Back v. Reisterstown Lumber Co.

Moore, J., delivered the opinion of the Court. This case, involving lien claims for building materials and supplies, arose out of the subdivision of a small parcel of real estate located at Hunt Road and Denby Road in Baltimore County and its development into seven improved lots. An appeal was taken from a decree of the Circuit Court for Baltimore County (Maguire, J.) ordering enforcement of lien claims for building materials and supplies against Lot 4, owned by appellants Back; Lot 5, owned by appellants Culotta and Lot 7, owned by appellants Mott. * 1 The appellants have paid the contractor for the materials and supplies. Their exposure to the lien claims of the supplier results from the forgery of the supplier’s signature to releases of liens.

On behalf of all appellants, it is contended that the supplier, the Reisterstown Lumber Company, may not claim entitlement to liens for items furnished prior to ninety days from the dates of its written notices of lien claims given pursuant to the Mechanics’ Lien Law then in effect, Art. 63, ⁴¹⁷ § 11 (a). 2 In addition, on behalf of appellants Culotta only, it is argued that Reisterstown failed to prove delivery of certain materials on August 21, 1969, within the above ninety day period. I The entire parcel was originally owned by the appellants Mott. Prior to 1967 Mr. and Mrs. Mott decided to subdivide the land, to retain one lot for their own residence and to sell the others. Mr. Mott, a registered professional engineer, entered into a “50-50 partnership” with one John E. Wiser for the construction and sale of houses on the other lots.

Both partners were engaged full time in other employment. Mr. Wiser was to handle advertising, selling and financing; Mr. Mott prepared the plans and specifications. The venture engaged as builder the firm of Winter Construction Co., Inc., of which Walter R. Winter, then 33, was president. The partners had known Mr. Winter for three or four months before signing an agreement with him for the construction of a house on Lot 3 in late May, 1967 and were familiar with his construction work in the nearby area.

Each of the houses was to be custom built. The prospective buyer would first acquire title to the lot and obtain his own construction loan. Thus the partnership put up no funds for construction, its only expense being for engineering and surveying. For each house, a construction agreement was entered into between Mott and Wiser as “Developer” and Winter Construction Co., Inc. as “Contractor.” When work was commenced on the first house.

(Lot 3) there was no purchaser. The house was bought, however, when half-completed and was then finished to the purchaser’s requirements. Thereafter, there was no predetermined schedule of construction. As Mr. Mott explained in response to a question from the chancellor: “A. We normally, we were overlapping at the end of one — if I might answer it this way, Your ⁴¹⁸ Honor, we were overlapping finishing one house and starting another.

We had no set schedule. We were completely dependent upon when our client showed up.” The eventual sequence of construction was as follows, the dates being the dates of commencement, not completion: Lot 8 — May, 1967 Lot 2 — October, 1967 Loti — December, 1967 Lot 5 — March, 1968 Lot 4 — May, 1968 Lot 7 — July, 1968 Winter Construction Co., Inc. received its final draw payment for each house upon presentation of a mechanic’s lien release sheet, as required by the respective lenders. In November, 1968 the partnership and the home purchasers became aware of claims of Reisterstown Lumber Co., Inc. for unpaid deliveries of materials and supplies in fairly substantial sums. The president of Reisterstown, Charles R. Forbes, Jr., characterized as forgeries the signatures on behalf of his company appearing on the releases of liens.

Mr. Winter could not be produced as a witness at the time of trial and the court received in evidence, at the instance of the appellants, his deposition taken on February 7,1969. 3 The material delivered by Reisterstown to the three properties in question together with the relevant dates, according to the supplier’s records and contentions, may be tabulated as follows: ⁴¹⁹ Lot 4 (Back) Lot 5 (Culotta) Lot 7 (Mott) Date of first delivery Date of last delivery Date of Notice Total claimed (less interest) Amt. in 90-day period prior to Lien Notice 5/3/68 3/36/68 7/2/68 9/16/68 8/21/68 11/1/68 11/18/68 11/13/68 1/9/69 $1,073.25 $7,563.59 $9,135.22 $ 116.66 $14.36 $1,316.94 Appellants Back and Mott do not contest the fact of delivery pursuant to the lien notice. Appellants Culotta, however, deny that the last delivery in the amount of $14.36 on August 21, 1967 was in fact madé. (The next preceding delivery to the Culottas was on August 9, 1968 and was thus outside the statutory ninety day period.) It is the position of all appellants that the liens properly attach only for specific deliveries made within ninety days of the lien notice, in the amounts above tabulated, and not for all prior unpaid deliveries. The chancellor concluded that the latter contention was unsupportable and that the delivery of the materials to the Culottas on August 21 had been established.

He therefore decreed that the respective liens be enforced. For the reasons hereafter stated we do not find error. Maryland Rule 1086. II The issues raised call for a construction of Section 11 of the Maryland lien law which provides that if “the contract” for furnishing materials is made with any person except the owner of the lot on which the building may be erected, the supplier shall not be entitled to a lien unless, within ninety days after furnishing them, he shall give notice in writing to the owner of his intention to claim a lien. 4 “The purpose of ⁴²⁰ this notice is to inform the property owner of the nature and amount of the claim intended to be fixed as a lien upon his property, in order that he may be able to protect himself in his future dealings with the contractor.” District Heights Apartments v. Noland Company, Inc., 202 Md. 43 , 95 A. 2d 90 (1953).

