MICHAEL FLYNN MANUFACTURING COMPANY, a Corporation,
v.
J. L. COE CONSTRUCTION COMPANY, Inc., Cutter Realty Company, Inc., Emery Inman, Trustee and North Carolina National Bank.
No. 234.
Supreme Court of North Carolina.
June 14, 1963.*489 Osborne & Griffin, by Wallace S. Osborne, Charlotte, for defendant Cutter Realty Co., Inc., appellant.
Harkey, Faggart & Coira, by Harry E. Faggart, Charlotte, for plaintiff-appellee.
PARKER, Justice.
Defendant Cutter has one assignment of error based on one exception, and that is to the judgment.
Plaintiff's contract is not with the owner, Cutter, but with the principal contractor, Coe. In the Special Session, 1880, N.C. Laws, ch. 44, the General Assembly first made provision for a lien for subcontractors. The present statutes giving such a lien appear in G.S. § 44-6 et seq.
In Schnepp v. Richardson, 222 N.C. 228, 22 S.E.2d 555, the Court said: "The claim of the subcontractor or material man supplants that of the contractor and the duty of the owner to pay is an independent and primary obligation created by statute."
In order for plaintiff to recover against the owner, Cutter, it must prove: (1) Its subcontract with Coe; (2) material furnished and labor performed in substantial fulfillment thereof; (3) a balance due it; (4) notice to owner, Cutter, as required by statute prior to payment of the contract price to the principal contractor, Coe; and (5) a balance due Coe by Cutter. G.S. §§ 44-6, 44-8, 44-9. Upon such a showing the statute requires the owner, Cutter, to apply the unexpended contract price due the principal contractor, Coe, to the payment of the amount due plaintiff of whose claim Cutter has received notice. G.S. §§ 44-8, 44-9, 44-10. The provisions of G.S. § 44-11, payment pro rata, if necessary, seem from the pleadings to be inapplicable here. Widenhouse v. Russ, 234 N.C. 382, 67 S.E.2d 287; Schnepp v. Richardson, supra; Grier-Lowrance Construction Co. v. Winston-Salem Journal Co., 198 N.C. 273, 151 S.E. 631; Atlas Powder Co. v. Denton, 176 N.C. 426, 97 S.E. 372; Charlotte Pipe & Foundry Co. v. Southern Aluminum Co., 172 N.C. 704, 90 S.E. 923; Orinoco Supply Co. v. Masonic & Eastern Star Home, 163 N.C. 513, 79 S.E. 964; Clark v. Edwards, 119 N. C. 115, 25 S.E. 794; 57 C.J.S. Mechanics' Liens § 113, Subcontract and Performance Thereof. See Brown v. Ward, 221 N.C. 344, 20 S.E.2d 324; Guilford Lumber Mfg. Co. v. Holladay, 178 N.C. 417, 100 S.E. 597.
Cutter in its answer, while admitting many allegations in plaintiff's complaint, denies that plaintiff has fully completed its contract with Coe, and denies that there is due plaintiff on its contract with Coe the amount alleged in the complaint of $46,166.14. The admissions in Coe's answer are not competent against Cutter. Lupton v. Day, 211 N.C. 443, 190 S.E. 722; 41 Am. Jur., Pleading, sec. 203.
Plaintiff seeks a judgment for the amount due, and a foreclosure of its statutory lien. "In general, anyone claiming an interest or who may be affected by the judgment enforcing a mechanic's lien may contest the right to the lien or the amount of the claim, as, for example, the owner either at the time the lien attached or at the time it is enforced * * *." 57 C.J.S. Mechanics' Liens § 279.
In an action to enforce such liens the ordinary rules of pleading are generally applied to pleas or answers. 57 C.J.S. Mechanics' Liens § 301; 36 Am.Jur., Mechanics' Liens, secs. 264, 265, and 266.
*490 Widenhouse v. Russ, supra, was an action to recover for building materials furnished defendant W. B. Russ, Sr., for use in constructing a building for defendant Lelia L. Smart on her land and to declare a lien therefor. In its opinion, the Court said: "If the contractor were suing the owner for the balance of contract price for the construction of the building in question, the owner could set up as a defense, claim for damages arising out of the failure of the contractor to construct the building in accordance with the terms of the contract." In such a case there is privity of contract between the owner and the contractor.
