Opinion
No. 34352.
December 23, 1940.
1. MECHANICS' LIENS. Subrogation.
Where under arrangement between building contractor and lender, the lender was to furnish money to finance construction job, when lender paid laborers and other claims under such arrangement, the lender was not entitled to lien or to "subrogation" to rights of parties whose claims he paid (Code 1930, sec. 2274).
2. SUBROGATION.
"Subrogation" is a doctrine of equity, governed by equitable principles.
3. SUBROGATION.
Where under arrangement between contractor and lender, lender was to furnish money to finance construction job, the lender was entitled to "subrogation," as against contractor, to extent of payments made.
4. MECHANICS' LIENS.
Where under arrangement between contractor and lender, lender was to furnish money to finance construction job, as between lender and parties assigning claim to him, the assignments were controlling, but as to other persons who had furnished labor and materials in construction of building and as to building funds paid into court by owner after contractor had abandoned contract, the lender was not entitled to lien against funds or building, but he was only entitled to a pro rata share (Code 1930, sec. 2274).
5. APPEAL AND ERROR.
A report of master as to finding of facts made by him has force and effect of a jury verdict.
APPEAL from the chancery court of Hinds county, HON. V.J. STRICKER, Chancellor.
L. Percy Quinn, of Jackson, for appellant.
The master's finding is contrary to the law and evidence of the case.
A holder of an assigned note given for materials furnished in a building may enforce the statutory lien against the building.
Dodd v. Cavett, 133 Miss. 470.
We can perceive no real distinction between the situation presented by the promissory note and the procedure which was followed in the case at bar. In the case at bar, it is true that the parties did not go through the formality of taking assignments from all the laborers when they were paid, nor did they pursue the formality as demonstrated by the example of the promissory note. However, it seems clear that appellant intended to, and did pay the laborers directly. The assignments thereafter procured merely serve to evidence the rights arising from equitable subrogation, which became vested at the time the respective laborers were paid.
The recent case of Planters Lumber Company v. Plumbing Wholesale Company, 181 So. 140, is authority in support of appellant's claim. This case involved a building contract similar to the one in the case at bar. Rubush, the contractor, was unable to finance the job, and the Planters Lbr. Co. agreed to furnish materials and payrolls as they came due. In an attempt to secure these advances, material, and monies, the lumber company procured an assignment from the contractor before the job was begun, and this assignment was held to be void under the provisions of Section 2275 of the Mississippi Code of 1930. However, the court allowed the claim of the lumber company.
We can perceive no real distinction between the lumber company case above and the case at bar. The court in the lumber company case held that the assignment was void, and the court, therefore, necessarily held that the lumber company was subrogated to the rights of the laborers which it paid with monies advanced for that purpose.
We submit that there is a very material distinction between those cases where money, especially in a lump sum, is advanced or loaned to a contractor and placed under his exclusive control and case such as we have here where money is placed in the hands of a contractor weekly to the extent of labor liens or claims.
Equity views with favor the rights arising from subrogation. No writing is necessary to invoke this equitable doctrine, and the formal assignment taken by appellant in the case at bar merely serves to evidence his rights which arose in the first instance from the equitable doctrine of subrogation. These rights arose and became vested when the payrolls were met by appellant.
Bert Crisler, of Jackson, for appellees.
In the case at bar, there was no contract between Glenn and the materialmen, or you might say, the appellees, for the furnishing of this money for labor, but was solely an agreement between the said Glenn and the said appellant about which the said appellees had no interest or concern.
The advancing of money by materialman to contractor, by checks payable to contractor, to pay laborers on payrolls made up by contractor did not constitute furnishing labor on the job so as to entitle materialman to lien, where contract for procuring and paying laborers, to which materialman was not a party, was between contractor and owner.
City Coal Lbr. Co. v. Gulf Refining Co., 185 So. 250.
In the case here under consideration, as above held by the Supreme Court, the appellant, to the extent of $1,800 was not advancing labor on the job, nor did he have a claim therefor against anyone but the contractor.
The appellant, in his brief, cites the case of the Planters Lumber Company v. Plumbing Wholesale Company, 181 So. 140, which said case is entirely different from the case here under consideration. Under the case so cited, the Planters Lumber Company had an actual agreement with the contractor and the laborers for the furnishing of the payroll money. That case is entirely different from the City Coal and Lumber Company case heretofore cited. In the City Coal and Lumber Company case where there was no such contractural relationship, the court held that there was not an actual furnishing of labor on the job, but in the Planters Lumber Company case that there was such a furnishing because of the fact of said contractural relationship. The appellant further claims that he would be entitled to his money under the doctrine of subrogation. However, there is no bona fide valid claim as far as the said $1,800 is concerned, to which he could be subrogated for the reasons as hereinabove set forth. He could not be subrogated to claims that had ceased to exist before the obtaining of his said assignments.
This case should be decided in accordance with the case of the City Coal and Lumber Company case heretofore set out and should be decided in accordance with the master's report and the decree entered in the lower court.
Under the City Coal and Lumber Company case, there is no question that, under no circumstances could the appellant be subrogated to the claims of the laborers, or the contractor, because none of said laborers had any claims because they had been fully paid. There is no equitable right of subrogation for the appellant in this case.
Argued orally by L. Percy Quinn, for appellant, and by Bert Crisler, for appellees.
