff-appellee Sussex Elec. Const. Co.
John E. Messick and Michael J. Rich, of Tunnell &amp; Raysor, Georgetown, for plaintiff-appellee Masten Lumber &amp; Supply Co., Inc.
H. Clay Davis, III, of Davis &amp; Marshall, Georgetown, for plaintiff-appellee McGee Plumbing &amp; Heating Co., Inc.
Before HERRMANN, C. J., DUFFY and McNEILLY, JJ.
PER CURIAM:
These are consolidated cases which require the Court to construe, for the first time, a 1971 amendment to the Mechanics' Lien Statute, 25 Del.C. § 2707.
*247 With the amendment, the Statute reads as follows:
Briefly, the Act exempts from the lien law owner-occupied residential property when the owner has made "full or final payment ... in good faith" to the contractor. The issue in these cases centers on the "good faith" requirement which an owner must meet to get the benefit of § 2707.
Relying on an unreported decision in Cassidy Company v. CCA Associates, Inc., and Sisler, Del.Super., C.A. No. 417, 1973 (1975), the Superior Court granted plaintiffs (each of whom had supplied materials to defendants' residence) in rem judgments. In Cassidy, the Court construed § 2707 as requiring a residential owner to obtain a certificate that all labor and material bills had been paid or a release of mechanics' liens before making a final payment to a general contractor, in order for such payment to be "in good faith" under § 2707. As we understand that decision, and as the Trial Court applied it to these cases, a residential owner may not get the benefit of the exemption unless he receives either such certificate or release. That view of § 2707 is indeed a narrow one and contrary to the Superior Court decision announced in Grier Lumber Company, Inc. v. Tryon, Del.Super., 337 A.2d 323 (1975).
In Grier, the Court noted that since § 2707 limits the right of a remote party (that is, one without a contractual relationship to the owner  a subcontractor, for example) to assert a mechanics' lien on residential property, the requirement that payment be "in good faith" of necessity refers to that between the owner and the remote party. The Court then concluded that:
Id. at 326.
We conclude that in Grier the Court correctly analyzed the purpose of § 2707 and how it is to be applied. Accordingly, with the one exception discussed in the footnote,[*]*248 we approve the construction of § 2707 made in Grier and we disapprove the rule of Cassidy. In short, the "good faith" required under § 2707 is not limited to securing either the certificate or the release referred to in Cassidy. It is, rather, to be determined by the Court from all of the relevant circumstances.
Each case is reversed and remanded for a "good faith" hearing and other proceedings consistent herewith.
[*]  In Grier the Court said that

"... where the owner has been put on notice by the remote lien holder of the fact that his bill is unpaid, it cannot be said that the subsequent act of paying the contractor was an action in good faith with respect to the remote lien holder."
As stated, this language is too narrow. Notice need not come only from the remote lien holder, but may arise from any set of circumstances in which the owner knows or should know that one who provided labor or material for his property has not been paid.