Court Opinion

ID: 7061548
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:21:23.303775+00
Date Added: 2024-06-11T16:12:11.756916
License: Public Domain

*193Dissenting Opinion.
Reinhard, J.
The appellee performed work and labor for one Jasper, the owner and keeper of a livery stable. These services were rendered during the seven weeks immediately preceding the 25th day of October, 1894, and amounted to about $60.00. Prior to that date, viz.: on January 9, 1894, Jasper had executed a chattel mortgage on the stock.and other contents of the stable to the appellant Bell, to secure him in the payment of a bona- fide debt of $1,000.00. The mortgage was duly recorded and was in all respects regular and for an amount, equaling the entire value of the property to which it attached. Jasper in good faith transferred the property to Bell in payment of his mortgage debt, and Bell sold and transfered it in turn to appellant Martin for a valuable considertion. Martin had full knowledge of appellee’s claim at the time of the purchase.
Appellee asserts a lien upon the property prior and paramount to the interests of the appellant Martin. It is agreed that whatever rights the appellee has acquired are founded upon and grow out of the provisions of section 7051, Burns’ E. S. 1894 (5206, E. S. 1881). That section reads as follows:
“Hereafter, when the property of any company, corporation, firm or person, engaged in any manufacturing, mechanical, agricultural or other business or employment, or in the construction of any work or building, shall be seized upon any mesne or final process of any court of this state, or where their business shall be suspended by the action of creditors, or put into the hands of any assignee, receiver or trustee, then in all such cases the debts owing to laborers or employes, which have accrued by reason of their labor or em*194ployment to an amount not exceeding $50.00 to each employe, for work and labor performed within six months next preceding the seizure of such property, shall be considered and treated as preferred debts, and such laborers or employes shall be preferred creditors and shall be first, paid in full, and if there be not sufficient to pay them in full, then the same shall be paid to them pro rata, after paying costs.”
Waiving all technical questions, and assuming the statute cited to be in force, and that it has not been repealed by implicaion as seems to have been intimated or at least questioned in the case of Eversole v. Chase, 127 Ind. 297, and granting that the conditions are such as entitle the appellee to enforce his claim under the statute, over the chattel mortgage and the rights growing out of the same, the proposition we are to determine is whether the mortgagee of a chattel mortgage, executed in good faith, and for a valid debt, or the assignee of such mortgage, may under the provisions of this section be cut out and deprived of the benefits of a legally acquired mortgage lien by a claim of the character of that of the appellee in this action, originating as much as nine months subsequent to the execution and the recording of such mortgage; and whether by virtue of the same section, by mere silence and without any legal steps being taken by which the intention to hold such a lien is declared and made a matter of public record, a charge may be fastened upon the mortgaged property superior and paramount to that of a chattel mortgage more than nine months old and that, too, in the absence of an express provision to that effect in the statute itself.
I am of the opinion that the case of Bass v. Doerman, 112 Ind. 390, does not decide that the employe acquired a lien which is even of as high a character as a chattel mortgage or other lien that accrued prior to *195the time of the performance of the labor of the employe, and that acquires validity only by being recorded or by. having notice thereof made a matter of public record. A careful reading of the case cited will show, as I think, that it does not sustain the view taken by the majority. What the court doubtless intended to hold, and as it appears to me did hold, was that a claim of the character of the appellee’s in the present case should have preference over that of any general creditor of the insolvent for debts that had accrued during the same period in which the laborer’s lien accrued, and that a transfer of the property in payment of such a general debt cannot be made to deprive the laborer of his claim; in other words, that general claims and debts against the concern which accrued contemporaneously with the claim of the employe should be deferred to the latter, and that the fund arising from the sale of the property should be used to pay such preferred claims in full before payment of general claims. There is no intention from anything that appears in the statute itself, as I read it, that the laborer was to acquire a lien at all, except a mere charge on the assets entitling him to preference over general creditors, much less one of such a superior character as to reach back and become paramount to all other liens, of whatever nature, that were created before the performance of the labor constituting the basis of the employe’s claim. A debt may be a preferred debt in a sense, and yet not be superior to another debt for which a lien is given, and so a creditor may be a preferred creditor and still his claim may not be superior to that of lien holders. The word “preferred” is a relative term. It necessarily refers to something else, and means that the thing to which it is attached has some advantage over another thing of the same character, which but for such ad*196vantage would be like the other. State v. Cheraw, etc., R. R. Co., 16 S. C. 524. Under this definition a preferred debt or claim, which is not a lien, is superior only to another preferred debt or claim of the same character, or that is not a lien. It is never superior to a lien unless made so expressly by the terms of the law. When we speak of “preferred claims” in connection with the settlement of decedents’ estates, for example, we do not necessarily mean claims that are superior to liens, or even equal to them. Thus a physician’s bill for services in attending the decedent in his last illness is a preferred claim or debt, and the physician holding such claim is. a preferred creditor, but this does not mean that his claim is superior to that of a mortgage or other lien created in the life time of the decedent. The same is true of funeral expenses, expenses of administration, etc. Such a claim is preferred simply to the general debts of the decedent; that is to say, to debts or claims that are not liens, and it becomes a charge upon the assets of the estate to be administered in preference to such other debts or claims that are not liens, just as a claim of the character with which we are now dealing is a charge upon the assets of the insolvent and is preferred to other debts not liens. But it does not become superior to those claims which are liens. Hence I do not see by what process of reasoning the conclusion can be reached that the statute in construction makes the claim of the appellee a lien superior and paramount to all other liens, of whatever character and antiquity, that may exist against the insolvent’s property.
