Opinion
Decided October 24, 1932.
Mechanic's liens — "Owner" construed — Landowner contracted to convey property to contractor and finance buildings — Section 8310, General Code — Descriptions, by job number, sufficient — Description sufficient if identification of property possible, when.
1. Landowner advancing certain amount to contractor to build houses pursuant to plans and specifications approved by landowner held "owner" within mechanic's lien statute. (Section 8310, General Code.)
2. Descriptions in mechanics' liens held sufficient where three houses, built on single unsubdivided corner lot, were referred to by number of job. (Section 8310, General Code.)
3. Mechanic's lien giving description enabling person familiar with locality to identify property is sufficient, especially where no third parties are affected. (Section 8310, General Code.)
APPEAL: Court of Appeals for Hamilton county.
ERROR: Court of Appeals for Hamilton county.
Messrs. Cramer Gordon, for plaintiff.
Messrs. Harmon, Colston, Goldsmith Hoadly and Mr. J.L. Kohl, for Rudolph H. Wurlitzer.
Messrs. Goebel, Dock Goebel, Messrs. Zielonka Kuertz, Mr. Charles T. Tatgenhorst, Jr., Mr. John H. Kilduff, Mr. Edwin Becker, Mr. Arthur Fix, Mr. G. Karpe, Mr. Clarence M. Smith, Messrs. Grischy Grischy, Mr. Joseph H. Rohrer, Mr. Louis J. Hoppe, Mr. Arthur Wolf, Messrs. Bolsinger Black, Mr. John D. Ellis, city solicitor, Mr. Charles Dornette, Mr. Julius R. Samuels, Mr. W.B. Mente, Messrs. Murphy Murphy, Messrs. Nichols, Morrill, Wood, Marx Ginter, Messrs. Kilgarriff Kilgarriff, Mr. E.H. Brink, Messrs. Beebe Borsch, Mr. David N. Rosenbaum and Messrs. Paxton, Warrington Seasongood, for defendants.
These three cases involve the same question and are considered on appeal. The original suit was begun by the Shannon Company against the defendant Wurlitzer, and was an action to foreclose a mechanic's lien on the property described. Wurlitzer was the owner of the fee in the real estate. The other defendants were lienholders, with the exception of one Blickensderfer and the auditor of Hamilton county and the auditor of the city of Cincinnati. All of the defendants claiming liens set up their liens by way of cross-petition.
Wurlitzer, in answer to the plaintiff's petition, and in separate answers to the cross-petitions, resisted all of the liens.
There were stipulations by counsel in the case that the amounts were not in dispute. The legality of the liens is the question before the court.
The liens are predicated on the proposition that Wurlitzer was the owner of the real estate in question, and that he entered into a contract with defendant Blickensderfer for the construction thereon of three houses, mentioned in the petition.
Wurlitzer denies that he entered into any such contract, and he denies that these lien claimants, as subcontractors, furnished this defendant, as owner, any labor or material for any purpose, or upon any of the houses in question.
The first question for consideration is whether or not Wurlitzer occupied such position with reference to the property and the construction of the houses as to make his interest in the property subject to the liens by virtue of the provisions of Section 8310, General Code.
Wurlitzer's claim is that he made a conditional sales option with Blickensderfer's concern, under which he was endeavoring to sell the real estate; that in the construction of the houses he was not the owner or part owner; nor had he any contractual relation for the construction of the houses with Blickensderfer or his company; that Blickensderfer's company having fallen down on its option of purchase, any improvements on the land, of which he had the legal title, reverted to him, subject only to the right of the parties interested to comply with Blickensderfer's obligation.
There is a great deal of oral evidence in the case.
Wurlitzer's position is disclosed by two contracts, which are in writing, and are introduced in evidence.
The first contract was entered into on the 25th day of October, 1926, between Wurlitzer and Blickensderfer and Ogden, a partnership doing business as the B O Company, of Cincinnati, Ohio. In this contract Wurlitzer recites that he is the owner of certain real estate, located at the northeast corner of Madison road and Bedford avenue, city of Cincinnati, fronting about 168 feet on Madison road, and running back 260 feet on Bedford avenue.
The contract recites that Wurlitzer is desirous of disposing of the real estate for the sum of $22,000 on certain terms and conditions as to interest and payments. The contract provides that the real estate shall be divided into three lots, known as lots 1, 2 and 3; that the B O Company is to build on said lots three houses according to plans and specifications which are to be submitted to Rudolph H. Wurlitzer; that upon his approval of the plans and specifications, Wurlitzer agrees to finance the cost of construction of such houses according to plans and specifications in a sum not to exceed $15,000 for each house, or $45,000 on the three houses.
