Opinion
(Filed 16 February, 1904.)
MECHANICS' LIENS — Corporations — Mortgages — The Code, secs. 1255, 1781 — Laws 1897, ch. 334.
A judgment for materials furnished for a corporation in building is not a prior lien to a mortgage executed and registered prior to the furnishing of the material.
ACTION by T. P. Cheesborough and others against the Asheville Sanatorium, heard by judge W. A. Hoke, at May Term, 1903, of BUNCOMBE.
F. A. Sondley for the plaintiffs McPherson Clark.
Merrimon Merrimon and J. D. Murphy for the plaintiff board of missions.
This action was brought by the plaintiffs for the purpose of enforcing the execution of the trusts declared in a certain deed executed by the defendant corporation to J. S. Adams. Charles McNamee was appointed receiver. At August Term, 1899, the plaintiffs were allowed to make themselves parties to such action, and filed their complaint therein. The cause was submitted to his Honor upon an agreed state of facts.
The defendant was, on and before 30 September, 1897, a corporation, created and organized under the laws of this State. On said day the said corporation executed to the Board of Home Missions of the Presbyterian Church certain bonds, aggregating the sum of $30,000, and, for the purpose of securing the payment thereof, executed a deed in trust upon its land and buildings in the city of Asheville, which was duly registered in Buncombe County on 3 January, 1898; that between 9 February, 1898, and 15 July, 1899, the plaintiffs, McPherson Clark, pursuant to a contract made with said corporation, "performed labor" and "furnished materials" for it, and in doing said work used said materials, which said materials were used and furnished by them on the buildings situate on the land and premises of the defendant (246) corporation, particularly described in the notice of lien filed by said plaintiffs; that said work and material were reasonably worth the prices set out and charged therefor; that by the terms of said contract the said corporation became indebted to the plaintiffs, McPherson Clark, in the sum of $646 for said labor and work and materials so furnished; that of said sum $115.60 is for items marked "work" in the bill of particulars filed with the notice of lien, the remainder of said sum being for "materials furnished"; that the plaintiffs filed their notice of lien, in compliance with the provisions of sections 1781 of the Code, on 16 August, 1899, and on 19 October, 1899, filed their complaint in this action; that the Board of Home Missions filed its answer to said complaint, alleging the execution of the said deed in trust and denying the plaintiff's right to any lien on said property or priority in the proceeds of the sale thereof over the payment of the bonds held by said board of missions and secured by said deed in trust.
His Honor adjudged that the defendant corporation was indebted to the plaintiffs, McPherson Clark, in the sum of $646.15, with interest, and of this amount the sum of $115.61, being for "work and labor," constituted a lien upon said property, and had priority over all other liens whatsoever, and over all mortgages and deeds in trust thereon, and that said sum be paid out of the proceeds of the sale of the property of the defendant corporation in preference to all other claims, etc. The plaintiffs excepted to the refusal of his Honor to declare the entire amount of their claim entitled to priority, and appealed.
The exception to the judgment of his Honor involves the (247) construction of section 1255 of the Code, as amended by chapter 334, Public Laws 1897. The section of the Code as originally enacted declared that "Mortgages of incorporated companies . . . shall not have power to exempt the property of such incorporations from execution for labor performed, nor for material furnished, nor for torts committed." This section was construed by this Court in Coal Co. v. Electric Light Co., 118 N.C. 232 (1896). The General Assembly, at the session of 1897, amended the section by striking therefrom the words "for material furnished such corporation" (chapter 334).
The sole question presented by this appeal, therefore, is whether the plaintiffs are entitled to priority over the deed in trust executed prior to the commencement of the work or the furnishing of the materials. There can be no doubt that, as against the defendant corporation, the plaintiffs have a lien pursuant to the provisions of section 1781 of the Code, providing for liens "for work done . . . or materials furnished." This lien, however, is subordinate to the registered deed in trust, attaching as it does at the time of the beginning of the work of furnishing materials. Burr v. Maultsby, 99 N.C. 263; 6 Am. St., 517; 20 Am. Eng. Enc. (2 Ed.), 479. While, therefore, as was said by the Court in Coal Co. v. Electric Light Co., supra, the right of priority asserted by the plaintiffs is not based upon the idea of a lien, we may resort to the construction put upon statutes providing for mechanics' liens to aid us in ascertaining and giving expression to the legislative intent. It is significant that the amendment of 1897 to section 1255 follows the decision of this Court in Coal Co. v. Electric Light Co., supra, being enacted at the next succeeding session of the General Assembly. "Whether mechanics' liens should be construed strictly or literally is a question upon which there is a hopeless division of opinion." Boisot on (248) Mechanics' Liens, sec. 34. The author cites a large number of cases, in which various opinions are expressed. Upon this question we prefer to adopt the following principles thus stated by him: "There is a line of decisions that seems to take a middle ground, holding that the statute should be reasonably construed, so as to ascertain the intent of the Legislature and to require a substantial compliance with the requirements of the statute, without extending its provisions beyond the plain language of the act." Ib., sec. 37.
This Court, in Cumming v. Bloodworth, 87 N.C. 83, drew a clear distinction between a lien for labor performed and one for material furnished, holding that in respect to the former the Legislature had the power, pursuant to Article X, section 4, of the Constitution, to provide for a lien for "work done" having priority over the right to homestead, but had no such power in respect to "materials furnished." The current of authority tends to sustain the distinction made by this Court. Boisot, supra, secs. 235 and 241. This Court, in Broyhill v. Gaither, 119 N.C. 443, says: "The laborer's lien is solely for `labor performed.' The mechanic's lien is broader and includes the `work done' — i. e., the building built, or superstructure on the premises." This language would seem to be decisive of this appeal, as, since the amendment of 1897, the right of priority secured by section 1255 is confined to "labor performed," and the amendment expressly excludes "materials furnished," thus narrowing the class of persons and claims entitled to its protection within a much smaller compass than the language of section 1781.
His Honor having separated the items in the bill of particulars for "work done" from those for "materials furnished," we are not called upon to decide the question discussed by counsel as to the rights of the laborers who, in the performance of the (249) contract, and as an essential part of their work, used materials.
It is difficult to reconcile the large number of the decisions found in the reports of the different States concerning lien laws, and we carefully refrain from announcing any principle of construction further than is necessary to dispose of this appeal.
Upon the facts found by his Honor we are of the opinion that he correctly construed the statute as amended.
Affirmed.