Noland Co. v. Hester, 190 N.C. 250 (1925)

Oct. 14, 1925 · Supreme Court of North Carolina
190 N.C. 250


(Filed 14 October, 1925.)

1. Mechanics’ Lien — Liens—Statutes.

The rights of laborers and materialmen to acquire liens against the property of the owner for work done upon, and material furnished to the contractor in the erection of his building, etc., do not rest by common law but strictly by statute, and the provisions of the statute must be followed for its enforcement; and where the property is not subject to this lien no duty or obligation is imposed upon the owner in respect to such claimants.

2. Schools — Municipal Corporations — Liability of Official Boards and Individual Members — Mechanics’ Liens — Liens.

The failure of a school committee to require of the contractor a bond as provided for by C. S., 2445, is expressly made by the statute a misdemeanor on the part of the individual members, and no civil liability for such failure attaches either to the school district or to the individual trustees, but only by indictment against the individuals composing the board.

Appeals by plaintiff and defendants from Oranmer, J., at April Term, 1925, of WayNe.

*251Civil action beard upon tbe following agreed facts:

1. On tbe 29tb day of July, 1922, tbe Board of Trustees of Southern Pines Schools entered into a contract with Hester & McElwee for tbe alteration of a school building at tbe price of $55,048.00. At tbe time A. S. Buggies, P. P. Pelton, J. S. Milliben, Mrs. Eebecca Swett, and M. Y. Poe constituted said board of trustees.

2.' Said board of trustees failed to require tbe defendants, Hester & McElwee, to furnish a bond as provided by section 2445 of the Consolidated Statutes. In failing to require said bond, tbe said board and tbe individual members thereof were acting on tbe advice' of Amar Embury, an architect, who advised them that tbe work could be easily done for tbe amount of tbe bid and that tbe purchase of a bond would be a useless expense to tbe board.

3. Of tbe materials used in said work by Hester & McElwee, Noland Company, Inc., (under an agreement with Hester & McElwee) furnished materials Of tbe value of $6,073.85, tbe first of said materials being furnished on 17 August, 1922, and tbe last of said materials being furnished on 21 May, 1923. At tbe time said materials were furnished said Noland Company, Inc., thought that a bond bad been required in accordance with O. S., 2445, never having been advised to tbe contrary by tbe board of trustees or tbe individual members thereof. Tbe sum of $2,848.99 has been paid to Noland Company, Inc., for said materials; and there is now due to Noland Company, Inc., therefor, tbe sum of $3,224.86, with interest from 27 September, 1923.

4. Within a few days after said materials were furnished by Noland Company, Inc., tbe board of trustees learned that Hester & McElwee were behind in their payments to tbe subcontractors and materialmen on said job; and thereupon tbe said trustees required tbe said Hester & McElwee to furnish a statement of all outstanding accounts due by them for materials and labor furnished on said job. Thereupon tbe said Hester & McElwee furnished said trustees statements of all outstanding accounts due by Hester & McElwee for materials and labor on said job, including among said ' statements an itemized statement of tbe indebtedness due Noland Company, Inc. Upon receiving these statements tbe trustees paid to Hester & McElwee under their contract a sufficient sum to pay off all outstanding indebtedness, including tbe entire amount due Noland Company, Inc. Tbe said Hester & Mc-Elwee, however, applied none of said funds to tbe payment of tbe amount due Noland Company, Inc., and after tbe completion of said building tbe board of trustees did not have a sufficient sum under said contract to reduce tbe amount due Noland Company, Inc., below tbe said sum of $3,224.86.

*252Plaintiff sues to recover the balance of its account, and seeks to hold the defendant, board of trustees, in its official capacity, as well as the members thereof individually, liable therefor.

His Honor entered judgment against the defendant, board of trustees, in its official capacity, for the balance of plaintiff’s claim, and declined to hold the members of the defendant board liable as individuals.

Both sides appeal, assigning errors.

Kenneth G. Boy all and Ballard S. Gay for plaintiff.

Johnson & Johnson and U. L. Spence for defendants.

PlaiNtiff’s Appeal.

Stacy, C. J.

The plaintiff’s appeal presents but a single question for decision. It is this: Does the failure to exact from the contractors a bond, as required by C. S., 2445, render the individual members of the defendant board of trustees civilly liable for any part of plaintiff’s uncollected claim? Under the express terms of the statute and in the light of the better-considered decisions on the subject, we think this question must be answered in the negative. Such was the direct holding in Fore v. Feimster, 171 N. C., 551.

