Court Opinion

ID: 3429970
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:58:51.620134+00
Date Added: 2024-06-11T09:25:20.652206
License: Public Domain

I cannot concur in the conclusion of the majority. The owner of the premises and the tenant entered into a written contract, by the terms of which the lessee agreed to erect certain improvements, the ownership of which was to vest in the lessor ultimately. Appellees furnished the material for such improvements. Under such a contract, requiring the lessee to make improvements for the ultimate benefit of the lessor (owner), I do not believe, as stated by the majority, that "it is too elementary to need discussion that the lien claimants cannot acquire a greater interest in the real estate than that held by the lessee." Their interests are altogether different from those of the lessee. Conceding that a lessee may be deemed "an owner," within the contemplation of the mechanic's lien statute (Code of 1924, Section 10270), and that he may do such acts as create a mechanic's lien against his leasehold interest in the premises, it does not follow that the lien claimants in the instant case are limited to a lien against merely the leasehold interest of the tenant. This is for the very obvious reason that the contract of lease required the tenant to make the improvements for thebenefit of the lessor. A homely illustration will convey my thought. If the contract of lease is silent, and the tenant builds a corncrib on a leased farm for his own use, the lien claimant could have a lien on the improvement and the leasehold interest of the tenant. The landlord would not be affected by such an arrangement. But suppose the lease bound the lessee to build the crib and to leave it there for the benefit of the landlord and the improvement of the premises, could it be said that the lien did not attach to the landlord's interest in the premises, as well? If not, then a door for fraud has been opened, in direct contravention of the mechanic's lien statute, as I view it.
If the majority are right, all a landlord needs to do is to lease his premises to an insolvent tenant, and bind him by contract to erect valuable improvements on the premises, and when *Page 1382 
in due time the tenant absconds, and forfeits his lease, the landlord will hold the improvements, free from any mechanic's lien.
To adopt the declaration of the majority, "this is neither law nor equity." We have never so held before. We should not announce it now.
We have frequently held that, when a vendor by specific provision in a contract of sale contemplates or requires the vendee to erect improvements upon the premises, a mechanic's lien attaches to the premises, which may be asserted against the vendor's interest therein. See Jameson  Sons v. Gile, 98 Iowa 490;  Kimball Bros. Co. v. Fehleisen, 184 Iowa 1109; Partello v.White, 197 Iowa 24; Veale Lbr. Co. v. Brown, 197 Iowa 240;Nunemaker v. Kulhavy, 197 Iowa 962; Schoeneman Lbr. Co. v. Davis,200 Iowa 873, and cases cited therein.
I see no good reason why the same rule as to improvements placed on the premises under contract should not apply between landlord and tenant, as between vendor and vendee. In the instant case, the landlord, by his contract, required the tenant to put the improvements on the premises, and provided that they should become the landlord's property and remain thereon at the termination of the lease. Under such circumstances, I confess I am at a loss to understand how it can be held that the lessor "had acquired specific interest in the improvements that were put upon the place" under the contract, and yet that the claimants who furnished the material for such improvements "can enforce nothing against Graeser's [the landlord's] interest in this property." The positions are wholly inconsistent, as I view it.
We had a similar situation in Denniston  Partridge Co. v.Brown, 183 Iowa 398. There a tenant had authority to make repairs and improvements under the terms of a lease. The permanent improvements were to revert to the owner at the termination of the lease. Speaking through Mr. Justice Gaynor, we said:
"It would open the door to great fraud in practice to allow the owner of property to lease it to another, contract with the other to put on permanent improvements, — improvements that are only valuable when standing upon the property, — and then say that the materialmen and the laborers who place these permanent *Page 1383 
improvements upon defendant's property have no claim against the property, and must go unrewarded if the tenant is insolvent."
If we were right then, the majority is wrong now. I see no reason to recede from the rule previously announced. I would hold the lien to be valid, not only against the improvement itself, but against the real estate. Appellees have not appealed from the decree establishing the lien against the improvement only, and hence the question of a lien on the real estate is not before us. The improvement can be removed without injury to the freehold.
The only legitimate answer to the position which we have heretofore taken, and which I think we should adhere to, is that, in the instant case, the landlord and tenant agreed between themselves that no mechanic's lien should be filed against the premises. The recording of this lease did not bind appellees. The recording act applies only to "subsequent purchasers." The mechanic's lien claimants are not subsequent purchasers, within the meaning of the recording statute. Fletcher v. Kelly, 88 Iowa 475. The rights given to the mechanic's lien holders are purely statutory. A landlord and tenant, or a vendor and vendee, cannot deprive a mechanic's lien holder of his statutory right to his lien, merely by a contract of the kind in question between the parties, even though the same be acknowledged and recorded.
I know of no case in this state or under any statute similar to ours, holding that a provision of this kind in a contract between landlord and tenant, even though duly acknowledged and recorded, imparts constructive notice to one who furnishes material or labor for the erection of improvements upon real estate, so as to deprive the materialman or laborer of his statutory right to a mechanic's lien. Such a contract is valid and enforcible as between the parties, but constructive notice thereof does not deprive a mechanic's lien claimant, who is not in any way a party to said contract, of his statutory right to his mechanic's lien.
The contract of lease required the lessee to construct the improvements in question upon the leased premises, and also provided that all improvements so placed upon the premises *Page 1384 
should vest in the lessor at the termination of the lease. The clause in the contract providing that no contractor should become entitled to any lien against the premises certainly did not have for its purpose the prevention of the making of the improvement contemplated. The contract contemplates that the lessee should pay for said improvements in such time and manner as to prevent the filing of a mechanic's lien, and should protect the property therefrom. The breach of such contract leaves the landlord with his remedy against the tenant. But the lienors have not waived any of their statutory rights to mechanics' liens, nor are they deprived thereof by any constructive notice of the terms of the lease in question. As bearing somewhat on the question discussed, see Oliver  Miller v. Davis, 81 Iowa 287.
I would affirm.
VERMILION, J., joins in this dissent.