Opinion ID: 2363755
Heading Depth: 1
Heading Rank: 4

Heading: inception of mechanic's and materialman's liens

Text: As a general rule, a properly perfected mechanic's lien relates back to a time referred to as the inception of the lien for the purpose of determining lien priorities. Therefore, the court of civil appeals held that the priority of the various liens involved in the instant case hinged upon the court's determination of the inception of the mechanic's liens held by Blaylock. In determining the inception of the mechanic's liens, the court relied upon Section 2 of Article 5459, which provides: The time of the inception of the lien, as used in this article, shall mean the occurrence of the earliest of any one of the following events: (a) The actual commencement of construction of the improvements or the delivery of the material to the land upon which the improvements are to be located for use thereon for which the lien herein provided results, provided such commencement or material is actually visible from inspection of the land upon which the improvements are being made; ... Subsections 2(b) and 2(c) further provide that the inception of the lien may be established by recordation of a written construction contract or recordation of an affidavit swearing to the existence of an oral contract for construction. However, in the instant case no party has contended that such a written construction agreement or affidavit was filed for the purposes of delineating the time of the inception of the liens. Therefore, determination of the inception of Blaylock's mechanic's liens depends upon this court's construction of Article 5459, Section 2(a). The court of civil appeals determined that the final proviso of Article 5459, Section 2(a), was controlling in determining the inception of a mechanic's lien; this proviso states: [P]rovided such commencement or material is actually visible from inspection of the land upon which the improvements are being made; ... By placing its emphasis upon this clause, the court of civil appeals enunciated the following standard to be applied in determining the inception of the mechanic's lien: Thus, we feel that the chief inquiry to be made by the courts is whether there was visibility of commencement of construction such that a person, upon inspection of the land, would be put on notice that construction work had commenced or, because of material delivered and resting on the land, work was to commence shortly thereafter. 548 S.W.2d 924 at 931. The intermediate court applied this visibility standard in determining that Blaylock's mechanic's liens on both the Fort Worth and Irving projects were incepted prior to the execution or recordation of the deeds of trust. The court of civil appeals determined that the staking, fill dirt, and batter boards were visible from an inspection of the land and would indicate that construction of improvements had commenced upon the land. The intermediate court further determined that the delivery of stakes, iron rods, concrete pipe, and lumber for batter boards constituted the visible delivery of material to the land. As such construction activities and delivery of material occurred prior to the execution and recordation of the deed of trust liens, the court of civil appeals held that Blaylock's mechanic's liens were incepted prior to the deed of trust liens held by DMI, as assignee of Palomar. DMI urges that the court of civil appeals erred in relying solely upon a visibility standard in determining the inception of the mechanic's liens. DMI maintains that Blaylock's activities prior to execution and recordation of the deeds of trust were only preparatory and preliminary to construction and did not constitute actual commencement of construction of the improvements as required by Article 5459, Section 2(a). Furthermore, DMI contends that the material delivered to the sites prior to execution and recordation of the deeds of trust do not constitute material as that term is defined in the statutes relating to mechanic's and materialman's liens: specifically, Article 5452, Section 2(b), which defines material as those items consumed in the direct prosecution of construction or incorporated in the work. [4] Therefore, DMI urges that Blaylock's activities on the projects prior to execution and recordation of the deeds of trust were not of the necessary degree or character to delineate the inception of a mechanic's lien. This court does not place reliance solely upon a visibility standard to determine the inception of mechanic's liens under Article 5459. Article 5459, when read in conjunction with the other statutes governing mechanic's liens, clearly provides additional standards or conditions which must exist before a mechanic's lien is incepted. Article 5459, Section 2(a), specifies two categories of activities which delineate the inception of a mechanic's lien: (1) the actual commencement of construction of the improvements; or (2) the delivery of material to the land upon which the improvements are to be located. This court must construe these provisions of the statute in order to determine what types of activities these inception-creating categories entail. Central to the construction of the phrase commencement of construction of the improvements is a definition of the term improvement. Under the Texas mechanic's and materialman's lien statutes, the term improvement is given an extended meaning, including more than a building, an addition to a building, or a fixture. Under Article 5452, improvement is defined as: The word `improvement' as used herein shall be construed so as to also include: abutting sidewalks and streets and utilities therein; clearing, grubbing, draining or fencing of land; wells, cisterns, tanks, reservoirs or artificial lakes or pools made for supplying or storing water; all pumps, siphons, and windmills or other machinery or apparatus used for raising water for stock, domestic use or for irrigation purposes; and the planting of orchard trees, grubbing out of orchards and replacing trees, and pruning said orchard trees.... Therefore, under the Texas statute, the term improvement has been expanded to encompass certain types of work or activity, as well as structures. Accordingly, the activities encompassed by the commencement of construction category is similarly enlarged. Where the activity defined as an improvement has been commenced or is being performed, such activity is sufficient to constitute commencement of construction of an improvement under Article 5459. On the other hand, where a building or a structure is the principal improvement involved, the statutory provisions of Article 5459, Section 2(a), are less definitive in establishing the inception of the mechanic's lien. The issue becomes whether construction of the structure itself is necessary or whether on-site preparation for such construction is sufficient. The majority of other jurisdictions dealing with statutes with similar wording has held that preliminary or preparatory activities are not sufficient to constitute commencement of construction. Specifically, these courts have held that such preliminary work as staking, measuring, filling, or making test holes is insufficient to define the inception of the lien. New Hampshire Savings Bank v. Varner, 216 F. 721 (8th