Court Opinion

ID: 9808837
Source: CourtListenerOpinion
Date Created: 2023-08-31 20:52:15.844195+00
Date Added: 2024-06-11T12:19:18.676352
License: Public Domain

Avery, J.,
dissenting: The plaintiffs’ appeal is from the refusal of the Court below to adjudge that, to secure the payment of the amount recovered from the defendant How-land, the plaintiffs have a lien “ upon all the property, rights of property, privileges and franchises of every nature whatsoever belonging to said Howland, under and by virtue of his aforesaid contract with the town of Durham, or which, by his aforesaid assignment, was transferred to the Durham Water Company, and also upon all lands, buildings, reser*626voirs, machinery j engines, boilers, fixtures, easements, rights-of-way, appurtenances and privileges belonging to and connected with and constituting the said Durham WaterWorks, situated in and near the town of Durham,” and to appoint Commissioners to sell the property-to which the lien attached, unless the balance due plaintiff should be paid by a given day. If the plaintiff company has failed to establish its right to a lien against the separate pieces of property that were being used for public pui'poses, and as well to show that any lien attached to the franchise of the defendant company for pipes furnished to its subcontractor, it would seem that the plaintiffs are entitled to nothing more than was conceded to them, without question a judgment against Howland for the balance due for piping.
Entertaining the highest respect for the views of my brethren, I think, nevertheless, that they have fallen into error. My own views of the points involved in the controversy may be summarized in the following propositions:
1. The plaintiff company sustained the relation to the defendant Howland and his assignee, the Durham Water Company, of material man, and while, as between the original contracting parties (the plaintiff and Howland) the debt for material furnished for a private building might, within twelve months, be made a lien, relating back as contended, the lien in favor of a subcontractor under the statute (The Code, § 1802) attaches only from the time of giving notice to the contractor, and only as to. any unpaid balance due to the subcontractor when the notice is given. Section 1781 applies to controversies between the owner of the land and the builder or contractor, and provides for subjecting the land to liability for work doue or material furnished by such builder or contractor and. in his favor, provided notice is filed within twelve months from the completion of the labor ■or the “ final furnishing of the material.” The Code, §§ 1782 and 1789.
*6272. If the lieu laws of 1868-’69, 1869-’70 and 1872-73 ■{The Code, §§ 1781 to 1800) apply to subcontractors, or the class of material men who are provided for under the Act of 1880, ch. 44 {The Code, §§ 1801 and 1802), and give the lien relation back when it is filed within twelve months from the time of furnishing the last material, as between individuals, I do not think thatthelien lajvs were intended to be so construed as to embarrass property devoted, by the very terms-of the contract, to a public purpose, and to be used by the sovereign State or any public or quasi public corporation in the exercise of its delegated sovereign powers.
3. The plaintiff could look in any event only to Howland, to whom it sold the material, and could not sell the franchise or sequester the profits of the defendant company for the satisfaction of Howland’s debt, which was not a lien upon land,-pipes, &c., used for the purpose Of furnishing water, and the statute cannot be construed as creating a lien upon a franchise if none attaches to the property.
After passing laws for the protection of laborers, mechanics and material men at successive sessions from 1868 to 1873, the Legislature made no further additions to or alterations in the statutes bearing upon this subject.till the enactment cf chapter 44, Laws of 1880. If the claims of subcontractors and material men furnishing them were superior to those of the original contractors before 1880 (under The Code, § 1781 to § 1800), why was the Legislature of 1880 guilty of the folly of providing that it should be preferred to “ the mechanic’s lien now provided by law.” If the enactment of that statute was necessary (as the Legislature seemed to think) in order to give such material men, as well as subcontractor, adequate protection against the mechanic to whom he furnished material, then we must look to its provisions alone for the adjustment of the rights previously unprotected, and proceeding upon that obviously fair construction of the law, we find in support of it the explicit proviso to section 1801 that “the sum *628.total of all liens due subcontractors and material men shall not exceed the amount due the original contractor at the time of notice given.” Such notice is to be given by the material man “at any time before settlement with the contractor,” and “after such notice is given no payment to the contractor shall be a credit on or discharge of the lien herein provided.” In the same way the subsequent Act of 1881 (The Code, §§ 1804 and 1805) protected subcontractors and laborers against contractors and stevedores only after notice given to the master, agent or owner of a vessel, thus showing a purpose to secure still another class of laborers not previously provided for.
