Report of 48th Session California Legislature as Pertaining to Credit Granting on Constuction Work

By C. V. Pinkerton, Chaiflnan of Committee on Legislation, The California Retail Lumbennen'g Association.

On February 18, 1929, when the Legislature convened after the constitutional r:ecess, a survey showed ninetyfour bills introduced in this session which had direct or indirect bearing on the work of the members of this Association.

Your representative at Sacramento investigated and kept in touch with these measures to see that no amendments were introduced which might have an adverse effect on your work, and also concentlated on these which seemed of rnost importance.

The Bills introduced had a direct bearing on Mechanics' Liens, Street Improvements, Bad Checks, Recording Lease Contracts, Contractors' Registration Act and Bidders' Prequalifications, Credit Bureaus and Investigations.

Two of the Street Improvement bills, A. B. 367 and 451, as introduced would have given no protection to machinery dealers and others furnishing certain supplies in connection with his work. These we were successful in having amended so as to give adequate protection to these deafers. These measures have been signed by the Governor.

Eight Bills were introduced in connection with different sections of the Mechanics' I-ien provisions. Of these one bill was not taken from the Committee. Two Bills, A. B. 88 and A. B. 785, were defeated. The strong fight was made on A. B.88, but the opposition to this bill, which opposition was largely due to the misunderstanding of the intent and purpose of the bill, and the necessity forits introduction, defeated it. A. B. 785 was defeated largely for the same reasons.

Five bills passed the Assembly and Senate and were sent to the Governor for approval. Of these, three A. 8.786,787 and 789 have been signed by the Governor and will become effective August L4th, IgD.

A. B. 786 is the most important of these three which amends Section 1183 of the Code of Civil Procedure to overcome certain evils which have grown up out of the writing of Labor and Material Bonds. This new measure does away with the custom of combining labor and material bonds with completion bonds and the setting forth in the bonds conditions precedent and conditions subsequent as to the right of r€covery thereon. Under this Amendment no conditions beyond the control of the laborer, sub-contractor or materialman can affect recovery on the part of the laborer, sub-contractor or materialman, except an intent to defraud on the part of those attempting to recover under the bond.

The Amendment also provides that if the contractual period under which recovery may be made is less than the statutory period of four years, the bond must be recorded. Where the bond is recorded, the contract time may be shortened to six months, in which case the persons claiming recovery under the bond must bring their claim to the attention of the Surety writing the bond. Where the bond is not recorded the time limit of the ordinary Statute of Limitations on written instruments is applicable.

This Amendment also makes clear that the materialman, sub-contractor and laborer has a lien for the work of grading and filling in a lot or tract of land. At the p_resent time Se-ction 1191 has to do with this subject. The Courts have held under that Section that only the original or direct contractor with the owner has this lien right and that materialmen, sub-contractors and laborers are not protected.

This Amendment also makes it clear that thi landscape gardener has a lien for his installations and services in connection with the original work of improvement.

It also gives a right of lien for the demolishing of structures for such purpbses as creating an auto park or for the removal of buildings to clear property. Nolien exists at the present time to cover this type of work.

This Amendment also provides that the bond is to be construed in favor of the persons for whose benefit the bond is given, and that the Court will not have to follow the old doctrine of favoring the Sureties, which has been done since the days of volunteer Sureties who acted for their friends, and which custom has become obsolete owing to the growth of the Surety Companies organized to take care of this phase of modern business.

There are provisions providing if the Bond is filed for record, that in order to recover against the Sur'ety, the laborer. sub-contractor, or materialman mtlst either file his lien within the time required by law or must give actual notice to the Surety of the existence of his claim within that same time limit, as a condition precedent to recovery on the bond.

Assembly Bill 787 refers to Sections 1187 and 1188 and establishes the time for filing a lien if notice of completion is recorded. This will now be within thirty days after the completion of such work of improvement as a whole.

It also requires the addresses of the owner together with the name of the contractor, if any.

It further provides that where one building is erected on more than one lot or parcel of land owned by one or more different owners, it shall not be the duty of the lien claimant to segregate the proportion of material or labor entering into the structure on any certain parcel, but upon trial thereof the Court may, il it deems it equitable so to do, distribute the lien equitably as between the several parcels involved, provided further that persons interested as owners of, encumbrances on, contractors or subcontractors, may be joined in one action to foreclose the liens referred to.

Also in the case of filing claims where a contract is entered into, covering several buildings on the same parcel of

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