The Law of Liens for Material Dealers

. INTRODUCTORY

The lawyer who says he knows all about thc licn law reminds me of the fellow. who said he never got excited. One night his hotd burned. -The guests ran screaming through the hall. Our hero calmly got up, drcssed, put on a clean collar and tie, his hat and cane, lookcd at his tie in the mirror, didn't likc it, so he reticd it. Then he sauntered downstairs and out in front. Approaching a group of his friends he said, "What's the idea of all the cxcitemcnt? Look at mc. f didn't get excited." His friends lookcd and one said, "Uh, huh, you didn't get ercitcd, eh. Well thcn why thc h....1 didn't you put your pants on?"

I have not discussed the cases fully, merely citing them to cover the principle laid down in each point. By rcferring to tte cascs nancd, you may, of course, get a much ful- lcr idca. Thc discussion is designed likc thc flappcrts dress-short enough to be intcrcsting, but long enough to cover the sub.icct at lcast partidly.

History

Thc licn law of California is statutory and not an outgrowth of thc Common Law. It thcrefore can only bc interprctcd from thc Conatitution and Statutes. I'hc first Statute appcars on the books in 1851 and thcrcafter cvery scssion of thc lcgislature has altercd it.

In lE79 thc prcsent Constitution then adoptcd, has this provision in Section 15, Artidc XX. "Matcrialmcn shall have a lieri upon prolrrty to which thcy have furnishcd g.atcrid. And thc lcgislaturc shall provide for spcedy enforccrnent of such licnj." Thc Licn law thcrcfore comcs from thc hichcst autbority giving matcrial dealcrs, tabolert, attisane and craftrmen epccial and equal pre- fcrcncc ovcr othcr ctasscs of credltors-for matcrials furnishcd to a particular job.

In 1919 thc final swccping changc in the licn law was made. Oring to thc number of changcs in the law, it takeg carcful cxarnination to scc what a materialman can licn for and how long he has to do it in.

Definition Of A Lien

A lien ie a charge imposcd upon a spccific piece of rcal cstatc by which it is rnade securtty for thc performancc of an act; the licn acts likc a mortgagc and ie a chargc upon thc land.

The theory of the llen law is that the naterialman has a right to follow his material iato the building of which it has become a part. The owner of the land on which the building is constructed exccpt undcr certain conditions, is estopped from denying benefit and must pay the matcrialman for materials supplied for it.

WHEN MAY A LIEN BE FILED BY A MATERIALMAN TO BE VALID l. A lien must be ricorded in the County in shich the work was done within 60 days by the original contractor aftcr notice of completion has becn filed by the owncr; and within.3O days by all matcrialmen. 1187 C. of C. P.

2. If no notice of cornpletion is filed, all parties have 90 days after complction to file; or, in general, 90 days after the last delivcry of a matcrial itcm; if work ceases 30 days the materialman has 90 days thercafter to file his licn. 1rE7 C. of C. P.

THE LA\,\/ OF LIENS FOR MATERIAL DEALERS

This very comPlete' comprehensive and accurate report of the California Lien Law, as now effective, is from the pen of Mr. L. D. Gilbert, of the Eureka Mill and L u m b e r Company, Oakland. Mr. Gilbert prepared the treatise for a meeting of the East BaY Lumbermen's Club, the officers of which later put the article in pamphlet form for general distribution to their members. It is offered as being entirely accurate and fully authoritative in its text, for use by any material dealer in the state. Additional copies of this issue will be mailed. on request.

3. Agrecmcnts to extend the lien pcriod are invalid. Partial paymcnts do not cxtcnd thc lien period. 1187 C. of C. P.

What Is Completion

1. Formal notice of complction filcd with thc County Rccorder-3O days thcrcaftcr to file.

2. Acceptance of thc job in writing by the owncr. 90 days to file.

3. Cessation of work 30 days- 90 days thcreafter to filc licn.

4, Occupancy or usc of ,t!c^ !944b-g-pf the owncr'or liis agcnt, ACCOMPANIED bv ccasation of work. Thir is constructivc c5moletion and the matcrialtnan has 90 days i" iii," ttis lien aftcr thc tvo above conditions iii.t. utttcs" he continucs to supply material aftcr that datc in which case he hae 90 davs aftcr thc last matcrial item is delivered' r18? C. of P. C.