Howland transferred the benefits and burdens of the original contract to his co-defendant company, and from and after January 1, 1887, became subcontractor, but still leaving his individual arrangement with the plaintiff intact, finished the work and received payment in negotiable bonds of the Water-works Company, which were payable to bearer and were secured by a mortgage on the franchise and property of said company. Up to the time when the plaintiff filed a lien on the reservoir of the company with the acre of land on which it was located, the line of piping, passing three feet under ground through the lands of various persons who cultivated the soil above the pipe-ditch and through seven miles of public street, under the said contract with the town of Durham, and also on the franchise of the defendant company, the company had no notice that plaintiff was furnishing Howland pipe and castings, and no information from whom he was purchasing it. When the notice was at last given, on July 19, 1887, the jury find that the defendant Durham Water-works Company had paid to the plaintiff in discharge of its indebtedness, under the agreement of January 1, 1887, fifty thousand dollars of its first mortgage bonds, transferrable by delivery. When the notice was given, therefore, the contractor stood in the same relation *629to the material man as though itc had previously paid the subcontractor in money every farthing due under the contract. We cannot assume that such bonds remained in the hands of Howland any more than money ora bill of exchange. How, then; can the Courts, without resorting to judicial legislation, make the lien of the plaintiff, as material man, exceed the “sum total” of “the amount due the original contractor (or the assignee who, in law, stood in his shoes) on the 19th day of July, 1887, when the plaintiff gave notice ? The Code, §1801. And when the notice was required to be given “before the settlement with the contractor” (The Code,% 1802), how could the plaintiff claim a lien if the debt had been discharged before the defendant company had learned who was furnishing the pipe?
As against Howland, if he had- contracted directly with the plaintiff to furnish pipe to be placed in a private house on his own land, it is admitted that the sale of his land to a third person, before notice of the lien filed, would not have defeated the lien or prevented its relation back under sections 1781 to 1800. This is the only point settled in Burr v. Maultsby, 99 N. C., 263, which is cited to sustain the opinion of the Court. Neither in that case, nor in any other heretofore decided by this Court, has it been held that the responsibility of a contractor for material furnished a subcontractor extended beyond his indebtedness, when he received notice of the claim of the material man or attached at all to his property, when notice was given after settlement with the subcontractor.
