Opinion
No. 23801
Decided March 15, 1933.
Liens — Highway subcontractor relinquishing lien releases surety on principal contractor's bond, when — Section 8324 et seq., General Code — Notary public may execute sworn statement, although attorney for lien claimant — Section 126, General Code.
1. When a subcontractor relinquishes a valid lien upon a public fund, established under Sections 8324 et seq., General Code, without notice to or knowledge of the surety upon the bond of the principal contractor, such subcontractor thereby releases such surety from liability to such subcontractor, to the amount of the lien relinquished.
2. Under Section 126, General Code, a notary public is authorized to execute the sworn and itemized statement required under Section 8324, General Code, even though such notary public is the attorney of the party thereafter claiming a lien upon public funds.
CERTIFIED by the Court of Appeals of Montgomery county.
This case comes into this court by reason of a certificate of conflict from the Court of Appeals of Montgomery county which reversed a judgment of the court of common pleas of Montgomery county, rendering judgment in favor of William H. Boyd, the plaintiff below.
William H. Boyd filed a petition praying for judgment against the Royal Indemnity Company upon its bond executed to secure the performance of a paving contract by one John Heier, a general contractor, who had entered into a contract with the commissioners of Montgomery county to pave certain streets within such county. Boyd was a subcontractor who installed all sewers, catchbasins, manholes and other appurtenances in connection with such paving. He alleged that the sum of $5,343.97 was owing to him from John Heier for the labor performed and material furnished under such contract, which sum Heier had refused to pay, that notice in writing of this unpaid claim had been served upon the Royal Indemnity Company, and that more than sixty days had passed since the serving of such notice. The petition prayed judgment for the sum so alleged to be owing.
The answer of the defendant the Royal Indemnity Company constituted a general denial. The defendant John Heier in an answer and cross-petition set up that William H. Boyd owed him a sum amounting to $4,059.30, with interest from April 1, 1928, and prayed for the dismissal of the petition.
The answer of the Royal Indemnity Company was later withdrawn and the company filed demurrers, which were overruled. Upon leave of court, an answer was then filed by the indemnity company, which admitted execution of the bond, made a general denial of the facts alleged in the petition, and in addition averred that Boyd was indebted to the defendant John Heier in a sum far in excess of the sum claimed in the petition.
The second defense of the Royal Indemnity Company, which is the important pleading in this case, is as follows:
"Defendant, Royal Indemnity Company, for its second defense to the petition of the plaintiff herein, avers that at the time of the execution of said contract for paving and improving Overlook avenue from Waterveliet to Ashland avenues, the county commissioners of Montgomery county, Ohio, withheld the sum of forty-four hundred, ninety-nine and 90/100 dollars ($4,499.90) due to the defendant, John Heier, under his contract with them as principal contractor, and deposited said sum with the auditor of Montgomery county, Ohio, for the protection and payment of all contractors, laborers and material men having valid claims against said John Heier for work or labor under said contract of paving. Defendant avers that immediately following the completion of his work on said contract, and within the time prescribed by law, plaintiff perfected a lien for his claim as sued on herein on said funds in possession of the auditor of Montgomery county, Ohio, in accordance with Section 8324 of the Ohio General Code, and thereby secured, to himself any sums to be paid to him under said contract.
"Thereafter, on or about the twelfth day of September, 1930, the plaintiff, William H. Boyd, without notice and without the knowledge of this defendant, voluntarily released said lien securing his claim as set forth in his petition herein, thereby releasing all security therefor together with his right to be paid from said fund to which he had theretofore been entitled. By reason of such release the defendant, Royal Indemnity Company, as surety on said contract bond of the defendant, John Heier, is discharged from the claim of the said William H. Boyd to the extent of his security so released."
A reply was filed, which denied every allegation of the answer not admitted in the petition.
Upon trial had to the court, the court entered judgment in favor of the plaintiff, William H. Boyd. This judgment was eventually reversed by the Court of Appeals, upon the following ground:
"The court finds that the plaintiff in error successfully established its second defense as alleged in its answer in the court below and that the defendant in error released a certain valid lien on certain funds in the hands of the auditor of Montgomery county, Ohio, on September 12, 1930, amounting to $4,285.00, and that by reason of such release the plaintiff in error, the Royal Indemnity Company, is discharged from the claim of William H. Boyd to the extent of $4,285.00, his security so released and that by reason thereof there is due and owing the defendant in error from the plaintiff in error the sum of $2,028.78 together with interest thereon from September 12, 1930. Judgment is awarded William H. Boyd in that amount, to all of which reversal, judgment, and order the defendant in error excepts.
"The judges of the Court of Appeals hereby find that the judgment upon which they have agreed in the above entitled case is in conflict with a judgment rendered and pronounced upon the same question by another Court of Appeals, namely, the Court of Appeals of Hamilton county, Ohio, in the case of Conroy Brothers v. J. J. Dugan Brother et al., decided March 19, 1923, and reported in 17 Ohio Appellate Reports, page 429, to which particular finding plaintiff in error excepts."
Further facts are stated in the opinion.
Messrs. Marshall Harlan, for plaintiff in error. Messrs. James Coolidge and Mr. Daniel L. Dwyer, for defendant in error.
It is conceded that when a valid lien has been released without notice to or knowledge of the surety securing the debt also secured by the lien, the surety is then released from liability under the bond for the amount covered by such lien. This is the general rule. Stearns on Suretyship (2d Ed.), Section 98, page 137; Day v. Ramey, 40 Ohio St. 446; Southern Surety Co. v. Merchants' Farmers' Bank of Avilla (Ind.App.), 161 N.E. 842.