What Must A Lien Contain

1. Date of filing.

2. Name of owncr or reputed-owncr to whose oremises material was deliverecl' or' if -u"in6*tt, John Doe will do; name of corrtractor by whose order materral was oe' livered. iror legal purposes' the -contractor' architect. lessee, builder, etc', is the owners agent. Ll92 C. of P. C.

1. Accuratc description of property-sou-ght to be charged. A technical flaw in the desiiii''i"it- -ili not destrov a lien if it is sufficiint for identification unless an innoccnt ;F;eittty is therebv injured. 1192 C' of C' P.

4. Statement (not itemized) of dcmand of amount due, after deducting all just-credits. showinc dates of first and last delivery' Aria that there has not bcen more than 90 davs since the job was finished or sincc last mitcrial item wls delivered. ll92 C. of C. P.

5. General statcmcnt of Lind of matcrial furnished, such as lumber, sash and doors, ctc. 1192 C. of C. P.

6. Statcmcnt that material was actually used in thc construction, alteration, addi' tion to or rcpair (as the casc may bc) of that certain building on above dcscribed land. rr92 C. of C. P.

7. Above must be verified before a notary by the materialman or his agent and recorded iri the county where the land is. 1192 C. of c. P.

What Is A Notice Of Completion

It is a notice calling attention to all materialmen interested that a certain job is finished and it shortens their time to file a licn to 30 daYs.

A notice of completion must contain thc following: l. Date of comPlction.

2. Date of filing this notice.

3. Contractor's namc.

4. Owner's namc.

5. Nature of job.

6. Nature of owner's interest in the rcal estatc.

This notice can bc filed BY THE OWNER ONLY. It must be filed within l0 days of complction and rnust so state' rlaT C. of C. P. If filed before completion whilc work ia going on it is of no effect. Failurc to do work on thc job for 3O consecutivc days is called "constrictivc complction."

\[|HEN IS A LIEN INVALID

1. Where thc owncr filcs notice of non' resoonsibilitv within l0 days after hc has knowtedsc that thc job was going- og 9r finighed.- In othcr words, the owncr is liable only if he knows thc work is going on (it's uD to you as Plaintiff to prove he knew.) Ii within l0 days of such knowledgc, he posts notice of non-rcsponsibility on the lot ind files a verified copy with thc county recorder of that county, no lien will hold' rcgardlcss of what stage of work was at. rlEg C. of C. P.

2. A lien will not hold against a ship. Iron Works vs. Owens, 168 Cal. 81.

3. A scller to a materialman or thc lattcr's cmployees has no licn. Hinckley vs. Field 9l Cal. 136.

1. A licn must bc against actual structures attachcd to tfie Rcal Estatc and will not hold against swings, Bcat8, gardcn furnihrre. Lotham vs. Wood 55 Cal. 199.

5. Public works of any kind cannot be liened. Milcs vs. Ryan 172 Cal. 205.

6. A unit of real cstatc from which matc' rial is rernoved and on which said matcrial was not actually used in the "construction, altcration, addition or repair" of structurcs on the ground is not subject to lien for thc part removed. 1187 C. of C. P. Also Mclain vs. Ilutton l3l Cal. 132, and California Portland Cement Co. vs. Wentworth 16 Cal., App. 692.

7. Temporary structure even if necessary to the job is not lienable, A temporary bridge was not lienable; nor was scaffolding; nor a cook house and bunk house. Stinson vs. Traction Co. 141 Cal. 30.

8. Material delivered to the job and unused will not give a lien. Ensele vs. Jolly lEE Cal. 297. Cement Co. vs. Wentworth 16 Cal. App. 692. Cartage and handling charge on all such material is a lien, however, if material was delivcred by contractor's order. Stinson vs. Traction Co. l4l Cd. 30. Aftcr filing a lien you may at your option remove such material as is not built into the

(Continued on Page 38)

Claim Of Litn

John Smith, Contractor John Doe, Owner

NOTICE IS HEREBY GMN that (Lumber Company), a corporation organized and existing undcr the laws of the Statc of California, hereby claims a lien upon the land and premises hereinafter described for materials fur. nished and delivered by claimant upon the said premises, and used in the (construction, alteration, addition or repair as the case may be) of a frame building upon that certain lot, piece or parcel of lanil sought to be charged with this claim of lien, situatc in thc City of.........., County of.... ......, State of California, tnore particularly described as follows, to-wit:

Accurate

Description:

THAT John Smith and John Doe arc the owners or reputed owners of said land, togcthcr with thc buildings and improvements thereon.