Secret liens have never been favored by the law, and nothing but the clearest expression of the legislative purpose should be construed to extend their operation in derogation of common law and common right. Jones on Liens, sections 170, 1854, 1856. It is conceded that the intent of the Legislature to give to mechanics, as original contractors, a lien which may have relation back and affect the rights of subse*630quent purchasers, is clearly expressed in the statute, and that material men dealing with owners of land, on which improvements are made, come within its provisions. But in the face of the express provision of the statute that the subcontractor’s lien shall not relate back behind the notice, I do not concede the authority of the Courts to create another lien not contemplated by the Legislature. The general, almost universal, construction of similar statutes elsewhere has been that a subcontractor has no lien until “service of notice,” and then only to the extent of the unpaid balance due to the contractor, and that upon service of notice the lien of a subcontractor does not relate back so as to defeat intervening rights growing out of conveyances of land by the owner, or attachment of the debt due the original contractor. 15 Am. and Eng. Enc., 95, 97, note 5; Cohoon v. Levy, 6 Cal., 295; Brown v. Marsh, 10 Cal., 435; Schneider v. Hobrin, 41 How. Pr. (N. Y.), 236; McNeal Pipe & F. Co. v. Bullock, 38 Fed. Rep., 585. Under the provisions of our statute (The Code, §§ 1801 and 1802), the material man who deals with the original contractor is treated for all purposes as a subcontractor, and in express terms is given the same remedy. Before the lien was filed or any notice given to it, the Water Company, in ignorance of the existence of the contract between plaintiffs and Plowland, indeed not knowing from whom he had bought the pipe and castings, delivered to him, in discharge of their liability to him, negotiable bonds of the company secured by a mortgage on its franchise, property and rights to the full amount of his debt. Howland held $5,000 in these negotiable bonds when the lien was filed, but they had passed beyond the control of the Water Company. The manifest meaning of the statute (section 1801) is that the contractor shall be answerable at his peril to the material man for every dollar paid the subcontractor after notice of the lien; but the effect of a payment in negotiable bonds is the same as a payment in money, in that *631the bonds cannot be recalled. The debt is no longer one growing directly out of the contract to finish the reservoir and ditches; but it is founded upon a distinct agreement to pay interest on these bonds for a given number of years, and the principal at maturity is secured by the conveyance of the franchise, etc., to a trust company in New York. Whether the plaintiffs could have reached these bonds and subjected them as property of Howland when the lien was filed, it is not necessary to determine. For present purposes it is only necessary to say that the notice came too late for the Water Company to protect the plaintiffs by withholding a payment still due, as was contemplated by the statute. I conclude, therefore, that the lien could not relate back prior to July 19, 1887, when notice was served.
But I maintain further, that if it be admitted that, ordinarily, where the rights of individuals only are involved, the Legislature intended to create a secret lien in favor of subcontractors or material men who deal directly with them, still, unless the Legislature has explicitly so declared, property devoted to the use of the State, or conveyed for corporate purposes to a public corporation, such as a town, or a company organized to furnish water to a town, is not subject to-such secret lien. We will search in vain in our statute law for any such expression of such legislative intent.
“ In the absence of special statutory provision on the subject, it would seem,” says Judge Dillon (2 Mun. Corp., 576 [446] ) “ to be a sound view' to hold that the right to contract and the power to be sued gives the creditors a right to recover judgments, that the judgments should be enforcible by execution against the strictly private property of the corporation, but not against any property owned or used by the-corporation for public purposes, such as public buildings, hospitals and cemeteries, fire engines and apparatus, waterworks and the like, and that the judgments should not be deemed liens upon real property except when it may be taken in execution Y *632Freeman, in his work on Executions (sec. 123), also sustains the view that property held or used for the public or governmental purposes of a municipal corporation is not subject to ■execution. Both Freeman and Dillon agree that “ buildings which cannot be sold under an execution cannot be sold on foreclosure of a mechanic’s lien,” and that “it is only such property as can be sold under judicial process that is subject to such lien.” 2 Dillon, sec. 577; 1 Freeman on Ex , sec. 126; Bass v. Navigation Company, ante, 439. In the case of Foster v. Fowler, 60 Pa. St., 27, which is cited with approval both by Dillon and Freeman, the Court held that a water company, formed for the purpose of supplying a town with water, was a public corporation, and its buildings necessary for carrying on its operations were Dot subject to a mechanic’s lien, and the doctrine finds support in many other decisions, and is approved by discriminating text-writers. 2 Jones on Liens, sec. 1378, note 2; Phillips on Mechanic’s Liens, sec. 1804, note 1; Commissioners v. Torney, 115 U. S., 122. The trend of our own decisions has been in the same direction in recognizing the principle upon which the authorities cited rest. Hughes v. Commissioners, 107 N. C., 602; Gooch v. McGee, 83 N. C., 64. A direct authority, in which it seems the same plantiff brought an action under a similar statute of the State of Alabama, is to be found in Pipe & F. Co. v Bullock, supra, in which the Circuit Court of Alabama held that pipes furnished by contractors in constructing city water-works for a water company, did not constitute a lien upon its property, and that the plaintiff could not recover anything beyond the amount due from the contractor to the subcontractor when notice was given of the lien.