For the sake of clearness, it may be well to observe that the law in regard to liens, in so far as it relates to materialmen, is statutory, and not a creature or development of equity jurisprudence. “The 'material lien’ is by virtue of the statute only.” Broyhill v. Gaither, 119 N. C., 443. The principles of equity, therefore, should not be confused with the provisions of the statutes bearing on the subject. Liens are given to subcontractors and those who furnish labor, materials and supplies, to the end that they may effect collections from their debtors, the original contractors, and not for the purpose of rendering the owners primarily liable for such claims. Rose v. Davis, 188 N. C., 355.

The statutes enacted to secure the payment of these claims, and which have been amended from time to time in an effort to remedy defects found in the existing laws, have been construed by us in a number of cases and their operation confined to buildings other than those erected for a public use. It is the uniform holding that no lien can be secured or enforced against a public building. Warner v. Halyburton, 187 N. C., 414 (public school building); Ingold v. Hickory, 178 N. C., 614 (public school building); Scheflow v. Pierce, 176 N. C., 91 (sewer system, town of Tarboro); Hutchinson v. Comrs., 172 N. C., 844 (county home); McCausland v. Const. Co., 172 N. C., 708 (public school building); Fore v. Feimster, 171 N. C., 551 (county home); Hdw. Co. *253 v. Graded School, 150 N. C., 680; S. c., 151 N. C., 507 (public school building); Gastonia v. Engineering Co., 131 N. C., 359 (municipal electric-lighting plant and waterworks pumping station); Snow v. Comrs., 112 N. C., 336 (court house).

The lien laws, therefore, may be put aside as inapplicable to the instant case, being, as it is, an action to recover for materials furnished in the construction of a public school building. "Where the property is not subject to a lien, as here, no duty or obligation is imposed upon the owner by virtue of any notice or attempt to acquire a lien thereon. Foundry Co. v. Aluminum Co., 172 N. C., p. 707. No doubt the failure to hold this circumstance clearly in mind led to an inexact dictum in Scheflow v. Pierce, 176 N. C., p. 93; and it is possible that similar expressions may be found in other cases.

In Hutchinson v. Comrs., 172 N. C., 844, the Board of Commissioners of Iredell County, upon notice duly received, paid to a subcontractor (Lon Gr. Cruse Company) its claim for painting a county home out of funds retained and due the original contractor at the time of notice given. In a suit by the receiver of the original contractor against the board of commissioners to recover the balance due under the contract it was held that, as the subcontractor acquired no lien on the property, and the notice given by it imposed no obligation upon the owner with reference to the amount due the original contractor, such payment was made by the defendant, board of commissioners, upon its own motion, when under no duty to do so, and that the amount so paid could not be allowed as a credit against the balance due the original contractor.

Nor is it a case of common-law origin with additional and elective remedies added by statute. No such right in favor of the material men existed at common law. All their rights and remedies against the owner are statutory; hence we must look to the legislation on the subject in order to ascertain the standard by which the rights of the parties are to be determined. Mfg. Co. v. Andrews, 165 N. C., 285.

As a substitute for the remedies afforded by the lien statutes, where other than public buildings are built, rebuilt, repaired or improved, and in an effort to 'place public construction somewhat on a parity with private work of a similar kind, the Legislature provided in C. S., 2445, that every county, city, town or other municipal corporation, which lets a contract for building, repairing or altering any building, public road or street, shall require the contractor of such work (when the contract price exceeds $500.00) to execute a bond, with one or more solvent sureties, before beginning any work under the contract, payable to said county, city, town or other municipal corporation, and conditioned for the payment of all labor done or materials and supplies *254furnished on said work,.and upon which suit may be brought for the benefit of the laborers and materialmen haying claims. Warner v. Halyburton, supra. It is further provided that, if the officials of any county, city, town or other municipal corporation, fail to require such bond, they shall be guilty of a misdemeanor.

It was assumed on the hearing and argument that a public school board, such as the one here sued, comes within the purview of this statute, and that the defendant board, under the terms of said statute, was in duty bound to exact a bond from the contractors or suffer the penalties imposed by law for the failure to perform, such duty. We shall treat the case on the same basis, following, in this respect, the ' precedent set by Warner v. Halyburton, 181 N. C., 414.