Cir. 1914), affirmed, 240 U.S. 617, 36 S.Ct. 409, 60 L.Ed. 828 (1916); Kiene v. Hodge, 90 Iowa 212, 57 N.W. 717 (1894); Rupp v. Earl H. Cline & Sons, Inc., 230 Md. 573, 188 A.2d 146 (1963); National Lumber Company v. Farmer & Son, Inc., 251 Minn. 100, 87 N.W.2d 32 (1957); North Shaker Boulevard Co. v. Harriman Nat. Bank, 22 Ohio App. 487, 153 N.E. 909 (1924); Annot., 1 A.L.R.3d 822. The majority of other jurisdictions has held that commencement of construction of a structure does not occur until there is a beginning of substantial excavation for or the laying of the foundations, footings, or bases of the new structure. Mortgage Associates, Inc. v. Monona Shores, Inc., 47 Wis.2d 171, 177 N.W.2d 340 (1970); Annot., 1 A.L.R.3d 822. Kiene v. Hodge, supra ; Carr-Cullen Co. v. Deming, 176 Minn. 1, 222 N.W. 507 (1928); North Shaker Boulevard Co. v. Harriman Nat. Bank, supra . See also cases cited in Annot., 1 A.L.R.3d 822, 830-35. It appears to this court that the approach taken by the majority of other jurisdictions is sound in that both the mechanic or materialman and other lienholders will be best served by a definitive measure for lien inception, rather than the case-by-case analysis enumerated by the court of civil appeals in the instant case. Such a standard would be a valid interpretation of Article 5459, which requires the  actual commencement of construction of the improvements. This court interprets the term actual as to require the placing of something of permanent value on the land, as opposed to preliminary or preparatory activities or structures. Therefore, under most circumstances, the commencement of construction of the improvements in the form of a building or a structure must entail the excavation for or the laying of the foundation. Accordingly, under the commencement of construction category in Article 5459, the inception of the mechanic's and materialman's lien occurs only when the activity: (1) is conducted on the land itself; (2) is visible upon the land; and (3) constitutes either (a) an activity which is defined as an improvement under the Texas statute or (b) the excavation for or the laying of the foundation of a building or a structure. The second category of activities under Article 5459, Section 2(a), which can give rise to the inception of a mechanic's lien is the delivery of material to the land upon which the improvements are to be located. Central to a construction of this category is the definition of the term material as used in the mechanic's and materialman's lien statutes. Material is defined in Article 5452, Section 2 b, as follows: b. The words `material,' `furnish material,' or `material furnished' as used in this Act are to be construed to mean any part or all of the following: (1) Material, machinery, fixtures or tools incorporated in the work, or consumed in the direct prosecution of the work, or ordered and delivered for such incorporation or such consumption.... Accordingly, under such a definition only the delivery of certain types of material will constitute the inception of a mechanic's lien: specifically, either material which will be incorporated into the permanent structure or material which will be consumed or used up during the construction of the permanent structure. Therefore, in order for the delivery of material to constitute the inception of a lien, the court must find: (1) that there has been a delivery of material to the site of construction; (2) that such material is visible upon inspection of the land; and (3) that such material constitutes either (a) material which will be consumed during construction or (b) material which will be incorporated in the permanent structure. The instant case must now be viewed under these standards and guidelines. The facts indicate that Blaylock's activity on the Fort Worth project was insufficient to constitute commencement of construction or delivery of material prior to recordation of the deed of trust on March 9, 1973. The construction activities performed by Blaylock prior to March 9 consisted of the following: subsurface investigation, topographical survey work, the spreading of fill dirt, staking, erection of batter boards, excavation for a retaining wall, and erection of a sign. Such activities constitute merely preliminary or preparatory work for construction and do not constitute the actual commencement of construction. Actual construction began after March 16, 1973 when foundation work was begun on the property. Similarly, the material delivered to the site is not of the character to give rise to the inception of a lien. Such material included bundles of stakes and fill dirt. None of this material ultimately formed part of the permanent structure or was consumed in such construction, but was merely preliminary or preparatory material used prior to actual construction. Therefore, the inception of Blaylock's mechanic's lien on the Fort Worth project was after March 16, 1973 and after recordation of the deed of trust lien on the property held by DMI, as assignee of Palomar. On the other hand, the work performed by Blaylock on the Irving project was sufficient to constitute the inception of a mechanic's lien prior to the recordation of the deed of trust on April 13, 1973. At least three aspects of Blaylock's activities on the Irving project were sufficient to constitute inception of the mechanic's lien. First, a subcontractor to Blaylock performed excavation, clearing, and work in the nature of grubbing activity on the land commencing on April 5, 1973. Such activity included: general site clearance, the digging up and removal of several large trees, and the digging up and removal of a swimming pool which was previously located on the site. This character of activity is encompassed under the expanded definition of improvement, which includes clearing, grubbing, draining or fencing of land. Therefore, as such clearing activity was performed on the Irving site, was visible upon inspection of the land, and was the performance of an activity included as an improvement under the mechanic's lien statutes, it is sufficient to constitute inception of the mechanic's lien as of April 5, 1973. In addition, affidavits and testimony indicate that concrete section pipe was delivered to the Irving site on April 7, 1973. Such material was to be incorporated in the permanent structure and was not material used for merely preparatory or preliminary activities. Therefore, as the concrete pipe was delivered to the site, was visible upon inspection of the site, and constitutes a material which will form part of the permanent structure, its delivery is sufficient to constitute inception of the lien on April 7, 1973. Finally, the trial court found that foundation work was begun on the property after April 11, 1973. The laying and excavation of a foundation clearly constitute commencement of the construction of an improvement under the standard enunciated by this court previously in this writing; therefore, such foundation work was sufficient to constitute inception of the lien on April 11, 1973. Accordingly, the delivery of material and construction activity on the Irving project were sufficient to constitute inception of the mechanic's lien prior to the April 13, 1973 recordation of the deed of trust held by DMI, as assignee of Palomar.