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IN BANK.

[Filed December 8, 1880.]
No. 6584.

H. T. HOLMES ET AL., RESPONDENTS,

VS.

MADAME J. RICHET ET AL., APPELLANTS.

MECHANICS' LIEN-MATERIALS MUST BE FURNISHED

TO

BE USED" IN

STRUCTURE. Where a complaint to foreclose a mechanics' lien for materials furnished, alleged that the materials were used in the construction, etc., without alleging that they were furnished "to be used" in the construction, etc.: Held, under the mechanics' lien law (C. C. P., § 1183), bad on demurrer for want of facts.

ACTION ON MECHANICS' LIEN BY MATERIAL MAN-ORIGINAL CONTRACTOR A PROPER PARTY DEFENDANT-PLEADING HIS LIEN. In an action by a material man to foreclose a mechanics' lien, the original contractor is a proper party defendant, and he has a right to set up in his pleading, whether he calls it an answer or a cross-complaint is immaterial, as its character will be determined by the Court, his claim of lien. BUILDING CONTRACT-EFFECT OF AGREEMENT THAT VALUE OF EXTRA WORK SHALL BE FIXED BY REFEREES. When a building contract provided that, in case of dispute respecting the true value of extra work, the same should be valued by two competent persons-one to be employed by the owner, and the other by the contractor, etc.: Held, that this was not an agreement to refer a case to arbitration, such as, according to settled law, the courts will not enforce; but it was an agreement that the value of the work was to be fixed in a certain manner, and until so fixed, or some good reason for failure so to fix it given, there was no right of action for such extra work.

BUILDING CONTRACT-EFFECT OF AGREEMENT THAT INSTALLMENT NOT DUE IN CASE OF LIEN. When a building contract, which was to be paid in installments, provided that the existence of any lien, at the time an installment would otherwise be due, should constitute a good and sufficient reason for non-payment of such installment; and in an action by the contractor, there being such a lien before the last installment fell due, it was adjudged by the Court below that the last installment was not due or payable, and ordered that the amount of such lien should be deducted from the amount due the contractor at the time suit was brought: Held, that the order that the amount of the lien should be deducted from the amount due the contractor at the commencement of the suit did not operate as such a payment and extinguishment of the lien as would render the last installment due and payable. Appeal from the District Court of the Twenty-third Judicial District, City and County of San Francisco.

Van Dyke & Powell and Pringle & Hayne, for appellants. S. H. Henry, for respondents.

MORRISON, C. J., delivered the opinion of the Court:

On the twentieth day of March, 1876, the plaintiffs filed a complaint in the Third District Court, against the defendants, to enforce a claim under the mechanics' lien law. The de

fendant, Richet, was sued as the owner of the lot described in the complaint, and the buildings erected thereon, and the defendant, Pharo, was sued as original contractor. The suit was brought to enforce a lien for certain materials alleged to have been furnished by the plaintiffs, and the allegation of the complaint is, "that the plaintiffs sold and delivered to defendants certain materials, consisting of lime, cement, etc., used in, upon, about, and for the construction, alteration, addition and reconstruction of a certain building or structure now upon that certein lot and parcel of land" (describing it). The plaintiffs seek to occupy the position of parties furnishing materials for the construction of a building on the lot of the defendant, Richet, and the question is whether the allegations of their complaint bring them within the provisions of the statute. To the complaint a demurrer was filed on behalf of Richet, one of the grounds of demurrer being "that the complaint does not state facts sufficient to constitute a cause of action against this defendant or against the property mentioned in the complaint as owned by this defendant.'

Section 1183 of the Code of Civil Procedure, concerning the liens of mechanics, provides that "every person performing labor upon or furnishing materials to be used in the construction, alteration, or repair of any mining claim, building, etc., has a lien upon the same for the work or labor done, or materials furnished by each," etc.

The language of the complaint is simply that the materials furnished by the plaintiffs were used in, upon and about, and for the construction, etc., of a certain building owned by the defendant, Richet, and there is no averment that the materials were furnished to be used in the construction of the building. There are two decisions of this Court upon the question of the sufficiency of this complaint. The first is the case of Bottomly vs. The Rector, Wardens and Vestry of Grace Church, 2 Cal. 90. The Court there say:

"The statute never contemplated that a lumber merchant should have the right of following the materials which he had sold to another in general terms, and obtaining a lien upon any building to which the materials had been applied. The language of the Act is sufficiently explicit, and must be strictly construed, because it gives rights in derogation of the common law. The materials must not only have been used in the construction of the building, but they must have been, by the express terms of the contract, furnished for the particular building on which the lien is claimed; and to entitle a material man to enforce such a lien at law, these

terms of the contract must be alleged and proved. The declaration in this case avers that the lumber was used in the building, etc.. This is not only an insufficient allegation, but, standing by itself, it excludes the conclusion which would be necessary to entitle the plaintiff to recover against the owners of the building. It shows upon its face no right whatever in the plaintiff as against the rector, wardens and vestry of Grace Church."

In the later case of Houghton vs. Blake, 5 Cal. 240, the same principle was announced, and it was there held that "to entitle a material man to enforce a lien upon a building for materials furnished, it must be alleged and proved that not only the materials have been used in the construction of the building, but they must have been, by the express terms of the contract, furnished for the particular building on which the lien is claimed."

