Opinion ID: 2378547
Heading Depth: 1
Heading Rank: 3

Heading: Leach v. Sard

Text: The plaintiff Leach by his complaint does not seek to impose a lien upon the defendant's premises but rather seeks recovery as upon quantum meruit for the fair value of goods sold and delivered and labor performed for the defendant. The Referee made no detailed findings but merely awarded judgment for the amount claimed in the complaint. Here again the test is whether or not there is credible evidence to support the Referee's conclusion. Plaintiff was requested by Pendleton to do the excavation work on the site. Although the defendant knew of the work being performed on her premises by the plaintiff, there was no contractual relationship between them. Plaintiff submitted bills from time to time to Pendleton who in turn approved them and forwarded them to defendant's architect. Upon his approval, the bills were paid by the defendant to Pendleton who then paid Leach. When the defendant stopped making payments to Pendleton she declined to pay the last bill submitted by Leach to Pendleton. Leach has not as yet instituted any action against Pendleton for his unpaid balance but has proceeded directly against the defendant owner. The general rule almost universally followed was well stated in 53 Am.Jur.2d 932, Mechanics' Liens, Sec. 418 in these terms:    it is generally recognized apart from unjust enrichment    that subcontractors and materialmen have no right to a personal judgment against the owner where there is no contractual relation between them. (Emphasis ours.) We recognized this as the rule in Maine when in Thompson v. Heald (1961) 157 Me. 78, 83, 170 A.2d 156, 160 we said, It should be noted that no judgment is awarded against the owner where, as in the instant case, he never contracted with the plaintiff supplier but dealt only with his contractor. Without elaboration or analysis a long line of cases has adhered to the general rule above stated, basing the rule on lack of privity of contract. Alberti v. Moore (1908) 20 Okl. 78, 93 P. 543; Seran v. Rose (1923Okl.) 219 P. 940; Newman v. Kirk (1933Okl.) 23 P.2d 163; Schram v. Manary (1927Or.) 262 P. 263; Blossom Provine Lumber Co. v. Schumacher (1928Wash.) 266 P. 167; Keefer v. Lavender (1952) 74 Ariz. 24, 243 P.2d 457; Brannan Sand & Gravel Co. v. Santa Fe Land & Imp. Co. (1958Colo.) 332 P.2d 892; H.T.C. Corp. v. Olds (1971Colo.) 486 P.2d 463; Gignilliat v. West Lumber Co. (1949) 80 Ga.App. 652, 56 S.E.2d 841; Drawdy v. McVeigh (1964) 110 Ga.App. 329, 138 S.E.2d 477; McCorkle v. Lawson & Co. (1953Ky.) 259 S.W.2d 27; Gatchell v. Henderson (1952) 156 Neb. 1, 54 N.W. 2d 227; Walker v. Ball (1960C.A. Ohio) 171 N.E.2d 541; Keeley Lumber & Coal Co. v. Dunker (1956S.D.) 77 N.W.2d 689. The statement of law above quoted, however, contained the phrase, apart from unjust enrichment. Under what circumstances, then, do we attach meaning to that reservation or exception? The lien statute itself affords the security of a lien to a subcontractor under appropriate circumstances without regard to privity of contract. But the contractual debt secured by lien on the owner's property is in the case of a subcontractor ordinarily the debt owed him by the prime contractor. See Cole v. Clark (1893) 85 Me. 336, 27 A. 186; see Bangor Roofing v. Robbins et al. (1955) 151 Me. 145, 116 A.2d 664. And the lien statute itself make no provision for a personal judgment, absent privity of contract, in favor of the subcontractor and against the owner. In a few cases courts have come to grips with the logic or illogic of denying personal judgment merely because of lack of privity of contractand with varying results. In Paschall's Inc. v. Dozier (1966) 219 Tenn. 45, 407 S.W.2d 150, 155 plaintiff supplied labor and materials incorporated into the premises of defendant owners at the request of defendants' daughter and grandson who also resided in the defendants' home. The complaint, the adequacy of which was tested by demurrer, alleged that the materials and services were furnished with the full knowledge and consent of defendants and that the latter had been unjustly enriched thereby. The Court began by carefully distinguishing between contracts implied in fact and contracts implied in law. The latter, commonly referred to as quasi contracts, are raised by the law on the basis of justice and equity regardless of the assent of the parties. The Court noted that it is well established that want of privity between parties is no obstacle to recovery under quasi contract. Holding that plaintiff (having failed to perfect a lien) was entitled to a hearing on its complaint, the Court said: Based upon the foregoing authorities, we hold that where a materialman or subcontractor furnishes labor or materials which benefit the property of a person with whom there is no privity of contract, an action on quantum meruit may lie against the landowner to recover the reasonable value of said labor and materials so furnished.    