The principal controversy involving the parties (including the Culottas) centers on the fact that, as shown by the tabulation above, most of the materials and supplies were delivered to each of the sites more than ninety days prior to the dates of the respective notices of intention to file liens. In essence, the three appellants contend that each order and delivery constituted a separate “contract” as that term is employed in Section 11 and, therefore, that the lien claims must be limited to the amount of materials delivered in the 90-day period prior to the notice. 5 Reisterstown Lumber, on the other hand, contends in effect that there was a single open account contract and that the notices reach all the deliveries because they were given within ninety days from the last delivery to each site. The factual context in which the resolution of these issues must be made is further reflected in the following tabulation of orders and deliveries to the respective sites based upon the lien claims and the particulars thereof: Orders Deliveries Delivery Dates Total Invoices Lot 4 (Back) 44 37 5/3/68-9/16/68 $6,480.47 Lot 5 (Culotta) 57 42 3/28/68-8/21/68 $7,563.59 Lot 7 (Mott) 41 37 7/2/68-11/1/68 $9,135.22 These orders and deliveries were not made pursuant to an express contract. The evidence before the chancellor concerning the arrangements between the supplier and the builder may be summarized as follows: 1.

A sales representative of Reisterstown for more ⁴²¹ than 25 years, Mr. Jacob M. Hundertmark, called upon the builder, Mr. Winter, at the construction site of Lot No. 3 (the first to be improved) when the builder had completed only the foundation work. In this way, the relationship between the supplier and the builder presumably began. 2. The evidence was conflicting as to whether estimates were supplied by the lumber company and if so, their number and extent. According to the deposition of the builder, there was at least one estimate.

The president of the company did not recall any estimates. The salesman, Mr. Hundertmark, testified that he prepared several estimates for building materials which Reisterstown could supply. The estimates, he testified, included lumber, millwork, roofing, flooring and insulation. Estimates were not given for all of the houses, he testified, because “Mr. Winter said he was satisfied with our material and prices and our delivery.” 3.

Orders for materials and supplies were given by the builder on an average of twice each week, either to the salesman at the job site or by telephone call to him at the company’s offices or at the salesman’s home. According to Mr. Winter’s deposition, he called Reisterstown “practically every day.” He also ordered from other suppliers but “mostly I called Reisterstown.. ..” 4. The orders would be designated at the offices of Reisterstown by lot number for the respective homes and deliveries were made usually on the day the order was received, trucked to the site by the lumber company. 5. The contractor was given wholesale or builders’ prices and was billed on open account once each month.

As shown by the particulars, the items ⁴²² sold fell into the category of building materials, hardware and millwork. 6. Less than all the materials and supplies required for the construction of the several houses came from Reisterstown Lumber Company. The builder was free to purchase from other suppliers and did so. According to the testimony of the salesman, however, Reisterstown provided “the majority” of the building materials which went into the houses constructed on Lots 4, 5 and 7. 7.

Most of Reisterstown’s supply business was done without an express contract. The leading case involving the meaning of the term “contract” in Section 11 of the lien law is Trustees of the German Lutheran Church v. Heise, 44 Md. 453 , decided by the Court of Appeals in 1876 in an opinion by Judge Alvey. The chancellor in the instant appeal took careful note of the pronouncements of the Court in Heise . With respect to the meaning of the term contract, the Court of Appeals there stated (p. 469): “The lien law, Code, Art. 61, secs.

I, II, speaks of the contract for furnishing work or materials to the builder, or other person than the owner; but we do not understand from this that it is incumbent upon the claimant to establish the fact that there was an express antecedent contract made with respect to the exact quantity of work or materials to be done or furnished by him.” (Italics in original.) Immediately thereafter the Court set out the following standards to be applied in the absence of evidence of an express contract: “In the absence of evidence of such express contract, the character of the account, the time within which the work was done or the materials were furnished, and the object of the work or materials, may afford ⁴²³ proper grounds for the presumption that the work was done or the materials were furnished with reference to an understanding from the commencement that such work or materials should be done or furnished, if required by the builder; and in such case, it is from the last item in the account that the notice, and the time within which to take the lien, should date. If this were not so, in every case where there is no express contract, the mechanic or material man would be under the necessity of taking several liens during the progress of a single building.” (Emphasis added.) Further, the Court in Heise delineated the circumstances where the above presumption did not arise (p. 470): “But where the materials are furnished for separate and distinct purposes, or at different times, and at considerable intervals, or under distinct contracts or orders, though to be used by the contractor or builder in executing one and the same contract with the owner, no such presumption will arise, and the right to take the lien must date from the time of furnishing the different parcels of material, and not from the last item in the account.” (Emphasis added.) In Heise , the Court had before it the bill to enforce a lien by Heise and Company, the supplier of the lumber used for the construction of the church. (The proceedings were consolidated with a bill to enforce the lien claim of a partnership which furnished the bricks.) The Court rejected the argument that the lumber was not furnished under a continuous contract and concluded that the court below was correct in regarding the lien as established. The language of the Court of Appeals in reaching this conclusion casts further illumination on the question before us: “In this case, there was such a continuous dealing, and running account of the materials furnished, and the deliveries were at such short in ⁴²⁴ tervals, and in such quantities, that the presumption arises that it was understood from the beginning that the claimants were to furnish the materials charged for as they were required in the progress of the building.

