Court Opinion

ID: 6480359
Source: CourtListenerOpinion
Date Created: 2022-06-26 23:02:28.001659+00
Date Added: 2024-06-11T15:54:07.919500
License: Public Domain

ROBERT O. ROYLSTON, Superior Court Judge
(dissenting).
I dissent. However sympathetic to the statutory lienholder we may be, I believe that through semantics the majority is indulging in judicial legislation.
Our Supreme Court considered an almost identical factual situation in Irwin, discussed in the majority opinion. In that case, the claimant who had furnished labor and material contended that he should recover as a “third-party creditor-beneficiary”; in the present case, the lien-holder contends that he should recover as the "“holder of an equitable lien”. Persons in identical factual situations in civil cases should fare the same in court regardless of the label supplied by the lawyers. Under the majority opinion, the litigant using the “third-party creditor-beneficiary” label would fall within the reasoning of Irwin and his claim would be defeated; whereas, the lawyer who is currently informed on our swiftly changing law would label his litigant as a “holder of an equitable lien” and emerge victorious. If the majority opinion intends to overrule Irwin, it should so state.
The majority holds that under circumstances similar to those here, the laborers and materialmen “rely upon the lender and moneys to be advanced by the lender rather than relying upon the owner for payment”. This is undoubtedly true, but whether that reliance invests a legal right is another matter. Our Supreme Court stated in Moeur as follows :
“ * * * It is the law that a promise or agreement to pay out of a particular fund does not give to the promisee an equitable assignment or a lien upon such fund * * (citing cases) 35 Ariz. at page 138, 274 P. at page 1045.
If a specific promise or agreement does not create an equitable lien, it is difficult to conceive that the mere reliance on the existence of the fund without any promise or agreement on the part of the lender of the fund will create the lien. The majority opinion does not discuss the Moeur case. If it is the intention to overrule this case, the opinion should so state.
The case of Smith v. Anglo-California Trust Co., cited with extensive quotation in the majority opinion, was decided in 1928. The factual situation was greatly different from the present situation. The dispute was between the personal representative of the owner-builder and the mechanic’s lien claimants over the right to the undisbursed construction loan proceeds. Unlike the present case, the houses were completed in substantial compliance with the plans and specifications submitted with the application for the loan and the lender did not claim an interest in the fund. It clearly owed the money to some party, for the work on the houses had been completed. The only question before the Court was whether the lender should pay the undisbursed proceeds to the builder. or to the mechanic’s lien claimants. The Court held that the lien claimants had equitable liens on the undisbursed proceeds and were entitled to the proceeds as against the borrower or his successor in interest.
The other California case cited and relied- upon by the majority, A-1 Door v. Fresno Guarantee, finds “that the evidence does not support the finding that the mechanic’s lien claimants were entitled to equitable liens on' the loan funds”. (40 Cal.Rptr. page 88, 394 P.2d page 832). By way of dictum, the Court went on to state that an equitable lien arises if the borrower or lender represents to the claimant that the claimant will be paid out of the proceeds of the loan and cites Smith as authority. As previously stated, Smith was a dispute between borrower and lien-holder. To this date, not even California has held that the borrower may induce the supplier of labor or materials to rely on the fund for payment and thereby create an equitable lien for the supplier which is prior to the lender’s interest.
To create this right for laborers and materialmen, which is far greater than that *501presently in effect by statute, should be a matter for the Legislature rather than the Courts.
For the foregoing reasons, I respectfully dissent.
Note: Judge JAMES DUKE CAMERON having requested that he be relieved from the consideration of this matter, Judge ROBERT O. ROYLSTON was called to sit in his° stead and participate in the determination of this cause.