Court Opinion

ID: 9545940
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:22:24.026842+00
Date Added: 2024-06-11T15:15:47.238052
License: Public Domain

Abbott, J.,
dissenting: This case involves the corporate owner of a pipeline easement (KPL) which purchased pipe from a retail supplier (Continental) which in turn obtained the pipe from its supplier (Interlake). In my opinion, this case involves the supplier of a supplier and not the supplier of a contractor or subcontractor.
KPL intended to and did subsequently construct a pipeline in Kansas. In preparation, it ordered the pipe involved in this case from Continental, issuing its verbal order for pipe on April 22, 1976. Continental issued a written order and shipping instructions to Interlake on the same day for pipe. Interlake was to invoice Continental and subsequently made specific and detailed arrangements with Continental as to how and when it was to pay for the pipe. The pipe was shipped in June and July of 1976 to Plexco which had a separate contract with KPL to coat the pipe and reship it to designated points in Kansas ranging from Abilene to Meade. KPL purchased a wide range of material from other sources for use in the construction of the pipeline. KPL awarded a contract the last week of July 1976 to a contractor to construct at least that part of the pipeline involved in this suit. KPL furnished all of the material for the pipeline except welding rod, cadweld, rockshield, wood slat for coating protection and above-ground fence repair materials. The contractor had no contract of any kind with Plexco, Continental or Interlake. Interlake did nothing other than sell the pipe in question to Continental which sold it to KPL.
It is important to note the majority does not rely on Continental’s being an agent of KPL. The majority, as I view the opinion, holds that Continental, by virtue of furnishing supplies used on KPL’s project, is a contractor or subcontractor and thus Interlake has a lien by virtue of furnishing supplies to a contractor or subcontractor.
If Interlake has a lien, it must be by virtue of K.S.A. 55-207 or 55-208. The general lien statutes (K.S.A. 60-1101 et seq.) do not apply to oil and gas leases. 2 Gard’s Kansas C. Civ. Proc. 2d Ann. § 60-1101, Comments (1979); Mountain Iron & Supply Co. v. Branum, 200 Kan. 38, 41, 434 P.2d 1015 (1967). The general lien *24statutes are useful only to the extent they might shed some light on legislative intent in construing K.S.A. 55-207 and 55-208. Oil and gas lien laws are strictly construed against those claiming a lien, and their scope is not to be extended beyond that clearly granted by the legislature. Gaudreau v. Smith, 137 Kan. 644, 21 P.2d 330 (1933).
As applied to the facts before us, K.S.A. 55-207 protects any person or entity that contracts with the owner of any gas pipeline. Continental unquestionably would be entitled to a lien pursuant to 55-207, but Interlake would not. The majority does not rely on 55-207, but on 55-208. In order to do so, it must first be determined that Continental is a contractor as contemplated by 55-207. That is the crux of the majority opinion, and where I am unable to agree.
I am forced to concede at the outset that our Supreme Court in construing the general lien statutes has stated that “[a] contractor is one who furnishes labor or materials under a contract direct with the owner for the improvement of property.” Stewart v. Cunningham, 219 Kan. 374, 377, 548 P.2d 740 (1976). The Supreme Court there, however, was not considering the question before us here and depended upon a broad statement in 57 C.J.S., Mechanics’ Liens § 90, as authority for that statement. That definition, in my opinion, cannot be interpreted to control the factual question before us.
I can only assume that when the word “contractor” was used by the legislature in K.S.A. 55-208, it was used in the same sense that it has been defined in other statutes and as courts have generally interpreted it when construing lien statutes.
The definition of contractor and subcontractor in K.S.A. 44-717(h)(3) has remained constant through several legislative changes, with the latest version of that statute found in L. 1981, ch. 205, § 3(b)(3). The Statute has consistently defined contractor and subcontractor as those persons or entities “engaged in the business of the construction, alteration, repairing, dismantling or demolition of buildings, roads, bridges, viaducts, sewers, water and gas mains, streets, disposal plants, water filters, tanks and towers, airports, dams, levees and canals, oil and gas wells, water wells, pipelines, and every other type of structure, project, development or improvement coming within the definition of real property.” (Emphasis added.) See also K.S.A. 79-1008 and K.S.A. *2582a-1203.1 am unable to find that the legislature has ever defined a contractor or subcontractor as one who merely supplies materials. The general lien laws in chapter 60 certainly do not include a supplier of material in the terms contractor or subcontractor. To say that the legislature by its enactment of K.S.A. 55-207 and 55-208 intended for a supplier of material to have the status of a contractor is not only totally inconsistent with the general lien laws but with all specific statutory definitions of “contractor.”