The town of Durham, though not a party to this action, cannot afford to be an indifferent observer, if the plaintiff should succeed in making good some of its demands. But whether the municipality is before the Court or not, we must take notice of the admitted facts that the reservoir and land *633upon which it is situate, together with ditches, pipes and castings, were being used for supplying water for public purposes in the town, and that the property cannot be sold without interfering with the conveniences of the municipality, and embarrassing it in the exercise of its governmental duties. The fact that this property is used for the town is sufficient to exempt it from sale under execution except as incident to a franchise, under which a purchaser might step into the shoes of a corporation and discharge its functions, when he could not accomplish that end as the individual owner of the reservoir, or of the easement in the ditches or of the pipes. 2 Dillon, supra; Freeman, supra, 115 U. S., supra. Leaving the town out of view, the Water-works Company is a public corporation, and in the language cited by Chief Justice Smith in Gooch v. McGee, supra, “as to land which has been appropriated to its corporate objects and is necessary for the full enjoyment and exercise of any franchise of the company, whether acquired by purchase or the exercise of the delegated power of eminent domain, the company holds it entirely exempt from levy and sale, and this on the ground of prerogative or corporative immunity; for the company can no more alien or transfer such land by their own act than a creditor by legal process, but the exemption rests on the public interests involved in the corporation.” Gooch v. McGee, supra; Railroad v. Caldwell, 39 Pa., 337; Gore v. Tide-water Company, 24 Howard U. S., 263; Jones, supra, section 180. It is clear that the current of authorities is in favor of the doctrine that in the absence of statutory provision, neither the property nor the franchise of a public corporation is subject to sale under execution upon the same principle that exempts a public square on which a courthouse is built. For a review of cases, see discussion by Freeman in Note 15, Am. Dec., 595. It was this concensus of opinion which led the Court, in Gooch v. McGee, supra, to question the soundness of the principle laid down in State v. *634Rives, 5 Ired., 297, and to declare, in effect, that but for the enactment of our statute (The Code, §§ 671 to 678) neither the property nor the franchise of a public corporation could be sold. Bass v. Navigation Company, supra.
The first contention of the plaintiff is that though the defendant company could sell nothing but the franchise, an individual, where he has induced a city to give an easement in its streets and other privileges by agreeing to devote a reservoir and land on which it is constructed, with the pipes laid in ditches, to the purpose of supplying the town with water, could subsequently subject said land and piping, as distinct property, to a lieu filed after the works were in operation by a manufacturer who furnished the pipe. No matter,, therefore, what expense a municipality might incur in procuring water, if it deal with an individual instead of a corporate contractor, the public would be left dependent upon the solvency or honesty of the contractor, because separate sales of the land on which the reservoir is located, and the other property, would necessitate new arrangements for a water supply. Is it possible for a city to provide for the wants of its citizens and the protection of the public against fire, without organizing a corporation as a contractor or incurring the risk of failure and disappointment? It appears as. a fact in this case that the plaintiff had notice of the purpose for which the pipes and castings were to be used. Plaintiff knew that the land bought for the reservoir was held and used for the purposes of a public corporation acting for the people in its governmental capacity under an agreement with Howland. They should therefore have looked more closely to their security, certainly when the contractor made default in paying monthly according to his agreement, though it is not incumbent on the Courts to point out how the debt could have been secured. This case presents a widely different state of facts, as already intimated, and questions of law easily distinguishable from those passed upon in Burr v. *635Maultsby, 99 N. C., 263, and the class of cases to which it belongs. The contesting parties in those cases were individ: uals, between whom the original lien law (The Code, § 1781 to 1800) was intended to operate and to relate back to the time of beginning the work or furnishing the material. But a city, when it engages in the work of supplying its inhabitants with water and furnishes it for the purpose of protecting public buildings, such as the court-house aud jail, as well as private houses, as was provided in the contract in this case,, is an authorized agent of the sovereign State, clothed with authority to aid in the discharge of this governmental duty to the people. United States v. Railroad Co., 17 Wall., 328; Hughes v. Commissioners, supra; Kluin v. New Orleans, 99 U. S., 149; Cooley Const. Lim., 655, 656.