THAT claimant, within two years last past, at thc special instance and request of said John Smith and John Doe, as the owners and reputed owncrs of said land and premises, furnished and delivered upon the said prcmises for use, and which werc actudly used in thc construction of a building thereon, building materials consisting of lumber and lumber products of the reasonable value of.....

Dollars, which amount, the reasonable valuc of said building materials, said John Smith and John Doe promised and agrecd to pay.

THAT clainant has been paid nothing by said John Smith and John Doe, on account of said materials sold and delivcred aforcsaid, leaving a balance due and owing to clairnant and unpaid in the amount of . ($. ) Dollars which is the arnount of claimant's claim and demand, after deducting all just credits and offsets.

THAT, under the terms of the agreement of sale of said lumber and lumber products, and the conditions of the delivery thercof, claimant's bill therefore is and was at all times payable on demand, and remains unpaid after demand which has bcen made therefor, and the same is now due and owing and no extension of credit has been given thereon.

THAT said buildings and improvements upon said lot were actually completed on or about the day of work. 1925, and the period of ninety (90) days has not elapsed sincc the actual completion of said

THAT no notice of the completion of said building has been filed in the office of the Recorder in the County of State of California.

WHEREFORE, said (Lumber Company), a corporation, claims a lien upon said land and premises and ttre builaings and improvements thereon, in the amount of

Dollars under the provisions of the laws of this State relating to liens of mechanics and others upon real property.

Irumber Company

NOTE: Corect Form of Materialman's Lien. This Form has been repeatedly used in the Superior Courts of Stanislaus, Mcrced, San Joaquin, Tuolumne and Calaveras County and hricc has been before a U. S. Court of Appcals and oncc before the U. S. Supreme Court without a qucstion being raised as to its form.

(Continued from Page 36)

L. D. Gilbert

job. In recidng your credit for this material you must verify as to items and price and show that credit is equal to charged price. You do not endanger your lien by removing such unusued material. It is well to get a third disinterested party to verify the items at the time you remove it from the time qf delivery a mortgage is fileil, the lien cill"go ahdad of the mortgage for the entire claim, BUT if there is no contract and material is being purchased on open account only as needed, the lien will hold only for thal portion of the account prior to--the recording of the mortgage. Avery vs. Clark 87 CaL2L9.

15. A false or fraudulent lien defeats itself and cannot be amended. An erroneous one does not UNLESS a third innocent party suffers. f184 C. of C. P.

When Is A Lien Valid

'1. Against an owner's equity filed in due form within the legal dme whire no notice of non-responsibility as shown above. Payment to contractor in full does not release the ov/ner.

2. A lien will hold against a homestead if the material is delivered before the homestead is recorded. This is where a lien has the advantage over an attachment. L24l C, of c. P.

3. Similarly a lien holds against a bankruptcy proceeding filed after material is delivered.

4, Where owner files notice of non-responsibility but materialmen proved the les- of completion where same is filed more than 10 dayi after completion or if filcd bcforc thc job ii substantialfu completed. In 1lE7c C. of C. P.

10. All liens rank cqually. Therc 'is no orioritv. The fact that one is filed ahead of inother docs not givc the one who filed first anv prioritv. -Labor and materialmen share e<iuaily. 1184 b C. of C' P. flowever, materialhen, labor, etc', rank ahead- of I contractor's-lien and must be paid in firll before the original contractor takes anything. Ogram vs. Welchoff 40 Cal. App. 298.

11. Lien will be valid against a building for fixtures even if same are removed, screcn dbors. alterations of any kind, counters, sideboards, shelving, partitions, wainscoting, et-c', the removal of which would damage thc U"itai"e or cause necessity of further repair' Gross vs. Helburg 77 Cal. 190.