Case law, legal scholars and authorities such as Black’s Law Dictionary have stated that the term “contractor,” when strictly defined, is applicable to any person or entity that enters into a contract. In the context of a mechanic’s lien statute, however, a supplier is considered neither a contractor nor a subcontractor. 53 Am. Jur. 2d, Mechanics’ Liens § 71. Greatly simplified, a contractor or subcontractor must actually construct some part of the improvement. A materialman (supplier) merely furnishes supplies to a contractor to be used in the construction project.
The majority correctly notes that cases from other jurisdictions are generally not persuasive due to fundamental differences in the lien statutes involved. Nevertheless, I find the general rule is that the supplier of a supplier is not entitled to a lien in the absence of a statute clearly expressing legislative intent to extend the lien statute to that supplier. See 57 C.J.S., Mechanics’ Liens § 103; 53 Am. Jur. 2d, Mechanics’ Liens § 73; Annot., 141 A.L.R. 321.
In American Buildings Co. v. Wheelers Stores, 585 P.2d 845 (Wyo. 1978), the Wyoming Supreme Court considered a statute somewhat similar to ours. The court first determined that one who supplies materials but is not involved in construction of the improvement is a materialman within the mechanic’s lien laws, not a contractor. The facts of the case are analogous to those before us. Wheelers Stores was expanding into Wyoming and contacted American Buildings directly to purchase prefabricated steel buildings to be used as stores. It was agreed that Wheelers would buy the buildings through American Buildings’ Wyoming dealer. The dealer would place the orders with American, American would manufacture the buildings, the buildings would be delivered to Wheelers and Wheelers would arrange for their erection. American would bill its dealer which in turn would bill Wheelers. This arrangement worked until the fifth building was completed. Wheelers paid the dealer — as KPL in this case paid *26Continental. The dealer was unable to pay American, and American claimed to be a supplier to a contractor. The Wyoming court noted that American parted with title to the building upon its sale to the dealer, so American was only the supplier to the supplier and not entitled to a lien.
In City of Evansville v. Verplank Concrete & Supply, ___ Ind. App. ___, 400 N.E.2d 812 (1980), the Indiana Court of Appeals considered a case where the landowner contracted with Corley Concrete Corporation to purchase preformed and prestressed concrete which Corley was to manufacture according to the architect’s specifications. Verplank supplied ready mixed concrete to Corley for use in casting the components. The landowner paid Corley. Corley did not pay Verplank, so Verplank attempted to perfect and foreclose a mechanic’s lien. The trial court ordered foreclosure. In reversing the trial court, the Indiana Court of Appeals stated that the trial court erroneously found Corley to be a contractor or subcontractor — that Corley was only a materialman and Verplank as the supplier of a supplier was not entitled to a mechanic’s lien. Other cases also hold that the supplier of a supplier is not entitled to a lien in the absence of a statute clearly granting such a lien. See, e.g., Watson v. Murphey, 36 Ariz. 377, 285 Pac. 1037 (1930); Ga.-Pacific Corp. v. Dan Austin Prop. Inc., 126 Ga. App. 191, 190 S.E.2d 131, aff’d 229 Ga. 803, 194 S.E.2d 472 (1972); Ronald A. Coco, Inc. v. St. Paul’s Methodist Church, 78 N.M. 97, 428 P.2d 636 (1967).
In my opinion, the majority opinion places a heavy burden on the owner of any leasehold for oil and gas purposes far beyond that contemplated by the legislature and one that as a practical matter is nearly impossible to meet. If the majority is correct, then I am unable to see why KPL would not be required to ensure that Continental paid Interlake and that Interlake paid for the steel used in the pipe, paid its employees and paid for welding rods, etc. Carried to the logical extreme, if KPL purchases a piece of drilling equipment from a retailer (the majority would label the retailer a “contractor”), it would be forced to ensure that the manufacturer (a subcontractor) is paid and that the manufacturer pays its employees and its suppliers of component parts. It appears that would be the end result unless the appellate courts are willing to rewrite the statutes by limiting this decision to special orders, or property not held in the regular course of *27business, etc. I am not inclined to do so, as in my opinion the legislature did not intend for the term “contractor” as used in K.S.A. 55-208 to include a supplier.
Here we have a supplier claiming protection under the lien laws who did nothing other than sell his product to a retailer who in turn had contracted to sell the pipe to an owner of a leasehold interest who then furnished that product to a contractor who incorporated the product in the construction project. The legislature never intended to protect such a remote supplier. I would reverse the trial court.