Pringle-Associated Mortgage Corporation v. Eanes

McCALEB, Justice.

The primary issue presented in these consolidated writs of review is whether a subcontractor who pays his own employees for labor performed on a building project as their wages become due is legally subrogated under Article 2161(1) and (3) of the Civil Code to the superior privilege granted such laborers by R.S. 9:4801(D) and R.S. 9:4812.

The record reveals the following undisputed facts: Prior to July 1965 Ernest R. Eanes, Jr., the original defendant in the case, purchased Lot A, Plantation Trace Subdivision in East Baton Rouge Parish, for the purpose of subdividing the property and constructing apartment buildings thereon. In order to secure funds for the construction work, Eanes executed a promissory note in the sum of $335,000 in favor of plaintiff mortgage corporation, the payment of which was secured by a collateral mortgage affecting the land upon which the development project was to be erected. Eanes also entered into an agreement (the record does not show whether this was a written or an oral contract) with Buddy Eanes Homebuilders, Incorporated, of which he was president, to construct certain apartments or other buildings on the mortgaged property. Pursuant to this agreement, Buddy Eanes Homebuilders let various subcontracts to other firms to supply the labor and material necessary to perform the desired construction. Although considerable work and effort was devoted to the project, it was never completed as Buddy Eanes Homebuilders defaulted as prime contractor. At the time of the default, plaintiff corporation had advanced Eanes on account of the project the sum of $263,615.70.

' On April 20, 1966 plaintiff sued Eanes in this proceeding on his promissory note and was awarded judgment for the amount then due. A writ of fieri facias was issued under which the property subject to the collateral mortgage was seized and sold and, on June 8, 1966, plaintiff purchased the property at the sheriff’s sale. This sale was made subject to various liens and privileges which had been previously recorded.

. Shortly after its acquisition, plaintiff filed a rule in this proceeding against the *711various lien holders to show cause why their liens should not be cancelled. Although many liens had been recorded against the property, the trial court held that only three (those here involved) primed the collateral mortgage held by plaintiff, viz., Livingston Roofing & Sheet Metal Company, Inc., in the sum of $2,-961.74, representing wages paid by it for labor; J. R. McFarland, d/b/a United Masonry Company, in the sum of $5,606.86, representing wages paid to his employees (.$3,214.24) and also wages in the sum of $2,396.62 for labor personally performed by McFarland, as subcontractor of the masonry work involved; and Capitol Detective Agency, Inc. for $1,446.26, representing salaries paid two night watchmen who were assigned to protect the project during its construction.

Plaintiff appealed from the adverse decision to the Court of Appeal, First Circuit, where the judgment was reversed, the Court holding that the privilege of plaintiff, as mortgagee,, was superior in rank and entitled to payment with preference and priority over all liens filed by the three subcontractors, except the lien for labor personally performed by J. R. McFarland in the sum of $2,396.62. See 208 So.2d 346. Thereafter, McFarland, Livingston Roofing & Sheet Metal Company, Inc. and Capitol Detective Agency, Inc. applied for certiorari. The applications were granted and the case has been argued and submitted for our decision.

Liens were timely filed by the subcontractors herein, and it is conceded that no lien was filed by any laborer, except McFarland for work personally performed by him. The three subcontractors are claiming the privilege of their laborers (which primes even the privilege of the holder of a prior mortgage) on the ground that, under Article 2161(1) and (3) of the Civil Code, they became legally subrogated to the rights of their respective laborers when they paid their wages. They cite, as controlling, our 1932 decision in Tilly v. Bauman, 174 La. 71, 139 So. 762, where it was held that subcontractors who have paid their laborers become legally subrogated to the laborers’ liens where, as here, the prime contractor has defaulted on a building contract which has not been timely recorded.

Counsel for plaintiff concede, as they must, that this case is indistinguishable from Tilly v. Bauman. However, they assail the ruling in Tilly v. Bauman as unsound, proclaiming that the Court misinterpreted the meaning of Article 2161(1) and (3) of our Code. To buttress this postulation they rely on a diverse view expounded by the commentator Planiol (see 2 Planiol Civil Law Treatise, as translated by the Louisiana Law Institute, Nos. 477, 491, 499 and 501) in his interpretation of *713Article 1251 of the Code Napoleon of 18041 from which Article 2161 of our Code is derived, and also upon the expression of an alleged contrary construction of Article 2161(1) in the 1891 decision of New Orleans National Bank v. Eagle Cotton Warehouse & Compress Co., 43 La. Ann. 814, 9 So. 442.

