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08/09/65 Hartford Accident and v. A.B.C. Cleaning

August 9, 1965

HARTFORD ACCIDENT AND INDEMNITY COMPANY, APPELLANT

v.

A.B.C. CLEANING CONTRACTORS, INC., APPELLEE 1965.CDC.181 DATE DECIDED: AUGUST 9, 1965



UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

APPELLATE PANEL:

Danaher, Burger and McGowan, Circuit Judges. McGowan, Circuit Judge (concurring).

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE DANAHER

The appellee instituted its action in the District Court "To Enforce Mechanic's Lien" against Nassau Management Company, Inc. and Tracy Roosevelt Corporation. It later filed an amended complaint adding the appellant as a party. In two counts appellee alleged it had entered into two contracts with Nassau for sand-blasting portions of the Hotel Roosevelt "reputed to be owned by the defendant Tracy Roosevelt Corporation." Nassau was alleged to be the duly authorized agent of Tracy Roosevelt Corporation. After receiving payments of only $8,750, leaving a substantial balance owing on the first contract, no payment having been made on the second contract, the appellee filed two mechanic's liens "against the interest of Tracy Roosevelt Corporation" in the Hotel Roosevelt premises. Under circumstances to be mentioned, Nassau and Tracy Roosevelt having defaulted, the District Court entered judgment against the appellant surety in favor of the appellee to recover $5,850 together with interest and costs from February 27, 1957. This appeal followed.

Shortly after notice of intention to file the mechanic's liens had been given to Tracy Roosevelt by registered mail, Tracy Roosevelt as principal and the appellant as surety entered into and filed a "Mechanic's Lien Undertaking." The instrument in part recited that the "above-named Tracy Roosevelt Corporation, owner" and the appellant "undertake . . . that they will pay and satisfy any judgment that may be recovered in any suit . . . that may be instituted on, or to enforce the above entitled mechanic's lien."

Appellant insists that the District Court erred in granting judgment *fn1 against it in that its undertaking merely had been substituted for whatever rights the appellee might have had to foreclose a mechanic's lien against the interest of Tracy Roosevelt Corporation in the property known as the Roosevelt Hotel. It was urged at trial and is argued here that the appellee had not proved that Tracy Roosevelt Corporation ever had any "interest" in the property purportedly subject to lien. Thus, if the property could not have been held to respond to the appellee's claim of lien, the appellee had gained no greater rights from the undertaking. It was stipulated in the District Court between counsel for the respective parties hereto that the land records of the District of Columbia disclosed "no leases or other instruments of record in the names of either Nassau Management Company, Inc. or Tracy Roosevelt Corporation, and that William Newman, Jack Salvage, and Jack Freeman were record title owners of the above-described property at all times pertinent to the dispute in this case . . .."

The District Judge noted that the mechanic's lien undertaking had been entered into between "Tracy Roosevelt Corporation, owner, and Hartford Accident and Indemnity Company, surety," and that the parties had undertaken "for themselves, and each of them" to pay and satisfy any judgment that may be recovered in any suit "to enforce the above entitled mechanic's lien." He concluded that although the default judgment entered against Nassau and Tracy Roosevelt "did not constitute an adjudication that the lien should be foreclosed," *fn2 nevertheless the "judgment" against Tracy Roosevelt had flowed from a suit "instituted on, and to enforce the mechanic's lien."

The judge therefore ruled, in effect, that the surety may be held liable on its undertaking *fn3 even though the appellee had secured no more than a personal judgment against Tracy Roosevelt Corporation and even though it was not shown that the latter had ever owned any interest in the property. But the default judgment had expressly reserved a ruling with respect to the validity of the mechanic's lien. In making that reservation, the motions judge undoubtedly had in mind that a prerequisite to ultimate liability of the surety on the undertaking *fn4 involved an establishment on the record that Tracy Roosevelt Corporation had some interest in the Roosevelt Hotel which might have been made subject to a mechanic's lien. *fn5

D.C.CODE ยง 38-102 (1961) provides that a valid notice of mechanic's lien must include (1) the amount claimed, (2) the name of the party against whose interest the lien is claimed and (3) a description of the property to be charged. On its face, the "notice of lien" in this case purportedly complied with those requirements. We have held however, that where a lienor has named as the alleged owner one who has no interest in the property or the lienor has named the wrong person as purported owner, the notice is fatally insufficient. *fn6 Surely it may not successfully be maintained that a contractor may gain a valid lien against the true owner of property by filing notice of lien against one who has no interest whatever in the property named.

It is the theory of our mechanic's lien law that an undertaking, when approved by the court as was the case here, becomes a substitute *fn7 for that interest in the premises which was "subject to a lien." The Code provides that enforcement of the lien proceeds by a bill in equity, and the burden of proof rests upon the complainant. Indeed, the Code expressly provides:

"If the right of the complainant . . . to the lien . . . shall be established, the court shall decree a sale of the land and premises or the estate and interest therein of the person who, as owner, contracted [for the work done]." (Emphasis added.)8

That judgment which establishes a right to a lien upon the interest "subject to lien"9 is the judgment which is secured by the undertaking. The instrument here in suit did not include a liability upon the surety to respond at all events simply because the appellee secured a personal judgment that Tracy Roosevelt was indebted to the appellee. The surety's "obligation is confined to the purpose of the statute."10 The trial judge erred in resting his decision on the default judgment rendered against Tracy Roosevelt Corporation.

But after reference to the default judgment against Tracy Roosevelt as one basis for his decision, the District Judge also said:

"The second string to my bow is that if I am in error on that, plaintiff is entitled to judgment because, in my opinion, the defendant surety company is estopped from denying that ...


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