West Lumber Company v. Gignilliat

Where a vendor improves real estate and the vendee, under a contract to purchase, consents to and co-operates in the improving of the property subsequently to the executory contract of sale, the lien of a materialman for materials furnished to the vendor for the improvement of the property, properly prepared and recorded and foreclosed in time, binds the interests of both vendor and vendee in the property even though the vendee receives a deed to the property and records it before the materialman's lien is filed for record and recorded.

DECIDED JUNE 5, 1948. REHEARING DENIED JULY 8, 1948. West Lumber Company brought an action against William R. Gignilliat, Falkenberg Meador Inc., and Homer George, as receiver for Falkenberg Meador Inc., to obtain a money judgment against the company and to establish a lien on certain improved real estate as against all the defendants. The plaintiff dismissed the suit as to the receiver. The petition, as amended, alleged substantially: On or about April 23, 1946, the defendants obligated themselves to pay the plaintiff the sum of $1905.34 in consideration of the plaintiff's delivering certain itemized material at and upon certain realty, known as 1747 Clairmont Road, in DeKalb County, for use upon a dwelling for improving the realty; the plaintiff delivered the material and it was used for the purpose alleged, but payment therefor has been refused; the defendant, William R. Gignilliat, purchased the aforesaid property from Falkenberg Meador Inc., on or about September 20, 1946, with notice that Falkenberg Meador Inc., had not paid for all materials furnished in the construction of the premises; William R. Gignilliat had entered into a contract in February, 1946, for the purchase of this real estate with the understanding that it would be improved by the erection of a house thereon by Falkenberg Meador Inc., the defendant Gignilliat had this house built by Falkenberg Meador Inc.; the house was constructed by Falkenberg Meador Inc. for Gignilliat and the materials were furnished by the plaintiff to Falkenberg Meador Inc., and Gignilliat. The plaintiff recorded its lien on October 8, 1946, claiming "a lien on the real estate and improvement thereon of William R. Gignilliat and Falkenberg Meador Inc." And the claim of lien stated further: "This lien is claimed for the material furnished Falkenberg Meador Inc., owners and builders." The defendant Gignilliat filed his answer of general denial and alleged that he had purchased the property on September 20, 1946, from Falkenberg Meador Inc., who conveyed it to him by warranty deed which was duly recorded on September 27, 1946; but alleged that he purchased the property in good faith and at the time of said purchase had no knowledge or notice, actual or otherwise, of any lien, or claim of liens in favor of the plaintiff or any other person; and the plaintiff's lien was recorded more than two weeks subsequent to his purchase of the property. On the trial of the case, the court directed a verdict in favor of the plaintiff and against Falkenberg Meador Inc., for the amount due for material and in favor of Gignilliat and against the lien's attaching to his property. The plaintiff excepts to the direction of the verdict on the ground that it was contrary to law. There was no dispute about the amount of materials furnished for the improvement of the property. The defendant Gignilliat testified on cross-examination, without objection, that he entered into a sale contract for the purchase of the house involved in February, 1946; that he entered into a contract to purchase the house when it was finished; that from February, 1946 until September 20, 1946, when he got a deed to the property, he constantly followed the direction of the house; that he was there every few days; that from February until September 20, Falkenberg Meador Inc. were building the house for him; that at the time he contracted for the house the foundation had already been put in the ground; that the house was basically built the way he wanted it and that he made some minor changes in the plans; that he knew nothing of where the materials for the house came from; that at the time of the completion of the purchase of the house the attorney handling the matter stated to him that an affidavit was being prepared to the effect that there were no outstanding bills or liens.

1. The defendant in error contends that the direction of the verdict was proper because there was no evidence that Gignilliat contracted with the West Lumber Co. or that he purchased the property with knowledge of its claim of lien. We do not agree with this contention. Under certain circumstances that contention states the true rule but the cases in which the rule is stated are those which do not involve an executory contract of sale and the participation by both parties in the construction of the improvements on the premises. The words "true owner" as used in this lien statute, Code § 67-2001, does not mean legal title. It has been held many times that such a lien obtains on whatever interest the one has who has the right and authority to cause the improvements to be made. James G. Wilson Mfg. Co. v.Chamberlin-Johnson-DuBose Co., 140 Ga. 593 (79 S.E. 465), and cases cited. We think the principle of law has been so well stated in this State that further discussion is superfluous except possibly to apply the rule to the particular facts of this case. In the case of Williams v. Brewton, 170 Ga. 164 (152 S.E. 441), it was held that the liens of laborers and materialmen do not rest upon contract but upon the law, that the title of the true owner can not be subjected to liens for materials or labor done in its improvement unless he expressly or impliedly consents to the contract under which the improvements are made; that "when, however, the vendor has in some way consented to the improvement of real estate by his vendee, or has expressly or impliedly authorized it, or has co-operated with the vendee in plans for the improvements, or has been active and instrumental in having the improvements made, such liens will attach to his property. 40 C. J. 111 ( § 111) cc."; that "If a vendor and his vendee co-operate in plans for the erection of improvements upon real estate covered by their agreement, the interest of the vendor as well as that of the vendee is bound for the payment of liens for labor and material furnished for such improvements. Guiou v. Rickman, 77 Neb. 833 (110 N.W. 759, 124 Am. St. R. 877)." While the case of Williams v. Brewton, supra, deals with the lien as it affects the vendor, what is ruled therein necessarily applies to the vendee in an executory contract of sale as shown in the citation of the Nebraska case, where the same circumstances appear which bind the vendee. It would seem, furthermore, that public policy would require such a conclusion. Otherwise the lien laws could be circumvented by placing the title to land in contractors who could in turn agree to sell the lot as improved. Then the purchaser could claim to be a bona fide purchaser upon receipt of a deed to the property and materialmen and laborers would have no recourse upon the property. A more exhaustive search of foreign authorities would no doubt reveal other holdings similar to the above, but the answer is so clear and the rule so sound, sensible and just, that we rest content with what we have stated. The purchaser here consented and co-operated in the improving of the property with the vendors, and under the facts and the pleadings, the lien of West Lumber Co. on the improved property is binding as against Falkenberg Meador Inc., and William Robert Gignilliat. The rule of actual notice of claim of lien does not apply except as to those who do not consent to or co-operate in the making of improvements. The law charges with notice those who consent or co-operate. There was no waiver of lien or affidavit showing all bills for labor and material paid. The evidence demanded a verdict in favor of the plaintiff's lien against the property, binding on both the defendants.

The court erred in directing a verdict that the plaintiff is not entitled to a lien against the real estate of William Robert Gignilliat and generally in favor of Gignilliat.

Judgment reversed. Sutton, C. J., Parker, J., concur.