Springer Land Association v. Ford

[Syllabus from pages 513-515 intentionally omitted]

This was a bill filed by Patrick P. Ford against the Springer Land Association and others, in the district court of New Mexico for the county of Colfax, to foreclose a mechanic's lien upon an irrigating ditch and reservoir system, the land covered thereby, the right of way therefor, and the particular lands intended to be irrigated. A cross bill was filed by the Springer Land Association and other defendants. The cause was heard on pleadings and proofs, and, on findings of fact and conclusions of law duly made and filed, the district court entered a decree in favor of Ford, adjudging a lien for the sum of $22,097.75, with interest and costs, on the ditch and reservoirs in question, together with the right of way (specifically describing them), and also on 22,000 acres of land appurtenant to the ditch, and to be irrigated thereby, specifying 46 sections in four designated townships.

It was further decreed that the Springer Land Association and other defendants pay or cause to be paid the sum found due, with interest and costs ($3,000 thereof to be paid to the clerk of the court), within 90 days, and in case of default that the property be sold by a special master, and the proceeds distributed as prescribed; $3,000 to be retained by the clerk of the court to await the determination of a suit by Dargle, a subcontractor, to recover the amount of $2,279.30, with interest and costs, or its payment and discharge by Ford. If a surplus was realized t the sale, it was to be held subject to the further order of the court. If a deficiency resulted, the amount was to be reported by the master to the court.

The case was carried to the supreme court of the territory, which found the facts, in substance, to be these:

On October 26, 1888, the Springer Land Association entered into a contract with Patrick P. Ford for the grading work in the construction of a certain ditch line and reservoir system for irrigation in Colfax county, N. M., which contract, and the specifications forming part of it, were set forth at length.

The contract provided: 'The party of the first part agrees to furnish all necessary tools and labor, and perform all the work of grading, required in the construction of the Cimarron ditch and its accessories. Said work to be done in a thorough and workmanlike manner, and in full accordance with the specifications hereto attached and made a part of this contract. Said first party agrees to begin work within ten days after signing this contract, and to complete the same on or before July 1st, 1889. The party of the second part agrees to pay said first party for work so done at the rate of eleven cents per cubic yard, without classification. And the amounts due for said work shall be paid at the time and in the manner described in the specifications hereto attached.'

Specification 11 related to allowance for extra work when done under the orders of the engineer.

Specifications 13 and 15 were:

'13. Subcontracts. Subcontracts must be submitted to the engineer, and receive his approval, before work is begun under them. No second subcontractor will be allowed. Subcontractors will be bound by the same specifications as the contractor, and will be equally under the suthority of the engineer.'

'15. Estimates. On or about the first day of each current month, the engineer will measure and compute the quantity of material moved by the contractory during the preceding month. He will certify the amount to the company, together with an account of the same at the price stipulated, which amount will be audited by the company without unnecessary delay, and the amount thereof, lessten (10) per centum retained, will be paid to the contractor in cash within ten days thereafter. This retained percentage will be held by the company as a guaranty for the faithful completion of the work, and will be paid in full, with the final estimate, upon the certificate of the engineer, accepting and approving the work; it being expressly understood that the failure of the contractor to fulfill his obligations will work a forfeiture of this retained percentage to the company. The amount due to the contractor under the final estimate will only be paid upon satisfactory showing that the work is free from all dangel from liens or claims of any kind through failure on his part to liquidate his just indebtedness as connected with this work.' 'Previous to the making of the last-mentioned contract, and on May 1, 1888, the Maxwell Land-Grant Company made a contract with C. C. Stawn and associates, who afterwards organized the Springer Land Association, which succeeded to their rights and obligations, by which the Maxwell Company gave to them a right of way for the proposed irrigation system of ditches and reservoirs, and by which said agreement it was, among other things, provided that with the view of selling certain of its lands at an enhanced value, and in consideration of certain perpetual water rights and franchises to be granted to it by the other party, it agreed to set apart and reserve from sale 22,000 acres of its lands, to be selected by the other party, and give to the other party a certain portion of the proceeds which might be derived from the sale of said lands, when sold. These lands were under the proposed ditch system, and to be irrigated by it; and, by this agreement, Strawn and his associates were to expend about sixty thousand dollars, or a sufficient sum to complete the enterprise on the proposed plan.' This contract was set forth in extenso.

'The title of the lands at that time, and at all times afterwards, was and remained in the Maxwell Land-Grant Company, except as to the rights acquired by Strawn and associates, and their successors in interest, under said contract. The same contract constituted Strawn and his associates and successors in interest the agents of the Maxwell Company, to the extent of, and for the purpose of, carrying into effect the spirit and intent of the contract as to the sale of the said lands; but that party (the Springer Land Association) had no other title in the lands than as given by said contract.

'Five days subsequent to the making of his grading contract, complainant, Ford, entered into another contract with the Springer Land Association, by which he agreed to select and accept one section of land under the proposed ditch system at the stipulated price of eight thousand dollars, to be taken as part payment on the contract price for Ford's grading work, by way of deduction of that sum from the final estimates on the contract for the construction of said ditch.

