Court Opinion

ID: 9575979
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:19:10.711323+00
Date Added: 2024-06-11T12:52:31.731716
License: Public Domain

Clark, Judge.
Where a statutory bond is provided to release realty from a recorded lien, is it incumbent upon the lienor in suing the principal and surety on the security to prove entitlement to the lien? Our answer is in the affirmative.
Community Building Corp. of Atlanta contracted with the owner of realty in Gwinnett County to build a sewer plant and outfall sewers. C.B.C. engaged Yates Construction Co. as a subcontractor on the project. Contractual disputes developed between the owner and the general contractor. When Yates was not paid by C.B.C. it recorded a laborer’s lien in the amount of $64,315. M. Shapiro & Sons, Inc. had been retained by the realty owner to complete the work under C.B.C.’s contract after the original contract was terminated. On March 27, *6761975 Shapiro as principal with St. Paul Fire & Marine Ins. Co. as surety filed a bond with the Clerk of the Superior Court of Gwinnett County to release the property from the lien in conformance with Code Ann. § 67-2004.
The instant suit was filed by Yates against Shapiro and St. Paul to recover on the bond. Yates thereafter obtained a consent judgment for the amount of its claim against C.B.C.
The answer of defendants Shapiro and St. Paul in the present action presented a general denial and also asserted six affirmative defenses, viz., failure to state a claim; improper venue; full payment of the contract price to C.B.C by the owner; statute of limitation on the filing of the lien and the action against C.B.C.; waiver, based on paragraph 17 of the C.B.C.-Yates contract; and the right to set offliquidated damages claimed to be due from Yates by virtue of paragraph 3.4 of the C.B.C.-Yates contract.
Asserting that it had fulfilled the requisite under the bond of obtaining a judgment against C.B.C., its general contractor, Yates moved for a summary judgment. Shapiro and its surety argued that judgment should not be granted because the affirmative defenses had not been pierced. The trial court granted the summary judgment and this appeal followed. Held:
What was the intent of the General Assembly in enacting the statute now contained in Code Ann. § 64-2004?
"In all interpretations, the court shall look diligently for the intention of the General Assembly, keeping in view, at all times, the old law, the evil, and the remedy.” Code § 102-102 (9). Until 1953 an owner of realty was subjected to situations where suppliers of material or labor for improvement of realty could plague the owner by recording claims of lien which might be legally unauthorized or excessive as to amount. This would stymie an owner who wished to sell his property or convey it to secure a loan. He had no quick remedy excepting to proceed into equity for cancellation. This was not only expensive litigation but could be drawn out by a recalcitrant adversary. Similarly, general contractors could be embarrassed by dissatisfied sub-contractors or *677unhappy laborers filing unwarranted liens against the property of the owner with whom they had contracted.
To correct this evil, the 1953 General Assembly enacted Code § 67-2004 permitting either the owner or his contractor "before or after foreclosure proceedings are instituted” to file a bond and thereby discharge the realty from the lien. In 1972 this statute was amended so as to provide expressly that if property was posted as a bond that inter alia "So long as the bond exists it shall constitute a lien against the property” given as security for the discharge of the original lien.
Those portions of the two statutes make clear that the intent of the legislature was to have the bond serve as a replacement for the lien — and not to establish a new and different procedure limited to the bond. Certainly, in doing so, the legislature did not intend to deprive the owner or contractor of those defenses which would have been available to defeat foreclosure of the lien. In short, the intention was to have the bond as a security to stand in the place of the lien so that the lienor still had to show a compliance with the lien law and the lienee could in a suit on the bond use as defenses those which would have been available to a lien foreclosure.
Obviously, it was not the intention of the General Assembly to cause an owner or his contractor to be deprived of legal defenses if they had been in a position to sweat out the twelve-month period that is the alternative to posting a bond if the lienor takes no enforcement action during the statute’s allotted time. Clearly, for instance, a lienor suing on the bond would have to establish his rights to a lien including filing within the 90-day period and suing within the statutory twelve-months time.
That is the meaning of the cases decided by this court. Thus Pickett v. Chamblee Const. Co., 124 Ga. App. 769, 774 (8) (186 SE2d 123), said "The bond substitutes for the lien on the realty. . Judge Eberhardt cited that case in Vector Co. v. Star Enterprises, 131 Ga. App. 569, 571 (206 SE2d 636) and said that "the lien, being discharged, could no longer be foreclosed against the real estate or the owners, though the supplier of the materials has a remedy against the bond.” He prefaced his statement on this foundation: "When the bond to discharge the lien under *678Code Ann. § 67-2004 was filed and recorded the bond was substituted for the lien (Pickett v. Chamblee Construction Co., [supra]).. .’’His use of the word "substitute” was in the thesaurus meaning: "put in the place of, change for; make way for, give place to; supply [or] take the place of; supplant, superseded, cut out, serve as a substitute; step into [or] stand in the shoes of.” (Roget’s Thesaurus (Rev. Am. Ed. 1947) p. 48). Therefore, Judge Eberhardt could not have intended by his language to have deprived the owner or general contractor of defenses which would have been available if they had been able to await a foreclosure.
The posting of the bond is analogous to the situation where sales take place under court order with the proviso that the funds "shall stand in lieu of the real estate.” See Parker v. Cherokee Bldg. Supply Co., 207 Ga. 710 (64 SE2d 51). Actions may not then be taken against the realty but this does not banish defenses that would be available if the action had been in rem.
It is submitted that the language in the first division of Montgomery v. Richards Bldg. Materials, Inc., 122 Ga. App. 472 (177 SE2d 507) is squarely in line with this case where Yates obtained a judgment by consent in a separate suit against Community Building Corp. There, this court noted that on a similar discharge bond filed by the owner that a judgment against the general contractor did not make the principal (owner) and surety liable "in the absence of a judgment in favor of the materialman and against the owners establishing the right to a lien.” (Emphasis supplied.) In short, to enforce the bond the lienor must establish his rights both to a lien and foreclosure thereof upon the recorded lien which the bond replaced — and the owner or general contractor may present as defenses those which would be available to a foreclosure of the lien for which the bond was substituted.
In brief, we hold that the intent of the bond statute was to provide a procedure whereby owners could alienate their property while disputes regarding claims of liens are pending; that the bond "stands in the shoes of’ the lien to serve as security after the lien claimant has proved entitlement to the lien; and that the principal and surety under this statutory bond is entitled to present any defenses to an action on the bond that would exist if the *679lien for which the bond served as a substitute were being foreclosed, whether the principal be the owner or the contractor.
Argued July 12, 1976
Decided November 18, 1976
Rehearing denied December 8, 1976
Sutherland, Asbill & Brennan, Charles T. Lester, Jr., for appellants.
Hurt, Richardson, Garner & Todd, SamE. Thomas, Robert B. Wedge, for appellee.

Judgment reversed. Bell, C. J., Deen,P. J., Quillian, P. J., Webb and McMurray, JJ., concur. Smith, J., concurs specially.

Stolz and Marshall, JJ., dissent.