Our statute does not establish privity of contract between plaintiff and Cutter. Morgantown Hardware Co. v. Morgantown Graded Schools, 151 N.C. 507, 66 S.E. 583. However, where plaintiff's "lien arises under the provisions of G.S. § 44-6 it does so by substituting the claimant to the rights of contractor [Coe] limited as therein stated." Widenhouse v. Russ, supra. Since plaintiff, so far as his claim is concerned, has been substituted to the rights of Coe limited as stated in G.S. 44-6, and since if Coe were suing Cutter for the balance of the contract price for the construction of the office building, Cutter could set up as a defense to Coe's action a claim for damages arising out of the failure of Coe to construct the building according to the terms of the contract, plaintiff who was a subcontractor under Coe is in no better position in respect to the question as to whether he has performed his contract with Coe, so far as Cutter is concerned, than Coe, with whom plaintiff contracted. Under such circumstances, Cutter has a right to set up as a defense against plaintiff the failure of plaintiff to perform its part in the construction of the building in accordance with the terms of its contract with Coe, and to contest the balance, if any, due plaintiff on its contract with Coe. To hold otherwise, when plaintiff seeks a foreclosure of its statutory lien, would seem to be inequitable and unjust, and would put the subcontractor in a better position than the general contractor.
In Terrell v. McHenry, 121 Ky. 452, 89 S.W. 306, it is said:
"It is insisted that Miller, who did the work, is entitled to a lien as a subcontractor, although McHenry, under whom he worked, is not entitled to recover. We cannot concur in this construction of the statute. Miller was employed by McHenry, and, while McHenry says that he employed Miller at the request of Terrell, the evidence does not sustain him in this. Miller, having been employed by McHenry, must look to McHenry for his pay. If McHenry was entitled to any lien on the house, Miller would be entitled to the benefit of that lien; but if McHenry has no claim which he can enforce, and never had any, there is nothing for Miller's right to attach to. If McHenry had had a claim he could enforce against Terrell, and Terrell had paid McHenry, leaving Miller unpaid, a different question would be presented. But where a contractor fails to carry out his contract, and the owner of the property does not get what he contracted for, and in fact gets nothing of any value, so that he is in no way liable to the contractor, and never was liable, the subcontractor must look to the person with whom he contracted for his pay. McHenry was to get nothing for the roof if it leaked within 30 days, nor until it was made to stop leaking. Miller, who was a subcontractor under McHenry, is in no better attitude, so far as Terrell is concerned, than McHenry, with whom he contracted."
See also Holloman v. Britton (Okl.), 346 P.2d 941, rehearing denied 24 November 1959; Anno. 16 A.L.R. 981.
In Perkins v. Perkins, 249 N.C. 152, 105 S.E.2d 663, the Court said:
"`It is well settled that the averments as to set-off or counterclaim *491 must be definite and certain. Vague, general, and indefinite allegations are not sufficient. The counterclaim is substantially the allegation of a cause of action on the part of the defendant against the plaintiff, and it ought to be set forth with * * * precision and certainty.' American Nat. Bank v. Hill, 169 N.C. 235, 85 S.E. 209; American Nat. Bank of Richmond, Va., v. Northcutt, 169 N.C. 219, 85 S.E. 210; G.S. § 1-135."
A study of what Cutter terms a counterclaim shows allegations so vague, general, and indefinite that the so-called counterclaim amounts in effect to a defense of plaintiff's claim on the ground that plaintiff did not perform its contract with Coe according to its terms, and that it is not a counterclaim to secure a judgment against plaintiff for damages. Such being the case the question is not presented as to whether or not Cutter can maintain a counterclaim to recover damages against plaintiff when there is no privity of contract between them.
Cutter's denial in its answer that plaintiff has fully performed its contract with Coe, which is amplified in its so-called counterclaim, and its denial that there is due plaintiff on its contract with Coe the amount of $46,166.14 present issues of fact, because an issue of fact arises on the pleadings whenever a material fact is maintained by one party and controverted by the other. G.S. § 1-196; Wells v. Clayton, 236 N.C. 102, 72 S.E.2d 16.
"The law does not authorize the entry of a judgment on the pleadings in any case where the pleadings raise an issue of fact on any single material proposition." Erickson v. Starling, 235 N.C. 643, 71 S.E.2d 384.
Full liberty of consideration on the part of the jury would seem to be Cutter's due. Suum cuique tribuere.
Reversed.