The Court of Appeal subscribed to the arguments of plaintiff’s counsel and refused to follow the decision in Tilly v. Bauman, declaring it to be in conflict with Planiol’s translation of the comparable article of the Code Napoleon and also with certain statements appearing in the opinion in New Orleans National Bank v. Eagle Cotton Warehouse & Compress Co. The Court of Appeal stated:

“Readily acknowledging our duty and obligation to follow and apply the decisions of the Supreme Court when its rulings are clear and unambiguous, we also are under the obligation of pointing out those instances wherein we find conflicting views expressed by our superiors. Where such conflict exists, we are disposed to follow the view which appears to us most sound. We do so in order that such conflicts may be resolved by a reconsideration of the issues by the Supreme Court to the end that all resulting uncertainties may be resolved and removed.” (Italics ours) See 208 So.2d at p. 348.

We think it illusory for the Court of Appeal to suggest that our rulings on the subject under consideration are vague and ambiguous for, admittedly, Tilly v. Bauman (our only, hence last, expression) is on all fours with the case at bar. Indeed, the above quoted statement manifests that the appellate court is laboring under a misconception as to its duty to follow the jurisprudence of this Court. Should any appellate court find our jurisprudence equivocal, it is nevertheless obligated to reach a result concordant with the last expression of this Court on the subject matter.

A reading of the concise opinion in Tilly v. Bauman with reference to legal subrogation discloses that the Court, in holding paragraphs (1) and (3) of Article 2161 of the Civil Code governed the case, simply determined that the literal reading of each paragraph of the codal article *715was applicable to the facts. The Court stated:

“These two claims involve exactly the same point of law, which is this, Is a subcontractor who pays off his laborers employed by him subrogated to the lien rights of such laborers? We think he is. Under the statute, the building (and therefore, in effect the owner of the building) is liable for the workmen’s wages, because they have a lien on it; the subcontractor is of course liable for these wages, because he employed the men. Again, since the laborer’s lien primes the mortgage and the subcontractor’s does not, the laborer’s lien is necessarily preferable to that of the subcontractor.
“We have therefore before tis both cases provided for by the Civil Code, art. 2161, R.C.C. which provides as follows :
“ ‘Subrogation takes place at right:
“ T. For the benefit of him who, being himself a creditor, pays another creditor, whose claim is preferable to his by reason of his privileges or mortgages.
‡ •f' ■i' “ ‘3. For the benefit of him who, being bound with others, or for others, for the payment of the debt, had an interest in discharging it.’ ” (Italics ours)

It is thus seen, as indicated above, the Court was of the opinion that considered in either aspect, as a creditor of the owner or as a solidary debtor with the owner for the laborer’s wages, the subcontractor by paying the laborer’s wages satisfied the requirements of both paragraphs (1) and (3) of Article 2161. The legal subrogation provided in paragraph (1) of the codal article was found to be applicable because the subcontractor, who had not been paid for work performed under the Statute (now R.S. 9:4812), was a creditor of the owner as well as the laborers, who became the highest ranking privileged creditors of the owner as soon as they performed work on the property. This construction seems justifiable because the language of paragraph (1) is explicit and free from ambiguity and, hence, under Article 13 of the Civil Code, its letter may not be disregarded “under the pretext of pursuing its spirit.” 2

The interpretation given by Planiol and also the dictum in the case of New Orleans National Bank v. Eagle Cotton Warehouse & Compress Co.,3 upon which the Court of Appeal relied, is to the effect that this *717subrogation takes place only when the junior creditor is a third person and is not a debtor of the preferred creditor, as in the case here. But evidently the Court in the Tilly case did not believe that such an interpretation was permissible because the language employed in Article 2161(1) does not limit the right of subrogation granted the subordinate creditor, who pays the preferred creditor, to instances in which such creditor is not indebted to the preferred creditor.4 Therefore, to restrict the operation of the article so as to exclude such inferior creditors, would require the Court to perform a legislative function by amending the language used in the paragraph to read that subrogation takes place of right for the benefit of him who, being himself a creditor, pays another creditor, whose claim is preferable to his, provided he is not also indebted to such creditor.

However, even were we willing to concede that this Court in the Tilly case may have erred in concluding that paragraph (1) of Article 2161 was applicable under the circumstances presented here, the result would nevertheless be the same. For we do not entertain the slightest doubt as to the soundness of the Court’s pronouncement that paragraph (3) of the article governs the issue herein. This is because the subcontractors and the owner of the property were solidarily liable to the laborers performing work on the job for payment of those laborers’ wages.

The Court of Appeal reasoned that the subcontractors were not solidarily liable with the owner for laborers’ wages because, at the time the wages were paid, the subcontractors “ * * * were the solé debtors and prime obligors of the laborers concerned.” The court stated “ * * * the mere earning of wages by performing work on a given project does not per se vest the laborer with a claim or right against the property and its owner”, theorizing that this right only springs into existence against the project and its owner when a notice is given “ * * * through the medium of a lien filed in compliance with the pertinent statute.”