At the time when the plaintiff agreed to furnish. Howland the piping, they knew that it was to be used in fulfilling the' contract with the municipal corporation, and they knew that the land on which the reservoir is located was to be used for the purpose to which it was devoted. If the State of North Carolina had authorized the Governor to contract with a person or corporate body for a supply of water for the protection of public buildings in Raleigh, and incidentally for the-use and protection of the people of the whole city, would it be contended that the piece of land covered in part by the ponded water, and on which the reservoir and the pumps for throwing the water into it are located, would be at all times subject to be sold separately from the privileges, to satisfy judgments for debts of the individual contractor, when, if the contractor had been a body corporate, the principle announced in Gooch v, McGee, supra, would have protected it from every species of liens upon its land or other property, except as incident to a lien upon the franchise ? It would not be contended that Burke Square, upon which the Governor’s Mansion was completed less than three years ago, could be sold to satisfy the lien of one who furnished material for the Mansion to a contractor *636■who was working upon it — such, for instance, as the pipe furnished by the manufacturer to the plumber for conducting gas or water through the building. Yet the protection •extended to corporations, acting for the State in the exercise •of delegated power, is founded upon the idea that they are ¡agents, like attorneys in fact, entitled to all the rights that the law gives to the principal.
If the lien did not attach to the reservoir, or land, or piping, •or right to lay it in the ditches, as separate and distinct pieces of property belonging to Howland, so as to subject •each to sale separately, it is clear that it could not attach to the franchise of the Water Company. So soon as that company bought from Howland, and he assigned his contract with the city to it, on January 1, 1887, he entered into an .agreement with the purchasing company to finish the work, •and, as to all labor done and material furnished subsequently, was a subcontractor. I cannot, for the reasons given, concur in the position maintained by the late Chief Justice, and adopted by the Court, that the land acquired by Howland for a reservoir and the right-of-way for piping over the land of private persons is subject to the lien and liable to be sold to satisfy the plaintiff’s judgment. I see no difference in principle between allowing the lien on the right-of-way in the streets of the town and on the connecting piping and reservoir outside of its limits, on which the people are ■dependent for their supply of water.
But while giving its sanction to the argument of the late Chief Justice, that a piece of land bought by a private individual and used for a site for a reservoir to furnish a supply •of water to the State capítol under a contract with the State, would be subject to the lien of a material man dealing with -such individual, and liable to be sold to satisfy his claim, 1 understand that the Court,now add the suggestion that a Better, but not an exclusive remedy would be the sale of the •franchise under section 671 of 1 he Code, or the appointment *637of a receiver to take charge and devote the net earnings of the corporation to the satisfaction of the claim.
Admitting that the Water-works' Company could sell its-franchise privately, and that as a company receiving tolls- and fares its franchise is subject to sale under execution in accordance with the provisions of the statute, I still maintain that no lien was created on the franchise held by the defendant company by the service of notice by the plaintiff as a material man, after the claim of the subcontractor had been paid in full, and that the defendant company owes no debt for which its earntngs can be taken by a receiver, for the-reasons already given.
If a lien was created at all, then, by the express terms of the statute, it attached not to the franchise, but to the “ house- and real estate” on which the material was used. How,, then, can this Court, in order to give adequate redress for the plaintiff, attach the lien, in derogation of common right, to the company’s franchise for the security of Howland’s, debt?