Opinion
No. 74-521
Decided December 11, 1974.
Liens — Mechanic — Rights and liabilities under contract — Work done on leased property — Lessor not party to contract — Lessor not liable for lessee's obligation, when — R.C. 1311.02 and 1311.16.
CERTIFIED by the Court of Appeals for Summit County.
Frank A. Flannery was the president and sole shareholder of Frank A. Flannery, Inc. He was also the president and sole shareholder of American Technical Institute, Inc., which operated a trade school in a building owned by Frank A. Flannery, Inc., in Akron.
The assets of American Technical were sold to persons who continued to operate the school under the same name at the same location under lease from Frank A. Flannery, Inc. Mr. Flannery remained in the employ of American Technical in an advisory capacity.
After the change in ownership, American Technical contracted with plaintiff for electrical work to be done by plaintiff on the property leased by American Technical.
Upon completion of the work, plaintiff requested payment and, when American Technical failed to pay, plaintiff perfected a mechanic's lien, naming the school as lessee and Frank A. Flannery, Inc., owner of the premises.
Plaintiff then brought a foreclosure action in the Common Pleas Court of Summit County, which held that plaintiff had a valid and subsisting lien only as to American Technical's leasehold interest and not against the fee interest of Frank A. Flannery, Inc. The court held also that plaintiff could remove the materials installed by it in the building and thereby reduce the judgment against American Technical.
From that order, plaintiff appealed to the Court of Appeals, claiming that it is entitled to a lien on the fee interest of the lessor, Frank A. Flannery, Inc. American Technical and Frank A. Flannery, Inc., cross-appealed, contending that the order permitting plaintiff to remove materials installed in the building is contrary to law.
The Court of Appeals held that plaintiff's contract was with the lessee, American Technical, which was solely obligated to pay for the work, and that, there being no contractual relationship between plaintiff and lessor, Frank A. Flannery, Inc., which could subject the lessor to the terms of R.C. 1311.16, no lien attaches to such lessor. The Court of Appeals affirmed the judgment of the Common Pleas Court except for that part which allowed the removal of materials by plaintiff, the court holding that the trial court had no authority to permit plaintiff to remove materials installed by it.
Finding its judgment to be in conflict with a judgment pronounced by the Court of Appeals for Stark County in Vitale Bros. Co. v. Wurtz (1965), 2 Ohio App.2d 99, the Court of Appeals certified the cause to this court for review and final determination.
Messrs. Buckingham, Doolittle Burroughs and Mr. Frederick M. Lombardi, for appellant.
Messrs. Gillen, Miller Tipping, Mr. Frederick H. Gillen and Mr. Harry A. Tipping, for appellees.
Appellant argues that R.C. 1311.16 gives a contractor, who contracts with a lessee to make improvements on leased property, a mechanic's lien against the lessor's interest for such improvements.
In Mahoning Park Co. v. Warren Home Development Co. (1924), 109 Ohio St. 358, at 364, 365, this court said that the "right of one who furnishes labor or material for the construction or repair of a structure to a lien therefore is created entirely by statute," and that under the provisions of R.C. 1311.02, "before one who furnishes labor or material may have a mechanic's lien to secure the payment therefor, it must appear as a condition precedent thereto that the same was furnished pursuant to a contract, express or implied, and that the contract was made with the owner, part owner or lessee of an interest in real estate, or with the authorized agent thereof; and the lien thereby procured extends only to the right, title, and interest of him with whom the contract, express or implied, was entered into." The court in Mahoning Park Co. found that there was such a contract, but that it was entered into by the lessee and the contractor and that "only between the lessee and the contractor was the relation of debtor and creditor created." The court added, on page 369, that "the fact that the owner of the fee knew that the lessee was making improvements does not subject his interest to the lien, as he does not thereby become a party to the contract."
R.C. 1311.02.
"Every person or corporation who does work or labor upon, or furnishes machinery, material, or fuel for constructing, altering, or repairing watercraft, or for erecting, altering, repairing, or removing a house, mill, manufactory or any furnace or furnace material therein, or other building, appurtenance, fixture, bridge, or other structure, * * * or who does work or labor or furnishes material for the improvement, enhancement, or embellishment of real property * * * by virtue of a contract, express or implied, with the owner, part owner, or lessee of any interest in real estate, or his authorized agent * * * has a lien to secure the payment thereof upon such watercraft, or upon such house, mill, manufactory, furnace, or other building or appurtenance, fixture, bridge, or other structure, or nursery stocks, * * * and upon the machinery or material so furnished, and upon the interest, leasehold or otherwise, of the owner, part owner, or lessee, in the lot or land upon which they stand, or to which they are removed * * * to the extent of the right, title, and interest of the owner, part owner, or lessee, at the time the work was commenced or materials were begun to be furnished by the contractor, under the original contract, and also to the extent of any subsequent acquired interest of any such owner, part owner, or lessee."
In Mahoning Park Co., this court held that a mechanic's lien attaches only to the interest of the person for whom the improvement is contracted to be made. On authority of that case, therefore, the judgment of the Court of Appeals is affirmed.
This court expressly disapproves the opinion and holding in Vitale Bros. Co. v. Wurtz, supra ( 2 Ohio App.2d 99), insofar as that case expresses a view different from that established in Mahoning Park Co.
Judgment affirmed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.