Court Opinion

ID: 8901000
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:07:50.327885+00
Date Added: 2024-06-11T17:07:50.957045
License: Public Domain

HUNTER, JR., Robert N., Judge,
dissenting.
I dissent from the majority’s opinion in the hope that our Supreme Court will clarify the answer to a question left unanswered by this Court’s opinion in Carolina Builders Corp. v. Howard-Veasey Homes, Inc., 72 N.C. App. 224, 324 S.E.2d 626 (1985). Namely, does a “subsequently acquired interest. . . support a materialman’s lien even if no enforceable interest existed when the contract was made or the work commenced”? Id. at 230, 324 S.E.2d at 630. Under the facts in this case, I would extend the holding of Carolina Builders to stand for the proposition that GHC should be considered an “owner” under N.C. Gen. Stat. §§ 44A-8 and 44A-7(3), because it directed Plaintiffs to begin work on the subject property, and then later acquired legal title.
As noted in the majority’s opinion, our Court held in Carolina Builders that a person under contract to purchase property is an “owner” as contemplated by Section 44A-8, because they possess an “equitable interest.” Id. at 231, 324 S.E.2d at 631. In Carolina Builders, the trial court reached the following conclusion of law:
North Carolina General Statute 44A, Article 2, allows material-men to [acquire] valid enforceable lien rights relating back in time to the first furnishing [of materials] under circumstances *45where the person or entity with whom he contracted did not at that time have legal title but later did acquire legal title.
Id. at 230, 324 S.E.2d at 630 (alterations in original).
In evaluating this interpretation of the statute, our Court noted the following:
This conclusion appears tantamount to stating that any subsequently acquired interest will support a materialman’s lien even if no enforceable interest existed when the contract was made or the work commenced. While that may be an appropriate rule, it goes beyond the facts here and encompasses factual situations which are not before this Court.
Id. (emphasis added) (footnote omitted) (citation omitted). Thus, the Court did not address the question presented by this case: namely, whether one who contracts for the provision of labor and materials who is not under an enforceable contract for sale, but who subsequently acquires title to the subject property, may subject such real property to a materialman’s lien. I would answer this question in the affirmative, in light of the rationale of Carolina Builders and the purpose of the materialman’s lien statute.
As the Court in Carolina Builders observed, “[t]he purpose of the materialman’s lien statute is to protect the interest of the supplier in the materials it supplies; the materialman, rather than the mortgagee, should have the benefit of materials that go into the property and give it value.” Id. at 229, 324 S.E.2d at 629. Thus, “as these statutes afford new remedies, they are liberally construed to effect the legislative purpose[.]” Id. at 234, 324 S.E.2d at 632 (quoting Lemire v. McCollum, 425 P.2d 755, 759 (Or. 1967)).
As an article cited by the Court in Carolina Builders explains, a narrow interpretation of the statute can produce an inequitable result in cases, such as this, which involve an “overeager purchaser”:
Some courts draw a distinction whereby they permit the lien to attach if the purchaser holds an equitable title under an enforceable executory contract, but deny the lien if the purchaser has only an unenforceable agreement to purchase that is later fully executed. This distinction can be criticized as overly technical since neither circumstance can be reasonably said to have influenced the parties’ behavior. It should not be expected that, prior to contracting with a homebuilder, a laborer or supplier of mate*46rials who is unversed in legal theories of ownership will undertake a costly and time-consuming title examination, or demand from a prospective employer or customer proof that he has equitable title to the building site. Instead, a more appropriate rule has been adopted by the courts of Oregon and Kansas: any subsequently acquired interest will support a materialman’s lien even if no enforceable interest in the property existed when the contract was made or the work was commenced.
Julianne G. Douglass, Materialmen’s Liens in North Carolina: The Problem of the Overeager Purchaser, 61 N.C. L. Rev. 926, 934 (1983) (footnotes omitted).
Thus, to hold that Plaintiffs in this case cannot make out a claim of lien because GHC did not have an enforceable contract for sale for the subject property at the time it requested Plaintiffs begin work, despite the fact that it subsequently acquired title consistent with all parties’ expectations, in essence allows Defendants in this case to “feed an estoppel,” and produces a result contrary to the remedial nature of the lien statute. This inequitable result is particularly troublesome given the mandate in our Constitution that “[t]he General Assembly shall provide by proper legislation for giving to mechanics and laborers an adequate lien on the subject-matter of their labor.” N.C. Const. art. X, § 3.
Although in no way binding on this state’s appellate courts, at least one federal court has observed that Carolina Builders “certainly [leaves] open the possibility that the same result might be reached even if the entity with whom the materialman contracted had no enforceable interest when the contract was made or the work commenced, provided that such entity later acquires legal title. ” In re: Alexander Scott Group, Ltd., No. B-94-10704C-11D, 1995 WL 17800994, at *4 (Bankr. M.D.N.C. Aug. 1, 1995) (emphasis added). Our Supreme Court is ultimately the appropriate venue to address this possibility.
For the foregoing reasons, I respectfully dissent from the majority.