Each case must be decided according to the essential elements of quasi contract, to-wit: A benefit conferred upon the defendant by the plaintiff, appreciation by the defendant of such benefit, and acceptance of such benefit under such circumstances that it would be inequitable for him to retain the benefit without payment of the value thereof. The most significant requirement for a recovery on quasi contract is that the enrichment to the defendant be unjust. Consequently, if the landowner has given any consideration to any person for the improvements, it would not be unjust for him to retain the benefit without paying the furnisher. Also, we think that before recovery can be had against the landowner on an unjust enrichment theory, the furnisher of the materials and labor must have exhausted his remedies against the person with whom he had contracted, and still has not received the reasonable value of his services. (Emphasis ours.) The importance we attach to the opinion in Paschall's, Inc. stems from the fact that it points up with some clarity that to deny quasi contractual recovery on the ground of lack of privity of contract is an over-simplification of the problem. On the other hand we note that none of the cases relied upon by the Tennessee Court as authority for affording recovery as upon a contract implied in law involved the intervention of a prime contractor between plaintiff subcontractor and the defendant owner. This suggests that we should look further for sound reasons, if any there be, for denying recovery under such circumstances. In Guldberg v. Greenfield (1966Iowa) 146 N.W.2d 298, 305, even though reliance was placed on lack of privity of contract, the Court in approaching directly the subject of unjust enrichment deemed it would be inequitable to permit a subcontractor to have a personal judgment against the owner where the owner had paid the prime contractor in full and the subcontractor's predicament stems from (the prime contractor's) failure to pay him as agreed. Leaving open the question as to whether an unusual situation might arise under other facts, which would result in unjust enrichment unless subcontractors were permitted to recover (from owners) in quasi-contract, the Court in Lundstrom Construction Co. v. Dygert (1959) 254 Minn. 224, 94 N.W.2d 527, 533 concluded that no unjust enrichment would occur and hence no quasi contractual recovery would be permitted where the owner in reliance upon lien waivers filed by the subcontractor paid the prime contractor for the labor and materials furnished by the subcontractor. We think the Texas Court of Civil Appeals approached the problem realistically when it denied a subcontractor the right to a personal judgment without making any reference to the lack of privity of contract. In Crockett v. Sampson (1969C.C.A. Tex.) 439 S.W.2d 355, 358 the Court said: Liability on quantum meruit is based on a contract implied in law. An essential prerequisite to such liability is the acceptance of benefits by the one sought to be charged, rendered under such circumstances as reasonably to notify him that the one performing such services expected to be paid therefor by him, the person sought to be charged.    There are no circumstances here which could have led appellee (subcontractor) to believe that anyone other than (the prime contractor) would pay him for the work and materials expended by him. No equities in behalf of appellee (subcontractor) against appellant (owner) are shown. There is no basis for a recovery in quantum meruit. (Emphasis ours.) The Legislature, motivated without doubt by its own concept of unconscionable and unjust enrichment, see Bangor Roofing v. Robbins et al., supra at page 148 of 151 Me., 116 A.2d 664, has seen fit to provide the security of a statutory lien which arbitrarily eliminates certain equities which might otherwise be available to the owner. The owner is, however, afforded some protection by (a) the rigid technical requirements imposed upon the lienor and (b) the avoidance by notice provisions of 10 M.R.S.A., Sec. 3252. The lien statute goes no further, however, and makes no provision for personal judgment other than for a deficiency as against one contractually indebted. 10 M.R.S.A., Sec. 3260. If the subcontractor is to be permitted a personal judgment against the owner, absent any contractual relationship, that can only occur as the result of judicial as opposed to legislative determination. We cannot anticipate every factual situation that may arise but we conclude that under ordinary and usual circumstances the equities will not permit the supplier of labor and materials to obtain a personal judgment against the owner with whom he had no contractual dealings. Some of these equitable considerations have been adverted to in cases cited above. The prime contractor may already have been paid in full by the owner. The subcontractor may not have exhausted his remedies against the prime contractor. The subcontractor, with opportunity available to test the credit of the prime contractor, has elected to give the latter credit. The owner may naturally assume that suppliers dealing with the prime contractor will look to the latter for payment. Defenses which may be available to the prime contractor as against the supplier may not be known or available to the owner. Any one or a combination of these equitable considerations, and perhaps others raised by the facts, will tend to prevent any enrichment from being unjust and will thus militate against a quasi contractual obligation. So in the instant case, as noted above, Leach was employed by Pendleton and looked to Pendleton for payment. He has not as yet sought to obtain a judgment against Pendleton. Mrs. Sard was justly entitled to assume that Leach would look to Pendleton rather than to her for his reasonable compensation. Although she has not as yet paid to Pendleton the amount which may be justly owed to Leach, she should be able to do so with assurance that she will not thereby be subjected to double recovery. It follows that no contract is implied in law and judgment below in the matter of Leach v. Sard must be set aside.