Granting, however, that the Bass case referred to does decide that the laborer has a lien, and that the statute provides that the same shall be a preferred lien (which I do not see how it can be admitted), the question still remains, to what liens or claims is it pre*197ferred or superior? How far back may the preference be carried under the provisions of the statute? The majority opinion holds that the labor lien is'prior and superior to all other liens, even those previously created.
The section referred to provides that claims of employes shall be preferred which have accrued for work or labor performed within the six months next preceding the seizure of the property or the suspension of business. If other liens have attached during that period to which the employe’s lien is to be preferred, and a preference is given over liens, that preference must allude to liens that accrued with the same period as the employe’s lien; or, in other words, to liens of the same character as to age. There is no language in the decision of Bass v. Doerman, supra, or in the statute itself which even remotely intimates, much less warrants, a construction which would give the employe a lien antedating that of a mortgage or other lien on the property given to secure a tona fide debt, and executed and recorded more than nine months before the seizure or sequestration of the chattels. To hold that the laborer by virtue of this law has a lien for his wages superior to all other liens, then or before then existing, is to inject into the statute language which is not there, and to enlarge by construction the scope of the rights conferred by this statute far beyond anything ever contemplated by it, even when the same is considered in the most favorable light of any interpretation placed upon it by the Bass case.
If such a construction is to prevail, a class of liens will be created which was never intended and which in the language of the Supreme Court of Pennsylvania, would be “of the most dangerous and obnoxious character. No one could purchase property without assum*198ing the risk of the insolvency of the vendor.” Wilkinson v. Patton, 162 Pa. St. 12, 29 Atl. 293.
More than that, no one who has taken a chattel mortgage to secure a debt, however sacred, will have any reason or ground to feel secure in the validity or priority of his lien, although the public records may be absolutely clear as to the property of the debtor covered by such mortgage. If this be the law, and A sell to B a. valuable horse, taking from the purchaser a chattel mortgage upon the animal to secure a balance of the purchase money still due, and B embark in the livery business, placing the horse in said business as part of the capital stock or assets thereof; or if B sell the horse to C, who afterward engages in such business, using the animal therein, every laborer or employe in the service of B or C would acquire a lien upon said horse for the value of his services for not exceeding $50.00, which would be superior to that of the original owner for the purchase money. The same is true of other personal property. The farmer who sells a cow and takes a mortgage for all or a portion of the purchase money, will be postponed in the collection of his debt or enforcement of his lien to the dairy maid who has rendered services in milking her. The coachman will have a prior lien upon the team of horses groomed by him, to a former owner who holds a mortgage for purchase money, and so on, ad infinitum. I do not believe that any such injustice, not to say absurdity, was contemplated by the enactment of this statute, yet these are only some of the many pernicious results that will be sure to flow from such a construction, if it should be upheld.