*719It is apparent from the above quoted deductions that the Court of Appeal gave consideration only to that part of R.S. 9:4812 providing for the creation of privileges upon the building by persons who have performed services or labor upon the same, which constitute a claim in rem against the building and that it failed to notice that the statute also provides a personal right of action in those parties entitled to a privilege against the owner for the amount of their claim for a period of one year from the filing of the claim. .Under this provision laborers, materialmen .and other persons performing services in the construction of a building for a contractor or subcontractor are granted this personal right of action as soon as the services are performed and the owner, who has failed to require a performance bond from the prime contractor or to record the construction contract in the office of the Clerk of Court or Recorder of •Mortgages within the time prescribed in the statute, becomes a debtor by operation of law.5 The owner, of course, is not solely responsible since the contractor or subcontractor, who hires the laborers or materialmen, is contractually liable for their wages or for the price of the material furnished. Accordingly, in this case the owner and the subcontractors were solidary obligors for payment of the laborers’ wages and, therefore, under paragraph (3) of Article 2161, the subcontractors, being bound with the owner for the payment of the laborers’ wages, had an interest in discharging the debt and became subrogated of right to the claims of the laborers from the moment the latter were paid. See Alfred Hiller Co. v. Hotel Grunewald Co., 138 La. 305, 70 So. 234. This view is fully supported by the applicable articles of the Civil Code and the jurisprudence construing them.

Article 2091 defines an obligation in solido to be one in which all the debtors are obliged to the same thing, i. e., as applied here the payment of wages— “so that each may be compelled for the whole, and when the payment which is made by one of them, exonerates the others toward the creditor.” Article 2092 declares: “The obligation may be in solido although one of the debtors be obliged differently from the other to the payment of one and the same thing; * * * ” and Article 2093 provides in essence that, although obligations in solido must be expressly stipulated, “This rule ceases to prevail only in cases where an obligation in solido takes place of right by virtue of some provisions of the law.”

In Rathborne Lumber & Supply Co. v. Falgout, 218 La. 629, 50 So.2d 295 (1950), *721we considered, from a procedural standpoint, the nature of the obligation owed to a furnisher of material by a defaulting contractor and the owner of a building. There, plaintiff had supplied on the order of the contractor, Falgout, building material which was used in the construction of the building situated in Plaquemines Parish owned by one Pelas. Suit was filed in Jefferson Parish against Falgout, a resident of that parish, and Pelas, a resident of Plaquemines Parish, for recovery of the price, as well as an in rem action directed against the building. Pelas excepted to the jurisdiction ratione personae and ratione materiae. This plea was maintained by the district judge. On appeal we sustained the ruling as to the action in rem but reversed the judgment upholding the exception to the jurisdiction ratione personae on the basis that Falgout and Pelas were obligors in solido. The Court stated in part:

“ * * * According to the petition herein no contract between defendant Pelas (the owner) and defendant Falgout (the contractor to whom the materials were sold and delivered) was timely placed on the public records of Plaquemines Parish; and, as a result thereof and pursuant to the provisions of the Building Contract Statute, Section 12 of Act 298 of 1926, as amended by Act 323 of 1938, plaintiff has a personal right of action against such owner for the amount of its claim against Falgout. Moreover, Pelas and Falgout are personally liable in solido inasmuch as they are obliged to the same thing. Civil Code Article 2091 ; Hiller Co., Ltd. v. Hotel Grunewald Co., Ltd., 138 La. 305, 70 So. 234; Glassell, Taylor & Robinson v. John W. Harris Associates, Inc., 209 La. 957, 26 So.2d 1; A. M. & J. C. Dupont, Inc. v. Boudreaux, La.App., 185 So. 317.”

Tilly v. Bauman, which is and has been the jurisprudence of this State for over thirty-six years, is sustained by the cited case and the authorities cited therein; it is correct and the trial court properly held in conformity therewith that the subcontractors, who paid their laborers furnishing personal services on the construction project, are subrogated of right to the laborers’ liens.

Disposal of the foregoing leaves for consideration two other questions: (1) whether or not the lien filed by Capitol Detective Agency, Inc. for $1,446.26, representing salaries paid two night watchmen who were assigned to protect the project during its construction, is entitled to be classified as a laborer’s lien, which primes the rights of plaintiff as mortgagee of the property and (2) whether Livingston Roofing & Sheet Metal Co., Inc. has established with certainty that it is entitled to the $2,961.74 allowed by the trial judge as being attributable to labor costs it paid for construction work.

