Opinion ID: 2163333
Heading Depth: 2
Heading Rank: 2

Heading: Michigan's Mechanics' Lien Law Post-1958

Text: In 1958 the Michigan Legislature amended § 1 of the mechanics' lien law, which describes lienable services, to include engineering and surveying services. [8] Amended § 1, further, included engineering and surveying services under the definition of the word improvement: The term `improvement' or the plural thereof as used in this act, shall include the    prepar[ing] and furnish[ing]    designs or engineering plans for the improvement of any lot or parcel of land   . [9] The gist of appellees' argument on appeal to us is that this definition of improvement found in § 1 of the mechanics' lien law describing liens is freely substitutable for the word improvement as it appears in the priority section of the lien law. The word improvement appears in § 9(3) in the following context: Third, they [mechanics' liens] shall be preferred to all other titles, liens or incumbrances which may attach to or upon such building, machinery, structure or improvement, or to or upon the land upon which they are situated, which shall either be given or recorded subsequent to the commencement of said building or buildings, erection, structure or improvement. (Emphasis supplied.) By this process of substitution, the appellees present us with a priority section which they claim, in this case, should read, in edited fashion, as follows: Third, they [W & W as professional engineers] shall be preferred to all liens recorded subsequent to the commencement of its furnishing engineering design or plans for the improvement of said lot. (Emphasis in appellees' brief.) To safeguard their position, appellees assert that the cases requiring visible, on-site construction in order to constitute commencement are obsolete since they construed the act at a time when engineering services were not lienable and that cases from other jurisdictions are of little significance since they construe statutes different from that of Michigan. The issue for resolution, then, is whether the Legislature, by amending MCL 570.1; MSA 26.281 to expand the definition of lienable items to include engineering services, intended to effect a departure from the requirement of visible, on-site construction which courts have traditionally required for a building or improvement to be commenced for purposes of the priority section. In other words, should the performance of non-visible, off-site engineering services before the recording of a mortgage, as was done in the present case, be sufficient to give all mechanics' lienors priority over the mortgagee? We find the appellee mechanics' lienors' substitution of the definition of improvement found in § 1 for the word improvement found in the priority section, although of some superficial persuasiveness, to be fundamentally unsound for several reasons. First, if appellees' contention is correct, then the § 1 definition of improvement should be freely substitutable wherever the word improvement is used in § 9 since that word always appears in the same context in several of that section's subsections, i.e., it appears at the end of a series of attachable items such as a building or buildings, machinery, erection, or structure. The illogical result of such mechanical substitution, however, indicates clearly the Legislature had no such intention. For example, § 9(4) actually reads as follows: The liens for such labor or materials furnished    shall attach to the buildings, machinery, erection, structure, or improvement for which they are furnished or done, subject to any prior recorded title, claim, lien, incumbrance, or mortgage to or upon the land upon which such building or buildings, machinery, erection, structure or improvement belongs or is put.    By incorporating the § 1 definition of improvement into § 9(4) wherever the word improvement is located, and by using the lien granted by § 1 for the preparation of an engineering plan as the hypothetical lien seeking § 9(4)'s application, we get the following: The lien for [the preparation of the engineering plan] shall attach to the buildings, machinery, erection, structure, or [preparation of the engineering plan] for which [the] [preparation of the engineering plan] [is] furnished or done, subject to any prior recorded title, claim, lien, incumbrance, or mortgage to or upon the land upon which such building or buildings, machinery, erection, structure or [preparation of the engineering plan] belongs or is put. (Emphasis to show substitution.) It is clear that § 9(4) contemplates a sequence that cannot possibly accommodate appellee's proposed substitution. Section 9(4) provides that the furnishing of a lienable service (such as an engineering plan) will give the engineer a lien on the end product for which the engineering plan was furnished, namely the buildings, machinery, erection, structure or improvement. Second, in the absence of specific precedent on the meaning of the word improvement in § 9(3), we are guided by accepted principles of construction. One such principle is noscitur a sociis, a principle relating the word in question to the associated words in the statutory context. 