Opinion
No. 71-243 (Supreme Court No. 24536)
Decided August 17, 1971. Rehearing denied September 8, 1971. Certiorari denied November 1, 1971.
Assignee of contract for installation of farm irrigating sprinkling system sought foreclosure of mechanic's lien. From denial of foreclosure and judgment for defendants on cross-claim against third-party defendants, plaintiff appealed.
Affirmed
1. MECHANICS' LIENS — Allowance of Credits — Payment by Owner — Thorough Examination — Materialman's Position — Knowledge. In determining whether materialman who is attempting to enforce a mechanic's lien must allow credits against its lien for payments made by an owner who will be required to make double payment if such credits are disallowed, considerations of justice and equity compel that a court thoroughly examine the materialman's position and the extent of his knowledge relative to such payments.
2. Conclusion — Payment to Salesman — Precluded Assignee — Further Payment — Supported by Evidence. Trial court's ultimate conclusion that defendant's final payment to salesman, who had been found to be member of joint venture engaged in selling sprinkling system to defendant, was such that that payment precluded assignee, whose major stockholder was also member of joint venture, from demanding additional payment was a conclusion well supported by the evidence and will not be disturbed on appeal.
Error to the District Court of Yuma County, Honorable Waino Johnson, Judge.
Sandhouse and Sandhouse, Charles H. Sandhouse, for plaintiff in error.
Francis A. Benedetti, for defendants in error.
This case was transferred from the Supreme Court pursuant to statute.
This is an action brought by American Irrigation Company to foreclose a mechanic's lien for the balance due under a contract providing for the purchase and installation of a farm irrigating sprinkling system. In the trial court, the Fadenrechts were defendants and also third-party plaintiffs as against the third-party defendants Nasib Ed Kalliel, Robert L. Tiedgen, and Tiedgen Motors, Inc. We shall refer to all of the parties by name designations.
The sprinkling system installation contract upon which this lien claim is based was executed in the form of a conditional sales agreement on April 10, 1968. Such agreement was between Edgar Fadenrecht and Tiedgen Motors, Inc. It was modified by an agreement dated May 3, 1968. In the April 10 agreement, execution on behalf of Tiedgen Motors was by Nasib Ed Kalliel. In the May 3 agreement, execution on the part of Tiedgen Motors was by Robert Tiedgen; however, he also inserted the name of Nasib Ed Kalliel under his name in the corporate execution. On May 9, 1968, the Fadenrechts made a deposit on the agreement in the amount of $4,600, which deposit was in the form of a check made payable to Tiedgen Motors and American Irrigation. This check was negotiated by Robert Tiedgen, who appears to have endorsed the check as acting on behalf of Tiedgen Motors and also on behalf of American Irrigation. Final payment under the agreement was made by the Fadenrechts to Nasib Ed Kalliel by the delivery of certified funds in the amount of $12,369.50. In exchange for such payment, Kalliel executed and delivered to the Fadenrechts a final receipt acknowledging payment in full for the purchase and installation of the sprinkling system.
American Irrigation asserts here that the agreement of May 3, 1968, relating to the purchase and installation of the sprinkling system was assigned to it on May 9, 1968; that it furnished all labor and materials for the installation of such system; and that accordingly, under Colorado law, it has a direct lien right against the Fadenrechts' property in an amount equal to the sums which it, American, claims are owing for the cost of the system without the allowance of any credit for the final payment which was made to Kalliel.
The possible legal relationship which existed between Nasib Ed Kalliel, Robert Tiedgen, Tiedgen Motors, and American Irrigation is the subject of conflicting evidence within the record of this case. However, there is certain evidence bearing on such matter which is beyond any dispute. Primary is the fact that Robert Tiedgen was a principal officer, a director, and a major interest holder in both Tiedgen Motors, Inc., and American Irrigation Company. Second, the record is clear that Robert Tiedgen and Nasib Ed Kalliel dealt jointly with the Fadenrechts in negotiating the sprinkling system purchase and installation contract, and that it was Robert Tiedgen who placed Kalliel's name on the May 3, 1968, modification of the contract. Third, no one contests that it was Robert Tiedgen who purportedly assigned the Fadenrecht contract to American Irrigation Company.
Because of such undisputed evidence and also because of the conclusions it drew from the disputed evidence, the trial court found that there was a joint venture between Robert Tiedgen, Kalliel, and Tiedgen Motors, Inc. Also, upon consideration of Robert Tiedgen's position within American Irrigation Company, the trial court imparted to that corporation the same knowledge of the joint venture arrangement as was possessed by Robert Tiedgen, and ruled that the assignment of the Fadenrecht agreement to American Irrigation was without legal effect. The legal conclusion of the trial court was that the final payment made to Kalliel bound the joint venture of which he was a member and that such payment also bound American Irrigation.
These determinations were correct, and we affirm.
American Irrigation is correct that, under the law of this jurisdiction, the general mechanic's lien right which is conferred by the Colorado statutes is in the nature of a direct lien right, and that even a subcontractor furnishing authorized labor and materials to an owner is treated, under certain circumstances, as a principal contractor. First National Bank v. Sam McClure Son, Inc., 163 Colo. 473, 431 P.2d 460. However, in this case no challenge is made against the lien itself or against the right to claim a lien in the first instance. The challenge here is against the right to enforce the lien.
This challenge is based upon the theory that the debt for which the lien is claimed has been paid in a manner which is binding upon the party asserting the lien. It is basic that payment of such debt constitutes a bar to the enforcement of the lien. Trustee Company v. Bresnahan, 19 Colo. 311, 203 P.2d 499.
[1,2] In assessing the legal effect of the payment made by the Fadenrechts to Kalliel, the trial court was correct in looking below the surface legal positions of the individuals and corporations involved in this transaction. As held in Jackson v. A.B.Z. Lumber Co., 155 Colo. 33, 392 P.2d 288, an action to foreclose a mechanic's lien is addressed to the equity side of a court. In determining whether a materialman who is attempting to enforce a mechanic's lien must allow credits against its lien for payments made by an owner who will be required to render double payment if such credits are disallowed, considerations of justice and equity compel that a court thoroughly examine the materialman's position and the extent of his knowledge relative to such payments. See Jackson v. A.B.Z. Lumber Co., supra. This was the procedure followed by the trial court in this case, and its ultimate conclusion arrived therefrom that the final payment to Kalliel precluded the right of American Irrigation to demand additional payment is well supported by the evidence and will not be disturbed in this appeal. Consolidated Oil Gas, Inc. v. Roberts, 162 Colo. 149, 425 P.2d 282.
The assertion in this appeal by American Irrigation that there was insufficient evidence to support the award of damages which was made by the trial court to the Fadenrechts on their counterclaim is also rejected. Viewing the record in a light favorable to the judgment entered by the trial court, which we are obligated to do on review, we hold that the evidence supports such judgment, and that it will not be disturbed. Fletcher v. Garrett, 167 Colo. 60, 445 P.2d 401; Andersen-Randolph Co. Taylor, 146 Colo. 170, 361 P.2d 142.
Judgment is affirmed.
JUDGE DWYER and JUDGE PIERCE concur.