*723Insofar as the latter claim is concerned, we are of the opinion that the objection of plaintiff has merit. Livingston Roofing was a subcontractor on the job under a contract with Buddy Eanes Homebuilders, Inc. to furnish for $11,731.55 the labor and materials for the roofing and sheet metal work on the apartment project. Although it filed a lien claiming $6,252.76 for labor, the President of the company, Mr. Shatter Chenevert, testified that only $2,961.74 represented the amount paid by the corporation for labor performed in conjunction with the project. He further stated that, of this amount, $1,471.50 was paid to corporation employees for wages and the balance of $1,490.24 was paid to Victoria Roofing Company of Texas, whose laborers performed roofing work on the building.

Livingston Roofing’s right of subrogation to the wage claims the laborers of Victoria Roofing Company may have had against the owner cannot be recognized for many reasons. However, it suffices to say that, aside from the fact that Livingston Roofing was not obligated to such laborers for their wages, the record does not show the portion of the $1,490.24 total which was paid for these laborer’s wages and how much thereof represented indebtedness to Victoria Roofing Company for overhead, taxes, insurance and profit. Livingston Roofing carried the burden of proving any legal subrogation to which it might have been entitled with reasonable certainty. Its failure to do so requires that this portion of its claim be dismissed.

The same result obtains with respect to the subrogation claim by Livingston Roofing for $1,471.50 attributable to wages paid its own laborers. There is no evidence or showing made by this claimant as to the specific portion of the laborer’s wages paid for work performed by them in Livingston Roofing’s shop where certain items were fabricated for roofing on the apartment project, and how much in laborer’s wages was actually paid for labor performed at the job site. As we have heretofore stated, the burden was on Livingston Roofing as claimant for subrogation to prove the amount of wages paid its laborers for work done at the construction site. Work performed away from the job site in fabricating material for use in the construction of a building does not entitle the laborers performing such work to the preferential privilege, which primes that of the mortgagee.

Respecting the right of Capitol Detective Agency, Inc., to subrogation for the wages paid two watchmen stationed at the apartment project while it was under construction, we think the law authorizes the allowance of this claim. The watchmen who protected the construction site from theft, vandalism, et cetera, are unquestionably laborers. This being so, they are entitled to a laborer’s lien since they perform services at the job site which *725are essential to and an integral part of the construction project.

For the reasons assigned the judgment of the Court of Appeal is reversed, insofar as it recognizes the mortgage of Pringle-Associated Mortgage Corporation to he superior in rank to the lien for labor filed herein by Capitol Detective Agency, Inc. in the amount of $1,446.26, and the judgment is amended insofar as it recognizes the lien of J. R. McFarland d/b/a United Masonry Company to be superior in rank to the mortgage of plaintiff, by increasing the amount of said lien to $5,-606.86. In other respects the judgment is affirmed. All costs are to be paid by plaintiff.

FOURNET, C. J., concurs in the decree. BARHAM, J., dissents and will assign written reasons.

. In a supplemental brief to this Court, plaintiff’s counsel have referred us to tbe view of tbe commentators Aubry & Rau to tbe effect that, under Article 1251(1) of the French Code, a creditor claiming subrogation must necessarily be a third person and cannot also be a debtor of the preferred privileged creditor. 1 Aubry & Rau, Civil Law Translations— Obligations (an English translation by the Louisiana Law Institute), See. 321. However, it is to be noted that this Court has declared that tbe views of tbe French commentators on tbe subject of, legal subrogation are not in harmony— See Ziegler v. His Creditors, on Rehearing, 49 La.Ann. 187, 21 So. 666 (1897).

. Since the Courts of France are not bound by the same rules pertaining to the application and construction of laws, as those provided by Chapter 4 of the Preliminary Title of our Civil Code, Arts. 13--21, the interpretation of Planiol, or other French commentators as to the meaning to be given an explicit provision while • ordinarily persuasive is not controlling.

. Incidentally, this ease is plainly without application to the situation here because *717Lallande, who made the payment, was never at any time a creditor of Horine. He was simply a principal debtor. Here, the subcontractors were creditors of the owner and were entitled to their legal privilege on the building at the time they paid their laborers who had the highest preferred privilege on the property.

. In Ziegler v. His Creditors, on Rehearing, 49 La.Ann. 187, 21 So. 666, the Court, after stating that there was some variance in the French authorities on the question of legal subrogation and after citing the views of Boileux, Toullier, Marcadé and Dalloz Code Annotés, pertinently observed: “After all, on this question, is not the Code itself enough? Its conciseness of expression, that subrogation takes place in favor of the creditor who pays another whose debt is preferable by reason of his privilege or mortgage, would certainly seem to preclude any aid for interpretation.”

. Article 1760 of the Code provides that, in relation to their origin, there are two kinds of civil obligations — viz., those created by operation of law and those arising from consent of the parties, called contracts.