The B O Company agrees to pay the brokerage charges on said loans, which shall be 5 per cent., and in addition thereto will pay interest at the rate of 7 per cent. per annum on the moneys so advanced, said interest to be deducted from said construction loan in the final accounting.
Upon completion of said houses the B O Company shall have a right to place a mortgage on each house, said mortgage on each house not to exceed the sum of $20,000, or a total of $60,000 on the three houses. These mortgages were to run for a certain period of years at a certain rate of interest.
The contract further provided that, in order to enable the B O Company to procure such mortgage loan, Wurlitzer should convey the property to the B O Company by general warranty deed, title to be marketable. Upon such conveyance of the property to the B O Company, and the concurrent execution of such mortgage, the B O Company shall execute and deliver to Wurlitzer a second mortgage, in payment of the lots, and pay Wurlitzer any and all moneys advanced to the B O Company as a "construction loan."
The B O Company were not to build more than one house on any one lot. Plans and specifications for such houses were attached to the contract and made part of it. Wurlitzer was to advance money on the construction money loans upon warrants signed by H. F. Beinfang, and attached to said warrants there should be affidavits from contractors, subcontractors, material companies, and/or materialmen furnishing material for said buildings, and from the B O Company in compliance with the mechanic's lien laws of the state of Ohio.
The contract also provided that Wurlitzer would convey the lots to such assigns as the B O Company would designate, such assigns to procure and make the mortgage loans and make the second mortgages to Wurlitzer.
Blickensderfer and Ogden, doing business as the B O Company, proceeded to erect the houses, Wurlitzer advancing money from time to time. Ogden was retired as a partner, and Blickensderfer entered into some kind of an arrangement with one McFarland, who undertook to place the loan, and it was testified to that Blickensderfer assigned his contract to McFarland, but McFarland failed to procure any loan, and Blickensderfer proceeded. Just how McFarland dropped from the proposition is not clear; neither is it shown that Wurlitzer knew anything about McFarland.
Blickensderfer completed the houses, was unable to pay his bills for labor and material, neither was he able to procure a loan to take over the property from Wurlitzer.
Following this situation, on the 27th day of May, 1927, Wurlitzer entered into a new contract with Blickensderfer, the first part of which was in substance as provided in the contract of October 25, 1926.
The contract of May 27, 1927, then recites:
"Whereas, the contractor has found that the actual cost of constructing the buildings referred to in the contract of October 25, 1926, has exceeded the estimated cost thereof; and,
"Whereas, the said contractor has been required to call upon the said Wurlitzer to advance, and the said Wurlitzer has been compelled to advance to the contractor a total sum of money in excess of that called for by the said agreement of October 25, 1926; and,
"Whereas, the said Wurlitzer has been called upon so to advance and up to the date hereof has so advanced a total sum of $61,481.80."
The contract then recites that certain mechanics' liens have been taken on the property, in the aggregate sum of $9,655, and that the contractor has requested Wurlitzer to pay and discharge said liens, and in addition thereto to advance an additional sum of $3,863.20, to enable the contractor to complete the buildings, and to that end Wurlitzer shall so advance and shall so have advanced to the contractor the sum of $75,000 in the aggregate.
The contract recites that said contractor is unable to consummate sales of the buildings and lots as contemplated in the contract of October 25, 1926.
The contract then states that Wurlitzer agrees with Blickensderfer to discharge these liens and pay the additional sum, and that the contractor, Blickensderfer, should be allowed until July 1, 1928, to negotiate the sale of the three buildings with the respective lots on terms and conditions set out in the agreement of October 25, 1926; that the net price sufficient to repay Wurlitzer was the sum of $75,000, plus the sale price of $22,000 for the lots; and provided other terms for the sale of the properties.
The contract then provided that upon the failure of the contractor to make sales on or before July 28, the buildings erected on the property of Wurlitzer should thenceforth belong to said Wurlitzer, free and clear of any and all claims or demands; and Blickensderfer, if necessary to clear the title, was to execute all necessary releases.
The lienholders claim these contracts create a liability on the part of Wurlitzer. Their claim is further supported by oral evidence to the effect that Wurlitzer desired to control the property and buildings which lay immediately across Bedford avenue from his residence property; that he visited the properties at different times when under the process of construction, and it is claimed did other minor acts which tended to show he was the real party in interest in the construction of the houses and the development of the property.
Something is said in the brief of counsel for Wurlitzer to the effect that his loans to Blickensderfer were construction loans. However, Wurlitzer did not follow the provisions of Section 8321-1, General Code, under which he might have obtained priority for construction money furnished, if he were not the real owner and Blickensderfer his agent in developing the property. That question need be given no further consideration.