'The contract of May 1, 1888, designated one E. H. Kellogg as the engineer to have charge of the construction of said system of ditches and reservoirs. No engineer was named in the contract between Ford and the Springer Land Association of October 26, 1888; but said Kellogg, with the assent of all parties, acted throughout as the supervising engineer.

'Ford let subcontracts for portions of the work to McGarvey, Dargle, and Haynes.'

That with Dargle was given in full, and the three were of like form and tenor, and approved by the engineer. Each contained this clause: 'It is mutually agreed that the amounts of these subestimates will in no case be demanded or paid in advance of the payment of the regular estimate.'

Estimates, as provided by the contract of October 26, 1888, were made by the supervising engineer from time to time, which were audited and paid by the Springer Land Association up to about May, 1889.

Estimate No. 6 was dated April 30, 1889, and showed the amount then due and payable, after reserving 10 per cent., to be $5,010.92. The amount of this estimate has never been paid.

June 13, 1889, the engineer gave Ford a written acceptance of the work, and a final estimate, set forth at large in the findings. The total amount payable under the contract was $48,553.56. The six prior estimates aggregated $35,928.03, and the last and final estimate was for $12,625.53; but as the sixth estimate, of $5,010.92, had not been paid, the total amount due was $17,636.45.

'This amount the Springer Land Association refused to audit any pay, on the ground that the sum so stated was in excess of the amount due; that the work had not been completed according to contract; that the engineer's final estimate was erroneous, either through fraud, inadvertence, or mistake, because the subcontractors had not been paid the several sums due them on the work by Ford, and that the property was not free from danger from liens; and also that Ford should accept the section of land which he had agreed to accept, and which he had previously selected, in payment of $8,000 of the amount of such final estimate.

'The Springer Land Association procured to be made and properly executed a deed of conveyance by the Maxwell Land-Grant Company, which held the title, to Patrick P. Ford, conveying to him the section of land which had been selected by said Ford, and had the said deed present in the hands of an agent of said Maxwell Company on June 19, 1889, when the representative of the Springer Land Association, said Ford, and his subcontractors met for final settlement; said deed to be delivered to said Ford upon payment to the agent of said Maxwell Company by the Springer Land Association of $4,000. The representative of the Springer Land Association had with him at that time, for the purpose of making settlement with Ford, currency and valid checks on a responsible Chicago ank for $17,000. He notified said agent and Ford that he was ready to pay the $4,000 to the agent of the Maxwell Company for the deed, if Ford would settle with his subcontractors. Ford examined the deed, and made no objection to it. McGarvey, one of the subcontractors, then present, claimed that Ford owed him about $4,000, which Ford disputed, as to $300 of it. Ford would not settle unless McGarvey would accept the amount he admitted, and give him a receipt in full, which McGarvey refused to do, and claimed that he had a lien on the ditch and reservoir for the amount of his claim. The agent of the Springer Land Association offered to pay the subcontractors directly, if Ford would agree with them as to the amounts due them. No settlement was made between Ford and McGarvey. McGarvey then informed the agent of the Springer Land Association that the work was not done according to contract, upon which the latter disputed the correctness of the final estimate, and ultimately refused to audit the same. The said disagreement between Ford and Subcontractor McGarvey was one of the reasons why the deed was not delivered to Ford. The representative of the Springer Land Association did not tender to the agent of the Maxwell Company the amount due it upon said deed, and that no sufficient tender of the deed was made to Ford to require him, in law, to accept it.'

The sums claimed by the several subcontractors at that time amounted to $7,537.72.

Thereupon, on July 3, 1889, complainant, Ford, filed his notice of claim of lien for $17,634.27 alleged to be due on the contract, including all moneys due subcontractors at that time, and $390 for extra work.

This claim asserted a lien on the ditch and right of way, and the 22,000 acres of land, to secure the payment of said two sums according to the contract, a copy of which and the specifications was attached to, and made part of, the claim; stated when the work was commenced, completed, and accepted; made the Springer Land Association and others, and the Maxwell Land-Grant Company and others, parties to the notice; gave the Maxwell Land-Grant Company and others as the reputed owners; stated that claimant was employed to do the work 'by the Springer Land Association, C. N. Barnes, general manager, approved by C. C. Strawn as president,' and that 'the terms, time given, and conditions of said contract are those that fully appear in the copy of the said contract which is attached hereto and made a part hereof.' It was properly verified, duly filed and recorded, and action commenced within the statutory time.

McGarvey and Dargle, subcontractors, filed notices of liens, and commenced suits, and Dargle's suit was pending at the date of the decree.

The findings continued:

'It appears by the admissions in the pleadings and from the testimony that the 22,000 acres of land outside of the ditches and reservoirs, and the right of way for the same, were appurtenant to said ditch and reservoirs,-were under said ditch, and to be irrigated thereby; that the same were included within the sections described in the notice of lien and bill of complaint. It does not appear that the particular sections described were selected or segregated by the Springer Land Association, under its contract of May 1, 1888, as capable of irrigation; and it does appear that in a number of the said sections only portions of the section were selected, because a number of them were not flooded, or situated so as to be overflowed with water or irrigated from the ditch. All of said sections were situated between the line of said ditch and the river, and were enhanced in value by reason of its construction.