And this presumption, we think, upon a fair construction of the evidence, is not overcome or removed by anything stated either in the testimony of William Heise, or his witness, J. G. Jones.” (p. 470). In the instant appeal, there was also continuous dealing, a running — on open account — for the materials furnished, and the deliveries were at short intervals, over a period of four to five months when the construction of the three houses overlapped. This is shown in the suppliers’ records which are impeccably detailed. And, of course, in each instance and for each lien claimed, the materials were furnished for the same general purpose — the building of each house.

It is true, as appellants emphasize, that the contractor was free to purchase elsewhere and did so. The Court of Appeals has held, however, in a case subsequent to Heise , that it is not incumbent upon the lienor to show that the agreement with the general contractor was entire and indivisible or that there was an intention from the beginning to furnish all the material that would be required by the contractor. Caltrider v. Isberg, 148 Md. 657, 664 , 130 A. 53 (1925). We find entirely proper the chancellor’s application of Heise and also his reliance upon Humphrey v. Harrison Bros., Inc., 196 F. 2d 630 (4th Cir. 1952) decided under the lien law of Maryland.

Appellants mistakenly maintain in their brief that Humphrey involved an express understanding between the supplier and the builder. The opinion of Judge Soper, writing for the Court, makes it abundantly clear that the only formal contract was between the plumbing and heating subcontractor (Alexander Green) and the owner and builder (James Humphrey). Prior to the execution of that contract “Green arranged” with the supplier (Harrison Bros.) to purchase the necessary material ⁴²⁵ to perform his contract with Humphrey and 90% of the supplies required for the job were actually purchased from Harrison, the supplier. The arrangements between the subcontractor and the supplier were thus described by Judge Soper: “Prices were named by Harrison at the beginning of the operation but there was no written or oral contract between Harrison and Green fixing the prices or binding the parties to a sales agreement for the entire project; and the goods were bought on open account as needed during the ensuing months, and payments on account were made from time to time.” The Court found that the lien for furnishing of plumbing supplies was enforceable. 6 We apprehend that the appellants, in their assertions of error on the part of the chancellor, fail to distinguish between a regular course of dealing between a supplier and a contractor, as exemplified in the instant appeal and cases like Humphrey, supra, and situations where separate and distinct contracts were entered into.

A graphic illustration of the latter is the case of Clark v. Boarman, 89 Md. 428 (1899) where a dwelling was erected under one contract for the sum of $1400 and, under another agreement, four outhouses were constructed at a cost of $200.50. The Court of Appeals held that these were distinct contracts and that, in such case, the material man was not entitled to a lien under both contracts by simply accounting from the date of the last item of one of them and, in all respects, the requirements of the lien law had to be observed as to each contract. In another early case, a material man entered into an ⁴²⁶ agreement to supply bricks at the prices of $9.00, $17.50 and $25.00 per thousand for the construction of twenty houses, with no definite quantity being stipulated. Deliveries were made from November to May and once again in August.

In May, however, bricks were ordered for paving purposes at a different price, namely, $10.00 per thousand. The Court of Appeals held that the paving bricks were furnished under a separate contract whereas all the others were supplied under one continuous contract and the paving bricks were not allowed as part of the lien claim under the earlier agreement. The Maryland Brick Company of Baltimore City v. Dunkerly, 85 Md. 199 (1899); see also Watts v. Whittington, 48 Md. 353 (1878). We conclude also that the appellants have misread the cases of Hensel v. Johnson, 94 Md. 729 (1902) and Brunt v. Farinholt Company, 121 Md. 126 (1913), upon which they rely in support of their contention that each order and delivery in the instant case constituted a distinct contract and that the lien is governed by the respective dates of delivery and not from the last item in the account.

Hensel also arose on a bill to enforce mechanics’ liens. As the opinion of Page, J. discloses, the record developed an enormous amount of evidence. In a relatively brief disposition of the case, however, the Court succinctly set forth the facts relating to the lien claims of some ten mechanics and/or suppliers who were involved. Appellants in their brief refer to the tenth claim only.

This was the claim by the firm of Myohl & Luken for the lumber supplied in the construction of five houses located in Baltimore County. The original undertaking of the lumber firm was to furnish “not such lumber as might be needed for the construction of the houses but a specific quantity contained on a list, a copy of which is in the record.” (Emphasis added.) These specific quantities were to be supplied at a stated price of $1487.45. Thereafter, the builder purchased more lumber and, in the language of the Court, “not by virtue of the original agreement, but as he needed it.” In our view, the following language of the Court is at variance with the position advanced by appellants in this case: “The lumber ⁴²⁷ furnished in addition to