The trend of authority leads us to the conclusion that Wurlitzer was the owner within the meaning of Section 8310, General Code.
In the case of Veale Lumber Co. v. Brown, 197 Iowa 240, 195 N.W. 248, the owner of certain unimproved residence lots entered into a contract with a carpenter and builder by the terms of which a conveyance of the property was to be made to the builder in the future. By the terms of the agreement the owner of the property was to advance to the builder money to be used in the erection of the houses. The court held that the owner of lots, who entered into an oral agreement with a contractor contemplating the improvement of the property and advances by the owner and sale to the contractor when the improvement was completed, was in effect a principal, and the contractor his agent, and his rights were subordinate to those of holders of mechanics' liens under Code Section 3096.
To the same effect was the holding in Arnstein Realty Co. v. Williams, 163 Tenn. 69, 40 S.W. (2nd), 1007, Bohn Mfg. Co. v. Kountze, 30 Neb. 719, 46 N.W. 1123, 12 L.R.A., 33, and Miller v. Schmitt (Sup.), 67 N.Y.S., 1077.
A case very similar to the one here under consideration is the case of Guiou v. Ryckman, 77 Neb. 833, 110 N.W. 759, 124 Am. St. Rep., 877. In that case an agreement was entered into between Wallace and Ryckman whereby Wallace agreed to convey a certain parcel of land upon the completion by Ryckman of the house on the land to be conveyed. In the opinion it is stated:
"The contract was plainly entered into by the parties for the purpose of having buildings erected on the lots, and this places it within the line of decisions of this court that hold that, where the vendor and vendee cooperate together in plans for the erection of improvements upon real estate covered by their agreement, the interest of the vendor, as well as that of the vendee, is bound for the payment of liens for labor and material which have been furnished for such improvements." Citing many cases.
In the case of Miller v. Mead, 127 N.Y. 544, 28 N.E. 387, 31 L.R.A., 701, the Court of Appeals of New York held that a contract for the sale of land, which obligated the vendee to erect six houses thereon, within a specified time, and in which the vendor agreed to advance the vendee a designated sum to partly pay the cost of their construction, was sufficient to show the vendor's consent that the buildings be erected, and rendered her interest in the land subject to such liens as might be filed for labor and material furnished for the construction of the houses.
While the Mead case involved the question of ownership under the New York statute, that question is not here, since Wurlitzer never parted with the title to the realty in question; he remaining the owner at all times. To hold with the contention of Wurlitzer on the point would open the door to grave injustice. In cases of the development of property, or subdivisions, it would be easy to defeat the salutary effect of the mechanic's lien law. The owner could shift responsibility to an irresponsible contractor, and thus be relieved of all liability for construction cost. At the same time, he would secure the benefits of the improvements on his real estate, sought to be improved at the expense of the laborers and materialmen.
While Wurlitzer may not have ordered the materials, he not only knew they were ordered, but knew they were going into the construction of the buildings, and not only approved the same, but furnished the money to pay for some of them, on affidavits furnished, and this in accordance with his contract with the B O Company.
We are therefore of the opinion that Wurlitzer's rights are subordinated to those of the holders of the mechanic's liens, properly filed.
Many liens were filed on the property and are challenged separately and individually by counsel for Wurlitzer.
We have examined the record with reference to the liens and are in accord with the finding of the trial court as to the validity of the same.
The main ground for challenge of several of these liens is the defect in the description of the premises. As elsewhere stated, there were three houses built on one single corner lot. The lot has never been subdivided and appears on the records as one lot. In the construction, the houses were referred to as jobs 631, 632, and 633, but there is nothing to show which part of the realty was or would be used for each particular house, or the different jobs. There seems to be no other way to describe the realty than as it existed on the record. It would seem that a description that would enable a party familiar with the locality to identify the premises would be a description with reasonable certainty, and would be sufficient, particularly so since there are no third parties interested to be affected thereby.
It might become necessary if a sale of the property was had to subdivide the realty to conform to the construction. This could be done without affecting the rights of the parties or the value of the properties.
We are of opinion that the description is sufficient, and the liens, so far as the description is concerned, are valid.
Other objections to several of the specific liens were properly allowed by the trial court.
A like decree to that entered in the court of common pleas may be entered here.
This conclusion disposes of the error case and the cross-petition of David Lupton Son's Company, which company also appealed to this court; its lien having been denied by the trial court.
Decree accordingly.
ROSS P.J., and CUSHING, J., concur.