Opinion ID: 2530186
Heading Depth: 1
Heading Rank: 5

Heading: The History of the Mechanics Lien Act and Prior Case Law

Text: The current version of section 16 was enacted in 1903. 770 ILCS 60/16 (West 2006). The language at issue in this case tracks section 20 of the Liens Act of 1845 and section 17 of the Liens Act of 1874 with the exception of the clause and the lien creditor shall be preferred to the value of the improvements erected on said premises. See Albrecht v. Buelow, 191 Ill.App. 481, 487 (1915); see also Gaty v. Casey, 15 Ill. 189, 192 (1853). In 1895, the Mechanics' Liens Act provided in section 16 that lien creditors had priority to the extent that the value of the land was enhanced by reason of the improvements and that where the owner has paid for labor or material, the enhanced value thereby given shall be treated as a fund in which the mortgagee and lien-holder shall participate pro rata.  Albrecht, 191 Ill.App. at 487. The Mechanics Lien Act of 1903 substantially reenacted the aforementioned sections of the 1845 and 1874 Acts, specifying that the lien creditor shall be preferred to the value of the improvements. See id. This court has applied the provision upon questions arising between incumbrancers and lien creditors, all previous incumbrances shall be preferred to the extent of the value of the land at the time of making of the contract on several occasions. With respect to section 20 of the Act of 1845, this court noted that the statute gives the mechanics and material men liens, paramount to the trust deed, upon the improvements made by them upon the premises. (Emphasis added.) Raymond v. Ewing, 26 Ill. 329, 343 (1861); see also Smith v. Moore, 26 Ill. 392, 396 (1861) (noting that the prior incumbrancer must look alone to the property as it was, before the mechanic's or material man's lien attached, and [the lienholder] must look to the improvement or materials for satisfaction of their claims (emphasis added)); Croskey v. Northwestern Manufacturing Co., 48 Ill. 481, 484-85 (1868) ([trial] court should have ascertained at what time the improvements were commenced for which the materials of complainants were furnished, and should have given to the prior mortgagees a paramount lien on the property as it stood when such improvements were commenced, and to the complainants a paramount lien on the improvements towards which they furnished materials  (emphases added)) [1] ; Howett v. Selby, 54 Ill. 151 (1870); Clark v. Moore, 64 Ill. 273 (1872). The language added to this provision in 1903 merely codifies the interpretation of the courts. This was the conclusion of the appellate court in 1915. In Albrecht v. Buelow, the appellate court summarized the operation of section 20 of the Act of 1845: when a mechanics lien attaches to a property previously encumbered by a mortgage, such lien is paramount to the lien of the mortgage to the extent of the increased value of the premises by reason of the improvements or repairs. Albrecht, 191 Ill.App. at 490. With respect to the earlier decisions of this court, the appellate court concluded, [i]nasmuch as section 16 of the present Act does not differ materially from section 20 of the Act of 1845,    these rulings are applicable to the present act. Id. at 491. In almost every subsequent instance, courts have found that the statute gives lienholders priority only with respect to the added value of the property attributable to those improvements forming the basis for the lien in question and gives the mortgagee priority with respect to the value of the land at the time the contract is entered into between the owner and the contractor. See, e.g., Commercial Mortgage & Finance Co. v. Woodcock Construction Co., 51 Ill.App.2d 61, 64-65, 200 N.E.2d 923 (1964); Moulding-Brownell Corp. v. E.C. Delfosse Construction Co., 304 Ill.App. 491, 500, 26 N.E.2d 709 (1940); see also Fair Play Development Organization v. Sarmach, 263 Ill.App. 593, 597 (1931) (noting that a subsequent mechanics lien was inferior to the lien of the mortgagee to the extent of the value of the premises at the time when the mechanic's lien attached). Eagle cites, and we have found, only one case that has held otherwise. In Mitchell v. Robinovitz, the appellate court affirmed an order that gave the prior mortgagees priority only with respect to the value of the vacant land and four mechanics lien claimants priority with respect to the entire improvement. Mitchell v. Robinovitz, 272 Ill.App. 414, 416-17, 424 (1933). The court rejected the mortgagees' arguments that, [a]s against a prior mortgagee[,] a contractor is preferred only to the value of the improvements erected by him, and the mortgagee is preferred to the extent of the value of the land, including in that term the enhanced value produced by labor and materials furnished by other contractors who have been paid, or who have waived, released or failed within the necessary time to assert their liens. (Emphases in original.) Id. at 418. The Mitchell court, however, fail[ed] to find evidence of the owner of the premises involved [in] making such payments. Id. at 423. To the extent that Mitchell affords priority to lienholders for work done by other contractors and paid for either by or on behalf of the owner of the property, we find it is in error and overrule it. The courts have thus applied this statute repeatedly and consistently since its adoption over one hundred years ago and the legislature has had ample time to contravene our understanding. This consistent judicial interpretation of the language in section 16 is considered a part of the statute until the legislature amends it contrary to that interpretation. See People v. Woodard, 175 Ill.2d 435, 444, 222 Ill.Dec. 401, 677 N.E.2d 935 (1997) (citing Miller v. Lockett, 98 Ill.2d 478, 75 Ill.Dec. 224, 457 N.E.2d 14 (1983)).