It is conceded that the defendant, board of trustees, acting on the advice of the architect, did not require a bond of the contractors, and that this is in direct violation of the statute. Such failure is denominated a misdemeanor, and accordingly the members of the board are liable to indictment therefor.

It will be observed that the law imposes no individual duty upon the defendants to exact a bond from the contractors, but this obligation is laid upon the “county, city, town or other municipal corporation,” when it, in its corporate capacity, enters into a contract for the erection of a public building or other public construction. The. coercive features of the statute are directed against the officials whose duty it is to take the bond, and who fail to do so. The only penalty prescribed for such failure, however, is liability to criminal indictment. Summing up the result of the decisions in other jurisdictions on similar statutes, and adopting the same as a correct interpretation of our own law, it was said in Fore v. Feimster, supra, “that where an act of the Legislature, in reference to a corporate body in its terms imposes a corporate duty, the individuals, as such, composing the corporation or charged with the general management and control of its corporate affairs shall not be held to personal liability unless expressly made so by the statute itself, or unless they have been charged with or have undertaken some individual or personal duty concerning the matter.” There is no contention that the present defendants have undertaken any individual or personal duty concerning the matter here in controversy, nor is there any allegation of wilful misconduct on their part.

This being the correct interpretation of the statute now under consideration, we must hold that it was not error for the court to decline to render judgment against the defendants individually.

True, in a number of cases, notably Hipp v. Farrell, 169 N. C., 551; S. c., 173 N. C., 167, it was said, in substance, that one who holds *255a public office, administrative in character, and in reference to an act clearly ministerial, may be held individually liable in a civil action, to the extent of any special damages sustained by reason of bis failure to perform bis official duties; and in Holt v. McLean, 75 N. C., 347, there is a dictum to the effect that, under such conditions, be may also be liable criminally to the public. But these decisions were made in reference to other statutes, and they are not controlling here. The fact that the General Assembly has imposed personal liability in some cases and failed to do so in others is equivalent to a legislative declaration that, in the latter instances, individual liability is not to attach. Expres-sio unius est exclusio alterius. Fore v. Feimster, 171 N. C., p. 555, and cases there cited.

The plaintiff’s exception, therefore, cannot be sustained; and no error has been made to appear so far as its appeal is concerned.



Stacy, C. J. The appeal of the defendants also presents but a single question for decision: Does the failure to exact from the contractors a bond, as required by C. S., 2445, render the defendant, board of trustees, in its official capacity, civilly liable for any part of plaintiff’s uncollected claim? This precise question was before the Court in Warner v. Halyburton, 187 N. C., 414, and decided in the negative. Mr. Justice Eolce (later Chief Justice), speaking for the Court, said: “In so far as the liability of the board of education, as such, is concerned, this statute, as it does, imposing a new duty and providing for its enforcement by indictment, on authority this remedy, and none other, must he pursued, and no civil liability will attach to them officially.”

The defendants’ exception, therefore, must he sustained. It was error to render judgment against the defendant, board of trustees, in its official capacity.

In answer to the plaintiff’s argument that the conclusions here reached leave the laborers and materialmen without adequate protection against officials defaulting in their duty, it is sufficient to say that criminal indictment is the only remedy prescribed by the statute, and we must declare the law as we find it. The Legislature alone may change it, if it is thought to be inadequate. Plaintiff’s rights and remedies against the defendant hoard and its members are statutory, and the courts are not at liberty to extend a penal statute, or one of this kind, beyond the clear meaning of its terms. “The legislative intent must be the controlling spirit in the construction and application of statutes of this nature.” — Varser, J., in Finance Co. v. Hendry, 189 N. C., p. 554. Then, too, it should be remembered, the plaintiff furnished *256materials to the contractors without knowing, or without making any inquiry, as to whether a bond had been given or exacted in accordance with the provisions of the statute. It is the duty of those who accept public office to obey the law, not to disregard it, and they are liable, according to the penalty prescribed, for their failure to do so; but, in the instant case, the plaintiff could easily have ascertained by inquiry as to whether the bond had been given or exacted, and it is presumed to have known that criminal indictment of the members of the defendant, board of trustees, was the only penalty named for the failure of the corporation to exact such bond.