12. It is not necessary to notify the owncr or to make demand on him in any way bef-o-r^c iilft a tien. Kellog vs. Howes 81 Caf' 170' Bui-to't"fus" a statiment within 10 days.gf -tiit"" a"-"nd for sarne by owner--voide vour lien. Kellog vs. Howes 81 Cal' 170' '-i - A lien is valid if it exceeds the contract price. LL92 C. of C. P.14.-A lien can be filed any time. You

(The Secretary's name) being first duly sworn' deposes and says: THAT he is an officer, to.wit, the Secretary of the (Lumber Company) the corporation and claimant named in the foregoing claim of lien; that he has read the same and knows the contents thereof, and that the same is true; that it contains, among other things, a correct statement of the demand of said claimant, after deducting all just credits and offsets lo. Destruction (total) by fire oi othcr causes destroys a lien. Humboldt !qtb"" Co. vs. Crisp. 146 Cal. 686. Partial destrrrction does nbt. Brenan vs' Swasey 16 Cal. 140. Pacific Sash & Door Co. vs. Wells.

Subscribed and sworn to before me this day of ......, 1926.

Notary Public in and for the County of State of California premises, Cement Co. vs. Wentworth 16 Cal. App. 692.

9. Where the contractor's work is so faulty as to entitle him to no compensatiorl thc iien is lost,-i. e., the building collapscd. Bianchi vs. Hughes 12+ Cal,24.

11. A settlement or waiver of lien in writing ends right to lien. Claiming error-or other reason for waiving will not rcvive the lien. Roystone vs. Darling 16 A. R. L. 981. Taking a security from the owner destroys a right to lien.

Martin vi. Becker 169 Cal. 301.

12. No licn will lie for money furnished a contractor even if it be proven he used this money to pay for material and labor actually used on the job. Sweet vs. Fresno Hotel Co. 174. Cal. 789.

13. An administrator, or guardian who acts WITHOUT A COURT ORDER does not render the real estate subject to lien. tr92 C. of C. P.

14. A lien will lie against the owner's equity only. However, if on a contract, mateiial is delivered and during or after the see had the right to REMOVE the'building within a certain time, the materialman could enforce his lien right and take the building as per' thc lessee's contract. Luck vs. Meikeljohn 2 Cal. App. 506. Similarlv -a building being moved cannot be liened until it is affixed again to a definite piece of real estate.

5. A trivial item will not hold up a completion (1187 C. of C. P.) nor will it extend a lien to change some small item of construction or to liave undone some trivial thing. Nor will a trivid purchase of a few cents. It should be $5.00 at least.

6, Owner cannot defeat a lien by pleading he did not want the work done or that it iamaged his property, if he had knowledge it was biing done ind did not file a notice of non-respon-ibility within 10 days of such knowledge.

7.. If-the contractor practices fraud on the owner or is negligent in his work or orders material of poorer quality than his contract calls for thC tien will hold providing the ooorer qualitv did not result in a total destruction of the work. Ilowe vs. Schmidt 151 Cal.436.

8. An unrecorded encumbrance does not affect a lien. Avery vs. Clark 87 Cal. 2L9-

9. A lien will hold against a formal notice do not have to await completion. Kellog vs. Ilowes E7 Cal. 170.

15. An innocent purchaser of Real Estate takcs subject to subscquent liens; nor does a subsequent judgmcnt takc priority. McCreary w. Osborne 9 Cal. 119.

16. An original contractor only can assign his right to lierr. A materialman cannot. Aftcr filing a materialman can assign his lien and join suit with others. Martin vs. Beckcr, 169 Cal. 301.

17. A false receipt in full to the contractor to induce owncr to pay does not void thc matcrialman's lien right if the owner is not thereby induced to pay the contractor. Washburn vs. Kahler 97 Cal. 58.

18. Any agreement between the owner and contractor whereby the contractor agrees to indemnify the owner against lieas does not affect the rights of the materialmen to lien Whittier vs. Coburn'18 Cal. 175.

19. A tien and an attachment can be filed simutaneously. Brennan vs. Swasey 16 Cal. 140. Securing a judgment on the attachmcnt does not merge the lien. German Building & Loan Assn. vs. Wagner 61 Cal. 349.

20. A materialman loses his lien if he takes a note or other security from the rowncr' (Continued on Page 4l)