'It appears that complainant, Ford, paid to his several subcontractors all amounts due them under the first five monthly estimates, but at the time of the commencement of this suit had not paid what was due them under the sixth estimate (May, 1889), nor under the final estimate of June 13, 1889.'

It was also found that there was no collusi n between Ford and the engineer, as charged in the cross bill; that the acceptance by the engineer was conclusive, and the amount shown by his ewtimates correct.

The decree was affirmed (41 Pac. 541), and an appeal was then taken to this court.

'(1) That the claim or notice of lien to foreclose which this suit was brought was insufficient in law to create a lien.

'(2) That the amount claimed and adjudged as a lien was excessive, and included claims not due or payable.

'(3) That the final estimate was not payable by reason of the existence of liens of subcontractors.

'(4) That defendant should be entitled to be credited with the sum of $8,000 on the final estimate, on account of land which was to have been taken in payment thereon.

'(5) That no lien attached to the land outside of the ditches, reservoirs, and the right of way for the same.'

The Compiled Laws of New Mexico of 1884 contain these sections:

'Sec. 1519. A lien is a charge imposed upon specific property, by which it is made security for the preformance of an act.

'Sec. 1520. Every person performing labor upon, or furnishing materials to be used in the construction, alteration, or repair of any mining claim, building, wharf, bridge, ditch, flume, tunnel, fence, machinery, railroad, wagon road or aqueduct to create hydraulic power, or any other structure, or who performs labor in any mining claim, has a lien upon the same for the work or labor done or materials furnished by each, respectively, whether done or furnished at the instance of the owner of the building, or other improvement or his agent; and every contractor, subcontractor, architect, builder, or other person having charge of any mining, or of the construction, alteration or repair, either in whole or in part, of any building or other improvement, as aforesaid, shall be held to be the agent of the owner, for the purposes of this act.'

'Sec. 1522. The land upon which any building, improvement, or structure is constructed, together with a convenient space about the same, or so much as may be required for the convenient use and occupation thereof, to be determined by the court on rendering judgment, is also subject to the lien, if at the commencement of the work, or of the furnishing the materials for the same, the land belonged to the person who caused said building, improvement or structure to be constructed, altered, or repaired, but if such person owned less than a fee simple estate in such land, then only his interest therein is subject to such lien.'

'Sec. 1524. Every original contractor, within ninety days after the completion of his contract, and every person, save the original contractor, claiming the benefit of this act, must within sixty days after the completion of any building, improvement, or structure, or after the completion of the alteration or repair thereof, or the performance of any labor in a mining claim, file for record with the county recorder of the county in which such property or some part thereof is situated, a claim containing a statement of his demands, after deducting all just credit and offset, with the name of the owner or reputed owner, if known, and also the name of the person by whom he was employed, or to whom he furnished the materials, with a statement of the terms, time given and conditions of his contract, and also a description of the property to be charged with the lien, sufficient for identification, which claim must be verified by the oath of himself or of some other person.'

'Sec. 1526. The recorder must record the claim in a book kept by him for that purpose, which record must be indexed as deeds and other conveyances are required by law to be indexed; and for which he may receive the same fees as are allowed by law for recording deeds and other instruments.'

'Sec. 1529. Every building or other improvement mentioned in section 1520, constructed upon any lands with the knowledge of the owner or the person having or claiming any interest therein, shall e held to have been constructed at the instance of such owner or person having or claiming any interest therein, and the interest owned or claimed shall be subject to any lien filed in accordance with the provisions of this act; unless such owner or person having or claiming an interest therein shall, within three days after he shall have obtained knowledge of the construction, alteration, or repair, or the intended construction, alteration, or repair, give notice that he will not be responsible for the same, by posting a notice in writing to the effect, in some conspicuous place upon said land, or upon the building or other improvement situated thereon.

'Sec. 1530. The contractor shall be entitled to recover upon a lien filed by him only such amount as may be due to him according to the terms of his contract, after deducting all claims of subcontractors under him who have filed liens for work done and materials furnished, as aforesaid, and in all cases where a lien shall be filed, under this act for work done or materials furnished to any contractor, he shall defend any action brought thereupon at his own expense; and during the pendency of such action the owner may withhold from the contractor the amount of money for which lien is filed, and in case of judgment against the owner, or his property, upon the lien, the said owner shall be entitled to deduct from any amount due, or to become due, by him to the contractor the amount of such judgment and costs; and if the amount of such judgment and costs shall exceed the amount due by him to the contractor, or if the owner shall have settled with the contractor in full, he shall be entitled to recover back from the contractor any amount so paid by him, the said owner, in excess of the contract price, and for which the contractor was originally the party liable.'

Frank Springer, for appellants.

Joel F. Vaile, for appellee.

Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.