Court Opinion

ID: 6616451
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:23:27.982229+00
Date Added: 2024-06-11T15:58:32.983946
License: Public Domain

Thompson, J.
(dissenting). — I have been asked to state, before the close of the term, the grounds on which I have dissented from the conclusions reached by my brethren in this case. The statute relating to mechanics’ liens contains the following section: ‘ ‘ The liens for work and labor .done, or things furnished, as specified in this article, shall be upon an equal footing, without reference to the date of filing the account or lien; and in all cases where a sale shall be ordered *600and the property sold, which may be described in any account or lien, the proceeds árising from such sale, when not sufficient to discharge in full all the liens against the same, without reference to the date of filing ■the account or lien, shall be paid pro rata, on the respective liens : Provided, such account or lien shall have been filed and suit brought as provided by this article.” R. S. 1889, sec. 6727; R. S. 1879, sec. 3193.
With this statute in force, the city of St. Louis, in making the contract with McLane, inserted the following provision: “And said party of the first part (which includes the contractor and his sureties) hereby further agrees that he will furnish the said Board of Public Improvements with satisfactory evidence that all persons, who have done work or furnished materials under this agreement, and are entitled to a lien therefor under any law of the state of Missouri, have been fully paid or no longer entitled to such lien; and, in ■case such evidence be not furnished, such amount as the board may consider necessary to meet the lawful ■claims of the persons aforesaid, provided said persons ■shall notify said board before the final estimates be returned, shall be retained from the moneys due the said party of the first part under this agreement, until the liabilities aforesaid may be fully discharged.”
With this provision in force, indicating the policy of the state to be that all mechanics and materialmen entitled to liens shall share ratably, the city sees fit to insert this clause in its contract with the mechanic, indicating a clear purpose on its part to see tha1 the policy of the statute is carried out, and that it will withhold enough of what is due to the principal contractor to pay his subcontractors or materialmen. It is true that such persons are not, under the law as judicially construed, entitled to a mechanics’ lien against any property belonging to the city; but that does not seem to afford a good reason why no effect whatever should be given to this clause of the contract. The city had *601the right, under the decision of Luthey v. Woods, 6 Mo. App. 67, and City of St. Louis v. Keane, 27 Mo. App. 642, to hold enough of what was due McLane, in the character of trustee for the materialmen who had furnished to him materials which he used in the work. But events took such a turn that there was not enough for all, and the city, finding itself thus embarrassed,, instead of executing the trust itself, brought the fund into a court of equity and asked that court to administer it, — in other words, asked that court to require the-contending parties to interplead for itr which was done. It is also true that the city has not, under the terms of the contract, elected to set this fund apart and to hold it for any particular beneficiary. But, nevertheless, I cannot but think that it ought to be distributed, not according to the attachment law, but according to the-policy of the mechanics’ lien law. This clause of the-contract has no doubt existed in the contract forms, on-which the city lets out contracts for city buildings,, •from a time when it was supposed that the city buildings were liable to mechanics’ liens. Persons supplying materials to city contractors may fairly be presumed' to know that such a clause exists in such contracts;. they may, therefore, be fairly presumed to give credit to the contractor on the faith of being protected by the city. But this faith is broken, and this just expectation disappointed, when the- creditor, that makes the first grab at the fund set apart for all, gets a preference over the- others, albeit in a court called a court of equity.
The ground on which this result is reached, if I understand the reasoning, is that this fund has never-been impressed with the character of%a trust, which distinguishes the case from the previous decisions of. this-court. To my mind it is a conclusive answer to this to say that the city has done all that it could safely do to-impress the fund with the character of a trust fund for the equal benefit of the materialmen, and has certainly *602not indicated a contrary purpose by handing it over to a court of equity for distribution.
But it is said that the proceedings in equity, which were taken against the city by the materialmen before the petition of interpleader was filed, were ‘ ‘ equitable ■garnishments,” and, therefore, the provisions of the •attachment law is to be imported into a court of equity, ■under which, instead of doing equity by making a ratable distribution among the creditors of equal merit, the rule of distribution 'is to be, first come, first served. It is true that, in judicial decisions in this state, the proceeding has "been denominated an “equitable garnishment.” But that expression was used for the mere convenience of having a name for an anomalous proceeding ; it was not used with reference to the question of priorities which we are here considering. To my mind there is no such thing as an “equitable garnishment,” in the sense in which it is here sought to employ the term, any more than there is an equitable indictment, or an equitable bill of attainder.