It is an old and familiar principle that statutes which are in derogation of common or private rights, or which confer special privileges, or impose special burdens or restrictions upon individuals, or upon any *199class of persons, which are not shared by others outside of such class, are to be strictly construed. Black Interp. of Laws, 300. But the construction of the prevailing opinion, while its effect will be to greatly restrict the rights and interests of lienholders other than the class established by this construction, and to confer special privileges upon the class of. persons coming within the provision of' the law thus construed, that cannot be enjoyed by others outside of such class, would be an excessively free interpretation in favor of the class benefited, thus violating as it occurs to me, one of the fundamental and cardinal rules of statutory construction. And to say, as does the majority opinion, that the creation of such a preferred lien by mere construction affects only the remedy and not any right of the parties is to my mind, incomprehensible. A lien given by statute is not a remedy and to so characterize it would be a misapplication of the term., as much so as it would be to say that a mortgage was but a remedy. Atkins v. Little, 17 Minn. 342. Statutes relating to remedies affect merely the course and form of the proceedings, and not the substance of the judgment to be pronounced. The withdrawing of a means of enforcing a right already existing strikes at the right itself and impairs the obligation of the contract. Johnson v. Fletcher, 54 Miss. 628, 28 Am. Rep. 388.
Much stress seems to be laid upon the fact that our Supreme Court, in several cases, has given to statutes of a similar nature, what is claimed to be, an equally broad interpretation and has expressly approved the decision in Bass v. Doerman, supra. I think, however, when the cases which it is claimed contain such approval are closely examined, it will be found that they are not at all analogous in principle to the case at bar, *200although in some of these cases the phrase “liberal construction” is made use of.
Thus, in Pendergast v. Yandes, 124 Ind. 159, no question of superiority of one lien over another arose, but the sole point discussed and decided was that the plaintiff, who was the superintendent of the defendant’s lines of gas pipes, with authority to hire and discharge employes, was a laborer within the meaning of the statute and was therefore entitled to have his claim for wages declared a preferred claim, as against the claims of general creditors.
The case of Farmers’, etc., Co. v. Canada, etc., R. W. Co., 127 Ind. 251, has reference to a mechanic’s and materialman’s lien upon a railroad, and does not involve the construction of the statute in consideration, although the case of Bass v. Doerman, supra, is cited to the proposition that when the mortgagee accepted his security he must have contracted with a view to future labor to be performed, and for which he knew the law would give the employes a preferred lien. But in the case alluded to (Farmers’, etc,, Co. v. Canada, etc., R. W. Co.), while the priority of the laborer’s lien was upheld, it was done upon the principle and for the reason that when the mortgagee accepted the chattel mortgage the property mortgaged had in fact no existence, for the railroad had not been built, and that the laborer had subsequently bestowed such work upon it as rendered it much more valuable than it was when the mortgage was executed; and, in fact, “gave all there was of value to the property claimed under the mortgage.” Of course, it is not contended that any such principle as this enters into the consideration of the case at bar. Here the entire property had an existence at the time the mortgage upon it was executed, and instead of its value having been increased, it is but natural to suppose that with the *201lapse of time it had actually deteriorated. The equities of the case of Farmers’, etc., Co. v. Canada, etc., R. W. Co., supra, necessarily entered into the construction of the statute, and must be considered in connection with its language. That this is so is evident from the language of Elliott, J., who in the course of the opinion says: “That there is a natural difference between a case, such as this, where the railroad has not been built, and a case where the railroad has been constructed, is so evident that no one can fail to perceive it the instant his attention is directed to the matter.”
Another case relied upon as giving sanction to the doctrine of “liberal construction” invoked by the majority is that of Aurora Nat. Bank v. Black, 129 Ind. 595. In that case, it is true, the general statement is made that such statutes should be liberally construed, and if this is any authority for injecting language into the statute which is not contained in it, then there is nothing further to be said. But it should not be forgotten that in the case just cited the statute we are now considering was not under construction, and that whatever was decided had reference to sections 5286-5288, Burns’ R. S. 1894 (3999-4001, R. S. 1881), which in express terms give the employes of a corporation doing business in this State a prior lien upon the corporate property for the labor performed; and even there, the lien is given only from the date of employment, and is made superior only to other liens acquired or created subsequently to the date of such employment, the sections cited also providing the method' of acquiring and the means of enforcing such liens.
In the case cited last, it was not held that the lien thus to be acquired is superior to all other liens, whether created before or after the date of the employment of the laborers, or that the statute contem*202plated any rights not apparent on the face thereof. The point decided there was that the lien extended to property of the corporation acquired and transferred by it the day before it went into the hands of a receiver and after the performance of the labor for which the lien was asserted. This interpretation was just and reasonable, but it falls far short of supporting the position taken by the appellee in the present case, and sustained by the majority of this court.