The second defense of the surety company shows, and it is conceded that the plaintiff in error here did relinquish a lien upon public funds established under Section 8324, General Code, securing the debt for which the surety was also liable. If this lien was valid, it follows that the surety was thereby released to the amount covered by such lien. Hence we proceed to consider whether the lien so released was valid.
The attorney of Boyd did execute the sworn statement upon which such claimed lien was based and this is the only ground upon which the validity of the lien is attacked. It is to be observed that Boyd himself attacks the validity of the lien under which he himself claimed and which he released, as set forth in the second defense of the answer of the surety.
Under Sections 8324 et seq., General Code, may the attorney of the party thereafter claiming a lien upon public funds, as a notary public, execute the sworn and itemized statement therein required?
The defendant in error relies strongly upon the case of Evans v. Lawyer, 123 Ohio St. 62, 173 N.E. 735, as being controlling of this controversy. In this case the court held:
"Since Section 8314, General Code, authorizes a lien claimant to make affidavit for a lien before his attorney, the statement under oath made out and given to the owner by the original contractor on a building, pursuant to Section 8312, General Code, showing the names of laborers, sub-contractors, materialmen furnishing labor or materials and the amounts still due therefor, is not invalid because the officer administering such oath is or becomes the attorney for the affiant in litigation which ensues."
This decision, however, while apparently in point, relates to the validity of an affidavit sworn to by a lien claimant before his own attorney under the Sections of the Code establishing liens upon private property, Sections 8312 et seq. These are not the sections construed in the instant controversy, and hence we are compelled to the decision that Evans v. Lawyer, supra, does not here apply.
Sections 8312 et seq., establishing a lien upon private real property, require an entirely different procedure from that set out in Sections 8324 et seq., which authorize a lien upon public funds. Sections 8312 et seq. require a preliminary statement. Under Sections 8324 et seq. no preliminary statement is required. The time for filing the affidavit under Section 8324 is totally different from the time within which the mechanics' lien affidavit is required to be recorded, being four months as contrasted with sixty days. One statute gives a lien upon public funds, and the other gives a lien upon private real property. Hence we repeat that the decision in Evans v. Lawyer, supra, relating to Sections 8312 et seq., does not decide this controversy.
The case of Conroy Brothers, Inc., v. J. J. Dugan Brother, 17 Ohio App. 429, was under consideration by this court in Evans v. Lawyer, supra, having been found to be in conflict with the decision of the Court of Appeals in the Evans case, and hence was in effect overruled by the holding of this court in that case. Since the Conroy Brothers case was not a judgment of this court, its holding was not discussed at length in the case of Evans v. Lawyer. It is not the practice of this court upon certification of conflict to discuss the case found to be in conflict with the case which is certified to this court. It is the practice of this court to render judgment in the case presented here, and if the law announced in that judgment conflicts with the law as announced by a Court of Appeals in the conflict case, the conflict case is necessarily overruled.
However, proceeding to consider whether under Section 8324, General Code, an attorney may verify the sworn and itemized account of his client thereunder required, so that through such verification a valid lien will be instituted upon public funds, we think that the reasoning in the case of Evans v. Lawyer, supra, is cogent in this case also. In this statute, Sections 8324 et seq., as well as in Sections 8312 et seq., the affidavit required is not an affidavit to be used in the sense of evidence, but is simply the verified statement made before a notary public, necessary before proceedings to enforce a lien may be instituted. The filing of this affidavit does not dispense with the necessity for proof of the facts set forth therein.
Is the attorney of the party thereafter claiming the lien empowered to verify this affidavit?
Section 126, General Code, reads as follows:
"A notary public shall have power, within the county or counties for which he is appointed, to administer oaths required or authorized by law, to take and certify depositions, to take and certify to acknowledgments of deeds, mortgages, liens, powers of attorney and other instruments of writing, and to receive, make and record notarial protests * * *."
If Section 8324, General Code, does not specifically limit this general power of the notary public to administer oaths required by law, and to certify to the acknowledgment of deeds, mortgages and liens, and if no other section of the statute limits this general power, then the attorney is qualified to act as such notary public in executing this affidavit.
Sections 8324 et seq. contain no such prohibition. However, Section 11532, General Code, provides that 'the officer before whom depositions are taken must not be a relative or attorney of either party, or otherwise interested in the event of the action or proceeding." Section 11524 provides that an affidavit may be made "before any person authorized to take depositions." Section 11522 defines an affidavit as a written declaration under oath made without notice to the adverse party.
It is argued that these sections, read together, limit the general power with which a notary public is invested under Section 126, General Code, and that necessarily no attorney can execute an affidavit for a party whom he represents in order to secure a lien thereafter claimed upon a public fund.
We do not so construe the statute. Sections 11522, 11524 and 11532, General Code, are found in Part Third, Title IV, Division III, Chapter 3, of the General Code, relative to procedure in common pleas court, under the subject of "Evidence," and under the chapter subdivision heading, "Modes of Taking Testimony; Exceptions to Depositions." Sections 8324 et seq., General Code, deal with commercial regulations, under the heading of "Liens." Hence Sections 8324 et seq. are not limited by Sections 11522, 11524 and 11532, which relate to sworn statements that are to be used as evidence or in procedure in common pleas court.
We hold, therefore, that under the broad power of Section 126, General Code, the notary public who takes the attestation required for the sworn and itemized statement necessary under Sections 8324 et seq., General Code, for the establishment of a lien upon public funds, may be the attorney of the party thereafter claiming the lien, and that the lien thus created, if otherwise valid, is not rendered void because the affidavit was so executed.
The judgment of the Court of Appeals will therefore be affirmed.
Judgment affirmed.
WEYGANDT, C.J., DAY, KINKADE, STEPHENSON, JONES and MATTHIAS, JJ., concur.