2A Sands, Sutherland Statutory Construction (4th ed), § 47.16, p 101. The words preceding improvement in § 9(3)  building, machinery, and structure  generally suggest a visible project or a tangible end product. Plainly, the furnishing of off-site engineering services is not the type of improvement which is comparable to the attachable, on-site products contemplated by the words building, machinery, and structure. Third, we think it unreasonable to believe the Legislature intended to indirectly change § 9(3), containing the traditional and well-established rule requiring a visible, on-site commencement of construction in order to establish priority, by the simple expansion of the lienable services outlined in a different section, § 1. Section 1 and § 9(3) treat of two entirely different concepts. Section 1 merely determines what is a lienable service in Michigan. It runs the gamut from the furnisher of labor and materials and the surveyor and engineer to the renter or lessor of equipment and the supplier of nursery stock. See fn 5, supra. Section 9(3), on the other hand, deals with the determination of when a particular lien attaches for priority purposes. It specifically leaves the establishment of what services are lienable to another part of the act, i.e., § 1, and concerns itself primarily with the ascertainment of the priorities among the liens: The several liens herein provided for    shall take priority as follows: [hereafter follow four rules for determining priorities]. (Emphasis supplied.) Fourth, the 1958 amendment to § 1 of the mechanics' lien law was only one of successive amendments to that section expanding what constitutes a lienable service in Michigan. For example, the protection of this section was extended to nursery stock in 1941, to surveying and engineering services and works in 1958, to sewers, sewage disposal equipment, water lines and pumping equipment in 1960, to rented or leased equipment in 1963, and to swimming pools in 1965. See fn 5, supra. Fifth, in contradistinction to this constant expansion of lienable services under § 1, § 9(3), fixing priorities, has been conspicuously quiescent. Not one of the many amendments to § 1 has been accompanied by an amendment significantly affecting the priority section of the mechanics' lien law. [10] Cf. Rupp v Earl H Cline & Sons, Inc, 230 Md 573, 577; 188 A2d 146, 148 (1963). Sixth, this Court in Wallich Lumber Co v Golds, 375 Mich 323, 327; 134 NW2d 722 (1965), a case decided after the 1958 amendment to § 1, recognized the early judicial construction of the virtually unchanged priority section. Wallich made explicit reference to Kay v Towsley, supra , where that case specifically referred to the fact that a lien has priority over a mortgage executed upon the land or premises after the actual commencement of the building    (emphasis supplied). For the above reasons, we believe that the Legislature neither intended the § 1 definition of improvement to be freely substitutable for the word improvement found in § 9, nor intended to indirectly change the established interpretation of § 9(3) through an amendment of § 1. Thus, we find that while the Legislature has continually broadened the range of lienable services in Michigan, it has not chosen to effect any change in the long-established judicial interpretation of commencement of said building or buildings, erection, structure or improvement as that phrase has been used in the past to determine priority between a mechanics' lienor and a mortgagee. As the Supreme Court of Arkansas observed in this regard within the context of a similar mechanics' lien law scheme: The statute provides for a lien for work upon a building or improvement [Ark Stat Ann § 51-601] but the priority is determined by the `commencement' (§ 51-607). The mere fact that the work was the proper subject of a lien cannot establish priority when it does not give notice of the commencement. Clark v General Electric Co, 243 Ark 399, 406; 420 SW2d 830, 834 (1967). See also Reuben E Johnson Co v Phelps, 279 Minn 107, 113-114; 156 NW2d 247, 251-252 (1968). In short, visible, on-site construction, such that it is obvious from the work done on the premises that a building, erection, structure or improvement is in progress, is still required in order to signal commencement. [11] We feel our holding today is consonant with the great weight of modern judicial authority. Indicative of this is the analogous decision of a unanimous California Supreme Court in Walker v Lytton Savings & Loan Ass'n of Northern California, 2 Cal 3d 152; 84 Cal Rptr 521; 465 P2d 497 (1970). In that case plaintiff architects contended that they had priority over a deed of trust given to secure a construction loan where the architects had prepared plans and specifications for the proposed construction prior to the recording of the deed of trust. The deed of trust, however, was recorded in advance of any actual, on-site physical construction. The then applicable California law (Cal Code of Civil Procedure, § 1188.1), similar to our own, provided that certain liens (including an architect's work) were preferred to any deed of trust which may have attached subsequent to the time when the building, improvement, structure, or work of improvement in connection with which the lien claimant has done his work    was commenced (emphasis added). Analogous to the broad definition of improvement found in § 1 of Michigan's mechanics' lien law, § 1182 of the California Code of Civil Procedure defined work of improvement as the entire structure or scheme of improvement as a whole. The California Court, in refusing to support the architects' argument that their preparation of plans was part of the scheme of improvement as a whole, there stated: We are convinced that under such circumstances it cannot be held that the structure or work of improvement had commenced within the meaning of the priority rules of section 1188.1 or that plaintiffs' preparation of plans and specifications constituted such commencement so as to give their lien priority over the deed of trust.