This is a contest between P.W. Sadler and certain materialmen for moneys paid into court by way of interpleader by Arthur M. White, who erected a building in the city of Jackson, and interpleaded the parties to this appeal in court upon the contract price, less amounts required to complete the contract after it was abandoned by the contractor.
Arthur M. White owned a lot in the city of Jackson, upon which he desired to erect a residence and garage. He contracted with W.S. Glenn, a contractor, to build and equip the house, this to be a "lock and key" job, for the sum of $4300. The contractor, W.S. Glenn, being unable to finance the job, procured P.W. Sadler to advance his payrolls, or to take care of them, throughout the construction of the house. It was understood in the contract between Glenn and Sadler that the latter was to receive compensation from Glenn for such service, Sadler estimating that it would amount to ten per cent on the amount so advanced, although there was no definite understanding.
It seems that the course pursued was for Glenn to make up the amounts he paid to the various laborers and others, and give it to Sadler, who would either give a check or pay the cash to the parties to whom money was due. Sadler under this arrangement kept the books, having an insurance office, and an employee who kept the accounts. The $1,600 was exhausted, and Sadler advanced $200 additional, and paid the same to the laborers. About this time Sadler and Glenn concluded that the contract could not be completed for the price, and abandoned the contract. Sadler then went to various parties to whom he had paid the money, and took assignments, and served notice on the owner, under section 2274, Code of 1930.
Upon the abandonment of the contract, Arthur M. White procured J.A. Roell to complete the building, on the basis of cost to be further incurred; and Roell completed the building without profit to him. But the Standard Millwork Supply Company, largely owned by Roell, had furnished material to the amount of $3,280.27. During the progress of the work on the house, White furnished the contractor, for the building, light fixtures, finish hardware, and a mantel and kitchen fan aggregating $210, which he had a right to do under the contract, as the master found.
On receiving the notices of the various parties, under section 2274, in order to protect himself from possible errors in payments, Arthur M. White filed a bill in interpleader, making the various parties who had furnished labor and material for the house parties thereto, to be interplead; and the several parties who had furnished such labor and materials appeared and propounded their claims.
The court thereupon appointed an attorney to act as master, who heard the evidence of all parties and made a report to the Chancery Court, showing a claim, propounded and passed upon by him, amounting to $4,623.41, being itemized and specifically set forth as follows: J.A. Roell, $3,280.27; Mississippi Glass Co., $156.80; Crane Co., $375.00; Joe Williams and W.W. Donovan, $110; Wells Interior Decorating Co., $69.70; Mack Gammill, $29.29; W.L. Bush, $96.75; W.B. Myers, $24; P.W. Sadler, assignee, $479.80.
The master ordered or directed that these claims be paid pro rata out of the funds amounting, after deducting expenses, to $3,969.47. But he allowed the claim of J.A. Roell, amounting to $120.53, out of the funds paid in full, and this balance remains $3,969.47, as stated.
Upon the filing of the master's report in the Chancery Court exceptions were taken, which exceptions were overruled by the chancellor, who affirmed the master's report. From this decree of the chancellor P.W. Sadler appealed; the appellees being J.A. Roell, doing business as Standard Millwork Supply Company, Joe Williams, W.W. Donovan, and Mississippi Glass Company. It is contended by P.W. Sadler that his total claim should have been allowed; and that he was entitled to a lien on the funds by virtue of the assignments taken from the various laborers and others, because, it is contended, he was subrogated to the rights of the parties who had assigned their claims to him, either in writing or orally; and that he should have a lien on the funds for the total amount advanced by him under the arrangements above stated.
The master held, rightly we think, that Sadler was not entitled to any liens paid by him up to the payment of the $1,800 made at the time it was learned by Glenn and Sadler that there would be a loss on the contract. Under the arrangement between Glenn and Sadler, the latter was to furnish money to finance the job; and when he paid the laborers, and other claims, under this arrangement, he was not entitled to the lien, or to subrogation to the rights of the parties whose claims he paid under the arrangement with Glenn.
Subrogation is a doctrine of equity, governed by equitable principles. Sadler had agreed and arranged to pay these parties for Glenn, the contractor, who, of course, was to reimburse him and share such profits as should be made, by such division thereof as might be agreed upon. Under the contract, Sadler was under the duty to Glenn to pay these claims, and of course he would be subrogated, as against Glenn, to the extent of such payments. But as to other people who had furnished labor and material in the construction of the building, he would not be entitled to have these claims, so paid by him, charged against the funds; but would be entitled only to the money paid after the abandonment of such contract with Glenn. He would only be entitled to a pro rata share, after abandoning the contract as to such funds paid or assignment made, after the contract was abandoned by Glenn.
As between Sadler and the parties assigning to him, the assignments, of course, would control, being governed by the written contract of assignment; but as to other persons, and as to the funds paid into court, he would not be entitled to a lien against the funds or building, or the money paid under the agreement with Glenn prior to the abandonment of the contract.
As to the moneys paid out before the abandonment of the contract, this case is controlled by City Coal Lumber Co. v. Gulf Refining Co., 184 Miss. 260, 185 So. 250.
We think the report of the master as to the finding of facts by him has the force and effect of a jury verdict; and as the chancellor approved this report fully, we are unable to hold that the master and chancellor were wrong, on the facts.
It follows from what we have said that the judgment must be affirmed.
Affirmed.