The principle of these cases is entirely in harmony with the letter and spirit of the statute. The language of the Code is that a party furnishing material to be used in the construction of a building shall have a lien. If they were furnished to be used in the construction of a ship, but were in fact used in the construction of a house, the material man would not, in consequence of the fact that they were so used, have a lien upon a house. In the one case the law would consider the materials furnished under and in pursuance of the provisions of the Code, and with a view to a lien, but in the other not. We are, therefore, of the opinion that the demurrer to the plaintiffs' complaint should have

been sustained.

The defendant, Pharo, was, as has already been stated, the original contractor, and he was joined as a defendant in the suit. He was a proper party to the proceeding, and had a right to set up in his answer or cross-complaint his claim of lien. It is immaterial what the defendant called his pleading, whether he designated it an answer or crosscomplaint, its character will be determined by the Court. It is the facts set up in the pleading which make it an answer or cross-complaint. Pharo makes a claim for extra work, and this claim was allowed by the Court below. The finding is as follows: "That during the progress of the work by defendant, Pharo, under said contract, the defendant, Richet, requested certain alterations and additions to be made to said contract, specifications and plans, and to said work and materials to be done and furnished under said contract, that no written order was required for such alterations and additions, that defendant, Pharo, performed said altera

tions as requested, and that the extra work and materials done and furnished by defendant, Pharo, by reason of said alterations and additions, were settled and agreed on by said Pharo and said architect to be worth the sum of $195," and this amount was allowed by the Court for and on account of extra work done by Pharo. The allowance of this amount is complained of by the defendant, Richet, and it is claimed that the allowance was contrary to the terms of the contract. The contract (which is set forth in the findings of the Court) contains the following clause: "Should any dispute arise respecting the true construction or meaning of the drawings or specifications, the same shall be decided by the aforesaid P. Huerne, architect, and his decision shall be final and conclusive; but should any dispute arise respecting the true value of the extra work or works omitted, the same shall be valued by two competent persons, one employed by the owner, and the other by the contractor, and in case they cannot agree, those two shall have the power to name an umpire, whose decision shall be binding on all parties.'

It appears from the pleadings in the case, that difficulties had arisen respecting the true value of the extra work, and the question here presented is, was it not the duty of the parties under the foregoing clause of the contract to have the said extra work valued by two competent persons. The finding of the Court is that the value of the extra work was agreed upon by the architect and Pharo, but it is claimed that the architect had no authority to bind the defendant, Richet, by any such agreement. By the terms of the contract, authority was given the architect to decide any dispute that might arise respecting the true construction and meaning of the drawings or specifications, and upon all such questions his decision should be final, but upon the question of extra work he was not authorized to decide. On the contrary, by the express terms of the contract, such disputes were to be referred to two competent persons, and if they could not agree, the services of an umpire were to be invoked. Was it competent for the parties to make such a stipulation? It has been frequently decided, and now seems to be the settled law, that an agreement to refer a case to arbitration will not be regarded by the Courts, and they will take jurisdiction and determine a dispute between parties, notwithstanding such an agreement. But that is not this case. Here the parties simply agreed that the amount or value of certain extra work should be fixed in a certain manner, and was there any right of action in this case for and on account of said extra work until the value thereof

was fixed according to the terms and conditions of the contract? In other words, was it not a condition precedent to any right of action that the value of the extra work should be determined in the mode provided by the contract? This question was very elaborately considered by the Court of Appeals of New York, in the recent case of The President etc. vs. The Pennsylvania Canal Company, 50 N. Y. 250. The Court there say: "The distinction between the two classes of cases is marked and well defined. In one case the parties undertake by an independent covenant or agreement to provide for an adjustment and settlement of all disputes and differences by arbitration to the exclusion of the Courts, and in the other they merely, by the same agreement which creates the liability and gives the right, qualify the right by providing that before any right of action shall accrue certain facts shall be determined, or amounts and values ascertained, and this is made a condition precedent, either in terms or by necessary implication. This condition being lawful, the Courts have never hesitated to give full effect to it. * * * * The reports abound in cases in which the principle has been affirmed and applied. (See Herrick vs. Belknap, 27 Vermont, 673.)

"In United States vs. Robeson, 9 Peters, 319, it was held that when the parties in the contract fix on a certain mode by which the amount to be paid shall be ascertained, the party that seeks the enforcement of the agreement must show that he has done everything on his part which could be done to carry it into effect; that he cannot compel the payment of the amount claimed unless he shall procure the kind of evidence required by the contract, or show that by time or accident he is unable to do so. Judge Story, in his work on Equity Jurisprudence (Section 1457 a) states the rule: 'But under a contract to pay the covenantee such damages in a certain contingency as a third person shall award, there is, in the absence of fraud, no cause of action, either at law or in equity, unless the award is made.'"

Referring to the case in 50 New York, the Supreme Court of Wisconsin, in Hudson vs. McCartney, 33 Wis. 345, say: "A late case in the Court of Appeals (50 N. Y. 250), to which our attention has been directed since the argument in this case, fully sustains the views above expressed as to the general principles of law governing contracts of this nature. The opinion of the Court, by Allen, J., is valuable for the discussion it contains and the authorities it collects and reviews, and particularly so for the clear and accurate distinction which it draws between those covenants for submission

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