Boise-Payette Lumber Co. v. Challis Independent School District No. 1

This cause involves appeals by Boise-Payette Lumber Company and National Park Lumber Company, plaintiffs in separate lien foreclosures upon the schoolhouse of the defendant, which appeals have been consolidated, and an appeal by the defendant district in each case.

The defendant district, at a time when it could legally do so, within the constitutional limits of section 3, article 8, by reason of funds on hand and a bond issue and provision for collection of a tax to pay interest and principal thereof, made a contract with the defendant Taylor for the erection of a schoolhouse, the amount of which did not exceed the amount of such authorized funds. After the letting of this contract the district made other contracts which, added to the amount of this one and previous expenditures, exceeded the amount of such funds. Plaintiffs, who furnished materials to Taylor, used in the construction of the building, filed liens for the respective balances claimed of $1,997.74 and $661.25. The district, in the meantime, by payments upon subsequent contracts, had expended all but $430.36 of such funds.

The court granted foreclosure of these liens, limited to the amount of this $430.36 remaining, and apportioned the amount thereof between plaintiffs in proportion to their claims, and disallowed a lien for any further amount or attorney's fees or costs, upon the ground that such allowance *Page 407 would exceed the revenues legally provided for the construction of the schoolhouse, and "be in contravention of section 3, article 8, of the constitution."

Plaintiffs allege error in this, that their liens should have been allowed in full, including attorney's fees and costs, Defendant, as respondent, contests this point, and contends that the Taylor contract is void by reason of the district having, in total contracts, exceeded the constitutional limitation, and in any event that a full allowance of the liens would do so; and, as appellant, alleges error in overruling its general demurrers to the complaints on the grounds of insufficiency to state a cause of action against the district for foreclosure, in that the allowance of a lien upon public school buildings is against public policy, and that C. S., sec. 7340, is void for this reason, and is in violation of section 3, article 8, of the constitution.

The only question necessary for decision is the constitutionality of C. S., sec. 7340, which purports to grant such lien, as follows:

"Every subcontractor, laborer or other person, who performs labor, or furnishes material for any original contractor or subcontractor, to be used in the construction, alteration or repair of any building, machinery or other structure, for any county, city, town or school district, has a lien upon such building, machinery or structure, and all the provisions of this chapter respecting the securing and enforcing of mechanics' liens shall apply thereto, so far as applicable.

Plaintiffs concede that it is the universal rule, in the absence of a specific provision therefor, that general statutes granting mechanics' liens are not construed to include public buildings. Such decisions are based upon the principle that the enforced sale of public buildings thereunder or upon execution is against public policy, in the absence of such specific provision. (Storey Fawcett v. Nampa Meridian Irr. Dist.,32 Idaho 713, 187 P. 946.) For an extended discussion and citation of authorities, see Hutchinson v. Krueger, 34 Okl. 23, Ann. Cas. 1914C, 98, *Page 408 124 P. 591, 41 L.R.A., N.S., 315. See, also, 40 C. J., p. 57, sec. 19; 18 Rawle C. L., p. 881, sec. 9; and note in 26 A.L.R. 326.

Plaintiffs rely upon C. S., sec. 7340, as such specific declaration of a public policy to make such buildings liable to a lien. Counsel for the defendant cites C. S., sec. 6920, as declarative of a public policy that public buildings are exempt from sale upon execution, except upon a judgment recovered for the price thereof or upon a mortgage thereon.

The public policy of a state is to be found in its constitution and statutes. (6 Rawle C. L., "Constitutional Law," p. 108, sec. 108.) No one provision of constitution or statute should be separated from all others, and considered alone; but all provisions bearing on a particular subject should be brought into view; and it is the duty of the court to have recourse to the whole constitution if necessary, to ascertain the true intent and meaning of any particular provision. (Id., p. 47, sec. 41.) In this view, section 4 of article 8 of the constitution must be considered, although not cited by appellants. A statute cannot declare a public policy contrary to the constitution.

We have three constitutional provisions which, in such view, must be considered. Section 3, article 8, provides:

"No . . . . school district . . . . shall incur any indebtedness, or liability in any manner, or for any purpose, exceeding in that year, the income and revenue provided for it for such year, without the assent of two-thirds of the qualified electors thereof, voting at an election to be held for that purpose, nor unless, before or at the time of incurring such indebtedness, provision shall be made for the collection, of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof . . . ."

Section 6, article 13, provides:

"The legislature shall provide by proper legislation for giving to mechanics, laborers, and material men, an adequate lien on the subject matter of their labor."

Section 4, article 8, provides. *Page 409

"No county, city, town, township, board of education, or school district, or other subdivision shall lend, or pledge the credit or faith thereof directly or indirectly, in any manner, to, or in aid of any individual, association, or corporation, for any amount or for any purpose whatever, or become responsible for any debt, contract or liability of any individual, association, or corporation in or out of this state."

California has a constitutional provision identical with our section 3, article 8, upon the point here involved. It has likewise another provision similar to, but if anything broader than, our section 6, article 13, that "Mechanics, materialmen, artisans, and laborers of every class shall have a lien upon the property upon which they have bestowed labor or furnished material, for the value of such labor done and material furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens"; while ours provides that "the legislature shall provide by properlegislation for giving . . . . an adequate lien on the subject matter of their labor."