But if we are to disregard the policy of the statute •relating to mechanics’ liens, and if we are also to disregard the contract between the city and McLane, which .shows that both parties had in mind the idea that the materialmen of • McLane should share equally, there is another ground which is inexorably logical, as well as undeniably just, on which the same result should be worked out. It is the doctrine of our supreme court in Rieper v. Rieper, 79 Mo. 352, — the same being, so far as I can see, the last controlling decision of that court upon this question — in which the familiar rule of equity is applied, that what are called equitable assets are to be divided pari passu among all creditors before the •court. The same doctrine was stated and applied, by this court in Heiman v. Fisher, 11 Mo. App. 275, and in City of St. Louis v. Keane, 27 Mo. App. 646.
What, then, are equitable assets? Judge Bakewell, in Heiman v. Fisher, 11 Mo. App., at page 280, *603says that “equitable assets are such as can be reached only by the aid of a court of equity, and the established rule is, that assets which can only be reached in equity must be distributed pari passu among all creditors.”' I take the rule to be that, where assets are of such a character that they are not vendible under an execution at law, and that no lien can be made to attach to them by any proceeding at law, but that they can only be reached and subjected to the demand of a creditor by the aid and the processes of a court of equity, they are, for that reason and that reason alone, equitable assets. Nor does it appear to me to make any difference why, or on what theory of law or of public policy, they are held to be available to the creditor through the aid of processes of equity alone. To bring them within the well-known rule in respect of the distribution of equitable assets, it is enough that they cannot' be touched in any way without aid of a court of equity, and that whatever creditor gets satisfaction out of them must submit himself to the principles of a court whose favorite maxim is that equity is equality.
But to this view there is opposed the argument that, in this state, in the case of what is called a creditor’s bill in aid of an execution at law to reach assets which have been concealed or fraudulently conveyed by the debtor, the rule is that the creditor first filing such a bill gets a priority over the others. Such is, no doubt, the rule in this state, though the contrary principió is every day administered in the courts of the United States here in our midst. But the assets thus pursued and made available by the creditor are not equitable assets within the sense of the rule under consideration, for the reason that they are vendible under his execution at law. The creditor can levy upon his debtor’s interest in property which the latter has fraudulently conveyed, have it sold at sheriff ’ s sale,- become the purchaser; and then bring a suit in equity to clear his-title ; and I understand that a third person may become-*604the purchaser at sheriff’s sale, and have the like remedy in equity. Rights may thus attach to such assets in proceedings at law, which, in their very nature, give a priority — not merely a priority of lien, but a priority of title.
But there is another reason which distinguishes those cases from this. In those cases the moving creditor, even where he does not first sell the debtor’s interest under his execution at law, often goes to great labor and expense in uncovering assets of his debtor. It is, therefore, debatable, to say the least, whether he ■ought to be required, after fighting the battle, to allow the camp-followers who have skulked in the rear, to come in and divide with him the fruits of the victory. But no such condition of things exists in respect of the question we are considering. The debtor has made no fraudulent convejmnce — has concealed no assets. He has simply run away, leaving visible certain assets in the hands of a custodian which is so privileged, under the policy of the law, that it can only be compelled to .account for them and to distribute them by a court of equity. Shall the principle, which rewards the diligence and courage of the judgment creditor who sues to set aside a fraudulent conveyance, be applied so as to give a priority to the creditor seeking satisfaction out of such equitable assets, merely because he may happen to file his bill- a day before the others % This is not rewarding diligence, courage, labor and the expenditure of money. It may result merely in rewarding good fortune. The creditor first filing his bill may not even be the most diligent; he may merely be the most fortunate. A day’s sickness in the case of his rival creditor, the accident of employing one lawyer instead of another, may, if this is to be the rule, turn the scale and give him all, while the others, standing in equal right, get none.
I can see no difference in principle between this case and the case of Rieper v. Rieper, 79 Mo. 352, which was beyond question correctly decided. In both cases the *605assets are well known, uncovered, undenied,unconcealed; but capable of being subjected only by proceedings in equity. The moving creditor, who, as in Hieper v. Hieper, seeks to subject the separate estate of a married woman, gets no lien by the mere filing of his bill, and for the naked reason that the assets ai-e equitable assets, and that it is the act of the-court, and not the act of the cx-editor, that creates the lien. The lien is cx’eated by the decree and not by the bringing of the suit. In all such cases the well-known rule <jf chancery procedure is that all creditors, who come in before the final decree of distribution, share pari passu.
Aside from the bald injustice which results from the view taken by my associates, there are, to my mind? strong l’easons why the provisions of the attachment law, under which we have seen here in St. Louis the spectacle of different deputies of the same sheriff driving fast horses at full speed to see which shall first get to a certain place to levy an attachment upon the stock of goods of a failing debtor, should not be imported into the proceedings of courts which'are called courts of conscience.
I agree, however, with the view of my associates that these materialmen are xxot entitled to anything that was earned by Higgins and Sellers in carrying out the contract of McLane, because, although they are included by the terms <jf the clause of the contract above quoted in the designation of “parties of the first part,” yet I do not see that they were sureties for the creditors of McLane other than the city.