Nor is there anything in the case of State v. Aetna Life Ins. Co., 117 Ind. 251, that requires us to adopt the construction of the majority of the court in this case.
Every case and its language must be interpreted with reference to the question under consideration. If isolated expressions or dicta of the judges can be used as authority for the establishment of such extraordinary doctrines as are declared in the prevailing opinion in the case before us, then there is no longer any security in a mortgage and other honestly acquired liens, and the only remedy is in dealing exclusively upon a cash-basis. In the case last cited, however, it is expressly declared that the statute itself must determine the character and extent of the lien, although the intention to make it paramount might be gathered from the general words and purposes of such statute. If there is anything in the general language or in the purpose of the statute now under construction indicating that the employe’s lien should reach back nine months, or to any indefinite period however remote, and supplant the lawfully acquired claims and rights of mortgagees or other lien holders, I have failed to perceive it. It was further expressly held, in the case last referrecl to, that the statute then in consideration did not contain any provision evincing an intention to make a preexisting mortgage lien subordinate to that of an assessment for benefits arising from the con*203struction of a ditch, and that without such a provision the court could not give the statute that construction. Just what language would be sufficient to manifest such an intention is not stated, nor do I believe that the mere fact that the claim for which a preference is asserted is that of a laborer or employe, will of itself give it such preference.
In Warren v. Sohn, 112 Ind. 213, the court but gave effect to the words of the statute giving miners who are employed in performing labor in mines a paramount lien over those of all other claimants except for taxes. I am not now disputing the proposition that a statute might not by its terms give the kind of a preference claimed in the present case, but what I do insist upon is that the law under construction does not give it.
When a lien is purely statutory, as is that claimed here, if any there be, it exists and must be controlled solely by the statute. Cook v. State, 101 Ind. 446; Hauch, v. Ripley, 127 Ind. 151; Jones on Liens, section 105.
Even a mechanic’s or materialman’s lien only attaches as of the date when the mechanic first performs any labor or the materialman furnishes any material, and a preexisting mortgage lien cannot be subordinated to a mechanic’s or materialman’s lien so far as the realty is concerned upon which the building is erected which was placed there by the work of the mechanic, and in which the materials furnished are contained. As to the building itself, the lien is, of course, superior, and justly so, for the obvious reason that the labor and material have made the building what it is.
It is indeed difficult to discover any equity in the claim of appellee as compared with the right of the appellant or his grantor. When the appellee rendered *204the services for which he asserts the lien in question, he had constructive notice of the mortgage and was bound by it, and must be presumed to have acted in view of such knowledge. Had the appellant’s lien been contemporaneous with that of appellee, the case might be different, of course.
If the majority opinion is right, there is not a chattel in Indiana upon which it would be safe to take a mortgage for purchase money or any other debt; for who knows how soon the owner and his vendee may choose to put it to a use which will bring it within the operation of this statute and by reason of which any number of labor liens may attach to it? Nor am I able to perceive the force of the suggestion that the amount to which the laborer’s lien is limited makes the right given a less dangerous one, for although the amount of one man’s claim for labor is limited to $50.00, the number of claimants who may assert such a lien is as limitless as the sands of the sea.
It will not render the statute more just, nor improve the value of vested securities thus stricken-down, to say that the mortgagee, or other lienholder besides the laborer, can take notice of the existence of this law at the time the security is taken. The property may certainly be put to uses in the future,- of which at the time the security was accepted there was not the remotest indication nor prospect, and to say that whenever a chattel mortgage or other lien is given to secure a debt the lienholder must anticipate such extraordinary contingencies is, as it appears to me and as I think I have shown, to strike down vested rights and securities, and to inaugurate a system by which creditors will be driven to resort to other means of securing themselves than by those, or at least a portion of those, which have always existed for his benefit in the commercial and business world.
*205It must be remembered, too, that the lien here awarded the appellee, and for which a superiority is given over an older and naturally superior lien, attaches without any notice being given to hold the same upon the public records, and without a record of any kind being made thereof.
Moreover, if the lien here given is preferred to every other lien, there is nothing to hinder it from being preferred to a tax lien, and the State, county and municipality will all be superseded in their claims by the operation of this extraordinary statute. That the legislature has the power to enact such a law may be true, but I feel confident it has not done so in this particular instance.
For these reasons, among many others that might be mentioned, I cannot bring myself to agree with the prevailing opinion as to the meaning given this statute.
Eoss, J., concurs in the views expressed in the dissenting opinion of Eeinhard, J.