In considering a general enactment providing "that mechanics and materialmen shall have a lien for labor or material used in the construction of any building or other structure," it was there held that neither the constitutional provision for a lien nor the general act could be construed to include public buildings; that to do so would be against public policy; and that such public policy was declared in unmistakable language by the provision similar to our section 3, article 8, saying:

"The public policy appealed to is laid down in the constitution itself. It is a constitutional policy. The section under consideration on its face purports to be a Code provision providing a remedy by individuals against individuals. The constitutional policy referred to but emphasizes the rule of construction which would have been sufficient of itself. And the position is firmly fixed beyond cavil by section 18, article 11, which prohibits school-districts from incurring indebtedness exceeding the annual revenue provided *Page 410 for it, unless before the indebtedness is incurred provision shall be made for the payment of the debt by taxation. Could there be a plainer declaration that all indebtedness shall be paid from the revenue provided by law?" — Mayrhofer v. Boardof Education, 89 Cal. 110, 23 Am. St. 451, 26 P. 646.

This court has affirmed judgments granting liens under C. S., sec. 7340, but the constitutionality thereof has not been heretofore presented. (Chamberlain v. City of Lewiston, 23 Idaho 154,129 P. 1069; Gem State Lumber Co. v. School District No.8, 44 Idaho 359, 256 P. 949.)

A search has disclosed no similar law in any other state. Many have provision that the contractor shall furnish a bond for the protection of similar claimants. Others make provision for recourse to the funds held by the municipality or owed to the contractor, but in such cases the remedy has been in the manner of a foreclosure of a lien upon the fund, and the liability of a municipality has been limited to the amount owed to the contractor. (2 Dillon on Municipal Corporations, 5th ed., sec., 831.) The supreme court of Kansas is the only one which has held a general statute as to mechanics' liens to include public buildings, but held even then that the building could not be sold, there being a statute there similar to C. S., sec. 6920, exempting such buildings from sale on execution. (Wilson v. School District, 17 Kan. 104; Board of Commrs. v.Snodgrass Young Mfg. Co., 52 Kan. 253, 34 P. 741.)

Many states have constitutional provisions against the loan of credit by a state or a subdivision thereof, and several have provisions against such subdivisions becoming security for debts or liabilities of others. (Stimson on Federal and State Constitutions, p. 282, sec. 345; 2 Dillon on Municipal Corporations, 5th ed., sec. 814.) Colorado has a provision identical in effect with our section 6, article 13, and Georgia one very similar. (McWilliams v. Smith, 142 Ga. 209,82 S.E. 569.) In Leddy v. People, 59 Colo. 120, 147 P. 365, an act making a county liable for the amount of any school funds loaned therein by the state, was held to violate *Page 411 this provision. See, also, American Malleables Co. v. Town ofBloomfield, 83 N.J.L. 728, 85 A. 167.

The district has already incurred the indebtedness contemplated by the constitution by becoming indebted upon the bond issue. While, of course, the contract with Taylor in a measure creates an indebtedness, one hand will wash the other, and the fund provided by the bond issue would pay the amount of the Taylor contract. But if with this, the only indebtedness authorized, the subcontractors or materialmen or laborers may have a lien to be satisfied out of the building, and their claims are not limited by the amount due to Taylor (C. S., sec. 7346), the constitutional limit may easily be exceeded, and the district find itself forced to pay more than the Taylor contract, more than the constitutional limit, or lose the building and grounds upon claims of subcontractors and materialmen and laborers, even though it had paid nothing whatever to Taylor. The point is made more plain, if need be, when we contemplate that a lien for "alteration or repair" might subject an entire building, of a value greatly in excess of the amount of the contract liability therefor, to sale to satisfy a very minor claim, or one even in excess of the constitutional limit of power of the district to contract. The lien of a mortgage with similar dire possibilities has been held to be an indebtedness in excess of such a constitutional limitation, even though not creating a personal obligation of the district. (1 Dillon on Municipal Corporations, 5th ed., sec. 199; Palmer v. City of Albuquerque, 19 N.M. 285,142 P. 929, L.R.A. 1915A, 1106; 19 Rawle C. L., p. 979, n. 1.)

The test of the constitutionality of an act is not what is done thereunder in any particular instance, but what may be done under it. (6 Rawle C. L., p. 82, sec. 80; 12 C. J., p. 786, sec. 219.) While it is difficult to conceive of reasons to overthrow the reasoning of the Mayrhofer case, or that the infliction of a liability to a lien upon property of a district to pay the debts of a contractor is not the loaning of the credit of the district in violation of section 4, article 8, there is no room for doubt that *Page 412 making the property of the district liable to a lien for the debt of a contractor or subcontractor to a subcontractor, materialman, or laborer, with whom the district stands in no contract relation, and to whom it is not, by reason of such lien, liable in personam (Kruse v. Wilson, 3 Cal. App. 91,84 P. 442), is making the district responsible for the "debt, contract or liability of" the contractor. (Warner v.Willoughby, 60 Conn. 468, 25 Am. St. 343, 22 A. 1014.)

The terms "debt" and "liability" have been interpreted inBoise Development Co. v. Boise City, 26 Idaho 347, 143 P. 531, and Feil v. City of Coeur d'Alene, 23 Idaho 32, 129 P. 643. The district could not assume, and the legislature could not inflict, such responsibility or liability. (Leddy v. People,supra; 1 McQuillin on Municipal Corporations, sec. 237, p. 537. See, also, Lord v. City of Denver, 58 Colo. 1, Ann. Cas. 1916C, 893, 143 P. 284, L.R.A. 1915B, 306.) C. S., sec. 7340, is unconstitutional.

The judgments as against the district are reversed and the causes remanded, with instructions to enter judgments in favor of the district. Costs to respondent and cross-appellant, except that no costs be allowed for its brief as cross-appellant, the same not having been filed within the time allowed by rule 43.

Budge and T. Bailey Lee, JJ., concur.